provided by Research Papers in Economics
REVITALIZING FAMILY FARM AGRICULTURE
A.L. (Roy) Frederick
University of Nebraska-Lincoln
Family farms in the United States traditionally have enjoyed a status
akin to motherhood, apple pie, and the Fourth of July. By significant
majorities, public opinion polls indicate that citizens laud the past
performance of family farms and want them to survive — better yet,
prosper — in the future. Moreover, candidates for political office know
that votes are to be won or lost, depending on their responsiveness to
the problems of family farmers.
Economic Perspective on Family Farms
As economists, we have justified the existence of family-size opera-
tions primarily on the basis of technical production efficiency. Perhaps
no other area of agricultural economics has been studied more than
the economies of size of farm firms. Nearly 20 years ago, Madden [4]
concluded after an extensive survey of relevant literature that crop
farms requiring one or two man-years of labor could capture most of
the available economies due to size. More recently, Miller et al. [5]
found that middle-size commercial farms (gross incomes from $41,000
to $76,000) achieve most technical cost efficiencies and any further
increase in size results in little benefit to society.
During the 1980s, family farm agriculture has been under more
stress than at any time since the 1930s. Both the Economic Research
Service [8] and Jolly and Doye [1] have found particular problems for
midsize farms, i.e., those with sales of $40,000 to as much as $500,000.
Such farms are considered to be the mainstream of family-size com-
mercial agriculture. Farms with annual sales that fall below this range
often have sufficient off-farm income to service their agricultural debt.
For farms with sales above $500,000, available assets (and debt) seem
to be used more efficiently to generate high levels of income. In part,
this may be a function of the enterprises, such as poultry and fruits
and vegetables, in which they tend to specialize. However, an increas-
ing body of literature suggests that large farms have advantages that
are not manifested as technical production efficiencies.
In particular, researchers have found a different result if pecuniary
economies of size (defined as lower costs of purchased inputs or higher
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