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

Under the fourth definition, the income of the household operating a limitedresourcefarm must be less than the median for all U.S. households in a givenyear, and its net worth must be less than the median for all U.S. households.This “low-income, low-wealth” group is one category of the joint income/wealth indictor developed by ERS (Mishra et al., 2002, pp. 39-44). 8Counts and ConstraintsThe count of limited-resource farms is sensitive to the constraints on farmassets or household net worth. The count is lowest—65,800 and 82,500farms, respectively—under the modified original definition and the lowincome,low-wealth definitions (table 12). These definitions each classify 3 or4 percent of U.S. farms as limited-resource. The modified original definitionhas the most restrictive constraint on farm assets ($150,000), and the lowincome,low-wealth definition constrains net worth at $120,300.The updated original definition has a higher farm asset constraint ($366,800)than the modified original definition, which increases the number of limitedresourcefarms to 143,000 (7 percent of all farms). Finally, 255,000 farms(12 percent of all farms) were classified as limited-resource under the currentUSDA-wide definition, which has neither an asset nor a net worth constraint.The variation in the assets or net worth constraints is also reflected in therelatively large range in median farm assets and median household net worthamong the four definitions.8The 2007 Census of Agriculture alsoestimated the number of limited-resourcefarms. It defined limited-resource farmsas those selling less than $100,000 ofagricultural products run by a primaryoperator household receiving less than$20,000 in total income (USDA, NASS,2009, p. B-9). The census definition isnot examined here because it has noconstraints on assets, net worth, theprevious year’s sales, or the previousyear’s household income. For additionalinformation on limited-resource farmsfrom the 2007 Census of Agriculture, see“Appendix I: Comparing the Census andERS Farm Classifications.”SimilaritiesSome farm, operator, and household characteristics are common amonglimited-resource farms, regardless of the definition used. All four definitionshave a household income constraint, which means that median income is lowunder each definition and falls within a fairly narrow range—between $9,300and $22,000. The majority of households operating limited-resource farmshave a positive household income but experience losses from farming. Thisis also true, however, for “other farm households,” those not classified aslimited-resource under any definition.Limited-resource farms are very small. Median acres operated range from26 to 75 acres under the four definitions, compared with 97 acres for otherfarms. Median annual sales are also small, in the $1,300 to $3,600 range,compared with $6,800 for other farms.A few limited-resource farms generate sales of $100,000 or more, however,and are classified as medium-sales or large-scale farms. This includes 3percent of limited-resource farms under the low-income-low wealth definition(which has no sales constraint) as well as 3 percent under the updatedoriginal definition (which constrains sales at less than $250,000). The currentdefinition originally constrained farm sales at $100,000 in 2003, but theconstraint is indexed for price changes and crept up to $115,600 by 2007. Asa result, a small share of limited-resource farms under the current definition(less than 1 percent) has sales of $100,000 or more.Demographically, limited-resource farmers are much like other farmers.Regardless of the definition used, limited-resource farmers—like farmers in42Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition / EIB-66Economic Research Service/USDA