Weather Forecast

Close

House passes farm bill; legislation now goes to president's desk

Business

Erin Brown / Grand Vale Creative

What's a family farm?

'Family farm" can be one of the most controversial terms and concepts in modern agriculture. "America's Diverse Family Farms: 2017," a report from the U.S. Department of Agriculture's Economic Research Service, or ERS, won't resolve the controversy. But the new report does offer insight and conclusions.

Perhaps its most notable conclusion: "Farming is still overwhelming comprised of family businesses. Ninety-nine percent of U.S. farms are family farms, and they account for 90 percent of farm production."

A few definitions are in order:

The report says a family farm is one where the majority of the business is owned by the principal operator — the person most responsible for running the farm — and individuals related to the operator.

The report also says a farm is any place that produced and sold, or normally have, at least $1,000 in ag products during a given year. (That's the standard USDA designation of a farm.)

"Small" family farms are defined as one with gross cash farm income, or GCFI, of less than $350,000. "Midsize" family farms are ones with GCFI of $350,000 to to $999,000. "Large-scale" family farms have GCFI of at least $1 million.

Among key findings of the report, written in part by ERS economist Robert Hoppe:

• Small farms make up 90 percent of the farm count and operate half of the farmland.

• Small farms are much more likely to have an operating profit margin of less than 10 percent, an indicator of high financial risk. Many small farms receive off-farm income that helps to support their farm and pay living expenses, however.

• Conservation Reserve Programs payments generally go to retired farmers and farmers with low-sales farms and off-farm jobs.

Some of the conclusions won't surprise anyone familiar with Upper Midwest agriculture. For example, the report finds that "generational lifecycles, particularly the presence or absence of younger related operators on family farms," may affect whether farms expand or contract, as well as succession.

Nor will anyone familiar with ag be surprised that the report finds that a relatively large share of principal farm operators are 65 or older. Thirty-six percent of principal farm operators were at least 65 in 2016, compared with 14 percent of self-employed workers in non-ag businesses.

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

To read the report, go to: www.ers.usda.gov/publications/pub-details/?pubid=814.