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Production
Expenses
The major agricultural commodities produced in the U.S. have
relatively low per-acre value. Although crop yields have increased
over time due to improved plant genetics and more effective production,
fertilization, and pest control programs, crop prices have “failed
to keep pace with inflation.” For example, the average price paid
to farmers for soybeans in 2000 was $4.40 per bushel, the lowest average
price since 1972, and a 40 percent decline since 1996. USDA tracks both
prices received for farm products and prices paid for production inputs.
Using the 1910-1914 period as a base, the prices received by today’s
farmer have increased by a factor of six. However, prices paid by farmers
for production inputs have increased by a factor of sixteen!
Thin profit margins have forced producers to seek efficiencies in all
aspects of production. Efficiencies of scale favor large producers who
can make the most effective use of large, expensive machines. In crops
such as corn and soybeans, commercially viability is based on producing
"in volume." These forces have dramatically changed the size and
numbers of farms.
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