Small, midsize farms face shrinking numbers, sales while larger farms see growth in both fields

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Farm

Josh Hladik hopes to go into the family business. His family has farmed in Saunders County for 150 years, nearly a century on the farm outside Valparaiso, Nebraska, where Josh grew up, and now helps run with his brother and father. Someday he hopes to quit his other job selling seed and fertilizer, and farm full time there, like generations of Hladiks before him.

But the way things are now, Josh wonders if he’ll ever be able to live off farming alone.

“A publicly traded business would probably not be operating on the margins we’re making now,” he said. “If the cost of business gets too high, the business decision would be to step aside.”

Like many farmers in Nebraska, the Hladiks are finding it harder to compete in an increasingly top-heavy industry. Caught between falling prices and rising costs, small and midsize farms across the state have lost much of their land and revenue to bigger operations over the last two decades, according to data from the U.S. Department of Agriculture.

As a result, the number of smaller farms in Nebraska has declined  while the number  of large farms has increased.

In 1997, farms with 1,000 or more acres harvested 35 percent of Nebraska’s cropland, compared with 33 percent from farms with fewer than 500 acres. But in 2012, the most recent year for which the data are available, the large farms had increased their share of state cropland to 60 percent, while the smaller farms harvested just 19 percent of available land.

US State County-Level Map Example
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The map shows the change in shares of cropland harvested by 1,000-acre farms across Nebraska from 1997 to 2012. Two counties in orange had a decline in shares owned by larger farms. The greatest percentage increases are in darker green.

Large farms also account for more of the ag sales in Nebraska.

Farms with $1 million or more in annual sales made up 8 percent of the total number of farms in the state. But they accounted for 69 percent of all agricultural sales in 2012. Those farms had less than half of the total sales, 48 percent, in 2002.

There are more big money farms and fewer small sellers than there were back then. Farms with more than $500,000 in annual sales more than tripled from 1997 to 2012, while the number of operations with revenue between $100,000 and $499,999 dropped 20 percent.

The issue of inequality in agriculture is one Nebraska has grappled with for a long time, said Jay Rempe, senior economist at Nebraska Farm Bureau.

To be sure, farm consolidation means more efficient and productive farms, which helps keep food prices low for consumers and helps provide people with a wide array of food choices, he said.

“The consolidation of farms and ranches has been occurring for years, at least since the end of (World War II), driven largely by adoption of new technology and economies of scale,” Rempe said. “Beginning farmers don’t have the resources to compete with larger farmers.”

All three of the Hladik men who work on the farm have had to take second jobs . Josh doesn’t see that changing until they can acquire more land. Currently Hladik estimates their land to be about 1,000 acres, but he doesn’t see a sustainable business until they get to 1,500. But in all three land auctions Josh has bid at, he has been outbid by larger or more experienced operations.

That trouble outbidding larger competitors is typical among smaller farmers in Nebraska, said Josh’s older brother Johnathan, the policy program director at the Center for Rural Affairs in Walthill, Nebraska.

“If you’ve been farming 1,000 or more acres for 30 years, then you can pay more at an auction because you have all that ground that collectively earns money if you have a good year,” Johnathan said.

But for Josh, finding a way to compete with larger farms is more than a business priority. It’s crucial to preserving a way of life that means more than the bottom line.

“If we didn’t take pride in what we do and in our land we wouldn’t be in the business,” he said. “We like seeing tangible results from the hard work and the process we go through all year. It makes it worth it.”

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