Structural change in US agriculture.

This chapter examines recent changes in US farm structure and their causes, and identifies some important linkages to farm organization, commodity choices and farm policy. The analysis is organized around changes in the farm size distribution, based on an economic measure of size-farm sales. A simple classification across three years (1989, 1995, and 2002) is compared with sales expressed in 2002 dollars using the Producer Price Index for farm products as a deflator. Four distinct features of ongoing structural change in agriculture are identified. The first is a sharp, broad-based and continuing shift of production to large-scale family-operated farms, while the second is a growing number of very small, part-time farms whose operators rely on off-farm employment for almost all of their income. Third, large commercial farms increasingly rely on formal contracts, instead of spot markets, to govern the production and marketing of their output. Finally, large commercial farms hold a set of formal relationships, beyond contracting, with providers of land, labour, equipment and materials services to the farms. It is also indicated that changes in farm structure can affect the distribution of benefits from government payments. First, shifts of crop production lead to shifts of commodity payments toward the largest farms and higher-income households. Second, payments may generate higher prices for input providers, and therefore the benefits from commodity programmes may flow to non-farmer input providers. If structural change creates more resource mobility among farmers, then the extent of pass-though to input providers may increase.