As we debate how the farm bill should be
rewritten, it is interesting to see the news stories saying how well our farmers
are doing financially.
Recent stories say farm income is up in North Dakota and Minnesota, but down
slightly in South Dakota.
Several wire service news items discuss a new release from USDA entitled
"Economic Well-Being of Farm Households".
Some stories give the impression that farming pays well. Farm households have
"median wealth" five times that of the national average household, and
in recent years have higher annual income than the United States
"average" household income of $59,000, they say.
That news sounds great until one reads other facts in the report, such as (on
average) 93% of farm households make no positive net income from their farming
operations.
How do these families live? Not from farming. About 90 percent of their income
is from off-farm jobs or investments. That is not new. Since the 1960s, most
farm household income has come from off-farm sources, while farming pays only
about ten to twenty thousand dollars a year. Only the percent is new. It has
risen from 50% in the 1960s.
Farming contributes no income (or causes a loss) for most operations generating
less than $100,000 a year. That group is 85 % of all farm households.
In recent times, farm household income has followed the national trend simply
because farming has very little to do with the farmer’s income level. In the
last few years, large farms pushed the "average" above the average
nonfarm household income level.
The small operations (85% of farms) get only about 20% of commodity payments.
The next size (8% of farms) generating between $100,000 and $250,000 get about
27% of the payments. The next size (4%), generating over $250,000 but less than
$500,000 get 23% of the payments, and the really big operations (3%) get about
30%.
The study also looks at farm wealth. The small farms produce only about 15% of
our food and make very little income, but they have farm equity ranging from a
quarter to half a million dollars. Within the farm income spectrum, there is a
group on one end who may not be helped by government subsidies and a group at
the other end who may not need subsidies. Congress could fix that, maybe. You
never know what will come from a congressional "fix".
Averages can be misleading and only hint at reality. An "average" may
not be accurate for anyone and they vary locally. One could say that South
Dakota farmers are three times better than the national average, because (on
average) only about a third lose money in any given year.
In the meantime, remember this: if you sell $1,000 worth of stuff from your
garden, you are a real USDA-qualified "farmer", even if you never make
a cent of net profit.
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Source: http://www.state.sd.us/doa/secretary/news/Column_155.htm