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United States Department of Agriculture

A report summary from the Economic Research Service April 2013

Find the full report at 

www.ers.usda.gov/

publications/eib-economic-informationbulletin/eib-110.aspx

What Is the Issue?

The USDA’s Economic Research Service (ERS) originally developed a farm typology that sorted 

farms into seven homogenous groups for reporting and research purposes. Over the years, it has 

been used extensively in ERS publications and USDA analyses to help clarify the distributional 

impacts of policy, market, and technological developments. 

Nearly 15 years have passed since ERS first released its farm typology. In this report, we update it for 

two recent trends: commodity price inflation and a shift in production to farms with sales of $1 million 

or more. The original farm typology based its groups (in part) on the level of gross farm sales. Since 

then, inflation in commodity prices—for farm products as well as for farm inputs like feed, fuels, and 

fertilizers—has increased sales and expenses for farms even when they have had no change in production, shifting some farms into different typology groups solely because of price increases. Adjusting 

sales for price changes corrects for these shifts. 

Meanwhile, shifts of production to million-dollar farms increase the need for information about 

farms at the upper end of the sales spectrum. We also introduce a technical change in the measurement of farm business size, shifting from gross farm sales to gross cash farm income (GCFI), a 

better measure of farm revenue given the prevalence of production contracts in livestock production. 

Comparing the original and revised typologies

Farm type

Operator’s primary 

occupation1 Original typology Revised typology

Farm size measured 

by gross farm sales

Farm size measured 

by GCFI

Small family farms2 Varies Less than $250,000 Less than $350,000

 Retirement farms Retired Less than $250,000 Less than $350,000

 Off-farm occupation farms3 Nonfarm Less than $250,000 Less than $350,000

 Farm occupation farms:

 Low-sales Farming Less than $100,000 Less than $150,000

 Moderate-sales4 Farming $100,000- $249,999 $150,000-$349,999

Midsize family farms2 Not a criterion Category not used $350,000-$999,999

Large-scale family farms2 Not a criterion $250,000 or more $1,000,000 or more

 Large farms Not a criterion $250,000- $500,000 $1,000,000-$4,999,999

 Very large farms Not a criterion $500,000 or more $5,000,000 or more

Nonfamily farms2 Not a criterion Not a criterion Not a criterion

1

Occupation at which the operator spent 50 percent or more of his or her work time. 

2

Family farms include any farm where the majority of the business is owned by the operator and individuals related to 

the operator. Nonfamily farms do not meet that criterion.

3

Formerly residential/lifestyle farms.

4

Formerly medium-sales farms.

Updating the ERS Farm Typology

Robert A. Hoppe and James M. MacDonald

Robert A. Hoppe

James M. MacDonald

Economic

Research

Service

Economic 

Information

Bulletin 

Number 110

April 2013

United States Department of Agriculture

Updating the ERS Farm Typology
www.ers.usda.gov

What Are the Study Findings?

The earliest versions of the typology were based on data from a 1995 USDA survey. Between that year and 2010, the 

Producer Price Index (PPI) for farm products increased by 41 percent. The revised typology adjusts for this price 

inflation by increasing the cutoff between small and larger-scale farms from $250,000 to $350,000 and by increasing 

the upper bound on low-sales farms from $100,000 to $150,000. To address the shift in production, we add two sales 

classes for farms with sales of at least $1 million—sales of $1,000,000 to $4,999,999 and sales of $5 million or more.

GCFI focuses on the revenue actually received by the farm business and includes the farm’s sales of crops and livestock, 

receipts of Government payments, and other farm-related income. Gross farm sales differs from GCFI by excluding 

other farm-related income and by including items that are not revenue to the farm: the value of production accruing to 

share landlords and production contractors, as well as Government payments accruing to landlords. 

The difference between gross farm sales and GCFI is pronounced for farms with livestock production contracts.

Contract growers provide labor, capital, and utilities. Contractors, who provide feed as well as young animals to be 

raised by the growers, pay growers a fee for their services, which is a fraction of gross farm sales. The share of farms 

with production contracts classified as small increases from 26 percent when using gross farm sales to 77 percent when 

using GCFI.

The revised typology moderately increases the share of farms classified as small. Raising the small-farm cutoff 

moves 46,400 formerly large-scale farms with sales from $250,000 to $349,999 into various small-farm groups. In 

addition, shifting the measure of farm size to GCFI adds another 17,900 farms to the small-farm categories. As a 

result, the small-farm share of all farms increases from 88 percent to 91 percent. Roughly 2 percentage points of the 

3-percentage-point increase results from raising the small-farm cutoff, and another 1 percentage point results from the 

shift to GCFI.

The increase in the small-farm share of production is more substantial. The small-farm share of U.S. production 

increases from 16 percent under the original typology to 29 percent under the revised typology. Five percentage points 

of the 13-percentage-point increase result from updating the small-farm cutoff for commodity price inflation. The 

remaining 8 percentage points result from the shift to GCFI as the measure of farm size. Using GCFI in the revised 

typology moves $22 billion of production to small family farms, virtually all of it associated with production contracts.

How Was the Study Conducted?

Data in this report are from the Agricultural Resource Management Survey (ARMS) for 1996 to 2010 and the 1995 

Farm Costs and Returns Survey, a predecessor to ARMS. ARMS is an annual sample survey designed and conducted 

by ERS and USDA’s National Agricultural Statistics Service.

What’s included?

Item Gross farm sales Gross cash farm income

Revenue to the farm from:

 Crop and livestock sales Yes Yes

 Government payments Yes Yes

 Other farm-related income1 No Yes

Value of production accruing to:

 Share landlords Yes No

 Contractors Yes No

Landlord receipt of

 Government payments Yes No

1

Receipts from custom work, machine hire, livestock grazing fees, timber sales, outdoor recreation, 

production contract fees, etc.