Farming industry

Industry Snapshot

GENERAL INDUSTRY: Agriculture and Food

CAREER CLUSTER: Agriculture, Food, and Natural Resources

SUBCATEGORY INDUSTRIES: Cotton Farming; Fruit and Tree Nut Farming; Greenhouse, Nursery, and Floriculture Production; Hay Farming; Oilseed and Grain Farming; Peanut Farming; Sugarcane and Sugar Beet Farming; Tobacco Farming; Vegetable and Melon Farming

RELATED INDUSTRIES: Beverage and Tobacco Industry; Biofuels Industry; Food Manufacturing and Wholesaling Industry; Food Retail Industry; Food Services; Livestock and Animal Products Industry; Logging Industry; Natural Resources Management; Restaurant Industry; Textile and Fabrics Industry

ANNUAL DOMESTIC REVENUES: US$202.3 billion (Economic Research Service, US Dept. of Agriculture, 2022)

ANNUAL GLOBAL REVENUES: US$14,356 billion (Business Research Company, 2024)

NAICS NUMBERS: 111, 1151

Summary

The farming industry plants, grows, harvests, transports, and markets crops to be used for food, animal feed, biofuel, textiles, and other purposes. Some of the major industrial crops include grain, oilseeds, tobacco, dry beans, potatoes, vegetables, melons, fruits, and nuts. In the United States, the five most significant crops are heavily subsidized by the federal government: corn, rice, soy, wheat, and cotton. The industry encompasses many additional areas of labor beyond simply working the fields, such as agricultural science, engineering, business, and economics.

History of the Industry

The US farming industry dates back to European agricultural practices that were brought to the New World during colonial times and combined with American Indian farming techniques. The southern colonies planted tobacco and cotton and used slave labor to grow them. This slave-based agriculture was central to the nation's economy through the founding of the United States and through the American Civil War, which brought an end to slavery in the 1860s. The system was then transformed into largely one of sharecropping.

The mid-to-late 1800s saw the introduction of more industrial agricultural practices that increased productivity and helped drive US economic growth. The advancement of the farming industry was facilitated in 1887 by the establishment of state land-grant universities. These educational institutions taught and studied agriculture and established a federally funded system of agricultural experiment stations and networks in each state. In addition, as the Industrial Revolution progressed, the farming industry was rapidly mechanized during the late nineteenth and early twentieth centuries. Farmers employing such machines as tractors and combine harvesters could complete tasks at a speed and on a scale previously considered impossible. Mechanized agricultural production thus replaced manual labor wherever possible.

In the early 1930s, the farming industry was struggling in the face of economic and environmental hardships. The Dust Bowl ruined many farms, driving farmers off their land, during a time when the Great Depression had already caused a wave of farm foreclosures. In response, the US Congress passed the Agricultural Adjustment Act of 1933, instituting an emergency program to aid farmers by protecting their equity and increasing the prices paid for farm products. Programs were also instituted to teach farm operators techniques to help protect soil resources.

Renewed demand for the industry was generated by World War II, and farm prices improved. By the mid-1940s and early 1950s, US agriculture entered a sustained period of productivity gains that became known as the Green Revolution. The development of railroad and highway networks and the increasing use of container shipping also were essential to the growth of mechanized agriculture. They expanded the size of the market any given farm could reach by making long-distance shipping of produce affordable. This in turn made it possible for farmers to increase their profits by producing more food than their local regions could purchase, providing a motive to increase productivity beyond the scope of local demand.

Even with long-distance shipping, however, in the later twentieth century, agricultural productivity exceeded demand nationally, creating a surplus of agricultural commodities. The government sought to reduce this surplus, instituting policies designed simultaneously to increase demand and reduce supply. Surplus food, for example, was purchased by the government for use in school lunch programs to feed impoverished children.

In the late twentieth and early twenty-first century, agriculture has become an increasingly global industry. Exports continue to account for approximately 30 percent of total gross farm receipts in the United States, but American farm operators face new challenges, including the emergence of new foreign competitors, trade tensions over new technologies, the impact of climate change, and food safety issues.

Increased use of machines and the introduction of government price supports during the past century allowed farm operators to increase the size of their farms and gain efficiencies. Such advances in productivity through mechanization, plant developments, and new chemical fertilizers and pesticides led to fewer, larger, more specialized farms and a massive migration out of the farming industry.

Also in recent decades, the farming industry has seen consumers becoming increasingly concerned about food safety, nutrition, quality, variety, and prices. Environmental interests have established relationships to help bring environmentally friendly production methods to agriculture. Government expenditures on food and nutrition programs and conservation of natural resources have increased and become more integrated within the industry. The demand for organic food products also continues to expand rapidly.

The Industry Today

The farming industry today is driven by demand from federal agricultural policy programs, food consumption trends, and the crop export market. The profitability of individual farm operators or companies depends on their ability to maximize crop yield, minimize input costs, and minimize risk. Larger farms and companies have the advantage of highly automated technologies and have access to the latest in seed and crop technologies. However, more data indicate that small operations can compete effectively by producing specialty products.

U.S. farms that produce and market crops are becoming larger and more concentrated. There has been an increase in the number of farm operators contracting with large business operations called agribusinesses. These businesses purchase crops from many farms to achieve vast economies of scale. They allow contractors to reduce their risk levels, because the contractors are guaranteed a buyer and a set price for their crops. Other operators sell their products themselves, either to local distributors and suppliers or on commodities exchanges, where prices often are determined by worldwide supply and demand.

The farming industry increasingly encompasses and partners with highly technological businesses that are integral in the production and sales of farm products. These include companies developing farm machinery, fertilizer, and pesticides and herbicides. Some farmers, however, engage in pest management without the use of pesticides. For example, they may use natural predators, such as insects that eat other insects rather than crops, or introduce bacteria that only harm insects or substances that interfere with pests’ reproductive cycles. Such techniques are often referred to as “organic” and are seen as aspects of the larger umbrella practice of organic farming.

In addition to organic farming, the industry employs a host of new and renewed methods of raising crops, including precision farming and bioengineering. Precision farming utilizes technology and data to make efficient decisions about raising crops. For example, precision farmers make detailed maps of their land and use electronic devices to monitor and manage crop conditions. Monitoring devices measure the amounts of water, weeds, and nutrients in the soil and overlay those data on maps created from satellite and aerial photographs. The Global Positioning System (GPS) is used to pinpoint the exact locations of land and nutrients. This information is used to determine where additional fertilizer, herbicides, and water may be required. By reducing unnecessary applications of chemicals, operators reduce their production costs. GPS technology also helps operators navigate equipment accurately through their fields. Sensors on this equipment monitor yields, providing operators with even more information to determine where extra nutrients may be needed or which crops are ready for harvest.

Bioengineers modify the genetic code of plants to provide them with desirable characteristics or remove undesirable characteristics. Some crops are engineered to resist certain pests, tolerate drought, or contain additional nutrients. A growing number of farm operations, however, avoid the use of synthetic pesticides and herbicides and of bioengineered crops altogether. These organic farms take advantage of the higher prices they can charge for certified organic grains, fruits, and vegetables. Since 1990, sales of organic products have grown 20 percent per year, and they are expected to continue climbing. The organic market has allowed many small farms to remain profitable. Organic farmers often need to know more than conventional farmers about the science of agriculture: They must know how plants grow and what helps them thrive. Most organic operators (and some conventional operators) adopt techniques that raise soil quality to naturally resist diseases, weeds, and insects. They might increase soil quality by planting high-nutrient crops in the off-season, for example, or by using conservation tillage practices, such as leaving remains of a crop to decompose in the soil after harvesting.

Advances in the farm industry have created many other disciplines related to agriculture. Agricultural scientists, for example, advise farm operators regarding the optimal techniques to control weeds, apply pesticides, conserve water, or prevent soil erosion. Agricultural sales involves selling farm-related products, which requires knowledge of agriculture. There are many avenues one can take if one is interested in the farm industry in the twenty-first century. Opportunities exist, from owning or managing a large, capital-intensive farm to providing the technology to discover a specialty product that is in high demand. Whatever sector of the twenty-first-century farming industry one embarks upon, one will need to possess a strong business aptitude and the ability to make money in an industry that is expensive to enter and that involves substantial risk.

Industry Outlook

Overview

The outlook for the farming industry shows it to be somewhat stable. This outlook stands in contrast to many years of decline in small farms and in farm-related employment. The number of agricultural workers is expected to decrease by 2 percent between 2022 and 2032. However, jobs for agriculture and food scientists are projected to grow by 6 percent over the same time, which is faster than average.

Market pressures on small and midsize family farms will continue to drive consolidation in the farm industry; however, a growing number of small-scale farms have found success with organic food production and horticulture, which are among the fastest growing segments of the agricultural industry. The larger, more prosperous farms are likely to grow in size in order to achieve greater economic returns on their investments. Larger farms may also continue to receive a greater portion of farm subsidies to help offset losses beyond the operators’ control, such as drought, disease, and depressed markets. Despite this ongoing shift to larger farms, the majority of farms in the United States are family farms according to the Food and Agriculture Organization, meaning that the principal operator and spouse provide most of the farms labor; just 2 percent of US farms in 2021, the latest year for which information was available, were classified as nonfamily farms but accounted for 12 percent of the value of production that year. Through advances in technology, productivity will continue to improve and also result in less farm labor being required to produce crops. Low prices for many agricultural goods have not kept up with the increasing costs of farming. If these conditions continue, it will be difficult for many small farmers to survive. The difficulty of making a living exclusively from farming may continue to require farmers to seek other means of employment in addition to their farms.

There are factors on the horizon that are influencing the changes taking place in agriculture. More domestic consumers are purchasing agricultural products from farmers markets, community supported agriculture (CSA), and other local food distribution systems. Consumers are becoming increasingly health conscious, and the demand for organic produce continues to grow. Such produce is grown mostly on small to midsize farms that can use nonchemical methods of pest control effectively. This type of production within the industry allows farms of small acreage to remain economically viable. Federal, state, and local government programs are increasingly available to provide assistance targeted at small to midsize farms.

Exports for agricultural products have been rising, reflecting international demand, reaching a record of $196 billion in 2022, despite a strong US dollar. Sixty percent of US agricultural exports were sent to East Asia and other North American countries. Rising incomes in countries such as China, India, Indonesia, and Brazil increased the demand for diversified diets in those countries, leading them to seek products beyond their traditional foods. An increased global consumption of biofuels and related research and technology for the development of energy self-sufficiency added further to the US agriculture industry. This type of pressure on supply and price is strongly shown by the case of corn. This farm commodity dramatically affects the broader structure of global food markets, and at one point 25 percent of the corn crop was found to be used for ethanol production. In the future, whether corn will be used that intensely for fuel is critically dependent on the price of oil and also on the politics of biofuels. Cereals and oilseeds can also be used in multiple ways, and the competition for these commodities is expected to rise among businesses.

Climate change also threatens the productivity of the entire global food system. Some food supply and world economics experts foresee a looming food crisis that will first affect those populations that are already food-insecure and that may then spread to other populations. This could place a high demand on the farming industry in countries where high-efficiency agriculture continues to exist and thrive.

Employment Advantages

Those who work in the farming industry directly or indirectly enjoy the variety of the work. Many are exposed to rural settings and the satisfaction of being self-employed and working the land. Many small-farm operators work alongside family members, strengthening their families’ cohesiveness. Food policy and sustainable agriculture are rapidly gaining traction as fields of great concern to many people, and many young people are passionately committed to finding ways to make sustainable farming pay. It remains unclear how many will succeed, but resources to help them are increasing. These include programs to develop cohesive local food production, processing, and distribution systems called foodsheds, as well as resources to enable small and midsize farms to compete with large farms. If these programs succeed, small-scale farming is poised to be an extremely exciting and fulfilling, albeit difficult, career choice.

Annual Earnings

The farming industry is ever changing and depends on several factors, including market pressures, alternative-fuel consumption, and politics. In 2022, the US farm industry realized total gross incomes of $202.3 billion, according to the USDA’s Economic Research Service and agricultural exports reached $196 billion in 2022. In 2022, agriculture, crops, and related industries added $1.420 trillion to the gross domestic product of the US.

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