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 then, the number of U.S. farms has continued to decline, but much more slowly. In the most recent survey, there were 2.01 million U.S. farms in 2021, down from 2.20 million in 2007. With 895 million acres of land in farms in 2021, the average farm size was 445 acres, 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.
Gross cash farm income (GCFI) is annual income before expenses and includes cash receipts, farm-related cash income, and Government farm program payments. GCFI is forecast at $600.0 billion in calendar year 2022, versus $343.3 billion (inflation-adjusted 2022 dollars) in 2002, with the increase across time primarily due to higher cash receipts. If forecasts are realized, GCFI would increase 14.3 percent in 2022 relative to 2021 and be at its highest level on record.
Gross farm income reflects the total value of agricultural output plus Government farm program payments. Net farm income (NFI)—which reflects income after expenses from production in the current year—is calculated by subtracting farm 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 increase 7.2 percent in calendar year 2022 relative to 2021, to $160.5 billion and be at its highest level since 1973. Inflation-adjusted farm production expenses are projected to increase 11.8 percent in 2022.
Crop cash receipts totaled $240.0 billion in the calendar year 2021. Receipts from corn and soybeans accounted for $120.2 billion (50.1 percent) of the total.
Cash receipts from animals and animal products totaled $195.8 billion in the 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.