Growth in Agricultural Productivity & Changing Organization of U.S. Farming

Growth in Agricultural Productivity & Changing Organization of U.S. Farming


U.S. agricultural productivity has increased by nearly 50% since 1982, while using less land and labor, according to the findings of USDA's Economic Research Service's (ERS) study, "The Changing Organization of U.S. Farming." Innovations in farm organization, business arrangements and production practices have allowed farmers to produce more with less, the study notes. The use of genetically engineered seeds and no-till have allowed producers to reduce the use of machinery, fuel and pesticides.

The report also forewarned what is needed in the future to meet global demand. The report said, "If global population and energy demands grow as expected, and if prices continue to fluctuate – or even undergo larger swings, which might cause farmers to underinvest in capital-intensive technologies – current productivity gains will not keep pace with the increasing demands placed upon U.S. agriculture." Some key items from the study include:

·         Use of two major inputs, land and labor, has decreased over time. From 1982 to 2007, land used in agriculture dropped from 54% to 51% of total U.S. land area, while farming used 30% less hired labor and 40% less operator labor.

·         Farmers have altered how they manage their risk, including a heavier reliance on contracting (the value of production under contract increased roughly 10 percentage points between 1991 and 2007) and a shift of production to farms organized as partnerships and corporations moved from 34% of all farm product sales in 1982 to 43% by 2007, allowing risks to be spread over a wider set of stakeholders.

·         Federal crop insurance has also become a major risk management tool. Farmers insured 100 million acres in 1989; by 2007, over 270 million acres were insured.

·         Larger farms receive the bulk of commodity payments while most conservation payments accrue to smaller farms.

·         Despite declines in the use of land and labor, agricultural productivity has maintained a linear growth pattern.

·         Driven by the increased use of technology, production practices have changed. For example, the use of no-till increased from 5% of all planted acres in 1989 to 23% by 2004.

·         Although production has shifted dramatically to larger farms over the past 25 years, 97% of all farms remain family farms, generating more than 85% of the total value of U.S. agricultural production.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.

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