Wednesday, January 04, 2017

Farm Structure

ERS did a piece on farm structure recently. Here's its graph:

I've used it to counter the common meme that big corporations dominate agriculture.  It's not true, at least with field crops.  But then I started thinking--it's true enough that corporations are big in fruits and vegetables, but why would that be?

I'm guessing the key is that fruits and vegetables must offer much higher gross income per acre than wheat or corn.  If true, it would follow that those acres are much more valuable and therefore take more capital to acquire, leading naturally to the greater use of corporations to assemble the acreage.

Another factor might be the economic structure: field crops likely require less processing than do vegetables. And fruits and vegetables spoil, they can't be stored, at least not unless they're processed by canning, juicing, drying, or freezing. Those factors make it more likely for vertical integration.    We've had vertical integration with poultry and eggs for 50-60 years.  I suspect the fruits and vegetables sector preceded birds.

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