THE CHANGING STRUCTURE OF AGRICULTURE



provided by Research Papers in Economics

THE CHANGING STRUCTURE OF
AGRICULTURE

John O. Gerald, Agricultural Economist*

Marketing Economics Division, Economic Research Service
U.S. Department of Agriculture

Structural analysis of agriculture means more than just the or-
ganization of agriculture for production with particular reference to
sizes and types of farms. It also involves analysis of the resource
allocation and pricing processes as these affect, and are affected by,
the structure of firms in existence.

It is relatively simple to describe the structure of agriculture and
how it is changing, and to state some widely accepted hypotheses
concerning why the structure is changing. But when we come to the
critical task of evaluating past performance and the means for im-
proving future performance, we find that the hypotheses concerning
the implications of the changes in structure are much less widely
accepted.

THE STRUCTURE OF AGRICULTURE

Agriculture has an atomistic structure with few if any exceptions.
The 3.1 million farms in the United States in 1967 are not likely to
constitute a structure in which the typical commercial farmer takes
account of the probable reactions of other commercial farmers in
making his production decisions. Even in the year 1980 when the
number of farms is projected to be 1.7 million, or the year 2000
when the number is projected to be only 585,000, we see no reason
to think that a typical farmer will be able to affect the prices he
pays or receives.

There is quite a wide distribution of sizes, types, and locations
of farms in agriculture. In 1967, 183,000 farms had sales of $40,000
or more, 318,000 had sales of $20,000 to $39,999, and 492,000
between $10,000 and $19,999, while 2,153,000 had sales of less
than $10,000. The one-third of the farms that are largest in size
account for over 85 percent of sales. Those farms having cash re-
ceipts (including government payments) of $20,000 or more in
1966 are estimated to have received 107 percent of the returns they

*The views expressed herein are those of the author and do not necessarily
reflect those of the Economic Research Service or the U.S. Department of Agri-
culture.

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