The U.S. Agriculture Industry and How It Works

Agriculture is the process of producing food and other products by growing plants and raising animals. It's also called farming.

In the United States, there are 2.05 million farms, of which 97% are family owned. There is a competitive advantage to family farms because they are able to pass on their understanding of local soil conditions and weather patterns. Despite this, most small farms make only $350,000 a year before costs. 

U.S. agriculture is dominated by the 3% of farms that are large or very large. Large farms have an income of $1 million or more. These large farms are successful because they focus on one crop. This practice is called monoculture, and it’s very cost-effective.

Large agricultural corporations are also better equipped to deal with volatile food prices. Corporations can afford the staff needed to track and profit from the commodities market.

Through this auction, commodities traders determine the prices on an open exchange. As a result, food prices change daily because they are traded on the market. This introduces additional risk for farmers.

To lower the risk, farmers can buy futures contracts that promise to sell at an agreed-upon price on a specific date. Farmers take their chances on what the price will be when it’s time to harvest. Either way, they are betting that their costs will be lower than their future revenue. Small farmers aren’t as sophisticated as corporations in using the futures market to offset risk. This gives the large corporations another advantage over small farmers. 

U.S. Agriculture Components

In the United States, agriculture generated $374 billion in revenue in 2018, when adjusted for inflation. Around 75% of this income was from meat and feed for the animals that produce it. By comparison, just 17% of U.S. agricultural receipts were from non-meat food for people. This includes fruits, nuts, vegetables, wheat, and rice. The remaining 10% of receipts were from cotton, tobacco, and miscellaneous products.

Animal feed comprised 25% of total receipts in 2018. This is primarily corn and soybeans. Sorghum, barley, and oats are also used for feed.

The nation’s biggest crop is corn, and the United States is the world’s largest producer. The 90-million acre “corn belt” is mostly in Illinois, Indiana, Iowa, Missouri, and Nebraska. Corn is also used for cereal, alcohol, and corn syrup. Another 40% of the crop is used for fuel ethanol. In 2017, 17% of U.S. corn was exported.

U.S. Meat Production

Half of U.S. agriculture revenue is from meat production. Most of this is cattle, dairy, poultry, hogs, and eggs. A smaller proportion is bison, rabbits, sheep, goats, and ostriches.

The United States is the world’s largest beef producer. Large farms with 100 or more head of cattle produce 56% of all beef cows. The cattle forage on grasslands before they are shipped to grain feedlots for the last 90 to 300 days. Enormous feedlots with 32,000 head of capacity finish 40% of U.S. cattle.

The United States is also the world’s largest poultry producer. Almost 18% is exported. The United States is the world’s second-largest pork producer and the second-largest pork exporter and importer.

Agricultural Exports

Exports totaled $143.4 billion in 2018. Until 2018, China was the largest export recipient, but the trade war initiated by President Donald Trump reduced exports of soybeans and other agricultural products. As a result, Canada became the largest export market in 2018. 

• Canada: $20.7 billion
• Mexico: $19.0 billion
• European Union: $13.5 billion
• Japan: $12.9 billion
• China: $9.2 billion

Industrial Agriculture

The success of modern U.S. farming is a result of industrial agriculture. This is when mass-production techniques are used to create food. A big component is monocultural growing of the same crop in the same large field. Chemical fertilizers, pesticides, and feed additives must be used to boost production.

Between 1948 and 2015, industrial agriculture doubled U.S. farm production. At the same time, both the amount of land tilled and the number of farmers declined.

Industrial agriculture began in the 1900s. Chicago’s Union Stock Yard slaughterhouse used conveyor belts to increase meat production. Henry Ford said industrial slaughterhouse operations inspired him to use assembly lines in his auto production. 

In the late 1920s, chickens were the first animals to be raised in economical but large, cramped facilities. In the 1970s, pork and beef farmers followed suit. This type of factory farming is called concentrated animal feeding operations.

To prevent illnesses from these cramped conditions, animals are fed antibiotics. In 1951, the Federal Drug Administration approved antibiotic use because it also increases weight gain of the animals. Some scientists estimate that 80% of all antibiotics sold are used in agriculture. There are now concerns that this use has increased antibiotic-resistance in human communicable diseases.

Sustainable Agriculture

In response to the issues of industrial agriculture, many farmers are adopting more sustainable techniques. Sustainable agriculture incorporates environmental, animal, and farmworker well-being into a profitable business model. It uses methods that improve soil health, minimize water use, and reduce pollution levels. It’s called sustainable because it doesn’t degrade the natural resources needed for future farming.

Sustainable farming returns to traditional methods, such as crop rotation. It avoids monoculture crops. This not only improves the soil but also protects the farmer from price swings or diseases in a single-crop harvest. It nurtures the soil with cover crops, compost, and mulches. It avoids confined livestock production. Instead, it incorporates livestock into crop production.

Sustainable agriculture relies on renewable energy and organic farming methods. This reduces the burning of fossil fuels that contribute to the greenhouse gases that cause global warming. A higher global temperature has caused the climate to change. It has created extreme weather that is threatening the U.S. agriculture industry. For example, Midwest flooding in 2019 interrupted the calving season and delayed corn planting.

The Important Role of the U.S. Department of Agriculture

The U.S. Department of Agriculture (USDA) plays a huge role in supporting the U.S. agriculture industry. America’s food supply must be protected from extreme weather like droughts, tornadoes, and hurricanes. The government has a role in ensuring food production during wars, recessions, and other economic crises. Food production is considered to be more important to the nation’s welfare than other business products.

To accomplish its task, the USDA has 29 agencies and offices. Its 100,000 employees work at 4,500 locations. USDA provides research, animal and plant inspections, and nutrition guidelines.

The most wide-ranging USDA function is to manage farm subsidies. In fiscal year 2018, farm subsidies totaled $4 billion. The agency pays farmers when either their total revenue or individual crop prices are below average. It also offers loans when market prices are below established rates. In 2017, Texas, Nebraska, Kansas, Arkansas, and Illinois received 38.5% of the total subsidies.

The government subsidizes just five crops: corn, soybeans, wheat, cotton, and rice. There are smaller subsidies for peanuts, sorghum, and mohair. Producers of meat, fruits, and vegetables can benefit only from crop insurance and disaster relief.

The USDA Farm Service Agency helps the nation’s farmers with loans, financial aid, and technical assistance. It also provides emergency assistance throughout rural America, even assistance to combat bee colony collapse disorder.

The USDA offers resources to farmers affected by the opioid crisis. A 2017 survey found that 74% of farmers have been directly affected.

The USDA is also responsible for several non-farm food programs:

• The Supplemental Nutrition Assistance Program provides subsidies to purchase food for low-income families.
• The Supplemental Nutrition Program for Women, Infants, and Children provide food to more than half of all U.S. infants.
• In fiscal year 2018, the National School Lunch Program served 4.8 billion free or reduced-price lunches to eligible children.
• The School Breakfast Program served 2.4 billion breakfasts.
• The Summer Food Service Program makes sure children have food during summer recess.
• The Child and Adult Care Food Program feeds 4.2 million children and 130,000 adults in care facilities.

The USDA also includes the U.S. Forest Service. It manages the national forests and grasslands and fights a growing number of wildfires.