Economic Well-Being of Farm Households
Carol A. Jones, Hisham El-Osta, and Robert Green
Farm subsidy programs in the 1930s were largely prompted by concern for the chronically low, and
highly variable, incomes of U.S. farm households. Seventy years later, commodity-based support
programs are still prominent, even though the income and wealth of the average farm household
now exceed those of the average nonfarm household—wealth by a large margin.
Farm households continue to face variability in income due to weather and natural disasters.
Household income is most variable for the small segment that operates commercial farms (above
$250,000 in annual sales). Relative to small farms, these farms achieve greater economies of scale,
generate higher profit margins, and their households realize a larger share of their income from
farming. However, the substantial net worth of these households acts as a cushion against uncer-
tain farm income, much as off-farm income does for households operating smaller farms.
In a variable-income/high-wealth sector such as farming, economic well-being measures based on
both income and wealth can provide a better signal of household capacity to support a consistent
living standard than income measures alone. In 2003, 5 percent of farm households had both income
and wealth below the respective U.S. household medians, and those households, on average, spent
more on basic consumption than they earned in income. Households with low income and low
wealth are less likely to receive farm payments, excluding conservation programs; by contrast, only
3 percent of households receiving payments had income and wealth below the U.S. household
medians for each.
ECONOMIC BRIEF
Economic Well-Being of Farm Households
UNITED STATES DEPARTMENT OF AGRICULTURE
2
Increasing Farm Household Participation in Off-Farm Employment
and Investment is Key to Well-Being
The average income of farm households increased from half of nonfarm household income (per capita)
in the 1930s to relative parity by the 1970s. In ev