ERS Charts of Note
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Monday, June 22, 2020
Nearly half of all family farm operators and their spouses reported having a job off the farm in 2018. The majority of households, regardless of farm size, report that they work off the farm because it is more lucrative than farm work, provides more reliable income, and may offer health and retirement benefits. Households had the option to report more than one reason for working off the farm. Among small family farms—those with annual gross cash farm income (GCFI) under $350,000—about 88 percent of these households reported working off the farm because it was more reliable and 75 percent because it was more lucrative. By comparison, among large-scale farm households—those with GCFI of $1 million or more—about 72 percent reported working off the farm because it was more reliable and 51 percent because it was more lucrative. In addition, about 40 percent of all principal operators or their spouses who work off the farm listed farm-related financial stress, such as low commodity prices or low farm revenue, as a reason for having a job off the farm. This chart appears in the March 2020 Amber Waves article, “Family Farm Households Reap Benefits in Working Off the Farm.”
Monday, March 16, 2020
USDA’s Economic Research Service classifies farm households based on the annual gross cash farm income (GCFI) of the farm that they operate, and further separates small farms by the primary occupation of the principal operator. Data from USDA’s Agricultural Resource Management Survey consistently show that income earned off the farm is an important source of income for most farm households. Nearly half of all family farm operators and their spouses reported having a job off the farm in 2018. In general, spouses of principal operators are more likely to work off the farm, except among those classified as off-farm occupation farms. However, off-farm employment varies across farm types. For example, only 11 percent of operators of large farms and 3 percent of very large farms have a job off the farm, while between 17 and 19 percent of those operating low-sales, moderate-sales, and mid-size farms have an off-farm job. About 20 percent of operators on retirement farms hold off-farm jobs. This chart appears in the December 2019 report, America’s Diverse Family Farms: 2019 Edition.
Thursday, December 19, 2019
The composition of family farm household income varies by the type of farm. For example, households operating commercial family farms earned most of their income on the farm ($225,264 on average in 2017). Residence family farm households relied mostly on off-farm wages and salaries ($69,493 on average). Intermediate family farm households, meanwhile, had relatively high retirement and disability income ($19,222 on average), in part because these households had the oldest principal operators on average. Less than half of all farm households had positive incomes from their farm operations in 2017. Among commercial farm households, 86 percent had positive income from farming, compared to 51 percent of intermediate farm households and 35 percent of residence farm households. At the median, U.S. farm households earned $67,500 from non-farm sources, compared to a median loss of $800 from farming operations. This chart appears in the Amber Waves infographic “Farm Households Rely on Many Sources of Income,” published June 2019. This Chart of Note was originally published June 14, 2019.
Friday, December 13, 2019
Farm households often earn higher incomes than other types of households. In 2018, 57 percent of U.S. farm households received incomes at or above the median for all U.S. households, which was $63,179 that year. ERS classifies farm households into 7 types based on their annual gross cash farm income (GCFI), and groups small farms by the primary occupation of the principal producer. Median household incomes for 5 out of 7 farm types exceeded both the median U.S. household and the median income for households with self-employment income. However, the median income for all family farm households is lower than the median among all U.S. households with self-employment income. Overall, only 3 percent of farm households had lower wealth than the median U.S. household. This chart appears in the December 2019 report, America’s Diverse Family Farms: 2019 Edition.
ICYMI… More time spent working on the farm leads to less off-farm labor across different commodities
Thursday, August 1, 2019
Survey data show that the more time a household allots to its farm operation, the less time is available for off-farm employment. Many farm operations require primarily part-time or seasonal work, which can allow household members to work off-farm with little interruption to the farming operation. Across all farms by commodity type, average onfarm hours worked by the principal operator in 2016 ranged from 16 hours per week for general crop farms (where no one crop accounted for a majority of the value of production) to 64 hours per week for dairy farms. Time spent working on the farm limits the time available not only for off-farm employment but also for housework, family, sleep, and leisure activities. Accordingly, the amounts of time spent working on and off the farm are negatively correlated across all commodity types. For example, dairy farmers, who tend to have the most rigid farm schedules, work only 6 hours per week off-farm on average. By comparison, beef cattle farmers tend to have highly flexible schedules and, consequently, spend an average of 20 hours per week working off-farm. This chart updates data found in the August 2018 ERS report, Economic Returns to Farming for U.S. Farm Households. Survey data is drawn from the 2016 Agricultural Resource Management Survey (ARMS), jointly administered by the National Agricultural Statistics Service and the Economic Research Service. This Chart of Note was originally published February 14, 2019.
Friday, June 14, 2019
The composition of family farm household income varies by the type of farm. For example, households operating commercial family farms earned most of their income on the farm ($225,264 on average in 2017). Residence family farm households relied mostly on off-farm wages and salaries ($69,493 on average). Intermediate family farm households, meanwhile, had relatively high retirement and disability income ($19,222 on average), in part because these households had the oldest principal operators on average. Less than half of all farm households had positive incomes from their farm operations in 2017. Among commercial farm households, 86 percent had positive income from farming, compared to 51 percent of intermediate farm households and 35 percent of residence farm households. At the median, U.S. farm households earned $67,500 from non-farm sources, compared to a median loss of $800 from farming operations. This chart appears in the Amber Waves infographic “Farm Households Rely on Many Sources of Income,” published June 2019.
Thursday, April 11, 2019
The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, eliminates or modifies many itemized deductions and tax credits, while lowering Federal income tax bracket rates on individual and business income. Had the TCJA been in place in 2016, family farm households would have faced an estimated average effective tax rate of 13.9 percent, compared to the actual 17.2 percent effective tax rate that year. Had the TCJA also been in effect in 2017, the average effective tax rate would have been 12.8 percent, more than a percentage point lower than had it been in effect in 2016. By comparison, the actual effective tax rate in 2017 was 16.8 percent. The estimates vary by farm size. For example, small family farms would experience the lowest average effective tax rates, at 11.5 percent in 2016 and 10.4 percent in 2017. Only midsized family farms would have experienced an increase in their average tax rate, from 14.7 percent in 2016 to 15.8 percent in 2017. Those rates are still below the actual tax rates midsized farms experienced: 20.5 percent in 2016 and 20.8 percent in 2017. This chart updates data found in the June 2018 ERS report, Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households. For more on this topic, see “The Tax Cuts and Jobs Act Would Have Lowered Average Income Tax Rates for Farm Households between 2016 and 2017” in the April 2019 edition of Amber Waves.
Thursday, February 14, 2019
Survey data show that the more time a household allots to its farm operation, the less time is available for off-farm employment. Many farm operations require primarily part-time or seasonal work, which can allow household members to work off-farm with little interruption to the farming operation. Across all farms by commodity type, average onfarm hours worked by the principal operator in 2016 ranged from 16 hours per week for general crop farms (where no one crop accounted for a majority of the value of production) to 64 hours per week for dairy farms. Time spent working on the farm limits the time available not only for off-farm employment but also for housework, family, sleep, and leisure activities. Accordingly, the amounts of time spent working on and off the farm are negatively correlated across all commodity types. For example, dairy farmers, who tend to have the most rigid farm schedules, work only 6 hours per week off-farm on average. By comparison, beef cattle farmers tend to have highly flexible schedules and, consequently, spend an average of 20 hours per week working off-farm. This chart updates data found in the August 2018 ERS report, Economic Returns to Farming for U.S. Farm Households. Survey data is drawn from the 2016 Agricultural Resource Management Survey (ARMS), jointly administered by the National Agricultural Statistics Service and the Economic Research Service.
Friday, December 14, 2018
The median total household income for commercial U.S. farms is estimated to decline from $239,526 in 2012 to $200,090 in 2017. By comparison, the median farm income for residence and intermediate farms is estimated to remain relatively unchanged. In 2017, the median total household income for residence and commercial farms remained above the median income for all U.S. households ($63,172), despite declines in total income. Farm households rely on a combination of on-farm and off-farm sources of income. On-farm sources include income from the farm business, which is determined by farm costs and returns that often vary from year to year. In any given year, a significant number of farm households report negative farm income. Off-farm sources—including wage income, nonfarm business earnings, dividends, and transfers—are the main contributor to household income for residence and intermediate farms. The heavier reliance on off-farm income of these farms makes them less susceptible to changes in farming costs and returns than commercial farms. Because households operating commercial farms rely most on on-farm sources of income, they experience the largest drop in their total household income when farm sector income falls. This chart uses data from the new ERS and NASS Agricultural Resource Management Survey webtool, released December 2018.
Friday, October 19, 2018
Federal Government programs distribute payments each year to farms, farm operators, and their households. For example, USDA’s Conservation Reserve Program and Environmental Quality Incentive Program provide payments to operators for conservation purposes. And USDA’s commodity programs, such as Price Loss Coverage and Agriculture Risk Coverage, pay producers when prices or revenues fall below a certain level. “Other payments” include disaster assistance programs and other Federal, State and local programs. In 2016, only 23 percent of all residence farms and 33 percent of all intermediate farms received any government payments, compared to 69 percent of all commercial farms. The amount of government payments received varied by farm type. Commercial farms that received payments got an average of $42,459, with commodity payments accounting for the majority (70 percent) of the total. On the other hand, conservation payments were relatively more important for residence and intermediate farms—accounting for about 70 percent and 38 percent of total payments, respectively. This chart updates data found in the August 2018 ERS report, Economic Returns to Farming for U.S. Farm Households.
Monday, October 15, 2018
The Tax Cuts and Jobs Act (TCJA), passed in December 2017, doubled the Federal estate tax exemption amount to $11.18 million per individual. The estate tax exemption amount has increased significantly since 2000, when the exemption was $675,000, resulting in fewer farm estates that must file a tax return and that owe estate taxes. ERS researchers estimated that 39,214 farm estates were created in 2016 and, had the TCJA been in effect in 2016, only 0.58 percent of these farm estates would have been required to file an estate tax return. After accounting for adjustments, deductions, and expenses, 0.11 percent would have owed estate taxes, with an aggregate estate tax liability estimated at $104 million. By comparison, ERS estimated that under the previous law, 2.05 percent of farm estates were required to file an estate tax return in 2016 and that 0.86 percent owed estate taxes. The aggregate liability was estimated at $496 million. This chart uses data found in the June 2018 ERS report, Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households.
Wednesday, August 22, 2018
The Tax Cuts and Jobs Act (TCJA) of 2017 eliminates or modifies many itemized deductions and tax credits, while lowering tax bracket rates on individual and business income. Had the TCJA been in place in 2016, ERS estimates that family farm households would have experienced a decline of 3.3 percentage points on average in their effective tax rate—the share of income paid in taxes after tax credits and adjustments are taken into account. The effects of the TCJA vary across specializations. Dairy producers would have experienced the largest decline at 4.3 percentage points. This was largely due to the new TCJA deduction for business income, since dairy farmers tend to earn a higher share of total household income from the farm business. Producers of beef cattle, which represented the greatest number of farms of any specialty in 2016, would have experienced the smallest decline at 2.6 percentage points. Beef cattle producers generally operate small farms with farm income making up a lower share of their total household income, which results in smaller tax reductions than for farm households with a higher share of farm income. This chart uses data found in the June 2018 ERS report, Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households.
Thursday, August 2, 2018
Of the roughly 2 million U.S. farm households, more than half report negative income from their farming operations each year. Most farms are small, and the proportion incurring farm losses is higher for households operating smaller farms—where most or all of their income is typically derived from off-farm activities. However, many households offset their off-farm income with these farm losses, thus reducing their taxable income. Also, in many years, farm real estate values have increased, which bolsters the economic returns for farmland owners. When these tax-loss benefits and changes in farm real estate values are taken into consideration, the returns to farming increased in 2015. For example, for residence farm households, estimated average returns increased from a negative $2,241 to positive $13,619. The increases in average returns for intermediate and commercial farm households were even greater. Finally, the share of total farm households with positive returns from their farm operation rose from 43 percent to 70 percent, primarily due to the broad increases in farmland real estate prices in 2015. This chart appears in the August 2018 ERS report, Economic Returns to Farming for U.S. Farm Households.
Friday, June 29, 2018
In 2016, family farm households faced an estimated income tax rate of 17.2 percent on average. However, the recently passed Tax Cuts and Jobs Act (TCJA) of 2017 eliminates or modifies many itemized deductions and tax credits, while lowering tax rates on individual and business income. The TCJA also expands some business provisions. Had the TCJA been in place in 2016, ERS estimates that family farm households would have faced a lower average income tax rate of 13.9 percent. The effects of the TCJA varies by farm size, with the greatest reduction for households operating midsized farms. The average income tax rate for households of midsized farms would have decreased by 5.8 percentage points. By comparison, the average income tax rate for households operating large farms would have decreased by 3.4 percentage points, for small farms by 3.0 percentage points. The expansion of the standard deduction is a primary reason households operating smaller farms are estimated to face lower income tax rates, while those operating large farms benefit more from reductions in individual tax rates and a new provision allowing a portion of farm income to be excluded from household taxable income (income from farming is taxed at the individual level for family farms). Midsized farms are expected to benefit from all these provisions. This chart appears in the June 2018 ERS report, Estimated Effects of the Tax Cuts and Jobs Act on Farms and Farm Households.
Wednesday, May 23, 2018
Households that operate farm businesses—which include farmers with commercial farms earning at least $350,000 in gross cash farm income before expenses and those with smaller farms who report farming as their primary occupation—account for two-fifths of U.S. farm households. Since 1996, the median income of these farm business households has remained below the income of self-employed households. However, the median income gap between farm business and self-employed households has varied and has narrowed considerably during this period. Over the past 20 years, after adjusting for inflation, the median income of farm business households has increased substantially. This has occurred both because farms have become more profitable and average off-farm income has risen. In 1996, the median income of farm business households was $35,166, compared to $76,483 for self-employed households. By 2016, the median income of farm business households had increased to $64,929, compared to $84,459 for self-employed households. This chart appears in the ERS topic page Farm Household Well-being, updated May 2018.
Friday, January 26, 2018
Most farm households rely on off-farm income, such as wages from a job outside the farm. Typically, only commercial farm households receive a substantial share of their income from the farm. For example, in 2016, the median farm income was negative $2,008 for households operating residence farms (where the operator primarily works off-farm or is retired from farming), while median off-farm income was $83,400. Households operating intermediate farms (smaller farms where the operator’s occupation is farming) also earn the bulk of their income from off-farm sources. In contrast, households operating commercial farms—where gross cash income is $350,000 or more—derive most of their income from the farm (nearly $144,000 in 2016). Changes to their total household income follow profits from farming. Most agricultural production takes place on commercial farms. In 2016, residential and intermediate farms together accounted for over 90 percent of U.S. family farms and one-quarter of the value of production. By comparison, commercial farms accounted for 9 percent of family farms and three-quarters of production. This chart is based on data from the ERS data product Farm Household Income and Characteristics, updated November 2017.
Wednesday, November 29, 2017
After several years of decline, net farm income in 2017 for the U.S. farm sector as a whole is forecast to be relatively unchanged at $63.2 billion in inflation-adjusted terms (up about $0.5 billion, or 0.8 percent), while inflation-adjusted U.S. net cash farm income is forecast to rise almost $2.0 billion (2.1 percent) to $96.9 billion. Both profitability measures remain below their 2000-16 averages, which included substantial increases in crop and animal/animal product cash receipts from 2010 to 2013. Net cash farm income and net farm income are two conventional measures of farm sector profitability. Net cash farm income measures cash receipts from farming as well as cash farm-related income, including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates noncash items, including changes in inventories, economic depreciation, and gross imputed rental income. Find additional information and analysis on ERS’s Farm Sector Income and Finances topic page, released November 29, 2017.
Wednesday, August 30, 2017
After several years of declines, inflation-adjusted U.S. net farm income is forecast to increase about $0.9 billion (1.5 percent) to $63.4 billion in 2017, while inflation-adjusted U.S. net cash farm income is forecast to rise almost $9.8 billion (10.8 percent) to $100.4 billion. The expected increases are led by rising production and prices in the animal and animal product sector compared to 2016, while crops are expected to be flat. The stronger forecast growth in net cash farm income, relative to net farm income, is largely due to an additional $9.7 billion in cash receipts from the sale of crop inventories. The net cash farm income measure counts those sales as part of current-year income, while the net farm income measure counts the value of those inventories as part of prior-year income (when the crops were produced). Despite the forecast increases over 2016 levels, both profitability measures remain below their 2000-16 averages, which included surging crop and animal/animal product cash receipts from 2010 to 2013. Net cash farm income and net farm income are two conventional measures of farm sector profitability. Net cash farm income measures cash receipts from farming as well as farm-related income including government payments, minus cash expenses. Net farm income is a more comprehensive measure that incorporates non-cash items, including changes in inventories, economic depreciation, and gross imputed rental income. Find additional information and analysis on ERS’s Farm Sector Income and Finances topic page, released August 30, 2017.
Tuesday, April 18, 2017
Nearly 90 percent of family farms are structured as sole proprietorships. These entities are not subject to pay income tax themselves; rather, the owners of the entities (farmers) are taxed individually on their share of income. Numerous Federal income tax law provisions allow farmers to reduce their tax liabilities by reporting losses. From 1998 to 2008, for example, taxable losses from farming (the red area of the chart) rose from $16.7 billion to $24.6 billion. This was due, in part, to changes in the tax code beginning in 2001 that expanded the ability of farms to deduct capital costs—such as tractors and machinery—in the year the equipment was purchased and used. Between 2007 and 2014, strong commodity prices bolstered farm-sector profits (the green area), but taxable net farm income (the blue line) remained negative. Farm sole proprietors, in aggregate, have reported negative net farm income since 1980; in other words, they’ve reported a farm loss due to higher farm expenses than income. In 2014, the latest year for which complete tax data are available, U.S. Internal Revenue Service data showed that nearly 67 percent of farm sole proprietors reported a farm loss. This chart appears in the ERS topic page for Federal Tax Policy Issues, updated January 2017.
Friday, March 24, 2017
In 2015, farm households had a median total income of $76,735 per household—a third greater than that of all U.S. households ($56,516). Median total household income increased with farm size, with the median income of households operating small family farms approximating the U.S. median household and those operating larger family farms far exceeding it. The source of household income also varied with farm size: As farm size decreased, off-farm income represented a larger share of total household income. Households operating midsize and large farms (gross cash farm income or GCFI greater than $350,000) earned the majority of their total household income from their farm operations. By comparison, more than half of households operating small farms (GCFI less than $350,000) incurred small losses from farming, so the majority of their total household income came from off-farm sources. Wages from off-farm jobs accounted for more than half of off-farm income across all farm households. Farm households also receive significant income from transfers (such as Social Security or private pensions), interest and dividends, and non-farm business income. This chart appears in the ERS data product Ag and Food Statistics: Charting the Essentials, updated March 2017.