ERS Charts of Note

Subscribe to get highlights from our current and past research, Monday through Friday, or see our privacy policy.
See also: Editors' Pick 2018: Best of Charts of Note gallery.

Reset

U.S. farm sector income forecasts down for 2016, led by lower animal/animal products receipts

Wednesday, November 30, 2016

Net cash farm income and net farm income are two conventionally used and related measures of farm sector profitability. The first measure includes cash receipts, government payments, and other farm-related cash income net of cash expenses, while the second is more comprehensive and incorporates noncash transactions such as implicit rents, changes in inventories, and economic depreciation. Following several years of high income, both measures have trended downward since 2013. ERS forecasts that net cash farm and net farm income for 2016 will be $90.1 billion and $66.9 billion, respectively, or $80.9 billion and $60.1 billion, respectively, when adjusted for inflation (in 2009 dollars). Cash receipts declined across a broad set of agricultural commodities in 2015, and are expected to fall further in 2016—primarily for animal/animal products. Production expenses are forecast to contract in 2016, but not enough to offset the commodity price declines. Net cash farm and net farm income are below their 10-year averages, which include surging crop and animal/animal product cash receipts from 2010 to 2013. Find additional information and analysis in ERS’ Farm Sector Income and Finances topic page, updated November 30, 2016.

Farm households vary in their reliance on income from farming

Thursday, August 4, 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.

Distribution of farm program payments varies by farm type

Tuesday, July 12, 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.

Most U.S. farm estates exempt from Federal estate tax in 2015

Monday, June 20, 2016

The Federal estate tax applies to the transfer of property at death. Under present law, the estate of a decedent who, at death, owns assets in excess of the estate-tax exemption amount ($5.43 million in 2015) must file a Federal estate-tax return. However, only those returns that have a taxable estate above the exempt amount (after deductions for expenses, debts, and bequests to a surviving spouse or charity) are subject to tax at a graduated rate, up to a current maximum of 40 percent. Based on simulations using farm-level survey data from USDA’s 2014 Agricultural Resource Management Survey (ARMS), about 3 percent of farm estates would have been required to file an estate tax return in 2015, while 0.8 percent of all farm estates would have owed any Federal estate tax. This chart is based on the ERS topic page on Federal Estate Taxes.

Taxable U.S. net income from farming remained negative in 2013

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.

Older farmers play a larger role in farmland ownership than in production

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.

Household income from farming varies by farm business type

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.

Midsize and large-scale family farms dominate the production of dairy, cotton, and cash grains/soybeans

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.

Small family farms operate nearly half of U.S. farmland; account for 22 percent of the value of production

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.

Nonoperator women spouses contribute substantial time to farming

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.

Median income of farm operator households expected to dip in 2015

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.

Reduced livestock receipts are largest contributor to the forecast decline in U.S. farm income for 2015

Tuesday, August 25, 2015

Net farm income (NFI) is forecast to decline for the second consecutive year, after reaching recent historic highs in 2013. NFI is expected to fall nearly $33 billion (36 percent) from 2014’s estimate to $58.3 billion in 2015. The 2015 forecast would be the lowest since 2010, and $29.1 billion (in real terms) below the 10-year average. Crop receipts are expected to decrease by $12.9 billion from 2014, led by a projected $7.1 billion decline in corn receipts and a $3.4 billion decline in soybean receipts. Livestock receipts are also expected to decline, with the largest decreases expected for hog and dairy receipts. Total production expenses are forecast to fall by $1.5 billion in 2015, the first decline since 2009. Government payments are projected to rise 16 percent ($1.6 billion) to $11.4 billion in 2015. This chart is based on information found in the 2015 Farm Sector Income Forecast, updated August 25, 2015.

Median income of farm households exceeds that of U.S. households

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.

Profitability varies by farm size

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.

Estate tax liability varies by farm size

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.

Taxable net farm income increased in 2012, but was still negative

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.”

Women operate about 14 percent of U.S. farms

Friday, March 13, 2015

The share of U.S. farms operated by women nearly tripled over the past three decades, from 5 percent in 1978 to about 14 percent byThe share of U.S. farms operated by women nearly tripled over the past three decades, from 5 percent in 1978 to about 14 percent by 2012. Although there have always been women farm operators, national-level statistics to track their numbers and examine their characteristics were not available until the Census of Agriculture began asking for principal farm operators’ gender in 1978. 2012 marked the first census, however, in which the number (and share) of women-operated farms did not increase. The number of women-operated farms declined 6 percent between 2007 and 2012, similar to the 4-percent decline for men-operated farms. For both genders, most of the decline (about 75 percent) occurred in the smallest size category of farms (those with annual sales less than $1,000). Between the 1992 and 2007 censuses, the number of farms in this category increased substantially—in part because of increased efforts to find all small farms, including those operated by women. Fewer of these very small farms are overlooked now, resulting in more stable farm numbers. This chart updates one found in the ERS report, Characteristics of Women Farm Operators and Their Farms, EIB-111, April 2013. 2012. Although there have always been women farm operators, national-level statistics to track their numbers and examine their characteristics were not available until the Census of Agriculture began asking for principal farm operators? gender in 1978. 2012 marked the first census, however, in which the number (and share) of women-operated farms did not increase. The number of women-operated farms declined 6 percent between 2007 and 2012, similar to the 4-percent decline for men-operated farms. For both genders, most of the decline (about 75 percent) occurred in the smallest size category of farms (those with annual sales less than $1,000). Between the 1992 and 2007 censuses, the number of farms in this category increased substantially?in part because of increased efforts to find all small farms, including those operated by women. Fewer of these very small farms are overlooked now, resulting in more stable farm numbers. This chart updates one found in the ERS report, Characteristics of Women Farm Operators and Their Farms, EIB-111, April 2013.

U.S. farm sector assets and equity (inflation-adjusted) forecast to decline in 2015 for the first time since 2009

Monday, March 2, 2015

The rate of growth in U.S. farm sector assets and equity (assets minus debt) is forecast to moderate in 2015 compared with recent years, and to decline for the first time since 2009 after adjusting for inflation. Lower projected farm asset growth is primarily driven by decreases in financial assets and a small drop in farm real estate value. These declines reflect lower forecast net cash income for 2014-15, along with expectations of slightly higher interest rates. Farm sector debt is expected to increase in both nominal and inflation-adjusted terms in 2015. Debt is led higher by an increase in nonreal estate borrowing because lower cash income is expected to reduce cash available to cover operating expenses. As a result, the debt-to-asset ratio is expected to increase from 10.6 to 10.9 in 2015, marking the first increase since 2009. Dig deeper into the U.S. farm balance sheet with the data visualization released on February 10, 2015.

Farm sector profitability expected to weaken in 2015

Tuesday, February 10, 2015

U.S. net farm income—a measure of the sector’s profitability—is forecast to be $73.6 billion in 2015, down nearly 32 percent from 2014’s forecast of $108 billion. The 2015 forecast would be the lowest since 2009 and a drop of nearly 43 percent from the record high of $129 billion in 2013. Lower crop receipts (-$15.6 billion) and livestock receipts (-$10.1 billion) are the main drivers of the change, as production expenses are projected up less than 1 percent ($2.5 billion) and government payments are forecast to increase about 15 percent ($1.6 billion) in 2015. Net cash income is forecast at $89.4 billion, down about 22 percent from the 2014 forecast. Net cash income is projected to decline less than net farm income primarily because it reflects the sale of carryover stocks from 2014. This chart is found in 2015 Farm Sector Income Forecast, released February 10, 2015.

Reduced crop receipts largest contributor to the forecast decline in U.S. farm income

Friday, January 16, 2015

Net farm income is forecast to be $97.3 billion in 2014, down nearly $32 billion (25 percent) from 2013’s estimate. The 2014 forecast would be the lowest since 2010, but still $12.3 billion above the previous 10-year average. Crop receipts are expected to decrease by $25.1 billion, led by a projected $10.9-billion decline in corn receipts and a $9.5-billion decline in oil crop receipts, largely due to weak prices. Livestock value of production is expected to have strong gains, with increases across almost all livestock categories and the largest gains expected in cattle/calves and milk. Total production expenses are forecast to increase $18 billion in 2014, extending the upward movement in expenses for a fifth straight year. The elimination of direct payments under the Agricultural Act of 2014 resulted in a projected 4-percent decline in government payments due to offsetting supplemental and ad hoc disaster assistance payments related to drought. For additional analysis, see the 2014 Farm Sector Income Forecast, updated December 12, 2014.

Charts of Note header image for left nav