Farm Definition; What’s it Mean and Why is it Important?

Michael DuffyIowa State University

AAEA Annual MeetingsOrlando, FL

2008

Farm Definition

• For Census of Agriculture;“a farm is any place from which

$1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the census year.”

• This definition was first used for the 1974 Census

2002 Census

• The 2002 Census continued this definition but there was expanded coverage

• The goal of the expanded coverage was to capture the underreported farms, especially small farms.

• NASS was very successful in meeting their goal

Percent Change in 1997 Estimates by Sales Class

0%

10%

20%

30%

40%

50%

60%

>$1,

000

$1 to

$2,

499

$25t

o $4

,999

$5 to

$9,

999

10 to

$20

,000

20 to

$25

,000

25 to

$39

,999

40 to

$49

,999

50 to

$99

,999

100

to $

249,

999

250

to $

499,

999

500

to $

999,

999

> $1

M

Background

Percent US Farms and Sales by Sales Class 2002

0%

10%

20%

30%

40%

50%

>$1K

1 to

$2,

499

$2.5

to $

4,99

9

$5 to

$9,

999

10 to

$19

,999

20 to

$24

,999

25 to

$39

,999

40 to

$ 4

9,99

9

50 to

$99

,999

100

to $

249,

999

250

to $

499,

999

500

to $

999,

999

> $1M

Farms Sales

Percent Change in US Farms and Sales by Sales Class, 1997 to 2002

-20%

-10%

0%

10%

20%

30%

40%

>$1K

1 to

$2,

499

$2.5

to $

4,99

9

$5 to

$9,

999

10 to

$19

,999

20 to

$24

,999

25 to

$39

,999

49 to

$ 4

9,99

9

50 to

$99

,999

100

to $

249,

999

250

to $

499,

999

500

to $

999,

999

> $1M

Farms Sales

The Smallest Farms

Percent of Operators in Each Age Group

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Under 25 25-34 35-44 45-49 50-54 55-59 60-64 65-69 Over 70

All Farms >$1,000

Years Operator has been on Current Farm

0%

10%

20%

30%

40%

50%

60%

70%

80%

2 years or less 3 or 4 years 5 to 9 years 10 years or more

All Farms Under $1000

Farms in Programs or Receiving Payments for All Farms and those with Sales Under $1000

0%

10%

20%

30%

40%

50%

60%

Government Payments CRP WRP Federal or Crop Insurance Programs

All Farms >$1K

Percent of Operators Working Off Farm

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

None 1 to 49 days 50 to 99 days 100 to 199 days 200 days or more

All Farms >$1,000

Gender of Principal Operator

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Male Female

All Farms Under $1000

Tenure of All Farms and those Under $1000 in Sales

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Full owners Part owners Tenants

All Farms Under $1000

Percent of Operators in Sales Class by Primary Occupation

0%

10%

20%

30%

40%

50%

60%

70%

Farming Other

All Farms <$1000

Percent of Operators total Household Income from Farming

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

<25% 25-49% 50-74% 75-99% 100%

All Farms <$1000

Operators Under $1,000 as a Percent of Total Operators, 2002

0%

5%

10%

15%

20%

25%

30%

35%

Male Female

Changes in Female Farm Operators as a Percent of Total Operators

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1992 1997 2002

% Female $1K as % of Females

Percent of Farms with Sales Under $1000 in the State

W Y

W V

W I

W A

VT

VA

U T

TX

TN

SD

SC

R I

PA

O R

O K

O H

N Y

N V

N M

N J

N H

N E

N D

N C

M T

M S

M O

M N

M I

M E

M D

M A

LA

KYKS

INIL

ID

IA

H I

G A

FL

D E

C T

C OC A

AZAR

AL

AK

21.9%

37.6%

31.3%

29.0%

25.9%

24.0%

36.8%

28.2%

28.4%

18.2%

43.8%

24.1%

30.4%

27.6%

24.1%

24.3%

26.4%

25.4%

36.4%

29.5%

37.2%

16.2%

28.2%

25.1%

28.6%

39.0%

22.1%

29.4%

32.7%

37.0%

29.8%

28.4%

29.0%

21.3%25.6%

25.7%22.7%

33.4%

21.7%

12.2%

34.7%

27.3%

13.6%

31.3%

30.1%20.8%

34.8%20.5%

29.5%

20.9%

12% - 24%

24% - 30%

30% - 35%

35% - 44%

So Why Worry?

• “The census of agriculture is the leading source of facts and statistics about the Nation’s agriculture”

• The data is used by a variety of sources and for a variety of purposes, including:– “…formulate farm and rural policies..”– “Allocate local and national funds for

farm programs…”

So Why Worry?• It causes misinformation to be

disseminated regarding the sector, the information is there but people won’t take the time to verify ‘facts’

• It masks the changes that are occurring, such as consolidation and it provides an erroneous message with respect to the entry of women and minorities in ag.

So Why Worry?• Current method provides a distorted view

of the production ag. sector.– Over past decade net farm income was 20% of

gross farm income. If averages hold and using

gross for sales this would mean the small class had less than $200 in net farm income

- In 2002 only 47% of the farms with sales less than $1,000 said they intended to do so. 39% did not and 15% didn’t answer.

- With point farms, the total number of farms decreased 3%, without them there was a 13% decrease

Solutions

• Dual census• Increase the cutoff based on

inflation since 1974• Change approach entirely• Leave it as it is