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North Carolina, recently affected by Hurricane Florence, accounted for an estimated 3 percent ($11 billion) of U.S. farm sector cash receipts in 2017

Monday, September 24, 2018

Each August, as part of the its Farm Income data product, ERS produces estimates of the prior year’s farm sector cash receipts—the cash income the sector receives from agricultural commodity sales. State-level estimates provide background information about States subject to unexpected changes that affect the agricultural sector, such as the recent hurricane that struck North Carolina and surrounding States. In 2017, cash receipts for all U.S. farm commodities totaled $374 billion. North Carolina contributed about 3 percent ($11 billion) of that total, ranking eighth among all States. Broilers (chickens that are raised for meat) accounted for the largest share of cash receipts in North Carolina at 31 percent ($4 billion), compared to 12 percent nationwide—followed by hogs at 21 percent ($2 billion), compared to 11 percent nationwide. The State ranked third in the nation in cash receipts for both broilers and hogs. North Carolina led the country in cash receipts from tobacco, sweet potatoes, and turkeys—accounting for 50, 47, and 15 percent of the U.S. total for those commodities, respectively—although they contributed a smaller share of the State’s total cash receipts. This chart uses data from the ERS U.S. and State-Level Farm Income and Wealth Statistics data product, updated August 2018.

Interest expenses to EBITC ratio has increased in recent years, but remains below its longrun average

Monday, September 17, 2018

The ratio of interest expenses to earnings before interest, taxes, and capital consumption (interest-to-EBITC) measures the farm sector’s ability to pay interest expenses on outstanding debt out of its earnings—a useful metric of the sector’s financial durability. High interest rates and low farm income caused the interest-to-EBITC ratio to peak at 37 percent in 1983—a development that coincided with higher rates of farm bankruptcies and loan defaults. After 1983, the interest-to-EBITC ratio declined year after year until 1995 and reached its 1970-2017 low of 8 percent in 2013. ERS’s 2018 forecast of 16 percent remains below the longrun average of 17 percent. A 16-percent EBITC means that 16 percent of net farm earnings—before interest, taxes, and capital consumption—are spent on interest payments. Although inflation-adjusted farm debt increased 84 percent from 1994 (the lowest value since 1964) to 2017 (the most current estimate), interest expenses have remained relatively stable because of declining interest rates. If farm income remains near current levels and interest rates increase as currently forecast, projected interest expense-to-farm earnings ratios suggest that the farm sector as a whole is unlikely to face extensive debt repayment challenges by 2019. However, if farm income falls substantially, more farmers will find it difficult to meet their debt obligations. This chart updates data found in the July 2018 Amber Waves feature, “Current Indicators of Farm Sector Financial Health.”

The public sector of high-income countries accounts for a shrinking share of global spending on food and agricultural R&D

Monday, September 10, 2018

In high-income countries—such as the United States, Australia, and France—investment in agricultural research and development (R&D) has been a key factor in producing the new technologies that have raised output and reduced input use in agriculture. Recent ERS research found that public sectors in high-income countries accounted for a significant but declining share of total global spending on agricultural R&D. As recently as 1990, public-sector R&D spending by high-income countries accounted for about 36 percent of total public and private spending on food and agricultural research worldwide. That share had fallen to less than 25 percent by 2011. Although public agricultural R&D spending by high-income countries rose in 1990-2011, it rose much faster in developing countries. Total private R&D spending also rose much faster than public agricultural R&D spending in high-income countries during this time period. After adjusting for inflation, aggregate public agricultural R&D spending by high-income countries peaked in 2009, and subsequently declined. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

The number and value of Value-Added Producer Grants have varied substantially

Friday, August 24, 2018

USDA’s Value-Added Producer Grant (VAPG) program provides grants intended to help farmers and ranchers add greater value to agricultural commodities, such as through additional processing or marketing of new products. For example, producers could adopt organic practices, turn berries into jam, or process meat into sausage. The number of grants and the amount of grant money obligated under the VAPG program have fluctuated substantially since the program began in 2001. That year, USDA issued 62 VAPGs worth nearly $19.9 million in total funding. In 2015, by comparison, USDA issued 365 grants worth a total of about $44.2 million. Data fluctuated from year to year, largely due to VAPG funds rolling over to the next fiscal year. In many cases, a fiscal year included obligations for two VAPG cycles. Or in the case of 2002 and 2009, there were no obligations due to combining fiscal years for one VAPG cycle. This chart appears in the May 2018 ERS report, USDA’s Value-Added Producer Grant Program and Its Effect on Business Survival and Growth.

Young farmers who owned more of their land also borrowed more and bought more land

Wednesday, August 15, 2018

For many farmers, farm real estate represents a substantial share of total household wealth and is the most important source of equity used to secure loans. Recent ERS research tested the extent to which owning a larger share of their land allowed farmers in different age groups to borrow more, buy more land, or expand operations. Younger farmers (under age 50 in 1997) may need more credit (because they are in a growth phase of the business) and may be more constrained by their wealth (because they have less of it). For younger farmers, owning an additional 1 percent of one’s land increased the growth rate of interest expenses on real estate-secured debt by 1.44 percentage points between 1997 and 2007. Younger farmers with larger land wealth gains also bought more land: owning an additional 1 percent of one’s land increased the growth rate in land owned by 1.01 percentage points. For the average farm in the sample, that would increase interest expenses by $281, debt by $3,465, and land owned by 4.9 acres. There was no significant effect for older farmers. This chart appears in the February 2018 Amber Waves feature, “Changing Farmland Values Affect Renters and Landowners Differently.

Small farms produce a different mix of commodities than larger farms

Monday, August 13, 2018

Commodity mixes differ by farm size. For example, hogs and poultry accounted for 29 percent of the production of small farms in 2016, a much greater share than in other size classes. Small farms typically raise the animals for processors under contracts, which reduces price risks and allows them access to bank financing. Dairy production and fruit, vegetable, and nursery crops—where economies of scale give an advantage to larger farms—accounted for 59 percent of the output of very large farms, compared to 12 percent of the output of small farms. Midsize farms emphasize corn and soybean production, as well as other field crops. This chart updates data found in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.

Since the late 1970s, agricultural productivity growth in high-income countries has raised output and reduced farm input use

Monday, August 6, 2018

In high-income countries—such as the United States, Australia, and France—increases in productivity typically account for nearly all growth in agricultural outputs. Productivity growth may also reduce the amounts of land, labor, capital, or other inputs used in farm production. Between 1961 and 2014, aggregate agricultural outputs in high-income countries increased by 98 percent (nearly doubling), while total inputs declined by 14 percent. Total inputs grew slowly until the late 1970s and have declined ever since. The mix of inputs also changed, with capital and material inputs substituting for labor and land. Overall, the growth in agricultural outputs and the decline in inputs implies that total factor productivity—the total productivity of the land, labor, capital, and material inputs employed in production—more than doubled over this 54-year period. Investment in agricultural research was a key factor in producing the new technologies that have raised productivity. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Including asset appreciation and tax-loss benefits raises average farm household economic returns for all types of farms

Thursday, August 2, 2018

Of the roughly 2 million U.S. farm households, more than half report negative income from their farming operations each year. Most farms are small, and the proportion incurring farm losses is higher for households operating smaller farms—where most or all of their income is typically derived from off-farm activities. However, many households offset their off-farm income with these farm losses, thus reducing their taxable income. Also, in many years, farm real estate values have increased, which bolsters the economic returns for farmland owners. When these tax-loss benefits and changes in farm real estate values are taken into consideration, the returns to farming increased in 2015. For example, for residence farm households, estimated average returns increased from a negative $2,241 to positive $13,619. The increases in average returns for intermediate and commercial farm households were even greater. Finally, the share of total farm households with positive returns from their farm operation rose from 43 percent to 70 percent, primarily due to the broad increases in farmland real estate prices in 2015. This chart appears in the August 2018 ERS report, Economic Returns to Farming for U.S. Farm Households.

Although farm wages have increased, labor costs as a share of farm gross cash income remained relatively flat

Tuesday, July 31, 2018

Farm wages have risen since 2000, reaching an annual average of $13.32 per hour in 2017. However, farm labor costs as a share of farm gross cash income do not show an upward trend over 2000-16, as rising wage rates for farm workers have been offset by a number of factors, including rising labor productivity and output prices for some commodities. For all farms, labor costs averaged 10.1 percent of gross cash income in 2016, compared to 10.6 percent in 2000. For the more labor-intensive fruit, vegetable, and horticulture operations, labor costs in 2016 amounted to 26.7 percent of gross cash income, compared to 28.6 percent in 2000. For farms specializing in dairy, the labor cost share of gross cash income was 10.2 percent in 2016, compared to 9.5 percent in 2000. This chart appears in the ERS topic page for Farm Labor, updated May 2018.

Oil and gas payments accounted for about 30 percent of net cash farm income in Texas, Oklahoma, and Pennsylvania

Friday, July 27, 2018

From 2005 to 2014, high energy prices and innovation in extraction methods enabled U.S. production of oil and gas to grow by 69 percent, with almost 67 percent of overall production occurring on farmland. The growth generated tens of billions of dollars of additional revenue for owners of oil and gas rights and increased the value of those rights. In 2014, farm operators owned $19.1 billion in oil and gas rights that generated $3.8 billion in payments through leases with energy firms. These payments accounted for about 4 percent of net cash farm income nationally in 2014, but made up a more substantial portion of farm income (11 percent) in oil and gas production regions. The share attributable to royalty income was particularly noteworthy in Texas, Oklahoma, and Pennsylvania, where oil and gas payments amounted to about 30 percent of net cash farm income. These States are host to productive shale plays, including the Marcellus, Barnett, Eagle Ford, and Woodford plays. This chart appears in the June 2018 ERS report, Ownership of Oil and Gas Rights: Implications for U.S. Farm Income and Wealth.

USDA’s Value-Added Producer Grants concentrated in the north-central, western, and northeastern United States

Monday, July 9, 2018

USDA’s Value-Added Producer Grant (VAPG) program provides grants intended to enable farmers and ranchers to add greater value to agricultural commodities, such as through additional processing or marketing of new products. For example, producers could adopt organic practices, turn berries into jam, or process meat into sausage. Between 2001 and 2015, the program provided a total of 2,345 grants to farmers and ranchers—a total value of $318 million, or about $136,000 per grant, on average. These grants were concentrated mainly in the north-central, western, and northeastern regions of the United States. The north-central States of Iowa, Wisconsin, Missouri, Nebraska, and Minnesota received a combined 28 percent of all grants. Overall, a little over half of grant recipients were located in rural (nonmetro) counties. Promotion of value-added agriculture has been seen by some researchers and policymakers as a strategy to promote increased rural employment and income. This chart appears in the May 2018 ERS report Impacts of USDA’s Value-Added Producer Grants Program on Business Survival and Growth.

Livestock production has shifted to more specialized farms over time

Friday, July 6, 2018

Livestock production has become increasingly specialized, relying less on homegrown and more on purchased feed. Since fully specialized farms have no cropland to absorb manure as fertilizer, they must move their manure off the farm. In 2015, 37 percent of all livestock were produced on farms that had no crop production, up from 22 percent in 1996. Specialization grew in each major livestock commodity during this period. In 2015, nearly 53 of all poultry production occurred on farms that raised no crops, up from 44 percent in 1996. Poultry manure is lighter than other manure and easier to transport, making it cheaper for a contract poultry operation to dispose of all its manure off the farm and reducing the incentive to grow crops on farm. Specialization increased substantially in hog production, where 31 percent of production occurred on farms with no crops in 2015, up from 14 percent in 1996. This chart appears in the March 2018 ERS report, Three Decades of Consolidation in U.S. Agriculture.

Net cash farm income forecast to fall below 1970-2016 average level

Tuesday, July 3, 2018

Farm sector net cash farm income is a measure of the profitability of farming and, hence, the ability of farmers to meet their loan obligations, invest in new machinery, remain in production, expand their operations, and provide for family living expenses. Beginning in 2010, inflation-adjusted farm sector net cash income rose to near record highs, peaking in 2012. Much of this growth was due to commodity cash receipts, which increased by $113.2 billion from 2009 to 2014. Between 2012 and 2016, however, farm sector net cash income fell 33 percent to $97.3 billion. This is the largest multiyear decline since the 1970s in both absolute and percentage terms. Slowing global demand, a strengthening dollar, and large inventories depressed crop as well as animal and animal product prices and contributed to the decline. Although the decline is large, when viewed over a longer time horizon, net cash farm income has returned near levels seen before the record growth from 2010 to 2013. ERS forecasts net cash farm income in 2018 to be 7 percent below the average across 1970-2016. This chart appears in the July 2018 Amber Waves feature, “Current Indicators of Farm Sector Financial Health.

Ownership of oil and gas rights among farm operators varies across States

Wednesday, June 27, 2018

The ability of landowners to profit from oil and gas development on their land depends on whether they own the oil and gas rights associated with their property. Nationally, 5.4 percent of farm operators reported owning oil and gas rights in 2014. In counties with oil and gas production, the share was higher at 11.4 percent. The share of operators who reported owning oil and gas rights exceeded the national average in States where oil and gas counties were abundant—including Oklahoma and Pennsylvania (about 14 percent each) and Kansas, Texas, Arkansas, and North Dakota (about 10 percent each). Separate ownership of the surface and subsurface rights is more common in the Western United States, particularly when shale formations lie above or below conventional oil and gas fields with a history of drilling, because oil and gas rights may have been sold previously. By comparison, the Marcellus shale play extends into areas of Pennsylvania with little history of drilling. Unified ownership is likely much higher there, increasing that State’s share. This chart appears in the June 2018 ERS report, Ownership of Oil and Gas Rights: Implications for U.S. Farm Income and Wealth.

Hourly wages for hired farmworkers have grown steadily since 1989

Wednesday, June 20, 2018

Hired farmworkers are found in a variety of occupations, including field crop workers, nursery workers, livestock workers, graders and sorters, agricultural inspectors, supervisors, and hired farm managers. Since 1989, the average hourly wage for hired farmworkers (excluding contract labor) has increased at almost 1 percent per year, after adjusting for inflation—reaching an annual average of $13.32 per hour in 2017. Wages grew by 3.7 percent in 2015 and 2.2 percent in 2016, but grew only 0.5 percent in 2017. Wage growth for nonsupervisory farmworkers was lower than the average for all hired farmworkers. In 2017, nonsupervisory farmworkers averaged $12.47 per hour, with little difference between crop and livestock wage rates. Higher demand for farm labor and a lower supply of immigrant labor since 2007 have contributed to rising wages. This chart appears in the ERS topic page for Farm Labor, updated May 2018.

Farm debt-to-asset ratio forecast to stabilize in 2017-18

Friday, June 15, 2018

The debt-to-asset ratio compares the farm sector’s outstanding debt relative to the value of the sector’s aggregate assets. An indicator of the farm sector’s level of risk exposure, this ratio provides a measure of the sector’s ability to repay financial liabilities (debt) via the sale of assets. A lower debt-to-asset ratio indicates fewer assets are financed by debt and suggests the sector would be better able to overcome adverse financial events. After reaching a low of 11.3 percent in 2012, the debt-to-asset ratio increased gradually to 12.7 percent in 2016 as the growth rate for debt exceeded the growth rate for assets. ERS forecasts the debt-to-asset ratio to remain relatively unchanged in 2017-18, as farm sector assets stabilized at $3.1 billion (adjusted for inflation) between 2016 and 2018. Still, the ratio remains well below the peak in 1985 (22.2 percent) as farm sector asset values have nearly doubled since 1985. About 80 percent of the value of farm sector assets is attributable to the market value of farm real estate assets, which increased 115 percent from 1985 to 2016 and is forecast to increase 2 percent in 2017 and remain flat in 2018. This chart uses data from the ERS data product Farm Income and Wealth Statistics, updated February 2018.

Public spending on agricultural R&D by high-income countries grew after 1960, but is now in decline

Wednesday, May 30, 2018

On May 30, 2018, the Chart of Note article “Public spending on agricultural R&D by high-income countries grew after 1960, but is now in decline” was reposted to correct an error in the third sentence, which cited the spending peak as $18.7 billion instead of $18.6 billion.


For high-income countries as a group, public agricultural research expenditures (adjusted for inflation) grew rapidly after 1960. However, growth slowed markedly in recent decades and has now turned negative. In constant 2011 dollars, public agricultural R&D spending in these countries grew from $3.9 billion in 1960 to a peak of $18.6 billion in 2009, before declining to $17.5 billion by 2013 (the latest year with complete data). This decline in public R&D spending marked the first sustained fall in agricultural R&D investment by these countries in 50 years, and was most pronounced in the United States and Southern Europe. The United States continues to lead among high-income countries in public agricultural R&D spending, but the U.S. share of the total declined from 35 percent in 1960 to less than 25 percent by 2013. This chart appears in the ERS report Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.

Older operators often run small family farms, particularly retirement and low-sales farms

Friday, May 25, 2018

A notable characteristic of principal farm operators (those most responsible for running the farm) is their relatively advanced age. In 2016, 36 percent of principal farm operators were at least 65 years old, compared with only 14 percent of self-employed workers in nonagricultural businesses. Older operators ran 37 percent of all small family farms—those with annual gross cash farm income (GCFI) before expenses under $350,000—including 68 percent of retirement farms and 38 percent of low-sales farms. By comparison, older operators ran 21 percent of large family farms (GCFI of $1 million to $4,999,999) and 23 percent of very large family farms (GCFI of $5 million or more). Improved health and advances in farm equipment enable operators to farm later in life than in past generations. The farm is also home for most farmers, and they can gradually phase out of farming by renting out or selling parcels of their land. Some larger, more commercially oriented farms run by older farmers may have a younger, secondary operator who might eventually replace the principal operator. This chart appears in the ERS report America's Diverse Family Farms: 2017 Edition, released December 2017.

The median income of households operating farm businesses has risen over the past two decades, but remains below that of self-employed households

Wednesday, May 23, 2018

Households that operate farm businesses—which include farmers with commercial farms earning at least $350,000 in gross cash farm income before expenses and those with smaller farms who report farming as their primary occupation—account for two-fifths of U.S. farm households. Since 1996, the median income of these farm business households has remained below the income of self-employed households. However, the median income gap between farm business and self-employed households has varied and has narrowed considerably during this period. Over the past 20 years, after adjusting for inflation, the median income of farm business households has increased substantially. This has occurred both because farms have become more profitable and average off-farm income has risen. In 1996, the median income of farm business households was $35,166, compared to $76,483 for self-employed households. By 2016, the median income of farm business households had increased to $64,929, compared to $84,459 for self-employed households. This chart appears in the ERS topic page Farm Household Well-being, updated May 2018.

Agriculture and its related industries added over $1 trillion to U.S. GDP in 2016

Tuesday, May 15, 2018

Agriculture, food, and related industries contributed 1.05 trillion to U.S. gross domestic product (GDP) in 2016, a 5.7-percent share. The output of America’s farms contributed $136.7 billion of this sum—about 1 percent of GDP. The overall contribution of the agriculture sector to GDP is larger than this because sectors related to agriculture—forestry, fishing, and related activities; food, beverages, and tobacco products; textiles, apparel, and leather products; food and beverage stores; and food service, eating and drinking places—rely on agricultural inputs in order to contribute added value to the economy. The value added by America’s farms has decreased in each of the last 3 years, from a high of $187.0 billion in 2013. The decline in value added is primarily driven by lower commodity prices for major crops like corn and soy, which were near record highs in 2013. All other agriculture related industries included grew in 2016 relative to a year earlier. The largest growth occurred in the food service, eating and drinking places industries, with 6 percent more value added in 2016 than in the previous year. This chart is updated for 2016 and is from ERS's data product, Ag and Food Statistics: Charting the Essentials.

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