Factors Affecting the Profitability of Limited-Resource and Other Small Farms

Ashok K. Mishra, Hisham S. Ol-Osta, Cheryl J. Steele

Elsewhere No. (0009), January 1999

Small farms as defined by the National Commission on Small Farms constitute 90 percent of U.S. farms, contain 67 percent of farm land, and hold 77 percent of farm sector net worth. They also contribute significantly to rural economies as purchasers of inputs and supplies and as preservers of the rural landscape. Under the 1996 Federal Agriculture Improvement and Reform Act (FAIR, 1996) farmers face greater risk of income volatility because of the likelihood of increased volatility in the prices they receive. An understanding of which farm and operator characteristics influence profitability would be useful to operators of limited-resource farms and other small farms who wish to make changes in their operations in order to increase profit.

Keywords: small farms, limited-resource farms, farm structure, farm income, profitability, costs of production, beginning farmers, leasing, Economic Research Service, ERS, USDA, U.S. Department of Agriculture

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Updated date: January 1999