Agriculture Summary

  • Last updated on November 10, 2022

Farming advances and efficiencies have made the United States one of the world’s largest exporters of agricultural products. However, U.S. agriculture has come under censure internationally because of its farm subsidies and tariffs and domestically because of environmental concerns, its inhumane treatment of animals, and its employment and treatment of immigrant workers.

Farming practices were first brought to America during the colonial years, when England granted large tracts of land to private companies or individuals for farming and development. After America won its independence in 1783, all unsettled lands came under the supervision of the federal government. Poor settlers, known as squatters, would often farm these tracts of land and claim ownership. Wheat, barley, rice, indigo, tobacco, maize, potatoes, and cotton were some of the first crops cultivated in the United States. In 1839, Congress set aside $1,000 to fund the distribution of seeds for crops and to collect agriculture statistics. The Homestead Act of 1862 offered vast amounts of land in the West for settlement, and by the mid-nineteenth century, American agriculture was a vital part of the economy, becoming a business operation that advanced the United States as a nation.Agriculture

The Industrial Revolution

The American Industrial Revolution, occurring between 1820 and 1870, was significant to the U.S. economic evolution. Mills and factories expanded, waterways and railroads were built to ship goods long distances, and new inventions made production more efficient and quicker. Farm equipment, such as plowshares, reapers, the cotton gin, steam tractors, and the combine, made farming easier and faster. By 1860, there were approximately 2 million farms with an average size of 199 acres, which produced a variety of goods. Some of the agricultural products were consumed by farmers, some were sold domestically, and some were exported.

As the number of farms increased to supply the growing population, farmers began to organize to have more of a say in the governmental policies that affected them. The U.S. Agricultural Society was organized by farmers in 1852 to protect their interests and was active in all areas of farming. Although it disbanded in 1860, its influence still can be seen in U.S. agricultural policy. The U.S. Agricultural Society demanded a national bureau of agriculture to regulate farming issues, and the U.S. Department of Agriculture, U.S. Department ofAgriculture (USDA) was established in 1862 to meet its demands. The early mission of the USDA was to disseminate information about agricultural methods and distribute new and valuable seeds and plants.

In 1867, a group of farmers known as the Granger movementNational Grange of the Patrons of Husbandry was organized to plan educational events and social gatherings for farming families. Other groups, such as the Greenback Party during the 1870’s, the Farmers’ Alliance during the 1880’s, and the Populist Party during the 1890’s, soon evolved into political groups that advocated for and protected farmers. Because middlemen, bankers, and shippers often took unfair advantage of farmers economically, farming advocacy efforts resulted in government regulations and the formation of bank cooperatives that strengthened the economic viability of the farming community.

Federal Intervention

President Abraham Lincoln appointed Isaac Newton, Isaac (USDA)Newton, a successful farmer, the first commissioner of the USDA (1862-1867). Under his progressive leadership, the USDA set up the Bureau of Animal Industry along with botany, chemistry, entomology, statistics, forestry, and other departments that advanced agricultural practices. In 1862, the Homestead Act of 1862Homestead Act gave public land to anyone willing to farm it, and the Morrill Land-Grant Act of 1862Morrill Land-Grant Act established colleges with agricultural education programs. Commissioner and Secretary of Agriculture Norman J. Colman (1885-1889) was instrumental in passing the Hatch Act of 1887Hatch Act in 1887. The Hatch Act established Office of Experiment stations and funded agricultural experiments to advance better and efficient farming practices.

In 1897, James Wilson, JamesWilson became secretary of agriculture, and he served for sixteen years. Under his astute management, the USDA became well known for quality research, regulations, and education programs. He established extension services; initiated soil conservation, reforestation, and farm credits; expanded research into plant disease and insect control; and began experimental farms and labs. These experimental farms and extension services were valuable for teaching farmers how to implement new farming techniques that improved crop yields. Many of these programs helped prevent or cure plant and animal diseases, improved nutrition and fattened animals in less time, used selective breeding for healthier animals, developed new disease-resistant hybrid seeds, and increased crop production through use of new fertilizers.

The first two decades of the twentieth century saw cities and the U.S. population continue to grow. Prices for farm products were high, as demand for goods increased and land values soared. During World War I[World War 01];agricultureWorld War I, the United States became the primary supplier of food and agricultural goods to other countries involved in the war. Soon after the war ended, so did the higher demand for agricultural products, and prices fell. Despite economic prosperity in the rest of the country, farmers fell on hard times as their incomes plummeted. They pleaded with the U.S. government for assistance, but to no avail. The stock market crash of 1929 and the resulting Great Depression soon brought the rest of the nation into the same economic plight. Farming conditions in parts of the midwestern and southern plains soon became worse, as weather cycles took a downturn and turned once-productive farmlands into dust bowls. The burgeoning American economy was in tatters.

Depression and Recovery

The federal government regarded the agriculture industry as an integral component of the U.S. economy. In 1929, President Herbert Hoover created the Federal Farm BoardFederal Farm Board, which raised prices without limiting production and provided economic stability for farmers by regulating farm markets. Target prices for the commodity crops of wheat, corn, and rice were legislated. Deficiency payments were made to farmers based on the difference between the crop target price and the average market price, regardless of market demand in the state in which they farmed.

New farming techniques, gasoline- and electric-powered equipment, and widespread use of pesticides and chemical fertilizers also created work efficiencies that continued to increase food production. Although this was good for the overall economy, it was bad for farmers, because high yields meant increased supply, which meant lower prices. The new farming techniques also required the purchase of large, expensive equipment and chemicals, raising the farmers’ cost of production. These combined to decrease their profits and ability to make an adequate living from farming. President Franklin D. Roosevelt and the Congress passed the Agricultural Adjustment Act of 1933Agricultural Adjustment Act of 1933, which provided economic incentives to farmers for decreasing their production of hog and dairy products and soil-depleting crops. The act was in part designed to remedy the farming practices that had resulted in the soil erosion that added to the Dust Bowl problem. Many later farm bills would similarly contain conservation measures. Farmers who willingly decreased production received parity payments that balanced prices between farm and nonfarm products and set up a system of price supports that guaranteed farmers a price equal to prices they would have received during favorable times. Some excess crops were purchased by the government and stored for sale during lean years.

The Farm Credit Act of 1933Farm Credit Act of 1933 also kept farmers solvent by allowing them to refinance one-fifth of their farm mortgages over an eighteen-month period. Infrastructure supports, such as extending power lines into rural areas (through the Rural Electrification Administration) and building a network of farm-to-market roads, helped farmers market their goods in distant cities and towns. All-risk insurance programs were begun in 1939 to protect farmers against crop failures due to natural disasters. Improvements in storage and transport, such as cold-storage warehouses, refrigerated railroad cars and trucks, air freight, and eventually development of quick-freeze processes, also allowed perishable foods to be shipped to all areas of the United States. By 1935, there were more than 6 million farms with an average size of 155 acres.

Before World War II, low farm prices were largely the result of business cycles, bad weather, lack of adequate transportation methods, and credit difficulties. World War II and the Korean War temporarily boosted farm prices, as U.S. farmers supplied agricultural products to foreign countries hard hit by the war. After World War II, overproduction of crops became the main reason for decreased farm product prices and decreased profits for farmers. During the 1950’s and 1960’s, programs were started to use excess agricultural products. In 1954, Congress created the Food for PeaceFood for Peace program, exporting U.S. agricultural goods to poor countries. President Lyndon B. Johnson established the Food Stamp Program in 1961, which gave eligible Americans coupons for commodity foods. Surplus foods were also used in school meal programs available to schools in poorer areas.

The Agricultural Act of 1956Agricultural Act of 1956, also called the Soil Bank Act, continued the effort to decrease production of specific crops and convert cropland to soil-conserving reserve lands through incentive payments to farmers. Although advanced agricultural techniques–use of hybrid plants and better feeding and breeding methods for livestock–had increased food production dramatically, they had created overproduction, which was wasting land and water resources and depressing farm product prices.

Good Times and Bad Times

The Agriculture and Consumer Protection Act of 1973 , an omnibus farm bill, dealt with soil conservation, lowered the limit on farm program payments, provided direct disaster payments, and shifted to a market-oriented farm policy. The Food and Agriculture Act of 1977 continued the market-oriented loan and target price policies of the 1973 legislation and further limited farm program payments. It created an extended storage program for grains, known as the farmer-reserve program, in an attempt to deal with surpluses. The Agricultural Credit Act of 1978 increased the amount of credit available to farmers. For much of the 1970’s, the worldwide demand for agricultural products was growing, creating higher land prices and incomes and reducing surpluses. However, as farmers borrowed money at low interest rates to expand their businesses by purchasing equipment and land, many became overextended. As market prices for agricultural crops fell, land prices dropped and credit became tighter. Farms began going into foreclosure, and manufacturers and sellers of farm equipment, seed, and fertilizer, along with rural banks, also experienced economic difficulties. The embargo in 1980 on U.S. food exports to the Soviet Union, through which President Jimmy Carter canceled sales of 17 million metric tons of corn, soybeans, and wheat, also reduced demand for agricultural products. The Soviet grain embargo ended in 1981.

In 1983, the Payment-in-Kind program was implemented in an attempt to reduce government surplus holdings of grains, rice, and cotton by removing 25 percent of farming land from production. A crop insurance program was also implemented to provide relief to farmers from natural disasters. However, the government had amassed large stockpiles of farm products and could not sell them. Gradually, market prices began to strengthen, but the cost of farming support programs exceeded $4 billion annually.

In 1985, President Ronald Reagan and the Congress enacted the Food Security Act, also known as the 1985 Food Security Act of 1985Farm Bill. This legislation lowered commodity prices and subsidies and established a dairy-herd buyout program. Loan deficiency payments, compensation for crops when market prices fell below a government-set minimum, were implemented to protect farmers when market prices were low. The result did reduce crop surpluses and made U.S. agricultural products more attractive to other countries.

Legislation in 1990 encouraged farmers to raise crops for which they had not received subsidy payments and reduced the amount of payments for which they could qualify. In 1996, Congress worked to stop farming reliance on government assistance altogether. The Federal Agriculture Improvement and Reform Act of 1996Federal Agriculture Improvement and Reform Act (FAIR Act), also called the Freedom-to-Farm Act or 1996 Farm Bill, dismantled price and income supports, allowed farmers to plant crops for global markets without restriction, and phased out dairy price supports.

Congress eased the transition for farmers with the Agricultural Market Transition Act of 1996Agricultural Market Transition Act (AMTA) of 1996. The AMTA provided deficiency payments over a seven-year period for corn, wheat, grain sorghum, barley, oats, cotton, and rice crops, and government stockpiles for these crops were eliminated. By 1999, an estimated 30 million acres that would have been idle were in production, with crops that allowed farmers to respond to changing market and climate conditions. Overseas exports slumped, however, and livestock and crop prices plunged in 1998. The government responded with a number of emergency appropriation bills, again boosting farm subsidies to keep the agricultural business stable.

Besides crop deficiency payments, the loan program for farmers started during the 1930’s also acts as a subsidy for farmers. Under this loan program, farmers originally would repay loans plus interest after their crops were sold in the marketplace. These loans had no penalty for nonpayment, except that the low-value crop was defaulted to the government. When the FAIR Act was implemented, the requirement to default low-value crops was removed, and the loan became a direct subsidy for the farmer. Loan deficiency payments (LDP) were also implemented and allowed farmers to bypass the loan process and receive a subsidy payment instead. This created a system in which farmers could take loan subsidies when market prices were low and sell their crops when market prices improved.

In 1985, the Conservation Reserve Program (1985)Conservation Reserve Program (CRP) was implemented and set aside millions of acres of farmland in highly erodable or environmentally sensitive areas. Farmers were paid per acre for a ten- to fifteen-year period to not grow crops but instead plant native grasses on the land or create riparian areas. The FAIR Act lessened the total number of acres that could be enrolled under the conservation program from 45 million acres to 39.2 million acres.

Twenty-first Century Policy

In the twenty-first century, improvements in soil conservation, farm machinery, fertilizers and seeds, irrigation methods, and pest control have continued to increase crop yields. At the same time, these new methods have increased the costs of producing crops. Agriculture remains a capital-intensive industry with large fixed costs and uncertain outcomes, influenced by weather (drought, flooding) and the ups and downs of the commodity markets, both domestically and globally.

There were 2.1 million farms in the United States in 2002, with an average size of 441 acres, compared with nearly 5.4 million farms with an average size of 215 acres during the 1950’s. Many small American farms have been replaced by agribusinesses ranging from small hog-confinement operations to huge multinational firms. Although agribusinesses often result in cost-effective production of agricultural products, they have been criticized for producing pollution and environmental problems (often caused by disposal of animal wastes or large-scale use of pesticides), creating inhumane environments for animals (such as confinement sheds), and being the main beneficiaries of farm subsidies, rather than small family farms. Agribusinesses have also been criticized because they employ migrant workers, some of whom may be in the country illegally, and expose them to harsh working conditions.

Many small farmers must work part-time in addition to farming because of high land and equipment costs and the difficulty of earning enough to support their families. Continued federal Farm subsidiessubsidies for wheat, corn, rice, cotton, and soybeans as well as loan and set-aside program have shielded farmers from the ravages of market supply and demand but have cost the American government an estimated $20 billion per year in 2001, up from about $9 billion per year during the early 1990’s.

Farm subsidies have also caused problems at the global level. For example, the World Trade Organization has repeatedly called for fewer government subsidies for American cotton growers. The organization claims that the U.S. government is illegally subsidizing American cotton farmers, which drives down cotton prices on the world market, creating poverty in other cotton-producing countries. Brazil won a ruling at the World Trade Organization against the United States for providing subsidies to cotton farmers; this may result in the creation of a tariff against American cotton in Brazil.

Proponents of farm subsidies argue that price supports, which are paid when market prices fall below a certain point, are caused by falling prices and certainly do not trigger them. Also, because farmers have fixed costs of production, falling prices–not subsidies–will trigger overproduction as farmers strain to recoup their investments. Proponents argue that because farmers cannot control commodity prices, the government should use a combination of price supports and supply controls to avoid the negative effects of rapidly falling prices, which include farmer bankruptcies, land loss, accelerated consolidation of farms, and pressure to switch to input-intensive farming methods (such as factory farming).

Toward the end of the first decade of the twenty-first century, fuel concerns in the United States increased the demand for biofuels. This in turn drove up the demand and price for corn, a source of biofuel that supporters praise as a renewable source of energy and critics say is an inefficient source of energy and lucrative for farmers largely because of subsidies. Increased demand for grains by China and India, coupled with a weak American dollar, drove up market prices for corn and other grains. Higher grain prices translated into increased costs for beef, dairy, and poultry producers. The result has been higher consumer food costs worldwide. Domestically, higher prices and increased demand have reduced the amount of surplus commodities held by the Department of Agriculture, which means food banks are receiving less food from the government. The increase in demand means that farmers will increase production to increase supply and drive down costs, but if the market for agricultural products decreases, that will again result in overproduction. The fluctuations in farm prices due to market forces and uncontrollable weather conditions may require occasion federal interventions to maintain an adequate food supply and ensure that the economy thrives. However, the costs of these interventions must be carefully examined.

Further Reading
  • Cochrane, Willard W. The Curse of American Agricultural Abundance. Lincoln: University of Nebraska Press, 2003. Ironic account of the negative consequences of the vast productive capacity of American farms and farmlands.
  • Etter, Lauren, and Greg Hitt. “Bountiful Harvest: Farm Lobby Beats Back Assault on Subsidies.” The Wall Street Journal, March 27, 2008. Details the battle over farm subsidies on Capitol Hill.
  • Fitzgerald, Deborah. Every Farm a Factory: The Industrial Ideal in American Agriculture. New Haven, Conn.: Yale University Press, 2003. Analysis of the costs and benefits of the industrialization of American agriculture.
  • Gardner, Bruce L. American Agriculture in the Twentieth Century: How It Flourished and What It Cost. Cambridge, Mass.: Harvard University Press, 2002. Comprehensive economic history of twentieth century U.S. agriculture.
  • Hurt, R. Douglas. American Agriculture: A Brief History. West Lafayette, Ind.: Purdue University Press, 2002. Historical overview of agriculture in the United States.

Agribusiness

U.S. Department of Agriculture

Beef industry

Cereal crops

Cotton industry

Dairy industry

Farm Credit Administration

Farm labor

Farm protests

Farm subsidies

Pork industry

Poultry industry

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