ERS Charts of Note
Friday, May 22, 2020
The H-2A Temporary Agricultural Program provides a legal means to bring foreign-born workers into the United States on a temporary basis. Workers employed on an H-2A visa are allowed to remain in the U.S. for up to 10 months at a time. Employers must demonstrate, and the U.S. Department of Labor must certify, that efforts to recruit U.S. workers were not successful. Employers must also pay a region-specific minimum wage, known as the Adverse Effect Wage Rate, which is set at the average wage for crop and livestock workers in that region in the prior year, as measured in USDA’s Farm Labor Survey. In addition, employers must pay for application and visa processing fees, provide housing for their H-2A workers, and pay for their domestic and international transportation. One of the clearest indicators of the scarcity of farm labor is the fact that the number of H-2A positions requested and approved has increased fivefold in the past 14 years—from just over 48,000 positions certified in fiscal 2005 to nearly 258,000 in fiscal 2019. The average duration of an H-2A certification in fiscal 2019 was 5.3 months, implying that the 258,000 positions certified represented about 114,000 full-year equivalents. The impact of this year’s shelter-in-place restrictions due to COVID-19 are not reflected in the data discussed. This chart appears in the Economic Research Service topic page for Farm Labor, updated April 2020.
Monday, May 4, 2020
Each August, the Economic Research Service (ERS) produces and publishes estimates of the (farm sector) cash receipts—the cash income the farm sector receives from agricultural commodity sales—from the prior year. These data include State-level estimates, which can help offer background information about States subject to unexpected changes that may affect the agricultural sector, such as the current COVID-19 shelter-in-place restrictions in New York and other States. In 2018, U.S. cash receipts for all commodities totaled $373 billion. New York contributed about 1 percent ($5 billion) of that total, ranking 27th among all States. Receipts from milk accounted for the largest share of cash receipts in New York, at 49 percent ($2.5 billion). The State ranked third in milk cash receipts behind California and Wisconsin, accounting for 7 percent of milk cash receipts nationwide. New York also ranked third in apple cash receipts behind Washington and Michigan, accounting for 9 percent ($262 million) of apple cash receipts nationwide and 5 percent of New York’s total cash receipts. Receipts for corn and cattle/calves each accounted for 7 percent of the State’s total cash receipts. Although contributing a smaller amount to total cash receipts in the State, nationwide New York accounted for 18 percent ($26 million) of maple products receipts, 13 percent ($53 million) of cabbage receipts and 13 percent ($24 million) squash receipts. This chart uses State-level data from the ERS data product Farm Income and Wealth Statistics, updated February 2020.
Monday, April 27, 2020
Solvency is a measure of the ability of a farm or ranch operation to satisfy its debt obligations when due. Popular measures of solvency include the debt-to-equity ratio, debt-to-asset ratio, and equity-to-asset ratio. Solvency ratios compare the amount of debt relative to equity invested in the farm sector. As a result, these ratios provide a measure of the farm sector’s ability to repay financial liabilities via the sale of assets. The ratios also measure the farm sector’s risk exposure and ability to overcome adverse financial events. The farm sector debt-to-equity and debt-to-asset ratios are expected to continue their slow increases from 2012. The Economic Research Service (ERS) forecasts a debt-to-equity ratio of 15.7 percent in 2020, and a debt-to-asset ratio of 13.6 percent. These higher ratios indicate that more of the farm sector’s assets are financed by credit or debt relative to owner capital (equity). This is the result of farm sector debt growing at a faster rate than farm sector assets. The impact of this year’s shelter-in-place restrictions due to COVID-19 are not reflected in this ERS data. This chart appears in the ERS topic page for Farm Sector Income and Finances.
Friday, April 24, 2020
In 2018, restaurants and other eating-out places claimed 37.4 cents of the U.S. food dollar—foodservices’ highest share during the 1993 to 2018 period covered by the Economic Research Service’s (ERS’s) Food Dollar Series and the seventh consecutive annual increase. More eating out in 2018 was also reflected in the 12.3-cent retail-trade share claimed by grocery stores and other food retailers, which was at its lowest level in the 1993-2018 period. The only other industry groups that showed an increasing food dollar share in 2018 were farm producers, up 0.3 cents to 8 cents in 2018, and energy industries, such as electric power and natural gas, which increased their share for the third consecutive year, up to 4.2 cents. 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 value added, or cost contributions, from 12 industry groups in the food supply chain. Annual shifts in food dollar shares between industry groups occur for a variety of reasons, ranging from the mix of foods that consumers purchase to relative input costs; implications of this year’s COVID-19-related shelter-in-place restrictions will be reflected in the 2020 food dollar. This chart is available for the years 1993 to 2018, and can be found in ERS’s Food Dollar Series data product, updated on March 23, 2020.
Friday, April 10, 2020
In 2019, the United States produced more than 8 billion dozen table eggs, a 2.8-percent increase over 2018. Much of this growth came in the first half of 2019, driven by a larger layer flock—a flock of egg-laying hens—as well as higher egg lay rates. However, this growth resulted in an oversupply of eggs, which put significant downward pressure on egg prices. In response, the industry took measures beginning in June 2019 to downsize the layer flock. For the remainder of 2019, the layer flock inventory fell below or hovered around previous year levels. Nonetheless, table egg production in the second half of 2019 remained 1.5 percent higher over 2018 because of record-high lay rates. On November 1, 2019, the U.S. table egg lay rate reached 82 eggs per 100 layers, the highest rate on record. Lay rates, which have increased by approximately 11 percent since 2000, have been an important driver of growth in egg production. Several factors can affect lay rates, including day length, hen age, nutrition, disease, genetics, and flock management. Egg production decreases with shorter days, particularly during fall and winter, but this can be remedied with artificial lighting. Younger hens and older hens do not produce as many eggs as those hens of peak production age (approximately 26 weeks). Finally, advancements in nutrition, disease prevention, genetic selection, and improved flock management practices have contributed to improving overall hen health, which is associated with good lay rates. In the beginning of 2020, although lay rates continued to trend higher year over year, the layer flock contracted sizably. This tightening of supply has been met with a surge in demand, causing prices to increase in March. This chart is drawn from the Economic Research Service Livestock, Dairy, and Poultry Monthly Outlook, published March 2020, and the Livestock & Meat Domestic Data: Production Indicators.
Monday, April 6, 2020
Over the past three decades, the midpoint acreage—where half of the acres of a specific crop are on farms that harvest more than the midpoint, and half are on farms that harvest less—has shifted to larger farms for almost all crops. In 1987, for example, the midpoint acreage for corn was 200 acres; it increased to 685 acres by 2017. Four other major field crops (cotton, rice, soybeans, and wheat) showed a very similar pattern: the midpoint for harvested acreage increased between 1987 and 2017 by amounts ranging from 166 to 243 percent. The midpoints also increased persistently in each census year, with the single exception of a decline in cotton from 2007 to 2012. Economic Research Service researchers extended the analysis to 10 more field crops and to 40 fruit, tree nut, berry, vegetable, and melon crops. Consolidation was nearly ubiquitous, as the 2017 midpoint acreage exceeded its 1987 level for 53 of 55 crops (the exceptions were lemons and plums/prunes). Consolidation was also substantial—the average 1987-2017 midpoint increase across the 55 crops was 148 percent, and 44 of 55 crops showed at least a 100-percent increase. Finally, consolidation was persistent over time, with continued midpoint increases for 42 crops between 2012 and 2017. This chart appears in the February 2020 Amber Waves feature, “Consolidation in U.S. Agriculture Continues.”
Friday, April 3, 2020
The growth rate of the world’s agricultural output has varied over the decades. Output growth slowed in the 1970s and 1980s, but then accelerated in the 1990s and 2000s. In the latest period for which estimates are available (2001-16), global output of total crop and livestock commodities grew by an average rate of 2.45 percent per year. The different bar colors in the chart show the sources of this output growth. In the decades prior to 1990, most output growth came about from intensification of input use (more labor, capital, and material inputs per acre). Bringing new land into agriculture production and extending irrigation to existing agricultural land were also important sources of growth. During the periods of 1991-2000 and 2001-16, however, the rate of growth in input use significantly slowed. Instead, improvements in agricultural productivity—getting more output from existing resources—drove global output growth. Total factor productivity (TFP) grew from the adoption of new technologies, management practices, and other efficiency improvements in farming around the world. Between 2001 and 2016, TFP accounted for 77 percent of the total growth in agricultural output worldwide. This chart appears in the Economic Research Service topic page for International Agricultural Productivity Summary Findings, updated November 2019.
Wednesday, April 1, 2020
On average, U.S. farmers received 14.6 cents for farm commodity sales from each dollar spent on domestically produced food in 2018, up slightly from 14.4 cents in 2017. Known as the farm share, this amount rose for the first time since 2011. This increase coincides with a flattening in average prices received by U.S. farmers (as measured by the Producer Price Index for farm products) in 2017 and 2018, after steep declines in 2015 and 2016. A preliminary 2017 farm share estimate published last year was also 14.6 cents, but the 2017 figure has been revised downward to 14.4 cents in the newly-released updates. The Economic Research Service (ERS) uses input-output analysis to calculate the farm and marketing shares from a typical food dollar, including food purchased both at grocery stores and at restaurants and other eating-out places. The marketing share covers the costs of getting domestically produced food from farm to points of purchase, including costs related to packaging, transporting, processing, and selling to consumers at grocery stores and eating-out places. The relatively low farm share measures for 2015-18 occurred during a 7-year trend of increases in the portion of the food dollar going to the foodservice industry. Farmers receive a smaller share from eating-out dollars because of the added costs for preparing and serving meals at eating-out places, so more food-away-from-home spending also drives down the farm share. The data for this chart can be found in ERS’s Food Dollar Series data product, updated on March 23, 2020.
Monday, March 23, 2020
Farm real estate, including land and the structures on that land, typically accounts for more than 80 percent of the total value of U.S. farm sector assets. Farmers often use the value of their real estate as collateral for farm loans. After a long period of appreciation following the farm crisis of the 1980s, farm real estate values have leveled off since 2015. U.S. farm real estate value in 2019 remained near its historic high, averaging $3,160 per acre—a modest increase of 0.2 percent over 2018. The Economic Research Service (ERS) forecast farm income to increase nationwide in 2019. This increase, combined with historically low interest rates, contributes to the ability of the farm sector to support higher farmland values. Regional farmland real estate values vary widely because of differences in general economic conditions, local farm economic conditions, government policy, and local geographic conditions. For example, farm real estate values in the Corn Belt are nearly twice the national average, while values in the Mountain region are less than half the national average. This chart appears in the ERS topic page for Farmland Value, updated March 2020.
Monday, March 16, 2020
USDA’s Economic Research Service classifies farm households based on the annual gross cash farm income (GCFI) of the farm that they operate, and further separates small farms by the primary occupation of the principal operator. Data from USDA’s Agricultural Resource Management Survey consistently show that income earned off the farm is an important source of income for most farm households. Nearly half of all family farm operators and their spouses reported having a job off the farm in 2018. In general, spouses of principal operators are more likely to work off the farm, except among those classified as off-farm occupation farms. However, off-farm employment varies across farm types. For example, only 11 percent of operators of large farms and 3 percent of very large farms have a job off the farm, while between 17 and 19 percent of those operating low-sales, moderate-sales, and mid-size farms have an off-farm job. About 20 percent of operators on retirement farms hold off-farm jobs. This chart appears in the December 2019 report, America’s Diverse Family Farms: 2019 Edition.
Monday, March 2, 2020
The H-2A Temporary Agricultural Program provides a legal means to bring in foreign-born workers into the United States on a short-term basis. Workers employed on an H-2A visa may remain in the U.S. for up to 10 months at a time. Employers must demonstrate and the U.S. Department of Labor must certify that efforts to recruit U.S. workers were not successful. Employers must also pay a State-specific minimum wage, known as the Adverse Effect Wage Rate (AEWR). The rate is set at the region’s average farm wage to prevent H-2A employment from negatively affecting domestic farmworkers by lowering their wages. For fiscal 2019, this minimum hourly wage was highest in Oregon and Washington at $15.03, followed by Hawaii at $14.73. The wage rate was also high in the Dakotas, Nebraska, and Kansas at $14.38. By comparison, Alabama, Georgia, and South Carolina had the lowest minimum wages at $11.13. This chart appears in the Economic Research Service topic page for Farm Labor, updated January 2020.
Wednesday, February 19, 2020
Technological developments in agriculture have been influential in driving changes in the farm sector. Innovations in animal and crop genetics, chemicals, equipment, and farm organization have enabled continuing output growth without adding much to inputs (including land, labor, machinery, and intermediate goods). As a result, even as the amount of land and labor used in farming declined, total farm output nearly tripled between 1948 and 2017. During this period, agricultural output grew at an average annual rate of 1.53 percent, compared to 0.07 percent for total farm inputs. Output growth was largely driven by the growth in agricultural productivity, as measured by total factor productivity (TFP)—the difference between the growth of aggregate output and growth of aggregate inputs. Between 1948 and 2017, TFP grew at an average annual rate of 1.46 percent. In the short term, TFP estimates can fluctuate from time to time—reflecting transitive events, such as bad weather or oil shocks—but it usually recovers and returns to its long-term trend growth, as has happened in recent years. This chart appears in the ERS data product, Agricultural Productivity in the U.S., updated January 2020.
Monday, February 10, 2020
Contracts are widely used in the production and sale of U.S agricultural commodities. Under marketing contracts, ownership of the commodity remains with the farmer during production, with little involvement from the contractor. By comparison, under a production contract, the contractor usually owns the commodity (e.g., the chicks for poultry operations) during production and often provides specific inputs and services, production guidelines, and technical advice to the grower—who receives a contract fee for raising the commodity. Across all commodities, the value of contract production was nearly evenly split between marketing and production contracts in 2018. However, the use of contract types varies sharply across commodities. Most contract crop production (except for seeds and some processing vegetables) used marketing contracts, as did all contract dairy production. In contrast, production contracts were used extensively for the production of hogs and poultry. Some hogs may be raised under a production contract between a grower and an integrator (an intermediary that coordinates production), and then sold by the integrator under a marketing contract with a processor, who slaughters and processes the animal for sale. This chart updates data found in the July 2019 Amber Waves article, “Marketing and Production Contracts Are Widely Used in U.S. Agriculture.”
Wednesday, February 5, 2020
U.S. net cash farm income—gross cash income less cash expenses—when adjusted for inflation is forecast to decrease $13.1 billion (10.7 percent) to $109.6 billion in 2020. U.S. net farm income—a broader measure of farm sector profitability that incorporates noncash items including economic depreciation and gross imputed rental income—is forecast to increase $1.4 billion (1.4 percent) from 2019 to $96.7 billion in 2020. If forecast changes are realized, net cash farm income in 2020 would be 0.6 percent below its inflation-adjusted average calculated over the 2000-18 period, while net farm income would be 5.4 percent above its 2000-18 average. The trajectories of the two income measures diverge in 2020 largely because of how net sales from inventories are treated. Net cash farm income records income in the year the sale took place, while net farm income counts it in the year the production occurred. High net sales ($14.9 billion) from crop inventories forecast in 2019 are expected to boost net cash farm income significantly that year. Very low net sales from inventories ($0.5 billion) in 2020 are expected to contribute to a decrease in net cash farm income between the two years. In the net farm income series, net inventory changes are removed from cash receipts and track more closely with the value of annual agricultural production. Find additional information and analysis on the ERS Farm Sector Income and Finances topic page, reflecting data released February 5, 2020.
Friday, January 31, 2020
From 2013 to 2017, there were an average of 898,100 operators with no more than 10 years of farming experience. Of these beginning farmers, a little more than half (461,400) were operators of beginning farms, or those farms on which all the operators were beginning farmers. Overall, there were an average of 339,400 beginning farms and 1,691,400 established farms between 2013 and 2017. About a third of beginning farms and half of established farms produced at least $10,000 worth of output. Beginning farms (67 percent) were also more likely than established farms (52 percent) to be very small, generating less than $10,000 worth of output. Although the majority of beginning and established farms were very small, these operations contributed a relatively low share of production—accounting for about 2 percent of output from all beginning farms and 1 percent from all established farms. This chart appears in the ERS report, An Overview of Beginning Farms and Farmers, released September 2019.
Thursday, December 19, 2019
The composition of family farm household income varies by the type of farm. For example, households operating commercial family farms earned most of their income on the farm ($225,264 on average in 2017). Residence family farm households relied mostly on off-farm wages and salaries ($69,493 on average). Intermediate family farm households, meanwhile, had relatively high retirement and disability income ($19,222 on average), in part because these households had the oldest principal operators on average. Less than half of all farm households had positive incomes from their farm operations in 2017. Among commercial farm households, 86 percent had positive income from farming, compared to 51 percent of intermediate farm households and 35 percent of residence farm households. At the median, U.S. farm households earned $67,500 from non-farm sources, compared to a median loss of $800 from farming operations. This chart appears in the Amber Waves infographic “Farm Households Rely on Many Sources of Income,” published June 2019. This Chart of Note was originally published June 14, 2019.
Friday, December 13, 2019
Farm households often earn higher incomes than other types of households. In 2018, 57 percent of U.S. farm households received incomes at or above the median for all U.S. households, which was $63,179 that year. ERS classifies farm households into 7 types based on their annual gross cash farm income (GCFI), and groups small farms by the primary occupation of the principal producer. Median household incomes for 5 out of 7 farm types exceeded both the median U.S. household and the median income for households with self-employment income. However, the median income for all family farm households is lower than the median among all U.S. households with self-employment income. Overall, only 3 percent of farm households had lower wealth than the median U.S. household. This chart appears in the December 2019 report, America’s Diverse Family Farms: 2019 Edition.
Wednesday, December 4, 2019
One way of comparing research and development (R&D) investment across countries is to measure R&D spending relative to the size of the economy, or as a percentage of Gross Domestic Product (GDP). While the United States spends more on public agricultural R&D than other high-income countries, U.S. expenditures relative to the size of its agricultural sector have been about average. Over time, agricultural R&D spending has tended to rise as a percentage of agricultural GDP in virtually all countries. This tendency reflects the greater technological sophistication of agriculture, as well as the broadening of research agendas beyond production agriculture to include more emphasis on various societal issues, including food safety, rural development, and the environment. In the United States, public spending on agricultural R&D as a percentage of GDP peaked in the mid-2000s at about 3.5 percent of agricultural GDP but significantly declined since 2009. By 2013, public spending fell to 2 percent of agricultural GDP. U.S. agricultural research intensity is now below average for high-income countries. Leading regions, such as Northwest Europe and high-income Asia, have agricultural R&D spending of around 4.5 percent of agricultural GDP. Public agricultural research intensities also leveled off or even fell in the agricultural-exporting countries of Canada, Australia, and New Zealand. Research intensities in Southern European and Mediterranean countries and in Central European countries have been consistently lower than those in other high-income countries. This chart appears in the ERS report, Agricultural Research Investment and Policy Reform in High-Income Countries, released May 2018.
Thursday, October 31, 2019
Farm real estate (including farmland and the structures on the land) accounts for over 80 percent of farm-sector assets and represents a significant investment for many farms. Beginning in the mid-2000s, higher farm incomes and lower interest rates contributed to rapid appreciation. Nationally, average per-acre farm real estate values more than doubled when adjusted for inflation, from $1,483 in 2000 to $3,010 in 2016. Two major uses of farmland are cropland and pastureland. From 2003 to 2014, U.S. cropland values doubled, appreciating faster than pastureland and reflecting a rise in grain and oilseed commodity prices. However, the value of cropland and farm real estate dipped slightly in 2008–09, reflecting the effect of the Great Recession and the downturn in the U.S. housing market. In contrast, average U.S. pastureland values remained relatively flat. This chart appears in the February 2018 ERS report, Farmland Values, Land Ownership, and Returns to Farmland, 2000–2016. This Chart of Note was originally published May 23, 2019.
Monday, October 28, 2019
Contracts are widely used in the production and sale of U.S agricultural commodities. Farmers use contracts to obtain compensation for higher product quality, specify outlets for products, and provide assurance of sales to manage income risk or finance debt. Processors use contracts to gain timely flows of products and greater control over the characteristics and consistency of the products they acquire. Contracts cover relatively small shares of corn, soybean, and wheat production—and those shares have changed little in 20 years. In contrast, most poultry is produced under contract, and what is not produced under contracts between processors and growers is raised in facilities operated directly by processors. These differences between commodities reflect differences in markets and product characteristics. Because corn, wheat, and soybean producers have many potential buyers and can store their crops for long periods, cash markets work well for them. On the other hand, poultry producers make a substantial investment to produce birds that lose value quickly after reaching maturity, and there are usually just one or two local buyers for the product. Facing a risk that, without a contract in place, buyers would be able to force the price down, poultry producers are reluctant to invest in their business without the assurance of a contract. This chart appears in the December 2018 report, America’s Diverse Family Farms: 2018 Edition. It was also highlighted in the ERS’s Amber Waves Data Feature, “Marketing and Production Contracts Are Widely Used in U.S. Agriculture” in July.