by: Wes Ishmael

Consolidation — and concentration, in some cases — continues in agriculture, due in part to both specialization and the alarming fact that there's lots less agricultural land remaining than many suspected.

“Farm production has continued to shift to larger farms. By 2015, 51 percent of the value of U.S. farm production came from farms with at least $1 million in sales, compared to 31 percent in 1991 (adjusted for price changes),” say James MacDonald and fellow researchers in the recently published, Three Decades of Consolidation in U.S. Agriculture (TDCA), from USDA's Economic Research Service (ERS). MacDonald is chief of that agency's structure, technology and productivity branch.

“By 2012, 36 percent of all cropland was on farms with at least 2,000 acres of cropland, up from 15 percent in 1987,” according to the report. “The midpoint for cropland acreage, at which half of all cropland is on larger farms and half is on smaller farms, nearly doubled from 650 acres in 1987 to 1,201 acres in 2012…Consolidation in crop production has been persistent, increasing in each five-year Census of Agriculture between 1982 and 2012…”

Specialization, boosted by technology, is one of the obvious drivers of consolidation, being able to manage more acres with the same manpower.

“While few farms specialize in a single crop, field crop operations increasingly grow just two or three crops, versus four to six crops crops previously,” explain MacDonald and fellow researchers. “Livestock production continues to shift toward farms that produce no crops, and instead rely on purchased feed.”

Livestock operations continue to consolidate, too, albeit at a different pace.

“In contrast to crops, consolidation in livestock appears to be episodic, with little change over some periods, interspersed with dramatic changes in farm/industry organization and farm size,” according to the report. “Such dramatic shifts have occurred in the last 25 years in U.S. dairy, egg, hog, and turkey production; consolidation has continued to occur in broiler and fed cattle production, within an industry organization that was set in earlier decades.”

Beef cow operations are the lone, notable exception. Yes, most of the relative production comes from the minority of operations, but the necessary grazing land and capital investment continue to limit consolidation levels.

For perspective, according to the last Census of Agriculture, 81.64 percent of the all beef cow operations had 49 or fewer beef cows and accounted for 29.79 percent of the cows. On the other end of the scale, 3.58 percent of all beef cow operations had 200 or more cows and accounted for 37.23 percent of all beef cows.

By herd size, the only category that grew in 2012, compared to the prior Census, were herds with one to nine head. The Census breaks herd size into eight different groups, from one to nine head to 2,500 head or more. Most of the attrition occurred among those with 20-199 head.

“Cow-calf operations exhibit little consolidation. On a related note, 44 percent of pasture and grazing land (primarily used for cattle) was on ranches with at least 10,000 acres in 2012, down from 51 percent in 1987. These sectors are important because permanent pasture and grazing land accounts for over 400 million acres (45 percent) of U.S. farmland, and because over 700,000 U.S. farms have beef cows,” according to the TDCA. “Cow-calf enterprises are widespread: in 1987, 841,778 farms had beef cows. The midpoint cow-calf operation had a herd of 89 cows in that year, a bit larger than the midpoint milk cow herd. While the midpoint dairy herd grew over 1,000 percent from 1987 to 2012, the midpoint beef cow herd grew only marginally, to 110 cows, and 727,906 farms still had beef cows. Because cow-calf operations graze their animals, and often need a large land area to do so, they are a primary user of permanent pasture and rangeland in the United States. Recall that land consolidation is concentrated in cropland; consolidation in pasture and rangeland is less evident.”

Despite consolidation, authors of the ERS report emphasize that most agricultural production—both crop and livestock—continues to occur on family farms. “Family farms accounted for 90 percent of farms with at least $1 million in sales in 2015, and produced 83 percent of production from million-dollar farms,” they say.

Disappearing Ag Land

Paradoxically, the argument can be made that some of the consolidation stems from how much less agricultural land there is today than just a few decades ago.

“Between 1992 and 2012, almost 31 million acres of farmland were lost, equal to all the farmland in Iowa,” according to a new report from the American Farmland Trust (AFT). “Nearly twice the area of farmland was lost than was previously shown; 11 million of those acres were among the best farmland in the nation…In less than one generation, the United States irrevocably developed nearly 11 million acres of its best land for intensive food and crop production. While a 3.2 percent loss does not sound devastating, it is roughly equivalent to losing one of the most productive growing regions in the United States, California's Central Valley.”

The report, Farms Under Threat: the State of America's Farmland, summarizes the innovative AFT assessment of how much agricultural land exists in the U.S. and how much has been diverted to other uses over time.

“Development disproportionately occurred on agricultural lands, with 62 percent of all development occurring on farmland, and expanding urban areas accounted for 59 percent of the loss. Low-density residential development, or the building of houses on 1-to-20-acre parcels, accounted for 41 percent,” according to the report.

Understanding how much of the world's prime agricultural land exists in the United States adds urgency to the revelation.

“Less than six percent of the Earth's surface is suitable for agriculture and growing food,” according to the report. “When climate, soils, and topography are factored into the equation, just over half of this land can be farmed without any physical constraints. Over 10 percent of the world's arable acres are in the United States.”

Technology as Equalizer

Ironically, the technology that helped foster consolidation is also helping level the playing field for operations of all sizes.

“Technologies have led to increased farm size and greater consolidation. However, that does not have to be the case,” say authors of the TDCA. “An emerging example appears in dairy production, where one source of large-farm cost advantages lies in current milking systems: a single large rotary milking parlor with a crew of four to five workers can handle 2,500 to 3,000 cows three times a day, and realize significant unit cost advantages over smaller farms. Smaller operations are, however, starting to adopt robotic milking machines, which free labor (usually family labor on smaller farms) to work on herd management and crop production. A single robot serves about 70 cows, and larger farms simply add more machines. Thus, robotic milkers appear to be ‘constant returns' technologies, beyond 70 cows, and therefore can reduce per-unit costs more on small than on large farms, thus favoring smaller operations. More broadly, robotic systems may enhance farm productivity in the future without providing substantial scale advantages to larger farms.”

For beef cattle, consider genetic evaluation and advanced reproduction technologies.

Genome-enhanced Expected Progeny Differences (EPDs) provide producers of all sizes increased precision in selecting seedstock at younger ages. Both purebred and commercial cow-calf operations are using DNA profiling to identify replacement heifer candidates with the best odds of succeeding for specific traits. Some commercial herds conduct their own genetic evaluations and have EPDs for all of their cows and calves.

Likewise, reproductive technologies such as estrus synchronization and artificial insemination are available and proven for operations of all sizes.

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