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Multiple-operator farms are prevalent among larger family farms

Tuesday, January 13, 2015

Larger farms often require more management and labor than an individual can provide. Additional operators can provide the necessary labor, management, and possibly other resources such as capital or farmland. Having a secondary operator may also provide a successor when an older principal operator phases out of farming. Multiple-operator farms are prevalent among large and very large family farms. In 2013, 38 percent of all U.S. farms were multiple-operator farms, while 73 percent of very large family farms had more than one operator. Since farms are generally family businesses, 68 percent of all secondary operators were spouses. About 16 percent of all multiple-operator farms (and 6 percent of all farms) were multiple-generation farms in 2013, with at least 20 years' difference between the ages of the oldest and youngest operators. The presence or absence of younger related operators may affect farm expansion and contraction decisions, depending on the principal operator's lifecycle position. This chart updates one found in the ERS report brochure, America’s Diverse Family Farms, EIB-133, December 2014.

Small family farms operate 48 percent of U.S. farmland and account for 22 percent of U.S. agricultural production

Wednesday, January 7, 2015

In 2013, 98 percent of U.S. farms were family farms, where the principal operator and his or her relatives owned the majority of the business. Two features of family farms stand out. First, there are many small family farms—those reporting less than $350,000 in gross cash farm income (GCFI)— and they account for 89 percent of all U.S. farms and operate 48 percent of U.S. farmland. Second, while most production—65 percent—occurs on the 9 percent of farms classified as midsize/large-scale family farms, small farms’ 22-percent share of production is larger than that of midsize farms alone (20 percent) or nonfamily farms (12 percent). This chart updates one found in Structure and Finances of U.S. Farms: Family Farm Report, 2014 Edition, EIB-132, December 2014.

The distribution of beginning farms reflects local farm economies

Friday, December 19, 2014

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.

Most nonfarm income of farm households comes from wages & salaries

Wednesday, December 17, 2014

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.

Farm sector profitability expected to weaken in 2014

Tuesday, November 25, 2014

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.

Share of women farm operators varies widely by specialization

Monday, October 6, 2014

According to the 2012 Census of Agriculture, women are the principal operators of nearly 14 percent of U.S. farms, but their share varies widely by farm specialization. Women operate a disproportionately large portion of sheep/goat farms and “other livestock farms,” three-quarters of which are horse farms. Farms in these two categories tend to be small; 46 percent of sheep/goat farms and 57 percent of other livestock farms have sales less than $1,000, compared with only 20 percent of all U.S. farms. Establishments of this size qualify as farms under USDA’s definition because they have sufficient acres of crops or head of livestock to indicate they could normally have $1,000 or more in sales. For example, five horses or ponies would qualify an establishment as a farm even if the operator has no plans to sell the animals. On the other hand, 1 percent of farms with a woman principal operator (2,486 farms) have sales of $1 million or more. This chart is an update of one found in the ERS report, Characteristics of Women Farm Operators and Their Farms, EIB-111, April 2013.

Median farm household income forecast to decline slightly in 2014

Monday, September 15, 2014

Median total farm household income is forecast to decline slightly in 2014 to $70,992, down from $71,504 forecast for 2013. Given the broad USDA definition of a farm and the large number of relatively small farms, most farm households earn all of their income from off-farm sources. In 2014, median off-farm income is projected to increase by 3.7 percent to $64,840. On the other hand, many farms are not profitable businesses even in the best farm income years; as a result, median income from farming is negative when calculated for all farm households. Sector-wide farm income is expected to dip in 2014, and median farm household income from farming is expected to decline to -$1,626. (Note: Because they are based on unique distributions, median total income will generally not equal the sum of median off-farm and median farm income.) This chart is found in the ERS topics page, Farm Household Well-being, updated August 26, 2014.

Farm income is forecast to decline in 2014, but remain above previous 10-year averages

Tuesday, August 26, 2014

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.

Contract broiler growers have higher median and greater range of household incomes

Thursday, August 14, 2014

For farmers, household income combines the income that the household receives from off-farm activities with the income that the household receives from the farm business, net of expenses and payments to other stakeholders in the business. Households that raise broilers have higher median incomes than other farm households, and other U.S. households. In 2011, the median income among all U.S. households was $50,504, while the median income among farm households was $57,050. The median for contract broiler growers was higher, at $68,455. However, median income doesn’t tell the whole story; the range of household incomes earned by broiler growers is also wider than other groups, even though contract growers are a much more demographically homogeneous than both the U.S. population and the overall farm population. The wider range reflects, in part, the financial risks associated with contract broiler production. Grower costs can vary widely, and flat annual broiler production in recent years has increased the risk that growers will get fewer chicks placed, or that their contracts won’t be renewed. This chart is found in the August 2014 Amber Waves feature, “Financial Risks and Incomes in Contract Broiler Production.”

New farmers account for a small share of agricultural production

Tuesday, June 17, 2014

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.

Less production and debt concentrated in highly-leveraged farm businesses than 20 years ago

Friday, April 25, 2014

While the average leverage of farm businesses—as measured by debt-to-asset (D/A) ratios—has decreased over time, some farms remain highly leveraged. The D/A ratio that implies financial vulnerability varies with individual farm business characteristics, but a commonly used threshold to indicate high leverage is a D/A ratio greater than 0.4. Using this definition, highly-leveraged farms consistently accounted for a disproportionate but declining share of the total value of production by all farm businesses between 1992 and 2011. In 2011, 5.3 percent of farm businesses were highly leveraged and contributed 13.4 percent of farm businesses’ total value of production; by comparison, in 1992, 9.5 percent of farm businesses, responsible for 19.6 percent of production, were highly leveraged. The declining role of highly-leveraged farms suggests the sector’s financial resiliency has increased over time because financial shocks—such as an unexpected drop in income or a sudden jump in interest rates—would likely affect fewer farm businesses, producing a smaller share of the value of production. This chart appears “Farm Businesses Well-Positioned Financially, Despite Rising Debt” in the April 2014 Amber Waves online magazine.

Median farm household income has exceeded median U.S. household income in recent years

Thursday, April 3, 2014

Since the 1980s, ERS has reported an income measure for farm operator households comparable to the U.S. Census Bureau's measure for all U.S. households. From 1991 to 1997, median farm household income (which is driven almost entirely by off-farm income) was consistently less than median U.S. household income. Since 1998, however, the opposite has been true. The reversal may reflect greater returns to farm household skills employed off the farm, in addition to other factors such as changes in the composition of the farm population. As such, the size of the median household income gap reflects differences in the location and type of nonfarm jobs held by the typical farm and U.S. household, as well as variation in farm income. This chart is found in the ERS topic page on Farm Household Well-being, updated February 2014.

Expected falling crop receipts lead decline in 2014 forecast for net farm income

Tuesday, February 11, 2014

USDA’s initial forecast for 2014 net farm income is $34.7 billion lower than current expectations for 2013, but is $8 billion higher than the average of the previous 10 years. Lower crop cash receipts, and, to a lesser degree, a change in the value of crop inventories and reduced government farm payments, drive the expected drop in net farm income. Crop receipts are expected to decrease more than 12 percent in 2014, led by an expected $11-billion decline in corn receipts and a $6-billion decline in soybean receipts. Elimination of direct payments under the Agricultural Act of 2014 and uncertainty about program enrollment during 2014 result in a projected $5.1 billion decline in government payments. On the other hand, total production expenses are forecast to decline $3.9 billion in 2014, which would be only the second decline in the last 10 years. Livestock receipts and value of inventory change also are expected to increase a combined $3.5 billion in 2014, largely due to higher dairy receipts and the potential for expansion of the beef cattle herd for the first time since 2007. This chart is based on the data available in Farm Income and Wealth Statistics, updated February 11, 2014.

Farm estate taxes vary by type of family farm

Monday, January 6, 2014

The Federal estate tax applies to the transfer of property after death. 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. Based on simulations using farm-level survey data from the 2011 Agricultural Resource Management Survey (ARMS), only about 2.7 percent of family farm estates would be required to file an estate tax return in 2013, with a much smaller share of estates (about .6 percent) owing any Federal estate tax. The impact of the Federal estate tax varies by farm type. Most Federal estate taxes are owed by larger family farm estates. Although these farms account for only about 5 percent of all family farm estates, they account for 73 percent of total family farm estate taxes paid. Only about 7.3 percent of the estimated 2,103 estates involving larger family farms are likely to owe Federal estate taxes in 2013. This chart is found in the ERS topic page on Federal Tax Issues, updated November 2013.

Most farm estates would be exempt from Federal estate tax in 2013

Wednesday, November 13, 2013

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.

Most farmers receive off-farm income, but small-scale operators depend on it

Wednesday, September 25, 2013

Median total household income among all farm households ($57,050) exceeded the median for all U.S. households ($50,054) in 2011. More than half of U.S. farms are very small, with annual sales under $10,000; the households operating these farms typically draw all of their income from off-farm sources. Median household income and income from farming increase with farm size, as defined by sales. The typical household operating the largest commercial farms earned about $380,000 in 2011, and most of that came from farming. This chart is found in the chart collection, Ag and Food Statistics: Charting the Essentials, on the ERS website, updated September 2013.

When working off-farm, operators most commonly work in management and professional occupations

Friday, September 13, 2013

Most farm households earn income from nonfarm sources, and in 2011, roughly 56 percent of their nonfarm income came from off-farm jobs, on average. Based on USDA’s 2010 Agricultural Resource Management Survey, when working off-farm, 36 percent of farm operators and their spouses reported working in management and professional occupations. This share is much higher than that for nonmetropolitan area workers in general (25 percent) and is even higher than that for metropolitan area workers (32 percent). Among farm couples where the operator, spouse, or both reported working off-farm, operators of larger farms reported the highest shares of employment in management and professional occupations, suggesting that many of them are able to apply the knowledge and skills used in managing a sizeable farm operation to other areas of employment. This chart is found in “When Working Off the Farm, Farm Operators Most Commonly Work in Management and Professional Occupations” in the September 2013 issue of ERS’s Amber Waves magazine.

The percent of rural households with Internet at home varies across the Nation

Monday, July 29, 2013

By 2010, 73 percent of U.S. urban households had home subscriptions to the Internet, compared with only 62 percent of rural households and farms, according to Current Population Survey (CPS) data. Rural Internet usage, however, is not uniform across the country. On average, rural households in the Northeast and West are more likely to have some form of inhome access to the Internet, while households in the rural South are the least likely to subscribe. The regional disparity in subscriber rates reflects, to some degree, demographic differences such as income, education, and age. Among rural households that use the Internet, broadband adoption rates (not shown here) are lowest in Appalachia and in several areas—such as Michigan and South Carolina—that experienced the highest unemployment rates during the Great Recession of 2007-09. Rural broadband adoption rates are uniformly below corresponding statewide urban rates. This map is found in the ERS report, Rural Broadband At A Glance, 2013 Edition, June 2013.

The distributions of women-operated farms and farm sales differ widely among commodity specializations

Friday, June 7, 2013

According to the most recent Census of Agriculture, women-operated farms—farms where a woman was the principal operator—numbered 306,200 in 2007 (13.9 percent of all U.S. farms). Most women-operated farms (about 62 percent in 2007) specialized in grazing livestock or miscellaneous crops, but these are mostly small operations that contributed relatively little (16 percent) to the total sales of women-operated farms. A large majority of women-operated grazing livestock farms and ranches had less than $10,000 in annual sales, and 98 percent of miscellaneous crop farms had no sales in 2007. Most sales by women-operated farms (nearly 72 percent in 2007) came from farms specializing in poultry and eggs, specialty crops, grains and oilseeds, and dairy. While accounting for only about 20 percent of women-operated farms, average annual sales exceeded $130,000 for farms with these specializations. This chart is found in the May 2013 Amber Waves.

Understanding farm income's role in farm household finances

Tuesday, May 28, 2013

Over the last 20 years, U.S. farm income has represented as little as 4.6 percent of total annual farm household income and never more than 17.5 percent. However, this indicator of farm income’s importance to farm household finances can be misleading since the broad definition of a farm results in a population that includes many households with little or no agricultural production. The role of farm income is better understood by looking at the percent of households with positive income from farming and, for them, the median share of total household income coming from farming. When disaggregated by farm sales class, it becomes clear that farm income contributes little to the annual income of farm households operating smaller farms, is a secondary source of income for those operating farms with sales of $10,000-$249,999, and is a primary source of income for those operating farms with $250,000 or more in sales. This chart is found in the April 2013 issue of Amber Waves.

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