• The average farm size tends to increase as a country becomes more developed and has a larger economy.¹
• Smaller farms tend to achieve higher yields per hectare, but have much lower output per labor hour.¹
• Small farms account for 32% of the world's food supply. Smaller farms tend to allocate a larger share of their crops towards food directly consumed by humans, rather than animal feed or biofuels.¹

Defining Farms by Size or Ownership

It is not uncommon for the terms "small farm" and "family farm" to be used interchangeably. However, this common practice creates a misconception that all family-owned farms are small or that large farms are not owned by families.

Family describes the ownership of the farm. A family farm is classified as one where the majority of the business is owned by an operater and individuals related to the operator.⁵ The relatives may or may not live in the operator's household. Family farms can be any size. They range from small to very large. In fact, 98% of farms in the United States are owned by families.⁴ Nonfamily farms are classified as those where an operator and persons related to the operator do not own a majority of the business.⁵

Farm size is classified according to the farm's gross cash farm income (GCFI) rather than the physical size of the farm.⁶ GCFI is a measure of the farm's revenue before deducting expenses. It includes sales of crops and livestock, payments made under agricultural federal programs, and other farm-related cash income.⁵ Farm size is not measured in acreage because the agricultural potential of one acre varies depending on the climate where it is located. For example, a non-irrigated acre in a desert climate cannot be compared to a fertile acre with high rainfall in a temperate or subtropical climate.

In the United States, farm sizes are classified as follows⁵:

• Small farm: GCFI less than $350,000
• Midsize farm: GCFI between $350,000 and $999,999
• Large farm: GCFI above $1,000,000

The terms conventional agriculture, contemporary agriculture, intensive farming, industrial agriculture, factory farming, and to some extent modern agriculture, are synonymous terms. Modern agriculture and smart farming are newer terms used to define production systems on the cutting edge of farming technology (digital and mechanical) designed to reduce inputs (labor, fertilizer, pesticides and water) and decrease environmental impacts, at scale.

An important question is, "Are large-scale farms replacing small farms in the United States?" In 2020, 89% of all farms in the United States were small farms. While small farms are an overwhelming majority of farms, they only contribute 20% of the total farm production. Large-scale farms account for 2.9% of farms, but provide 46% of total farm production.⁸ In summary, we have more small-scale farms than large-scale farms in the United States, but large-scale farms contribute the largest percentage of agricultural products to our society.

Economics and Farm Size

Economies of size is a term used in economics to explain that the average cost per unit of production decreases as the size of a business or operation increases. For example a small dairy farm with 300 head of milk cows will have higher production costs (per gallon of milk produced) than a large-scale dairy with 3,000 head of milk cows. Here are some factors that contribute to the varying production costs⁹:

• Both small and large farms have fixed expenses to purchase the equipment that they need to operate. A large farm can spread more production over the same level of fixed expenses.
• Sometimes volume discounts can be obtained for inputs such as seed, fertilizer, or other expenses.
• Costs can be reduced by spreading the resources over more than one enterprise.
• Large-scale farms are more likely to be capable of investing in labor-reducing technologies.

Economies of scale describes how much production increases as the farm (or business) increases its scale of production.

Another factor that influences farm size is processing. Farmers produce raw commodities such as milk, beef cattle, hogs, corn, and soybeans. However, those raw products need to be processed. Beef cattle need to be harvested and the meat needs to be cut into retail packages. Milk is pasteurized, homogenized, bottled, and/or used to make cheese, yogurt, butter, and other dairy products. Grains like wheat, oats, and corn are milled into flour or processed into a variety of food or feed products. Processing plants are also subject to economies of size and scale. Over the years, processing plants have grown larger in size and capacity, but smaller in numbers. To be profitable, a large processing plant will favor large producers because they can be more efficient and cost effective.⁹

Technology on the Farm and in Processing

Technology is another contributing factor to farm size. Farm size is limited to the amount of work that can be completed from start-to-finish in producing a commodity. Technology has increased the capacity of farmers to perform work through the decades. The production of grain crops like corn, wheat, or soybeans is highly mechanized. With the aid of modern tractors and combines, massive amounts of these commodities can be produced. However, some crops like fruits and vegetables still require a significant amount of manual labor to plant and harvest. Whether necessary farm tasks (such as planting, irrigation, or harvesting) are completed manually or by machine will influence the overall size of the farm.

Unlike competititve advantage where one business is able to differentiate itself over its competitors, comparative advantage is another consideration that is evaluated in business and economics. Farms are businesses. Comparative advantage is when a business has an advantage compared to other similar businesses. In agriculture a comparative advantage could come from the climate or location of the farm. A dairy farm in a temperate climate will need fewer buildings and facilities than a dairy farm in a very cold climate. Other examples of comparative advantages include availability for labor, location (distance from markets), or skills and experience of farm managers or workers.

Economics and technology are the two elements that have made large-scale farming both possible and economically viable.

Is industrial agriculture positive or negative? The pros of industrial agriculture include increased food production for a growing population, lower consumer costs, the encouragement of technical innovation, the creation of employment opportunities, and the expansion of food availability. Cons of industrial agriculture include negative impacts on small business agriculture and environmental concerns and impacts that can become problematic when raising livestock or produce crops on a large scale. Another factor to consider is the use of CAFOs, or concentrated animal feeding operations for the rearing of livestock. Determining if livestock housing systems are a pro, con, or neutral issue varies by individual perspectives. When we industrialize, we use the "factory model" for efficiency. Consumers do not have a problem with this process when we are making/manufacturing cell phones or a product that is non-sentient (devoid of feeling or sensation). However, animals are sentient and the factory approach can seem (to some) insensitive to animal needs. A closer look at modern, large-scale animal farms can help consumers evaluate if and how the needs of animals can be met in an agricultural setting. Use the lesson Hen House Engineering to explore the housing of laying hens.