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BA Deere
Honored Advisor

82% of Farm income is "off-farm".

Seems no matter how many people the "rich farmers" feed (166 people by last count) still we can`t feed ourselves WITHOUT off-farm income.  Vilsack says "we need more exports" yeah, give us your thoughts & prayers too while you`re at it.    We can get more exports but ONLY if we are price competitive, or poor crops around the rest of the world.  But then up go seed and fertilizer prices and land rent.  So, it`s a pretzels & beer thing.

https://www.iowaagribusinessradionetwork.com/usda-trying-to-fix-farm-income-balance/  

snip:

A recent CoBank report completed by the University of Missouri shows 82 percent of farm household income now comes from off-farm sources. Most farmers cited reliable income as the top reason for off-farm employment, as one-half of farm households have negative farm income in a typical year. Health and retirement benefits were also cited as keys reasons for off-farm jobs within farm households. Agriculture Secretary Tom Vilsack said it’s something he noticed when he returned to the USDA with the Biden administration.

“When I came back to the department, one of the first things that landed on my desk, ERS puts out a chart of every day,” Vilsack said. “It’s a really amazing little thing that they do, and I may be the first secretary that really actually couldn’t wait to get the chart of the day. So, one of the charts that they gave like in the first week I was there, was a chart that was a little bit distressing because it indicated that 89.6 percent of farms in this country don’t generate the majority of income for the farm family that’s farming. So, that means that those farms, somebody’s working off the farm. And I thought to myself, well, we can’t say that we’ve got a completely successful model, if only ten percent of the folks are able to make a living off what they do and what they love to do. So, our task at USDA is to figure out more new and better markets.”

Vilsack said there are several ways the Department of Agriculture is working to build new markets to change the farm income balance.

 

“So that means, traditionally, we want to expand exports because we understand or appreciate how important exports are, and we are, in fact, doing that,” Vilsack said. “We had a record export year last year and a record export this year. But we can’t just depend on that, we’ve got to have that local regional food system market opportunity. We have to have the organic value-added proposition, competition and capacity for farmer-owned processing capacity. We need to expand renewable fuels and we need to figure out ways to reduce costs for farmers, and so all of that is going on at USDA.”

The University of Missouri report additionally shows only 6.5 percent of workers in rural counties are employed in agriculture, compared to 15.4 percent in 1970.

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16 Replies
lsc76cat
Senior Advisor

Re: 82% of Farm income is "off-farm".

And how much of that is driven by health care costs?

If you're too young for medicare - does husband and/or wife need to work to get coverage for them and kids?

erikjohnson61y
Senior Advisor

Re: 82% of Farm income is "off-farm".

My experience/observation would be that, during at least the first half of a farmer's career, the vast majority of earnings (income) goes into equity in a growing equipment and herd inventory. i.e. his net worth is growing, but he has precious few $$ in the checking account. Once you get to the point where the majority of debt is paid off and you have a stable business, suddenly you are generating more cash than you know what to do with. Unless of course you have kids that want to farm, then you have to figure out how to make one farm support two or more families for a period of time. Cash flow management and appropriate debt levels are as important as agronomy decisions to a successful farming operation.

I did work an off-farm job for the first 12 years of my farming career, and would not have been able to build a positive cash flow farming operation without it.

clayton58
Veteran Advisor

Re: 82% of Farm income is "off-farm".

Couple of tjhoughts/questions.  1) Do govt payments count as farm income, or non farm income?  2) For the 89.6% of farms where the majority of income is non farm, according to Vilsack, what is the average number of hours worked on the farm annually?  3) How many of these "part-time" farmers are that way by choice, or how many are forced into it?  Another note is that many households in thei country have more than one income.  I don't know the stats, but I would guess single earner families are a minority.  I am not really wanting to stir the pot, just stimulate some out of the box thinking.   Feedback???

WCMO
Senior Advisor

Re: 82% of Farm income is "off-farm".

Depends on the definition they're using for a "farm".  USDA definition doesn't really take very many acres, goats or chickens.

USDA defines a farm as any place that produced and sold—or normally would have produced and sold—at least $1,000 of agricultural products during a given year. USDA uses acres of crops and head of livestock to determine if a place with sales less than $1,000 could normally produce and sell at least that amount.

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BA Deere
Honored Advisor

Re: 82% of Farm income is "off-farm".

Hey Clayton, I would think farm payments are farm income, separate from household income, because they are entered on schedule F of the income taxes.    To be a "farmer" I believe if you gross $1000 in sales that makes you a farmer and that surely skews things. 

Some farmers, I would argue the smart ones have a S-corp and keep their farming separate from their living expense, that way maximum revenue goes to grow the farm and if you want to eat, you need a side hustle.

Some big farmers truck for the coop elevators (there must be more money in that that a guy would think) that enables them to extra trucks for the farm and make grocery money.   Some haul mail or drive school bus and of course be a seed dealer.  

I think in the article it tells about the type of off farm income is a surprisingly high percentage from non-agriculture related employment.

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timetippingpt
Honored Advisor

Re: 82% of Farm income is "off-farm".

Just another example of how statistics can be used for any purpose that the user deems important. A better stat that they surely have is what % is off-farm for full-time farm households (full time being 1,200 acres, or a 100 cows I suppose, they could define it when they do the big press announcement, but it takes at least 1200 corn/soy acres to support a full-time person).

This whole concept becomes really a waste of time. What percentage of Uber drivers get income from another job? 90%? It just kind of becomes meaningless number salads. Is burying tile "off-farm" income? It was  a big percentage in a short crop yield year back a few years ago for us...does this mean we can't feed ourselves?

And, just to go another way, how many weeks a year do you actually farm? For some, it is easy under 20, so why should they expect to make a full-time living at it? 

just thoughts

BA Deere
Honored Advisor

Re: 82% of Farm income is "off-farm".

I see points on all sides of the story.  When I took a off farm job, my banker and I were talking and he said "Yeah, I see many farmers that think going to Menards and looking for bargains is part of their job"  and maybe sometimes it isn`t what you make at a job, but keeps you away from spending money you don`t have for things you don`t need 😀

Some grain farmers will argue they do mechanic work, deliver grain to e-plants during the dead of winter, scout crops during the summer layby (are the crops ever truly "layedby" anymore? Gone are days when you cultivated 3rd week in June and didn`t look at them again until October) 

Some will argue their actual physical work might be a fraction of the year, but with the massive amounts of money they handle, that responsibility makes it a full-time job or they are merely independently wealthy "buying themselves a job". 

I felt like I was "born on homeplate" however as farming has changed, it`s as though I was pulled away from my homerun and dragged all the way back to second base 😀   I`ve been working off-farm for 6 years and I will say without that bump in income, I don`t know how we would`ve made it.  Of course during that 6 years we had at times 2 kids at university, the last one being out of the nest in a few short months  😀   But, now I`m addicted to the paycheck and how do I let go of the tiger`s tail?

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k-289
Senior Advisor

Re: 82% of Farm income is "off-farm".

Having  2  cows  -  1  has  twins  =  150 %  stat 

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Hobbyfarmer
Honored Advisor

Re: 82% of Farm income is "off-farm".

BA, why let go as long as it's working for you?

As age creeps into ever more B days the time will come when you will know the answer.

The jobs u and the wife have will be nice at #67 B day for that SS ponsy scheme you've been contributing to.