ALABAMA AGRICULTURAL EXPERIMENT STATION AUBURN UNIVERSITY GALE A. BUCHANAN, DIRECTOR AUBURN UNIVERSITY, ALABAMA i_i y *r{ V4'f Z 1, BULLETIN 535 FEBRUARY 1982 CONTENTS Page OBJECTIVES. ............................................. ...................................... 4 5 DATA AND METHOD. Measurement and Analysis............................6 Sample Representativeness............................6 FINDINGS ...................... 7 ....... . .7 Agricultural Structure Issues.......... Commitment to Farming..............................9 Small Farm Problem................................ The Entry Process................................... Prospects for the Farm ............................... SUMMARY AND CONCLUSION................................ 10 11 16 23 LITERATURE CITED ........................................ 27 APPENDIX A.......................................... APPENDIX-B ............ 29 30 ............................. FIRST PRINTING 3M, FEBRUARY 1982 Information contained herein is available to all without regard to race, color, sex, or national origin. Alabama Farm Operator Perspectives On A Changing Structure of Agriculture* JOSEPH J. MOLNAR** REFERS TO THE organization and composition of the agricultural sector (12). Reflecting a variety of features that describe the distribution of resources in the industry, structure is defined by the number, size, and organizational arrangement of farms (7). Structural changes in American agriculture are of concern for several reasons, including their effect on people, on communities, and on the cost, stability, and availability of the nation's food supply. Technological advances have reduced the need for people in farming. Mechanization expanded the acreage a single individual could capably operate, displacing laborers and tenants. As most rural areas offered no substitute for the employment lost from the transition to large-scale farming, many individuals and families migrated to find jobs and better opportunities in cities and other regions (7). The availability of these opportunities also hastened the exit of labor from low-pay, low-skill, farm occupations, further increasing the pressure to mechanize. Depopulated rural communities were affected in other ways by a concentrated structure of fewer and larger farms. Locally-owned businesses that serviced agriculture dwindled as a smaller number of large operations tended to bypass small town firms in favor of more direct sources of supply (3). Because buying practices for fuel, equipment, and other farm inputs shifted away from local suppliers, many lively rural communities have disappeared and others have fewer, more tenuous ties to agriculture (5). Concentration of agricultural holdings is reflected in larger size *Contribution to Regional Project S-148, "Changing Structure of Agriculture: Causes, Consequences, and Policy Implications." **Associate Professor, Department of Agricultural Economics and Rural Sociology. STRUCTURE 4 ALABAMA AGRICULTURAL EXPERIMENT STATION farms that focus on production of one or two crops or animal enterprises. Although not an imminent development in Alabama, concentrated structure could present a threat to public confidence in the equity and fairness of the agricultural system. If a structure with many small, privately owned farms characterized by relatively easy entry or exit is largely replaced by a narrow segment of largescale operations, the consequent difficulty in getting started in farming may undermine the belief in an open economy guided by freely functioning processes. It also may stir public resentment toward institutional arrangements and landholding patterns that contribute to a concentrated structure (2). For the past several decades, Alabama farms have been declining in numbers and increasing in size, paralleling a national trend toward concentration (1). However, the 1978 Census of Agriculture shows a slight increase in the total number, to 57,540 farms from 56,678 farms in 1974. Similarly, average farm size has decreased slightly to 201 acres from 209 acres in 1974 (13). Some of the most recent changes may be attributable to supplemental estimation methods designed to more accurately count small farms, as well as definitional changes between years, rather than to a break in the actual pattern of fewer and larger farms. Although many people, particularly blacks (9), have been displaced by the trend toward concentrated holdings, it has occurred for a number of useful and positive reasons. Larger units may more readily mobilize capital and they have greater access to production efficiencies associated with mechanization of standard repetitive tasks (3). Productivity gains, increases in economic efficiency, and competitive advantages that underlie the shifting structure also have had long-run social costs that have stimulated a great deal of interest and attention (11). OBJECTIVES The purpose of the study on which this report is based was to examine selected issues and trends in the structure of agriculture from the perspective of the Alabama farmer. The report is addressed to farmers, extension personnel, and others in the agricultural community concerned with the future of farming in Alabama. The results should provide a statistical profile of Alabama farm operator opinions which may be used to anticipate policy preferences and concerns for the future. One objective was to profile farm operator perceptions of several ALABAMA FARM OPERATOR PERSPECTIVES 5 central issues in the ongoing dialogue over significant changes that have occurred in the number and type of agricultural firms. These include the notion of family-operated farms and their relationship to corporate agriculture, commitment to farming, and the special needs of small farms. In addition, perceptions of entry problems for young farmers were examined. Attention was given to beliefs about the entry process and comparisons made by age of survey respondents. A second objective was to examine sources of change or influence on farm operator plans and decision making. The perceived importance of these factors may provide some insight into the future of Alabama agriculture as an aging population of farmers nears retirement and their replacements encounter increasing difficulty in entering the business. A third objective was to examine the relationship between attitudes and perceptions of agricultural issues and the respondents' positions on selected dimensions of agricultural structure. Multiple regression analysis was employed to address this objective. DATA AND METHOD Data for this study were obtained from a statewide random sample of Alabama farmers through a mail survey conducted in the spring of 1981. As a contribution to a larger regional project, the questionnaire was designed to assess farmer beliefs about various issues related to the structure of agriculture and other matters relevant to policy, decision making, and social change in the State. Questionnaire content reflected the ongoing discussion of structure issues in the professional literature as well as concerns relating to changes in agriculture as they have surfaced in Alabama and other parts of the country. The sample was drawn from an exhaustive listing of Alabama farm operators maintained by various agencies and organizations serving the State. From a master list, a sample of 1,005 farm operators was drawn, representing 1.75 percent of the 57,540 Alabama farmers reported in the 1978 Census of Agriculture (13). In January 1981, a 10-page questionnaire and a cover letter explaining the purpose and intent of the study were mailed to each farmer in the sample. One week later, a reminder postcard was sent. Two weeks later, a replacement questionnaire was mailed to nonrespondents. In another three weeks, a third questionnaire was sent to the remaining nonrespondents (4). 6 ALABAMA AGRICULTURAL EXPERIMENT STATION A total of 705 farmers returned completed, usable questionnaires, representing a 70.1 percent completion rate. At least one operator in each county returned a questionnaire. Another 15 percent of the sample returned blank questionnaires or were reported as retired, deceased, or no longer in farming. Measurement and Analysis Beliefs about agricultural structure, commitment to farming, small farm problems, and the entry process were assessed with fixed-format response categories, "'strongly agree" to "strongly disagree." For purposes of analysis, these responses were collapsed into three categories, "agree," "undecided," and"disagree." Sets of questionnaire items were examined in terms of patterns of agreement or disagreement. Similarly, a series of factors was related as helping or hindering the farm operator's future in the business. To measure agricultural structure dimensions, questions used in the Census of Agriculture were employed whenever possible. Gross sales was obtained by asking, "What was the approximate gross value of farm sales from this place in 1980?" The seven response categories ranged from "less than $2,500" to "$100,000 or more." Land operated was derived from responses to a sequence of questions asking for land owned, land rented from others, and land rented to others. These data were summarized in six categories ranging from "less than 49 acres" to "more than 1,000 acres." Respondents reported their off-farm work status as "did not work off the farm," "worked part-time," and "worked full-time," coded as 1 to 3. Farmers were asked to indicate the percentage of total family income from farming in five categories ranging from "less than 19 percent" to "more than 80 percent." Education was obtained by asking, "What is your education?" Six categories were provided ranging from "less than high school" to "completed post-graduate degree." Respondents reported their age in years. To relate attitudes to position on various structural dimensions, such as size of farm, stepwise multiple regression was employed. This procedure was used to identify attitudinal patterns associated with each structural dimension. Sample Representativeness In order to assess the degree to which the sample represents the actual population of Alabama farmers, certain comparisons were ALABAMA FARM OPERATOR PERSPECTIVES 7 TABLE 1. DISTRIBUTION OF FARM OPERATORS BY GROSS FARM SALES IN 1981: ALABAMA FARMER SURVEY AND 1978 CENSUS OF AGRICULTURE STATE TOTAL Gross farm sales in 1980 Less than $2,500 ......... ....... $2,500 to $4,999................ $5,000 to $9,999 ................ $10,000 to $19,999.............. $20,000 to $39,999 ............. $40,000 to $99,999.............. $100,000 or more .............. (Missing) .................. Number....................... Sample 24.6 17.7 16.2 12.0 9.7 11.5 8.2 (58) 647 Percent Alabama total 39.9 16.5 13.4 8.9 6.3 7.8 7.1 Difference - + + + + + + 15.3 1.2 2.8 3.1 3.4 3.7 1.1 TABLE 2. DISTRIBUTION OF FARM OPERATORS BY NUMBER OF ACRES OPERATED IN 1981: ALABAMA FARMER SURVEY AND 1978 CENSUS OF AGRICULTURE STATE TOTAL Farm acres operated in 1980 Less than 10 acres .............. 10-49 acres.................... 50-179 acres................... 180-499 acres.................. 500-999 acres.................. 1,000-1,999 acres ................ 2,000+ acres................... Number ......... ................ Sample .3.1 11.7 35.9 27.4 11.6 .5.1 5.2 705 Percent Alabama total 7.8 28.2 38.3 17.2 5.3 2.2 1.0 Difference 4.7 -16.5 - 2.4 10.2 6.3 2.9 4.1 - 57,540 made between the sample and Census of Agriculture profiles of farms. When gross farm sales were compared, it was found that the sample underrepresents small farms with less than $2,500 in sales (-15. 1 percent) but closely represents all other sales categories, table In a similar comparison for farm acres operated, farms in the smaller severely in the 10-49 acre category (-16.2 percent), while the 180-499 acre category is somewhat overrepresented (10.2 percent), table 2. Thus, the sample may underrepresent small farms and slightly overrepresent middle-sized farms. Further comparisons are made in Appendix A. These data show that partnership and incorporated farms are overrepresented in the sample, as are older farmers. FINDINGS Agricultural Structure Issues Responses to questions about selected agricultural structure issues revealed that most farmers (83. 1 percent) saw inflated land acreage classes are underrepresented in the study, most 8 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 3. PERCEPTIONS OF SELECTED AGRICULTURAL STRUCTURE ISSUES: ALABAMA FARMERS, 1981 Item Agree Pet. Response Undecided Pet. 9.0 13.9 Disagree Pet. 7.9 8.5 No answer No. (30) (30) I. Inflated land values are a major threat to the family farm .................. 2. We should have laws that protect the family farm.......... 3. Large farms get more than their share of government benefits ........... 4. Corporate farms should have stricter financial reporting requirements than individual or family-owned farms............. 5. Limits should be placed on the amount of farmland a nonresident of the State can own ............. 6. The family farm should be preserved no matter the cost to consumers .......... 7. Corporate farms should receive the same tax breaks as family farms ......... N= 705 83. 1 77.6 65.8 20.5 13.7 (23) 61.5 20.7 17.8 (25) 61.0 13.2 25.8 (25) 43.6 26.0 30.2 (29) 29.0 23.2 47.8 (29) values as a major threat to the family farm and a similar proportion said laws should be passed to protect the family farm, table 3. Most respondents seemed to express a deep-seated concern for the longterm future of the family farm. The belief that large farms got more than their share of government benefits was voiced by 65.8 percent of those surveyed. A majority (61.5 percent) also felt that corporate farms should have stricter financial reporting requirements. About the same proportion expressed agreement with a need for limits on the amount of farmland a nonresident of the State can own. Such limits are already in force or have been discussed in other states. Farmers were divided over item 6, which suggested that the family farm should be preserved no matter the cost to consumers. Twenty-six percent were undecided on this question. As consumers themselves, the farmers seemed to appreciate the need for balanced approaches that would not seriously disrupt the population at large. Most respondents did not agree that corporate farms should receive the same tax breaks as family farms. More than 26 percent ALABAMA FARM OPERATOR PERSPECTIVES 9 were undecided, possibly because many family farms are incorporated for tax and inheritance purposes, and because nonfamily corporate farms are relatively uncommon in the State. Although 700 farm corporations were reported in Alabama in 1978, only 7 percent were nonfamily-held organizations. In 1974, 279 farm corporations were reported in the State. Commitment to Farming Reasons for staying in farming and weathering the many difficulties and uncertainties of agricultural production also were explored. TABLE 4. SELECTED SOURCES OF COMMITMENT TO FARMING: ALABAMA FARMERS, 1981 Item Agree Pet. Response Undecided Pet. No answer Disagree Pet. No. 1. Being my own boss is one of the major reasons I enjoy farming ................. 2. To me, having the freedom to make my own decisions is one of the major advantages of farming.......... 3. For me, farming is strictly a business ............... 4. I regard myself as the kind of person who is willing to take a few more risks than the average farmer .............. 5. Even if his income has dropped to a low point, a farmer should try to stick it out so his children can grow up on a farm ...................... 6. If I had a son growing up at present, I would like to see him become a farm er..................... 7. There are so many good things about farming that a person should be willing to get along on a lower income to keep these advantages .............. 8. The recognition I get from my friends and neighbors is one of the main reasons I enjoy farming ...................... N=705 86.7 4.0 9.3 (37) 86.2 68.1 4.7 6.5 9.1 25.4 (29) (30) 60.0 17.0 23.0 (27) 44.1 22.9 33.0 (23) 42.5 29.3 28.2 (22) 41.2 14.0 44.8 (27) 27.5 12.5 60.0 (33) 10 ALABAMA AGRICULTURAL EXPERIMENT STATION A large proportion (86.7 percent) felt that being one's own boss Was one of the major reasons they enjoyed farming, table 4. Freedom to make one's own decisions expressed a similar idea and received similar support. More than two-thirds indicated that, for them, farming was strictly a business. Many regarded themselves as willing to take more risks than the average farmer. Independence and a desire for self-regulated entrepreneurship seemed to underlie the occupational commitment of most Alabama farmers. Nearly half the farmers thought that a farmer should stay in business simply to provide his children with a farm experience. Almost a third disagreed with this item. Less than half the respondents wanted to see their sons become farmers. Despite their own choice of lifestyle and activity, the farmers seemed to be expressing a traditional view of upward mobility off the farm toward occupations in business, the professions, and other industries. Almost 30 percent were undecided on this item. Farmers were not willing to sacrifice economic well-being simply for the sake of an agrarian lifestyle. More disagreed with the suggestions that the advantages of farm life could outweigh a low income, although nearly. as many agreed. Response's to item 8 indicate that most farmers are not in business for social reasons. Most disagreed that recognition from friends and neighbors was a major reason they enjoyed farming. Small Farm Problem Farms are small by various definitions of land holding, tenure, sales, or income. The term generally refers to a class of operations not accessible to the economies of scale and the technological and marketing advantages enjoyed by larger units. Small farms are operated by a diverse group of retirees, part-time operators, hobby farmers, and full-time low and moderate-income farmers. Four statements about conditions facing the small farmer were posed to the respondents, table 5. Most respondents agreed that special government programs should focus on the problems of the small farmer. Along the same lines, most felt that the small farmer had not received a fair share of government benefits (69.8 percent). Farmers were divided over whether it was advisable to encourage small farmers to stay in agriculture, but more disagreed. Over 60 ALABAMA FARM OPERATOR PERSPECTIVES ALABAMA FARM OPERATOR PERSPECTIVES TABLE 5. PERCEPTIONS OF SMALL FARMER PROBLEMS IN AGRICULTURE: ALABAMA FARMERS, 1981 11 1 Item Agree Pet. Response Undecided Pct. No answer Disagree Pct. No. 1. Special government programs should focus on the problems of the small farmer ............... 2. The small farmer has not received a fair share of public services ......... 75.1 12.2 12.7 (22) (24) 69.8 15.4 14.8 3. Because of the realities of agriculture today, it is unwise to encourage small farmers to stay in agriculture ............. 4. Special help for small farmers is really just another welfare program ............... N=705 36.6 18.7 44.7 (22) 24.0 15.8 60.2 (29) percent disagreed with the idea that special help for small farmers is a form of welfare. Most farmers thought that small operations had a legitimate right to assistance tailored to their own special problems. The Entry Process The future structure of agriculture will be determined by the number and type of individuals entering the industry in the next few years. The advanced age of today's farm operators suggests that a great number of operations will become available to young operators or will be absorbed into existing farms in the near future. One section of the survey was used to determine farmer perceptions of the entry process. Most (79.7 percent) agreed that the lack of land for sale at any price is a problem for beginning farmers, table 6. Almost as many (71.8 percent) agreed that government programs should focus on getting young people started in agriculture. Considerably fewer (51.4 percent), however, thought that we should try to get farmland into the hands of as many people as possible, and almost a third disagreed. Eight frequently given responses to the question, "What do you think is the biggest problem the beginning farmer must overcome to be successful?" were categorized according to age of respondent, 12 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 6. PERCEPTIONS OF THE AGRICULTURAL ENTRY PROCESS: SURVEY RESPONSES OF ALABAMA FARMERS, 1981 Item Agree Pct. Response Undecided Pct. Disagree Pct. No answer No. 1. The lack of land for sale at any price is a real problem for beginning farmers in this county ................... 2. Government programs should focus on getting young people started in agriculture ........... 3. We should try to get farmland into the hands of as many people as possible ............. N=705 79.7 8.2 12.1 (21) 71.8 14.6 13.6 (21) 51.4 18.8 29.8 (18) table 7. Since this was an open-ended question to which a respondent could give more than one answer, responses do not sum to 100 percent. Percentages are shown for the total sample and within age categories.. Of the 562 respondents noting any special obstacle for the beginning farmer, nearly a third reported money or some aspect of financial resources as an entry problem. Land, in terms of availability or price, was noted by 16.4 percent of the farmers. Similar proportions mentioned money across age categories. Over 15 percent suggested that management, some form of the ability to coordinate equipment, personnel, and other resources to earn a profit, was the number one problem to be overcome by the TABLE 7. FREQUENTLY MENTIONED ENTRY PROBLEMS FOR TOTAL SAMPLE AND BY AGE CATEGORY, ALABAMA FARMERS, 1981 Entry problem Money .......................... Land ........................... Management ..................... Equipment ...................... Personal problems ................ Percent of Percentage mentioning; by age total 34.2 16.4 15.1 13.5 11.7 Under 44 42.4 17.6 8.2 17.6 5.9 45-54 34.1 16.7 9.5 16.7 7.9 55-64 38.5 15.6 16.7 8.9 11.5 65 & over 26.1 17.6 21.8 14.1 16.2 Finance problems ................ M arketing ....................... Production costs ................. Number ......................... 5.5 5.3 1.8 562 7.1 8.2 2.4 85 5.6 5.6 .8 126 6.3 5.7 2.6 192 3.5 3.5 1.4 142 ALABAMA FARM OPERATOR PERSPECTIVES 13 beginning farmer. Older farmers mentioned this more than twice as often as the younger farmers (21.8 versus 8.2 percent). A smaller proportion of respondents (13.5 percent) noted equipment as a problem for beginners. Younger farmers were somewhat more likely to mention this difficulty. Personal problems of self control, personal energy, or talent were mentioned by 61, or 11.7 percent, of the farmers. Older operators were more likely to mention this type of obstacle, suggesting that the effects of such difficulties may become more apparent with experience. Marketing was mentioned nearly twice as often by younger farmers as by the oldest group (8.2 versus 3.5 percent), but only 5.3 percent of those replying to the question saw it as a problem. Production costs were cited as an obstacle for beginning farmers by only 1.8 percent of the sample, probably because this idea was captured in the larger category of money. PREDICTING STRUCTURAL POSITION. To demonstrate the aggregate and specific relationships between attitudes toward agricultural structural issues and location on various structural dimensions, stepwise multiple regression was employed. In table 8, selected structural dimensions are treated as dependent variables and attitudinal items as independent variables. Following stepwise procedures, only items that were statistically significant predictors are shown. The attitude variables are scored 1 to 5 so that a high score indicates "strongly agree." (Correlations among the structure variables are shown in Appendix B.) Farm operators reporting high gross sales were less likely to agree that corporate farms should receive the same tax breaks as family farms (B=-.08), as were more educated farmers (B=-.09). Older farmers, however, were more likely to agree with this statement (B=.08).' Agreement with the idea that laws should be passed to protect the family farm was a negative predictor of gross sales (B=-.08) and education (B=-.08). More educated farmers did not think that limits should be placed on nonresident ownership of farmland (B=-.12), 'A standardized regression coefficient (B or Beta) shows the amount of change in the dependent variable which is associated with a unit change on the independent variable (when other variables are taken into account). Normally ranging between -1 and 1, a large positive coefficient suggests a high degree of association between the attitude and the structural dimension. A negative coefficient indicates an inverse relationship. Only those variables with Beta coefficients statistically different from zero were included in the equations. 14 14 ALABAMA AGRICULTURAL EXPERIMENT STATION TABLE 8. STEPWISE REGRESSION OF SELECTED AGRICULTURAL STRUCTURE DIMENSIONS ON ISSUE, COMMITMENT, SMALL FARM, AND ENTRY VARIABLES, ALABAMA, 1981 Item Gross sales Standardized regression coefficients Off-farm Percent Acres operated work income farm Education Age Structural issues Corporate farms receive same tax breaks. Laws to protect family farm ................ Limits on nonresident farmland .............. .08* -. 08* .08* .13* .11* Inflated land values a threat............... Commitment to farming Recognition from friends is main reason.......... Farming is strictly a business............... -.09* .08* -. .08* II* -. -. -.08* 19** .19** Take lower income to keep farm advantages.... Willing to take more risks than average farmer............... Being own boss is major reason............... Would like son to become a farmer... Small farmer problems Small farmer not received fair share of services .. Unwise to encourage small farmers .......... Special programs for small farmer ........... Small farmer help welfare program... 16** .1l0* -. 14** .08* .10* -. 10* -.14** -. l0* .16** .11* Entry process Get farmland to many people............... -. 19** Lack of land problem for farmers ............ ................... 223 20.2** F.................... *p <.05 **pI ( in each regI onltl in Alahma. Fverv citi zen of the State hts a staike in this research prigram, since m& advantage from li ew and moric~ econonm e tir~l va~avs o~f prodcUCing and handlingl farm prod uct s directly henefitfi s the co~nsuming~r public. -~ ti (I i a Research Unit Identification ® Main Agricultural Experiment Station, Auburn. r E. V. Smith Research Center, Shorter. Tennessee Valley Substation, Belle Mina Sand Mountain Substation, Crossville North Alabama Horticulture Substation, Cullman Upper Coastal Plain Substation, Winfield. Forestry Unit, Fayette County Foundation Seed Stocks Farm, Thorsby Chilton Area Horticulture Substation, Clanton Forestry Unit, Coosa County Piedmont Substation, Camp Hill Plant Breeding Unit, Tallassee. Forestry Unit. Autauga County Prattville Experiment Field, Prattville. Black Belt Substation, Marion Junction The Turnipseed-Ikenberry Place, Union Springs. Lower Coastal Plain Substation, Camden Forestry Unit, Barbour County. Monroeville Experiment Field, Monroeville. Wiregrass Substation, Headland Brewton Experiment Field, Brewton. Solon Dixon Forestry Education Center, Covington and Escambia counties. 21. Ornamental Horticulture Field Station, Spring Hill 22 Gulf Coast Substation. Fairhope 1 2. 3 4. 5 6 7 8. 9 10 11. 12 13 14 15 16. 17. 18. 19 20