The organization of farming

If a family farm is defined as one for which the farm operator and family members supply at least half of the labour, the majority of farms in the world are family farms. Family farming is carried on under a wide range of conditions, from the small farms of Asia to the highly mechanized farms of Canada, the United States, and the United Kingdom.

The family farm may be owned by the farmer or rented. The most rapidly expanding type of tenure in the United States is that in which the farmer owns part of the land and rents the remainder; almost one-third of all farmland in the United States consists of part-owner farms. This arrangement enables the farmer to increase the size of the farm through renting and to invest capital in machinery and livestock.

Family farms may be large in terms of total assets or sales. The relative importance of family farms among the largest farms in the United States has increased over the past few decades. One of the more striking changes in industrial countries has been the increased importance of nonfarm income received by farm families. In the United States, Canada, and Japan more than half of the total income of farm families comes from nonfarm sources, while in most western European countries at least a third of the income of farm families is earned outside of agriculture.

A system of tenant farming known as sharecropping developed in the South of the United States following the freeing of the slaves in the 19th century. It was essentially an adjustment of the plantation system created to permit the owners to maintain a large measure of control over farm operations. The sharecroppers usually supplied only the labour, while the owners provided animal power, machinery, and most of the other inputs in the form of an advance. The sharecroppers received what was left after they had paid back the owners—generally about half of what had been produced.

For various reasons, including the exodus of blacks from American agriculture, the introduction of farm machinery, and the reduction in the acreage of cotton, the number of sharecroppers in the South has diminished drastically since 1935.

In the second half of the 20th century, there began a growth of large-scale farming run as a business enterprise. Such “industrial farms” are of growing significance in world agriculture. There are farms covering extensive areas of land in Africa, South America, Australia, and the United States, where farms became larger as their numbers grew smaller. Such large farms tend to specialize in the production of vegetables, fruits, cotton, poultry and poultry products, and livestock.

If they were free to choose, most farm families would want to own the land they farm. Wherever collectivization of private farmers has been carried out, it has required the use of force or the threat of force. But if family farming is to be viable, it must function efficiently, which means that farmers must have access to adequate sources of credit; must be able to obtain fertilizers, machinery, and other equipment; and must be able to market their produce easily. Laws and institutions must be sufficiently flexible to permit the average size of farms to increase as economic growth occurs.

Collective farming did not fulfill the hopes of its early advocates. In the Soviet Union the collective farm was used by Joseph Stalin as a means of exploiting the rural population in order to finance the expansion of industrialization. In the post-Stalin era the incomes of collective farm members increased, and it was believed that many remaining difficulties could be eliminated if the farms were given greater freedom in running their affairs. Nothing in the concept of the collective farm required the imposition of delivery quotas, centralized control of farm investment, or a particular organization of farm labour. Another weakness of collective farms was the failure to provide adequate incentives for individual members. Because of the difficulties involved in rewarding members for their individual work on the common land, the household plots of the members all too often tended to flourish at the expense of the collective.

There is no ideal form of organization that fits all farming. Under some circumstances the ownership of land may absorb so much capital that other investments, such as machinery and livestock, are neglected. Land rental may be a better alternative for many families, especially those with limited capital. The Israeli kibbutz has made it possible for many people with little or no agricultural experience to learn farming techniques quickly and efficiently. The most important consideration is whether the other institutions—economic, political, and social—are adequate to provide farmers with a wide range of resources and alternatives.

Useful introductory and general treatments are John B. Penson, Jr., et al., Introduction to Agricultural Economics, 6th ed. (2014); Andrew Barkley and Paul W. Barkley, Principles of Agricultural Economics, 2nd ed. (2016); Jeffrey H. Dorfman, Economics and Management of the Food Industry (2014); and George W. Norton, Jeffrey Alwang, and William A. Masters, Economics of Agricultural Development, 2nd ed. (2010).