ABSTRACT
Most agricultural output is produced by a relatively few large farms whose activity significantly influences long-run price levels. This chapter describes the concepts of farm size economy, the role of management ability, and the nature of the structure of this economic sector, and provides the kind of insight that motivates useful proposals concerning solutions. The consideration of the relationship among cost, size, and income helps to define these as representing the core of the farm income problem. Labor-saving technological change has caused many people to leave agriculture for higher incomes in off-farm employment. A quest for an understanding of the financial problems of the farmer must follow from a perspective on the structural organization of the sector and its adjustment dynamics. Continuance of the so-called family farm as the main structure of agriculture suggests, on the one hand, that if size economies exist, they soon give way to diseconomies.
