Getting Started – What is a Farm?

What is a farm?  This question is similar to defining, ‘what is rich?’  Everyone asked will have a different answer.

About 20 years ago, the USDA, Economic Research Service (ERS) began providing US farms in a hierarchy of farm typology.  It was not the first hierarchy explored by ERS, but this overlay of farm categories is intuitively informative.  The farm typology is merely a filter through which roughly 2 million US farms are sorted.  The best place to begin is with this chart:

The first take home from this chart is that 90 percent of the 2 million US farms counted by USDA are identified as small.

What is small in this case?  ERS defines small as less than $350,000 in annual gross cash farm income, or revenues before expenses.   If a farm brings in $325,000 in revenue, but has $300,000 in expenses, their gross income (before taxes) would be $25,000.

If farm revenue is $325,000 gross cash farm income and their expenses are $350,000, then their annual profit is -$25,000.  This sort of outcome is far too common in farming.

So, 90 percent of US farms, 1.8 million of the 2 million farms, are identified as small.  These small farms produce 21 percent of the farm output, or production.  This means that the other 10 percent of farms, 200,000 farms produce 79 percent of the farm output or production.

What does this mean?

Only that it takes many different kinds of farms to deliver food, feed, fertilizer, fuel, and fiber that US farms produce.  The larger farms tend to produce for different markets than the smaller farms.  They all play a role.  Local food has been becoming increasingly important.  After COVID-19, the economic demand for local food is growing even faster.

The most important take-home message in this post is that a ‘farm’ in the US is not a uniform measure by which to build a support industry, such as agribusiness, around.  When considering farms in a global/international context, it gets even more difficult to evaluate a ‘farm’ as a unit of measure.

As we develop the definition of a farm in this space, we will see that it is much broader than the dollar-value of production in how a farm is defined.  As biomass production is considered, reliance on the definition of the US farm is very limiting.

Thanks for reading!