Perspective on Farm Size and Structure Provided by Value-Added Measures

Abstract

Much wider use of net value-added, instead of gross sales, can lend perspective on how farm size and structure are changing in the United States. Net value-added is changing a more appropriate economic measure to use in comparing farms by size or type on a consistent basis. Net value-added emphasizes the net returns to farm households from the use of their land, labor, capital, and management in agricultural production. Net value-added as a percentage of gross farm income is highest (over 60 percent) on vegetable, greenhouse and nursery, and cash grain farms. It is much lower on livestock farms that buy substantial amoungs of their inputs (fed cattle and hogs). Wider use of net value-added directs attention to the economic impact of resources used in agricultural production in the form of returns to those resources.