Opinion: Farm smart: Adding value in a consolidating industry

Christi Sudbrock

Many have expressed concerns as the average age of the American farmer continues to increase. It’s true the average age has risen consistently for decades, but more concerning is the rate of farm consolidation occurring over the last 30 years. 

During this time, we’ve seen land in farms remain relatively stable while the number of farms has dropped from 2.04 million to only 1.88 million, according to the U.S. Department of Agriculture. (A note on number of farms: USDA defines a farm as “any place from which $1,000 or more of agricultural products were produced or sold or normally would have been sold, during the year,” which is admittedly a low threshold. This means smaller farms may be masking the full extent of consolidation.) 

In crop farms, this consolidation has resulted in average farm size increasing. In 1987, 15% of farms were over 2,000 acres; while in 2017, that number rose to a whopping 41%, according to USDA data. In livestock operations, consolidation has led to increasing herd sizes. For example, the sales midpoint for fed cattle in 1987 was 17,523 and in 2017, that number had grown to 42,300 head. Similar increases were seen in many industries.

Forces behind the shift 
There are several factors driving consolidation. The first is that production agriculture benefits from economies of scale, which is when a company increases production and their average cost of production decreases. Many industries rely on economies of scale, including electric companies and the airline industry. Varied factors can influence the impact of an economy of scale and in production agriculture, high fixed costs (costs that do not change with production level) are a significant factor.  

While the average value for farmland in the U.S. is about $4,350 per acre per USDA research, in the corn belt, that value is closer to $8,940. And in 2023, Missouri broke the record for price per acre when a farm in Saline County sold for $34,800 per acre, according to a report from the Farm Journal. Certainly, land prices represent a significant investment. Further, high equipment and input costs coupled with volatile markets are key pressures driving larger farms to be the norm.  

Farm consolidation is also likely a contributing factor for increasing farmer age. Working in a College of Agriculture, I see firsthand that many students are eager to return to family farms and must confront a hard reality. For a farm to support multiple families, there are really two options: Get bigger or find a way to increase profit margins. In 2024, according to the USDA, only 11.8 cents of every dollar spent on food went to farm production. Instead, most of that dollar goes to other parts of the distribution system. 

How value-added agriculture helps 
Enter value-added agriculture. There are many definitions, but one way to think of what constitutes value-added agriculture is that a producer either changes the product, changes the way the product is produced and/or engages in direct-to-consumer sales. 

In Missouri, value-added agriculture contributes about $33 billion to the economy, according to data from the state, and in Springfield, we see evidence of growth. For example, Springfield Community Gardens and CoxHealth partnered to offer a test kitchen exclusively for value-added producers. The kitchen allows over 100 small farmers to experiment and grow while established producers can use the space for one-off production needs such as turning a bumper crop into shelf-stable products like jams or jellies.  

Another great example is the Missouri Flower Exchange. Recognizing the growth of cut flower producers, the group created a collective in 2022 allowing businesses to buy locally produced, wholesale flowers. Not to mention value-added experiences in the area, such as baby-animal experiences, flower festivals and u-picks.  

Participating in value-added agriculture represents a great opportunity not only for current producers, but also those wanting to enter the industry. Land needs are typically smaller and operating costs, such as labor and inputs, are also scaled down. In addition, value-added agriculture supports the local economy. The USDA found 78% of all farms selling directly to consumers sold their products within a 100-mile radius.  

As I look to the future and students wanting to return to the farm, value-added agriculture and diversifying the operation are key talking points. I encourage all consumers to support their local value-added agriculture producers. 

Christi Sudbrock is an associate professor of agriculture at Missouri State University. She can be reached at csudbrock@missouristate.edu.