A Skeptical Look at the 2007 USDA Census of Agriculture

The Global Development and Environment Institute (GDAE) at Tufts University recently published a policy brief titled, "Boom for Whom? Family Farmers Saw Lower On-Farm Income Despite High Prices" (link to PDF). I am thrilled to have this paper to refer to when I need to explain why we need to continue to advocate for fair policies and prices for our farmers.

Here's the problem: If you read the recent headlines about the 2007 USDA Census of Agriculture, you hear that farmers raked in the cash over the past couple years with record profits. Here's the reality: That's an oversimplification that completely distorts the truth. The truth, according to the GDAE and the farmers we've been taking to, is that "midsized family farmers actually saw lower incomes from farming operations in 2007 than they did in 2003 (the date of the last USDA agricultural census), with high costs and reduced government support outpacing the rise in income from farm sales."

How can the USDA report be so far off, with claims that the average farm household income was $86,864 in 2008, 27% higher than the average for all American households? Because the USDA takes into account a category of "farms" called rural residence farms. These rural residences are not farms in the sense that they don't make their living from farming; they're retirees and hobby farmers who rely mostly on off-farm income, which is counted in the census numbers as farm income. So, for instance, say you've got a CEO who makes $25 million a year and who happens to live on a ranch and run some cattle. That $25 million earned off the farm is counted in the farm income survey. Distorting, isn't it? And these rural residence farms account for a full 2/3 of the "farms" surveyed by the USDA. Of course, these "farmers" are not all millionaires, but you can see how their off-farm income distorts the numbers.

If you take out those rural residence farms and leave in the folks who are most likely to be family farmers, you get a slightly more accurate picture. The USDA says these family farmers increased their average household income by 23%. But again that number is distorted, because it still includes off-farm income. And, according to the GDAE report, the entire 23% increase can be attributed to off-farm, not on-farm, income.

With record high crop prices, why didn't farmers increase their on-farm income? Because the prices for fertilizer, feed and fuel were high too, so any increased income farmers might have seen for their crops was absorbed by their higher cost of production.

The moral of the story? You can't just read headlines, you've got to read the small print and, in this case, really dive into the numbers and methodology. While the USDA and newspapers across the country tell us that farmers raked in the profits last year, Farm Aid received a record number of calls on our hotline during 2008. Looking forward to 2009, those record high crop prices have fallen while the cost of feed and fertilizer remain very high, and to further compound the situation in our current economic crisis farmers are finding it hard to get the credit they need to put this year's crop in the ground. Unfortunately we expect to have another record year on our hotline here at Farm Aid. And this is why, despite what the newspapers say, it is so important to support our farmers with our vote and our fork.

To read the complete GDAE report in PDF format, click here. To examine the full USDA agricultural Census, click here.

P.S. And on another note, in addition to good food, thriving local economies, community and environmental stewardship, this is why we need our family farmers: ingenuity in helping us solve problems. Read this great piece in The New York Times about how two farmers found a brilliant use for cow manure!