Farm Size: Numbers and Sales

The number of USA farms has steadily declined. What does this mean? To conventional (conservative and liberal) economists, such as those at the Federal Reserve Bank of Kansas City, "this trend does have one clear economic impact -- it lowers the cost of production by enabling the remaining farms to capture more economies of scale."  Yet in class I showed you a graph that showed that up to a certain size -- depending on when and which type of farming -- farms do become more efficient but beyond that size, they are no more efficient than smaller farms, and indeed, eventually, they even become inefficient when they get "too" large. Source: Mark Drabenstott, Consolidation in U.S. Agriculture: The New Rural Landscape and Public Policy, Economic Review, First Quarter 1999, pp. 64-65.

The graph to the left shows the percentage of the number of farms, acres operated, and gross sales for six gross farm sales categories. 1) What percentage of all farms do the largest farms represent?  2) What percentage of all farm income do they represent? 3) What percentage of all farms do the smallest farms represent? 4) What percentage of all farm income do they represent? 5) Which of these two farm sizes operate, on average, more acreage?

Answers:

characteristics	largest farms	smallest farms
percentage of all farms:	2.5 percent	almost 60 percent
percentage of all farm income:	almost 40 percent	just under 5 percent
percentage of all acreage:	13 percent	18 percent

Examine another way of showing this uneven relationship between the size of farms and their contribution to farm production.

Created by Ingolf Vogeler on 30 April 1996; last revised on 25 April 2002.