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February 20, 2018

Conclusions on America’s Diverse Family Farming Traditions

Don Harden shares the numbers and trends of family farming traditions. 

In my latest column in Central Florida Ag News, I shared the facts and figures found in America’s Diverse Family Farms, 2017 Edition. It’s a publication from the USDA’s Economic Research Service (ERS) examining the family farming traditions we all hold so dear. As I explained in my column, the report seeks to better understand conditions within our diverse farming sector through classifying farms by factors like annual revenue and ownership rather than by U.S. averages. In case you missed it, we’ll discuss the top five takeaways concerning family farming traditions here.

Top Five Conclusions on Family Farming Traditions 

The report defines a “family farm” as one “owned by the principal operator—the person most responsible for running the farm—and individuals related to the principal operator.” This means that a family farm is a farm that is run by those who own it, along with family members. Family farms can consist of generations running the operation or be an extended family operation where other relatives like siblings, aunts and uncles, cousins, and spouses are involved in the operation.

The report looked at family farms of all sizes—from small farms with a gross cash farm income (GCFI) of under $350,000 to very large-scale farms with over $5 million GCFI. Family farming traditions are interesting to explore and continue to play an important role in agriculture.

  1. Farming is still a family affair. According to the report, 98.8 percent of farms were family farms of some kind. All told, family farms generate 90 percent of ag production in the U.S.
  2. Most U.S. farms are categorized as small farms. In total, 89.9 percent of U.S. farms are considered small farms. Those small farms work just over half of the country’s farmland.
  3. Small farms are more likely to be operating with high financial risk. The report found that 50 to 75 percent of all small farms have an operating profit margin (OPM) below 10 percent. Conversely, only 31 to 42 percent of mid-sized and large farms had OPMs under 10 percent. An OPM measures what percentage of a business’s revenue is leftover to finance ongoing operations after paying operating costs. It can be used as a measurement of risk; an OPM of 25 percent or higher is considered to be desirable, and equates to low financial risk. This is important when it comes time to get a loan, as ag lenders are more likely to extend credit to agribusinesses with the least amount of risk.
  4. Farm households in general are not low income when compared with all U.S. households. The research shows 62 percent of farm households had income above the median for all U.S. households, which is $59,039. However, many small farms require off-farm income, such as a job or business outside the farm, to cover farm expenses.
  5. Farms have higher wealth than the average household. Only 3 percent of farm households have wealth below the median for all U.S. households. A large chunk of this wealth is in real estate. According to the report, farm real estate accounts for about 81 percent of the assets of family farms.

Let AgAmerica Lending help you carry on your family farming traditions. Our spectrum of agricultural loan solutions is designed with the long-term health and stability of your operation in mind.  Contact us today to explore how our custom loan packages can help your agribusiness.


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