February 2009
A Multi-Client Study Proposal
The Structure and Performance of the Farm Sector in an Era of Volatility and Uncertainty

BACKGROUND AND STUDY OBJECTIVE

There are few industries in North America quite as diverse as production agriculture. The nearly 2.5 million farms in the US and Canada include a majority that are simply part-time endeavors, producing little if any income, and perhaps using out-dated technology. At the other end of the spectrum are a relatively small number of operations that are enormous in size, responsible for a major share of food and fiber produced, and on the cutting edge of technology, finance and risk management. The ones in between especially represent the iconic class of "family farms" - fulltime commercial businesses under continuous pressure to modernize and expand, or that eventually downsize, focus on finding off-farm income sources, or exit the industry entirely.

Across the spectrum of North American farms there is also broad diversity in the types of crops and livestock produced, the degree of specialization and the marketing and production strategies employed, many reflecting regional aspects including land resources, climate and proximity to key markets, among other factors. This heterogeneity is well known but often ignored or overlooked in statistics that attempt to document the financial health of the sector, and in public policies intended to support incomes or protect the environment.

But understanding the structure of agriculture has important implications for all entities that serve agriculture by providing productive inputs and services, as well as those that depend on a reliable supply of commodities to serve consumers across the United States and worldwide. And, only by carefully examining the characteristics of different types of farms is it possible to assess with any degree of accuracy the trends and emerging developments that will determine the future patterns of market growth as well as industry needs and opportunities.

By almost any measure, the agriculture sector today faces a unique and powerful set of risks and forces for change that will affect markets and structure for years to come. Official USDA statistics report that the farm sector generated record income in 2008, but expenses hit a new record, as well. And, a deepening US and worldwide recession, the political upheaval from the 2008 elections, and rapidly changing markets for agricultural products promise to affect the farm sector in important ways that differ along structural characteristics.

The entire prospectus and enrollment in pdf form

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