ERS Charts of Note
Thursday, September 1, 2016
In large part, the regional distribution of beginning farms mirrors that of all farms, but there are some differences. Beginning farms are located all across the country, but overall, the South is home to the largest percentage of beginning farms: 47 percent, which is about 5 percent higher than its share of all farms. The South also has the largest percentage of small beginning farms. Large-scale beginning farms are most likely to be in the Midwest, but with 30 percent of the nation?s beginning farms, the Midwest has fewer than its 37 percent share of all farms. The concentration of cash grain farms in the Midwest, which on average are larger than farms specializing in other types of commodities, not only explains the region?s higher shares of mid-size and large scale beginning farms, but may also explain the fact that fewer of its farms are operated by beginning farmers. This chart is found in the ERS topic page on Beginning & Disadvantaged Farmers, updated October 2014.
Thursday, September 1, 2016
Nearly 15 years have passed since ERS first released its farm typology to classify farms into relatively homogeneous groups based on their gross farm sales, the primary occupation of their operators, and family farm status. A recent update to the ERS farm typology reflects commodity price inflation and structural changes in production that have occurred over time. In response to these changes, ERS recalibrated the size thresholds used in its farm typology, reduced aggregation among large farms, and changed its sales measure to reflect the growth in production contracts. To better reflect income earned by farm operators, we now measure farm size by gross cash farm income (GCFI)—the total revenue received by a farm business in a given year; after adjusting inflation, the new size thresholds for small, midsize, and large farms are as specified in the graph. Using the updated typology, 91 percent of U.S. farms were classified as small in 2010, and accounted for about 29 percent of the value of U.S. farm production. Large-scale family farms under the new typology—less than 2 percent of all farms—accounted for a disproportionately large 34-percent share of the value of production. This chart is based on table 9 in the ERS report, Updating the ERS Farm Typology, EIB-110, April 2013.
Thursday, September 1, 2016
The Federal estate tax applies to the transfer of property after death; it was repealed in 2010 but reinstated for 2011 and years thereafter. Under present law, the estate of a decedent who at death owns assets in excess of the estate tax exemption amount ($5.25 million in 2013 for an individual, $10.5 million for married couples) must file a Federal estate tax return, and those estates are subject to a 40 percent tax rate on the nonexempt amount.? Based on simulations using farm-level survey data from the 2011 Agricultural Resource Management Survey (ARMS), in 2013, only about 2.7 percent of farm estates would be required to file an estate tax return, with a much smaller share (about .6 percent) owing any Federal estate tax. Total Federal estate tax liabilities on all farm estates in 2013 are estimated at about half a billion dollars. Historically, these amounts have been much higher. Since 2000, the exemption amount has grown considerably, while the maximum tax rate has fallen. Consequently, the share of estates required to file a return or pay taxes has fallen. This chart is found in the Federal Tax Issues topic page on the ERS website, updated November 2013.
Thursday, September 1, 2016
With the number of new entrants declining, encouraging and supporting new farmers is a continuing policy goal. According to Census of Agriculture data, 38 percent of principal operators had less than 10 years of farming experience in 1982; by 2007, only 26 percent had such experience. In 2012, beginning farms?farms headed and completely operated by farmers with 10 or fewer years of experience?made up 17.2 percent of family farms and collectively accounted for only about 6-7 percent of the land in farms and the value of farm production. Beginning farm operators tend to hold fewer farm assets and have a median farm net worth that is roughly half the median farm net worth of established farmers. Not all beginning farmers are young; on average, the principal operator of a beginning farm is 49 years old. The unique demographic and production profiles of beginning farmers suggest the strategies for supporting them may need to be different than those aimed at established farmers. This chart is found in ?Beginning Farmers and Ranchers and the Agricultural Act of 2014? in the June 2014 Amber Waves online magazine.
Thursday, September 1, 2016
Net farm income is forecast at $113.2 billion in 2014, down about 14 percent from the 2013 forecast of $131.3 billion.? If realized, the 2014 forecast would be the fourth-highest value since 1970 after adjusting for inflation. Lower cash receipts for crops, and to a lesser degree, higher production expenses and reduced government farm payments, drive the expected drop in net farm income. Net cash income is forecast at $123 billion, down almost 6 percent from the 2013 forecast. Net cash income is projected to decline less than net farm income primarily because it reflects the sale of more than $10 billion in carryover stocks from 2013. Despite expected record-setting harvests, crop receipts are expected to decrease more than 7 percent in 2014 due to lower prices. Livestock receipts are forecast to increase by more than 15 percent in 2014, largely due to higher prices. This chart is found in the topic page on the 2014 Farm Sector Income Forecast on the ERS website, updated August 26, 2014.
Thursday, September 1, 2016
U.S. net farm income?a measure of the sector?s profitability?is forecast to be $96.9 billion in 2014, down over 20 percent from 2013?s estimate. The 2014 forecast would be the seventh highest value since 1970 after adjusting for inflation. Higher production expenses are the main driver of the 2013-14 change in net farm income, as changes in crop and livestock receipts are offsetting. Crop receipts are expected to decrease by 12.3 percent in 2014, led by declines in corn and soybean receipts, while livestock receipts are forecast to increase by 14 percent, largely due to anticipated record prices for beef cattle and milk. Total production expenses are forecast to increase 5.7 percent in 2014 extending a 4-year upward trend in expenses. Net cash income is forecast at $108.2 billion, down over 19 percent from its 2013 estimate, and is projected to decline less than net farm income primarily because it includes the sale of carryover stocks from 2013. This chart is found in 2014 Farm Sector Income Forecast, updated November 25, 2014.
Thursday, September 1, 2016
In 2013, only about one-quarter of total farm household income came from farming. Because of the broad USDA definition of a farm (which includes places with the potential for as little as $1,000 in annual sales), more than half of farm operator households consistently incur a net loss from farming activities in any given year, and far more do not earn the equivalent of a market wage for their on-farm labor. As a result, most farm operator households rely heavily on off-farm income. Of the total off-farm income earned by all farm operator households, the majority comes from wages and salaries earned by household members through nonfarm jobs, followed by income transfers (e.g., Social Security) and profits from nonfarm businesses owned by farm household members. As a group, U.S. farm operator households earn their income from a wide range of activities, reflecting the diverse set of skills, knowledge, and economic goals held by farm operators and their families. This chart is found in the ERS topic page, Farm Household Well-Being, updated November 2014.
Thursday, September 1, 2016
The roughly 2.05 million U.S. family farms vary widely in size and by the share of household income from farming. Farm income contributes little to the annual income of farm households operating residence farms--those with annual gross cash farm income (GCFI) less than $350,000 and where the principal operator is either retired or has a primary occupation other than farming.? In contrast, farm income is a secondary source of income for households with intermediate farms?those with annual GCFI less than $350,000 and a principal operator whose primary occupation is farming. For commercial farms with annual GCFI greater than $350,000, farm income is a primary source of income. In 2014, 40 percent of residence farms had positive income from farming activities, which contributed only 7 percent to total household income for the typical (or median) household reporting positive farm income. For households of intermediate farms, 56 percent had positive farm income, which comprised 27 percent of their total household income. Most commercial farms--85 percent--had positive farm income, and farm income typically accounted for 77 percent of total income for these households. Annual income from farming is volatile--15 percent of households of commercial farms experienced a loss from their farming operation in 2014. This chart is found in the ERS topic page on Farm Household Well-being.
Thursday, September 1, 2016
Farmers can receive government farm program payments from three broad categories of agricultural programs: commodity-related programs, working-land conservation programs, and land-retirement conservation programs. The distribution of payments in each category varies by farm type. In 2014, nearly 70 percent of commodity-related program payments went to moderate-sales, midsize, and large family farms, roughly proportional to their 80-percent share of acres in program-eligible crops. Midsize and large family farms together received about 60 percent of working-land payments that help farmers adopt conservation practices on agricultural land in production. Land-retirement programs pay farmers to remove environmentally sensitive land from production. Retirement, off-farm occupation, and low-sales farms received about three-fourths of these payments. Retired farmers and older farmers on low-sales farms may be more likely to take land out of production as they scale back their operations. Although government farm program payments can be important to the farms receiving them, 75 percent of farms in 2014 received no government payments. (These data summarize payments made in 2014. The Farm Act that was passed in 2014 introduced changes to commodity programs as part of a shift to greater reliance on crop insurance; most of those changes will be reflected in the source data beginning in 2015. Nevertheless, who receives particular government payments will continue to reflect farm and operator characteristics.) This chart is found in the ERS report America?s Diverse Family Farms: 2015 Edition. ?
Thursday, April 14, 2016
U.S. farm households generally receive income from both farm and off-farm activities, and for many, off-farm income largely determines the household’s income-tax liability. Since 1980, farm sole proprietors, in aggregate, have reported negative net farm income for tax purposes. From 1998 to 2008, both the share of farm sole proprietors reporting losses and the total amount of losses reported generally increased, due in part to deduction allowances for capital expenses. Since 2007, strong commodity prices bolstered farm-sector profits and the net losses from farming declined, leading to a peak in taxable profits (though still a negative taxable amount on net) in 2012. In 2013, the latest year for which complete tax data are available, U.S. Internal Revenue Service data showed that nearly 68 percent of farm sole proprietors reported a farm loss, totaling $25 billion. The remaining farms reported profits totaling $17 billion. This chart is found on the ERS Federal Tax Issues topic page, updated April 2016.
Wednesday, February 24, 2016
The average age of principal operators in the latest Census of Agriculture (2012) was 58 and has been greater than 50 since the 1959 Census. That farmers are older, on average, than other self-employed workers is understandable, given that the farm is the home for most farmers, and they can gradually phase out of farming over a decade or more. While older (age 65+) farmers make up a third of all farm operators, they account for a much smaller share (20 percent) of production. Nevertheless, older farmers still operate on 29 percent of all U.S. farmland (on land owned or leased, slightly less than their share of all farms). The largest portion of owned farmland is held by producers age 55-64; operators over 55 tend to own the land they farm, while younger operators are more likely to lease it. Older farmers’ land will shift to existing or new farms—or go into nonagricultural uses—as they exit agriculture. This chart is based on the information found in the Farm Structure and Organization topic page.
Friday, February 19, 2016
On average, households associated with farm businesses supplement farm income with income from off-farm sources. However, across different types of farm operations, the extent that off-farm income supplements farm income varies considerably. For example, with its extensive and ongoing time demands, managing a dairy farm rarely permits an operator to work many hours off-farm and is a main reason why farm income constitutes over four-fifths of these households’ total income. In 2014, households with farm businesses specializing in dairy and hogs had the highest average total household income (combining income from farm and off-farm sources), and the highest shares of household income derived from farming, followed by farms specializing in cash grains (corn, soybeans, sorghum, or wheat). Farm households with businesses specializing in beef cattle, other field crops, and poultry had the largest shares of average household income derived from off-farm activities. This chart is a variation of one found in the Farm Household Well-being topic page, and based on data available in ARMS Farm Financial and Crop Production Practices.
Friday, January 8, 2016
In 2014, 99 percent of U.S. farms were family farms, where the principal operator and his or her relatives owned the majority of the business. Most of U.S. farm production—68 percent—occurred on the 9 percent of farms classified as midsize or large-scale family farms having at least $350,000 in annual gross cash farm income (GCFI). Those farms together accounted for most production of dairy (87 percent of production), cotton (81 percent), and cash grains/soybeans (76 percent). Large-scale family farms alone (those with annual GCFI of $1 million or more) produced 73 percent of dairy output in 2014. Although small family farms (with less than $350,000 annual GCFI) accounted for 90 percent of U.S. farms, they contributed just 22 percent to U.S. farm production. Among some commodity specializations, though, small family farms account for a much higher share of production, accounting for over half of poultry output (mostly under production contracts) and hay. Non-family farms accounted for 10.4 percent of all production, but were most prominent in high-value crops and beef (through operating feedlots). This chart is found in America’s Diverse Family Farms: 2015 Edition, released in December 2015.
Thursday, December 10, 2015
In 2014, 99 percent of U.S. farms were family farms, where the principal operator and his or her relatives owned the majority of the business. Most were small family farms, having less than $350,000 in annual gross cash farm income (GCFI)—which includes commodity cash receipts, other farm-related income (such as receipts from custom work or production contract fees), and government payments. In 2014, these small family farms accounted for 90 percent of all U.S. farms, 46 percent of the land operated by farms, and 22 percent of agricultural production. Large-scale family farms—with $1 million or more in annual GCFI—accounted for about 3 percent of all farms, but had a disproportionately large share of the value of production (47 percent). This chart is found in America’s Diverse Family Farms: 2015 Edition, released December 2015.
Wednesday, October 7, 2015
About 222,000 women are principal farm operators, or the person most responsible for making day-to-day decisions about the farm; 1.5 million women are spouses of principal operators. About one-third of these women spouses are secondary operators who work on the farm and participate in day-to-day decisions with their husband. The remaining women spouses do not make management decisions and are not farm operators. There are nearly one million of these nonoperator spouses, 46 percent of whom provide farm labor and collectively work 371 million hours on farms. Their labor amounts to 10 percent of the total hours worked on farms by principal operators and their spouses, and 34 percent of the total hours worked by female principal operators and spouses. The average hours of farm work—for persons reporting work hours—is substantial for women principal operators (1,097 hours per person per year), secondary operator spouses (895 hours/person/year), and nonoperator spouses (818 hours/person/year). Nonoperator women spouses contribute significant time to farm operations. This chart is an extension and update of information presented in the ERS report, Characteristics of Women Farm Operators and Their Farms, EIB-111, April 2013.
Tuesday, September 8, 2015
The median total income of farm households has increased steadily over the past 5 years (in both nominal and inflation-adjusted terms), peaking at an estimated $80,620 in 2014. However, it is forecast to decrease slightly in 2015, to $79,287. Households with commercial farms—operations which earn at least $350,000 in gross cash farm income—derive roughly three-fourths of their income from farming. Conversely, off-farm income contributes substantially to the total income of many farm households, especially those with smaller farms or a primary occupation other than farming. Farm households, on average, derive roughly 60 percent of their off-farm income from wages, salaries, and operating other businesses, while the remaining portion comes mostly from interest, dividends, and private and public transfer payments. Farm household median income remains higher than the median income of U.S. households, which was $51,939 in 2013 (the latest figure available). This chart is based on the Farm Household Well-Being Topic Page.
Tuesday, July 14, 2015
Since USDA’s Agricultural Resource Management Survey began collecting data in 1996, the median income of farm households has risen while real U.S. median household income has remained essentially flat. This may be due to a variety of factors, including farm consolidation, increasing commodity prices, and minimal increases in hourly wages for all U.S. workers. In 2013, the median household income of farm households was about $72,000, compared with $52,000 for all U.S. households. Farm households benefitted from high commodity prices in 2012 and 2013; however, many farm households experience considerable variability in their income from year-to-year compared with their non-farm counterparts. The share of farm household income from farming (shown in the green bars) varies, accounting for as little as 5 percent in the early 2000s and reaching a high of 24 percent in 2013. The importance of farm income to households also varies with the size of the operation. Households with smaller and intermediate size farms typically receive the majority of their income from off-farm sources, while large (commercial) farm households derive the bulk of total household income from their farm activities. The most recent ERS farm sector income forecast shows farm sector income for 2014 and 2015 returning to pre-2012 levels. Households operating large farms are the most vulnerable to decreases in farm income. This chart is based on data found in Farm Household Income and Characteristics and information found in the Farm Household Well-being topic page.
Friday, July 10, 2015
Profitability—measured here by the rate of return on assets (RRA)—is strongly associated with farm size. Seventy-nine to 86 percent of retirement, off-farm occupation, and low-sales farms are in the "red zone" (farms with an RRA of less than 1 percent), indicating a very low return to farming. The share of farms in the red zone drops rapidly for the remaining family farm types, those with moderate sales and higher. Likewise, the share of farms in the green zone—with a RRA greater than 5 percent—increases with farm size. Larger farms can often use their resources more productively than smaller farms, generating more dollars of sales per unit of capital. Given the high share of small farms in the red zone, many operators stay in business by undervaluing their labor, effectively ignoring the value of the unpaid labor they provide. Such small-farm households typically receive substantial off-farm income and do not rely primarily on their farms for their livelihood, often using off-farm income to cover farm expenses and make investments in their farm operations. This chart is found on the ERS topic page, Farm Structure and Organization, updated July 2015.
Thursday, June 11, 2015
Since 1916, the Federal estate tax has been applied to the transfer of property at death. Under present law, the estate of a decedent, who at death owned assets in excess of the estate tax exemption amount ($5.43 million in 2015), must file a Federal estate tax return; those estates are subject to a 40 percent tax rate on the nonexempt amount. Based on simulations using farm-level survey data from the 2013 Agricultural Resource Management Survey (ARMS), for the 2014 tax year an estimated 2.7 percent of farm estates would be required to file an estate tax return, with a much smaller share of estates (about 0.8 percent) owing any Federal estate tax. On average, a farm estate that owed Federal estate tax had net worth of $11.1 million and a tax liability of $1.68 million, paying an average tax rate of 15 percent. Estates of small family farms (those with gross cash farm income (GCFI) below $350,000) faced the lowest average effective tax rate, while estates of large-scale family farms (those with GCFI of $1 million or more) were taxed at an average effective rate of 18 percent. This chart is found on the ERS topic page on Federal Estate Taxes, updated May 2015.
Wednesday, April 15, 2015
U.S. farm households generally receive income from both farm and off-farm activities, and for many, off-farm income largely determines the household’s income tax liability. Since 1980, farm sole proprietors, in aggregate, have reported negative net farm income for tax purposes. Over the 1998-2008 period, both the share of farm sole proprietors reporting losses and the amount of losses reported generally increased, due in part to deduction allowances for capital expenses. Since 2007, strong commodity prices have bolstered farm sector profits and the net losses from farming have declined. In 2012, the latest year for which complete data are available, U.S. Internal Revenue Service data showed that nearly 70 percent of farm sole proprietors reported a farm loss, totaling almost $24 billion. The remaining farms reported profits totaling $18.2 billion. This chart updates the chart found in the February 2013 Amber Waves feature, “Federal Income Tax Reform and the Potential Effects on Farm Households.”