An economic analysis of agricultural credit usage and census data conducted by the University of Arkansas System Division of Agriculture found that the number of farms and ranches across the U.S. dropped by 3% during the last decade and the demographics of primary operators is evolving.
More minorities and women became primary operators of farms and ranches in the past decade, while the number of white male-operated farms decreased by nearly 15% between 2012 and 2017, and proportionately fewer non-Hispanic white males are starting farms and ranches.
White male-operated farms remained the largest demographic segment of established and beginning farmers, and largest user of agricultural credit.
The Division of Agriculture study looked at interest paid on agricultural loans and USDA Census of Agriculture data from 2012 and 2017. Researchers also used USDA’s Census of Agriculture, Agricultural Resource Management Survey and Farm Service Agency data to gauge lender success and potential gaps in serving beginning farmers/ranchers. The USDA Census of Agriculture is taken every five years, and 2022 data will be released in 2024.
“A large share of Farm Service Agency funds is going out to beginning farmers,” said Bruce Ahrendsen, the study’s lead author and professor of agricultural economics and agribusiness for the Arkansas Agricultural Experiment Station, the research arm of the Division of Agriculture. “Part of it is targeted funds required by Congress, but the FSA is exceeding those targets in most years for direct loans and serving an important role for U.S. agriculture.”
Beginning mid-sized family farms with annual sales between $350,000 and $1 million had the largest share of farms using Farm Service Agency loans.
“About one in four mid-size beginning family farm operations have either a direct or a guaranteed loan from the Farm Service Agency,” Ahrendsen said. “So, FSA loans are being used much more than expected. FSA is an important source of credit, particularly for beginning farmers.”
In 20 states, more than 50% of indebted minority beginning farmers and ranchers were Farm Service Agency borrowers over the course of the study period. So, federal credit programs appeared to have had some success in increasing socially disadvantaged farmer and rancher access to credit, allowing for easier entry into farming. Still, the programs “may not be as effective at correcting historical inequities,” the study added.
Data collected for the study consistently showed that greater shares of socially disadvantaged farmers and ranchers were “beginning” operations compared with non-Hispanic white men.
The USDA defines a “beginning farmer or rancher” as someone with no more than 10 cumulative years of experience as an operator on any farm. “Socially disadvantaged farmers and ranchers” include women; individuals with Hispanic, Latino or Spanish origin; and individuals who identify as American Indian or Alaskan Native, Black or African American, Asian, Native Hawaiian or other Pacific Islander. “Non-socially disadvantaged farmers/ranchers” are defined in the study as non-Hispanic white males.
While the share of farms using agricultural credit had a slight drop, the U.S. Department of Agriculture’s Farm Service Agency federal loan programs “appeared to be crucial in enabling beginning farmers and ranchers, and especially beginning socially disadvantaged farmer and rancher groups, to access loans,” the study states.
The nation’s total number of farm operations decreased 3.2% between 2012 and 2017, but the Division of Agriculture study showed the number of “socially disadvantaged beginning farmers/ranchers” counted as “primary producers” went up by 10.7%. Average farm size did not increase as much as might be expected, Ahrendsen said, since some farmland went for use for other purposes, such as urban development. The average farm size increased 1.8% from 433 acres in 2012 to 441 acres in 2017, while the total land in farms decreased 1.6%.
The study concluded the U.S. might be making some progress toward the goal of making it easier for farmers to get started, especially among historically underserved groups. Without the federal credit sources, beginning farmers and ranchers could be restricted in growing their operations, the study added.
The Farm Service Agency’s 2023 budget included an increase of $5.5 million for outreach to historically underserved producers in support of a presidential priority to promote racial and economic equity. The budget also includes $1.6 million for the Urban Agriculture Initiative, which would support county committees to facilitate urban agricultural production and help address climate change, the USDA budget summary states.