88 percent of U.S. farms considered small family farms

WILLMAR -- Despite the fact that large-scale farming operations now produce the bulk of our nation's agricultural products, a recent study found that a vast majority of the farms in the United States are owned by what the U.S. Department of Agriculture defines as small family farming operations.

That was the finding of the most recent periodic study conducted by USDA's Economic Research Service. The required study provides agricultural policymakers with an accurate, detailed and unbiased source of information on the structure and finances of U.S. farms.

According to the study, small family farms -- which USDA defines as farms with annual sales of $250,000 or less -- comprised 88 percent of all U.S. farms in 2007. Small family farms also held about 64 percent of all farm assets, including 63 percent of our nation's farmland.

Since the majority of U.S. farmland is owned by small family farms, they play a key role in natural resource and environmental policies. For example, small farms accounted for 76 percent of the land enrolled by farmers in USDA's land-retirement programs, most of which are in the Conservation Reserve Program.

While the majority of U.S. farms are considered small family farms, there's no denying the importance of very large family farms and nonfamily farms.

The study found that large-scale family farms -- those with annual sales of $250,000 or more -- plus nonfamily farms, comprised 12 percent of U.S. farms in 2007, but accounted for 84 percent of the value of U.S. agricultural production.

In terms of finances, the study discovered that large-scale farms were generally more viable businesses than small family farms.

The average operating profit margins and rates of return on assets and equity for large farms (annual sales of $250,000 to $499,999) and very large farms (annual sales of $500,000 or more) were all positive in 2007. Meanwhile, average operating profit margins and rates of return on assets and equity were negative for most small farms.

The poor financial performance of small family farm family households is often supported by their reliance on substantial off-farm income, most of which comes from wage and salary jobs or self-employment.

In contrast, households operating as retirement farms received most of their off-farm income from sources such as Social Security, pensions, dividends, interest and rent.

The study concluded that the distribution of commodity-related government payments is roughly proportional to the production of program commodities. Medium-sized farms (annual sales of $100,000 to $249,999) and large-scale farms received 76 percent of commodity-related government payments in 2007.

In terms of government land-retirement programs, 73 percent of the payments went to retirement, residential lifestyle and low-sales small farms.

Surprisingly, 61 percent of U.S. farms received no government payments and were not directly affected by farm program payments.

Applications open for organic cost share program

The Minnesota Department of Agriculture is currently accepting applications for the Minnesota Organic Cost Share Program.

Minnesota organic farmers and processors will have until Oct. 30 to apply for a rebate of up to $750 to help cover the cost of organic certification. Funds for the rebate program come from a cooperative agreement with the U.S. Department of Agriculture.

Depending on farm or business size, the cost for organic certification can range from hundreds to thousands of dollars per year.

Certified organic operations are eligible for reimbursement of 75 percent of National Organic Program certification-related costs incurred between Oct. 1, 2009, and Sept. 30, 2010, up to a maximum of $750.

To qualify, applicants must submit the application form, proof of certification during the qualifying period, and proof of certification expenses.

The Minnesota Department of Agriculture has already mailed application packets to more than 800 certified organic operations in the state. Any certified organic farmer or processor who did not receive a packet can obtain the necessary materials by calling 651-201-6012.

Organic certification assures consumers that products are truly organic and that they are produced in compliance with federal regulations.

Farm worker survey results

According to USDA's National Agricultural Statistical Service, there were 64,000 hired workers on farms in the Lake Region during the week of July 11-17. The Lake Region includes the states of Minnesota, Michigan and Wisconsin.

Farm operators paid their hired workers an average wage of $11.10 per hour during the survey week, up 6 cents from last July.

Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.