Changes in the Farm Sector

The distribution of farms and farm production by size, tenure, and legal organization has changed to significantly alter the performance and financial characteristics of farms. The structure and organization of the farm sector are steadily evolving, driven by changes in production technology, off-farm opportunities, and the organization of markets and linked industries. Structural characteristics, along with institutional arrangements, are of equal importance with traditional economic relationships in influencing the financing and performance of the agricultural sector. The chapter focuses on interpreting how changes in the structure and institutional setting of the agricultural sector—particularly the structure of farm household income—may influence the financing of agriculture over the next generation. It reviews trends and presents new evidence on the distribution of farms, sales, and assets by sales class over time to provide additional insight into changes. Operator households are perhaps the most closely connected to farm businesses.