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Farming and Farm Income

American agriculture and rural life underwent a tremendous transformation in the 20th century. Early 20th century agriculture was labor intensive, and it took place on many small, diversified farms in rural areas where more than half the U.S. population lived. Agricultural production in the 21st century, on the other hand, is concentrated on a small number of large, specialized farms in rural areas where less than a fourth of the U.S. population lives. The following material provides an overview of these trends, as well as trends in farm sector and farm household incomes.

 
While gross farm income roughly measures the total value of agricultural output, it does not reflect the farm sector’s contribution to that value, nor does it measure the income earned by farm operators and other farm sector stakeholders. Net farm income—which reflects income from production in the current year—is calculated by subtracting farm expenses from gross income. Net farm income is forecast to be $97.3 billion in 2014, down almost 25 percent from 2013’s estimate. If realized, the 2014 forecast would be the lowest since 2010, but would still remain more than $12 billion above the previous 10-year average. 
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After peaking at 6.8 million farms in 1935, the number of U.S. farms fell sharply until leveling off in the early 1970s. Falling farm numbers during this period reflected growing productivity in agriculture and increased nonfarm employment opportunities. Because the amount of farmland did not decrease as much as the number of farms, the remaining farms have more acreage—on average, about 430 acres in 2012 versus 155 acres in 1935. Roughly 2.1 million farms are currently in operation.
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Median total household income among all farm households ($68,298) exceeded the median for all U.S. households ($51,017) in 2012. More than half of U.S. farms are very small, with annual sales under $10,000; the households operating these farms typically draw all of their income from off-farm sources. Median household income and income from farming increase with farm size; the typical household operating the largest commercial farms earned about $426,755 in 2012, and most of that came from farming.
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Livestock receipts totaled $182.8 billion in 2013. Beef receipts accounted for over one-third of total livestock sales. Poultry and egg sales were slightly higher than dairy sales and nearly double the sales from hogs.
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Crop cash receipts totaled $218.5 billion in 2013. Receipts from corn and oil crops accounted for half of total crop receipts.
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Gross farm cash income includes income from farm receipts, farm-related income, and government payments. Since 2000, gross farm cash income has increased from $227 billion to $443.9 billion in 2013. This reflects increasing cash receipts from farming. While government payments fluctuate from year to year, they declined slightly in 2010-13. 
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Over 97 percent of U.S. farms are family farms (where the majority of the business is owned by the operator and individuals related to the operator). Most are small family farms (having less than $350,000 in gross cash farm income, or GCFI)—these account for 90 percent of all U.S. farms. Large-scale family farms—with $1 million or more in GCFI—account for about 2 percent of all farms, but have a disproportionately large share of the value of production (35 percent).
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Technological developments in agriculture have been particularly influential in driving change in the farm sector. Advances in mechanization and the increasing availability of chemical inputs led to ever-increasing economies of scale that spurred rapid growth in the size of the farms responsible for most agricultural production. As a result, even as the amount of land and labor inputs used in farming declined, total farm output more than doubled between 1978 and 2011.
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Last updated: Tuesday, September 09, 2014

For more information contact: Kathleen Kassel