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WEEKLY NEWS FROM THE SECRETARY, 4/24/06
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 farmerís 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.
The only way to guarantee failure is to not try.
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