ment test values can be improved by fertilizer application, and especially in areas where stiff-strawed, lodging-resistant varieties are grown.

Yield response data imply that in areas where rainfall is not a limiting factor more nitrogen may be applied profitably to the wheat crop. Within a range of 20 to 80 pounds of nitrogen applied per acre, an additional 50 pounds of nitrogen with supporting practices, increases the yield of wheat 10 to 12 bushels an acre.

In 1963-64, the average yield of wheat in the Corn Belt, Lake States, and Northwest, was about 37 bushels an acre. Within the next 5 to 10 years it appears realistic to expect an increase of 5 to 10 bushels per acre in these areas, due to increased use of fertilizer and related practices. (This would compare with a recorded increase of about 5 bushels per acre in the past 5 years.)

The use of nitrogen on wheat in Texas, Oklahoma, Kansas, and Nebraska also has been increasing in recent years. In 1964, it is estimated that nitrogen was applied to wheat in these States as follows:

Although the economic incentives for applying more fertilizer on wheat are not as great as on corn, they are substantial in many areas. At current price levels it appears realistic to expect wheat yields to be increased 10 to 15 percent in the next 5 to 10 years as a result of increased use of fertilizer, especially nitrogen, together with improved varieties and technical practices. Also, as mentioned earlier, the development of hybrid wheat is a definite possibility.

Economics of fertilizer use on cotton.-In 1959 cotton producers in the Southeast, Delta, and Appalachian States applied an average of 61 pounds of N, 46 pounds of P2O5, and 51 pounds of K2O per acre. Cotton producers on irrigated land in the Western States including Texas, California, and Arizona applied from one-half more to twice as much nitrogen and about the same amount of other plant nutrients per acre.

Acre yields of cotton in 1963-64 were 37 percent higher than 10 years earlier and 22 percent higher than 5 years ago. A number of other cultural practices, including improved pesticides for insect control, herbicides, and skip row planting, have been equally important as increased use of fertilizers in achieving these yield increases in 1963-64 over earlier years. The advance in other technology to a large extent made it profitable to apply more fertilizer per acre.

Between 15 and 20 percent of the cotton acreage is irrigated, and irrigated cotton yields average from one-half more to double the yields on unirrigated land. Although the percentage of the cotton acreage which is irrigated increases slightly from year to year, increased irrigation has not been a major factor in increasing production in recent years.

Yield response data on cotton as related to fertilizer use have not been summarized and analyzed as fully as data on corn yields in the

Corn Belt States. However, cotton producers have used fertilizers for a much longer period than midwest corn producers. In view of existing technology, use of fertilizer on cotton probably is not far below the most profitable level.

If other technology continues to advance at recent rates, and if the use of fertilizer is increased accordingly, in the next 5 to 10 years, cotton yields might be expected to increase 60 to 100 pounds from the 1963-64 level of 520 pounds per acre.

Few field crops require the care, attention, and pest control measures which are required to achieve full potential cotton yields. Unless other necessary practices were carried out on time, response to heavier rates of fertilization would be impeded. For this reason fertilizer use on cotton may not increase as rapidly in relation to its otherwise economic potential as in the case of grain crops.

Increases in efficiency in livestock production

There have been no changes in livestock production in recent years comparable to the increased use of commercial fertilizers in crop production. Improvements in breeding stock, while important, especially in chickens and turkeys, have not equaled the improvements in crop varieties. Primarily for these reasons increases in livestock output per breeding animal or per ton of feed fed have not approached the recent increases in crop production per acre.

Although aggregate data are inconclusive, there have been modest increases in efficiency of livestock production, as indicated by unpublished data assembled by the Economic Research Service.

Beef cattle fattening has been influenced by a number of developments. Fewer cattle are being fattened to the highly finished, prime grade. Cattle are put in the feed lots at younger ages and a higher proportion of the cattle marketed are grain fattened. Stilbestrol, a synthetic hormone added to the feed, increases the rate of gain and efficiency in use of feed. Urea, a form of nitrogen fertilizer, is being used in increasing quantities to replace a part of the high protein supplements in cattle and sheep rations. As a result of these developments together with improved management, we now produce about 20 percent more live weight of grain-fattened cattle per 100 pounds of feed than 10 years ago.

Better cows, better feeding and better management all have been important in increasing the quantity of milk produced per cow. Dairymen are now getting about 28 percent more milk per cow than 10 years ago. However, each cow is being fed more concentrates to obtain the increased milk production and the amount of feed utilized to produce 100 pounds of milk has declined only 4 percent in the past 10 years.

Although a number of developments are underway in hog raising, none of them appear to have increased the efficiency with which feed grains are used in hog production. Such data as are available indicate it may take as many pounds of feed to produce 100 pounds of hogs as 10 years ago.

Feed fed per 100 pounds of broilers and turkeys produced has dropped about 25 and 15 percent, respectively, in the past 10 years. Feed fed to layers per 100 eggs produced also has dropped about 15 percent in the last decade.

From the standpoint of feed utilization in livestock production, probably the most important development has been the discovery of

satisfactory ways of substituting urea for a part of the high protein meals in cattle and sheep rations. In the past 8 years sales of urea for feed have more than doubled. Urea used for feed in 1963 was equal to about 20 percent of the high protein feeds used in cattle and sheep feeding. Because of its low cost, the substitution of urea for other forms of protein in these feeds is expected to continue. In recent years the use of high protein livestock feeds for cattle and sheep has been increasing at the rate of about 350,000 tons, or 7 percent, a year. If the use of urea increases another 50 percent in the next few years, as seems probable, it will offset the annual increase in high protein feeds for cattle and sheep for a period of 2 or 3 years. At present it appears doubtful that use of urea for feed will double again in the next 5 or 10 years, because of the toxicity problems encountered in its use.

CURRENT TRENDS IN NUMBER OF FARMS BY SIZE

Since 1954 the number of agricultural workers employed and the number of farms in the United States have declined by 27 and 28 percent, respectively. The decline in farm numbers was mostly among small farms that produced very little and had little effect on production for market. (See table 2, p. 19.)

In 1954, 78 percent of the farm products marketed was produced on 1,323,000 farms with sales of $5,000 or more. There were 3,475,000 smaller farms which accounted for the remaining 22 percent.

Estimates of the Economic Research Service indicate the number of farms with sales of $5,000 or more may have increased to 1,535,000 in 1964 and that these larger farms now market 92 percent of all farm products. Farms with sales of less than $5,000 have declined almost one-half-to 1,940,000. These 1,940,000 smaller farms marketed an estimated 8 percent of the farm products marketed in 1964. During the past 10 years, farms with sales of $40,000 or more have increased from 63,000 to an estimated 140,000, and farms with sales of $10,000 to $39,999 increased from 535,000 to 835,000. Medium to small farms with sales of $5,000 to $9,999 have declined moderately― from 725,000 to 560,000. The sharp decline in farm numbers in the past 10 years has been in the smaller farms with sales averaging about $1,000 per farm. As recently as 1954, these smaller farms marketed only 10 percent of the farm products marketed.

Several general conclusions can be drawn from these data. The first is that 1964-type commodity price-support programs in the future would continue primarily to benefit only about 1,500,000 farmers who produce over 92 percent of the products marketed, fewer than half of all farm families. Second, relatively large farms with sales of more than $40,000, which accounted for only 23 percent of the farm products marketed 10 years ago, have increased in number and size until they now account for about 37 percent of farm marketings. Within a few years these larger farms may account for 40 percent of farm marketings. Third, since most farm businesses going out of existence had sales of less than $2,500 and workers who left were replaced by machinesthe decline in farms and farmworkers has been a minor factor in the economic welfare of those continuing to farm. Official reports showing substantial increases in net income per farm in recent years are subject to misinterpretation. Farms with sales of over $5,000 have approximated 1,500,000 for a number of years and the increase in net income

per farm for these farms has increased only 1 percent since 1961, in contrast to a reported increase of 7 percent per farm for all farms. Production of price supported crops on relatively large farms

Census data for 1959, the most recent data available, indicate that at that time 61 percent of the rice and 43 percent of the cotton was harvested on farms with sales of $40,000 or more. Thirty percent of the soybeans, grain sorghum, and barley also were harvested on large farms. The percentage of the other price supported products produced on the larger farms was relatively low. The detailed data follow:

Barley

Corn...

Products produced on farms with sales of more than $40,000, 1959

Percent

30

10

8

30

43

12

9

61

30

3

18

Tobacco..

Wheat..

FARM PROGRAM INFLUENCES IN PAST 10 YEARS

In the opening paragraphs it was noted that since 1955, in spite of substantial acreage and commodity diversions each year, farm output has been increasing slightly faster than the annual increase in domestic demand resulting from the population increases and increases in real income per capita. In the absence of acreage and commodity diversions, in the past 10 years the volume of crop and livestock products moving through commercial markets almost surely would have been larger than it was by 5 percent or more.

Economists find that a 1-percent increase in farm products moving through commercial markets lowers farm prices 4 percent.3 Farm prices almost surely would have fallen 20 percent or more and net farm income would have fallen even further in the first few years, had acreage and commodity diversion been discontinued. Wheat cotton, feed grain, and tobacco prices would have been most affected. Wheat prices probably would have dropped as much as one-half, cotton prices as much as one-third, and feed grain and tobacco prices more than one-fourth.

The larger supplies and lower domestic prices for these commodities would have lowered world prices and probably increased exports. Some believe that a drop in farm product prices of this magnitude would cause a substantial and rather prompt reduction in production. It would result in some shifting of crop acreages. Analysts, however, doubt that total production would be cut back for several years.

Much of the increase in output in recent years has come from increased use of fertilizers, which would be profitable with improved technology even though prices fell as much as one-third. Improved crop varieties and improved pesticides, adoption of which are profitable almost regardless of product price levels, also contributed to recent increases in acre yields. Moderate acreages of low productivity

3 Tyner, Fred H., and Luther G. Tweeten, "Excess Capacity in U.S. Agriculture," Agricultural Economics Research, January 1964, p. 29.

lands might have been diverted to other uses if farm product prices had been lower in the past 10 years. But land released by individuals quitting farming often is taken over by more capable managers and production on it actually is increased.

With ample tractor power available, there is little incentive for a farmer to reduce his acreage of grains and intertilled crops as long as he continues to farm and can meet operating and family living

expenses.

The major economic force making for a decrease in the production of crops and livestock, if prices had been 20 to 30 percent lower than in recent years, would have been the inability of farm operators to maintain their tractors, farm implements, and equipment. With continued low prices, lack of funds and absence of economic incentives would result in a substantial deterioration in the capital equipment used in farming. This, plus a slower rate of adoption of improved practices, even though profitable with low prices, would eventually check further increases in crop and livestock production.

How long this would take is a matter of speculation. Most analysts estimate that it would take more than 5 years of extremely low prices to cause U.S. farm production to decline sufficiently to bring supplies into balance with commercial market outlets at current price levels, or even moderately lower levels. During this time farm mechanization, farm consolidation, and off-farm migration probably would be slowed down.

Acreage diversion and price support programs in the past 10 years may have accelerated the adoption of improved production practices and increased use of fertilizer as compared with what might have occurred under sharply lower and less stable prices. It is doubtful, however, that this rapid technical progress would have been slowed appreciably by moderately lower prices. Under the Government programs in the last 10 years, the approximately 1.5 million farms which produced over 90 percent of the farm products received less than parity returns on their productive assets and labor.

Such data and estimates as are available suggest that in 1961-63 fewer than 200,000 farms with sales of $20,000 or more received returns for their capital and labor which equaled the returns received by comparable capital and labor in other industries. The great majority of the farms, producing most of the farm products received substantially less than comparable returns on their capital investment and labor.4

Farm program benefits and costs, 1961-65

Utilizing statistical methods developed and improved over a period of years, analysts estimate that net farm income which averaged $12.6 billion a year in the past 3 years, would have averaged about $6 billion a year in the absence of price support and acreage diversion programs. Estimates for 1965 also indicate that with a continuation of existing programs realized net form income may continue near recent levels, but in the absence of the programs it would be expected to drop to $6 billion a year.

These estimates assume price supports had been discontinued 3 to 5 years earlier and that a short period of adjustment had elapsed. They also assume crop yields would have been lower in the absence

See Masucci. Robert H., "Income Parity Standards for Agriculture," Agricultural Economics Research, October 1962, pp. 121-130.