E-mail: nass-ny@nass.usda.gov
(518) 457-5570

Released: September 2001

Results from the Agricultural Resource Management Study survey conducted by the National Agricultural Statistics Service show that more than 60 percent of U.S. farms ended 1998 with a profit. For the most part, large and very large family farms were viable economic businesses. As a group, they tended to have economic cost/output ratios less than one, meaning they generated farm profits that could be used to retire debt, expand farm or nonfarm businesses, or support family living expenditures. In addition to being profitable, large and very large family farms produced 53 percent of the value of agricultural production in 1998.

Small farms were less viable businesses. Most small farm typology groups did not report adequate income to cover expenses in 1998. They subsidized the costs of their farming activities with income from off-farm sources. Like their nonfarm counterparts, a large share of farm households are dual career. In addition to working on their farms, the operator, the spouse, or both may have worked off the farm. Off-farm work is not entirely a recent development, since one-fourth to one-third of farm operators worked off-farm in the 1930's and 1940's.

Although small family farms are often unprofitable, they still are important to U.S. agriculture. They accounted for only 33 percent of the value of total agricultural production in 1998, but they produced larger shares of particular commodities: 62 percent for hay, 54 percent for tobacco, 49 percent for soybeans, 47 percent for wheat, 47 percent for corn, and 40 percent for beef.

Because of their sheer numbers (91 percent of all farms) small farms also accounted for a large share of assets owned by farms (69 percent) including land (68 percent). As custodians and managers of the bulk of farm assets, small farms play a major role in natural resource and environmental policy. Retirement farms alone accounted for 29 percent of the land in the Conservation Reserve Program (CRP) in 1998.

In 1998, 36 percent of U.S. farms reported receiving government payments of some type from participation in commodity, conservation, or other environmental programs (see table). Government payments amounted to 5 percent of gross cash income from farming for all farms. For farms that reported receiving government payments, payments were twice as important, 9 percent of total cash income. Farms vary in the commodities they produce, in ownership structure, in size of operation, and in decisions regarding land use for production or conservation. Each of these characteristics affects how government payments are distributed among farms. They also affect how important government payments are to farms, as reflected in the contribution of payments to farm income.

Larger farms received a disproportionate share of payments relative to their numbers, with the largest 8 percent of farms (sales of $250,000 or more), receiving 47 percent of all Government farm payments. These larger farms, accounted for 15 percent of farms that reported receipt of a Government program payment, indicating that they participated at a higher rate than farms in the lower sales classes.

In addition, the 19 percent of U.S. farms that specialized in cash grains (defined to include oilseeds) received nearly two-thirds of all Government program payments in 1998. Cash grain farms participated at a very high rate relative to all farms, second only to cotton farms, and accounted for 42 percent of all farms that reported receipt of payments.