Characteristics of U.S. Farm Managers

Total farm management can be viewed as the "systems" approach to running a farm. It is a complete way to look at the farm operation. While effective and efficient farm management has always been important for farm families trying to meet their personal and business objectives, it is even more critical in these rapidly changing times.

What Is Farm Management?

Farm management can be defined as the coordination and supervision of a farm business in order to increase longterm profits or to achieve other specified goals. It can be viewed as a combination of production management, business management, financial management, marketing management, and personnel management.

There are many types of farm managers, and the farms they operate have different sizes, types, and organizational structures. Many farm managers depend heavily on off-farm work for part of their income.

Tenure Arrangements

Throughout our history, some farmers have operated their own farms while others have operated farms as part owners or tenants. While full owners own all of the land that they farm, part owners rent land in addition to the land they own (see table 1).

As of 1987, the majority (59.3 percent) of the country's 2,087,759 farmers were full owners and 88.5 percent were either full owners (1,238,547) or part owners (609,012). Those renting all of their land are classified as tenant farmers and numbered 240,200 and comprised 11.5 percent of the total. The full owners controlled 32.9 percent of the acreage while the part owners had 53.9 percent of the acreage for a total of 519,814,523 acres. Tenants operated 13.2 percent of all acres and they represented 11.5 percent of all farms.

The full owners, who control about 33 percent of all U.S. farmland, clearly have full management control. Part owners have a large measure of control over about 54 percent of all farmland; their control is subject only to the terms and conditions of their contracts on the leased portion of the land. Tenant operators, who oversee about 11.5 percent of U.S. farms, also exercise significant control, even though some control is exercised by landlords. The vast majority of landlords are retired farmers or family members who inherited farms. At most, 40 percent of the farms have some management input from nonoperators potentially affecting 67 percent of the acres. In practice, nonoperators probably exert little control over farm operations and have little involvement in farm management.

Type of Farm Organization

Of the 2,087,759 farms recorded in 1987, 86.6 percent are individually owned farms, comprising 65.1 percent of the total farm acreage (see table 2). The next largest number of farms are organized as partnerships, comprising roughly 10 percent of all farms and 15.9 percent of total acreage. Family-held corporations comprise 2.9 percent of all farms and 11 percent of the acres, while corporations that are not family owned comprise .3 percent of all farms and 1.3 percent of the acres. Others types of farm owners including cooperatives, estates, and trusts comprise .6 percent of all farms and 6.7 percent of the acres.

The vast majority of farms are owned and controlled by individuals who have significant management control over their operations. As table 2 indicates, few farms are owned by someone other than farm families.

As farms grow, the basic "family" farm structure will remain essentially intact. However, farm managers are likely to adopt more complex organizational structures such as partnerships, leases, sharing arrangements, and corporations. This can facilitate the entry of beginning farmers into farming businesses and also help those who are leaving farming.

Off-Farm Work

Many farmers supplement their income with off-farm employment (see table 3). For many farm families, in fact, a large proportion of family income comes from off-farm sources.

In 1930, some 6.3 percent of farmers worked off the farm for 200 days or more; by 1987, the number of farmers who reported 200 or more days of off-farm employment rose to 37.6 percent. This shift clearly indicates that part-time farms are becoming the rule rather than the exception. Today, more than 60 percent of farm-family income comes from off-farm sources.

Farmers' Occupations

Not all farm operators view themselves primarily as farmers. Many have other principal occupations and think of farming as a sideline or avocation (see table 4).

Those whose primary occupation was farming managed about 62 percent of all farms and about 80 percent of the farm acreage. Hired managers operated only .8 percent of all farms but 5.9 percent of total farm acreage. The remaining acres are farmed by the 36.7 percent of farmers who do not consider themselves specialized farmers. They include landlords, hired managers, trustees, and part-time farmers.

Farmer operators have widely differing characteristics and organize their farms differently. An increasing number work off the farm and more than a third of them do not consider themselves specialized farmers. Clearly, further changes are on the way in farming and the rural community.

Robert A. Leuning, Professor Emeritus of Agricultural Economics, and Bruce L. Jones, Assistant Professor of Agricultural Economics, University of Wisconsin, Madison, WI.