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Farms with higher sales had a larger share of households with positive farm income

Wednesday, June 23, 2021

Farm households earn income from both farm operations and off-farm sources, such as off-farm employment, pensions, and capital gains. In 2019, more than half (51 percent) of all U.S. farm households had positive net returns, where total revenue from farming exceeded total costs. Farms with higher sales had a larger share of households with positive farm income. For example, 39 percent of farm households with annual gross sales less than $10,000 had positive farm income, compared with 85 percent of farms with sales of $1 million or more. At the same time, 56 percent of households operated the smallest farms with sales of less than $10,000, compared with 4 percent operating the largest ones with annual sales of $1 million or more. Households operating larger farms relied more on income from farming than households operating smaller farms. For instance, households that operated farms with sales of $1 million or more—and that had net positive returns—earned a median share of 87 percent of their income from farming. For those with sales less than $10,000, that median share was 5 percent. This chart is based on data from the ERS data product ARMS Farm Financial and Crop Production Practices, updated December 2020.

Average age of hired farm workforce increased from 2006 to 2019

Monday, June 14, 2021

With fewer young immigrants entering the U.S. farm workforce, the average age of foreign-born hired farmworkers rose in 2019. That, in turn, pulled up the average age for the U.S. farm workforce as a whole. According to the latest data from the American Community Survey, the average age of foreign-born farmworkers increased by nearly 7 years from 2006 to 2019, from 35.7 to 41.6 years. In contrast, the average age for farmworkers born in the United States remained roughly constant over the same period. The average age of all farmworkers increased from 35.8 years in 2006 to 39.5 years in 2019. U.S. farmworkers, who make up less than 1 percent of the Nation’s workforce, are more likely to be Hispanic of Mexican origin and less likely to be citizens than are workers in occupations other than agriculture, according to the American Community Survey. This chart updates data found 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.”

Largest shares of women principal farm operators found on poultry and other livestock operations in 2019

Wednesday, June 9, 2021

Women play an integral part in farming, either as a principal operator or as a secondary operator. In 2019, more than half (51 percent) of all farming operations in the United States had a woman principal or at least one woman secondary operator. Women were primarily responsible for the day-to-day operation decisions—the “principal operator”—on 14 percent of farms. In 37 percent of operations, women were “secondary operators,” meaning they were involved in decisions for the operation but were not the principal operators. The share of principal farm operators who were women varied by commodity specializations. In 2019, the two largest shares of women principal operators were found on farms specializing in poultry (31 percent) and other livestock (about 30 percent). Operations specializing in dairy production had the largest share of operations with at least one woman secondary operator, about 54 percent. The smallest share (about 33 percent) of women operators, either principal or at least one secondary, was found on cotton farms. Among operations with at least one woman operator, 78 percent of the women were the principal operator’s spouse and worked on the farm. This chart is found in the Economic Research Service report, America’s Diverse Family Farms: 2020 Edition, released December 2020. It also appears in the June 2021 Amber Waves article, “Women Identified as Operators on 51 Percent of U.S. Farms in 2019.”

Larger U.S. dairy farms tend to be more profitable than smaller dairy farms

Tuesday, June 1, 2021

According to the most recently available data, in 2016, 62 percent of U.S. dairy farms with at least 2,000 cows generated gross returns that exceeded total costs, compared with 43 to 44 percent of farms in the two next-largest classes (500-999 cows and 1,000-1,999 cows). In the smallest classes (10-49 cows and 50-99 cows), less than 10 percent of farms generated positive net returns. Total costs include cash expenses such as those for feed, fuel, and hired labor, but they also include estimates of the costs of the farm’s capital and of the family labor provided to operate the dairy farm. A farm that does not cover total costs can continue to operate, and to provide a living for the family operating the farm, if it covers cash expenses and the costs of the family’s labor (total cost except capital recovery). For example, while about 20 percent of farms with 100-199 cows earned positive net returns in 2016, 46 percent earned enough to cover all cash expenses and to provide a living for the farm family. However, these farms did not earn enough to cover annual costs of capital recovery (the replacement value of the capital, such as equipment and structures, used on the farm). Continued operation makes financial sense for those farms until the cash expenses of maintaining an aging plant rise enough to cut into the family’s income from dairy farming. This chart appears in the Economic Research Service report Consolidation in U.S. Dairy Farming, released July 2020. It also appears in the August 2020 Amber Waves feature, Scale Economies Provide Advantages to Large Dairy Farms.

U.S. farm sector liquidity forecast to decline in 2021

Friday, May 21, 2021

Liquidity is the ability to convert assets to cash quickly to satisfy short-term obligations without the assets losing material value. Researchers at the USDA, Economic Research Service (ERS) examined two measures of the U.S. farm sector’s liquidity: working capital and the times interest earned ratio. Working capital measures the amount of cash available to fund operating expenses after paying off debt to creditors due within 12 months (current debt). ERS forecasts U.S. farm sector working capital in 2021 at $74.3 billion, a 13.6-percent decrease from 2020 after adjusting for inflation. If realized, this would be the largest decline since 2016. By comparison, the times interest earned ratio measures the farm sector’s ability to service debt out of net farm income, so a higher times interest earned ratio indicates greater ease in making debt payments. ERS forecasts the times interest earned ratio will decrease from 9.2 in 2020 to 8.4 in 2021, after a forecasted increase in 2020. The weakening of this ratio in 2021 reflects the forecast decline in net farm income as well as the expected increase in interest expenses. Still, the times interest earned ratio is forecast to remain above 2014-19 levels. This chart appears in the ERS Amber Waves finding, Farm Sector Liquidity Forecast to Decline in 2021, released March 2021.

Food services industry share of the food dollar increased in 2019 for eighth consecutive year

Monday, May 17, 2021

In 2019, restaurants and other eating places claimed 38.5 cents of the average U.S. food dollar, continuing a steady climb since 2009, when the food services industry’s share was 29.6 cents. Farm production was the only other industry with a rising food dollar share in 2019, up slightly to 7.6 cents from its 25-year low of 7.4 cents in 2018. The proportion of the food dollar was the smallest since 1993 for several industries in 2019: agribusiness (such as fertilizer and farm services), food processing, packaging, wholesale trade and retail trade. The 2019 food dollar reflects conditions before the COVID-19 pandemic. ERS’s annual Food Dollar Series provides insight into the industries that make up the U.S. food system and their contributions to total U.S. spending on domestically produced food. ERS uses input-output analysis to calculate the cost contributions from 12 industry groups in the food supply chain. Annual shifts in the food dollar shares between industry groups occur for a variety of reasons, including changes in the mix of foods consumer buy, costs of materials, ingredients, and other inputs, as well as changes in the balance of food at home and away from home. This chart is available for the years 1993 to 2019, and can be found in ERS’s Food Dollar Series data product, updated on March 17, 2021.

COVID-19 Federal financial assistance to U.S. farms varied by State

Friday, May 7, 2021

In 2020, the Federal Government provided assistance to farm operations that experienced losses because of the Coronavirus (COVID-19) pandemic. The aid came in the form of loans from the Paycheck Protection Program (PPP) and payments from the two iterations of the Coronavirus Food Assistance Program (CFAP), programs 1 (CFAP 1) and 2 (CFAP 2). PPP, administered by the U.S. Small Business Administration, provided loans to small businesses to help them keep their workers employed during the pandemic. CFAP, administered by USDA’s Farm Service Agency, provides assistance to agricultural producers whose operations were directly affected by the pandemic. The PPP loan amount each farm business could receive depended on their income and employment costs, while CFAP payments were based on commodity prices, previous sales, acres, and/or inventory. USDA, Economic Research Service (ERS) researchers compared the total amount of PPP loans plus CFAP payments received in each State in 2020 to its 2019 value of production (estimates of the 2020 value of production are not yet available). Massachusetts received the largest share of total loans and payments relative to the State’s 2019 value of production (12.2 percent), and South Dakota came in second at 11.1 percent of its 2019 production. California, which had the highest value of agricultural production in 2019, received the largest total amount of PPP and CFAP aid at $3.1 billion. Iowa, which had the second highest level of agricultural production in 2019, was No. 2 with $2.4 billion in assistance. This chart used data found in the ERS data product Farm Income and Wealth Statistics, Farm sector financial indicators, State rankings, updated February 2021.

Share of off-farm income varies by commodity specialization

Monday, April 26, 2021

Farm households obtain income from farming and off-farm income, such as salaries, pensions, and investment interest. Among farm businesses, off-farm wage and salary income varied by commodity specialization. For general crops, beef cattle, and poultry operations, average off-farm wage and salary income contributed more than half of total household income. Dairy operations, by comparison, averaged $37,339 in off-farm wage and salary income, the lowest of any commodity. Dairy operations require extensive and ongoing time commitments, so managing a dairy farm rarely permits an operator to work many hours off-farm. As a result, dairy farm households relied primarily on income from the operation, an average of $148,831 in 2019. This chart is based on data from the ERS data product ARMS Farm Financial and Crop Production Practices, updated December 2020.

Farm share of U.S. food dollar increased in 2019 after 7 years of decline

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.

Nonoperator landlords residing within 50 miles of their land owned 67 percent of rented acreage in 2014

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.

Corn, soybean farmers covered part of their production with futures, options, and marketing contracts in 2016

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.

Women accounted for an increasing share of hired farm workforce from 2009 to 2018

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.

Principal operator, spouse or both worked off the farm in half of U.S. family farm households in 2019

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.

See also: Farms and Farm Households During the COVID-19 Pandemic

U.S. farm sector profits forecast to fall in 2021

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.

Beginning farm households rely more on off-farm income than do established farm households

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.

Farm sector profits forecast to rise in 2020

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.

Real wages for hired U.S. farmworkers rose between 1990 and 2019

Friday, November 27, 2020

Hired farmworkers make up less than 1 percent of all U.S. wage and salary workers, but they play an essential role in labor-intensive industries within U.S. agriculture, such as the production of fruits, vegetables, melons, dairy, and nursery and greenhouse crops. Farm wages have risen over time for nonsupervisory crop and livestock workers (excluding contract labor). According to data from the USDA’s Farm Labor Survey, real (inflation-adjusted) wages rose at an average annual rate of 1.1 percent between 1990 and 2019. In the past 5 years, real farm wages grew even faster at an average annual rate of 2.8 percent. This is consistent with growers’ reports that the longstanding supply of workers from Mexico has decreased, as growers may respond over time by raising wages to attract workers from other sources. The gap between farm and nonfarm wages has slowly shrunk but is still substantial. In 1990, the average wage for nonsupervisory farmworkers—$9.80 an hour in 2019 dollars—was about half the $19.40 wage of private-sector nonsupervisory workers in the nonfarm economy. By 2019, the $13.99 farm wage was 60 percent of the $23.51 nonfarm wage. 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.”

Larger corn and soybean farms used more futures, options, and marketing contracts in 2016

Friday, November 13, 2020

U.S. farmers can use a variety of market tools to manage risks. With a futures contract, the farmer can assure a certain price for a crop that has not yet been harvested. An option contract allows the farmer to protect against decreases in the futures price, while retaining the opportunity to take advantage of increases in the futures price. Futures and options usually do not result in actual delivery of the commodity, because most participants reach final financial settlements with each other when the contracts expire. In a marketing contract, by contrast, a farmer agrees to deliver a specified quantity of the commodity to a specified buyer during a specified time window. Corn and soybean farms account for most farm use of each of these contracts, and larger operations are more likely to use them than small. With more production, larger farms have more revenue at risk from price fluctuations, and therefore a greater incentive to learn about and manage price risks. Fewer than 5 percent of small corn and soy producers used futures contracts, compared with 27 percent of large producers. Less than 1 percent of small corn and soy producers used options, compared with 13 percent of large producers. And about 19 percent of small corn and soy producers used marketing contracts, compared with 58 percent of large producers. This chart is based on data found in the Economic Research Service report, Farm Use of Futures, Options, and Marketing Contracts, published October 2020. It also appears in the November 2020 Amber Waves feature, “Corn and Soybean Farmers Combine Futures, Options, and Marketing Contracts to Manage Financial Risks.”

Farm production expenses forecast to decrease in 2020, the sixth year in a row

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.

Organic dairy farms had higher costs, but also higher gross returns, than conventional farms in 2016

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.”