2022 United States Census of Agriculture

Many of you are familiar with the U.S. Census survey that is taken every ten years to count the number of people living in the country. The Census is a big deal because it determines how many seats each state gets in the House of Representatives and used for the allocation of government funds and programs like schools, hospitals, and roads. However, many people are unaware that there is also an agricultural census. Unlike the decennial U.S. Census, the U.S. Census of Agriculture is conducted every five years. Initiated in 1820, the agricultural census provides a rich history of valuable insights into American farmers and the agricultural economy. Today, it not only tracks the number and location of farmers but also assesses land use and ownership, operator demographics, production practices, and farm income.

The results of the 2022 Census of Agriculture were released in February of this year, carrying significant implications for policy, agricultural decision-making, and investment interest. Farmers and stakeholders in the agricultural industry pay close attention to these results as the census can affect USDA Farm Bill allocations, technological innovation, and the economic outlook for agriculture. The full report can be located here.  The USDA also does an excellent job of summarizing key data in a series of highlight reports.

Farms and Farmland

Will Rogers used to say, “Buy land. They ain’t making any more of the stuff.” These words have echoed across the agricultural sector for decades and it has never been truer. As of 2022, there are now 880 million acres of farmland in the United States which may sound like a lot, but it is down 20 million acres, or 2.2%, from 2017 and 40 million acres, or 4.4%, from 2007. Development pressure, renewable energy projects, and conservation programs are driving the reduction in farmland acreage. Consequently, the competition for land use has increased farmland prices which have been further buttressed by growing food demand for the world’s expanding population. The graphic below illustrates the concentration of farmland in the United States, with a significant portion located in the central part of the country.

Not only have the acres devoted to farmland declined but the number of farms continues to shrink due to industry consolidation. It was reported in the 2022 Census that the number of farms fell below 2 million for the first time. Family farms continue to dominate the sector, with 96% of farm operations still classified as family-owned. However, the number of family-owned farms is dwindling as the expensive nature of key inputs such as acreage and equipment needed for modern, efficient operations drive more people to leave rural America in search of job opportunities elsewhere.

Larger producers are eager to take advantage and expand their operations. The industry continues to become increasingly concentrated with the average size of a farm rising 5% from 441 acres in 2017 to 463 acres in 2022. It is important to note that the USDA classifies a farm as “any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the census year.” This definition can cause skewness in the data as small backyard gardens selling produce at local farmer’s markets could constitute a farm for the USDA census.

The shift in the concentration of farm ownership means fewer farm operators control a larger percentage of acres. The USDA estimates that 42% of U.S. farmland is controlled by 2% of U.S. farm operators. These large farms dominate agricultural production and income. On the other side of the scale coin, 42% of farms control only 2% of all U.S. farmland. Like other sectors of the U.S. economy, as time goes on the sector has continued to become more concentrated with the largest 10% of farm operators controlling more and more acres. From an efficiency standpoint, this isn’t necessarily a bad thing as large-scale farms are often much more efficient allocators of resources and capital but there will remain concerns over whether these large farms will consistently be good stewards of the land.

Farm Producers

Farm operations are evolving and the producers/farmers running these operations are changing as well. A persistent concern in the agricultural community is the increasing average age of agricultural producers. Consider your own image of a farmer. Do you envision someone young, educated, or perhaps a woman or a person of diverse background? More likely, the image that arises may resemble the figures in Grant Wood’s “American Gothic” painting from the board game “Masterpiece,” one of the most recognizable images in American art.

Wood’s painting actually paints a fairly accurate depiction of what the average farmer today based on the USDA’s findings. The average age of farmers continues to rise, now standing at 58.1 years young, with 95% of producers being white. The concern over the average age of the farmer has persisted for decades. The reason behind this demographic statistic largely stems from the capital intensity of agriculture. The table stakes for land, machinery, and other agricultural resources keep rising for young and beginning producers. Unless facilitated as part of a farm succession and estate plan, it is very difficult for new blood to enter the farming sector. The USDA has tried to facilitate new entrants with several young and beginning farmer programs which have provided some relief.

Farm Economics

Favorable commodity prices and yield trends for agriculture during and after the COVID-19 pandemic translated into strong growth in the value of agricultural production. As of 2022, the USDA reported U.S. farms produced $543.1 billion worth of agricultural crops, up 40% from $388.5 billion in 2017. The share of production value is largely split evenly between crops and livestock, with grains and oilseeds dominating production value on the crop side. Cattle and calves are the top-ranked commodity in agriculture, making up 17% of total US agricultural production by value.

Moving onto state-level data, California dominates agricultural production value. California’s prominence is largely due to California’s favorable year-round weather, overall crop diversity, and ability to produce high-valued specialty products like wine and table grapes, almonds, and pistachios. In 2022, California raised 11% of all US agricultural production with Iowa, Texas, Nebraska, and Minnesota making up the remaining top 5 spots. However, recent legislation in California surrounding trucking emissions and livestock and water management could threaten its standing. The legislation calls for a phasing out of diesel-based trucks and has raised concerns among producers, as most agricultural machinery relies on diesel fuel. Although Tesla is developing the Tesla Semi for the trucking industry, Tesla has no near-term plans to develop harvestors and other ag equipment. Currently, there are few viable or affordable alternatives to replace diesel engines in agricultural machinery.

Agriculture has evolved tremendously over the past several decades and is likely to continue to become more efficient and dependent upon technology. One of the barriers to technological expansion and information dissemination is access to reliable internet services. The internet has made it possible for a tremendous amount of information exchange in everyday life and the same is true for agriculture. As of 2022, 79% of farms had internet access which is up from 70% in 2012. Part of this modest upward trend could be credited to Elon Musk’s Starlink low earth orbit satellite system which has provided millions of people living in rural or remote areas with reliable, high-speed internet. On a personal note, my family farm has licensed Starlink internet services within the last five years. This is the first time we have been able to stream videos and surf the internet with ease. The expansion of high-speed internet services is also providing remote employment opportunities for rural workers. Such technological advancements could have possible repercussions on the average farmer's age and diversity in agriculture.

Implications for Promised Land

The 2022 Census of Agriculture results highlight the attractive opportunity set for Promised Land’s mission of being the leading rural development partner for Opportunity Zones in American farming communities. The future of agriculture continues to be bright as U.S. farming remains one of the largest and most efficient producers in the world. Promised Land is committed to finding strong farmer partners who are seeking to expand their operations while providing for a more sustainable future for their rural communities. Opportunity Zone tax legislation provides a catalyst for growth and innovation in rural communities that may be struggling with stagnant economic activity and unfavorable demographics as the USDA data suggest. With the USDA expected to expand its funding for young and beginning farmers, conservation efforts, Federal crop protection, and broadband initiatives within the next Farm Bill and related legislation Promised Land plans to work alongside its farmer partners to ensure the promise of American agriculture for generations to come.

On the legislative front, OZ extension and Rural OZ proposals remain top of mind for U.S. Rep. Mike Kelly, Republican from Pennsylvania and chairman of the Ways and Means Subcommittee on Tax.  In this recent Op Ed in Go Erie, he wrote:

“Moving forward, I want more communities to benefit from this legislation the way Erie has. In September 2023, I introduced the Opportunity Zones Transparency, Extension, and Improvement Act. This bipartisan legislation builds upon the success of the 2017 tax law. It would require mandatory data reporting of Opportunity Zone investments to increase transparency and streamline the reporting process. It also extends the investment and deferral window to provide more time to drive more investment into high-impact projects in low-income communities. We are also finding ways to expand Opportunity Zones to rural communities, as well.”

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    Farmer’s Daughter’s Harvest Update

    Farmer’s Daughter’s Harvest Update

    The rumble of the combine going through the field, the flutter of dust and debris through the air, and long hours spent working the same land that my family has farmed for 5 generations are all signs of my favorite time of year, Harvest. Fall is such a special time of year for me as students return to my classroom at the University of Illinois at Urbana-Champaign and the promise of another harvest season comes to fruition. I spent my childhood on the floor of a combine or tractor playing with my miniature versions of equipment and taking the best cab naps while my father, grandfather, and great uncle worked tirelessly to provide for our family. At fifteen, my brother went off to college at the University of Illinois giving me my first opportunity to truly be an active part of the farming operation. That year I learned to drive the combine and have spent every fall since behind the wheel of a John Deere Combine or a grain cart. While my grandfather and great-uncle have since passed, it is incredibly special to me to get to continue my family’s farming legacy while also educating the next generation on the importance of food and agriculture and sustainable farming practices.

    United States Harvest Progress and Supply and Demand Estimates

    Elmore farms finished up harvest in the middle of October while several farm operations in Illinois are still wrapping harvest up this month. We were blessed with adequate rain and growing conditions correlated to strong yields however not every farmer in the U.S. has been quite as lucky. Unfortunately, parts of Iowa, Kansas, Nebraska, and the Southern part of the U.S. have been facing an intense drought affecting crop yields in these areas. These areas have been plagued with extreme drought the past few years meaning crop yields in these areas have been unsatisfactory for multiple years. As of November 6th, the USDA reports that the top 18 corn producing states are 81% complete while soybean harvest in those states is 91% complete. Most farmers in the Midwest should be finished by the time the turkey is cut on Thanksgiving Day.

    The United States Department of Agriculture (USDA) released its November World Agricultural Supply and Demand Estimates on November 9th showing slightly improved yields from last year with an average yield of 174.9 bushels/acre compared to 173.0 bushels/acre last year. On the soybean side, yields remain similar with a projected U.S. average of 49.9 bushels/acre compared to 49.6 bushels/acre last year. On the demand side of the equation, supply is currently rising more than demand as foreign corn production is forecasted higher in Ukraine, Russia, Burma, and Paraguay. The ongoing conflict in Russia and Ukraine had an initial strong impact on global corn markets as Ukraine has historically been a large supplier of commodities for the rest of Europe. However, as the conflict persists, markets have adjusted shifting to strong dependence on South America’s growing production. USDA concluded in August of 2023 that Brazil overtook the United States as the world’s leading corn exporter. Brazil is already on the podium as the largest soy exporter with much of its demand meeting China’s growing commodity needs. The United States is allocating more of its share of corn production towards growing domestic biofuels and vegetable oils while exports are lower. The world’s shift toward more biofuels and larger food production continues to reflect a strong future for U.S. agriculture.

    Farmland Markets Update

    In August, our farmland values update showed that farmland values in the United States remained strong with US farmland appreciating 8.1% on average from 2022 to 2023. Transactions have started to slow recently, and prices are starting to level off in some areas of the U.S.  Some economists believe we may be in for a correction in farmland values. Farmland values are determined by a variety of factors with one of the main drivers being farm incomes and cost of capital considerations. 2021 and 2022 were record years for farm income as strong commodity prices boosted farmer returns which in turn put upward pressure on farmland values. However, 2023 incomes are not looking quite as strong. Growing input prices made planting commodities more expensive while commodity prices have declined from peaks in 2021 and 2022. While net farm income is projected to back off from a peak in 2022, it is still projected to remain modestly above the 20 year averages for net farm income and net cash farm income.

    The other factor impacting farmland values are changes in interest rates. Interest rates have remained relatively low since the mid-1980s making financing options in farmland relatively cheap and putting upward pressure on farmland markets. The figure below shows how the current return to farmland typically tracks with the ten-year contact maturity treasury rate. However, times of extreme interest rate hikes tend to have an adverse impact on farmland values. As the Federal Reserve fights to control inflation through interest rate hikes, it has become more expensive to finance farmland purchases for farmers and investors alike. If the FED continues to raise rates, it will likely put downward pressure on farmland values. However, recent inflation numbers suggest price pressure for consumers is starting to abate suggesting the FED’s interest rate hikes may have come to an end.

    Opportunity Zone Legislation Update

    Since the inception of the Opportunity Zone (OZ) legislation from the Tax Cuts and Jobs Act of 2017, low-income communities designated as OZ’s have seen an influx of capital moving in to help boost local economies and revitalize life for people living in these areas. On September 27th, legislation titled the Opportunity Zones Transparency, Extension, and Improvement Act was introduced to the house by Representatives Mike Kelly and Dan Kildee along with Representatives Carol Miller and Terri Sewell. The legislation is aimed at strengthening the Opportunity Zones policy with more reporting and measuring requirements while expanding incentives to invest in these areas. The legislation aims to reinstate the program and establish a State and Community Dynamism Fund to support public and private investment in qualified opportunity zones. The Economic Innovation Group released a full report with a summary of the legislation here. The legislation has yet to move forward as the House is still backlogged from weeks of trying to find a new Speaker of the House.  However, we are hopeful that legislation will be passed within the next year given its broad, bipartisan support.

    Final Thoughts

    Harvest time for me is always a time of reflection of where we have been and where we are going. At the start of each year there is uncertainty about the prospects of the new year’s harvest and what the future of agriculture looks like. Every person involved in agriculture has their perspective of what the future looks like for the food and agriculture industry. For me, the future of agriculture is visible in my own classroom among the faces staring back at me each day. I am constantly reminded of the bright future agriculture has, seeing young minds so energized to take on issues like food insecurity, environmental concerns, and continued profitability and innovation within the industry. In my mind, agriculture remains one of the safest asset classes as traditional food and fiber will be an essential part of our needs as long as humans roam the Earth.  Some see alternative food sources such as insects and worms as the future however I do not foresee providing much competition to traditional large-scale farm production as the consumer’s mindset towards these protein sources is largely still dismissive.

    In high school, I spent much of my time participating in my school’s FFA (formally known as the Future Farmers of America) chapter where at each meeting we would recite the organization’s creed. I still look at it from time to time to remind me why I do what I do and why there are many, many like-minded farming families across rural America working to ensure the success of the U.S. Agricultural Industry.

    The FFA Creed

    I believe in the future of agriculture, with a faith born not of words but of deeds – achievements won by the present and past generations of agriculturists; in the promise of better days through better ways, even as the better things we now enjoy have come to us from the struggles of former years.

    I believe that to live and work on a good farm, or to be engaged in other agricultural pursuits, is pleasant as well as challenging; for I know the joys and discomforts of agricultural life and hold an inborn fondness for those associations which, even in hours of discouragement, I cannot deny.

    I believe in leadership from ourselves and respect from others. I believe in my own ability to work efficiently and think clearly, with such knowledge and skill as I can secure, and in the ability of progressive agriculturists to serve our own and the public interest in producing and marketing the product of our toil.

    I believe in less dependence on begging and more power in bargaining; in the life abundant and enough honest wealth to help make it so–for others as well as myself; in less need for charity and more of it when needed; in being happy myself and playing square with those whose happiness depends upon me.

    I believe that American agriculture can and will hold true to the best traditions of our national life and that I can exert an influence in my home and community which will stand solid for my part in that inspiring task.

    The creed was written by E.M. Tiffany and adopted at the Third National FFA Convention. It was revised at the 38th and 63rd Conventions.

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