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ARMS is critical to the research and analysis mission
of ERS and is a key input to developing agricultural statistics
across USDA and other government agencies. It provides
the information base for sector estimates of value added,
income for farms by type of commodity specialization,
costs of producing major crop and livestock commodities,
indices of prices paid by farmers for production inputs,
and an annual report on the status of family farms. ARMS
supports USDA estimates of household income and wealth,
and contributes to a variety of applied farm production,
management, technology adoption, resource use, and household
well-being research applications.
ARMS data on the economic activities of individual farm
households aid policy analysis on how farmers cope with
risk, adjust to policy shocks, and make decisions on labor
and technology adoption. The data also enable researchers
to carry out disaggregated analyses ranging from a group-wise
estimate of financial well-being based on farm and/or
household characteristics (e.g., the ERS farm typology)
to behavioral hypothesis testing with unit-level data.
Collection
of the Agricultural Resource Management Survey (ARMS) data is critical
to the research and analysis mission of the Economic Research Service,
and is a key input to estimates across the Department of Agriculture
and in other agencies.
- ARMS is USDA's primary source of information about the current
status and trends in the financial condition, production practices,
and resource use of America's farmers, as well as their households
economic well being.
- ARMS provides the production expense and farm-related income
data that underlie USDA's annual estimates of net income earned
by the farm sector.
- USDA provides the farm sector net income estimates to the Bureau
of Economic Analysis (Department of Commerce) for developing annual
estimates of gross domestic product and personal income for the
U.S. economy.
- Farm income data from ARMS are key to assessing USDA's success
in improving the market income of U.S. farmers.
Mandated Uses
ARMS data enable ERS to issue annual estimates of average income
for farm operator households and to provide annual cost-of-production
estimates for over 15 agricultural commodities (a congressional
mandate) for use in analyzing farm commodity prices. In preparing
the Annual Report on Family Farms, required by the Food and Agriculture
Act of 1977, ERS draws on ARMS data for information on a host of
relationships, including:
- Farms' participation in agricultural programs
- The structure and organization of farms, including family and
nonfamily ownership
- The use of new production technology and other management practices
- Farmers' participation in off-farm employment.
To meet the requirements of the Food, Agriculture, Conservation,
and Trade Act of 1990 and the Food Quality Protection Act of 1996,
NASS collects ARMS data on field crop chemical use and publishes
those data annually in its report, Agricultural
Chemical Usage Field Crops Summary. ARMS data are also the
source for NASS's Farm
Production Expenditures, an annual summary of U.S. and regional
farm production expenditures.
ARMS production input data provide annual weights for NASS's computation
of the Prices
Paid by Farmers Index, used to calculate parity prices required
by the 1933 Agricultural Adjustment Act. Parity prices help regulate
some 45 fruit, vegetable, and nut Federal marketing orders. The
indices are also required by the 1978 Public Range Improvement Act
to calculate annual Federal grazing fees on the Nation's western
public lands by the Bureau of Land Management and the Forest Service.
Milk marketing boards are also dependent on the price indices and
expenditure data, which are also used in USDA's measures of farm
productivity.
Research and Analysis
ARMS data fuel ERS's research and analyses to answer key questions
from USDA, Congress, administration officials, and other decisionmakers
when weighing alternative policies and programs that touch the farm
sector or affect farm families. The ARMS survey is the only source
of national data to support research on farmers' decisions to adopt
new technologies and to relate those decisions to the economic performance
and structural attributes of farms and farm families, and to subsequent
environmental impacts. Key technology adoption decisions being tracked
in the ARMS survey include the choice of bio-engineered seed, the
selection of waste management practices by livestock producers,
the use of chemical and biological pest management alternatives,
and the use of information management technologies ranging from
precision farming in crop production to marketing commodities and
buying inputs via the Internet.
Some examples of ERS research based directly on ARMS data include
the following:
- How
Do U.S. Farmers Plan for Retirement?—Retirement
and succession planning are of considerable importance to farm
households and there are good reasons to believe that they are
affected by savings and retirement policies in ways that are different
from the rest of the Nation's households. This article examines
how farmers save for retirement as well as their dependency on
social security.
- Structure and Finances of U.S. Farms: Family Farm Report, 2007 Edition—ARMS
data including off-farm income shows that farms in the U.S. are
diverse, ranging from very small retirement and residential/ lifestyle
farms to establishments with sales in the millions of dollars.
Farming continues to be a distinctive industry in part because
most production, even among very large farms, is carried out on
family-operated farms whose operators often balance farm and off-farm
employment and investment decisions. The organization of farming
affects the efficiency and competitiveness of the farm sector,
the well-being of farm households, the design and impact of public
policies, and the nature of rural areas.
- The Conservation Reserve Program:
Economic Implications for Rural America—ARMS
data assesses the characteristics of farms enrolled in the CRP
and the impact that high levels of enrollment have had on economic
trends in rural counties since the program's inception in
1985. High levels of CRP enrollment appear to have affected farm-related
businesses over the long run, but growth in the number of other
nonfarm businesses moderated CRP's impact on total employment.
- Corn Characteristics
and Production Costs—This report is part of
a long running series examining how production costs vary among
producers. Data was from corn-specific versions of ARMS. Details
include production practices, input use, farm operator, and structural
characteristics. Commodity costs and returns are estimated using
the data from each survey and then updated between surveys to
reflect changes in input costs and commodity prices and production.
- ARMS Data Offer New
Perspectives on Cropping Practices (6/2004)
ARMS provides data regarding chemical use on field crops as required
under environmental and food safety legislation. Key technology
adoption decisions tracked by ARMS include the choice of bioengineered
seed, the selection of waste management practices by livestock
producers, the use of chemical and biological pest management
alternatives.
In addition to research that depends primarily on ARMS data, ARMS
contributes to other research, analyses, and situation and outlook
work because it provides the basic cost-of-production and supply
response information on which other analyses depend. Examples of
ARMS use in such research includes:
- Peanut Backgrounder—ARMS data shows how peanut policy was transformed
in 2002 by the elimination of a decades-old marketing quota system.
Like producers of other agricultural commodities, U.S. peanut
growers in recent years have confronted pressures from market
forces and the impacts of policy developments, both domestic and
international.
- Wheat Backgrounder—ARMS data shows the finances of specialized wheat
farms in the U.S. Farms depending on wheat sales for over half
of their receipts have much lower farm incomes and financial assets
compared with other farms producing wheat.
- Decoupled Payments In A Changing
Policy Setting—This report analyzes the U.S.
experience with decoupled payments in the Production Flexibility
Contracts program from 1996 to 2002. The studies in this report
consider the effects of decoupled payments on recipient households,
and assess land, labor, risk management, and capital market conditions
that can lead to links between decoupled payments and production
choices. Each study contributes a different perspective to understanding
the response of U.S. farm households and production to decoupled
income transfers.
Staff Analyses
Beyond formal, published research, ARMS data are provided across
USDA and other government agencies in response to specific staff
analysis requests and to meet recurring monitoring and information
needs. For example, ERS provides the Office of the Undersecretary
for Farm and Foreign Agricultural Service with information from
ARMS as needed to weigh alternative policies and programs affecting
the farm sector and farm families. Recent analyses on the financial
status of farming used ARMS data to prepare outlook information
for farms and farm households by type of farm, size of farm, and
U.S. region; balance sheets for farms by size of farming operation;
a cumulative distribution of farms by economic cost-to-output ratios;
and the distribution of key commodity production by production cost
level. ERS also makes frequent and extensive use of ARMS data meeting
requests for data and analysis from the Office of the Chief Economist.
Examples of such requests include:
- Calculating farm energy cost-to-output ratios;
- Highlighting the distribution of farm income, household income,
and potential problems servicing debt;
- Explaining the distribution of farm program payments; and
- Identifying the characteristics of producers purchasing crop
insurance.
Information for Other USDA Agencies
Use of ARMS data by USDA agencies is both periodic and topical.
Examples include:
- USDA's Office of Energy and New Uses relies on ARMS data
to show annual energy expenses of U.S. farms. Farm expenses for
gasoline, diesel, natural gas, lp gas, and other fuels are estimated
per acre of major commodity and for the whole farm.
- The Agricultural Marketing Service uses ARMS data in deriving
its monthly cost-of-production estimates for milk production for
the U.S. and five regions.
- The Risk Management Agency has used special tabulations from
ARMS to understand levels of farm income and risk management tools
used by farmers.
- The Agricultural Research Service has used special tabulations
from ARMS to better understand the structural and production characteristics
of farms and the demographic characteristics of farm operators
for each of its research planning regions.
- The Natural Resources Conservation Service (NRCS) had a pilot
project that combined the 2004 ARMS wheat survey with the NRCS
Conservation Effects Assessment Project (CEAP) survey. This single
survey has the potential to link farm financial decisions with
environmental decisions. NRCS has consulted ARMS data on production
costs, input use, and technology adoption to assess the performance
of conservation programs, and has used information on manure and
fertilizer use and management practices to calculate nutrient
mass balances for selected crops, regions, and management systems.
- The Cooperative State Research Education and Extension Service
has used ARMS information about adoption of alternative pest management
strategies used by farmers in its program planning.
- The Rural Business-Cooperative Service has used ARMS to obtain
information about the use of cooperatives by farmers.
- Extension services throughout the Land Grant system have used
the ARMS-based ERS farm
typology to better target farmer education programs.
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