Net Farm Income
Net farm income is that portion of
the net value added by agriculture to the national economy earned
by farm operators (i.e., the entrepreneurial earnings
of those individuals who share in the risks of production
and materially participate in the operation of the business).
Farm operators typically benefit most from the increases
and assimilate most of the declines arising from short-term,
unanticipated weather and market conditions.
What is the difference between net farm income and net
cash income?
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Net farm income differs from net
cash income by accounting for the value of home
consumption, changes in inventories, capital replacement,
and implicit rent and expenses related to the farm
operator's dwelling that are not reflected in cash
transactions during the current year.
What does net farm income measure?
-
Net farm income is a value of production measure,
indicating the farm operators' share of the net value
added to the national economy within a calendar year,
independent of whether it is received in cash or a
noncash form such as increases/decreases in inventories
and imputed rental for the farm operator's dwelling.
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