Farm Household Income (Historical)
Median total income for farm households was essentially unchanged in 2016. Broad increases in farm household income largely reflect greater income from off-farm sources, where the majority of farm households earn most of their income. At the median, household income from farming was slightly negative in 2016, as it has been for the past several years. Given the broad USDA definition of a farm (see glossary), many small farms are not profitable even in the best farm income years. As a result, the median household income from farming shows a loss of $940, which is small relative to total household income.
Note: The median is the income level at which half of all households have lower incomes and half have higher incomes. Because farm and off-farm income are not distributed identically for every farm, median total income will generally not equal the sum of median off-farm and median farm income. For changes in survey methodology and implementation, see the Background section of the Farm Household Income and Characteristics data product.
See the Farm Household Income and Characteristics data product table for statistics on principal farm operator household finances for recent years.
2016 Income Varies by Farm Typology
ERS has developed a family farm typology that considers annual gross cash farm income in combination with the occupational characteristics of principal farm operators (see glossary) to classify farms into more homogeneous groups. In the ERS typology, farms with less than $350,000 in annual gross cash farm income are classified as small farms, and are further subdivided based on the self-reported occupation of the farm's principal operator. If the operator reports being retired or having a major occupation other than farming, the farm is classified as a "residence" farm. If he or she reports farming as a major occupation and is not retired from farming, the farm is classified as "intermediate." "Commercial" farms are family farms with $350,000 or more in gross cash farm income, regardless of the occupation of the principal operator.
In contrast to residence and intermediate farms, households associated with commercial farms derive the majority of their income from farming activities (see the Farm Household Income and Characteristics data product table on principal farm operator household finances, by ERS farm typology, 2016). In 2016, the median income from farming was $143,968 for households operating commercial farms, and their median total household income was $199,738. Households associated with intermediate farms reported $428 in median farm income (out of $57,594 in median total household income) and residence farms reported negative median incomes from farming. However, the substantial off-farm income of residence farm households provided them with higher total incomes ($83,400) than intermediate farm households in 2016.
Details on farm operator household incomes are grouped by:
While the number of U.S. family farms has been relatively stable for the past decade (see the Farm Household Income and Characteristics data product table on all farms and family farms, by farm size class (gross sales), 1996-2016), the roughly 2.03 million family farms vary significantly in size and by the share of household income from farming. The role of farm income in farm household finances can be understood by looking at two complementary statistics: the share of households with positive income from farming and, among them, the median percent of total household income derived from farming.
Farm income contributes little to the annual income of farm households operating residence farms, is a secondary source of income for households with intermediate farms, and is a primary source of income for those operating commercial farms. In 2016, 37 percent of residence farms had positive income from farming. The positive farm income received by residence farms contributed 7 percent to their total household income (for the typical household reporting positive farm income). For intermediate farms, 52 percent had positive farm income, which represented 32 percent of their total household income. Finally, 85 percent of commercial farms had positive farm income, and farm income accounted for 84 percent of their total household income.
A farm's specialization is determined by the one commodity or group of commodities that makes up at least 50 percent of the farm's total value of agricultural production (see glossary). In any given year, production and market conditions will vary for farms that specialize in different commodities. Differences in household income across commodity specialization, however, may also stem from basic differences in the types of households that specialize in specific commodities. For example, with its extensive and ongoing time demands, managing a dairy farm rarely permits an operator to work many hours off-farm and is a main reason why farm income is a large share of total income for dairy farm households but not for households involved in the production of many other commodities. Consequently, operators with a high paying off-farm job, or the potential to obtain one, are more likely to specialize in a commodity that, unlike dairy farming, readily permits working many hours off the farm.
Households associated with farms specializing in cash grains such as corn, soybeans, sorghum, or wheat had a median total household income of $97,500 in 2016. Median total household income was $113,148 for those specializing in rice, tobacco, cotton, or peanuts. Hog producers had the highest median total household income among livestock producers, at $107,075.
Incomes of farm households vary by location as well, largely reflecting regional differences in farm typology and commodity specialization. ERS groups farm resource regions (nine) based on soil, climate, and agronomic needs. These conditions cut across State boundaries.
- For details on the ERS farm resource regions, see the ERS report: Farm Resource Regions
In recent years, only the Northern Great Plains and Heartland have had a consistently positive median farm income for family farms ($9,800 and $3,917, respectively, in 2016). The Heartland has the largest number of farms, the highest value of production, and the most cropland. The region is mainly composed of cash grain and cattle farms. The Northern Great Plains has the largest farms (in terms of acres operated) but among the fewest farms, consisting mainly of wheat, cattle, and sheep.