Small Farms Lead in USDA Statistics

January 7, 2017 02:40 AM
 
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USDA farm definition includes small farms that might not represent commercial farmers

Do you consider your neighbor’s five-acre property with 12 chickens a farm? No? What about your neighbor with two show pigs? No still? If that’s the case, the folks behind the USDA Census of Agriculture disagree.

To them, a farm is “any place that has or normally could have the potential for at least $1,000 in sales from agricultural commodities,” says Jim MacDonald, USDA–Economic Research Services (ERS) chief of structure, technology and productivity. USDA counts even farms with no production, giving “points” to certain assets, such as number of acres, creating what’s statistically considered a “point farm,” he adds.

This is key because USDA–ERS and USDA–National Agricultural Statistics Services (NASS) use these numbers to draw samples of farms for their surveys, which support estimates of prospective planting acres and other reports. MacDonald says this approach results in a comprehensive list of 
producers, from which USDA–NASS draws different subsamples to represent the farm sector accurately and to support implementation of agricultural policy.

USDA counted 2.1 million farms in the 2012 census, more than half of which reported farm commodity sales of less than $10,000, MacDonald says. (See more information below.)

Even when disaster hits, farms defined as having the “potential to make $1,000 in sales” are protected. 

“What the USDA was really trying to do in terms of adding the word ‘potential’ was to protect farmers when weather or other failure hurts their income, says Mike Gunderson, associate director of research and assistant professor, agricultural economics, Purdue University. 

Even without disaster, low commodity prices mean farmers have more potential to lose money, and this definition ensures operating farms are still counted.

“The potential part makes sense; what doesn’t make sense is the arbitrary $1,000 threshold,” Gunderson says. 

When commodity prices were high, as little as one acre could be considered a farm because it could have the potential for $1,000 in sales, he says. That one acre could be part of a traditional farm field, or just a backyard in a large subdivision. 

This definition has been in place since 1974 without updates for inflation, MacDonald says. “I do find many commercial farmers get irritated with the average size of a farm reported so low since the numbers are dominated by tiny farmers.”

Before 2002, when commodity prices started to increase, the $1,000 threshold was rarely argued. With inflation and higher prices, places that wouldn’t have been counted as farms are now included. 

MacDonald says USDA has requirements in place to protect farm bill programs for the farmers who use them. In many cases, farm bill programs are tied to historical production, crop mix and other factors that exclude non-farms or hobby farms.

In addition, USDA–NASS breaks down the large number of farms into sectors by type and scope of production. “The $1,000 definition is in statistical programs but has far less force in commodity and insurance programs [such as what is found in the farm bill],” MacDonald adds. 

Farms are placed into these statistical categories: small family farms, gross cash farm income (GCFI) less than $350,000; midsize family farms, GCFI of $350,000 to $999,999; large-scale family farms, GCFI of $1 million or more; and nonfamily farms.

The number of farms in each state affects money allocated to Extension programs. Each year, Congress sets aside money for Extension research. Some funds come through competitive grants, but others are allocated through a formula that includes the number of farms in each state.

Nationwide allocation likely wouldn’t change, but state versus state allocation would take a hit with a new definition. “Texas and Tennessee are two states that have a large number of small farms,” MacDonald says. More restrictions on farm size could mean fewer Extension dollars for those two states specifically.

Many state Extension leaders are content with the current definition and allocation program because levels don’t change much year-over-year.

Changing the definition of a farm could bring more accuracy but consequences as well. If the threshold were increased to even $5,000 it could leave out many non-farms or hobby farms that don’t represent the commercial farmer.

“Almost 1 million farms would be eliminated,” Gunderson says, cutting the number of reported farms in half.

The U.S. is more inclusive of small farmers than other countries, MacDonald says, and warns increasing the cutoff could lead to less complete coverage of total farm land. “Those with $10,000 or less account for 8% to 10% of land,” he says. “The definition gives us comprehensive coverage of anyone who could conceivably be a farmer.”

This year you will receive the USDA Census of Agriculture; the definition of a farm is unchanged. Be sure to accurately complete your census to help USDA statistics represent the size and scope of your operation.

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