Farm Support Services
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Industry Overview
The US farm support services industry includes about 85,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of $15 billion. No major companies dominate the industry, which is highly fragmented.
This industry includes companies that support crop and animal farm operations but don't themselves harvest crops, raise farm animals, or own farmland.
Competitive Landscape
Demand is driven by domestic trends in crop and livestock production. The profitability of individual companies depends on establishing a value-added benefit to farms and keeping wages low. Large companies have advantages in vertical integration and in offering a wide range of services. Small companies can compete effectively by specializing in a niche industry or service. The industry is labor-intensive: average revenue per worker for a typical company is $140,000.
Products, Operations & Technology
Major services include post-harvest crop activities like drying, cleaning, shelling, sorting, grading, and packing (45 percent of industry revenue); animal support activities like breeding livestock and pets, boarding and training horses, spraying cattle with insecticides, and stud services (25 percent); and soil preparation services like plowing, fertilizing, and planting, cultivating, and protecting crops (15 percent). Other services include machine-harvesting crops, crop farm management services, and farm labor contracting on citrus groves, vineyards, and orchards.
Among all US farm support service providers, half specialize in crops and half in livestock. However, crop-related activities account for 75 percent of total farm support service revenue.
Crops are at their most delicate and fragile at initial planting and just after harvest. To minimize crop loss, farms often outsource planting, harvesting, and post-harvest tasks to companies (or neighboring farmers) that specialize in these critical stages. While many farms have expertise in pre- and post-harvest activities, outsourcing these can help maximize yield and lower farm labor costs.
Immediately following harvest, water retention and temperature control are the two most critical concerns. Fresh products can quickly become damaged due to excessive hot or cold temperatures, direct sunlight, or desiccation (water loss). Uneven temperatures can lead to excessive browning, uneven ripening, softening, and off-flavors. Many fruits, vegetables, and flowers shrivel after losing only a small percentage of their ideal moisture content. For example, lettuce won't spoil for 10 days when picked at temperatures less than 60 degrees and cooled within two hours, but if picked at 75 degrees and not cooled until after 10 hours, spoilage begins after two days.
To make the most of a harvest, farms, particularly large farms, often use third-party services that can quickly pick and/or transfer harvest crops into the processing stage. Depending on the crop, key tasks include force-air-cooling, drying, cleaning, threshing, grading, and sorting.
Inputs vary depending on the support services provided. Common inputs include diesel fuel, electricity, machine repairs, chemicals, water, and hired farm labor.
Recent technological advances include automated grading and sorting machinery, GPS tracking, improved cattle spray technology, and yield monitoring software that optimizes farm labor hours needed at harvest. Support service providers often become experts in the technological advancements of their chosen field and can access new products that may be out of reach for the typical farm. Some companies work in conjunction with agricultural research schools. Universities that specialize in post-harvest crop research and livestock support include the University of California at Davis and North Carolina State University.
