Overview
This briefing room focuses on indicators of the economic
well-being of the households of the principal operators
of family farms. In addition to income and wealth, the
briefing room describes indicators of poverty status,
an income-wealth indicator, health insurance coverage,
household living expenses, and farm injuries. It
includes USDA's latest forecast for 2007. The
well-being of farm
operator households is not equivalent to the financial
performance of the farm sector or of farm businesses because
there are other stakeholders in farming, such as landlords
and contractors, besides farm operator households. In
addition, farm operator households have nonfarm investments,
jobs, businesses, and other links to the nonfarm economy
that are separate from their farming interests.
How do we define our target population—households
of principal operators of family farms? First of all,
we rely on USDA’s definition of a farm. The large
majority of these farms are small farms by any standard.
Second, a family
farm is defined as one in which the majority of the
ownership of the farm business is held by related individuals.
Nearly all farms (96 percent in 2006) are family farms.
Third, we identify the principal operator population and
his or her household. Most farms have only one operator.
For multiple-operator farms, a principal operator is identified
during the annual process of collecting economic information
from farm businesses. About 40 percent of farms have more
than one operator. Although that may appear to be a large
share of farms with multiple operators, for three-quarters
of the farms with multiple operators, the farm is operated
by a husband-wife team. Therefore, both operators are
part of the principal
operator household on which we focus.
The number of farms and the manner in which they are
distributed by size of farm, has a profound effect on
statistical indicators of farm operator household well-being,
such as averages or medians. Therefore, the briefing room
includes statistics based on classifications of farm operator
households that highlight the diversity of the farm sector.
The ERS website gives access to indicators of well-being
by several classification schemes through the Agricultural
Resource Management Survey (ARMS)
webtool. This tool allows a user to tailor a request through
data queries to produce statistical tables.
Features
Agricultural
Income and Finance Situation and Outlook—This annual periodical provides historical estimates
and forecasts of financial information that gauge the
financial health of the Nation's farmers and ranchers. Financial
information is provided for the whole farm sector (including
contractors and landlords), for all farms, for farm businesses
with a principal operator whose major occupation is farming,
and for the households of principal farm operators. Common
topics include trends in income, value added, receipts,
government payments, expenses, debt, assets, and financial
performance. Because of the great diversity across
the farm sector many indicators are presented by size
of farm and other relevant classification schemes. (12/07)
 Effects
of Reducing the Income Cap on Eligibility for Farm Program
Payments—The current $2.5-million income cap
on eligibility for farm program payments affects only
a small number of farm program payment recipients each
year. A reduction in the cap to $200,000 would affect
a larger number of farm households but still only a small
share of recipients. Based on IRS tax data and ARMS survey
data about 1.5 percent of all farm operator households
could be subject to this proposed cap. $807 million in
payments were received in 2004 by farm operators organized
as proprietors, partnerships, and corporations with incomes
exceeding $200,000. The study also found that farm income
averaged $271,749 and net worth averaged over $1.86 million
for farm households with AGI estimated to be over $200,000.
(9/07)
The
Importance of Farm Program Payments to Farm Households—Less
than half of all farms receive farm payments from commodity
or conservation programs. And two-thirds of those that
receive payments receive less than $10,000—a relatively
small amount of income compared to their other income
sources and their wealth position. This article describes
how different types of program payments are distributed
by farm size and region and identifies the relatively
small share of farms for which payments represent a large
part of farm returns. Amber Waves (6/07).
 Structure
and Finances of U.S. Farms: Family Farm Report, 2007 Edition—This
report presents comprehensive information on family and
nonfamily farms and important trends in farming, operator
household income, farm performance, and contracting. Most
farms are family farms, and small family farms account
for most farms but produce a modest share of farm output.
A companion brochure
summarizes the report's findings. (6/07)
Recommended Readings
Whole-Farm Approaches
to a Safety Net—In recent U.S. farm policy debates,
several "whole-farm revenue" programs have been proposed
as a new form of safety net that would be available to
all U.S. farms. A whole-farm program is based on revenues
from all farming activities added together and is not
linked to the production of particular commodities. This
report looks at the risk management potential for such
programs and the obstacles to implementing such a whole-farm
revenue approach to a farm safety net. (6/06)
See all recommended readings...
Recommended Data Products
Farm Business and Household Survey Data: Customized Data
Summaries from ARMS—Use this new dynamic web-based
data delivery tool to learn about agriculture online:
farming practices, commodity production costs and returns,
the economics of the farm business, the structure of American
farming, and the characteristics of the American farm
household. Get tailored reporting on agricultural production
technology, farm business viability, and the structure
of U.S. agriculture from the very latest information gleaned
from ARMS—including, for the first time, data for
15 selected States as well as the nation as a whole. This
new tool provides one-stop shopping, centralizing access
to all ARMS data, including that previously provided in
the Farm Financial Management and the Crop Production
Practices data products.
Deriving
operator household income, recent years—This
spreadsheet provides the data used to derive recent as
well as forecast U.S. average income to farm operator
households.
Historic
Data on Farm Operator Household Income—Operator
household income data prior to 1996, including a time
series back to 1960.
Farm Income provides
farm income forecasts, updated regularly, and farm income
estimates, released once a year. Forecasts are developed
using an economic accounting model that generates forecasts
of value-added and farm income, plus component accounts
of cash receipts and production expenditures, for the
national farm sector. Estimates are derived from survey
data gathered by USDA's National Agricultural Statistics
Service and other national institutions over the course
of the year.
Farm Balance Sheet
accounts include assets, debt, and equity, (equity equals
assets minus debt), and are used to assess wealth in the
farm sector. Both operators' and landlords' shares of
the assets and debt for the farming operation are included.
The financial ratios presented provide useful indicators
of the farm sector's financial performance.
Related Briefing Rooms
Glossary
Check the glossary
for explanations of the economic concepts used throughout
farm household economics and well-being.
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