Crop Production
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 967,000 crop farms in the US produce more than 421 million acres of commercial-scale grains, sugar, fruits, nuts, vegetables, and ornamental crops. The establishments that produce these are generally considered farms but, depending on the commodity produced, may be more specifically known as orchards, groves, greenhouses, and nurseries. About 25% of crops are grown as seed or as input for other crops or livestock.
Older Operators and the Future
There could be a mass exit of farmers from agriculture in the near future, as 36% of the principal farm operators in the US are at least 65 years old and the average age for all principal operators is 58.
Contract Farming More Popular
Contract farming is gaining in popularity among producers.
Industry size & Structure
The average crop farm has two employees and generates about $190,000 in annual revenue.
- The US census defines a farm as an operation that produces or should have reasonably produced over $1,000 in revenue during a given year, including government payments. Under this definition, there are about 967,000 crop farms in the US.
- Crop farms produce about $184 billion of value annually using more than 421 million acres.
- About 98% of farms are owned by farm families where the family owns and/or operates the farm and has done so for generations.
- Over 2.5 million are employed in the crop sector and over 45% of employees are family members.
- Small family farms (less than $250,000 in annual sales) make up 88% of US farms and hold 51% of all farm assets.
- Large farms (more than $1 million in annual sales) account for 68% of the production value.
- Over 12,600 crop farms are certified as organic, totaling more than 2.7 million acres. These farmers sell about $4.3 billion in organic crops annually. Marketing of organic products is primarily to food wholesalers (60%) and consumers (30%); the remainder is to food retailers.
- Approximately 89% of family farms and 46% of non-family farms are sole proprietorships.
Industry Forecast
Crop Production Industry Growth
Coronavirus Update
May 4, 2022 - Severe Drought Impacts Yields and Prices
- The US Drought Monitor shows that the West’s current multiyear drought is “the most extensive and intense” in the 22-year history of the database,” said Rich Tinker, a meteorologist and drought expert with the National Weather Service and the National Oceanic and Atmospheric Administration. Drought conditions extending from the Pacific Coast as far east as Mississippi, Wisconsin, and Illinois are driving down farmers’ yields and raising prices at the grocery store. California, especially, is hard hit with farmers there taking more farmland out of production this year. The drought is projected to cause more than $3 billion in negative economic impact in 2022, Mike Wade, executive director of the California Farm Water Coalition, told Forbes in April. In addition to affecting water-thirsty nuts like almonds and pistachios, California's severe drought is impacting the state’s fresh fruit and vegetable industry.
- The White House is asking Congress to approve $500 million for the farm sector to entice US wheat producers to double-crop their fields and boost how much the federal government will spend on short-term loans to farmers who grow certain food crops, Reuters reports. The request is part of the administration’s broader $33 billion request to lawmakers to support Ukraine in its war with Russia and comes amid surging global grain prices and shortages due to the conflict, which has disrupted shipments of corn and wheat from those key suppliers. The USDA estimates the additional funds would help US farmers replace up to 50% of the wheat typically exported by Ukraine onto the global market, and lower food costs for American consumers.
- As the conflict rages in Ukraine, one of the world’s major wheat producers and exporters, concerns are rising that wheat shipments to Europe will not be able to leave Ukraine and this year’s plantings will not take place or growth will be stunted by lack of fertilizer. US President Joe Biden and Canadian Prime Minister Justine Trudeau have discussed increasing their countries’ wheat production and exports to help Europe with the looming shortage. Both leaders have urged European nations to drop their import restrictions and accept assistance. Crop producers in the US stand to benefit if exports of wheat and other crops expand to help sustain Europe’s food supply and feed Ukrainian refugees in Poland and other neighboring countries. However, about 70% of US wheat production is in areas experiencing drought, according to the USDA. If US yields are low, supplying to the countries may be a challenge and could drive up prices domestically.
- Rural bankers remain optimistic about farm income in 2022, according to Creighton University’s March Rural Mainstreet Index (RMI). Compared to 2021, 42% of bank CEOs expect higher net farm income in 2022, and 46% expect no change. “While loan activity has increased, farmers seem to be in good cash positions,” says Ernie Goss, chair of Creighton’s Heider College of Business and lead of the RMI. Over 96$ of banks intend not to tighten credit standards for farmers, despite rising farm input costs and global unrest.
- The current farm bill expires in 2023, but lawmakers are starting to develop a new version. The Agriculture Committee has held hearings to examine how the USDA’s conservation, commodity, and other programs are faring under the existing Farm Bill, according to the Organic Farmers Association (OFA). In early March, OFA co-hosted a meeting with the Organic Trade Association to gather input from nearly 100 organic farmers and representatives of farm groups. Priorities for the new Farm Bill include addressing issues that impact continued improvements in organic standards, enforcement, obstacles to getting certified as organic, and the economic viability of organic farming.
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