How domestic processing shapes farm income and economic value
According to Dr. Faith Parum, Economist, American Farm Bureau Federation, American agriculture is one of the most productive sectors worldwide. Advances in plant and animal genetics, mechanization, and precision agriculture have driven significant yield improvements.
Corn yields increased from 38 bushels per acre in 1950 to nearly 187 today, while soybean yields have more than doubled.
However, farm profitability depends not just on productivity but also on where agricultural commodities are processed. Commodities such as grains, oilseeds, and cotton pass through processors, manufacturers, and retailers before creating income for farmers. The location of processing affects where economic value accumulates.
For example, oilseeds are transformed into cooking oils and renewable fuels, grains into ethanol and animal feed, and cotton into textiles and apparel. When these processes occur in the U.S., they support domestic businesses, workers, and rural communities. When processing moves overseas, the associated economic value shifts away from U.S. agriculture.
The cotton sector illustrates the impact of lost domestic manufacturing. U.S. textile mills once bought about 11.3 million bales annually in 1997/98. Today, domestic mill use has declined to roughly 1.6 million bales as apparel production shifted abroad. This change has forced farmers to rely heavily on exports and absorb more market risk.
On March 10, American Farm Bureau Federation President Zippy Duvall testified before the Senate Committee on Agriculture, Nutrition, and Forestry, emphasizing the need to rebuild domestic demand and strengthen resilient supply chains. According to Dr. Parum, supporting domestic processing is key to ensuring that productivity gains translate into income and economic stability for farmers and rural communities.
Photo Credit: cotton-gin-closures