Last week, the USDA’s Economic Research Service (ERS) released its annual report exploring the characteristics of US farms: “Various American Family Farms: 2021 Edition.” Today’s update includes highlights from the report, which was authored by Christine Whitt, Jessica E. Todd and Andrew Keller.
The report noted that “In total, family farms accounted for approximately 98% of total holdings and 87% of total production in 2020.”
“Non-family farms represented the remaining 2% farms and 13% of output“, says the report; adding that “examples of non-family farms include partnerships of unrelated partners, closely held non-family corporations, farms with a hired operator unrelated to the owners, and public corporations.”
Regarding the production of raw materials, ERS explained that “the majority of the values of cotton (62%), dairy (73%) and high value crops (57 percent) was produced on large family farms in 2020. Small family farms produced the majority hay (59%)”.
Taking a closer look at profitability, the report states that “Large family farms were probably have OPMs [operator profit margins] in the low risk zone (green) (OPM>25%) – between 43 and 45% – and less likely be in the Red zone in 2020 — between 26 and 30%. These farms are more likely to have positive results back to the farm.”
Last week’s update also pointed out that “the distribution of farm operating expenses varies according to the specializations of the raw materials, but remains largely unchanged over the 10-year period from 2011 to 2020… A large portion of total field crop farm spending went to fertilizers and other chemical products (26%) in 2020, which was slightly lower than the share spent in 2011 (27%).
Taking a closer look at government payments, the ERS report stated that “Small family farms has received 16 percent of all levels of the farm pandemic aid from the USDA and 22 percent of all other government payments— excluding payments from the Pandemic Relief and Conservation Program — which was compatible with the smallest production scale. Large family farms received 52 percentage of all pandemic aid at farm level and 44 % of all other payments.
With respect to Federal Crop Insurance, ERS stated that “Federal Crop Insurance payouts were roughly proportional to acres of cropland harvested and concentrated in medium-sized and large-scale farms in 2020.”
“Medium and large family farms together accounted for 65 percent of all programs harvested acres and received 77% of allowances federal crop insurance in 2020. These family farms were also the most likely to participate in federal crop insurance.