Median total income for farm households increased each year from 2010 to 2014. The increase largely reflects greater income from off-farm sources, where the majority of farm households earn most, if not all, of their income. Given the broad USDA definition of a farm (see glossary), many small farms are not profitable even in the best farm income years. As a result, the median household income from farming shows a loss. However, the loss decreased over the past 5 years, with 2014 having the smallest negative value for income from farming at -$869.
Note: The median is the income level at which half of all households have lower incomes and half have higher incomes. Because farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income.
Differences between estimates from 2012 onward and estimates from prior years reflect improved sample coverage (particularly among very small farms) and changes in survey methodology and implementation associated with the 2012 Agricultural Resource Management Survey, in addition to changes in the economic situation of farm households. One such change in survey methodology is the use of an expanded range of value codes to solicit off-farm income information, allowing farm households to report much higher incomes. These survey design changes make comparisons between farm household statistics calculated using survey data from 2012 and later years with those from earlier surveys difficult to interpret. More information is available in the Background section of the Farm Household Wealth and Characteristics data product.
Estimates from the 2012 ARMS differ slightly from past estimates, based on new weights from the 2012 Census of Agriculture, released by the National Agricultural Statistics Service earlier this year.
See more statistics on principal farm operator household finances for recent years.
2014 Income Varies by Farm Typology
ERS has developed a family farm typology that considers gross cash farm income in combination with the occupational characteristics of principal farm operators (see glossary) to classify farms into more homogeneous groups. In the ERS typology, farms with less than $350,000 in gross cash farm income are classified as small farms, and are further subdivided based on the self-reported occupation of the farm's principal operator. If the operator reports being retired or having a major occupation other than farming, the farm is classified as a "residence" farm. If he or she reports farming as a major occupation and is not retired from farming, the farm is classified as "intermediate." "Commercial" farms are those with $350,000 or more in gross cash farm income, regardless of the occupation of the principal operator.
In contrast to residence and intermediate farms, households associated with commercial farms derive the majority of their income from farming activities (see table on principal farm operator household finances, by ERS farm typology, 2014 ). In 2014, the median income from farming was $164,083 for households operating commercial farms, and their median total household income was $225,463. Households associated with intermediate farms reported $1,082 in median farm income (out of $64,559 in median total household income) and residence farms reported negative median incomes from farming. However, the substantial off-farm income of residence farm households provided them with higher total incomes ($85,422) than intermediate farm households in 2014.
Details on farm operator household incomes are grouped by:
Type of Farm Determines Primary Source of Household Income
While the number of U.S. family farms has been relatively stable for the past decade (see table on all farms and family farms, by farm size class (gross sales), 1996-2014 ), the roughly 2.05 million family farms vary significantly in size and by the share of household income from farming.
The role of farm income in household finances can be understood by looking at two complementary statistics: the share of households with positive income from farming and, for them, the median percent of total household income coming from farming. Farm income contributes little to the annual income of farm households operating residence farms, is a secondary source of income for households with intermediate farms, and is a primary source of income for those operating commercial farms. In 2014, only 37 percent of residence farms had positive income from farming activities. The positive farm income received by residence farms contributed only 7 percent to their total household income (for the typical household reporting positive farm income). For intermediate farms, 53 percent had positive farm income, which comprised 27 percent of their total household income. Finally, 86 percent of commercial farms had positive farm income, and farm income accounted for 77 percent of their total household income.
A farm's specialization is determined by the one commodity or group of commodities that makes up at least 50 percent of the farm's total value of agricultural production (see glossary). In any given year, production and market conditions will vary for farms that specialize in different commodities. Differences in household income across commodity specialization, however, may also stem from basic differences in the types of households that specialize in specific commodities. For example, with its extensive and ongoing time demands, managing a dairy farm rarely permits an operator to work many hours off-farm and is a main reason why farm income is a large share of total income for dairy farm households but not for households involved in the production of many other commodities. Consequently, operators with a high paying off-farm job, or the potential to obtain one, are more likely to specialize in an activity that, unlike dairy farming, readily permits working many hours off the farm.
Households associated with farms specializing in cash grains such as corn, soybeans, sorghum, or wheat had a median total household income of $98,895 in 2014. Median total household income was $78,615 for those specializing in rice, tobacco, cotton, or peanuts. Dairy and hog producers had the highest median total household income for livestock producers, at $109,005 and $104,099, respectively.
Income by Farm Resource Region
Incomes of farm households vary by location as well, largely reflecting regional variation in farm typology and commodity specialization. ERS groups farm resource regions (nine) based on common soil, climate, and agronomic needs. These conditions cut across State boundaries (see details in ERS Farm Resource Regions). In 2014 (and the 4 prior years), only the Northern Great Plains and Heartland had a positive median farm income for family farms ($12,734 and $3,800, respectively. The Heartland has the largest number of farms, the highest value of production, and the most cropland. The region is mainly comprised of cash grain and cattle farms. The Northern Great Plains has the largest farms (in terms of acres operated) yet among the fewest farms, consisting mainly of wheat, cattle, and sheep. In 2014, high beef cattle and cash grain incomes pushed median income in the Northern Great Plains above other regions.