Trends in Farm Household Economic Well-Being

Jeremy WeberUSDA Agricultural Outlook Forum,

February 20-21, 2014

Median Farm and U.S. Household Income, 1991-2012*

Source: Agricultural Resource Management Survey (1996-2012) and Farm Cost and Returns Survey (1991-1995). Dollar values are in nominal terms.*Differences between 2012 estimates and estimates from prior years reflect improved sample coverage (particularly among very small farms) and changes in survey methodology and implementation associated with the 2012 Agricultural Resource Management Survey in addition to changes in the economic situation of farm households

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000 Farm House-holds, $68,298

All U.S. Households,

$51,017

Med

ian

Inco

me

($)

Average annual percent increase since 1997: • 5.0% for farm households, • 2.2 % for all U.S. households

Farm income Off-farm income Total household income

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

20122013F2014F

F=forecast.

Source: USDA Agricultural Resource Management Survey.

Median Farm Household Income, 2012-2014F

$

3

Farm Household Income ForecastMedian farm household income was about $68,300 in 2012 and is forecast to remain stable at $68,132 for 2014.

Take Away Points from the Sector Forecast

• Declining crop income, particularly for grains• Steady or higher livestock income • Continued strong debt to asset ratios

– But how will farm asset values evolve?

A Disaggregated Look at Farm Household Finances

• Use most recent survey data (2012 calendar year)• Focus on households with farm businesses, by

commodity specialization– Specialization based on value of production

• Farm businesses account for more than 90 percent of production– Definition: farms where the principal operator

identifies farming as primary occupation or the farm has gross cash farm income greater than $350,000

Crops: Median Household Income and Relative Size of Farm Income% $

Notes: The group “Households without farm businesses” includes all households without farm businesses, regardless of their commodity specialization. Cash grains include all the major grains and oilseeds. High field crops include fruit, vegetable, and horticulture crops. Source: 2012 USDA Agricultural Resource Management Survey, preliminary.

Cash gra

ins

Rice, T

obacco, C

otton, Peants

Other field cr

ops

High value cr

ops

Households w

ithout f

arm busin

esses

Beef cattle

Hogs

Poultry

Dairy

General li

vesto

ck All

01020304050607080

010,00020,00030,00040,00050,00060,00070,00080,00090,000100,000$89,330 $88,060

$55,919$74,528 $76,800

Farm income zero or less (%)Farm income positive, but less than 50% of total household income (%)Farm income positive and 50% or more of total household income (%)Median total household income ($)

Livestock: Median Household Income and Relative Size of Farm Income

% $

Beef cattle Hogs Poultry Dairy General livestock 0

10

20

30

40

50

60

70

80

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

$46,382

$123,800

$76,421

$70,148

$50,727

Farm income zero or less (%)Farm income positive, but less than 50% of total household income (%)Farm income positive and 50% or more of total household income (%)Median total household income ($)

Source: 2012 USDA Agricultural Resource Management Survey, preliminary.

Crops: Median Household Asset Holdings and Concentration in Farm Assets

% $

Cash gra

ins

Rice, T

obacco, C

otton, Peants

Other field cr

ops

High value cr

ops

Households w

ithout f

arm busin

esses

0

20

40

60

80

0

400,000

800,000

1,200,000

1,600,000

2,000,000$1,819,895

$1,346,035 $848,876 $1,096,875$751,410

Farm assets are 75% or less of total assets (%)Farm assets are between 75 and 90 percent of total assets ($)Farm assets are 90% or more of total assets (%)Median total assets ($)

Notes: The group “Households without farm businesses” includes all households without farm businesses, regardless of their commodity specialization. Cash grains include all the major grains and oilseeds. High field crops include fruit, vegetable, and horticulture crops. Source: 2012 USDA Agricultural Resource Management Survey, preliminary.

Livestock: Median Household Asset Holdings and Concentration in Farm Assets

% $

Source: 2012 USDA Agricultural Resource Management Survey, preliminary.

Beef cattle Hogs Poultry Dairy General livestock 0

10

20

30

40

50

60

70

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

$881,329

$2,312,660

$1,383,729 $1,405,919

$591,026

Farm assets are 75% or less of total assets (%)Farm assets are between 75 and 90 percent of total assets ($)Farm assets are 90% or more of total assets (%)Median total assets ($)

Crops: Household Debt to Asset Ratios% debt/assets

Cash gra

ins

Rice, T

obacco, C

otton, Peants

Other field cr

ops

High value cr

ops

Households w

ithout f

arm busin

esses

0

10

20

30

40

50

60

70

0.000.010.020.030.040.050.060.070.080.090.10

0.07 0.070.09 0.08

0.07

Household debt to asset ratio 0.10 or less (%) Household debt to asset ratio between 0.10 and 0.30 (%) Household debt to asset ratio 0.30 or more (%) Median household debt to asset ratio

Notes: The group “Households without farm businesses” includes all households without farm businesses, regardless of their commodity specialization. Cash grains include all the major grains and oilseeds. High field crops include fruit, vegetable, and horticulture crops. Source: 2012 USDA Agricultural Resource Management Survey, preliminary.

Livestock: Household Debt to Asset Ratios%

Beef cattle Hogs Poultry Dairy General livestock 0

10

20

30

40

50

60

70

80

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

0.04

0.16

0.14

0.120.12

Household debt to asset ratio 0.10 or less (%) Household debt to asset ratio between 0.10 and 0.30 (%) Household debt to asset ratio 0.30 or more (%) Median household debt to asset ratio

Source: 2012 USDA Agricultural Resource Management Survey, preliminary.

debt/assets

Take Away Points• Households without farm businesses

– Depend little on farm income and have more wealth in nonfarm assets• Households with farm businesses

– In some specialties about half of households received at least half of their income from farming in 2012: cash grains; tobacco, cotton, rice peanuts; hogs, poultry, dairy

• In these specialties, more than half of households have more than 75% of their assets in the farm sector

– Household debt to asset ratios are low• Less than 10% of households specializing in cash grains have a debt to asset

ratio of 0.3 or more • Highest debt ratios are in hogs and poultry (where contracting provides

stability for lenders)

More Information• Farm household topic page:

– http://www.ers.usda.gov/topics/farm-economy/farm-household-well-being.aspx

• Farm household data tables:– http://

www.ers.usda.gov/data-products/farm-household-income-and-characteristics.aspx

• ARMS data query tool: – http://

www.ers.usda.gov/data-products/arms-farm-financial-and-crop-production-practices/tailored-reports.aspx

• Contact– jeweber@ers.usda.gov; 202-694-5584