AGRIC & FOOD INDUSTRY PROFILE

In 2015, the U.S. food and beverage manufacturing sector employed more than 1.5 million people, or just over 1 percent of all U.S. nonfarm employment. In over 34,000 food and beverage manufacturing plants located throughout the country, these employees were engaged in transforming raw agricultural materials into products for intermediate or final consumption. Meat and poultry plants employed the largest percentage of food and beverage manufacturing workers, followed by bakeries, and fruit and vegetable processing plants.

USDA conservation efforts rely mainly on voluntary incentive programs to address natural resource issues. The Conservation Reserve Program pays farmers to remove environmentally sensitive land from production and encourages partial field practices including grass waterways and riparian buffers. Working-land programs provide technical and financial assistance to farmers who install or maintain conservation practices on land in production (e.g., nutrient management, conservation tillage, and field-edge filter strips). Agricultural easements provide long-term protection for agricultural land and wetlands. The Regional Conservation Partners Program coordinates conservation program assistance with partners to solve problems on a regional or watershed scale.

Agriculture accounted for an estimated 10 percent of U.S. greenhouse gas (GHG) emissions in 2014. In agriculture, crop and livestock activities are important sources of nitrous oxide and methane emissions, notably from fertilizer application, enteric fermentation (a normal digestive process in animals that produces methane), and manure storage and management. GHG emissions from agriculture have increased by approximately 10 percent since 1990. During this time period, total U.S. GHG emissions increased approximately 7 percent.

The 2012 U.S. land area amounted to nearly 2.3 billion acres, with nearly 1.2 billion acres in agricultural use. The share of the land base in agricultural use declined from 63 percent in 1949 to 52 percent in 2012, the latest year for which comprehensive national data are available. Gradual declines have occurred in cropland, while grazed forestland has decreased more rapidly. In 2012, 392 million acres of agricultural land were in cropland (an 18-percent decline from 1949); 655 million acres were in grassland pasture and range (4 percent more than in 1949); 130 million acres were in grazed forestland (59 percent less than in 1949); and 8 million acres were in farmsteads and farm roads (45 percent less than in 1949). Urban land, while it represents a relatively small share of the U.S. land base, has nearly tripled in area since 1949.

The CRP covered about 24 million acres of environmentally sensitive land near the end of 2016, with an annual budget of roughly $2 billion (currently USDA’s largest conservation program in terms of spending). Enrollees receive annual rental and other incentive payments for taking eligible land out of production for 10 years or more. Program acreage tends to be concentrated on marginally productive cropland that is susceptible to erosion by wind or rainfall. A large share of CRP land is located in the Plains (from Texas to Montana), where rainfall is limited and much of the land is subject to potentially severe wind erosion. Smaller concentrations of CRP land are found in eastern Washington, southern Iowa, northern Missouri, and the Mississippi Delta.

After peaking at 6.8 million farms in 1935, the number of U.S. farms fell sharply until leveling off in the early 1970s. Falling farm numbers during this period reflected growing productivity in agriculture and increased nonfarm employment opportunities. Because the amount of farmland did not decrease as much as the number of farms, the remaining farms have more acreage, on average—about 440 acres in 2016 versus 155 acres in 1935. About 2.06 million farms are currently in operation.

Technological developments in agriculture have been influential in driving changes in the farm sector. Innovations in animal and crop genetics, chemicals, equipment, and farm organization have enabled continuing output growth without adding much to inputs. As a result, even as the amount of land and labor used in farming declined, total farm output more than doubled between 1948 and 2015.

Gross cash farm income (GCFI) is annual income before expenses and includes income from cash receipts, farm-related cash income, and Government farm program payments. GCFI is forecast at $404 billion in 2018, versus $320 billion (inflation-adjusted 2018 dollars) in 2000, with the increase largely due to higher cash receipts. After declining in 2015 and 2016, GCFI is forecast to stabilize in 2017 and decline 2 percent (or by $9 billion) in 2018.

Gross farm income reflects the total value of agricultural output plus Government farm program payments. Net farm income (NFI)—which reflects income from production in the current year—is calculated by subtracting farm expenses from gross farm income. NFI considers both cash and noncash income and expenses. Inflation-adjusted net farm income is forecast to stabilize in 2017 and decline 8 percent in 2018, to $59.5 billion, after declining in 2014 through 2016. Inflation-adjusted expenses are projected to be relatively unchanged in 2017 and 2018 after declining in 2015 and 2016.

Crop cash receipts totaled $194.4 billion in 2016. Receipts from corn and soybeans accounted for 46 percent of the total.
Cash receipts for animals and animal products totaled $162.9 billion in 2016. Cattle/calf receipts accounted for 39 percent of that total, while poultry/egg receipts accounted for 24 percent and dairy receipts 21 percent.
Gross cash farm income (GCFI) includes income from commodity cash receipts, farm-related income, and government payments. Family farms (where the majority of the business is owned by the operator and individuals related to the operator) of various types together accounted for nearly 99 percent of U.S. farms in 2016. Small family farms (less than $350,000 in GCFI) account for 90 percent of all U.S. farms. Large-scale family farms ($1 million or more in GCFI) account for about 3 percent of farms but 45 percent of the value of production.

Median total household income among all farm households ($76,250) exceeded the median for all U.S. households ($59,039) in 2016. Slightly more than half of U.S. farms are very small, with annual farm sales under $10,000; the households operating these farms typically rely on off-farm sources for the majority of their household income. Median household income and income from farming increase with farm size; the typical household operating the largest commercial farms earned $365,069 in 2016, and most of that came from farming.

Markets for major agricultural commodities are typically analyzed by looking at supply-and-use conditions and implications for prices. From an economic perspective, these factors determine the market equilibrium. In the U.S. agricultural sector, many interactions and relationships exist between and among different commodities. For example, corn production and prices affect feed costs in the livestock sector.

The United States produces and sells a wide variety of agricultural products across the Nation. In terms of sales value, California leads the country as the largest producer of agricultural products (crops and livestock), accounting for almost 11 percent of the national total, based on the 2012 Census of Agriculture. Iowa, Texas, Nebraska, and Minnesota round out the top five agricultural-producing States, with those five representing more than a third of U.S. agricultural-output value.

California, Iowa, Illinois, Minnesota, and Nebraska are the five States with the highest value of crop sales. With its large horticultural sector, California?s overall crop value of more than $30 billion in 2012 is about 75 percent higher than that of Iowa, the second-ranked State. In contrast to California, crop values in the next four leading States derive from grains and oilseeds, particularly corn and soybeans. For other crops, Washington State typically leads the country in apple production, while Florida is the largest producer of oranges.

Livestock production and sales occur in all 50 States. Texas, Iowa, California, Nebraska, and Kansas lead the country in sales value of livestock and their products. The cattle sector is the dominant source of value in Texas, Kansas, and Nebraska. Milk from cows accounts for about 57 percent of livestock-sale value in California. Both the hog and cattle sectors are large sources of sales value in Iowa. North Carolina is the leading producing State of poultry and eggs, followed by Georgia.

The value of agricultural production in the United States rose over most of the last decade due to increases in production as well as higher prices. Yield gains for crops were particularly important, although acreage also rose in response to elevated prices from 2008 to 2012. Falling prices in the last two years, accompanied by some reduction in acreage, have led to a 15-percent decline in the value of crop production since 2012. While livestock production increased over the decade, high feed costs and drought led to slower growth in recent years. Cattle herd rebuilding combined with Porcine Epidemic Diarrhea Virus (PEDv) to reduce red meat production by almost 4 percent in 2014, pushing overall red meat and poultry production down more than 1 percent. Higher prices more than compensated for lower production, resulting in a 17-percent increase in the value of livestock production last year.

Since 1990, combined acreage planted to corn, wheat, soybeans, and upland cotton in the United States has ranged from 218 million to 242 million acres. Policy changes increased planting flexibility provided to farmers starting in the 1990s, which has allowed them to respond to market signals in their cropping choices. Overall, acreage has generally been higher in recent years, with the four highest combined annual planting totals for these crops since 1990 occurring in 2011-14 when prices were higher. Reduced acreage in 2015 reflected, in part, lower prices.

U.S. fruit and tree nut value of production has increased steadily over the past decade, while the value of vegetable production has been more stable. Grapes, apples, strawberries, and oranges top the list of fruits; tomatoes and potatoes are the leading vegetables. Tree-nut value rose dramatically to record levels of around $10 billion in recent years, with crop value for most major tree nut crops?led by almonds, walnuts, and pistachios?achieving historical highs.

With only a few exceptions, production of broilers (the most efficient converter of feed to meat) has outpaced growth in beef and pork production since 1990, and poultry meat has been the major meat produced and consumed in the United States since the mid-1990s. Total domestic per capita beef, pork, and poultry disappearance (a proxy for use) is beginning to increase again after several years of decline that reflected higher feed costs, higher retail prices, and effects of the 2007-09 economic recession. Exports of meats and products also continue to be an important source of demand.

The number of milk cows in the United States generally fell in the 1980s and 1990s, but has generally risen over the past 10 years. Milk output has risen more than 60 percent since 1980 and now exceeds 200 billion pounds per year. Genetic developments and technological improvements underlie a pronounced upward trend in milk output per cow. Consolidation in the dairy sector also has facilitated efficiency gains in milk production.

Corn is the major agricultural input used in the United States to produce ethanol, which has accounted for 35-40 percent of U.S. corn use in recent years. Rapid expansion of ethanol production in the past decade reflected a response to high crude oil prices, the Renewable Fuel Standard, and other factors. However, ethanol production has plateaued as oil prices have fallen and the gasoline market has hit a 10-percent blend constraint.

The 10-year phase out of textile and apparel import quotas that existed under the international Multifiber Arrangement was completed at the start of 2005, leading to increased U.S. imports of those products and contributing to reduced U.S. milling and increased U.S. exports of cotton. Exports now account for more than 70 percent of overall use of U.S. cotton, compared with less than 40 percent in the 1990s. The United States is the leading global exporter of cotton. China is the largest destination of U.S. cotton exports.

Although prices for agricultural commodities frequently vary from year to year, they have generally moved higher in the past decade. In these aggregate measures, nominal prices for crops were up more than 70 percent above their 2005 levels, while those for livestock rose over 75 percent from 2006 to 2014. Prices for both crops and livestock fell in 2015, however, as U.S. and global markets responded to higher prices by increasing production.

Increased productivity in crop production underlies a general decrease in inflation-adjusted prices for corn, wheat, and soybeans over the past century. This downward price trend was reversed during the past decade by global growth in population and income, increasing biofuel production, and a depreciation of the U.S. dollar, but is likely to resume from these recent higher levels as population and income growth slow, biofuel production levels off, and the U.S. dollar strengthens.

From 2000 to 2014, inflation-adjusted meat prices have reflected slower production growth as meat output responded to lower producer profits due in part to rising feed costs. Cattle production costs, production, and prices also were affected by poor forage conditions due to lingering droughts over much of the past decade, particularly in the Southern Plains. As feed prices softened, however, livestock production rose in 2015, which lowered U.S. livestock prices.

Food and beverage manufacturing
Food and beverage manufacturing plants transform raw agricultural materials into products for intermediate or final consumption by applying labor, machinery, energy, and scientific knowledge. Some products may serve as inputs for further processing (such as syrup for manufacturing soda). In 2015, these plants accounted for 16 percent of the value of shipments from all U.S. manufacturing plants. Because intermediate inputs (primarily agricultural materials) account for a relatively large share of food and beverage manufacturers’ costs, value added in food and beverage manufacturing represents a slightly smaller share (14.1 percent) of value added in all manufacturing.

Meat processing includes livestock and poultry slaughter, processing, and rendering, and is the largest single component of food and beverage manufacturing, with 24 percent of shipments in 2015. Other important components include dairy (13 percent), beverages (13 percent), grains and oilseeds (10 percent), fruits and vegetables (8 percent), and other food products (12 percent). Beverage manufacturing (18 percent) and meat processing (17 percent) are also the largest components of the food sector’s total value added.

There are many food and beverage processing establishments (plants) in the U.S.—over 30,000 owned by about 25,800 companies in 2012, according to the most recent comprehensive data in the Census Bureau’s 2012 Economic Census.

These plants employed more than 1.5 million workers in 2015 (about 14 percent of all U.S. manufacturing employment and just over 1 percent of all U.S. nonfarm employment). The meat processing industry employed the largest percentage of food and beverage manufacturing workers in 2015 (31 percent), followed by bakeries (16 percent), and fruits and vegetables (11 percent).
Food and beverage processing plants are located throughout the United States. According to the Census Bureau’s County Business Patterns (CBP), California had the most food and beverage manufacturing plants (5,531) in 2015, while New York (2,508) and Texas (2,175) were also leading food and beverage manufacturing States. The number of processing plants for various industry segments are also reported in County Business Patterns.

Food processing plants
Food processing plants include many small local plants and relatively few large plants. However, large plants account for the major portion of shipments. In 2012, small plants (fewer than 20 employees) accounted for 68 percent of all plants, but only 4.5 percent of the total value of shipments. On the other hand, large plants (100 or more employees) accounted for 76 percent of shipment value in 2012, but only 12 percent of plants.

Consolidation is occurring in many food processing industries, where plant sizes have increased sharply and mergers have led to fewer but larger companies. In many cases, changing processing plant technologies and the emergence of new scale economies has facilitated consolidation. When market demand grows slowly, increased consolidation can lead to increased concentration (fewer competitors). ERS researchers examined the role of changing technology and demand on structural changes in nine food processing industries.

Concentration in several processing industries raises questions about market power in the sale of agricultural products and about the effects of concentration on innovation and productive efficiency. Consolidation in beef and pork slaughter has been of special interest to policy officials given the historically high and growing rates of concentration. For example, the four largest steer and heifer slaughter firms accounted for 85 percent of total slaughter in 2015, after remaining around 80 percent prior to 2009.

From 2002 to 2012, the four-firm national concentration ratio in the soft-drink industry increased from 52 percent to 68 percent. In 2012, there were 11 percent fewer soft-drink processing plants and 14 percent fewer companies than in 2002. One factor influencing consolidation is the decline in per capita consumption of soft drinks; U.S. soda sales dropped for the 11th consecutive year in 2015, reaching a 30-year low. U.S. bottled-water consumption surpassed soft drink consumption for the first time in 2016, becoming the largest beverage category by volume.

Methods of vertical coordination are also changing, with a shift away from the use of spot markets toward greater reliance on contracting in some grains and in livestock.

Vertical Coordination in the Pork and Broiler Industries: Implications for Pork and Chicken Products traced the spread of contracting in the pork and broiler industries, related to earlier changes in broiler production, and identified reasons for the growing reliance on contracts in place of spot market purchases. ERS also examined a small sample of actual contracts used by pork processors to explore how contracts address growing concerns over pork quality

High and increasing levels of concentration in some sectors of the food industry, coupled with changing methods of vertical coordination between producers and processors, have led to concerns about reduced competition. Policy concerns include thinly-traded spot markets where processors could use informational advantages to lower prices paid to producers and increased difficulties in gathering market information and assessing market performance. At the same time, contracts and vertical integration offer more opportunities for coordination that may foster gains in efficiency that would ultimately benefit producers, processors, and consumers.

After 5 years of steady growth, U.S. agricultural exports declined in 2015 to $133 billion due to slower world economic growth, a strong U.S. dollar, lower exports of high-value products, and falling prices for bulk commodities. U.S. imports continued to grow at 2 percent in 2015 as the real exchange rate has made foreign goods cheaper in the U.S. domestic market. However, import gains were well below the 7-percent average for 2000-15, reflecting slower growth in global trade volume last year. These shifts in U.S. agricultural trade produced a trade surplus in 2015 about half of its 2014 value at $19.5 billion.

The value of U.S. agricultural exports declined in 2015, reversing 5 consecutive years of export growth. Since 2000, developing countries–led by China–had been the main drivers of U.S. export gains. Horticultural exports were the only product group to grow in 2015, up about $266 million, which increased its share of total U.S. agricultural exports to about 25 percent. In fact, horticultural products became the largest share of any group, surpassing livestock products, grains/feeds, and oilseed/products, which had combined losses in 2015 that accounted for nearly all of the decreases in export values.

Over 44 percent of U.S. agricultural imports are horticultural products: fruits, vegetables, tree nuts, wine, essential oils, nursery stock, cut flowers, and hops. Sugar and tropical products such as coffee, cocoa, and rubber comprised just over 20 percent of agricultural imports in 2015. Imports of vegetable oils, processed grain products, red meat, and dairy products have grown significantly in recent years.

Over the past 10 years, U.S. agricultural exports to China have grown over 13 percent annually on average. However, exports to China peaked in 2012 at $25.9 billion, then remained steady for 2 years before dropping by over $4 billion in 2015. Meanwhile, U.S. exports to Canada have been relatively stable, restoring Canada as the largest destination for U.S. agricultural products in 2015. The next largest markets are Mexico, the European Union, and Japan, all longstanding destinations for U.S. agricultural commodities.

Canada and Mexico remain the United States’ largest suppliers of agricultural products ($22.2 billion and $19.3 billion in 2013-15 respectively), mostly consumer-oriented goods such as horticultural products, red meats, and snack foods. The European Union is a close third, accounting for $18.9 billion worth of U.S. agricultural imports in 2013-15, with horticultural products accounting for more than half the value. South America–led by Brazil, Chile, and Colombia–averaged $13.7 billion in U.S. imports over the past 3 years, consisting largely of horticultural, sugar, and tropical products in which it has a comparative or seasonal advantage.

From 2013 to 2015, East Asia and North America combined to account for about 62 percent of U.S. agricultural exports. East Asia–led by China, Japan, and South Korea–was the largest market, with a collective 34-percent share. The share of U.S. exports to Canada and Mexico has increased and accounted for 28 percent of world exports over the last 3 years. The European Union is the third largest regional destination, followed closely by Southeast Asia (led by the Philippines, Vietnam, and Indonesia). Meanwhile, South America is a shrinking market, with the noticeable exception of Colombia.

Exports account for a large share of the total volume of U.S. production for select agricultural products. For example, over 70 percent of the volume of U.S. production of tree nuts (largely almonds) and cotton were exported in 2011-13, as was more than 50 percent of rice and wheat production. Overall, the export share of U.S. agricultural production averaged 20 percent from 2011 to 2013 based on volume, the same average annual share since 2000.

U.S. consumers rely heavily on imports for certain products where demand far outweighs domestic production capacity. Over 95 percent of coffee/cocoa/spices and fish/shellfish products consumed in the United States are imported, as are about half of fresh fruits and fruit juices and almost a third of wine and sugar. As high U.S. incomes drive consumption, the volume of U.S. agricultural imports has increased by 4 percent annually, on average, since 2000.

Food Availability and Consumption
ERS’s Food Availability data measure annual supplies of several hundred raw and semi-processed food commodities moving through the U.S. marketing system, providing per capita estimates of the types and amounts of food available to U.S. consumers over time and identifying shifts in eating patterns and food demand. A second data series covering 1970 onward—the Loss-Adjusted Food Availability data—adjusts for losses from the farmgate to the fork, including damaged products, spoilage, plate waste, and other losses to more closely approximate per capita consumption.

While Americans are consuming more vegetables and fruit than in 1970, the average U.S. diet still falls short of the recommendations in the 2015-2020 Dietary Guidelines for Americans for these major food groups. Americans, on average, consumed more than the recommended amounts of meat, eggs, and nuts and grains in 2015.

In 2015, 62.6 pounds of chicken per person on a boneless, edible basis were available for Americans to eat, compared to 51.4 pounds of beef. Chicken began its upward climb in the 1940s, overtaking pork in 1996 as the second most consumed meat. Since 1970, U.S. chicken availability per person has more than doubled. In 2015, 15.5 pounds of fish and shellfish per person were available for consumption.

In 2015, 34 pounds per person of corn products (flour and meal, hominy and grits, and food starch) were available for consumption in the United States, up from 10.8 pounds per person in 1975, according to ERS’s food availability data. Wheat flour availability was 134 pounds per person in 2015—20 pounds higher than in 1975, but a decline from levels in the late 1990s.

In 2015, 129 pounds per person of caloric sweeteners were available for consumption by U.S. consumers, down from a high of 151.5 pounds in 1999. Availability of total corn sweeteners (high-fructose corn syrup, glucose syrup, and dextrose) fell from 83.6 pounds per person in 1999 to 57.7 pounds in 2015, while refined sugar (cane and beet) surpassed it in 2011, reaching 69.1 pounds per person in 2015.

According to ERS’s loss-adjusted food availability data, Americans consumed 1.5 cup-equivalents of dairy products per person per day in 1975 and in 2015—half the recommended amount for a 2,000-calorie-per-day diet. While overall quantity is the same, the mix has changed. Fluid milk consumption has fallen from 0.9 to 0.5 cup per person per day, while cheese consumption has doubled.

According to ERS’s loss-adjusted food availability data, Americans consumed 48.3 pounds per person of potatoes and 28.3 pounds of tomatoes in 2015. Just over 40 percent of potato consumption was frozen and 55 percent of tomato consumption was canned, as French fries and pizza sauce contribute to the high consumption of these two vegetables. The third highest vegetable—onions—came in at 7.7 pounds per person.

Americans consumed an average of 115.4 pounds of fresh and processed fruit per person in 2015, down from a high of 137.4 pounds in 1999. Apple juice consumption at 14 pounds (1.6 gallons) per person in 2015, combined with fresh apples at 10.7 pounds per person and canned, dried, and frozen apples (3.3 pounds per person), puts apples in the #1 spot for total fruit consumption. Bananas (11.4 pounds per person) top the list of most popular fresh fruits while orange juice leads juice consumption at 23.7 pounds (2.7 gallons).