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The evolution of American agriculture

The Mercatus center just released a paper I wrote entitled "The Evolving Role of the USDA in
the Food and Agricultural Economy."  I decided to write the paper after having a number of conversations with folks who held a variety of beliefs (some correct, some incorrect) about how agriculture has changed and were curious about the role of the USDA and how it has evolved over time.  In the next few posts, I'll share some of the data and figures I pulled together for the paper (most of which comes perhaps ironically from the USDA).  

Here is a bit on the evolution of American agriculture.  Future posts will cover changes in the USDA.

In 1900, just under 40 percent of the total US population lived on farms, and 60 percent lived in rural areas. Today, the respective figures are only about 1 percent and 20 percent. 

The United States had between six and seven million farms from 1910 to 1940 (figure 1). A sharp decline in the number of farms occurred from the 1940s to the 1980s. At the same time, the average farm size more than doubled, from about 150 acres to around 450 acres. 

Whereas farm households earned lower incomes than other households before the 1970s, since the mid- 1990s, farm households have consistently earned more than other US households.  In addition to earning higher incomes, farm households today tend to have substantially higher net worth than the average US household. Census data indicate that the mean (median) net worth of all US households in 2012 was $338,950 ($68,800). By contrast, the mean (median) net worth of farm households in 2014 was $915,210 ($802,000). In 2012 (the last ag census date), 98 percent of farm households had a net worth that exceeded the net worth of the median US household. (The average income for farm households in 2015-2016 is likely to come down somewhat given the fall in commodity prices.)

Farm household incomes have become more diversified over time in the sense that the percentage of household income from farming has steadily declined (aside from the increase in 2011–2012 from higher commodity prices). So while farms have become more specialized (growing fewer commodities than they did in the past), the household income of farmers has become more diversified and less reliant on farm income

Small farms account for only a small share of the value of agricultural output. In fact, farms with total sales of less than $25,000 (more than half of all farms) account for less than 1 percent of the value of agricultural output while farming 20.7 percent of the acreage. By contrast, 7.5 percent of the larger farms (those with more than $500,000 in sales) account for 80 percent of the value of agricultural output while farming only 38.4 percent of the land. These data suggest that much of the information the USDA reports on farms fails to correspond with businesses that have any substantive level of output.

The changes in the number and composition of farms over time are partly attributable to changes in technology and market conditions. The figure above shows an index of yields for corn, wheat, and cotton. Corn yields in 1900 were only 18 percent of what they were in 2014. In 1900, wheat yields were only about 30 percent of what they were in 2014. With the adoption of tractors, synthetic fertilizers, and improved seeds, yields began climbing after World War II. Yield growth has continued until today, although the rate of growth has slowed somewhat in recent decades.

It is possible to achieve higher output by increasing the volume of the inputs used. However, total agricultural output has more than doubled since 1948, while key agricultural inputs have fallen. More output with fewer inputs implies increased productivity. According to USDA-ERS data, in 1948, the amount of labor used in agriculture was four times what it is today. As the above figure shows, the United States produces more agricultural output today, despite using less land and substantially less labor.

Increasing productivity leads to falling prices. The figure above shows an index of real prices from 1910 to 2014 for corn, wheat, and cotton. Before the 1950s, prices for those commodities were routinely three to six times higher than they are today.  The beneficiaries of falling agricultural prices have been food and fiber consumers. Farmers face lower prices today than in the past, but as the preceding figures reveal, they have more output to sell, resulting in higher net incomes. 

In short, today there are fewer but larger farms than there were in the past.  The farms that remain tend to earn higher incomes and have higher net worth than average US households.  Farm production is today heavily concentrated among a small share of about 160,000 producers.

The Future of Food

In the last chapter of Unnaturally Delicious, I contrasted two issues of National Geographic about food and agriculture that appeared roughly 44 years apart.  The first story, written in 1970 by Jules Billard, was titled "The Revolution in American Agriculture."

Here's what I had to say:

Yes, some futurists teeter on the edge of technological utopianism (where is that flying car we were promised in the 1950s?), and today’s farms may not have the modern architectural flare depicted by the artist. But the reality is not that far off. Soil sensors, drones, satellite images, soy burgers, contour plowing, efficient irrigation, chicken cages, and mechanical harvesters all
were discussed as the future of food nearly five decades ago, and they are now a regular part of farm and food practices on what are larger, more specialized, but still family-owned farms. GPS signals drive today’s tractors, and fertilizer applicators and planters distribute their payloads based on digital input from soil sensors and crop consultants. Farmers watch the evolution of crop prices and thunderstorms on their smartphones. Farmers apply livestock waste as fertilizer or use it in anaerobic digesters to create energy for the farm. Drones track crop yields, cattle location, and animal health. Farming innovators are moving high-value crops indoors under blue and red light-emitting diodes (LEDs) that give off precisely the wavelengths the plants need in environments that use recycled water, reduce water losses from evaporation, and prevent pests and thus the need for pesticides.
U.S. agriculture largely delivered on the hopes of the 1970s to satisfy the growling stomachs of a growing world, primarily through innovation and technological development. Yet, it seems
Americans are hardly content. While an abundant food supply sufficient for an expanding population remains a top concern, the 1970 and 2014 stories in National Geographic also reveal shifts in the food problems that occupy our attention as well as changes in how we envisions addressing them. The 2014 special edition of National Geographic argued that “agriculture is among the greatest contributors to global warming” and the “environmental challenges posed by agriculture are huge, and they’ll only become more pressing as we try to meet the growing need for food worldwide.” Other articles in that issue worried about corporate control, hunger, deforestation, nutrition, food deserts, waste, and more. Yet it’s not clear whether our cultural food pessimism is warranted.

and

Technological advancement and industrialization have been great food equalizers—freeing peasants and serfs from the demands of the land and letting them eat like the royalty they once served. [Rachel] Laudan correctly observes that “were we able to turn back the clock, as they urge, most of us would be toiling all day in the fields or the kitchen; many of us would be starving. Nostalgia is not what we need.” What we need is a recognition of the ability of technology to help solve our food problems along with wisdom about how to ensure against
the risks that technology can create.

I conclude the book by saying:

I have no idea whether the particular products and technologies will ever make it to our farms and kitchens. But that’s not really the point. The point is the process. Experimentation and innovation are what will ultimately help address our food problems. If we’ll let them.

Origins and Evolution of Food

I've seen a number of stories on the research of a team of people at International Center for Tropical Agriculture, the USDA, and elsewhere, some of which was published in a paper in the Proceedings of the Royal Society B and in another paper in the Proceedings of the National Academies of Science (PNAS).  The team aimed to identified where many of our crops originated and how our eating patterns have changed over time. 

Their website has a number of fantastic, interactive visualizations.  Here's one.  

What I like about the figure above is how it challenges our idea of what is "local" or "authentic."  It also illustrates how much we've gained from trading with people in different parts of the world.  

The folks at Scientific American put together this graph based on data in the PNAS article, showing the convergence of dietary patterns worldwide.  

While there might be a temptation to decry the "sameness" brought about by globalism and the loss of cultural foods, the reality is much cheerier.  First, as the initial figure showed, what we think of as "our" cultural foods are probably relatively recent historical constructs.  Second, one of the reasons people eat more similarly to each other across the world is that we are now all eating each other's foodstuffs.  We've taken the best from each country and culture and exported it everywhere, and as a result have more diverse diets.  Finally, this trade has forestalled the doom-and-gloom Malthusian concern, as there has been a near universal increase in calorie availability worldwide.

Here's from the abstract of the PNAS article.

We assess trends over the past 50 y in the richness, abundance, and composition of crop species in national food supplies worldwide. Over this period, national per capita food supplies expanded in total quantities of food calories, protein, fat, and weight, with increased proportions of those quantities sourcing from energy-dense foods. At the same time the
number of measured crop commodities contributing to national food supplies increased, the relative contribution of these commodities within these supplies became more even, and the dominance of the most significant commodities decreased. As a consequence, national food supplies worldwide became more similar in composition, correlated particularly with an increased supply of a number of globally important cereal and oil crops, and a decline of other cereal, oil, and starchy root species. The increase in homogeneity worldwide portends the establishment of a global standard food supply, which is relatively species-rich in regard to measured crops at the national level, but species-poor globally. These changes in food supplies heighten interdependence among countries in regard to availability and access to these food sources and the genetic resources supporting their production, and give further urgency to nutrition development priorities aimed at bolstering food security

Adaptation to Climate Change

I ran across this fascinating paper by Richard Sutch on the the relationship between the Dust Bowl and hybrid corn adoption.  The discussion is interesting in light of current discussions bout how and whether farmers will be able to adapt to climate change and whether technology development can help mitigate some adverse effects.

Here's a passage from Sutch.

The suggestion that I make in this chapter is that the severe drought of 1936 revealed an advantage of hybrid corn not previously recognized— its drought tolerance. This ecological resilience motivated some farmers to adopt hybrids despite their commercial unattractiveness in normal years. But that response to climate change had a tipping effect. The increase in sales of hybrid seed in 1937 and 1938 financed research at private seed companies that led to new varieties with significantly improved yields in normal years. This development provided the economic incentive for late adopters to follow suit. Because post- 1936 hybrid varieties conferred advantages beyond improved drought resistance, the negative ecological impact of the devastating 1936 drought had the surprising, but beneficial, consequence of moving more farmers to superior corn seed selection sooner than they might otherwise.

This long quote is from the conclusions and is well worth reading.

The sociologists Bryce Ryan and Neal Gross, writing in 1950, studied the diffusion of hybrid corn in two communities located in Greene County, Iowa (Ryan and Gross 1950). In their view, late adopters were farmers bound by tradition. They were irrational, backward, and “rural.” The early adopters by contrast were flexible, calculating, receptive, and “urbanized.” “Certainly,” they summarized, “farmers refusing to accept hybrid corn even for trial until after 1937 or 1938 were conservative beyond all demands of reasonable business methods”. They drew a policy implication: “The interest of a technically progressive agriculture may not be well served by social policies designed to preserve or revivify the traditional rural- folk community”. In part, this view was based on Ryan and Gross’s (incorrect) belief that hybrid corn was profitable in the early 1930s. I have suggested that this was not the case. Figure 7.11 should also give pause to the view that rural laggards delayed the adoption of hybrid corn. It would be hard to argue that the farmers in Iowa Crop Reporting District 6 were predominantly forward-thinking leaders, attentive, and flexible, while those in Indiana and Ohio were predominately backward rustics trapped by inflexible folk tradition.

I think an implication of this study is that farmers (even those of rural America in the 1930s) are remarkably resilient and adaptive. Sudden and dramatic climate change induced a prompt and prudent response. An unexpected consequence was that an otherwise more gradual process of technological development and adoption was given a kick start by the drought and the farmers’ response. That pushed the technology beyond a tipping point and propelled the major Corn Belt states to the universal adoption of hybrid corn by 1943. The country as a whole reached universal adoption by 1960.

The paper has a number of interesting discussions about the role of the USDA, federal research, and strong personalities that pushed along the development of hybrid corn.  For more on the history of the development of hybrid corn, see this previous post.

Food Demand Survey (FooDS) - June 2016

The results from the June 2016 edition of the Food Demand Survey (FooDS) are now in.  

In terms of the monthly tracking portion of the survey, willingness-to-pay (WTP) decreased for all food products in June compared to May. This is the third month in a row that WTP has fallen for steak, chicken breast, and chicken wing, and the fourth month in a row that WTP has fallen for pork chops and deli ham. 

There was a sizable increased in awareness of GMOs in the news this month, as was also the case for battery cages and beta-agonists.  The largest percent increase in concern was for bird flu and farm animal welfare. The largest percent decrease in concern was for cancer and meat consumption, antibiotics, and E. coli. 

Several new ad hoc questions were added this month.

First, I followed up on some questions I'd previously asked in response to some research conducted by Marc Bellemare at University of Minnesota on food safety and farmers markets. In particular, participants were asked: “Have you or anyone in your household bought and eaten food from a farmers market in the past two weeks?”

Approximately 67% of participants stated they have not purchased food from a farmer’s market in the past two weeks. Less than one third of participants stated they have purchased food from a farmer’s market in the past two weeks. 2.31% of participants stated they did not know if they have purchased food from a farmer’s market in the past two weeks.


Here comes the interesting part.  The people who shopped or ate at farmers markets were much more likely (20% vs. 2.5%) to say they had food poisoning in the past two weeks than people who did not eat or buy food at a farmers market. I'm surprised the difference is so large, but the results are perfectly in line with Marc's research.  

There are other demographic differences as well.  People who shopped or ate at farmers markets were more likely to be male (55.6% vs. 26%), to be on SNAP - aka food stamps - (24.1% vs. 14.5%), not be from the Midwest (90% vs. 80%), to have higher incomes ($91,167 vs.
$67,607), be younger (39 vs. 20 years of age), and be more liberal (3.4 vs. 2.9 on a 1 to 5 scale) on average than are people who did not shop at farmers markets. 

Next, a couple questions were added on food waste.  Participants were asked “Of all the food you buy at grocery stores and supermarkets, what percentage would you estimate is thrown away uneaten?” 

About 80% of respondents said they throw away some portion of food that has been uneaten. Only about 20% said they threw away no food. About 60% of the sample said they throw away 10% of the food they buy or less. Only about 10% of respondents said they threw away 50% or more of the food they purchased. Across all respondents, the average percentage of food purchased that was eventually thrown away was estimated at about 17%. 

Finally, there's been a lot of hand wringing on the possible effects of different sell-by, use-by, and expiration dates on food waste (e.g., witness this report from The Harvard Food Law and Policy Clinic (FLPC) and the Natural Resources Defense Council (NRDC).

To explore this issue, respondents were randomly split into four groups and asked: “Supposed you found a package of food in your kitchen that had the following label <<label>>.  What would you do?"  Participants responded on a 5 point scale: 1 = I’d definitely eat it, 2 = I’d probably eat it, 3 = I’m not sure whether I’d eat it or throw it away, 4 = I’d probably throw it away, or 5 = I’d definitely throw it away.

Respondents randomly saw one of the following four labels:

  • "Expiration Date June 9"; 
  • “Sell by June 9”; 
  • “Best if Used by June 9”; or 
  • “Use by June 9”.

Note that the survey was purposefully fielded on June 10, one day after the date used in the question.

The most common answer across all categories was “I’d probably eat it”. The percent saying they’d definitely or probably eat the food was 60%, 73%, 68%, and 64% for the expiration date, sell by, best if used by, and use by labels. Less than 10% of respondents answered “I’d definitely throw it away” for all labels. The sell by label generated the least food waste, and it was the only label that generated less waste than the expiration date label. The differences in stated food waste was not particularly large for the four labels considered.