Small Farms: Perceptions versus Realities

John Ikerd

University of Missouri

Published in Sustaining People through Agriculture column, Small Farm Today, September/October, 2000 issue

People who choose to live and work on small farms face a number of unnecessary obstacles as they pursue their chosen way of life. In general, these obstacles arise from misperceptions on the part of those in the agricultural establishment – those who make public policies or provide public services pertaining to agriculture.

Perception: Small farms are not really a significant part of American agriculture. Government farm programs for the past several decades have been driven by concerns for production rather than people. The underlying assumption has been that the public would benefit most by focusing on improving the efficiency of farming, ultimately bringing down the cost of food and fiber to consumers. This focus on efficiency is the root cause of the trend toward larger, more specialized, farming operations. Today, the USDA and Land Grant Universities are promoting high-tech and biotech production for the same reason – cheap food for consumers.

Reality: Small farms are a significant part of American agriculture. While a focus on production may have been a legitimate orientation in the past, there is no longer any significant benefit to be gained from increasing the productive efficiency of agriculture. First, the American consumer no longer spends 40%-50% of their income for food, as they did when the USDA and Land Grants were established, but instead spends a little more than 10% – a dime of each dollar and the farmer only gets about a penny from that dime. The rest goes for farm inputs and marketing costs. Even if farming were perfectly efficient, if farming cost nothing, consumers would only save a dime of each dollar spent for food. Further improvements in the efficiency of farming simply cannot make food much cheaper. Consumers no longer benefit from making farms bigger.

Perception: Small farmers are not real farmers. Most small farms are part-time farms; many are nothing more than rural residences with a garden or a few head of livestock. Others are strictly hobby farmers with no intention of earning a farm income. Some “farmers” actually are urban residents who own land in the country. While living in the country or owning land may be important to these people, they are not real farmers.

Reality: Most real farmers are small farmers. Admittedly, many of those census entities counted as farms are hobby farmers and rural residences. But, many are not. The census asks farmers to provide their primary occupation – the occupation at which they spend more than half of their working hours. When considering only those whose primary occupation is farming, and who are not retired, more than half of these real farmers would easily be classified as small farmers. Well over half of these primary-occupation farmers have less than $100,000 in annual gross sales, and nearly half have gross sales of less than $50,000 per year.

Perception: A family can’t depend on a small farm for a significant part of their living. There is no way that a farm with gross sales of less than $50,000 a year can be a serious commercial operation. Farmer’s net incomes generally run about 10% to 20% of gross sales, even on well managed small farms, and $7,000 to $10,000 a year certainly won’t support a family. The only hope for farm families grossing less than $100,000 per year is to rely on non-farm sources for most of their income. Those grossing between $100,000 and $250,000 are not really small farms, but are middle-sized farms on their way to getting big.

Reality: A small farm can support a family. Successful small farmers pursue a fundamentally different approach to farming than do big farmers. They reduce their reliance on purchased inputs by substituting labor and management for capital and purchased inputs – they are low-input farmers. They focus on creating value, as well as reducing costs – they are niche-marketers. They give individual consumers what they want, rather than produce bulk commodities for mass markets. They do the things they do best, the things they have a passion for, and as a consequence, do them better. They build relationships with their customers, and thus, are less vulnerable to the ups and downs of commodity prices. As a result of all these things, these new small farmers can earn far greater income per dollar of sales than do conventional large farmers. A farm with $50,000 gross sales may well contribute $25,000 or more to support the family; a farm with gross sales of $100,000 can be a full-time family farm.

Perception: Many small farms earn little if any net income. Many small farms report no net farm income, and thus, are an economic burden rather than an asset – or perhaps a luxury that many small farm families cannot afford. For those who are actually trying to make a living on small farms and are failing, this is a public welfare issue, not an agricultural issue. Farm programs were never intended to be rural welfare programs.

Reality: Small farms that report little if any net income may still be very important economically to small farm families. First, many families on small farm live simply. They do not live in poverty, but their economic standard of living is not as high as that of their urban neighbors. To them, farming is truly a way of life as well as a business. The farm provides them with a home, much of their food, a good place to raise their family, a place for recreation and relaxation, and a place for learning and teaching – as well as a place to work. Many of these smaller farms are not obligated to report any net income from farming because many of the costs of living on a farm qualify as “farm costs.” Many small farms, if they are part-time farms, need not earn an income; their non-market value to the family is sufficient to justify the farming operation.

Perception: Technologies are scale neutral. Technologies developed for larger, commercial farming operations are equally useful on small farms. After all, the only way for a small farm to survive and succeed is for it to get larger – to grow into more efficient technologies. And for those who can afford to farm as a hobby, they surely want access to the best technology available. What difference does it make to a cow whether she is in a herd of ten to ten thousand; her needs still are the same. What difference does it make to a corn plant whether it is in a field of ten to ten thousand acres; its needs are still the same. If the scale of technology doesn’t matter to the animal or plant, it is of no consequence to the farmer.

Reality: Technologies are not scale-neutral. Industrial technologies developed for larger, commercial farming operations are not appropriate for small farms. Agricultural technologies of the past have provided means of specializing and standardizing production processes, thus industrializing the management function and allowing farms to grow larger. Successful small farms must be management intensive – they must earn more returns per acre, per dollar invested, per dollar-value of production. The higher returns to management from intensively managed farms comes from the efficiency with which the various practices, methods, and enterprises on the farm are integrated together – not necessarily from the efficiency of each individual practice, method, or enterprise. A cow or a stalk of corn has a very different role in a diversified, integrated small farm system than in a large, specialized beef herd or corn farm. Small farmers need research and technology that will enhance their human capacity to manage things – to understand, to think. They need technologies that will allow them to manage more intensively.

Perception: Existing publicly funded programs are adequately meeting legitimate needs of small farmers. The public agencies, like the USDA and Land Grant Universities, contend that those who complain about inadequate attention to small farm issues are simply living in the past when small farms were actually economically viable. Progress in the agricultural economy, by necessity, has left small farmers behind. There is nothing that government could do to roll back or even slow the technological advances of large-scale agriculture, even if it could justify doing so. Small farm advocates are simply out of touch with today’s reality.

Reality: Publicly funded programs are not adequately meeting the legitimate needs of small farmers. Small farmers have found ways to survive and persist in spite of the lack of research and educational support, and in spite of government programs that have supported and promoted large farms and corporate competitors. Small farmers, using any reasonable definition, make up more than half of all primary occupation farmers. This is not a fantasy; this is a statistical fact. These are not farmers of the past, these are farmers of the present, and they deserve the respect and attention of their public institutions.

Small farm advocates are in touch with the realities of today, but perhaps more important, they are looking to the future. They are not opposed to technology; they simply want technologies that are consistent with long run sustainability as well as short run profitability. The future of human civilization depends not only upon food, but also on a healthy environment and a civilized human society. There is no better means of sustaining human life on earth than to have people of the land who are intellectually capable, socially responsible, and ethically committed to meeting the needs of both present and future generations through farming. An industrial agriculture is not sustainable. There can be no better investment of public dollars than in keeping the land in the hands of small farmers who are committed to the sustainability of agriculture.