Farm Support Services

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 9,500 companies in the farm support services sector provide a variety of services for either crop or animal production. Services include farm management services, farm labor contracting, pest control, packaging of crops, breeding, and sheep dipping and shearing, among many others.

Dependence On Farm Production

Farm support services companies are subject to supply and demand fluctuations in animal and crop production.

Impact Of Immigration Reform

Many farm services companies use migrant workers, particularly farm management services and farm labor contractors.

Industry size & Structure

The average farm support service provider employs about 9 workers and generates $2-3 million in annual revenue.

    • Farm support services companies vary widely in the type of services provided and processes used.
    • More than 9,500 companies and over $24 billion in annual revenue.
    • About 89,400 employees in crop and animal production support services with annual payroll of $3.6 billion.
    • 92% of companies employ 20 or fewer people.
    • Large firms include Archer Daniels Midland, Cargill, and Syngenta.
                            Industry Forecast
                            Farm Support Services Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Nov 25, 2022 - Farmland Values Hit Record Highs
                            • Small farmers are being priced out of the market for farmland as competition from investors and real estate developers drives up prices across the country, The New York Times reported in November. In South Dakota, farmland values surged by 18.7% from 2021 to 2022, one of the largest increases in the nation, according to the most recent figures from the Agriculture Department cited by NYTs. Nationwide, values increased by 12.4% to $3,800 an acre, the highest price on record since 1970, with cropland at $5,050 an acre and pastureland at $1,650 an acre, according to the USDA. In a recent survey conducted by the National Young Farmers Coalition, young farmers said finding affordable land for purchase was the top challenge this year. Fewer farms translate into reduced demand for farm support services.
                            • As the climate crisis drives an increase in insect activity, demand for agricultural pest control is poised to rise. The 2022 Pesticide Atlas produced by a German environmental group cites research from Seattle University on the effects of climate on insect activity that found that insect activity in crop-growing regions will rise along with temperatures, resulting in losses of rice, maize, and wheat by 10% to 25% for each degree Celsius that temperatures rise. Moreover, crops’ natural potential to resist pests decreases as a result of climate-related stress. Climate change also is altering pest populations and the ratio of pests to beneficial insects, further driving pesticide usage. Measured in tons, pesticide use increased across six of the seven continents between 1999 and 2020 with South America up 119% and Europe down 0.2%.
                            • Highly pathogenic avian influenza (HPAI) has returned with migratory birds, posing a threat to poultry flocks. The 2022 avian influenza outbreak is the US’s worst since 2015, The New York Times reported in October. As of November, the virus had affected more than 49 million farmed birds, nearly as many as in the 2014-2015 season, according to the Centers for Disease Control and Prevention. Unlike in 2015, the virus did not fizzle out over the summer but continued to circulate in wild birds, many of which spend their summers in the Arctic. Now, as wild birds fly south for the winter, they are bringing the virus with them. HPAI has killed about 6.4 million turkeys, or about 2.9% of US annual turkey production. The virus and inflation are causing turkey prices to rise to an average of $2.99 per pound, up from $1.59 this time last year, according to the USDA.
                            • Firms that support dairy and poultry production are benefiting from larger herd sizes while those supporting cattle and hogs are experiencing herd reductions, which may impact contracts. Ranches are aggressively culling cattle herds to take advantage of high beef prices and minimize feed costs. However, ranches are expected to replace heads of cattle at higher-than-expected rates in late 2022 and early 2023, according to the USDA. In August 2022, dairy farms had a higher-than-expected headcount as farms ramped up production to capture elevated dairy product prices. Hog farmers have lower-than-expected head counts and production is not forecast to increase during the remainder of 2022. Poultry farmers are increasing their flock sizes of both meat chickens and egg-layers in late 2022 as meat and egg prices climb and feed prices moderate.
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