1. Transformations in the Farm Economy

Writers who discuss farm policy tend to rely on images and conceptions from the 1930s. At that time, almost a fifth of the population farmed, farms produced a fraction of what they do today, and farm household incomes were less than half that of non-farm households.⁶ The Great Depression caused widespread foreclosures and tax sales, which the government stopped with massive New Deal spending programs.⁷ These programs inaugurated a new regime in the farm economy.⁸ From 1929 to 1940, government payments increased from 3% of net farm income to 29%.⁹ Most of these funds went to large farms, a trend that has continued and intensified to the present day.¹⁰ Between 1930 and 1992, the number of white farmers fell by 65% and Black farmers by 98%,¹¹ while the average farm size more than doubled from 199 to 464 acres.

As a result of these broad historical trends, the average farm household now has a higher annual income and more non-farm wealth than the average household. There are very few farm households below the poverty level, and the majority of the remaining ones are composed of elderly people who sell little to no agricultural products.¹² The farm operations that produce the vast majority of our food now more closely resemble small factories. The operator is often dependent on the modern financial system for both loans and current and future sales, and manages their operation from an office while hired labor works the land or livestock. These businesses rely heavily on a seasonal work force, assisted by heavy machinery, to produce a huge amount of standardized product for minimal cost. Our discussion below distinguishes between farm businesses and nonbusinesses, and examines the implications for farm policy and analysis.

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