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USDA looks at size, profits of family farms

WASHINGTON — Family farms are one of the most controversial topics in modern agriculture. There’s widespread disagreement on what constitutes a family farm and what doesn’t.

A new report from the U.S. Department of Agriculture won’t end the debate, but does shed light on family farms nationwide. Among its conclusions:

  • Ninety percent of million-dollar farms, or ones with gross cash farm income of at least $1 million, are family farms.
  • Relatively big farms continue to gain a growing share of ag production. The million-dollar farms now account for half of farm production, up from a third in 1991.
  • Though some small farms are profitable, they’re more likely to have a higher risk of financial problems.
  • Farm households in general are neither low income nor low wealth.

The report, “America’s Diverse Family Farm, 2016 Edition,” was prepared by the Economic Research Service, an arm of USDA. Robert Hoppe, an ERS economist, discussed the report during an online meeting Wednesday with the news media.

ERS defines a family farm as one where the majority of the business is owned by the operator and individuals related to the operator. It also uses the broader USDA definition of a farm as any place that produces and sells, or normally produces and sells, at least $1,000 of agricultural products during a given year.

The small and large-scale categories are broken down further:

  • Small is split into self-declared retired farmers who continue to farm on a small scale; farmers whose major occupation is off the farm; and farmers who report farming their major occupation.
  • Large-scale family farms are divided into large (gross cash farm income between $1 million and $5 million) and very large (gross cash farm income of more than $5 million.)

Today, small family farms account for 90 percent of all farms, 48 percent of all farmland and 24 percent of production.

But small family farms play a bigger role in some sectors than others. For instance, small farmers account for 57 percent of poultry and eggs, most under contract, and 52 percent of hay, Hoppe said.

The report also found that family businesses still dominate U.S. farming. Ninety-nine percent of U.S. farms are family farms, and the latter account for 89 percent of farm production.

Many U.S. agriculturalists wonder if big farms will continue to grab an increasingly bigger percentage of overall ag production or if the longstanding trend will change.

Hoppe noted that farming operations in some other countries have grown very large.

But, “There are some characteristics of small farms that help them, family farms, continue,” including flexibility in working off farm and knowledge of local growing conditions, he said. “There are advantages that small farm operators and family farm operators do have.”

The ERS says its mission is to “anticipate trends and emerging issues in agriculture, food, the environment, and rural America and to conduct high-quality, objective economic research to inform and enhance public and private decision making.”

Read the report at www.ers.usda.gov/webdocs/publications/eib164/eib-164.pdf?v=42709.

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