Size does not buy a bigger profit margin on American crop farms, according to an analysis by Purdue University agricultural economist Michael Langemeier. Looking at farm records from 2007 to 2025, he found operating profit margins averaged about 20 per cent on small and large farms alike.
The study drew on FINBIN, a database of farm financial and production records built and kept by the University of Minnesota. It compared farms with fewer than 500 acres of crops with those farming more than 2,000 acres.
Profitability and the growth of net worth showed little difference between the two groups. Where the large farms did pull ahead was asset turnover, the measure of how much revenue a farm generates from the land, machinery and other assets it holds.
The largest farms averaged an asset turnover of 35.2 per cent, against 22.3 per cent for the smallest. That gap, the analysis found, has narrowed over the years.
The finding is that the difference in returns between big and small crop farms comes more from how efficiently assets are used than from the margin earned on each sale. Further work is planned on labour and machinery benchmarks.
Photo: USDA / Wikimedia Commons (Public domain)
Source: Michigan Ag Today
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