contents

• Multiple well-being measures
• Farm household income
• 2003 farm income estimates Released 08/25/04
• Farm sector income forecast To be updated 11/09/04
• Farm business income
• Assets, debt and wealth
• Farm household well-being
• Commodity costs and returns

features
Assessing Farm Household Well-being-Beyond Farmers and Farm Income—The median farm household has higher income as well as higher wealth than the median nonfarm household. However, the median nonfarm self-employed household has a higher level of income than the median farm household, and a roughly-similar level of wealth. Because farm policies are often justified as correcting for differences in relative well-being, these findings indicate that the ranking of the well-being of farm households relative to nonfarm households depends not only on which well-being indicator is used but also which reference population is used.

Production Costs Critical to Farming Decisions—Weather, breeding cycles, world stocks, and consumption swings can all make for uncertain farm income, but farmers make a host of production decisions that can affect costs and predispose them to weathering out rough patches. Analysts can evaluate such decisions to identify perennially high-cost and low-cost producers and thereby anticipate industry trends. Based on information from the annual Agricultural Resource Management Survey (ARMS), this article examines the extent to which U.S. producers are covering costs and why costs vary among farms.

Income, Wealth and the Economic Well-Being of Farm Households—This report examines factors that affect the economic well-being of farm operator households based on USDA's ARMS survey data. The analysis uses a new concept of economic well-being that captures farm household wealth and expenditures in addition to more conventional income measures. The report examines whether farm households are inherently disadvantaged and whether they have lower incomes, lower wealth, and lower household expenditures than nonfarm households. AER-812 (7/02)

Agricultural Income and Finance Situation and Outlook—This periodical provides historical estimates and forecasts of farm sector financial information that gauge the financial health of the Nation's farmers and ranchers. Common topics include trends in farm sector receipts, expenses, debt, assets, and costs of producing crops and livestock. Each issue concentrates on a particular area of the farm financial picture.

Farm Payments: Decoupled Payments Increase Households' Well-Being, Not Production—Traditionally, subsidies in the U.S. and elsewhere have linked payments to current prices and production. Such subsidies distort, or alter, the signals sent by market prices. In 1996, the U.S. revamped its farm support and introduced a farm payment that breaks the links between the amounts paid to farmers, their level of production, and market prices. There is little evidence that these decoupled payments distort production. Their primary consequence has been an improvement in the overall well-being of recipient households that own base acres, where well-being is defined broadly to encompass income, wealth, and consumption, as well as how people choose to spend their time. Amber Waves (2/03).

Characteristics and Production Costs—This series of reports examines how production costs vary among producers of different commodities, including details and production practices and input use levels (i.e., the technology set), farm operator and structural characteristics. The reports also illustrate the degree to which costs vary for producers of different commodities and indicate possible reasons for the variation. Characteristics and production costs are examined for low- and high-cost producers of each commodity, and producers of varying size, region, and typology classification.

• Characteristics and Production Costs of U.S. Corn Farms (9/01).
• Characteristics and Production Costs of U.S. Cotton Farms (10/01).
• Characteristics and Production Costs of U.S. Cow-Calf Operations (11/01).
• Characteristics and Production Costs of U.S. Soybean Farms (4/02).
• Characteristics and Production Costs of U.S. Wheat Farms (7/02).
• Characteristics and Production Costs of U.S. Dairy Operations (2/04).
• Characteristics and Production Costs of U.S. Rice Farms (03/04).

See all recommended readings...

recommended data products
Farm Income provides farm income forecasts, updated regularly, and farm income estimates, released once a year. Forecasts are developed using an economic accounting model that generates forecasts of value-added and farm income, plus component accounts of cash receipts and production expenditures, for the national farm sector. Estimates are derived from survey data gathered by USDA's National Agricultural Statistics Service and other national institutions over the course of the year.

Farm Balance Sheet accounts include assets, debt, and equity, where equity equals assets minus debt, and are used to assess wealth in the farm sector. Both operators' and landlords' shares of the assets and debt for the farming operation are included. The financial ratios presented provide useful indicators of the farm sector's financial performance.

Commodity Costs and Returns have been estimated for major field crop and livestock enterprises each year since 1975. Cost and return estimates are reported for the United States and major production regions for corn, soybeans, wheat, cotton, grain sorghum, rice, peanuts, oats, barley, sugar beets, tobacco, milk, hogs, and cow-calf. These cost and return accounts are "historical" accounts based on the actual costs incurred by producers during each year.

Farm Financial Management Data—Updates ARMS data previously available on farm business financial management and the ERS farm typology to 2001. Standard financial statements (income statement, balance sheet) and financial ratios are summarized for various classifications of farms such as farm type, economic class, region, and operator age. The typology tables include standard financial statements as well as structural characteristics for all farms in both a three-category typology (rural residence, intermediate, and commercial farms) and the full eight-category typology. In addition, selected financial information is provided for farm operator households and family farms.

recent research developments
Ongoing and planned research is organized in four projects:

• Measuring value added at the farm level
• Costs of producing major field crops, livestock, and dairy
• Analyzing financial forecast methods
• Regionalization in agriculture

Farm Savings Accounts Workshop—ERS held a 1-day workshop on farm savings accounts and their potential to assist farmers in managing their variability in farm income at the ERS headquarters on June 2, 2003. The workshop provided an opportunity to learn about the experiences of other countries that already utilize such accounts and to interact with those currently conducting research on the potential role in the U.S. of farm savings accounts as part of the farm safety net. The workshop was cosponsored with the Risk Management Agency and the Farm Foundation. Download summaries of the sessions.

related briefing rooms
Farm financial management
Farm risk management
Farm structure
Farm and commodity policy
Agricultural Resource Management Survey (ARMS)

related links
Farm Service Agency
AAEA Task Force on Commodity Costs and Returns

glossary
Check the glossary for explanations of the economic concepts used throughout farm income and costs.

for more information, contact: Roger Strickland, or William McBride.
web administration: webadmin@ers.usda.gov
page updated: August 17, 2004