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

Operator Household Income and Net Worth 5Given their negative operating profit margins and low net farm income, onaverage, how do so many small farms continue to exist? Households operatingsmall farms typically receive substantial off-farm income. In 2007,average off-farm income for small-farm households ranged from just under$50,000 for low- and medium-sales households to $107,700 for householdsoperating residential/lifestyle farms (table 10). Most off-farm income—76percent for all U.S. farm households—is from earned sources, either awage-and-salary job or self-employment. However, households operatingretirement farms receive nearly three-fifths of their off-farm income fromunearned sources (such as Social Security, pensions, dividends, interest, andrent), reflecting the advanced age of operators on those farms.5See “Appendix III: Measuring OperatorHousehold Income and Net Worth,”for more information on how operatorhousehold income and net worth aremeasured and defined.Participation in off-farm work varies by farm type. At one extreme, neitherthe operator nor spouse worked off-farm on 66 percent of retirement farms.At the other extreme, both the operator and spouse worked off-farm on 57percent of residential/lifestyle farms. In the remaining farm types, someone—the operator and/or the spouse—worked off-farm in 43 to 59 percent of farmhouseholds.Level of Operator Household IncomeAverage operator household income for all farm households was $88,900in 2007, about 9 percent higher than in 2006. The 2007 estimate also wasabout 32 percent higher than the average for all U.S households in 2007, asmeasured by the Current Population Survey.Mean income, however, may not be the best income measure to use forsuch comparisons because a few very high-income households can raise themean well above the income received by most households. Median incomefor farm households as a group is similar to that for all U.S. households (fig.10). Median farm-operator household income in 2007 was $54,000, only8 percent higher than the $50,200 median for all U.S. households. Farmoperator households in general cannot be considered low income. Only twotypes of farm households—those operating retirement or low-sales farms—received median household income below the U.S. median.Operator Household Net WorthThe income that farm operator households receive from farming does notreflect the large net worth of many farm households. For example, for householdson farms with gross sales of at least $100,000, average net worth in2007 ranged from $1.3 million for medium-sales farms to $2.5 million forvery large family farms (table 10).Unlike household income, most of which comes from off-farm sources,net worth from the farm makes up most of the wealth of farm households,regardless of farm type. The farm—on average—accounts for 76 percent30Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition / EIB-66Economic Research Service/USDA