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Kent Thiesse

Ask ten people to describe a family farm and you will probably get ten different definitions. Some will likely be similar to each other and some will be totally different.

How a “family farm” is defined probably is a big guide toward people’s attitudes about today’s U.S. agriculture industry. In December of 2020, The U.S. Department of Agriculture’s Economic Research Service issued a report titled “America’s Diverse Family Farms,” which was based on U.S. farm data from 2019 and offered some definitions of different types of farms.

The USDA ERS definition for a family farm is the following: “Any farm where the majority of the business is owned by the principal operator and individuals related to the principal operator, who are the persons most responsible for making the day-to-day decisions on the farm.”

USDA defines a farm as any place where at least $1,000 of agricultural products are produced and sold in a given year, or are normally produced during a year. The ERS measures farm size by the “gross cash farm income (GCFI), which includes sales of crops and livestock, government payments, and other farm-related income.

Based on the 2020 ERS report, there were just over 2 million farms in the United States, with just under 90 percent of the farms being categorized as “small family farms.”

Following is a breakdown of the criteria that ERS used to categorize U.S. farms, along with the number and percentage of farms in each category:

Small family farms (less than $350,000 GCFI)

Retirement farms — Small farms whose principal operator is retired, but they continue to operate a farm on a small scale. There were 215,959 farms or 10.7 percent of the total farms in this category. 

Off-farm occupation farms — Small farms whose principal operator reports a primary occupation other than farming. There were 833,450 farms or 41.4 percent of the total farms in this category.

Farming occupation farms — Small farms whose principal operators report farming as their primary occupation. There are two sales classes listed under this category: Low sales (farms with a GCFI of less than $150,000); and moderate sales (farms with a GCFI of between $150,000 and $349,999). There were 653,716 farms, or 32.4 percent of the total farms, in the low sales category. There were 103,058 farms or 5.1 percent of the total farms classified in the moderate sales category.

Midsize family farms (GCFI between $350,00 and $999,999)

There were 107,316 family farms or 5.3 percent of the total farms in this category.

Large-scale family farms (GCFI of $1 million or more)

Large farms — Family farms with a GCFI of between $1,000,000 and $4,999,999. There were 48,339 farms or 2.41 percent of the total farms in this category.

Very large farms — Family farms with an annual GCFI of $5,000,000 or more. There were 5,780 farms or 0.3 percent of the total farms in this category.

Non-family farms

This category describes any farm where the principal farm operators do not own a majority of the farm business. (Many times, these types of farms are referred to as “corporate farms.”) There were 47,451 farms or 2.4 percent of the total farms in this category.

As was pointed out earlier, 89.6 percent of U.S. farms (as defined by USDA) were categorized as small family farms, 5.3 percent were midsize family farms, 2.7 percent were large-scale family farms, and 2.4 percent were non-family farms. Based on the 2019 ERS data, following is a review of some other characteristics of these various categories of U.S. farms and other farm operator demographics:

Percentage of land operated 48.8 percent of farm land was operated by small family farms, 22.6 percent of land was operated by midsize family farms, 20.7 percent operated by large-scale family farms, and 7.9 percent by non-family farms.

Percentage of the value of farm production Large-scale family farms accounted for 43.8 percent of the value of U.S. farm production in 2019, which was followed by small family farms at 21.5 percent, midsize family farms at 21.1 percent, and non-family farms at 13.6 percent.

Large-scale family farms accounted for over two-thirds of U.S. dairy production, 61 percent of U.S. cotton production, and 54 percent of the production of high value crops — which includes fruits, vegetables, nuts and nursey crops. This category of farm operators also accounted for 39 percent of U.S. cash grain production, 44 percent of hog production, and nearly 43 percent of beef production.

Small family farmsaccounted for over 45 percent of poultry and egg production and hay production. However, this category of farms accounted only 21 percent of cash grain production, 26 percent of beef production, 23 percent of hog production, and less than 9 percent of dairy production.

Midsize family farmsaccounted for approximately one-third of cash grain production and nearly 39 percent of poultry and egg production. However, this category of farms accounted for less than 17 percent of beef, hog, and dairy production.

Non-family farmsaccounted for over 30 percent of the production of high value crops, as well as just under 17 percent of beef production and just under 16 percent of hog production. However, this category of farms accounted only 7 percent of cash grain production, 8 percent of cotton production, and less than 9 percent of dairy production.

Operating Profit Margin (OPM)

Nearly three-fourths of all farms had an OPM of less than 10 percent, which USDA considers “high risk.” Small family farms ranged from 62 to 81 percent in the “high risk” category, depending on the farm type (described earlier). Interestingly, nearly 70 percent of non-family farms were also in the “high risk” category, compared to 47 percent for midsize family farms and less than 38 percent for large-scale family farms. Nearly 40 percent of large family farms and over 31 percent of midsize family farms had an OPM above 25 percent in 2019, compared to only14 percent of all farms and just over 20 percent of non-family farms.

Government payments

81 percent of USDA commodity farm programs in 2019 went to large-scale farms, midsize farms and small farms with moderate sales, which is exactly the same as the percentage of crop land operated by these three categories of farms. These groups also received a large majority of the USDA conservation payments on working lands (CSP, EQIP, etc.).

By contrast, 80 percent of Conservation Reserve Program payments, which are paid to farm owners to take crop land out of production, went to retirement farms, low-sales farms, and farm owners with off-farm occupations. Approximately 69 percent of farms received no government payments in 2019.

Women in agriculture

Women played a key role in over half of U.S. farm operations in 2019. A higher percentage of women were either the principal operator or a co-operator of livestock and dairy operations, as well as high value crop farms other than general cash grain operations.

Farms operated by minority groups

There were 112,451 Spanish, Hispanic and Latino farm operators in 2019, which is up by 13 percent since 2012, as well as 45,508 African American farm operators, which increased by 2 percent since 2012.

Even though farms have increased in size, and the structures of many farm business have changed and evolved over the past few decades, approximately 98 percent of U.S. farms are still categorized as “family farms.” The family farm still accounts for over 86 percent of U.S, farm production. The family farm comes in many shapes, sizes and types — including increasing diversity of farm operators, which helps explain some of the confusion over understanding the definition of a family farm.

Kent Thiesse is a government farm programs analyst and a vice president at MinnStar Bank in Lake Crystal, Minn. He may be reached at (507) 726-2137 or kent.thiesse@minnstarbank.com.

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