FOOD, FARMING, & SUSTAINABILITY: READINGS IN AGRICULTURAL LAW 2015 SUPPLEMENT © Susan A. Schneider August 1, 2015 This supplement is supported by a website that provides electronic copies of documents cited and/or direct links to the websites and documents referenced. The website is at www.FoodFarmingSustainability.com. Select the Resources tab; references are organized by chapter. DISCLAIMER The book, FOOD, FARMING, & SUSTAINABILITY: READINGS IN AGRICULTURAL LAW, this 2015 SUPPLEMENT, and the companion website at www.FoodFarmingSustainability.com are intended for educational use only and not as legal advice. The author is not engaged in the private practice of law and does not provide any advice or suggestion on individual legal needs. All materials and resources provided are for educational purposes only. Copyright © 2015 Susan A. Schneider. All rights reserved. I. Agriculture and Agricultural Law A. The Agrarian Ideal or the Agrarian Myth? B. Agrarianism and the Development of U.S. Agricultural Law C. The Industrialization of Agriculture 1. Improved Agricultural Production Through Technology 2. The Large Scale Production of a Specialized Product 3. Vertical Integration 4. Industrialization in Animal Agriculture 5. Unanticipated Costs D. Sustainability E. What is a Family Farm? F. A Survey of Current U.S. Agricultural Production G. Consumer Awareness and Impact Links to the resources referenced in this supplement are provided on the FoodFarming Sustainability website, under Resources, Agriculture and Agricultural Law. I. Agriculture and Agricultural Law E. What is a family farm? Additional Information to be added at the end of this section, on page 44: In 2013, as a reflection of commodity price increases and a shift in production to larger farms, the USDA categories of farms were revised. The following table provides the new definitions. Revised ERS Farm Typology Farm Type Farm Operator’s Farm Size Measured by Primary Occupation Annual Gross Cash Farm Sales Small Family Farm Varies Less than $350,000 Retirement Farms Retired from farming Less than $350,000 Off-farm Occupation Farms Non-farm Less than $350,000 Farm Occupation Farms: Low-sales Farming Less than $150,000 Moderate-sales Farming $150,000 - $349,999 Mid-Sized Family Farm Not a criterion $350,000-$999,999 Large-scale Family Farm Not a criterion $1,000,000 or more Large farms Not a criterion $1,000,000 to $499,999,999 Very large farms $,5,000,000,000 or more Robert A. Hoppe, Structure and Finances of Family Farms: Family Farm, Report 2014 Edition 4, USDA, ERS, Econ. Inform. Bull. No. 132 (Dec. 2014) (linked on www.FoodFarmingSustainability.com). 2 Copyright © 2015 Susan A. Schneider. All rights reserved. The USDA ERS summarizes its findings as follows: Family farms accounted for 97 percent of U.S. farms in 2011. Small family farms alone—those reporting annual gross cash farm income (GCFI) less than $350,000—made up 90 percent of farms. They also operated 52 percent of the Nation’s farmland. In contrast, small farms accounted for a relatively small share of production, 26 percent, although their share of production was much higher for specific commodities. For example, small farms accounted for 56 percent of poultry production, which accounted for the largest share of small farms’ production under contract. Midsize and large-scale family farms together produce the bulk of agricultural output. Large-scale and midsize family farms made up only 8 percent of all U.S. farms in 2011, but they accounted for 60 percent of the value of U.S. agricultural production. Another 3 percent of farms were nonfamily farms, producing 15 percent of U.S. farm output; roughly 85 percent of nonfamily farm output was on farms with GCFI of $1,000,000 or more. Most nonfamily farms (78 percent), however, had GCFI below the $350,000 cutoff used to identify small farms. Small family farms are more likely to have profitability measures that fall in the critical zone, indicating potential financial problems. About three-fourths of U.S. farms are in the critical zone for rate of return on assets (a value less than 1 percent), and two-thirds are in the critical zone for operating profit margin (a value less than 10 percent). The shares in these critical zones are especially high for farms in the retirement, off-farm occupation, and low-sales categories, tapering off rapidly as farm size (measured by GCFI) increases. Robert A. Hoppe, Structure and Finances of Family Farms: Family Farm, Report 2014 Edition, Report Summary, USDA, ERS, Econ. Inform. Bull. No. 132 (Dec. 2014), available on the USDA ERS website and linked on www.FoodFarmingSustainability.com F. A Survey of Current U.S. Agricultural Production Updated Information, replacing the text in this subsection, pages 45-49: Every 5 years, the USDA National Agricultural Statistics Service (NASS) conducts a Census or survey of U.S. agriculture. NASS describes this census providing "a complete count of U.S. farms and ranches and the people who operate them" and it includes information about "land use and ownership, operator characteristics, production practices, income and expenditures, and many other areas." The first agriculture Census was taken in 1840, and for the next 156 years (1840–1996) the U.S. Department of Commerce, Bureau of the Census conducted the Census of Agriculture. In 1997, responsibility for conducting the Census of Agriculture transferred to the USDA NASS. The most recent census, the 2012 Census of Agriculture was the 28th Federal Census of Agriculture and the fourth conducted by NASS. 3 Copyright © 2015 Susan A. Schneider. All rights reserved. The 2012 Census reports fewer farmers than in 2007, but the productivity and economic influence of American agriculture has increased. The Census reveals a productive, largely industrialized agricultural sector that produces food, fiber, and fuel for the United States and for export. The following summary of U.S. agriculture is based on the 2012 Census of Agriculture. The data and the summary reports are available on the USDA NASS Ag Census website and a link is provided on www.FoodFarmingSustainability.com. 1. The Number of Farms As noted, the USDA National Agricultural Statistics Service (NASS) uses a broad definition of the term “farm” for purpose of the census, defining it as any place that produced or sold — or normally would have produced or sold — $1,000 or more of agricultural products in a given year. The 2012 Census of Agriculture counted 2,109,303 farms in the United States, down 4.3 percent from the previous census in 2007. The 2007 Census had shown an increase, an exception to the general trend. Other than in 2007, the number of farms has declined each census since World War II. The majority of these 2.1 million farms are small farms, measured by sales, and the majority are supported by off-farm income. Seventy-five percent had farm sales of less than $50,000 in 2012, and almost 57 percent had sales less than $10,000. 2. The Number of Farmers and Farm Demographics The number of farmers is also down, from 2007 to 2012, a disappointment to many who were encouraged by an increase observed in 2007. The 2012 Census counted 3,180,074 farmers, a decline of 3.1 percent over 2007. The number of farmers is determined by the “farm operators” identified. The Census of Agriculture identifies the “principal operator” of the farm, defined as the “person primarily responsible for the day-to- day operation of the farm,” but also identifies any second or third farm operators who are also involved in the day-to-day decision making on the farm. These categories combine to reveal the reported number of “farmers.” The number of principal farm operators declined by 4.3 percent from 2007 to 2012. Seventy-eight percent of principal operators had been on their current farm for at least 10 years. Almost 80 percent of principal operators lived on their farm, but 70 percent indicated that less than 25 percent of their household income came from farming. Just over 52 percent had a primary occupation other than farming, but most worked some days off the farm. The decline in the number of farmers is consistent with the movement toward larger farms. A separate concern is raised, however, by the aging of the farmer population. The 2012 Census revealed a continuation of the long term trend of the aging of farm operators. The average age of the principal farm operator is now 58.3 years. The average age has increased roughly one year in each census cycle for the last 30 years. 4 Copyright © 2015 Susan A. Schneider. All rights reserved. Average Age of Principal Farm Operator 60 58.3 57.1 58 55.3 56 54.3 53.3 54 52 52 50.5 50 48 46 1982 1992 2002 2012 USDA NASS , 2012 Census of Agriculture, Highlights: Farm Demographics These averages reveal a potential concern for the farming profession. Younger farmers decreased in number. Between 2007 and 2012, there was a decrease in each age category of principal operators from age 54 downward, with a statistically significant drop in operators from 45-54 and from 35-44 years of age. In contrast, older farmers increased in number as existing farmers aged. From 2007 to 2012, there was an increase in each of the categories of principal operator at the high end of the age spectrum, with a statistically significant increase in the top age categories, 65 to 74 and 75 years of age and older. Principal Operators by Age Group: 2007 and 2012 243,472 75 years of age and older 257,705 412,182 65 to 74 years of age 443,571 596,306 55 to 64 years of age 608,052 565,401 2007 Census 45 to 54 years of age 466,036 2012 Census 268,818 35-44 years of age 214,106 106,735 25-34 years of age 109,119 11,878 Under 25 10,714 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 USDA NASS , 2012 Census of Agriculture, Highlights: Farm Demographics 5 Copyright © 2015 Susan A.