Partitioning the Definition of a Farm
The definition of a farm employed by the USDA for data collection
purposes is "any operation that sells at least one
thousand dollars of agricultural commodities or that would
have sold that amount of produce under normal circumstances."
The USDA farm income accounts are the basis for the Bureau
of Economic Analysis (BEA) determining the contribution
of the agricultural sector to Gross Domestic Product (GDP).
Because GDP is one of the most important measures of production
in the National economy, it is important to measure all
production of agricultural commodities, which in turn
are defined under the North
American Industry Classification System (NAICS).
In the farm income sector accounts, ERS does not compile
and report statistical averages across all farms because
a large majority of production comes from a small minority
of farms. Thus averages represent a dilution of the data
and don't convey meaningful information about the participants.
It is more useful to segment the population of farms into
groups with some common characteristics and do in-depth
analysis of the groups and/or comparative analysis across
groups.
For analytical purposes, one is not necessarily constrained by
this definition of a farm, even when using data collected under
this definition. One can effect and implement a different definition
more appropriate to the particular issue to be studied or analyzed
by segmenting the populations of farms into different groups. The
size-class data presented here do just that based on the farm operation's
total value of production. There are other ways to segment the farms
represented in the data.
More current information on farm structure can be found in Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition.
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