Agriculture Reference
In-Depth Information
Given the importance of the production agriculture sector, it has been the policy of the
U.S. government since the 1930s to support the income of farmers when market conditions
are not favorable. There are a wide variety of such programs that assist farmers, and these
vary by commodity. Some crop and livestock products, such as peanuts, wheat, and dairy
products, have substantial government involvement. Other crop and livestock products such
as soybeans, pork, and lettuce have much lower levels of government involvement. When
combined across all crops, total payments from the government have been an important, but
declining, component of net farm income in the U.S. (
Table 1.7)
. The government payments
Future issues
The production agriculture sector continues to evolve. Consolidation in the sector has been
rapid to date, and farms are getting larger every year—especially in the livestock sector.
International competition, volatile input prices, environmental and food safety regulations,
and rapid deployment of new technology have all placed substantial pressure on the owner/
manager of a production agriculture business. Agricultural producers have responded to
these pressures with an increased emphasis on fi nancial and risk management; a focus on
control of assets like land and machinery as opposed to ownership; and the general applica-
tion of many of the management ideas we will address in this topic. For many years people
talked about farming as “a way of life.” While the “way of life” aspect remains important to
many producers, successful commercial agricultural producers in today's business environ-
ment are astute, sophisticated business managers running large and complex organizations.
The input supply sector
The
input supply sector
of the food production and marketing system comprises the fi rms
that manufacture and distribute myriad inputs used by the production agriculture sector. The
agricultural input industry umbrella is a broad one and includes a wide range of fi rms that
Table 1.7
Net income from farming, 1970-2009
Year
Net Income (millions $)
Government Payments
(millions $)
Payments as %
of Farm Income
1970
14,365.9
3,717.4
25.9
1975
25,510.2
807.1
3.2
1980
16,141.4
1,285.7
8.0
1985
28,509.3
7,704.2
27.0
1990
46,260.7
9,298.0
20.1
1995
39,770.8
7,279.5
18.3
2000
50,684.9
23,221.6
45.8
2005
78,763.0
24,395.9
31.0
2006
57,436.4
15,788.8
27.5
2007
70,323.0
11,903.4
16.9
2008
86,597.6
12,241.7
14.1
2009
62,187.1
12,262.6
19.7
Source: McGath 2011.
