The Farm and Food System

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The Farm and Food System Powered By Docstoc
					The Farm and Food System

         Chapter 2
    Agriculture’s Role in US Economy

   What do you consider Agriculture?
   Agriculture includes:
      Family Farms

      Corporate Farms

      Credit Organizations

      Input Suppliers

      Marketing Firms and Processors

      Retailers
    Agriculture’s Contribution to US
    Economy

   15.8 % of US Labor Force
   14% of US Gross Domestic Product
      What is GDP?

      GDP - the total value of goods and services
       produced within the US by either foreign or
       domestic resources.
   Farming’s Contribution
      3 % of Labor Force

      2 % of GNP
           Agriculture’s Role in the US
           Economy
Type of Industry                              National   Employed
                                              Output     Labor Force
Farming                                       2          3
Mining and Construction                       5          5
Manufacturing                                 17         14
Transportation, Communication and utilities   8          5
Wholesale and retail trade                    16         23
Finance, Insurance and real estate            19         6
Services                                      20         29
Government (state, local and federal          13         15
Agriculture’s Role in the US
Economy
   In total however, agriculture indirectly
    accounts for much of the employment in
    other sectors.
   Agriculture is thus responsible for providing
    about 21.6 million jobs, constituting 15.8
    percent of the total employment in the US.
   In addition the farm and food system
    contributes 14 percent of the nation’s GDP.
Types of Farms in US

   Family Farms               86%
   Partnerships               10%
   Corporations                4%
       30% of Farmland
       27% of Product Sales
   All others                 <1%
    Farming Facts

   Average size of farm in US is 447 acres
       This number is increasing
   Number of farms in US is 2 million
       This number is decreasing
   Number of people living on farms is
    decreasing and now around 4 million
       Why is this the case. (In 1920 there used
        to be 32 million people living on farms)
Family Farms
   Because many of the partnerships and
    corporations are family organizations,
    about 96 percent of our farms are really
    family farms.
Why Incorporate?
   Lower cost of transferring wealth
   Employee benefits tax deductible
   Management can be separated from
    ownership
   Reduce Liability
      Revised Tax Rates
      (as of 1995) Corporate



Tax Rate            Income Level
15 %                Taxable income up to $50,000
25 %                Incomes between $50,000 and $75,000
34 %                Incomes between $75,000 and $100,000
39 %                Incomes between $100,000 and $335,000
34 %                Incomes between $335,000 and $10 million
35%                 Incomes between $10 and $15 million
38 %                Incomes between $15 million and $18,333,333
35 %                Income over $18,333,333
Revised Tax Rates
(as of 1996) Individual




Tax Rate         Income Level
15 %             Taxable income up to $24,000
28 %             Incomes between $24,000 and $58,150
31 %             Incomes between $58,150 and $121,300
36 %             Incomes between $121,300 and $263,750
39.6 %           Incomes over $263,750
Economic Size Classes of
Farms
   Expanding Sector of Agriculture
       Farms with sales greater than $100,000
        annually
       Make up 16.7 % of the number of farms
        with 343,000 of them
       Make up 81.9 % of the cash receipts of all
        farms
       Off farm income in this category has grown
        from $10,635 in 1980 to $37,392 in 1997
Economic Size Classes of
Farms (Expanding Sector)
    Total of all income is $191,426
    Net Income is $52,896
    Direct Government Payments $13,628
    Economic Size Classes of
    Farms
   Declining Sector of Agriculture
       Farms with sales between $20,000 and
        $99,999 annually
       Make up 22.2 % of the number of farms with
        458,000 of them
       Make up 14.2 % of the cash receipts of all
        farms
       Off farm income in this category has grown
        from $9,285 in 1980 to $43,115 in 1997
Economic Size Classes of
Farms (Declining Sector)
    Total of all income is $63,396
    Net Income is $9,285
    Direct Government Payments $4,229
     Economic Size Classes of
     Farms
   Non Commercial Sector of Agriculture
       Farms with sales less than $20,000 annually
       Make up 61.1 % of the number of farms with
        1,257,000 of them
       Make up 3.9 % of the cash receipts of all farms
       Off farm income in this category has grown from
        $16,677 in 1980 to $49,678 in 1997
       Average net income per farm is -$1,397
Economic Size Classes of
Farms (Non Commercial Sector)
    Total of all income is $48,567
    Net Income is -$1397
    Direct Government Payments $700
Vertical Integration
   Vertical integration, vertical
    coordination, and contract
    production are terms that are
    often used interchangeably
   An example of this type of
    integration might be a wheat
    farmer buying a flour mill or
    vice versa.
      Farmer Cooperatives
Cooperatives are an organizational structure that is an alternative
to an individual proprietorship, partnership or corporation.




A cooperative is a business that is organized, capitalized, and managed
by its member-patrons, furnishing and/or marketing goods and services
to the patrons at cost.
   Number, Population and Size
   of Farms in the US
Year   Number of   Farm         Average     US
       Farms       Population   Farm Size   Population
                   (000)        (Acres)     on Farms
                                            (%)
1920   6,518,000   31,974       147         30.1


1950   5,648,000   23,048       213         15.3


1980   2,439,510   6,051        426         2.7


1998   2,191,510   4,712        435         1.7
The Agribusiness Complex            1997


   Farm supplies industry $167 billion
   Total consumer purchases in US was
    $751 billion
   The farm value of these purchases was
    $148 billion
   This means the total value added was
    $603 billion
International Trade
   Value of exports in 1998 was $51.8
    billion
   US trade balance was about $14.7 in
    the same year. (exports – imports)
             Overview of our Economic
             System

                                    Households




    Resource Markets                                        Product Markets
                                                 Finished
                   Land, Labor Capital and       Goods                 Money
Money              Management                    And                   Flow
Flow                                             Services              (Consumer
(Wages,                                                                Expenditures)
Salaries,                            Business
Interest,                             Firms
Profits,
Dividends)
Measuring Output
   Gross National Product
    Is the total value of all finished goods and services
    produced in the economy within a given time period,
    such as a year whether these goods and services
    were produced in the US or overseas.


   Gross Domestic Product
    Is the total value of goods and services produced
    within the United States by either foreign or domestic
    resources.
       Calculating GDP and GNP
Stages of Production   Product Value at   Value Added
                       Point of Sale
Cotton Farmer                 $2                   $2

Cotton Mill                    4                   2

Textile Mill                   9                   5

Shirt Manufacturer            14                   5

Wholesaler                    16                   2

Retail Outlet                 20                   4

      Totals                  65                  20
Government Policy
   Monetary Policy
       Interest Rates
       Money Supply
   Fiscal Policy
       Taxes
       Spending

				
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posted:9/13/2012
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