5.7 Spatial Organization of Agriculture

In the United States, the number of farms peaked at about 6.8 million in 1935. The 2022 Census of Agriculture counted about 1.9 million, with an average size of 463 acres, far bigger than in the 1930s. Similar consolidation has happened in Canada, Western Europe and Australia.

This doesn't mean family farms have vanished. The U.S. Department of Agriculture classifies the large majority of farms, including many very large ones, as family-owned. The change is that a smaller number of large operations now produce most of the output, while many small farms earn most of their income off the farm.

Economies of scale means the cost of producing each unit falls as an operation grows. A large grain farm can spread the cost of a combine harvester over thousands of acres and buy seed and fertilizer in bulk at lower prices. That gives big farms a cost advantage and pushes smaller ones to grow, specialize or sell.

Technology adds to this advantage. GPS-guided tractors, precision application of fertilizer, drones, improved seeds and large-scale irrigation raise output per acre and per worker. In geographic terms, technology has raised the land's carrying capacity, the number of people a given area can support.

Agribusiness is the whole system of businesses connected to food production: seed and chemical companies, equipment makers, farms, processors, shippers, wholesalers and retailers.

Vertical integration means one company owns or controls several steps in the chain. The U.S. chicken industry is a clear example. Large companies own the birds and feed, hire farmers as contract growers to raise them, then slaughter, process and sell the chicken under their own brands. Most U.S. broiler chickens are raised this way.

Power is also concentrated within some steps. After a wave of mergers completed in 2017 and 2018 (including Bayer buying Monsanto), a handful of companies sell more than half of the world's commercial seed. In U.S. beef, the four largest meatpackers handle about 85% of fed-cattle slaughter, according to USDA. Critics say this concentration lowers the prices farmers receive; supporters say it brings efficiency and cheaper food.

An agricultural commodity chain is the series of steps that links a farm product to the consumer: inputs, growing, processing, packaging, shipping, distribution and retail. Following a chain shows where money is made and who has power.

Take coffee. A smallholder in Ethiopia's highlands grows and picks the cherries, a cooperative processes them, an exporter ships the green beans, a roaster in Europe or North America roasts and brands them, and a café or grocery sells the result. Most of the final price is added after the beans leave the farm, in roasting, branding and retail, so farmers often receive only a small share.