In recent decades, U.S. agriculture has witnessed a decline in the number of “farming occupation” farms—where operators report farming as their main occupation—in all gross sales categories below $500,000. Many observers attribute the difficulties faced by small and midsized farms to their inability to effectively compete in the highly competitive and increasingly globalized agricultural markets for generic commodities. The most significant challenges faced by these “agriculture of the middle” farms include difficulty in accessing capital, lower rates of return on equity compared to very large farms, inability to take full advantage of mechanization and economies of scale, higher transaction costs in dealing with supply chain partners, improvements in information technology designed for commodity-scale farms and the impacts of federal farm programs.
In response, some small and midsized farm operators are exploring alternatives to commodity markets. A few have achieved success by selling through local and direct markets. Many others, however, produce too much, raise unsuitable products or are located too far from these direct marketing opportunities. Some of these farmers have turned instead to the types of strategies described and defined in this set of case studies as “values-based food supply chains,” or strategic business alliances formed between primarily midsized farms/ranches and their supply chain partners to distribute significant volumes of high-quality, differentiated food products and share the rewards equitably.