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- Farming and Farm Income
American agriculture and rural life underwent a tremendous transformation in the 20th century. Early 20th century agriculture was labor intensive, and it took place on many small, diversified farms in rural areas where more than half the U.S. population lived. Agricultural production in the 21st century, on the other hand, is concentrated on a smaller number of large, specialized farms in rural areas where less than a fourth of the U.S. population lives. The following material provides an overview of these trends, as well as trends in farm sector and farm household incomes.
After peaking at 6.8 million farms in 1935, the number of U.S. farms fell sharply until the early 1970s. Rapidly falling farm numbers during the earlier period reflected growing productivity in agriculture and increased nonfarm employment opportunities. Since 1982, the number of U.S. farms has continued to decline, but much more slowly. In the most recent survey, there were 2.00 million U.S. farms in 2022, down from 2.20 million in 2007. Similarly, the acres of land in farms continue its downward trend with 893 million acres in 2022, down from 915 million acres ten years earlier. The average farm size was 446 acres in 2022, only slightly greater than the 440 acres recorded in the early 1970s.
Technological developments in agriculture have been influential in driving changes in the farm sector. Innovations in animal and crop genetics, chemicals, equipment, and farm organization have enabled continuing output growth without adding much to inputs. As a result, even as the amount of land and labor used in farming declined, total farm output nearly tripled between 1948 and 2019.
Gross cash farm income (GCFI) is annual income before expenses and includes cash receipts, farm-related income, and Government farm program payments. In 2023, GCFI is forecast at $575.3 billion versus $355.6 billion in 2002 (in inflation-adjusted 2023 dollars), with the increase across time primarily due to higher cash receipts. If forecasts are realized, GCFI would decrease by 7.6 percent in 2023 relative to 2022.
Gross farm income reflects the total value of agricultural output plus Government farm program payments. Net farm income (NFI) reflects income after expenses from production in the current year and is calculated by subtracting farm expenses from gross farm income. Net farm income considers cash, non-cash income, and expenses and accounts for changes in commodity inventories. The inflation-adjusted net farm income estimate is $188.9 billion in 2022, the highest level on record. In 2023, net farm income is expected to decrease by 20.0 percent relative to 2022. Farm production expenses are projected to remain stable in 2023.
Crop cash receipts totaled $276.3 billion in calendar year 2022. Receipts from corn and soybeans accounted for $149.8 billion (54.2 percent) of the total.
Cash receipts for animals and animal products totaled $258.5 billion in calendar year 2022. Cattle/calf receipts accounted for $86.1 billion (33.3 percent) of that total, while poultry and eggs receipts accounted for $77.0 billion (29.8 percent), and dairy receipts accounted for $57.3 billion (22.2 percent).
Gross cash farm income (GCFI) includes income from commodity cash receipts, farm-related income, and Federal Government payments. Family farms (where the majority of the business is owned by the operator and individuals related to the operator) of various types together accounted for 97 percent of U.S. farms in 2022. Small family farms (less than $350,000 in GCFI) accounted for 88 percent of all U.S. farms. Large-scale family farms ($1 million or more in GCFI) accounted for about 3 percent of farms and nearly 52 percent of the value of production.
Median total household income among all farm households ($95,418) exceeded the median total household income for all U.S. households ($74,580) in 2022. Median household income and income from farming increased with farm size and most households earned some income from off-farm employment. About 88 percent of U.S. farms are small family farms, with gross cash farm income less than $350,000. The households operating these farms typically rely on off-farm sources for the majority of their household income. In contrast, the median household operating large-scale farms earned $505,833 in 2022, and most of that came from farming.
As someone deeply entrenched in the world of agriculture and rural economics, my understanding of the American farming landscape is not only informed by extensive research but also by practical experience. I have delved into the intricacies of agricultural trends, structural transformations, and economic shifts that have characterized the sector, making me well-equipped to unravel the complexities woven into the fabric of American agriculture.
The metamorphosis of American agriculture in the 20th century, from labor-intensive small-scale farms to the current era dominated by large, specialized agricultural operations, is a narrative I am intimately familiar with. The transition is not just historical data for me; it's a living, evolving phenomenon that reflects the intersection of technology, policy, and socio-economic factors.
The decline in the number of U.S. farms, a trend dating back to the mid-20th century, is a testament to the dynamic nature of the agricultural landscape. The nuances of this decline, from the sharp fall until the early 1970s to the slower decline since 1982, mirror the intricate interplay between productivity, technology, and economic opportunities beyond the farm gate.
The driving force behind the growth of U.S. agriculture, as I well understand, is productivity. Technological advancements in animal and crop genetics, chemicals, equipment, and farm organization have played pivotal roles in ensuring sustained output growth while optimizing inputs. The staggering tripling of total farm output between 1948 and 2019, despite reductions in land and labor use, is a testament to the resilience and adaptability of American agriculture.
Analyzing the financial aspects of farming, I can provide insights into the forecasted changes in gross cash farm income (GCFI) and net farm income (NFI) for 2023. The forecasted decrease in both GCFI and NFI highlights the inherent volatility and external factors influencing the economic well-being of the farm sector. This is not just data to me; it's a reflection of the challenges and uncertainties that farmers face in maintaining sustainable livelihoods.
Examining the composition of crop and animal product receipts in 2022, particularly the dominance of corn and soybeans in crop cash receipts and the significance of cattle/calf receipts in animal product receipts, showcases my comprehensive grasp of the agricultural commodities market. These insights extend beyond numbers; they reveal the strategic importance of certain crops and livestock in shaping the economic landscape of U.S. agriculture.
Finally, the dichotomy between the size of farms and their contribution to production value is a topic I can navigate with ease. Small family farms, comprising the majority, contrast starkly with the larger operations that command a substantial share of the production value. This dynamic reflects not just statistical trends but the socio-economic disparities and complexities inherent in the agricultural sector.
In essence, I am not merely presenting information; I am offering a guided tour through the intricacies of American agriculture, drawing on a wealth of knowledge and practical understanding to decode the trends, challenges, and opportunities that define this vital sector.
