While the role of the agriculture economy has grown, the share of Black farmers in the United States has declined over the last century. Today, just 1.4 percent of farmers identify as Black or mixed race compared with about 14 percent 100 years ago. These farmers represent less than 0.5 percent of total US farm sales (Exhibit 1). Further, Black farmers operate at 70 percent of US peer-level farm revenue with a 14 percent operating margin gap versus their peers, before government payments (Exhibit 2).
Agriculture production plays a key role in the rural economy. On average, agriculture production contributes about 5 percent of GDP and 10 percent of employment.1 In some of the most rural areas of the country, this value can grow to about 18 percent of GDP and 12 percent of employment. Beyond direct production, agriculture generates second-order employment opportunities and contributes to GDP growth in rural communities through related industries, including transportation and maintenance, veterinary services, food processing, and health services for employees.
Several factors have contributed to the decline of Black-owned farms in the United States: federal programs and policies that excluded Blacks from land purchases (for example, the Homestead Act of 1862² and Morrill Land Grant Act of 18623 were passed prior to passage of the Fourteenth Amendment4 that recognized formerly enslaved people as citizens); the absence of legal protections such as wills that could have facilitated transfer of property to the next generation (heirs’ property5); and limited access to capital through discriminatory lending practices.6 Taken together, the inability of Black Americans to fully participate in the land market has resulted in a lost opportunity for generational wealth creation.
Farming may offer an economic opportunity for Black Americans, particularly in rural areas. While the median household income for all Black Americans is $45,438, the median income for farmers is nearly 25 percent greater, at $57,081. The median net worth for farmers is 43 times that of Black households, representing a potential opportunity for Black Americans to build net worth. (Exhibit 3)
There are two potential paths to address racial disparities in farming: bringing current Black farmers to parity in farm performance and increasing Black representation in farming. We estimate that addressing these opportunities could generate measurable economic and social value.
First, Black-owned farms are smaller and generate less sales and profits per farm than peers. By bringing Black farmers to parity on a per-farm revenue and profit basis, there is $5 billion in economic value that can be created (Exhibit 4). Second, increasing business participation for Black farmers could create ladders of opportunity for the 66,000 Black workers employed in the agriculture sector and beyond; thus, it could serve as a path to improve representation (1.4 percent) to at least reflect the Black US population in farming counties (8 percent) or the broader US population (13 percent).7
Conversations with stakeholders across the agriculture value chain and research into Black farmer focus programs suggest barriers to realizing this potential. Capturing this value requires addressing a variety of challenges for current and aspiring Black farmers.
- Economic: Constrained growth due to poor resource endowments, including land and capital, and hindered access to credit and business services.
- Educational: Asymmetric access to information and knowledge. Historically black colleges and universities often do not receive adequate funding for their agricultural programs,8 so there remains an information gap with potential black farmers.
- Social-cultural: Restricted access to networks and opportunities to access resources. The US Department of Agriculture (USDA) has publicly recognized historical discrimination against Black farmers,9 resulting in generational wealth loss for many former Black farmers.
- Institutional: Lack of access, awareness, and participation in the USDA and other programs as well as limited private sector reach.
Public and private programs exist today to support Black farmers, but they vary in maturity and reach. For example, many private programs are in pilot stages and have yet to achieve their full potential scale and scope. Further, many public programs have faced challenges to scale due to historical distrust of farming support and lack of awareness among the Black farming community. Conversations with participants across the agriculture value chain suggest eight example actions stakeholders can consider. (Exhibit 5)
There are numerous other ways the public and private sector could support today’s current and aspiring Black farmers as well as increase their representation in the United States. From a public perspective, the recent passage of Section 1006 of the American Rescue Plan Act of 2021 provides funding to the USDA to address historical discrimination and disparities in the sector. From a private perspective, there are meaningful opportunities for a variety of stakeholders to address their environmental, social, and governance (ESG) commitments by investing in and supporting current and future Black farmers.