3. A More Accurate Assessment of Farm Income and Wealth

People who work on and write about farm policy are heavily influenced by the widespread belief, noted above, that farmers face an almost continuous financial crisis. In fact, recent years have, by and large, been lucrative for farmers.

First, it is critical to look at recent farm income data in context. From 2011 to 2013, farmers saw some of their highest total profits since 1929,³⁷ so comparisons of current incomes against this peak can be misleading.³⁸ Viewed more broadly, farmers’ total profits are projected to be at their 24th and 23rd highest ever in 2019 and 2020, far above average.

Second, it is important to look to income figures based on the number of actual farm businesses. Standard USDA annual ranking figures of total incomes understate the incomes of individual farmers, since almost all of the most profitable farm income years were in the 1940s, when there were two to three times as many farms sharing these profits. Using USDA’s figures for the number of farms, as in Figure 1 on the next page, 2019 and 2020 are projected to be the 11th and 9th most profitable years ever. Measured by net income per farm, five of the best ten years happened in the past decade. And in absolute terms, these figures translated to a net median income of $195,000 for commercial farms in 2017. Using the more accurate figure of about one million farms, the net income per farm—of active farms—in recent years would be about double that shown using USDA’s official tally, and the rankings of the years’ profitability would go even higher.

Third, farm policy must reflect an accurate understanding of farm wealth. The median farm household, which includes retirement and lifestyle farms, had a total net worth of $1 million in 2019 according to USDA, about eight times median household wealth, and of that total their non-farm net wealth is about $370,000, which alone is three times median household

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wealth.³⁹ Moreover, “intermediate” farm businesses (gross sales less than $350,000) had a median net worth around $1 million and commercial farms had a median net worth around $2 million.⁴⁰ Farm owners also benefit from land appreciation, which has been positive in every year since 1990 and which has had a greater rate of return than the S&P 500 since the post-war period.⁴¹ As a result of these trends, farm wealth significantly exceeds that of non-farm households in every decile (as seen in Figure 2).

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