Economist points to long-term consolidation trend
By MATEUSZ PERKOWSKI
The number of farms earning $500,000 or more rose last year in Oregon, Washington and California, reflecting a national trend toward more large farms.
The USDA ranks farms with $500,000 or more in annual revenues as the highest sales class in the nation. The U.S. had 126,720 operations in this category last year, up by 1,950 farms since 2009.
A recent report by the USDA's National Agricultural Statistics Service attributes the shift in numbers to rising commodity crop prices in 2010. The additional revenues from that price spike probably pushed some farmers across the threshold to the highest sales category, but the shift toward bigger operations is a long-term pattern in agriculture, said Thorsten Egelkraut, an agricultural economist at Oregon State University.
To compete in the modern economy, farms are relying on more specialized equipment and business practices, he said. Such complexity typically necessitates a larger scale, driving consolidation of medium-sized farms.
"They become more sophisticated, but more expensive at the same time," Egelkraut said. "You have to be able to spread the cost over more acres."
Across the West, the top sales class grew by about 400 farms in 2010, nearly a 2 percent increase, according to the agency's National Agricultural Statistics Service.
California led the region, with the state's top sales category rising by 200 farms, to 8,900 operations overall.
In Washington, the number increased by 100 farms to 2,600 operations overall, while Oregon's top sales class remained unchanged last year at 1,800 farms.
The West's total gain in top-earning farms was offset by a drop in Idaho, which lost 200 such operations last year. No other Western state reported a decrease in this category, but NASS does not disclose the number of top-earning farms for several states in the region.
There was a parallel trend in the amount of land controlled by farms earning $500,000 or more, according to NASS.
The acreage of top-earning farms across the U.S. increased by about 3 percent, to nearly 299 million acres. Though farms in this class represent less than 6 percent of total operations, they control nearly a third of the country's farmland.
In the West, top-earning farms controlled about 92 million acres in 2010, up about 3 percent from the prior year. In California and Washington, the acreage in this class grew by about 100,000 acres each.
The farmland in this category stayed at 5.6 million acres in Oregon and fell by 200,000 acres in Idaho.
The smallest farms in the U.S. -- those earning more than $1,000 but less than $10,000 in annual sales -- grew slightly in number nationally, by about a tenth of 1 percent.
The rise of small farms is associated with people moving to the country for lifestyle reasons, often producing some crops and livestock to supplement their regular income, Egelkraut said. The phenomenon has gotten a boost from the recent popularity of organic agriculture and farmers' markets.
"People have definitely become more interested in food," he said.
The West saw a similar overall increase in this sales class. The number of small farms in Oregon and Washington rose by less than 1 percent. The number of operations in the lowest sales category grew by 3 percent in Idaho but shrunk slightly in California.
Farms in intermediate sales categories fell by a negligible margin -- generally less than half of 1 percent -- across the U.S., with farms in the Western states mirroring that trend.