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.
Gross cash farm income (GCFI) is annual income before expenses and includes cash receipts, farm-related income, and Government farm program payments. GCFI is forecast at $447 billion in 2020, higher than $331 billion (inflation-adjusted 2020 dollars) in 2000, with the increase across time mainly because of higher cash receipts. If the 2020 forecast is realized, GCFI would be at its highest level since 2015.
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 and expenses. Inflation-adjusted net farm income is forecast to increase 41.3 percent in 2020, to $119.6 billion. Inflation-adjusted farm production expenses are projected to decrease about 2.7 percent in 2020.
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 98 percent of U.S. farms in 2019. Small family farms (less than $350,000 in GCFI) accounted for 90 percent of all U.S. farms. Large-scale family farms ($1 million or more in GCFI) make up about 3 percent of farms but 44 percent of the value of production.
Median total household income among all farm households ($83,111) exceeded the median for all U.S. households ($68,703) in 2019. Median household income and income from farming increase with farm size and most households earn some income from off-farm employment. About half of U.S. farms are very small, with annual farm sales under $10,000; the households operating these farms typically rely on off-farm sources for most of their household income. In contrast, the median household operating large-scale farms earned $350,373 in 2019 with most of that from farming.