Myth Busters Part 3 – Big Farms vs. Small Farms

April 20, 2008

In the third installment of our ongoing series about the unsubstantiated claims by farm policy opponents, Farm Policy Facts will examine the relationship between farm payments and food production.

Myth: U.S. farm policy benefits corporate agribusinesses at the expense of the family farm.

The Truth: Corporate Agribusinesses as you would think of it (global firms like Cargill, ADM, Bunge, etc.) are simply not involved in the production of row crops. Rather, the landscape of U.S. agriculture is dominated by family farms. Whether organized as sole proprietorships, partnerships or a family corporation, farmers today are still independent, entrepreneurial pioneers that are braving exceptional business risks — just as they always have – to provide food and fiber for a needy world.

Only about 3 percent of farms in the U.S. are categorized by USDA as non-family farms, or “corporate farms” as the critics call them. However, most of the 3 percent actually represents family-owned and controlled corporations. The categorized “non-family farms” receive significantly less safety-net benefits compared to the value of the crops they produce.

According to USDA definitions, “large family farms” make up only 8 percent of all U.S. farms. Yet they produce the lion’s share (62 percent) of all crops produced in this country. Proportionally, their share of farm safety net benefits is less than the value of the food they provide American consumers. In contrast, smaller family farms produce only 15 percent of the value of all crops produced in the U.S., but receive proportionally more safety-net benefits.

So, who exactly is included in the USDA’s definition of a farm? Any place from which $1,000 or more of agricultural products, crops and livestock, were sold or normally would have been sold during the year under consideration is considered a farm.

The fact of the matter is that the majority of U.S. farms, over 60 percent, are retirement or lifestyle farms whose occupants earn their income off-the-farm rather than off the land, and collectively contribute only 7 percent of the value of all crops produced.

Indeed, America’s farms are diverse and differ in their contribution to U.S. food and fiber production. Likewise, farmers who receive farm safety-net benefits run the gamut – from smaller part-time retirement/lifestyle farmers, to those whose sole occupation is farming and whose operations are large enough to be viable commercial businesses.

The overwhelming majority of farms, including those in the large category, are family farms. But the bottom line is that America depends on larger, full-time family farms to produce the bulk of our nation’s food supply.