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THE FEDERAL RESERVE BANK OF CHICAGO AGRICULTURAL LETTER April 4, 1952 Small scale farms account for nearly one-fifth of all commercial farms in the U.S., according to a recent USDA analysis of 1950 Census data. These are farms with gross sales of $250 to $1,199 and on which incane the farm family is dependent primarily for a living. But this is far from the full story of small scale farming in this country. Value of Sales Farms Farms (Thousands) ( Per Cent) (Thousands) (Per Cent) commercial farms: 106 2.0 Part-time farms: $25,000 and over 642 10,000 to $24,999 386 7.2 11.9 $250 to $1,199 Residential farms: 5,000 to 9,999 726 13.5 882 16.4 Under $250 19.2 2,500 to 4,999 1,032 0.1 896 16.6 Other farms 1,200 to 2,499 100.0 All farms 250 to 1,199 708 13.1 5,38~ Over 6o per cent of all farms have gross sales of products of less than $2,500. About one-half of these farm families are dependent primarily on farm income for a living and one-half have important other sources of income. In general, the approximate 40 per cent of commercial and part-time farms with gross sales of $250 to $2,500 do not provide adequate employment for the available labor resources. Consequently, these farm families are relatively unproductive and, for the most part, have low levels of living. These facts are important to public policy, both farm and nonfarm. In general, if these families are to enjoy higher levels of 11ving they must become more product! ve. For most of them, this will require nonfarm employment. For some, it will require larger, more productive farm units. The largest concentration of these low income farms, of course, is in the Southeast. But they exist in lesser numbers in all parts of the country. Measures which facilitate industrial development in the areas where these pools of underutilized labor exist or which facilitate migration to industrialized areas may strike at the heart of the problem. Similarly, measures which aid in the consolidation, improvement, and mechanization of undersize land holdings contribute to the productivity of thos:e who continue to farm. A current great development in agriculture appears to be especially important to some of the low income areas. New varieties of grasses and legumes, new cultural practices, e.nd new techniques for handling and utilizing such crops are generally considered by farm scientists to hold real promise of providing the next big bulge in farm output. Same of these developments appear to be well adapted to the soil and climate resources of heretofor e low income areas. But it takes more than scientific progress to solve social and economic problems. The new knowledge and skills must be applied-to land and to people. In our lllodern society production advances usually involve substantial capital investments to make lllan ' s labor more productive. Finally, as indicated above, the problem of low income Amer lean farm families cannot be solved by agricultural progress alone, or even primarily, but requires broad econcmic growth in industry and other segments of the econany as well. One thing is clear, however, from the above classification of farms by size and dolnational averages of such measures fail to describe the problem accurately and therefore may be quite misleading as to what the appropriate public policies 8hou.ld be. Ernest T. Baughman Agricultural Econcmist Research Department lio. 138 lar volume of sales: https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis