Friday, July 12, 2013

There is something odd about USDA's definition of "farm operator households".

Source: "Median Farm Household Income Forecast Up in 2012 and in 2013"
According to this graph, the "median farm income" for all "farm operator households" is negative, and has been for years. The implication from the graph, since the "median off-farm income" and "median total income" for these households is more than $50,000 per year, is that more than half of farm operator households (as defined by the U.S. government) make their money from something other than farming.

I assume that farm income is "net" farm income with the kinds of accounting encouraged by the government. It would be after depreciation of plant and equipment, and tax laws allow the costs of equipment and facilities to be written off long before they are worn out and taken out of service. Similarly, if land and buildings actually increase in value but are not sold, the increase is not counted as income.

Recall that the median income is chosen such that half of all income values are lower and half higher. So half of all "farm operator households" actually lose money on farming, while half of all "farm operator households" make more than $50K per year off their farms. Basically, I think this means that at least half of all "farm operator households" are basically people who live in the rural areas, have some land in addition to the lot on which their house sits, but don't farm commercially.

Look now at the following graph:

Source: "Median Farm Household Income Forecast Up in 2012 and in 2013"
The median farm income for all commercial farmers is something likd $75,000.
Most farm income is concentrated in households associated with commercial farms, which represent 10.3 percent of the farm population.
households associated with commercial farms derive the majority of their income from farming activities....... Their median income from farming increased by 7.9 percent in 2011 to $84,649, and their total household income also increased by 7.9 percent, to $127,009. 
I conclude that most farm operator households don't operate farms as their major employment, and that I am more interested in how the relatively small number of commercial farmers are doing when considering the health of American agriculture. Commercial farmers seem to be doing quite well! 

No comments: