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Owner-operators and cash-rent farmers lead cover crop adoption

Wednesday, July 17, 2024

Cash-renters and owner-operators adopt cover crops at rates higher than share-renters. Researchers with USDA’s Economic Research Service (ERS) explored whether adopting cover crops (a crop grown between two commodity or forage crops but unharvested/terminated with the intention of improving soil health) differed between farmers who owned the land they farmed and those who were renters, whether under a cash- or share-rent agreement. Using data from USDA’s Agricultural Resource Management Survey (ARMS), researchers calculated national-level statistics for five crops. They found that owner-operated cotton fields had the highest rates of cover crop adoption for owned land, with 22 percent of owner-operated cotton fields having cover crops in 2019. Owner-operated fields nominally led cash-rented fields in cover cropping for cotton, corn, and sorghum, but trailed cash-rented fields for soybeans and barley. Owner-operated fields exceeded share-rented fields in cover crop adoption for all five commodity crops surveyed. About 40 percent of farmland in the contiguous 48 States is rented. Information on the use of various rental agreements, as well as conservation tillage and structural practice adoption, can be found in the ERS report Farmland Rental and Conservation Practice Adoption, published in March 2024.

2022 Census of Agriculture shows concentration of cash rent payments in the United States

Monday, July 15, 2024

The USDA, National Agricultural Statistical Service (NASS) 2022 Census of Agriculture shows that producer expenditures on cash rents were heavily concentrated in the upper Midwest, the northern Great Plains, and California’s Central Valley. In total, producers spent $27.3 billion on cash rent expenses in 2022, or 6.4 percent of total production expenses. This represents a nearly 10-percent increase in cash rents from the 2017 Agricultural Census, after adjusting for inflation. Many farmers rent farmland from landowners for a cash payment. This cash rent reflects the economic returns to land from farming. Cash rent per acre of land is influenced by several factors, such as cash receipts, government payments, land quality, and financing constraints. For more information, see the NASS 2022 Census of Agriculture website. For more information on how farmland cash rental rates vary across regions, see the USDA, Economic Research Service (ERS) Land Use, Land Value & Tenure topic page. See also the NASS publication Tenure, Ownership, and Transition of Agricultural Lands and the ERS report Farmland Values, Land Ownership, and Returns to Farmland, 2000-2016.

Majority of farms with debt have loans from a commercial bank

Monday, July 8, 2024

Not all farms use debt to finance their operations, but of those that do, the majority used commercial banks. Researchers with USDA, Economic Research Service examined direct loans reported from five different sources in 2022: the Farm Credit System, USDA Farm Service Agency, commercial banks, trade credit, and other lenders. More than half of each farm type reported loans owed to a commercial bank. Among borrowers, small family farms using debt had the highest proportion receiving financing through other lenders (28 percent). Among all the lending sources, the Farm Service Agency serviced between 8 and 10 percent of farms with loans, making it the least likely to provide a direct loan. Not reflected, however, are actions by the Farm Service Agency to provide a loan guarantee for some of those operations reporting loans from commercial banks and the Farm Credit System. This chart appears in America’s Farms and Ranches at a Glance, published December 2023.

Forecast estimates 2 in 1,000 farm estates created in 2023 likely owed Federal estate tax returns

Tuesday, June 25, 2024

Created in 1916, the Federal estate tax is a tax on the transfer of property to a person’s heirs upon death. In 2023, the Federal estate tax exemption amount was $12.92 million per person, and the Federal estate tax rate was 40 percent. By law, the estate of a person who owns assets above the exemption amount at death must file a Federal estate tax return. However, only returns that have an estate above the exemption after deductions for expenses, debts, and bequests will pay Federal estate tax. Researchers from USDA, Economic Research Service (ERS) estimate that 39,988 estates would have been created from principal operator deaths in 2023. ERS forecasts that 330 (about 0.8 percent) of those estates would have been required to file an estate tax return, and 89 (about 0.2 percent) would likely have owed Federal estate tax. Total Federal estate tax liabilities from the 89 farm estates owing taxes are forecast to be $473 million in 2023. The exemption amount increased to $13.61 million per person in 2024, because of an annual inflation adjustment. This chart appears in the ERS topic page Federal Estate Taxes, published in April 2024.

2022 Census of Agriculture: Average farmland value higher on coasts and in Corn Belt

Monday, June 24, 2024

Data from the USDA Census of Agriculture report that farmland values tend to be higher along the coasts and a stretch from Iowa to Ohio, often called the Corn Belt. Lower average county farmland values in the Mountain States (States that encompass the Rocky Mountains) and Great Plains (the area just east of the Rocky Mountains) are likely because of their high share of pastureland, typically valued below that of cropland. Conducted every 5 years by USDA’s National Agricultural Statistics Service (NASS), the Census of Agriculture includes producer responses to questions about their farming operations on a range of topics, including the value of farmland they operate. The national average value per acre of farmland (including buildings) was $3,846 in 2022. Farmland values increased 10 percent after adjusting for inflation (using the Gross Domestic Product Price Index) when compared with the 2017 Census of Agriculture. Farmland tends to be more valuable in States where cropland is more productive and the value of production is higher, such as in the Corn Belt. The map also shows that farmland values increase in counties in the immediate vicinity of urban areas or with higher population density overall, reflecting competition with residential and other nonagricultural land uses. For more details on farmland values, see USDA, Economic Research Service’s Farmland Value topic page. For more details from the 2022 Census of Agriculture, see the NASS Census of Agriculture page.

Cover crops planted by dairy producers are often harvested

Monday, June 17, 2024

More than half of dairy operations that plant cover crops reported harvesting all their cover crop acreage for forage or other on-farm use between 2018 and 2020. While not all dairy operations have cropland, many of those who plant cover crops use them to provide feed for their herd, such as by harvesting a cover crop like cereal rye or triticale for silage to later feed to dairy cattle. Cover crops can also be planted and left unharvested to improve water quality and soil health. From 2018 to 2020, the Agricultural Resource Management Survey asked producers how many acres of cover crops they harvested for forage or other on-farm use, and how many acres of cover crops went unharvested. Exclusively harvesting cover crops was relatively more common in the Fruitful Rim and Heartland regions, where 63 percent of dairy operations only harvested acreage of cover crops in each region. The Northern Crescent had a higher proportion of dairy operations that only reported unharvested cover crops (31 percent). Information on cover crop practices can be found in the USDA, Economic Research Service report Cover Crops on Livestock Operations: Potential for Expansion in the United States, published in May 2024.

2022 Economic Census: The growing contribution of support services to U.S. agricultural production

Wednesday, June 5, 2024

U.S. farms have increasingly relied on agricultural services establishments to undertake production activities, such as soil preparation, planting, harvesting, livestock breeding, providing farm workers, and managing operations, according to data from the U.S. Census Bureau’s 2022 Economic Census. From 1978 to 2022, establishments in the agricultural services sector in the United States saw a 263-percent increase in the value of their receipts (adjusted for inflation to 2022 dollars), from about $16.3 billion to $59.3 billion. For comparison, the inflation-adjusted value of receipts from farms increased 12 percent over the same period when compared with recently released farm data from USDA’s 2022 Census of Agriculture. Although the contribution of agricultural services providers to the farm economy has grown, the number of active establishments declined over the same period. There were 10 percent fewer establishments in 2022 than in 1978, according to the Economic Census. The increased concentration within agricultural services is a phenomenon that has also been documented for farms—the number of farms fell 23 percent between 1978 and 2022, from about 2.5 million to 1.9 million. Researchers are able to describe these important trends because, for the first time since 1978, the 2022 Economic Census includes data on businesses that provide agricultural support services. USDA, Economic Research Service researchers supported those efforts to resume data collection of agricultural services and are collaborating with Census Bureau staff on future data releases based on survey responses. For more information on the U.S. farm sector, see the ERS topic page Farm Economy, last updated in September 2023.

Livestock operations with cover crops often use them for forage

Monday, June 3, 2024

Researchers with USDA, Economic Research Service (ERS) examined survey data to identify how producers who planted cover crops, such as rye or winter wheat, used them. Unharvested cover crops are often left in the field to provide residue cover or to add organic matter to the soil. Cover crops can also be used for livestock forage, such as when livestock graze in the spring or fall, or can be mechanically harvested in the spring and stored as haylage or silage. Researchers found that in 2021, 89 percent of cow-calf operations and 72 percent of dairy operations with cover crops reported using at least some of their cover crop acreage for forage, either through harvesting or grazing. The high proportions of livestock producers who used cover crops for forage suggests that their value as forage is an important factor in cover crop adoption for these operations, especially in cow-calf operations. Dairy operations were more likely to harvest cover crops than graze them. One of the reasons for this is because dairy cows often consume at least a portion of rations as harvested hay or silage in a barn or milking parlor. This contrasts with cow-calf operations, where cattle are more likely to graze on pasture than be fed in a barn. Dairy operations also commonly harvest and store corn silage, so they may be more likely to have the equipment and experience necessary to harvest and store cover crops as haylage or silage. Even among operations without livestock, harvesting cover crops for forage is relatively common, with 41 percent of operations without livestock reporting harvesting cover crops for forage. Information on cover crop practices in livestock operations can be found in the ERS report Cover Crops on Livestock Operations: Potential for Expansion in the United States, published in May 2024.

Wind energy development varies by region

Wednesday, May 29, 2024

As of 2020, large-scale, commercial wind energy development in the contiguous United States has been concentrated in areas with consistent, high wind speeds. Wind turbines are most prominent in the Plains, followed by the Midwest and West. While the regional distribution of wind energy development is influenced by State-level energy policy, one of the most important factors for development is the wind potential in a region. Some regions, such as the South, lack sufficient wind potential for large-scale development. USDA, Economic Research Service (ERS) researchers found that 90 percent of wind turbines in rural areas were installed on agricultural land (crop, pasture, or range land). Because the amount of land cover directly affected by wind turbines was small relative to the amount of farmland, and because farmers and ranchers can typically continue agricultural production near wind turbines after they are installed, land cover changed on only 4.8 percent of sites after installation. Some of this change was from one agricultural use to another, such as from cropland to pasture. The estimated footprint for wind farms was roughly 88,000 acres in 2020. For more about the expansion of wind and solar in rural areas of the contiguous United States, the regional distribution of renewable energy development, and the land cover change associated with development, see the ERS report Utility-Scale Solar and Wind Development in Rural Areas: Land Cover Change (2009–20), released in May 2024.

Renewable diesel production surpasses biodiesel

Tuesday, May 28, 2024

The U.S. Renewable Fuel Standard, a program that originated in the mid-2000s, mandates that a specific volume of certain biofuels be used each year in transportation fuel. One category of biofuels included in this mandate is biomass-based diesel. For many years, this portion of the biofuels mandate was filled by biodiesel, which is produced using fats such as soybean oil, corn oil, yellow grease, or tallow and must be blended with traditional diesel. Production of biodiesel grew steadily beginning in the early 2000s to a peak of 1.8 billion gallons during the 2018/19 marketing year for soybean oil (October–September) but has declined slightly to 1.7 billion gallons in 2022/23. Renewable diesel has displaced biodiesel’s share of the market. Renewable diesel can be produced from similar fats as biodiesel, but unlike biodiesel, renewable diesel is a “drop in” biofuel, meaning it does not need to be blended with traditional diesel. Production of renewable diesel has grown from 40 million gallons in the 2010/11 marketing year to 2.3 billion gallons in 2022/23, surpassing biodiesel production for the first time. Combined, biodiesel and renewable diesel pushed total biomass-based diesel production to an all-time high in 2022/23. As this portion of the biofuels sector has mostly expanded since 2001/02, an increasing share of soybean oil produced in the United States is now used for biofuel, growing from less than 1 percent in 2001/02 to 46 percent in 2022/23. This chart was drawn from the USDA, Economic Research Service data product, U.S. Bioenergy Statistics.

Following the Sun: solar energy development varies by region

Thursday, May 23, 2024

Solar energy development has been concentrated in the Atlantic and West regions of the United States, especially in California, North Carolina, and Massachusetts. These States are among those with policies that have promoted renewable energy development—much of it occurring in rural areas. Between 2016 and 2020, utility-scale solar capacity in rural areas more than doubled, increasing to 45 gigawatts, 3.7 percent of U.S. electric power capacity, and the number of solar projects increased from 2,316 to 3,364. Roughly 70 percent of the solar projects installed between 2009 and 2020 in rural areas were located on agricultural land. About 336,000 acres of rural land were estimated to have been directly affected by solar development. For more about the expansion of solar and wind in rural areas of the contiguous United States, the regional distribution of renewable energy development, and the land cover change associated with development, see the USDA, Economic Research Service report Utility-Scale Solar and Wind Development in Rural Areas: Land Cover Change (2009–20), released in May 2024.

2022 Census of Agriculture: Share of farmland rented holds steady at 39 percent

Wednesday, May 22, 2024

Thirty-nine percent of the 880 million acres of U.S. farmland in 2022 was rented or leased, a similar rate to that in 2017, according to new data from the 2022 Census of Agriculture. Over the past 50 years, the share of farmland rented across the nation has been relatively stable, with a slight but noticeable increase during the farm financial crisis of the 1980s. In general, rental activity is concentrated in grain production areas, with cash grains such as rice, corn, soybeans, and wheat commonly being grown in areas where more than 50 percent of farmland is rented. The region along the Mississippi River is home to the majority of U.S. rice production, while corn and soybeans dominate the Corn Belt, and corn and wheat dominate the Northern Plains. In 2022, higher rates of farmland rental were reported in counties along the Mississippi River, as well as in the Corn Belt and the Northern Plains. Higher rates of farmland rental are concentrated in areas where farms tend to be larger. Roughly two-thirds (68 percent) of rented farmland is on operations with 2,000 acres or more. According to USDA, Economic Research Service (ERS) studies, more than half the cropland in the contiguous U.S. is rented, but just over a quarter of pastureland is rented. For more information on farmland ownership and tenure, see the ERS topic page Land Use, Land Value & Tenure.

Brazil’s lower production and marketing costs challenge U.S. competitiveness in the global soybean market

Wednesday, May 15, 2024

The United States and Brazil compete to satisfy the global demand for soybeans. Soybean exports contribute billions of dollars to the U.S. economy each year even as Brazil's exports have gradually eroded the U.S. share of the global soybean market. Researchers with USDA, Economic Research Service (ERS) compared factors affecting the two countries’ competitiveness, including costs of both production and marketing. They determined that, on average, production costs per acre for soybeans in Brazil were 22.5 percent lower than U.S. costs from 2010/11–2021/22. Lower capital and land costs accounted for most of this difference. Brazil’s farmers largely hire out services to provide equipment and labor for field operations, whereas U.S. farmers tend to own their machinery. Land costs were also higher in the United States, where one crop is typically harvested per marketing year. Brazil’s abundant land resources and its capacity to grow two crops per year increase both the output and revenue generated per unit of land. On aggregate, U.S. costs to produce an acre of soybeans increased 2.6 percent annually from 2010/11–2021/22, while Brazil’s costs increased 0.5 percent, not adjusting for inflation. Factors driving the increase in U.S. costs per acre were higher fertilizer, pesticide, machinery, repair, and land costs. In Brazil, rising fertilizer and pesticide costs represented the bulk of the increase. In both countries, transportation of soybeans to ports adds to the cost of soybeans paid by overseas buyers. However, Brazil’s investments in overland transportation infrastructure have reduced the relative marketing cost for exporting soybeans. Average inland transport costs per metric ton in 2017/18–2021/22 in Brazil decreased by 21.4 percent compared with 2008/09–2012/13. More information can be found in the ERS report Soybean Production, Marketing Costs, and Export Competitiveness in Brazil and the United States, December 2023.

Energy development payments to farmers vary by region

Wednesday, May 8, 2024

Energy markets experienced significant shifts beginning in the early 2000s, with price increases and technological improvements leading to a dramatic increase in oil and natural gas production, as well as wind energy development. Research by USDA, Economic Research Service shows that the Plains region had the largest share of farm producers receiving energy payments from energy developers for on-farm energy production, 7.40 percent, and the largest average annual payment, $39,087, between 2011–20. This region includes States with significant oil, natural gas, and wind energy production, such as Texas and Oklahoma, as well as a high proportion of farmers who own the oil and gas development rights to their land. The West and Atlantic regions have a far lower share of producers who received payments on average, 2.18 and 2.82 percent, respectively. Significant oil and gas production in the Atlantic is limited to Pennsylvania and West Virginia, and many producers in the West do not own their land’s oil and gas mineral rights, which can be legally separated from land rights. However, for those receiving payments, the average annual payments in the West and Atlantic regions were $31,821 and $29,015, respectively. These payments were near the national average of $30,482. The lowest proportion of farmers receiving energy payments was in the South, at 1.45 percent. Most Southern States have low potential for large-scale wind energy development and little onshore oil and natural gas development. In the Midwest, where there is little oil and gas production and more wind power, payments were less common, 2.34 percent, and producers received the lowest average payment, $10,953. Read more about the size, frequency, trends, and relative contribution of energy payments to farm operator income in the ERS report The Role of Commercial Energy Payments in Agricultural Producer Income, released in April 2024.

2022 Census of Agriculture: Interest expense data illustrate distribution of U.S. farm debt

Tuesday, May 7, 2024

The recently released USDA Census of Agriculture shows interest payments on farm debt in 2022 were heavily concentrated in the upper Midwest, northern Great Plains, and California’s Central Valley. Conducted every 5 years by USDA’s National Agricultural Statistics Service (NASS), the census includes producer responses to questions about production expenses for their farms and ranches, including how much interest they paid on debt. Interest expenditures are a good indicator for where agricultural operations hold debt across the country. In 2022, producers spent $13.4 billion on interest payments, an 8.1-percent real decline from the 2017 Agricultural Census, even though real total farm debt rose 7.8 percent from $390.4 billion to $420.4 billion. Interest rates had dropped throughout most of 2020 and 2021 and were still relatively low during the 2022 calendar year, only beginning to rise in the second quarter of 2022. For more details from the 2022 Census of Agriculture, see the NASS Agricultural Census website. For more on financial sectors and their relationship with agriculture, see the USDA, Economic Research Service (ERS) Farm Income and Wealth Statistics data product. See also Increases in U.S. Farm Debt and Interest Expenses Minimally Affect Sector’s Financial Position in the Short-Term, as Measured by Liquidity and Solvency Ratios, published in August 2023 in ERS’s Amber Waves magazine.

Energy payments to farmers rise and fall with oil prices

Monday, May 6, 2024

The amount of money farmers receive for leasing their land for the production of energy, such as oil, natural gas, or wind, varies significantly from year to year and has typically followed the price of oil. According to data analyzed by USDA, Economic Research Service (ERS) researchers, payments grew from an average of $38,788 in 2011 to $62,944 in 2013, when the price of oil averaged about $110 per barrel (adjusted for inflation), but then fell as low as $14,032 in 2020, when oil was near $40 per barrel. Not all farmers receive energy payments since many farm operators do not own their land, and even for those who do, subsurface mineral rights might have been separated from surface rights so that the farmer would not receive payments from on-farm energy production. For farmers who have historically benefited from energy, development of oil and natural gas have been a more common source of income than wind power, which is a younger industry. In the United States, about 3.5 percent of farm operations received energy payments between 2011 and 2020. Read more about the size, frequency, trends, and relative contribution of energy payments to farm operator income in the ERS report The Role of Commercial Energy Payments in Agricultural Producer Income, released in April 2024.

2022 Census of Agriculture: Most U.S. counties with high concentration of specialty crop farms are located along coasts

Tuesday, April 30, 2024

Data from the recently released 2022 USDA Census of Agriculture show that farms specializing in specialty crops accounted for 10 percent of all farm operations. Specialty crop operations include those that primarily grow vegetables and melons, fruit and tree nuts, and greenhouse, nursery, and floriculture products, and are responsible for $84 billion in cash receipts (15 percent of the U.S. total). For 127 counties (or county equivalents), specialty crop farms accounted for more than 40 percent of all farms within the county. Most of these counties are in States along the west and east coasts (including Alaska and Hawaii) and in or near metropolitan areas. Half of the counties with the highest concentration of farms primarily engaged in growing specialty crops were in California, New York, Florida, and New Jersey. Almost all (95 percent) of U.S. counties with farms as well as every State had at least one farm growing primarily specialty crops. This chart was drawn from data from USDA, National Agricultural Statistics Service’s website. For more information on cash receipts by State and commodity, including specialty crop commodities, see USDA, Economic Research Service’s Farm Income and Wealth Statistics data product.

Crop insurance payments to farmers vary by farm type

Wednesday, April 24, 2024

About 13 percent of U.S. farms participated in Federal crop insurance programs in 2022, with the highest share of participants coming from small family farms. The four types of small family farms (retirement, off-farm occupation, low sales, and moderate sales) accounted for 54 percent of the participants in Federal crop insurance programs and received 12 percent of the insurance payments. Small family farms harvested 26 percent of all cropland acres. On the other hand, midsize and large-scale family farm operators accounted for a slightly lower proportion of Federal crop insurance participants (42 percent) but harvested a majority of the U.S. cropland acres (67 percent) and received 80 percent of payments from Federal crop insurance. Larger farms like these account for 46 percent of agricultural acres operated in 2022. Researchers with USDA, Economic Research Service examined survey data and found that participation rates varied widely across commodity production. In 2022, 62 percent of farms producing row crops (cotton, corn, soybeans, wheat, peanuts, rice, and sorghum) purchased Federal crop insurance, while 9 percent of farms growing specialty crops, such as fruits, vegetables, and nursery crops, did the same. This chart appears in America’s Farms and Ranches at a Glance, published December 2023.

Crop acreage managed under mix of owner operation and lease agreements

Thursday, April 18, 2024

The proportion of farmland managed under a lease agreement and land that is managed by owner-operators varies across crops, according to data collected from Agricultural Resource Management Surveys (ARMS). Owner-operators farmed close to half of U.S. corn, soybean, and barley acres but roughly a third of sorghum and cotton acres. While both cotton and sorghum acreage were roughly evenly split among owner-operated, cash-rent, and share-rent agreements, share-rented farmland had a lower proportion of corn, soybean, and barley acreage. Cash contracts are those in which the tenant pays a fixed rent and provides both inputs and management, and share-based contracts are those in which the landlord and tenant split costs and revenues. Other agreements, such as hybrid arrangements, make up less than 1 percent of crops based on planted acreage in the survey year. Researchers with USDA, Economic Research Service (ERS) examined information supplied by farmers from ARMS across various crops to find that the overall trend in the farmland market favors cash-rented farmland. More information on land leasing can be found in the ERS report Farmland Rental and Conservation Practice Adoption, published in March 2024.

2022 Census of Agriculture: Fewer U.S. farms are growing wheat

Wednesday, April 3, 2024

The number of farms producing wheat for grain declined substantially from 2002 to 2022, according to new data from USDA, National Agricultural Statistics Service (NASS) 2022 Census of Agriculture. In 2022, the number of U.S. farms reporting wheat production was 97,014, a 43-percent decrease compared with the 2002 census, when 169,528 farms reported wheat production. The reduction in the number of farms producing wheat was spread across all classes of wheat. The number of farms producing winter wheat—84 percent of U.S. wheat farms in 2022—dropped by nearly 60,000, or 42 percent, between the 2002 and 2022 censuses. Farms producing durum wheat decreased by the largest percentage, down 59 percent from 2002. The number of farms growing spring wheat (other than durum) declined 43 percent from 2002 to 2022. During the same time period, total volume of U.S. wheat produced trended down slightly, largely because of less acreage being harvested. As the profitability of other crops rises, wheat is increasingly planted in rotation with more profitable corn or soybean crops. Among major wheat-producing States, Kansas, which accounts for 15 percent of all U.S. wheat farms, saw a reduction of 9,716 farms—a 40-percent decrease from 2002 to 2022. Texas and Oklahoma reported decreases of 54 and 47 percent, respectively, between 2002 and 2022. Together, these 3 States harvested nearly 32 of percent of the volume of winter wheat produced in 2022, according to data reported by NASS in the Small Grains Annual report. For more details on the 2022 Census of Agriculture, see the NASS Census of Agriculture website. Information on trends in the wheat production sector can be found in the special article, “U.S. Census of Agriculture: Highlighting Changing Trends in Wheat Farming” in USDA, Economic Research Service’s March 2024 Wheat Outlook.