Size matters when it comes to profits

Big farms make more money per acre than smaller farms. Terry Kastens, ag economist with Kansas State University, says the biggest third of U.S. farms, based on data from 1998 to 2007, make an extra $19 per acre over the average farm. Think about that for a minute. Not only do they have more acres, but they're making more profit on each of those acres. That's why, Kastens says, farmers continue to get bigger. The economies of size are pushing farms in that direction.

I listened to Kastens speak online in an archived presentation from the Canadian Farm Business Management Council’s Managing Excellence in Agriculture conference, which was in January. You can watch it, too. Click here. If you have trouble with the streaming video-audio feed, click "Download audio file" in the bottom right. You don't get the slides, but you can at least listen without interruption.

Kastens gives 5 reasons why big farms are more profitable

1. They have much lower costs per acre, particularly for machinery and labour.

2. They get higher yields.

3. With bigger volumes, they can negotiate higher prices.

4. They farm more intensively.

5. They are faster adopters of technology that will lower costs per acre or increase yields.