Farm Activities Associated With Rural Development Initiatives
by Faqir Bagi and Richard Reeder
Economic Research Report No. (ERR-134) 48 pp, May 2012
What Is the Issue?
Over the last 10 years, several USDA Rural Development programs,
including the Business and Industry (B&I) Loan Guarantee
program, 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. In this study, we identified five farm
activities: organic production; value-added agriculture (activities
that add value to a farm product or service, such as the production
of jam, jelly, wine, or cheese); direct marketing to consumers;
agritourism; and renewable energy/electricity production. We
examined farm and farm operator characteristics to explore factors
that may be related to a farmer's decision to participate in these
Previous research provided some information about specific farm
activities, but it varied from one activity to another and mostly
offered descriptive information with no attempt to identify factors
that play an independent and statistically significant role in farm
(and farmer) activities. This report represents an opportunity to
gain a better understanding of the five types of farms that provide
a product or perform a function related to USDA's recent rural
What Did the Study Find?
Farms whose owners pursue activities associated with rural
development policy initiatives tended to differ from others in
terms of several farm and farm operator characteristics, including
farm size, net farm income, household income and net worth, and
geographic location. For example:
• Farm operators involved with most of these activities were, on
average, better educated, better advised, and had greater access to
• Among the five activities evaluated, average farm household net
worth was highest for agritourism farms ($2.0 million) and lowest
for direct marketing farms ($631,000). Total household income was
highest for energy/electricity farms ($164,000 annually) and lowest
for direct marketing ($71,000 annually), on average.
• While a substantial percentage (39-60 percent) of the farms
involved in these five farm activities qualify as rural residence
farms, a higher percentage (65 percent) of all other farms fall
into this rural residence farm category.
• Farms that focused on agritourism and energy/electricity
production were typically larger in size, while direct marketing
farms averaged fewer acres.
• Farm operator age and education, family net worth, farm size,
farm ownership characteristics, farmland use and practices, farm
typology, geographic location, farm management advice, and Internet
access contribute to farmer involvement in one or more of the
onfarm rural development activities.
• A rural or urban setting is statistically related to farmer
involvement only in the direct marketing activity and not in the
other onfarm activities studied.
While this study did not attempt to evaluate the costs and
benefits to society resulting from growth in these farm-related
activities, the findings may still have policy relevance. Public-
and private-sector initiatives may have some influence on
education, farm management advice, and Internet availability, all
of which were found to be significantly related to the farm
activities studied. The findings also indicate the types and
location of farms engaged in one or more of the five farm
activities covered in this report, or that would most likely be
receptive to involvement if incentives were provided to do so.
How Was the Study Conducted?
Our data were based on USDA's 2007 Agricultural Resource
Management Survey (ARMS), conducted jointly by the Economic
Research Service (ERS) and the National Agricultural Statistics
Service (NASS) and on the 2007 Census of Agriculture, conducted by
USDA/NASS. ARMS collected data from 18,709 U.S. farms and
identified farms involved in farm activities associated with
local/regional foods, renewable energy, and other rural development
emphases. These data provided descriptive information about farm
and farm operator characteristics. A logit analysis identified
characteristics and locations that were independently and
significantly related to farmer involvement in each of the
activities studied. Data on farm location, reflecting the
geographic region and urban/rural characteristics of the county in
which each farm is located, came from the decennial U.S. Census and
other related sources.