Farm businesses are farms that have an annual gross cash farm income (GCFI) of at least $350,000, or operations that have an annual gross cash farm income of less than $350,000, but where agriculture is reported as a major business for the operators.
Most farms do not make money. Their costs exceed their revenues. So farmers operate with the aid of subsidies. The purpose of government subsidies is to maintain farming activities when they would otherwise be profitless. This is important in order to ensure that the United States does not enter a good shortage.
The median income of households operating middle-sized farms (with less than $350,000 in annual gross cash farm income and where farming is the principal operator’s primary occupation) is $71,338. Based on recent comparable data (2011), the median income of small farming households, those whose farms had annual gross sales under $10,000 (59 percent of all farms), was higher than that of the median U.S. household. While the composition of income for farm households varied depending on the size and type of farm, on average, farm households earned $64,120 (intermediate farm households) to $115,337 (residential farm households) in 2015 from non-farm sources.
Farming Revenues Are Often Low
While 82% of households operating a commercial farm had positive revenue from their farm operations, just a third of residence farm households and just under half of the middle-class farm households earned income from their farming operations in 2015. In 2019, USDA reported that production from on-farm operations contributed less than 25% on average of a farm household’s income, and the remaining 75% earned money from outside of the farm.
The USDA reported in 2020 that average funds generated by farm operators to cover living expenses and debt obligations, after accounting for input costs, were negative nine of the past 10 years. The reports indicate many farmers are relying on income from outside of their farms to keep them afloat.
Many farmers take non-farm jobs to help offset their family expenses. Most of these farmers are unable to sustain themselves solely through farming. Farmers cannot earn their livelihoods just from farming anymore–it is costing them money–but neither would they make a living without it.
Many, if not most, farm families are double-income, with one member of the household working outside of the home. As a result, many have at least one member of the household working outside of the farm as their main source of income. The median farm income of most of these farmers is around $8,000 per year, according to USDA data.
Subsidies Are Required for Continued Farming
The subsidies, totaling roughly $14 billion annually, account for roughly 5% of all farms’ total cash income, according to USDA. Schuitemans farm is one of more than 50,000 farms across the country with annual gross sales of over $1 million, according to USDA.
When you add up farms that sell more than $250,000 annually, and independent farms that make millions of dollars, they make up only 10% of U.S. farms, yet they make up 82% of the total product produced. Million-dollar independent farms typically have the wherewithal to provide raw products for major food companies such as Tyson Foods (TSN) or Dole (DOLE).
Farmers purchase and operate farm equipment, like tractors; maintain farm facilities, such as sheds and fencing; and purchase supplies, like seeds and fertilizer. In many regions across the country, researchers wrote, farmers effectively must pay for their participation in the labor-intensive, labor-intensive acts of farming.
Richard Viswall points out in The Organic Farmers Business Manual that it is possible to earn a living from small farms competitive with salaries from doctors or lawyers. If you are not prepared to do this type of intense work of managing and focusing on the returns on your investments, it is still possible to live off of your farm, but you are still probably going to need some off-farm income.
Farm Revenues Vary Immensely Across Geographies
Figuring out what percentage of an individual farm’s income is lost, on average, is complicated because farming households typically have one member of the household who brings in income from nonfarm employment, notes Burchfield. Farm operations typically produce a variety of commodities, so statistics about the median cash income per farm are not to be interpreted as being derived exclusively from the production and sale of one commodity, which is highlighted as a specialization of that commodity.
For Oklahoma farmers, higher net farm income does not necessarily need to mean more, as the average net farm income was the lowest in the country in 1982. USDA economists predicted higher net farm income this year, even with lower cash receipts, which had never happened before. USDA economists also recently announced that the nation’s top 12% farm operation represented 68% of cash receipts by farms nationwide and 95% of its net income from farms in 1982.
Despite the higher prices of many crops, 2012 is no exception, and the average farm income is expected to be-$2,799. About 63% of this income comes from subsidies and crop insurance designed to help farms stay afloat in times of crises like floods, droughts, or even trade wars.
It happens that the prices of foods can rise even as the prices of agricultural commodities fall. It also does not seem to do farmers any favors to remind consumers that much of the cost of their food comes after products leave farms. Increasing evidence, however, suggests that many hidden costs of cheaper foods can pass on, due to factors including reduced nutrient levels, environmental degradation, and reduced livelihoods of U.S. farm operators. Some information from national and state sources provides an overall picture of what farmers earn in any given year.
