by andrew martin new york times february 7, 2009
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By Andrew MartinNew York TimesFebruary 7, 2009
More and more people are embracing country lifestylessort of.Pride in their work, frustration with desk jobs are a couple of reasons cited for this trend.According to the Agriculture Department, the number of farms increased by 4% from 2002 to 2007.Most of the increase was in small, part-time farmsAmerican farming is highly polarized: 41% of the nations farms harvested $2,500 or less in sales in the year 2007.In contrast, 5% of the farms produced 75% of the total agricultural output in 2007.
Newly appointed Ag. Secretary Tom Vilsack is keenly aware that farmers with a few hundred acres of land are being outbid by farmers with thousands of acreage.Diversification is his approach to helping the small-time farmers out: Energy productionCarbon sequestrationConservationEcotourism
Despite recent strong profits, less than half of the 2.2 million American farms were profitable in 2007.In 2007, 65% of farmers had non-agricultural jobs, up from 55% in 2006.Land costs and health care are major hurdles for most prospective farmers, according to Amy Bacigalupo, a program organizer for the Farm Beginnings program in Minnesota.
The number of American farms peaked in 1935 at about 6.8 million and declined steadily for decades, until it stabilized for the last two decades between 2 and 2.5 million.The average farmer today is a 57 year-old white male with 418 acres of farm generating about $135,000 in annual salesBUT the number of female farmers grew by 30% from 2006 to 2007 to 306,200.Hispanic famers grew by 10% in the same time span, with more modest gains by black and Asian farmers.American Indian famers more than doubled, but the Ag. Dept. attributes that rise to different reporting techniques.
About a third of farms generated less than $250,000 in sales and the farmer had another job as a primary occupation.Although most farmers focus on cattle or crops, more are closing in on niche areas of agriculture.The number of organic farms increased by 51% from 2002 to 2007.
Presumably, the small-time farmers are the ones not profiting. Why? Land rents are bid upward by other people looking for more satisfying jobs and their competitors, who might buy them out to eliminate competition; economies of scale and scope might also drive profits higher for larger, more diversified farms.The small farmers compete against the large farmers in two markets: the goods market, in which they supply agricultural products to the public, and the market for land, which they need as a factor to production.The small farmers are competing against more people wanting to have the country life in the land market.Federal subsidies help out rural land owners who are not farmers, driving land costs further up.
In the closed city model where utility is constant, if land price is bid upwards, people are worse off so they move elsewhere . The city contracts until everyone is just as well off as someone else.So, then the more wealthy large farmers will keep buying the agricultural land until the marginal profit of that next unit of land is zero and they are just as well off as the small farmers.
Potential farmers and small-time farmers must pay more to satisfy their preference for the country lifeHaving to pay extra to have that life might not be possible, considering the extra challenges brought on by smaller incomes and/or higher transportation costs, and perhaps more commuting time if the farmer is a part-time farmer.How much extra the land will get bid up is an issue too because of the low profitability of the industry. The question is, how big of a farm do you need to be profitable? Is there some average acres of land that all farmers (of one type) are profitable?
Relevant markets and the distribution of profits needs to be further investigated to better understand that issue.