The financial health of farms is commonly assessed by net income, or a farm household’s earnings or losses over the course of a year. According to those metrics, each year just over half of the 2 million farms in the United States don’t make money. But a new report from the USDA’s Economic Research Service uses a wider scope—including asset appreciation, unpaid labor, and tax benefits from farming—to assess the economic state of the country’s farms in 2015, and it finds that some farms have a healthier economic outlook than it would seem.
When land and asset appreciation and tax-loss benefits are taken into account, the share of farms that have positive returns increased from 43 to 70 percent, the report found. Farm and non-farm assets and farm real estate all increased in value, on average, since 2003.
The report found that 82 percent of commercial farms (those with more than $350,000 in gross income) earned money in 2015. But just one-third of residential farms, and under half of intermediate farm households earned money that year. USDA defines residential farms as those with less than $350,000 in annual gross income, where the principal operator is retired or working off the farm. Intermediate farms also have less than $350,000 in annual gross income but the residents are actively farming.
To supplement their incomes, many farm residents work off the farm. On average, intermediate farm households earned about $64,000 from off-farm jobs in 2015, and residential farm households earned $115,000 from off-farm jobs
About 65 percent of total U.S. agricultural production takes place on commercial farms, though they account for just 9 percent of all family farms.