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 smaller 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.
After peaking at 6.8 million farms in 1935, the number of U.S. farms fell sharply until the early 1970s. Rapidly falling farm numbers during the earlier period reflected growing productivity in agriculture and increased nonfarm employment opportunities. Since 1982, the number of U.S. farms has continued to decline, but much more slowly. In the most recent survey, there were 2.00 million U.S. farms in 2022, down from 2.20 million in 2007. Similarly, the acres of land in farms continue its downward trend with 893 million acres in 2022, down from 915 million acres ten years earlier. The average farm size was 446 acres in 2022, only slightly greater than the 440 acres recorded in the early 1970s.
Technological developments in agriculture have been influential in driving changes in the farm sector. Innovations in animal and crop genetics, chemicals, equipment, and farm organization have enabled continuing output growth without adding much to inputs. As a result, even as the amount of land and labor used in farming declined, total farm output nearly tripled between 1948 and 2019.
U.S. sector gross cash farm income (GCFI) is measured as annual income before expenses and includes cash receipts, farm-related cash income, and Government farm program payments. In inflation-adjusted 2023 dollars, GCFI is forecast at $618.0 billion in the calendar year 2022 and $575.4 billion in 2023. In 2002, GCFI was $354.6 billion and has increased over time primarily due to higher cash receipts. If forecasts are realized, GCFI would increase by 13.8 percent in 2022 relative to 2021 and then decrease by 6.9 percent in 2023 relative to 2022.
Gross farm income reflects the total value of agricultural output plus Government farm program payments. Net farm income (NFI) reflects income after expenses from production in the current year and is calculated by subtracting farm production expenses from gross farm income. NFI considers both cash and noncash income as well as expenses and accounts for changes in commodity inventories. Inflation-adjusted net farm income is forecast to be $167.3 billion in calendar year 2022, an 8.3-percent increase from 2021 and the highest level since 1973. In 2023, net farm income is expected to decrease by 18.2 percent relative to 2022. Farm production expenses are projected to increase 11.0 percent in 2022 relative to 2021 and 1.3 percent from 2022 to 2023.
Crop cash receipts totaled $241.0 billion in calendar year 2021. Receipts from corn and soybeans accounted for $121.2 billion (50.3 percent) of the total.
Cash receipts for animals and animal products totaled $195.8 billion in calendar year 2021. Cattle/calf receipts accounted for $72.9 billion (37.2 percent) of that total, while poultry and eggs receipts accounted for $46.1 billion (23.5 percent), and dairy receipts accounted for $41.8 billion (21.3 percent).
Gross cash farm income (GCFI) includes income from commodity cash receipts, farm-related income, and Government payments. Family farms (where most of the business is owned by the operator and individuals related to the operator) of various types together accounted for nearly 98 percent of U.S. farms in 2021. Small family farms (less than $350,000 in GCFI) accounted for 89 percent of all U.S. farms. Large-scale family farms ($1 million or more in GCFI) accounted for about 3 percent of farms but 47 percent of the value of production.
Median total household income among all farm households ($92,239) exceeded the median total household income for all U.S. households ($70,784) in 2021. Median household income and income from farming increase with farm size and most households earn some income from off-farm employment. About 89 percent of U.S. farms are small, with GCFI less than $350,000; the households operating these farms typically rely on off-farm sources for the majority of their household income. In contrast, the median household operating large-scale farms earned $486,475 in 2021, and most of that came from farming.