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pdfUnited States
Department of
Agriculture
Economic
Research
Service
Economic
Information
Bulletin
Number 26
June 2007
America’s Diverse
Family Farms
2007 Edition
America’s Diverse Family Farms
A
merican farms encompass a wide range of sizes, ownership structures, and business types. A farm classification developed by
USDA’s Economic Research Service (ERS) categorizes farms into
more homogeneous groupings for reporting and evaluation purposes.
The typology is based largely on farm sales, organization, and the farm
operator’s primary occupation.
Farm Types for 2004
The farm classification developed by ERS focuses on the “family farm,” or any
farm organized as a sole proprietorship, partnership, or family corporation.
Family farms exclude farms organized as nonfamily corporations or cooperatives and farms with hired managers.
Small Family Farms (sales less than $250,000)
Limited-resource. Farms with gross sales less than $100,000 in 2003 and less
than $105,000 in 2004.1 Operators of limited-resource farms must also receive
low household income in both 2003 and 2004. Household income is considered
low in a given year if it is less than the poverty level for a family of four, or it is
less than half the county median household income. Operators may report any
major occupation except hired manager.
Retirement. Small farms whose operators report they are retired (excludes
limited-resource farms operated by retired farmers).
Residential/lifestyle. Small farms whose operators report a major occupation
other than farming (excludes limited-resource farms with operators who report
nonfarm work as their major occupation).
Farming-occupation. Farms whose operators report farming as their major
occupation (excludes limited-resource farms whose operators report farming
as their major occupation).
Low-sales. Gross sales of less than $100,000.
Medium-sales. Gross sales between $100,000 and $249,999.
Large-Scale Family Farms (sales of $250,000 or more)
Large family farms. Farms with sales between $250,000 and $499,999.
Very large family farms. Farms with sales of $500,000 or more.
Nonfamily Farms
Nonfamily farms. Farms organized as nonfamily corporations and
cooperatives, as well as farms operated by hired managers. Also includes
farms held in estates or trusts.
1The original gross sales cutoff was established at $100,000 for 2003. The cutoff for subsequent
years is adjusted by the index of prices paid by farmers.
Cover photo: USDA, Natural Resources Conservation Service.
2
America’s Diverse Family Farms
Farms, Assets, and Production
Most farms are small, and most farm assets are on small farms,
but small farms account for only 25 percent of production.
Ninety percent of farms are small, and these farms account for 68 percent
of farm assets, including 61 percent of the land owned by farms.
Large-scale family farms and nonfamily farms account for 75 percent
of production.
Family farms of different sizes account for 98 percent of farms and 85
percent of production.
Distribution of farms, value of production, and farm assets, 2004
Percent of U.S. total
50
45.4
45
Farms
Value of production
Farm assets
39.7
40
35
30
23.7
25
18.8
20
16.9
16.1
15
10
11.3
10.8 10.3
9.4
5.3
5.5
5
1.0
16.1
14.8
5.5
15.2
9.1
7.1
6.3
2.0
4.1
3.4
2.2
Very large
Nonfamily
0
Limitedresource
Retirement Residential Low-sales
Mediumsales
Farming-occupation
Small family farms
(sales less than $250,000)
Large
Large-scale
family farms
Differences among farm types are illustrated in this
brochure using 2004 data from the Agricultural
Resource Management Survey, an annual survey conducted by USDA’s Economic Research Service (ERS)
and National Agricultural Statistics Service (NASS).
Data from various censuses of agriculture are used to
follow trends over time.
For more information about the diversity of U.S. farms,
see ERS’s Structure and Finances of U.S. Farms:
Family Farm Report, 2007 Edition.
America’s Diverse Family Farms
Agricultural Resource
Management Survey
3
Shifts in Production to Million-Dollar Farms
Sales of farm products have shifted to million-dollar farms (sales of
$1,000,000 or more, in 2002 dollars) over the past two decades
Million-dollar farms—less than 2 percent of all farms—accounted for 48
percent of the sales of farm products in 2002, up from 23 percent in 1982.
At the same time, the share of sales by farms with less than $250,000 fell from
53 percent to 24 percent.
The most common specializations among million-dollar farms are specialty
crops (27 percent of the group), poultry (19 percent), dairy (14 percent), and
hogs (10 percent).
Most million-dollar farms (88 percent) are family operations. Less than 1 percent of million-dollar farms are operated by large, publicly held corporations.
Farm product sales by constant-dollar sales class (2002 dollars),
1982 to 2002
Percent of total farm product sales
100
90
22.9
28.2
80
70
9.4
60
15.0
32.3
12.5
14.5
15.5
16.5
40
14.4
15.7
52.7
20
14.2
45.7
38.8
30.7
10
0
47.5
10.6
50
30
39.1
1982
1987
1992
1997
23.9
2002
Census year
Sales class:
$1,000,000 or more
$500,000-$999,999
$250,000-$499,999
Less than $250,000
Note: Sales are expressed in constant 2002 dollars, using the Producer Price Index for farm products to adjust
for price changes.
4
America’s Diverse Family Farms
Organization of farms with gross sales of $1 million or more, 2004
Total number of million-dollar farms = 34,480
Organized as:
Nonfamily farms (12.2%):
Family farms
(87.8%)
Nonfamily corporations (5.4%)
Other (6.8%)
87.8% of nonfamily corporations
have no more than 10 shareholders.
Proprietorships, partnerships, or family
corporations with hired managers. Also
includes estates, trusts, and cooperatives.
Creatas
America’s Diverse Family Farms
5
Increase in Typical Enterprise Size
The shift of sales to larger sales classes is reflected by an increase in
typical enterprise size over time.
Between the 1987 and 2002 Censuses of Agriculture, typical acres harvested
roughly doubled for most types of vegetables, as well as for field crops.
We use animals to define typical livestock enterprise sizes. In 1987, half of all
hog sales came from farms selling 1,200 or fewer hogs, and half from farms
selling more. By 2002, that typical enterprise size rose to 23,400 hogs.
Typical fattened cattle and dairy enterprises also grew in size, approximately
doubling and tripling (respectively) over the 15-year period.
Change in typical enterprise size for selected vegetables,1987 to 2002
Harvested acres per farm
2,500
2,225
Census year:
1987
2,000
2002
1,500
949
1,000
810
500
160
700
400
350
236
88
200
100
222
0
Asparagus
Lettuce
Bell peppers
Potatoes
Sweet corn
Tomatoes
Note: “Typical enterprise size” is the median acres harvested of a particular vegetable. Half of all harvested acres
of a vegetable came from farms harvesting more than the typical acreage, and half came from farms harvesting less.
Enterprise size differs from farm size because a farm may have multiple crop or livestock enterprises.
Creatas
6
America’s Diverse Family Farms
Farm Financial Performance
Small farms are more likely to have a negative profit margin, but some
are profitable.
Nearly half or more of the farms in each small farm type had a negative
operating profit margin in 2004.
Other small farms were more profitable—between 15 and 28 percent of each
small farm group had an operating profit margin of at least 20 percent.
Nevertheless, an even greater share of large-scale farms had operating profit
margins that high, and most large-scale farms had positive margins.
Only 3 percent of U.S. farms are classified as vulnerable (negative net farm
income and debt/asset ratio greater than 40 percent), and 56 percent of these
farms are residential/lifestyle.
Farms by operating profit margin, 2004
Percent of group
100
15.1
1.3
3.4
75
24.6
6.6
5.1
23.8
5.6
4.5
16.5
5.6
8.0
27.6
23.7
35.5
42.2
12.5
50
18.7
63.6
66.1
69.9
25
6.7
6.5
15.8
15.9
80.3
49.6
11.2
13.4
9.2
6.3
63.2
48.6
32.8
25.7
34.9
0
Limitedresource
Retirement Residential Low -sales
Small family farms
(sales less than $250,000)
Operating profit margin:
Mediumsales
Farming-occupation
20% or more
Large
Very large
Nonfamily
All farms
Large-scale
family farms
10%-19.9%
0%-9.9%
Less than 0%
Note: Operating profit margin = 100% X (net farm income + interest paid - charge for unpaid operators’ labor and
management)/gross farm income.
EYEWIRE
America’s Diverse Family Farms
7
Farm Operator Household Income
Most types of farm households have a median income at or above the
median for all U.S. households, when both farm and off-farm sources
of income are considered.
Only two types of farm households—those operating limited-resource and
low-sales farms—have a median household income substantially below the
median for all U.S. households.
Operators of small farms (especially if farming is not their major occupation)
often report losses from farming.
Off-farm work provides the primary source of income for most types of farm
households.
Median income of operator households, 2004
Thousand dollars per household
175
155
150
125
Median income,
all U.S. households ($44,400)1
99
100
75
69
46
50
25
61
54
39
10
0
Limitedresource
Retirement Residential Low-sales
Small family farms
(sales less than $250,000)
Mediumsales
Farming-occupation
Large
Very large
Nonfamily
Large-scale
family farms
Note: Median income falls at the midpoint of the distribution of households by income, dividing households
into two groups. Half of the households have income above the median, while the other half have income
below that level. Farm household income is not estimated for nonfamily farms.
1Median income for all U.S. households is from the U.S. Census Bureau, 2005 Current Population Survey.
Corbis
8
America’s Diverse Family Farms
Average (mean) farm operator household income by source, 2004
Type of farm operated
Total average
income
Income from farming
Amount
Dollars per household
Small family farms:
Limited-resource
Retirement
Residential/lifestyle
Farming-occupation:
Low-sales
Medium-sales
Negative
Percent of
households
From off-farm sources
Total
1
Earned
1
Unearned
.......... Dollars per household ..........
7,680
62,468
96,515
-5,902
4,128
-365
72.1
50.8
64.4
13,582
58,339
96,879
3,463
20,252
83,548
10,118
38,087
13,331
63,043
70,365
4,925
34,354
44.4
24.6
58,118
36,011
36,950
26,241
21,168
9,769
125,120
272,527
80,250
225,094
16.8
16.3
44,870
47,434
33,238
29,320
11,633
18,114
81,596
14,317
52.8
67,279
48,818
18,461
Large-scale family farms:
Large family farms
Very large family farms
All family farms
Note: Farm household income is not estimated for nonfamily farms.
1Earned income comes from off-farm self-employment or wage or salary jobs. Unearned income includes interest and
dividends, benefits from Social Security and other public programs, alimony, annuities, net income of estates or trusts,
private pensions, etc.
USDA
America’s Diverse Family Farms
9
Government Payments
Government payments go primarily to family farms, but commodityrelated payments tend to go to large-scale family farms, while conservation payments tend to go to small family farms.
Commodity program payments reflect acreage in crops historically eligible for
support; 59 percent went to family farms with at least $250,000 in sales in 2004.
Conservation and commodity payments are distributed among different
farms; 80 percent of conservation payments went to family farms with less
than $250,000 in sales.
Because commodity-related payments make up 83 percent of all government
payments, the distribution of total government payments and commodityrelated payments is similar.
The share of farms receiving government payments is particularly high for
medium-sales small farms and large-scale farms, largely due to their participation in commodity-related programs.
Distribution of government payments by type of payment, 2004
Percent of U.S. payments
40
Conservation program payments
35
Commodity-related payments
35.1
30.8
Total payments
30
24.3
24.1
25
21.4
20
19.2
18.5
18.4
17.4
15
12.0
9.7
10
6.8
6.3
5
10.2
9.0
8.4
6.8
5.2
1.3 2.1
4.1
2.6
3.1 3.3
0
Limitedresource
Retirement
Residential
Low-sales
Mediumsales
Large
Very large
Nonfamily
Farming-occupation
Small family farms
(sales less than $250,000)
Large-scale
family farms
Conservation programs: Conservation Reserve Program (CRP), Wetlands Reserve Program (WRP), and Environmental
Quality Incentives Program (EQIP) payments.
Commodity-related programs: Direct payments, countercyclical payments, loan deficiency payments, marketing loan
gains, net value of commodity certificates, peanut quota buyout, milk income loss contract payments, agricultural disaster
payments, etc.
10
America’s Diverse Family Farms
Farms receiving government payments by type of payment, 2004
Percent of farms in group
90
80
2.0
Conservation only
Both types of payments
Commodity-related only
70
19.0
1.9
2.0
20.1
60
20.6
50
40
6.8
30
7.4
20
6.5
10
18.2
6.8
12.5
4.4
13.3
18.9
60.6
57.9
8.3
8.0
7.2
47.1
4.1
11.2
27.2
16.4
15.8
23.6
0
Limitedresource
Retirement Residential
Small family farms
(sales less than $250,000)
Low-sales
Mediumsales
Farming-occupation
Large
Very large
Nonfamily All farms
Large-scale
family farms
Sources of Data on Government Payments
The Agricultural Resource Management Survey (ARMS) relies entirely on responding farm operators for program-related information and records only the payments that they report receiving.
In contrast, administrative data—based on payment records kept by the agencies involved—also
include payments received by people who do not farm, mainly nonoperator landlords. Thus, the
survey shows different levels and composition of government payments than do administrative
data. The advantage to ARMS is that it includes detailed information about the farms and operators receiving the payments. Administrative data contain limited information about recipients of
government payments.
EYEWIRE
America’s Diverse Family Farms
11
Farm Policy and Family Farms
Sales of farm products shifted dramatically to farms with sales of
$1,000,000 or more between the 1982 and 2002 Censuses of
Agriculture. Most of these million-dollar farms are organized as family
farms, and those organized as nonfamily corporations generally have no
more than 10 stockholders.
Farming is still an industry of family businesses. Ninety-eight percent
of farms are family farms, and they account for 85 percent of farm
production.
Different farm policies affect distinctly different sets of farmers.
Commodity program payments largely flow to large and very large family
farms, and are shifting toward such farms along with production. Policies
addressing natural resource and conservation concerns, which are often
based on land ownership, have stronger impacts on smaller family farms.
The nonfarm economy is critically important to operators of small
family farms. Because small-farm households rely on off-farm work for
most of their income, general economic policies, such as tax or economic
development policy, can be as important to them as traditional farm policy.
For further information, contact:
Robert A. Hoppe
David E. Banker
Penni Korb
Erik J. O’Donoghue
James M. MacDonald
(202)
(202)
(202)
(202)
(202)
694-5572
694-5559
694-5575
694-5585
694-5610
1800 M Street, NW
Washington, DC 20036-5831
[email protected]
[email protected]
[email protected]
eo’[email protected]
[email protected]
June 2007
www.ers.usda.gov
The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of
race, color, national origin, age, disability, and, where applicable, sex, marital status, familial status, parental status,
religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual's
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To file a complaint of discrimination write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, S.W.,
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provider and employer.
| File Type | application/pdf |
| File Title | America’s Diverse Family Farms, 2007 Edition |
| Subject | family farms, farm program payments, farm production, farm household income, commodity payments, direct payments, government pay |
| Author | Robert A. Hoppe |
| File Modified | 2008-06-16 |
| File Created | 2007-05-31 |