Crop Production
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation 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
Recent Developments
Nov 10, 2022 - Strike Threat Worries Grain Farmers
- The potential for a railroad strike has farmers worried about getting harvested grain to market and future delays in the delivery of critical inputs, like fertilizer, in time to start planning for the next season, FB News reported in November. The threat by railway unions to strike comes amid already poor rail service conditions, a protracted truck driver shortage, and historically-low water levels on the Mississippi River. In October, the American Farm Bureau Federation along with more than 300 agriculture-related organizations, urged President Biden to continue to work with the railroad unions and railroads to ensure that the tentative agreement brokered this summer is ratified by the parties, according to FB News. As of late-October, six of the 12 unions had approved the labor agreement, while two rejected it and there are concerns others may follow suit.
- The US Department of Agriculture’s first crop rating for US winter wheat found nearly 75% of planted acres are in some level of drought, per the latest drought monitor. As a result, winter wheat condition ratings in early November 2022 were well below 2021’s 45% good to excellent and were at a record low for this time of year, according to AgWeb. The crop came in at only 28% good to excellent, with 35% of the crop rated poor to very poor. The last time the ratings were this low was in the drought year of 2012 at 40% good to excellent. On a regional basis, in Oklahoma only 11% of the crop is rated good to excellent, only 24% in Kansas, and in Texas only 4% is rated good, with none of the crop in the excellent category.
- Slowing consumer demand and the strong US dollar are putting downward pressure on cotton futures, The Wall Street Journal reported. Following a dismal harvest that sent prices sharply higher, cotton futures prices have returned to more normal levels. A 25% decline in futures prices between late August and late September effectively eliminated gains driven by a US Department of Agriculture forecast that more than 40% of US acres planted with cotton this year wouldn’t be harvested because of drought, according to WSJ. The decline brought prices closer to typical levels – about 88 cents a pound – in late September, down more than 40% from their decade-high peak in May 2022. A year ago cotton prices topped $1 a pound after restrictions were placed on cotton produced in China’s Xinjiang region due to concern that forced labor was being used to harvest it. WSJ noted that cotton prices have only exceeded $1 a pound three times since the late 1950s.
- The US Department of Agriculture has announced a $300 million effort to support crop producers transitioning to organic farming and to strengthen organic markets. The USDA’s Organic Transition Initiative, funded in part by the American Rescue Plan, will provide support in three main areas: mentoring and advice; direct farmer assistance; and organic market security. USDA said the department hopes the program will reverse a trend of slow growth in farmers transitioning to organic, open opportunities for new and beginning organic farmers, and expand consumer access to organic foods. According to the department’s National Agricultural Statistical Service, the number of farms transitioning has dropped by 71% since 2008. The Organic Trade Association, which welcomed USDA’s action, said it will increase access to organic foods for consumers.
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