ERS Charts of Note
Wednesday, March 31, 2021
On average, U.S. farmers received 14.3 cents for farm commodity sales from each dollar spent on domestically produced food in 2019, up from a newly revised estimate of 14.2 cents in 2018. Known as the farm share, this amount increased slightly after 7 consecutive years of decline. Average prices received by U.S. farmers (as measured by the Producer Price Index for farm products) have been relatively stable for the last three years, following sharp declines in 2015 and 2016. The USDA, Economic Research Service (ERS) uses input-output analysis to calculate the farm and marketing shares from a typical food dollar, including food purchased at grocery stores and at eating-out establishments. The marketing share covers the costs of getting domestically produced food from farms to points of purchase, including costs related to packaging, transporting, processing, and selling to consumers at grocery stores and eating-out places. The farm and marketing shares of the food dollar in 2019 reflect conditions before the COVID-19 pandemic. Beginning in March 2020, the ERS monthly Food Expenditure Series reported sharp declines in the share of eating-out food dollars. Farmers receive a smaller share from eating-out dollars because of the added costs for preparing and serving meals at restaurants, cafeterias and other food-service establishments. The data for this chart can be found in ERS’s Food Dollar Series data product, updated March 17, 2021.
Monday, March 29, 2021
Errata: On April 1, 2021, the title was revised to include nonoperator landlords. The text citing total rented farmland acreage owned by those residing within 200 miles of their farmland was corrected to 83 percent. No other data were affected.
In 2014, 39 percent of farmland acreage in the 48 contiguous States was rented. Of this share, 80 percent was owned by landlords who did not operate the farms. ERS researchers examined the data obtained from the 2014 Tenure, Ownership, and Transition of Agricultural Land (TOTAL) survey to study the characteristics of nonoperator landlords and their tenants in the 25 most important agricultural States by cash receipts. The study found that nonoperator landlords residing within 50 miles of their land owned the majority (67 percent) of rented farmland acreage in 2014. Eighty-three percent of total rented farmland acreage is owned by those who lived 200 miles or less from their farmland. Total rented acres progressively declined as the distance between landlords and tenants increased. Those living more than 1,000 miles away, for example, owned only 4 percent of total rented farmland acreage. While some nonoperator landlords lived in major U.S. coastal cities, most lived in major cities in agricultural States. Nonoperator landlords were also more likely to be retired farm operators or descendants who inherited agricultural land, rather than investors from more distant parts of the country. Nonoperator landlords who lived farther away from their rented land tended to have larger holdings than those who lived nearby. This chart appears in the Economic Research Service report Absent Landlords in Agriculture – A Statistical Analysis, released March 2021.
Monday, March 22, 2021
In 2016, corn and soybean producers accounted for about 93 percent of future and options contracts used by U.S. farmers and 60 percent of all production covered by marketing contracts. With a futures contract, a farmer can assure a certain price for a crop that has not yet been harvested. An options contract allows a farmer to protect against decreases in the futures price, while retaining the opportunity to take advantage of increases in the futures price. While futures and options contracts are usually settled without delivery, marketing contracts arrange for delivery of a commodity by a farmer during a specified future time window for an agreed price. Farmers who use these risk management options frequently use more than one contract type. On average, farms that used futures contracts covered 41 percent of their corn production and 47 percent of their soybean production in 2016. Shares were relatively similar for marketing contracts, which covered about 42 percent of corn and 53 percent of soybean production. By comparison, corn and soybean farmers covered a little more than 30 percent of their production with options contracts for both commodities. This chart appears in the Economic Research Service report, Farm Use of Futures, Options, and Marketing Contracts, published October 2020.
Monday, March 8, 2021
From 2006 to 2009, the share of women in the hired farm workforce decreased slightly, but then climbed from 18.6 percent in 2009 to 25.5 percent in 2018. Hired farmworkers (which exclude self-employed farmers and their families) make up less than 1 percent of all U.S. wage and salary workers, but the overall number of hired farmworkers has remained relatively unchanged over this same period. Hired farmworkers often work in the production of fruits, vegetables, melons, dairy, and nursery and greenhouse crops. As can be seen from the rise in percentage from 2009 to 2018, in recent years, more women have taken on farm work. Overall, farm wages have risen over this period along with changes in the mix of capital and labor farms use during production. These changes may have resulted in a gradual shift in the share of women who comprise the hired farm labor force. This chart appears in the October 2020 Amber Waves data feature, “U.S. Farm Employers Respond to Labor Market Changes With Higher Wages, Use of Visa Program, and More Women Workers.”
Friday, March 5, 2021
Farm households often rely on off-farm employment to provide other benefits, including health insurance, and to supplement their income. Loss of off-farm employment because of the COVID-19 pandemic can strain a farm household’s financial well-being. In 2019, 50 percent of all U.S. family farm households had the principal operator, the principal operator’s spouse, or both the principal operator and spouse working in an off-farm, wage-earning job. The shares of households working off-farm varied by the farm’s economic class. For small farms with less than $100,000 in annual gross farm sales, 51 percent had the principal operator, the spouse, or both work off the farm. By comparison, 34 percent of large farms with annual gross farm sales of $1 million or more had the principal operator, the spouse, or both work off the farm. As the farm’s sales size increases, the share of principal operators working off the farm decreased. Smaller family farms generally don’t earn enough from farm sources alone to cover household living expenses, whereas larger farms usually require increasingly more on-farm labor and management resources. While this information predates the COVID-19 pandemic, it can provide insights into the potential impact of decreased employment rates, which can result in the loss of off-farm employment for many farm households. This chart updates data found in the USDA, Economic Research Service report, America’s Diverse Family Farms, 2019 Edition, released December 2019.
Friday, February 5, 2021
USDA’s Economic Research Service (ERS) forecasts inflation-adjusted U.S. net cash farm income (NCFI, gross cash income minus cash expenses) to increase $26.6 billion (23.7 percent) in 2020, and then decrease $10.4 billion (7.5 percent) to $128.3 billion in 2021. U.S. net farm income (NFI) is forecast to increase $37.8 billion (44.2 percent) in 2020 and then decrease $12.0 billion (9.7 percent) to $111.4 billion in 2021. Net farm income is a broader measure of farm sector profitability that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income. If realized, this would be the first year NFI has fallen since 2016. However, both NCFI and NFI would remain above their respective 2019 levels as well as above their respective averages over the 2000-19 period. Underlying these forecasts, cash receipts for farm commodities are projected to rise $13.6 billion (3.6 percent) in 2021. Direct Government payments to farmers are expected to fall $21.8 billion (46.3 percent) after increasing $24 billion (104.0 percent) in 2020. This decline is largely caused by lower anticipated payments from supplemental and ad hoc disaster assistance for COVID-19 relief. Find additional information and analysis on the ERS topic page for Farm Sector Income and Finances, reflecting data released on February 5, 2021.
Monday, January 25, 2021
In a beginning farm, all operators—the person or people who makes most of the day-to-day decisions about the farm business—have no more than 10 years previous experience as a farm operator. Between 2013 and 2017, beginning farm households earned almost as much total household income as established farms—$150,877 versus $152,504 on average. However, off-farm income accounted for a greater share of total household income for beginning farms (77 percent, or $115,925) than for established farms (56 percent, or $85,605). Between 2013 and 2017, 55 percent of beginning farm principal operators worked off-farm, compared with 41 percent of established farm operators. The spouse of a beginning farm operator was also more likely to work off-farm than the spouse of an established farm operator. Between 2013 and 2017, the spouse of a principal operator worked off-farm on 60 percent of beginning farms, compared with 41 percent of established farms. This chart appears in the ERS report, An Overview of Beginning Farms and Farmers, released September 2019.
Wednesday, December 2, 2020
Inflation-adjusted U.S. net cash farm income (NCFI)—gross cash income minus cash expenses—is forecast to increase $23.4 billion (21.1 percent) to $134.1 billion in 2020. U.S. net farm income (NFI), a broader measure of farm sector profitability that incorporates noncash items including changes in inventories, economic depreciation, and gross imputed rental income, is forecast to increase $35.0 billion (41.3 percent) from 2019 to $119.6 billion in 2020. While cash receipts for farm commodities are forecast to fall $7.8 billion (2.1 percent), direct Government payments are expected to rise to $46.5 billion, more than twice the 2019 amount, a result of supplemental and ad hoc disaster assistance payments for COVID-19 relief in 2020. Total production expenses, which are subtracted out in the calculation of net income, are projected to fall $9.5 billion (2.7 percent) in 2020, including a drop of $5.6 billion in interest expenses. If forecasts are realized, NFI in 2020 would be at its highest level since 2013 and 32.0 percent above its inflation-adjusted average calculated over the 2000-19 period. NCFI would be at its highest level since 2014 and 22.5 percent above its 2000-19 average. Find additional information and analysis on the USDA, Economic Research Service Farm Sector Income and Finances topic page, reflecting data released December 2, 2020.
Monday, November 2, 2020
Farm sector production expenses (including expenses associated with operator dwellings) are forecast to decrease by $4.6 billion (1.3 percent) to $344.2 billion in 2020 in nominal terms, i.e. not adjusted for inflation. These expenses represent the costs of all inputs used to produce farm commodities and strongly affect farm profitability. Although overall production expenses are expected to decrease, changes in specific expenses vary. Specific expenses forecast to increase in 2020 account for approximately 69 percent of total expenses and are projected to collectively rise by $6.0 billion relative to 2019 before adjusting for inflation. These include the two largest expense categories—feed purchases (1.4 percent increase from 2019) and cash labor (3.1 percent). In contrast, expenses expected to decrease account for 31 percent of total expenses and are forecast to collectively decline by $10.6 billion from 2019 to 2020. Specifically, livestock and poultry purchases are anticipated to decrease by 7.5 percent, pesticides by 2.1 percent, and oil and fuel spending by 13.9 percent. In addition, interest expenses are forecast to be at their lowest level since 2014 (not adjusted for inflation), dropping by 27.1 percent ($5.6 billion) from 2019 as a result of historically low interest rates. After adjusting for inflation, total production expenses in 2020 are 19 percent below the record high of $427.1 billion in 2014, continuing a six-year streak of declining expenses. This chart appears in the ERS topic page for Farm Sector Income and Finances, updated September 2020.
Tuesday, September 8, 2020
Organic dairy production costs were substantially higher than those for conventional dairy in 2016—about 50 percent higher per hundredweight (cwt) of milk produced. Production costs include operating costs for feed, energy, and bedding, as well as the costs of capital and of the paid and/or family labor provided to the farm. Organic production costs were highest among farms with 10-49 cows at $48.87 per cwt, while production costs on conventional farms of that size were $33.54. Among farms with 100-199 cows in the herd, organic production costs amounted to $35.82 per cwt, while conventional farms in that category reported lower costs of $23.68. However, organic operations received much higher prices for their milk—organic gross returns per cwt of milk produced were about twice the gross returns realized by comparably sized conventional operations in 2016. With higher costs, but much higher gross returns, small organic dairy farms realized higher net returns on average than small conventional farms. (Net returns are the difference between gross returns and costs.) This chart appears in the Economic Research Service report, Consolidation in U.S. Dairy Farming, released July 2020. It also appears in the September 2020 Amber Waves finding, “Organic Dairy Farms Realized Both Higher Costs and Higher Gross and Net Returns Than Conventional Dairy Farms.”
Wednesday, September 2, 2020
Inflation-adjusted U.S. net cash farm income (NCFI), defined as gross cash income less cash expenses, is forecast to increase $4.0 billion (3.6 percent) to $115.2 billion in 2020. U.S. net farm income (NFI)—a broader measure of farm sector profitability that incorporates noncash items including changes in inventories, economic depreciation, and gross imputed rental income—is forecast to increase $18.3 billion (21.7 percent) from 2019 to $102.7 billion in 2020. While cash receipts from farm commodities are forecast to decline $15.2 billion (4.1 percent), direct government farm payments are expected to increase $14.6 billion (64.4 percent) because of supplemental and ad hoc disaster assistance payments for COVID-19 relief in 2020. Additionally, total production expenses—that are subtracted out in the calculation of net income—are projected to fall $7.3 billion (2.1 percent) in 2020, contributing to the growth in income. If forecast changes are realized, NCFI would be 5.7 percent above its inflation-adjusted average calculated over the 2000-19 period, and NFI in 2020 would be 13.8 percent above its 2000-19 average. Find additional information and analysis on the USDA, Economic Research Service’s Farm Sector Income and Finances topic page, reflecting data released September 2, 2020.
Wednesday, August 26, 2020
The total output—including livestock, crops, and other farm related outputs—produced by U.S. farms nearly tripled between 1948 and 2017, growing at an average annual rate of 1.53 percent. This output growth was primarily attributable to increased productivity, which grew at an average of 1.46 percent per year. Total inputs—including capital, land, labor, and intermediate goods—increased by 0.07 percent annually, by comparison. Though total input use grew slowly during this period, its composition shifted considerably. The use of intermediate goods (such as feed, seeds, and chemicals) increased by more than 130 percent, while agricultural labor declined by 76 percent and the amount of land devoted to agriculture was down by more than 25 percent. The continuing growth in intermediate goods contributed 0.58 percentage points per year to output growth, the highest among all inputs (capital, labor, and intermediate goods). However, the contribution of intermediate goods to output growth has been small (even negative in some years) since 1981. Over the long-term, productivity growth has been the major driver of agricultural growth. Productivity growth—spurred by innovations in animal and crop genetics, chemicals, equipment, and farm organization through research—is the only factor that contributed positively to agricultural growth in all sub-periods (measured from peak to peak between business cycles) since 1948. This chart appears in the July 2020 Amber Waves article, “Productivity Is the Major Driver of U.S. Farm Sector’s Economic Growth.”
Friday, August 14, 2020
Large dairy operations have significant financial advantages over small and midsized farms, primarily because of lower average production costs per pound of milk produced. Therefore, larger farms can earn profits during times when smaller farms bear losses. In every year between 2005 and 2018, average net returns increased with herd size and returns for herds of 1,000 head or more (the largest class for which the Economic Research Service (ERS) publishes annual estimates) exceeded those for all other herd sizes. While net returns fluctuate from year to year, farms with 1,000 head or more generated positive net returns of $1.12 per hundredweight on average between 2005 and 2018. These farms had positive net returns in 10 out of 14 years. By contrast, the smallest herd sizes (50-99 head and 100-199 head) never covered total costs, so their net returns were negative in every year. While some farms in each size class realize positive net returns, these class averages indicate that most small and midsize farms face persistent financial pressures. The persistent differences in net returns have led to structural changes in the dairy industry, with cows and production shifting away from smaller farms and toward larger ones. This chart appears in the ERS report, Consolidation in U.S. Dairy Farming, released July 2020. It also appears in the Amber Waves feature, “Scale Economies Provide Advantages to Large Dairy Farms.”
Wednesday, August 5, 2020
The ongoing COVID-19 pandemic has decreased labor availability in many sectors of the economy. In agriculture, labor inputs consist of unpaid farm operator labor (including spouse and family labor), direct-hire labor, and labor contracted through a third party. In 2018, 62 percent of total farm labor hours were unpaid, while the remaining 38 percent were paid. The majority (82 percent) of labor expenditures were to compensate hired employees, while 18 percent were spent on contracted labor. Paid labor hours are concentrated in certain time periods and regions, largely reflecting the importance and cyclicality of specialty crop production (which includes fruits, vegetables, and nursery crops). In the Atlantic region, paid labor hours peaked in the first quarter, whereas in the rest of the country, labor hours peaked in the second or third quarters. The Western region of the United States accounted for 35 percent of total employee labor hours, and the bulk of labor hours (37 percent) were recorded in the third quarter. If last year’s patterns hold, demand for farm-employed labor in the West could steadily increase and peak in the summer months. While the data in this chart predate the COVID-19 pandemic, agricultural workers have been deemed essential and information on the demand for these workers can provide insight into the potential impacts of the pandemic. This chart is based on data from the Economic Research Service data product, ARMS Farm Financial and Crop Production Practices, updated July 2020.
Friday, July 31, 2020
Contract operations (where the hog owner pays a per-unit fee to producers to care for the animals) sold or removed an average of 8,625 hogs per farm in 2015, an increase of about 3,500 from 1998. By comparison, non-contract operations (where producers own the hogs they raise) sold or removed an average of 5,217 hogs per farm in 2015, an increase of about 3,700 from 1998. The removal, or depopulation, of hogs from farms has distinctly different effects on contract operations and non-contract operations. Contract operations do not incur lost value from inputs invested in depopulated herds, whereas non-contract operations stand to bear depopulation and disposal costs as well as the entire costs of foregone hog sales, including costs associated with inputs (such as feed costs) that have already been incurred. While this research predates the COVID-19 pandemic, it can provide insight into potential impacts of depopulation due to the closing of processing hog plants during the COVID-19 pandemic. This chart updates data found in the Economic Research Service report, U.S. Hog Production From 1992 to 2009: Technology, Restructuring, and Productivity Growth, released October 2013.
Wednesday, July 22, 2020
Large dairy operations have significant financial advantages over small and midsized farms, primarily because of lower average production costs per pound of milk produced. Therefore, larger farms can earn profits during times when smaller farms bear losses. In 2016, average total costs of milk production fell from $33.54 per hundredweight among farms with 10-49 cows to $20.85 among farms with 200-499 cows. The latter costs were 21 percent higher than the average costs realized at the largest farms—those with at least 2,500 head. Larger herds realized lower gross returns because many are in regions with lower milk prices. Gross returns include milk sales, plus revenues from the sale of culled dairy animals, milk cooperative dividends, and the fertilizer value of manure. Despite their lower gross returns, lower costs led to much larger net returns among larger operations than among smaller farms. In 2016, farms with more than 1,000 head realized positive net returns on average, whereas farms with fewer head realized negative net returns on average. This chart appears in the Economic Research Service report Consolidation in U.S. Dairy Farming, released July 2020.
Wednesday, July 8, 2020
The U.S. agricultural workforce consists of a mixture of two groups of workers: (1) self-employed farm operators and their family members, referred to as “unpaid labor” because their remuneration comes out of farm profits rather than a wage; and (2) paid labor such as hired and contract workers that receive wages. Overall, between 2014 and 2018, U.S. farms used about 59 percent operator, spouse, and family labor, compared to 41 percent paid labor. However, farms of different sizes relied on different mixes of labor. Principal operators and their spouses provided most of the labor hours (76 percent) used on small farms, those with annual gross cash farm income (GCFI) under $350,000. That share fell to 43 percent on midsize farms (GCFI between $350,000 and $999,999), 17 percent on large farms (GCFI between $1 million and $4,999,999), and 2 percent on very large farms (GCFI of $5 million or more). Large and very large farms relied most on hired labor, which provided 64 and 74 percent of the labor hours on those farms, respectively. By comparison, hired labor provided about 12 percent of labor hours on small farms and 39 percent on midsize farms. Contract laborers were important on very large farms (particularly in fruit and vegetable operations), contributing 20 percent of labor hours. This chart updates data found in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.
Monday, June 22, 2020
Nearly half of all family farm operators and their spouses reported having a job off the farm in 2018. The majority of households, regardless of farm size, report that they work off the farm because it is more lucrative than farm work, provides more reliable income, and may offer health and retirement benefits. Households had the option to report more than one reason for working off the farm. Among small family farms—those with annual gross cash farm income (GCFI) under $350,000—about 88 percent of these households reported working off the farm because it was more reliable and 75 percent because it was more lucrative. By comparison, among large-scale farm households—those with GCFI of $1 million or more—about 72 percent reported working off the farm because it was more reliable and 51 percent because it was more lucrative. In addition, about 40 percent of all principal operators or their spouses who work off the farm listed farm-related financial stress, such as low commodity prices or low farm revenue, as a reason for having a job off the farm. This chart appears in the March 2020 Amber Waves article, “Family Farm Households Reap Benefits in Working Off the Farm.”
Tuesday, June 9, 2020
Some types of farms rely more on farm labor than others. According to data from USDA’s Agricultural Resources Management Survey, hired farm labor (including employees and contract labor) accounted for 13 percent, on average, of the total input costs used in agricultural production in 2018 (trailing only expenditures on fertilizer and chemicals). Specialty crop farms—which produce fruits, vegetables, and nursery crops—had the highest share of labor costs to total cash expenses at 39 percent. This made them the most vulnerable to labor shortages or wage shocks. The share of labor costs to total cash expenses for specialty crop farms was more than 3 times higher than the average for all farms. Dairy farms had the second highest share of labor costs at 14 percent, with large dairy farms mainly relying on hired labor. In contrast, corn and soybean farms rely mostly on unpaid operator and family labor, so paid labor accounted for less than 4 percent of total cash expenses in 2018. This chart updates data found in the Economic Research Service report, Farm Size and the Organization of U.S. Crop Farming, published in August 2013.
Friday, May 22, 2020
The H-2A Temporary Agricultural Program provides a legal means to bring foreign-born workers into the United States on a temporary basis. Workers employed on an H-2A visa are allowed to remain in the U.S. for up to 10 months at a time. Employers must demonstrate, and the U.S. Department of Labor must certify, that efforts to recruit U.S. workers were not successful. Employers must also pay a region-specific minimum wage, known as the Adverse Effect Wage Rate, which is set at the average wage for crop and livestock workers in that region in the prior year, as measured in USDA’s Farm Labor Survey. In addition, employers must pay for application and visa processing fees, provide housing for their H-2A workers, and pay for their domestic and international transportation. One of the clearest indicators of the scarcity of farm labor is the fact that the number of H-2A positions requested and approved has increased fivefold in the past 14 years—from just over 48,000 positions certified in fiscal 2005 to nearly 258,000 in fiscal 2019. The average duration of an H-2A certification in fiscal 2019 was 5.3 months, implying that the 258,000 positions certified represented about 114,000 full-year equivalents. The impact of this year’s shelter-in-place restrictions due to COVID-19 are not reflected in the data discussed. This chart appears in the Economic Research Service topic page for Farm Labor, updated April 2020.