Food prices are going up, but family farmers in the U.S. are worse off
Since late 2006, crop prices have risen dramatically, reversing a decades-long trend that saw persistent declines in agricultural commodities prices. U.S. Department of Agriculture officials talk about boom times for U.S. farmers, citing their most recent figures on the economic performance of the farm sector. Recent reports point to records in net farm income.
But are small-to-mid-scale family farmers really benefiting from the boom? No, according to the latest of three studies by Timothy A. Wise, Director of the Research and Policy Program at Tufts University’s Global Development And Environment Institute. Wise has looked behind the glowing headlines on the farm sector as a whole to examine how family farmers have fared in this high-price environment.
Using readily available USDA data that breaks down the widely diverse range of working and non-working farms included in aggregate statistics, Wise shows, in Still Waiting for the Farm Boom: Family Farmers Worse Off Despite High Crop Prices, that small-to-mid-scale family farmers – those with gross sales between $100,000 and $250,000 per year farming an average of about 1,100 acres – have seen a decline in net farm income with high prices.
Expenses have risen to gobble up higher sales revenues, and government payments have declined because some are triggered by lower prices. With the recession, off-farm income has declined dramatically, leaving family farm households worse off than they were earlier when crop prices were low. He finds that for 2009 (the most recent year of data available), for these family farmers:
- Household incomes were 28% below 2007 levels and 21% lower than the average for 2000-6, when crop prices were considerably lower.
- Average earnings from farming were just $19,274, including government payments.
- Off-farm income continued to sustain the family, providing on average about $35,000, but this represented a decline of 24% from 2007.
- Net cash farm income was down 18% from the lower price years 2000-6. Farm sales were up 10%, but expenses increased 8%. An $8,000 decline in government payments put these family farm businesses below their net incomes from the earlier period.
- The largest farms, those with sales over $500,000 per year, accounted for 73% of the net cash income for the U.S. farm sector as a whole. That figure rises to 88% if one includes the relatively small group of “non-family” farms, those that are incorporated or operate as other types of business. These are the clear winners from high crop prices.
Download Still Waiting for the Farm Boom: Family Farmers Worse Off Despite High Crop Prices, by Timothy A. Wise, GDAE Policy Brief 11-01, March 2011.