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USDA provides operating loans to farmers through different programs

Thursday, August 3, 2017

The USDA Farm Service Agency (FSA) provides loans to farmers through a number of programs. Direct Operating Microloans are designed to be more convenient and accessible than FSA’s traditional Direct Operating Loans (DOLs) for groups such as beginning farmers, women, and veterans. The number of new FSA direct loan borrowers—those who had not previously received an FSA direct loan, such as a traditional DOL or Microloan—increased substantially in 2009. During that time more farmers turned to FSA, as commercial sources of credit tightened during the Great Recession. Since then, the number of new FSA direct loan borrowers increased overall, though the number receiving traditional DOLs fell in 2013, when the Microloan program began. This suggests that the Microloan program may have attracted new borrowers that otherwise might have applied for traditional DOLs. At the time of receiving their first Microloan, 8,182 borrowers (71 percent) were new to FSA direct loans. Microloans are much smaller than traditional DOLs, with a maximum loan limit of $50,000 compared to $300,000. A version of this chart appears in the ERS report USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, released December 2016.

Beef cattle operations received more than half of all Microloans between 2013 and 2015

Thursday, June 15, 2017

In January 2013, USDA’s Farm Service Agency (FSA) launched the Direct Farm Operating Microloan program to better serve the credit needs of small farms, beginning farmers, farmers from socially disadvantaged groups (women and minorities), and veterans. FSA issued over 13,800 Microloans as of mid-November 2015, which varied by the type of operation. The number of Microloans received by crop farmers remained fairly stable, while those received by livestock farmers increased each year—from about 2,300 in 2013 to nearly 4,000 in 2015. Crops include grain and oilseeds, vegetables, and fruits; livestock include beef cattle, dairy, and poultry. Beef cattle operations alone received more than half of all Microloans. Grain and oilseed farms, the next largest category, received about 15 percent. Beef cattle operations accounted for about a third of all operations in 2014, a much larger share than any other production category. They also tend to be relatively small, so small loans like Microloans (up to $50,000 each) might fulfill the financing needs of more beef cattle operations relative to other commodity specializations. This chart appears in the ERS report USDA Microloans for Farmers: Participation Patterns and Effects of Outreach, released December 2016.

Nearly 14,000 USDA Microloans issued between 2013 and 2015

Wednesday, May 3, 2017

In January 2013, USDA’s Farm Service Agency (FSA) launched the Direct Farm Operating Microloan program to better serve the credit needs of small farms, beginning farmers, farmers from socially disadvantaged groups (women and minorities), and veterans. These loans (up to $50,000) are designed to be more convenient and accessible to groups not traditionally served through FSA’s credit programs. Relative to FSA’s traditional Direct Operating Loans, for example, the Microloan program has a shorter application and more relaxed requirements for farm management experience, production history, and collateral. FSA has issued over 13,800 Microloans as of mid-November 2015. The number of loans increased 13 percent from 2013 to 2014 and 31 percent from 2014 to 2015. Farmers belonging to one or more of the program’s targeted groups—beginning farmers, SDA borrowers, and veterans—received nearly 90 percent of Microloans issued. Overall, beginning farmers received the most Microloans (81 percent) out of any group. This chart appears in the March 2016 Amber Waves finding, "Nearly 14,000 USDA Microloans Issued Between 2013 and 2015."

Beginning farms that sell directly to consumers more likely to survive

Tuesday, October 4, 2016

Beginning farmers, those who have managed a farm or ranch for 10 years or less, generally have lower rates of business survival than more established farm operators. According to Census of Agriculture data, only 48.1 percent of beginning farmers with positive sales in 2007 also reported positive sales in 2012—compared with 55.7 percent of all farms. Running a larger operation and selling directly to consumers (at roadside stands, farmers’ markets, and so on) may help beginning farmers remain in business. As a whole, beginning farms with direct-to-consumer (DTC) sales had a 54.3 percent survival rate, while 47.4 percent of those without DTC sales survived. This pattern holds across operations of different sizes, as defined by annual sales. The difference in survival rates was substantial—ranging from 9 percentage points for the smallest farms to about 4 percentage points for the largest. Farmers with DTC sales can usually get a higher product price and reach a certain level of sales with less machinery and land. In turn, these farmers may have a more stable income and need to borrow less—further increasing chances of survival. This chart appeared in the September 2016 Amber Waves finding, “For Beginning Farmers, Business Survival Rates Increase With Scale and With Direct Sales to Consumers."

Older farm operators often responsible for running small family farms

Wednesday, September 21, 2016

A notable characteristic of principal farm operators—the person most responsible for running the farm—is their relatively advanced age. In 2014, 33 percent of principal farm operators were at least 65 years old. This is nearly three times the U.S. average (12 percent) for older self-employed workers in nonagricultural businesses, according to the U.S. Bureau of Labor Statistics. Most older principal farm operators run small family farms. Retirement farms had the highest percentage of older operators (67 percent), followed by low-sales farms (41 percent) and moderate sales farms (28 percent). Older operators made up about one-fifth of each of the remaining groups. The advanced age of farm operators is understandable. The farm is also home for most farmers and they can gradually phase out of farming. Improved health and advances in farm equipment also allow operators to farm later in life than in past generations. This chart appears in the 2015 ERS report America’s Diverse Family Farms.

Small family farms account for most U.S. farms and a majority of farm assets

Thursday, September 1, 2016

Ninety-seven percent of U.S. farms are family farms where the majority of the business is owned by the operator and individuals related to the operator. The remaining 3 percent are nonfamily farms, which produced 15 percent of the value of agricultural output in 2011. Two features of family farms stand out. First, there are many small family farms (having less than $250,000 in annual sales); together, they account for 87 percent of all U.S. farms. Second, large-scale family farms account for most of the Nation?s agricultural production?70 percent in 2011, as measured by value of output. The share of farm assets held by small farms is substantially higher than their 15-percent share of production. Small-scale family farms hold about 56 percent of all farm assets. The disproportionate asset holdings of smaller farms reflects their overinvestment, particularly in land and dwellings, for purposes other than production, and economies of size enjoyed by larger farms that allow them to produce more with the resources they control. This chart updates one found in the 2010 Edition of the ERS report, America?s Diverse Family Farms, with 2011 Agricultural Resource Management Survey data recently added to the ERS Web tool.

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

Thursday, September 1, 2016

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.

Beginning farmers differ demographically from established farmers

Thursday, September 1, 2016

In 1982, the Census of Agriculture reported 38 percent of principal operators had operated their farm for less than 10 years, but by 2007, this number had declined to 26 percent. In 2012, beginning farms?those headed and completely operated by farmers with 10 or fewer years of experience?made up just 17 percent of family farms. Although beginning farmers are more likely to be younger than established farmers?17 percent are under age 35, and their average age is 11 years younger (49 versus 60)?nearly 13 percent of beginning farmers are 65 or older. Beginning farmers are also more likely to be female than established farmers; nearly one in five principal operators of a beginning farm is female. Beginning farmers are also more likely than established farmers to have at least a 4-year college degree. The differing demographic profiles of beginning and established farmers may signal change for the sector as older farmers retire.? This chart is from the ERS topic page on Beginning & Disadvantaged Farmers, updated October 2014.

Farms involved in rural development related activities vary by type of activity

Thursday, September 1, 2016

While rural development efforts generally focus on the nonfarm economy in the United States, over the last 10 years, several USDA Rural Development programs have put increased emphasis on funding farm-related business activities associated with renewable energy, local/regional food industries, and the use of farm and ranch natural resources. Using data from the 2007 Agricultural Resource Management Survey, the characteristics of farms involved in organic farming, value-added agriculture, direct marketing, agritourism, and energy/electricity production are compared in this chart. Household wealth and income are important indicators of financial capacity, or the ability to make financial investments in farm activities. Average farm household net worth was highest for agritourism farms ($2.0 million) and lowest for direct marketing farms ($631,000). Total household income exhibited a different pattern and was highest for energy/electricity farms ($165,000 annually) and value-added farms ($90,000 annually), on average. The income generated by these rural development-related activities is considered part of farm income (which was highest, on average, for energy/electricity and organic farms, and negative for agritourism farms).?This chart comes from the ERS report, Farm Activities Associated With Rural Development Initiatives, ERR-134, May 2012.

The distribution of beginning farms reflects local farm economies

Thursday, September 1, 2016

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.

Nonoperator women spouses contribute substantial time to farming

Thursday, September 1, 2016

About 222,000 women are principal farm operators, or the person most responsible for making day-to-day decisions about the farm; 1.5 million women are spouses of principal operators. About one-third of these women spouses are secondary operators who work on the farm and participate in day-to-day decisions with their husband. The remaining women spouses do not make management decisions and are not farm operators. There are nearly one million of these nonoperator spouses, 46 percent of whom provide farm labor and collectively work 371 million hours on farms. Their labor amounts to 10 percent of the total hours worked on farms by principal operators and their spouses, and 34 percent of the total hours worked by female principal operators and spouses. The average hours of farm work?for persons reporting work hours?is substantial for women principal operators (1,097 hours per person per year), secondary operator spouses (895 hours/person/year), and nonoperator spouses (818 hours/person/year). Nonoperator women spouses contribute significant time to farm operations. This chart is an extension and update of information presented in the ERS report, Characteristics of Women Farm Operators and Their Farms, EIB-111, April 2013.

Multiple-operator farms are prevalent among large and very large family farms

Thursday, September 1, 2016

Commercial-sized farms often require more management and labor than an individual can provide. Additional operators can provide the necessary labor and 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 particularly prevalent among large and very large family farms. In 2011, 42 percent of all U.S. farms were multiple-operator farms, while 73 percent of very large family farms had more than one operator. Because farms are generally family businesses, one would expect family members to serve as secondary operators. In fact, 73 percent of all secondary operators were spouses.?About 12 percent of all multiple-operator farms (and 5 percent of all farms) were multiple-generation farms in 2011, 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 is found in the ERS topic on?Farm Structure and Organization, updated September 2013.

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

Thursday, September 1, 2016

In 2014, 99 percent of U.S. farms were family farms, where the principal operator and his or her relatives owned the majority of the business. Most were small family farms, having less than $350,000 in annual gross cash farm income (GCFI)?which includes commodity cash receipts, other farm-related income (such as receipts from custom work or production contract fees), and government payments. In 2014, these small family farms accounted for 90 percent of all U.S. farms, 46 percent of the land operated by farms, and 22 percent of agricultural production. Large-scale family farms?with $1 million or more in annual GCFI?accounted for about 3 percent of all farms, but had a disproportionately large share of the value of production (47 percent). This chart is found in?America?s Diverse Family Farms: 2015 Edition, released December 2015.

Many farm operators are retirement age

Thursday, September 1, 2016

One of the most striking characteristics of U.S. principal farm operators?the operator most responsible for running the farm?is their advanced age. In 2011, about 32 percent of principal farm operators were at least 65 years old, compared with less than 11 percent of nonagricultural self-employed U.S. workers.? Not surprisingly, retirement farms--those operated by farmers who consider themselves retired--had the highest percentage of older operators (72 percent).? Among the principal operators of larger family farms (those with annual sales of at least $250,000) and operators of smaller farms that consider farming their primary occupation, the share of older operators declines as farm size increases.? Thirty-eight percent of low-sales farm (under $100,000 in sales per year) operators are at least 65 years old, while 17 percent of operators running very large farms (with annual sales of $500,000 or more) are that old.? The advanced age of so many farm operators is understandable given that the farm is the home for most farmers and they can phase out of farming gradually.? This chart updates one found in the ERS report, America?s Diverse Family Farms, 2010 Edition, with data from the 2011 Agricultural Resource Management Survey, added to the ERS Web tool in November 2012.

Beginning farmers are less likely to inherit or purchase land from a relative than are established farmers

Thursday, September 1, 2016

Beginning farms (those with an operator with 10 or fewer years of experience) made up 21 percent of all family farms in 2010, and since they are smaller, on average, than established farms, they accounted for 10 percent of the value of production on family farms. Beginning farmers often report that their biggest challenge getting started in farming is access to enough capital and farmland to operate at a size capable of earning a sufficient profit. Not surprisingly, beginning farm operator?s households have lower farm and nonfarm net worth than established farm households. While most beginning farms include some operator-owned land, they are more likely than established farms to have only rented land. For U.S. farmers, in general, the most common way to have acquired ?owned land? for their operation is to have purchased it from a nonrelative. But established farms of all size classes are more likely than beginning farms to have inherited or purchased their owned land from relatives. This chart is drawn from Beginning Farmers and Ranchers at a Glance.

New farmers account for a small share of agricultural production

Thursday, September 1, 2016

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.

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

Wednesday, February 24, 2016

The average age of principal operators in the latest Census of Agriculture (2012) was 58 and has been greater than 50 since the 1959 Census. That farmers are older, on average, than other self-employed workers is understandable, given that the farm is the home for most farmers, and they can gradually phase out of farming over a decade or more. While older (age 65+) farmers make up a third of all farm operators, they account for a much smaller share (20 percent) of production. Nevertheless, older farmers still operate on 29 percent of all U.S. farmland (on land owned or leased, slightly less than their share of all farms). The largest portion of owned farmland is held by producers age 55-64; operators over 55 tend to own the land they farm, while younger operators are more likely to lease it. Older farmers’ land will shift to existing or new farms—or go into nonagricultural uses—as they exit agriculture. This chart is based on the information found in the Farm Structure and Organization topic page.

Profitability varies by farm size

Friday, July 10, 2015

Profitability—measured here by the rate of return on assets (RRA)—is strongly associated with farm size. Seventy-nine to 86 percent of retirement, off-farm occupation, and low-sales farms are in the "red zone" (farms with an RRA of less than 1 percent), indicating a very low return to farming. The share of farms in the red zone drops rapidly for the remaining family farm types, those with moderate sales and higher. Likewise, the share of farms in the green zone—with a RRA greater than 5 percent—increases with farm size. Larger farms can often use their resources more productively than smaller farms, generating more dollars of sales per unit of capital. Given the high share of small farms in the red zone, many operators stay in business by undervaluing their labor, effectively ignoring the value of the unpaid labor they provide. Such small-farm households typically receive substantial off-farm income and do not rely primarily on their farms for their livelihood, often using off-farm income to cover farm expenses and make investments in their farm operations. This chart is found on the ERS topic page, Farm Structure and Organization, updated July 2015.

Women operate about 14 percent of U.S. farms

Friday, March 13, 2015

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

One-third of U.S. principal farm operators are at least 65 years old

Tuesday, February 3, 2015

In 2013, roughly 34 percent of all U.S. principal farm operators were at least 65 years old, nearly 3 times the U.S. average share of older nonagricultural self-employed workers. Retirement farms had the highest percentage of older operators (67 percent)—as might be expected—followed by low-sales farms (41 percent). The advanced age of farm operators is understandable, given that the farm is the home for most farmers, and farmers can gradually phase out of farming over a decade or more. Improved health and advances in farm equipment also allow operators to farm later in life than in past generations. Principal operators of more commercially oriented farms—large farms with gross cash farm income (GCFI) of a million dollars or more—more closely resembled the nonagricultural self-employed workforce, with 14-17 percent age 65 and over. This chart updates one found in the ERS report brochure, America’s Diverse Family Farms, EIB-133, December 2014.

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