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 small 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 leveling off in the early 1970s. Falling farm numbers during this period reflected growing productivity in agriculture and increased nonfarm employment opportunities. Because the amount of farmland did not decrease as much as the number of farms, the remaining farms have more acreage, on average—about 430 acres in 2012 versus 155 acres in 1935. Roughly 2.1 million farms are currently in operation.
Gross cash farm income (GCFI) includes income from cash receipts, farm-related income, and government farm program payments. GCFI is forecast at $353 billion (inflation-adjusted 2009 dollars) in 2017, versus $277 billion in 2000, with the increase largely due to higher cash receipts. Since 2014, GCFI has declined due to a drop in both crop and animal/animal product cash receipts.
Gross farm income reflects the total value of agricultural output. Net farm income (NFI)—which reflects income from production in the current year—is calculated by subtracting farm expenses from gross farm income. NFI considers both cash and noncash income and expenses. Net farm income is forecast down by 10.5 percent as the drop in expenses is outpaced by the decline in gross farm income.
Median total household income among all farm households ($76,735) exceeded the median for all U.S. households ($56,516) in 2015. Slightly less than half of U.S. farms are very small, with annual gross cash farm income under $10,000; the households operating these farms typically rely on off-farm sources for the majority of their household income. Median household income and income from farming increase with farm size; the typical household operating the largest commercial farms earned $361,057 in 2015, and most of that came from farming.
Gross cash farm income (GCFI) includes income from commodity cash receipts, farm-related income, and government payments. Family farms (where the majority of the business is owned by the operator and individuals related to the operator) of various types together accounted for nearly 99 percent of U.S. farms. Small family farms (less than $350,000 in GCFI) account for 90 percent of all U.S. farms. Large-scale family farms ($1 million or more in GCFI) account for about 3 percent of farms but 42 percent of the value of production. This chart was revised March 7, 2017, see errata for details.
Technological developments in agriculture have been particularly influential in driving change in the farm sector. Advances in mechanization and the increasing availability of chemical inputs led to ever-increasing economies of scale that spurred rapid growth in the size of the farms responsible for most agricultural production. As a result, even as the amount of land and labor inputs used in farming declined, total farm output more than doubled between 1948 and 2013.