Structure and Finances of U.S. Farms: Family Farm Report ... - AgWeb

into more homogeneous categories based primarily on annual gross sales of thefarm, major occupation of the operator, and family/nonfamily ownership of thefarm. Use of these homogeneous groups in this report enables a clearer pictureto emerge of the status of farms in the United States today. 1Two changes were made to the ERS farm classification since the previousFamily Farm Report was released in 2007. First, the classification nowincorporates the refined ERS definition of “family farm,” which focuses onthe share of the farm business held by farm operators and their families. Therefined definition had a minor effect on the share of farms classified as familyfarms (see box, “What Is a Family Farm?”).1USDA’s National Agricultural StatisticsService also has released a farm classification,published in the 2007 Census ofAgriculture. For more information, see“Appendix I: Comparing the Census andERS Farm Classifications.”Second, limited-resource farms are now analyzed separately from the classification,not as a category in the classification. The USDA-wide definitionof limited-resource farms—based on farm sales and operator householdincome in both the current and previous years—is inconsistent with the restof the classification, which is based on farm sales and the operator’s occupationin the current year. This report provides more detailed informationabout limited-resource farmers by analyzing them separately. The analysisappears as a special feature, “Limited-Resource Farmers—Who Are They?”This is the third issue of the Family Farm Report series to feature a specialtopic. Previous special features were “Multiple-Operator Farms” (Hoppe andBanker, 2006) and the “The Shift to Larger Farms” (Hoppe et al., 2007).What Is a Family Farm?There is no hard-and-fast definition of the “familyfarm.” The ideal definition would allow changes inthe way in which operators structure their farm businessesas they respond to changes in technology, themarketplace, and Government policies but still capturethe general concept of a family farm in which a familymaintains majority control and ownership.The definition of family farm used at the EconomicResearch Service (ERS) has been refined over time. Thecurrent definition—introduced in the 2005 AgriculturalResource Management Survey (ARMS)—includesany farm where the majority of the business is ownedby the operator and individuals related to the operatorby blood or marriage, including relatives who do notreside in the operator’s household. Nonfamily farmsinclude any farm where the operator and relatives donot own a majority of the business. For example, nonfamilyfarms include farms operated by publicly heldcorporations, but also farms equally owned by threeunrelated business partners, as well as farms operatedby a hired manager for a family of absentee owners.Immediately prior to the implementation of the currentdefinition, family farms were defined largely on thebasis of business organization. Family farms includedany farm organized as a sole proprietorship, partnership,or family corporation. Family farms excludedfarms organized as cooperatives or nonfamily corporations,as well as farms operated by a hired manager orheld in estates or trusts. Survey respondents, however,found the terms “family corporation” and “hiredmanager” to be ambiguous. Redesigning the definitionto focus on the ownership of the farm simplifiedthe questionnaire for respondents and made the familyfarm definition more precise.The change in the definition had a minor impact on theshare of farms classified as family farms. In 2007, 98percent of farms in ARMS were classified as familyfarms under the current definition, the same percentagetypically classified as family farms prior to 2005 underthe previous definition.Information in this box is drawn from “Family Farm” inthe ERS briefing room on Farm Household Economicsand Well-Being at: www.ers.usda.gov/briefing/wellbeing/glossary.htm#familyfarm.2Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition / EIB-66Economic Research Service/USDA