Family farms pie chart

Editor’s note: The following was compiled by Keith Good, University of Illinois Farmdoc Project manager, based on a USDA Economic Research Service report from December 2018.

The USDA Economic Research Service recently released its annual brochure exploring characteristics of America’s farms.

In “America’s Diverse Family Farms: 2018,” ERS economists Christopher Burns and James M. MacDonald noted 89 percent of farms are small, and these farms accounted for 52 percent of the land operated by farms in 2017. Large-scale family farms accounted for the largest share of production, at 39 percent.

Family farms of various types together accounted for 98 percent of farms and 87 percent of production in 2017. Nonfamily farms accounted for the remaining farms (2 percent) and production (13 percent).

More narrowly with respect to commodity production, the ERS update indicated that:

Large-scale family farms accounted for over two-thirds of dairy production and over half of high-value crops like fruits and vegetables.

Midsize and large-scale family farms both accounted for more than one-third of total cash grain/soybean production (for a combined total of 72 percent).

Burn and MacDonald also pointed out that, “In 2017, net farm income for the sector declined almost 40 percent from its peak in 2013, though it was only slightly below its 10-year average. Midsize, large and very large farms had substantial declines in the share of farms with an operating profit margin (OPM) in the green zone between 2013 and 2017. Lower commodity prices worsened the OPM of many midsize, large and very large farms, especially those that produced field crops (e.g., corn, soybeans, wheat) or dairy.”

With respect to how farms are legally organized, the ERS update stated the vast majority of family farms (89 percent) are operated as sole proprietorships owned by a single individual or family.

While addressing government payments and crop insurance, Burn and MacDonald indicated, “Seventy-five percent of these payments went to moderate-sales, midsize and large family farms in 2017, which historically have produced the largest share of program crops; in 2017, they accounted for 79 percent of acres in program crops. Commodity program payments are limited to $125,000 annually per person or legal entity.”

Likewise, “Midsize and large family farms together received 68 percent of indemnities while accounting for 59 percent of harvested cropland in 2017.”

Farm payments

In summary, the ERS update reminded readers that, “Farming is still overwhelmingly a family business. Ninety-eight percent of U.S. farms are family farms, and they account for 87 percent of farm production.”