The Link Between Crop Subsidies and Bigger Farms
Hog farms are bigger than they were 20 years ago. So are dairy herds and crop farms. Lots bigger. Are federal crop payments part of the reason?
The Mississippi Delta is a region where crop subsidy payments per acre have been high — and farm size has increased the most.
Farms have gotten bigger over the last two decades, much bigger. The question the federal Economic Research Service has tried to answer is why. Have federal crop payments sped the concentration of land and the explosion of mega-farms?
This isn't just an academic question for rural communities. Andrew Isserman at the University of Illinois has found that the most prosperous rural communities have high numbers of farms and larger farm employment. The trend in much of rural America, however, is toward big time agriculture. These are all questions vital for rural America — even if they are rarely the subject of farm bill debates.
Hog finishing operations are two to three times what they were just in the early 1990s, according to the ERSï¿½s Nigel Key and Michael Roberts . Broiler operations have doubled in size over twenty years. There were fewer than 600 dairy herds of more than a thousand cows in 1992. Today, there are over 1,400.
The same was true with cropland. In 1982, farms with at least 1,000 acres used 19 percent of the land used for agriculture. By 2002, these large farms covered 48 percent of agricultural land.
The common economic explanation for this kind of concentration is efficiency. Larger farms are better able to automate. As agricultural labor shifts to other areas of the economy, farmers have substituted machines for men ï¿½ and that only works on larger operations.
In 1982 and 1987, medium sized farms (150-400 acres) accounted for more of the nation's cropland than farms of any other size. Since 1992, U.S. cropland has become concentrated on mega-farms of 1000 acres or more.
But machinery and efficiency may not be the only reason farms have grown so much larger. The ERS also finds a relationship between land concentration and federal crop subsidies. Key and Roberts discovered a strong statistical relationship between cropland concentration growth during 1987-2002 and (federal crop) payments received in 1987. In areas where per-acre crop payments in 1987 were high, farms subsequently grew larger and more concentrated.
In areas where payments were low in 1987, farm size grew, but not nearly as fast and the farms are not nearly as large. In regions where there were no federal crop payments, farm size declined. (See ERS chart below.)
This relationship could be found regionally, too. In parts of the country where the per-acre subsidy was higher ï¿½ the upper Midwest and the Mississippi Delta ï¿½ cropland concentrated into larger operations. Where crop payments per acre were lower, farms didnï¿½t grow as large.
Just because there's a relationship between two factors doesn't mean one caused the other, Key and Roberts write. Still, they agree that crop subsidy payments probably accelerated the concentration of farmlands. Subsidies aren't the only reason farms are growing larger — farmland is concentrated in areas where there were no subsidies at all — but it explains part of what's happening in rural communities.
The region that received the most federal subsidy payments — the "Heartland" of Missouri, Iowa, Illinois, Indiana — is also where cropland has become most concentrated. The same relationship — between increasing farm size and size of subsidy — appears in other regions, too.