For the past three decades, the number of U.S. farms has remained fairly stable at about 2.2 million, while the amount of farmland declined about 8 percent between 1982 and 2007. However, this relative stability masks major shifts in the distribution of production and significant growth in the amount of goods and services produced by the agricultural sector. The number of very large farms (those with over $500,000 in inflation-adjusted annual sales) has grown. Large farms’ share of agricultural production has increased, while the number and market share of all other farms except for the smallest (those with annual sales under $10,000) has declined (see “U.S. Farm Structure: Declining—But Persistent—Small Commercial Farms” in the September 2010 issue ofAmber Waves).

At the same time, U.S. agricultural output has continued to grow rapidly, even as the amount of land and labor devoted to farming has declined (see “Is U.S. Agricultural Productivity Growth Slowing?” in the September 2010 issue of Amber Waves). In response to changing market conditions, technologies, public policies, and a host of other factors, farmers, particularly those operating larger commercial-sized farms, have adjusted production practices in numerous ways to remain competitive.

U.S agriculture provides food and fiber for growing domestic and international markets, supplies the feedstock for an expanding bioenergy sector, and provides ecosystem services such as carbon sequestration to a nation increasingly concerned with the environment. Without the productivity growth embodied in more advanced farming practices, meeting the increased demand for agricultural goods and services would require expanded use of marginal land, thereby raising the cost of agricultural production, both in terms of market prices and environmental degradation.

Nonetheless, changing farming practices can have both positive and negative effects. For example, the introduction of genetically engineered (GE) seeds, wider adoption of irrigation, and growth in contract sales have allowed farm operators to diminish the intensity of soil tillage, reduce weather-related risks, and lower production costs through increased specialization. But widespread adoption of GE plants is viewed with concern by some consumers, by farmers experiencing weed resistance to herbicides, and by nearby farmers specializing in organic crop production. Wider adoption of irrigation can reduce the availability of water for other uses and has implications for pesticide and fertilizer runoff. Increased contracting can leave some farmers worried about price fixing and can increase their risk if the contractor defaults. Moreover, the geographic consolidation of larger livestock operations has heightened localized concerns about the handling of manure and its environmental consequences.