Farm Adjustments in an Expanding Economy and Their Effects on

Farm Adjustments in an Expanding Economy and Their Effects on
March 1960
Farm Adjustments in an Expanding Economy
and Their Effects on Income
Of all the changes in the District’s economy during the
1950’s, few were greater than those in farming. Pressed
by adverse income conditions, farmers coped with their
economic problems by improving management techniques
and adjusting land, labor, and capital to raise produc­
tivity and increase output. They could do this partly be­
cause the region’s economy was growing and provided uses
for excess farm resources as well as outlets for new farm
products. Whether these developments will continue dur­
ing the 1960’s, what form they will take, and what effect
they will have on farm earnings may be important to
economic growth in the Sixth Federal Reserve District—
Alabama, Florida, Georgia, southern Louisiana and Mis­
sissippi, and eastern Tennessee.
more capital to use than he had in 1950. In constant
1950 dollars, farm capital per worker rose from $6,615 in
1950 to $11,739 in 1959, over half of which was invested
in land.
Meanwhile, in each District state farms grew in size and
the number of farms declined correspondingly. Farm size
in terms of acres increased 25 percent during the ten
years, from 130 acres per farm in 1950 to over 160
acres in 1959. According to estimates by this Bank, there
are less than 850,000 farms in District states today,
compared with well over one million in 1950.
Farms in Sixth District States
1940-60
Changes in Structure of Farming in 1950's
Paramount to all other changes in District farming dur­
ing the 1950’s were those in the farm labor force. Despite
influences holding workers on farms, some 600,000, or
34 percent, of workers on District farms moved to jobs
off the farms.
Migration from farms was greatest in Alabama, Georgia,
and Mississippi. Despite this, however, and because of
a tendency toward more rapid replacement of men with
machines in those states, a larger underemployed farm
labor force exists there than in Florida, Louisiana, and
Tennessee.
Finally, farm lands are used differently today. Between
1950 and 1955, a million farming acres in District states
were diverted to sites for highways, homes, and industrial
plants. Also, farmers shifted three to four million acres
from crop production to pastures for livestock.
Farm W orkers and Capital Used
Sixth District States, 1950-59
Number of Farm Workers
A Closer Look at the Changes
Basic to these changes in District agriculture were the
lower incomes of farm workers than those of other
workers. Although exact comparisons are not possible,
Earnings Per W orker, Farm and Nonfarm
Sixth District States, 1950*59
In 1950 Dollars
In 1950 Dollars
[
1950
1951
1952
1953
1954
1955
1956
1957
1958
W orker
1959
Significant adjustments were also made in farm capital
investments. Almost twice as many dollars are invested
in the average District farm today as ten years ago. Each
farm worker in the District now has roughly 77 percent
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| Fa rm
1950
1951
1952
1953
1954
1955
1956
1957
1958
• 4 •
1959
March 1960
the average income for District farm workers in 1950
was $1,397 less than for those in construction, min­
ing, or manufacturing. This disparity suggests that labor
was excessive in relation to capital on District farms.
Under these conditions, economic forces would be ex­
pected to draw labor away from agriculture and to draw
capital to it. In the process, the structure of farm produc­
tion would change and labor would become more pro­
ductive. As already noted, this is exactly what happened
in the 1950’s.
Typical of the burst of productivity that resulted from
the application of more capital to District farming—
helped along by advancing technology— was the 21-per­
cent increase in livestock production between 1953 and
1959. More capital meant more machines, and because of
certain natural characteristics of the region, opportunities
to increase production through mechanization were great.
The region enjoys a long growing season and ample
rainfall, for example, conditions favorable for intensive
use of mechanical equipment and the adoption of modern
mechanical methods of farming.
The application of more capital through mechaniza­
tion increased total output in other ways. Replacing
animal power with machine power freed acreage formerly
used to produce feed for animals. In 1950, roughly eight
billion pounds of feed were fed to slightly over a million
mules in District states, whereas in 1959 less than half as
much feed was needed for about 400,000 mules. Over
four billion pounds of grain, hay, and pasture needed
for workstock ten years ago, therefore, was available for
cattle and hogs last year. Also, machines now perform
many jobs formerly done by hand labor, so laborers who
once followed mules and plows are available for more
productive farm tasks.
Farm Productivity, Sixth District States
Selected Y e ars, 1949-59
C otton
L b s Per Acre
Eggs
Per Layer
T o b a cc o
Lbs Per Acre
IP
m
$8Sl
■
if t
i.j
ing, which also meant increased capital investment. But
whatever the explanation, physical productivity increased,
whether measured in terms of yields per acre or yields
per manhour.
Measured in terms of physical output, the District’s
agriculture was certainly more productive at the end of
the decade than at the beginning. If productivity is meas­
ured by the District’s ability to produce higher incomes,
however, the story is different. The ability of the area’s
farm economy to expand production was greater than its
ability to market the expanded output profitably.
Farm Output and Population
United States, 1950-59
Percent
Percent
1951
1953
1955
1957
1959
Demand for farm products produced in this region grew
during the 1950’s but not as much as did supply. True,
there were more people to feed and clothe in the United
States— roughly 1.7 percent more each year— but farm
production increased 2.3 percent per year during the same
period. Higher personal incomes afforded people a much
higher level of living, but most people do not increase the
amount of farm products they buy as their incomes go up;
they only want better quality. Total farm sales, therefore,
were not very responsive to the increases in personal in­
comes. Then too, foreign demand for commodities pro­
duced in this District failed to boost demand for farm
products significantly. Tobacco, one of the District’s lead­
ing export items, has even lost foreign markets since the
1950’s began. Together, these forces held the increase in
demand for farm products below the increase in supply.
Consequently the increased output did not result in a
corresponding increase in farm income.
How Changes Benefited Farmers
&. si
IP
::P..
m&
Data for A lab am a, Flo rida, G e o rg ia, and South C a ro lin a .
Some of the increased output during the 1950’s can
be explained by a greater mastery of the science of farm­
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Was the average farmer actually any better off at the end
of the decade than at the start? Did the structural changes
in farming lift income enough so that the fewer workers
on farms at the end of the 1950’s were receiving more on
an average than the greater number at the beginning? The
answer is Yes, but the improvement was modest.
In 1950, the average District farm worker earned
$1,153. By the end of 1959, his earnings had risen to
$1,486 after adjustments for rising prices. Aside from
the small income gain, however, major improvements
were made in working conditions. Technological innova­
tions have reduced the drudgery in farming until it no
longer requires what has been termed the “unbearable
sweat and toil” of some years ago. Then too, some farm
• 5 •
March 1960
workers such as those on dairy farms enjoy more leisure
today than they did ten years ago— an important accom­
plishment. Finally, farm operators are wealthier in terms
of assets owned than they were at the beginning of the
1950’s.
The income benefits of the structural changes in farm­
ing, however, were by no means limited to farming. They
were felt in the nonfarm sectors of the economy as well.
As machines replaced men on farms, a ready pool of
workers became available for new industrial plants. Those
workers earned higher incomes. Farm production of food
and fiber encouraged growth in District food processing,
pulp and paper manufacturing, and other industries that
depend on farming for their raw materials. Also, the
large mechanized farms opened vast markets for farm
machinery, equipment, and supplies, thus directly stim­
ulating District business. Indeed, the stimulus to economic
developments in the nonfarm sectors of the District’s
economy by the structural changes in farming may well
have been agriculture’s greatest contribution to economic
growth in the region during the 1950’s.
Nevertheless, the disparity between incomes of farm
workers and nonfarm workers still exists. Actually, the
gap widened between 1950 and 1959. Employees in
construction, mining, and manufacturing earned $1,397
more than farm workers in 1950; in 1959, according to
estimates made by this Bank, they earned $1,879 more.
Effects of price increases have been removed in making
the comparison.
Continued Changes in the 1960's?
So long as the disparity between the incomes of farm
workers and those of comparable workers in other trades
continues, it is probable that maximum productive use is
still not being made of all the District’s labor force. Thus,
the incentive for farmers to improve their relative eco­
nomic position by continually reorganizing their resources
still exists. In the process the economic efficiency of the
region will be improved.
Farms could become larger in terms of land, capital,
and production as farmers apply technology still more.
By 1970, District farms may average well over 200 acres
per farm, compared with 163 acres in 1959. As the level
of farm management increases, there may be a rapid rise
in part-owners, farmers owning some farm land but rent­
ing additional acres.
If historical trends and current economic conditions
are a guide to the future, one can readily predict a
further decline in the District farm population and a
further change in its composition. Fewer unskilled workers
will find jobs on farms; they will either find unskilled
work elsewhere or they will become semi-skilled or skilled
and find more profitable employment in other businesses.
Part-time farming may become more attractive to lowincome farmers as they seek to close the income gap with
their nonfarm neighbor by getting a job in town and still
hang on to a part of their farm heritage. More emphasis
may be directed toward vocational education and job
placement for farmers who want other jobs but find the
transition difficult.
Farms will require more capital as they grow larger
and more productive. As a group, District farmers may
rely more heavily on borrowed capital, although their
savings will likely remain their most important source of
funds. A larger proportion of their total assets, however,
may be used directly in production during the next ten
years.
There is little doubt that changes similar to those just
discussed will occur in the 1960’s to some degree. How
great those changes will be, however, may well depend
upon the extent to which hindrances to farm adjustments
in the 1950’s are reduced by the present Rural Develop­
ment Program or other measures. In the 1950’s, changes
were limited by institutional factors such as price support
programs that encouraged uneconomical production and
rural educational programs that did not provide skills
for occupational adjustments. Another hindrance was
the lack of economic opportunities for some workers who
wanted to readjust. Many workers were poorly trained
for off-farm work, and were unable to get training because
of their age or financial obligations. Finally, some workers
simply resist changes.
The 1960’s may truly be an exciting decade for Dis­
trict farmers who are eager to accept the fundamental
changes occurring in our dynamic economy. For them,
the years ahead can be profitable ones indeed. They may
maintain sufficient flexibility to keep their farming opera­
tions in line with changing trends. Many others who adopt
new nonfarm trades will also find their rewards particu­
larly gratifying. Progress toward the farm adjustments
still needed may constitute one of the most important
contributions to this area’s income growth in the 1960’s.
N. C arson B r an an
This is the second in a series of articles that w ill appear in this
R e v ie w from tim e to tim e on different aspects of econom ic growth in
the Sixth D istrict during the 1950’s and im plications for the 1960’s .
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