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Half of U.S. Farms Generate Less Than $10,000 a Year by Patricia R. McCoy, Idaho Staff Writer Capital Press, November 11, 2005

BOISE - All producers are keenly aware that the agricultural industry is changing. How much, and how dramatically, was evident here Nov. 2 when Northwest Farm Credit Services reported on its 2005 member survey.

Productivity and off-farm employment are growing, said Jay Penick, NWFCS president and chief executive officer.

Half of all U.S. farms are diverse and small, with less than $10,000 in annual income from agriculture, Penick told the United Dairymen of Idaho during their annual meeting.

Only 3 percent of all U.S. farms have annual sales over $500,000. Their crops represent 44 percent of all production, he said.

There's a growing disconnect between rural development and agricultural policy. Farms are more dependent on rural communities than the communities are on them, Penick said. Only about 14 percent of all rural jobs are farm-related today, and production agriculture represents only about 6.5 percent of rural economic activity.

Only 403 of 2,052 rural counties across the nation are classified as farming dependent.

Even so, American agriculture represents great things: soil conservation and environmental stewardship; unparalleled efficiency; the cheapest, safest food supply in the world; a consumer-driven food system; and an export powerhouse.

Farmers and ranchers also enjoy a standard of living similar to that of urbanites, he said.

Most polls suggest the U.S. public is supportive of the classic farm model, as opposed to corporate agriculture. Agriculture remains critically important to the U.S. economy, growing 3.3 percent annually over the past 25 years. Productivity is up by 2 percent a year during the same time period, he said.

U.S. production agriculture is highly interdependent with agribusiness jobs. There are 631,000 jobs in agricultural services today, one for every 3.5 producers. Agricultural inputs provide 305,680 jobs, one for every 7.2 producers. Agricultural processing and marketing creates more than 2.5 million jobs, one for every 0.9 producers. That makes a total of 3.45 million agribusiness jobs, eight for every five farmers; 17.3 million jobs are peripherally related, he said.

Probably fewer than 200,000 farms fit the classic model of a family farm, but only about 1 percent of farms, accounting for 7 percent of all U.S. production, are operated outside the family ownership model, he said. The changing farm business model is focused on efficiency, with off-farm employment.

While operations vary in size, it's common to find diversified non-farm enterprises, value-added ventures and integrated value chains in the mix, Penick said.

The survey also found that 40 percent of all participants have not discussed or developed a formal business plan. Of those who have, the plans are primarily a financial or an estate plan. Only 22 percent are a strategic plan, he said.

Most recipients say they have no set growth objectives. Growth decisions are made on a case-by-case basis. The primary obstacles to growth are the availability of capital, overall profitability, and resource constraints or limitations, Penick said. There were 47 percent of respondents who are growing or expanding, and an equal number staying the same size. Only 6 percent are downsizing.

About a third of those surveyed have not planned or discussed an ownership transfer of their operation. Fewer than half said family or others are prepared to take over in the event of an accident or death.

On Idaho dairies, 81 percent of those surveyed and their spouses are not employed outside the operation. Of the 19 percent with outside employment, 33.4 percent of their household income comes from nondairy sources.