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Farming and Farm Income

American agriculture and rural life underwent a tremendous transformation in the 20th century. Early 20th century agriculture was labor intensive, and it took place on many small, diversified farms in rural areas where more than half the U.S. population lived. Agricultural production in the 21st century, on the other hand, is concentrated on a small number of large, specialized farms in rural areas where less than a fourth of the U.S. population lives. The following material provides an overview of these trends, as well as trends in farm sector and farm household incomes.

Net farm income forecast to fall in 2015  
Gross farm income reflects the total value of agricultural output. Net farm income (NFI)—which reflects income from production in the current year—is calculated by subtracting farm expenses from gross farm income. NFI considers both cash and non-cash income and expenses. NFI is forecast to be $50.9 billion in 2015 ($55.9 billion in nominal terms), down 39 percent from the 2014 estimate (38 percent in nominal terms).
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Sources and trends in gross cash farm income  
Gross cash farm income (GCFI) includes income from cash receipts, farm-related income, and government payments. GCFI increased from $277 billion in 2000 to $430 billion (inflation-adjusted 2009 dollars) in 2014, largely due to increasing cash receipts.
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Distribution of farms and value of production varies by farm type  
Gross cash farm income (GCFI) includes income from commodity cash receipts, farm-related income, and government payments. Over 98 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). Most are small family farms (having less than $350,000 in gross cash farm income, or GCFI)—these account for 90 percent of all U.S. farms. Large-scale family farms—with $1 million or more in GCFI—account for about 3 percent of all farms, but have a disproportionately large share of the value of production (47 percent).
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Cash receipts for corn and soybeans account for about half of all U.S. crop receipts  
Crop cash receipts totaled $209.7 billion in 2014. Receipts from corn and soybeans accounted for 46 percent of total crop receipts.
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Cattle/calf receipts account for nearly 40 percent of total U.S. cash receipts for livestock  
Livestock receipts totaled $212.2 billion in 2014. Cattle/calf receipts accounted for 38 percent of total livestock sales. Poultry and egg sales were about the same as dairy sales, with each at 23 percent of the total and nearly double the receipts from hogs.
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The number of farms has leveled off at about 2.1 million  
After peaking at 6.8 million farms in 1935, the number of U.S. farms fell sharply until leveling off in the early 1970s. Falling farm numbers during this period reflected growing productivity in agriculture and increased nonfarm employment opportunities. Because the amount of farmland did not decrease as much as the number of farms, the remaining farms have more acreage—on average, about 430 acres in 2012 versus 155 acres in 1935. Roughly 2.1 million farms are currently in operation.
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Most farmers receive off-farm income, but small-scale operators depend on it  
Median total household income among all farm households ($80,620) exceeded the median for all U.S. households ($53,657) in 2014. Slightly less 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; the typical household operating the largest commercial farms earned about $401,355 in 2014, and most of that came from farming.
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U.S. agricultural productivity has generally risen over time  
Technological developments in agriculture have been particularly influential in driving change in the farm sector. Advances in mechanization and the increasing availability of chemical inputs led to ever-increasing economies of scale that spurred rapid growth in the size of the farms responsible for most agricultural production. As a result, even as the amount of land and labor inputs used in farming declined, total farm output more than doubled between 1948 and 2011.
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Last updated: Tuesday, November 24, 2015

For more information contact: Kathleen Kassel