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
Economic Research Service 

www.ers.usda.gov

Recommended citation format for this publication:

Hoppe, Robert A., and James M. MacDonald. Updating the ERS Farm 

Typology, EIB-110, U.S. Department of Agriculture, Economic Research 

Service, April 2013.

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United States Department of Agriculture
Economic Information Bulletin Number 110 l A Report from the Economic Research Service l April 2013

Abstract

The USDA’s Economic Research Service (ERS) farm typology was originally 

developed to classify farms into relatively homogeneous groups based on their 

gross farm sales, the primary occupation of their operators, and whether the farms 

are family farms. Nearly 15 years have passed since ERS first released its farm 

typology; in this report, we update it to reflect commodity price inflation and the 

shift of production to larger farms. We also make a technical change, switching the 

measure of farm size from gross farm sales to gross cash farm income (GCFI), the 

total revenue received by a farm business in a given year. After the price adjustment, 

small farms are defined as those with GCFI less than $350,000, up from the original 

$250,000 cutoff. To adjust for the upward shift in production, two groups are added 

to the typology for farms with GCFI of $1 million or more, and a midsize group is 

added for farms with GCFI between $350,000 and $999,999. 

Keywords: classifying farms, family farms, farm businesses, farm operators, farm 

operator household income, farm size, farm structure, farm typology, large farms, 

large-scale farms, midsize farms, million-dollar farms, small farms 

Acknowledgments

The authors thank David Freshwater, University of Kentucky; Jeff Gillespie, 

Louisiana State University; David Buland, USDA Natural Resources Conservation 

Service; Virginia Harris, USDA National Agricultural Statistics Service; Joy 

Harwood and John Jinkins, USDA Farm Service Agency; Steven Koenig, Farm 

Credit Administration; and William McBride, USDA Economic Research Service 

(ERS) for their reviews and helpful comments. We also appreciate the editorial 

services of Dale Simms and Maria Williams and design and layout of the report by 

Cynthia Ray, all in the USDA Economic Research Service. 

Robert A. Hoppe, rhoppe@ers.usda.gov

James M. MacDonald, macdonal@ers.usda.gov

Updating the ERS Farm Typology
ii Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Contents

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Farm and Operator Household Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Earlier Changes in the Farm Typology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Addressing Recent Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Price Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Shift to Larger Farms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Applying New Cutoffs and Adding New Categories. . . . . . . . . . . . . . . . . . . . . . 9

New Categories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Combining and Renaming Categories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Changes in the Classification of Individual Farms. . . . . . . . . . . . . . . . . . . . . . 12

Small Family Farms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The Remaining Family Farms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Shifting to Gross Cash Farm Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Defining Gross Cash Farm Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Effects of Using Gross Cash Farm Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Results: The Revised Farm Typology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Changes in the Distribution of Farms and Production. . . . . . . . . . . . . . . . . . . . 20

Changes in Household Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Effects on Midsize and Large-Scale Farms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Changes in the Distribution of Farms and Production. . . . . . . . . . . . . . . . . . . . 27

Changes in Household Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Conclusions and Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Raising Cutoffs and Adding Categories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Switching from Gross Farm Sales to Gross Cash Farm Income. . . . . . . . . . . . 30

The Next Revision?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Appendix: Calculating Gross Cash Farm Income 

From the Census of Agriculture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 iii

Summary

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 GCFI2

Small family farms3 Varies Less than $250,000 Less than $350,000

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

 Off-farm occupation farms4 Nonfarm Less than $250,000 Less than $350,000

 Farming-occupation farms:

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

 Moderate-sales5 Farming $100,000- $249,999 $150,000-$349,999

Midsize family farms3 Not a criterion Category not used $350,000-$999,999

Large-scale family farms3 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 farms3 Not a criterion Not a criterion Not a criterion

1Occupation at which the operator spent 50 percent or more of his or her work time. 

2Gross cash farm income.

3Family 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.

4Formerly residential/lifestyle farms.

5Formerly medium-sales farms.
iv Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

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 farms 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

1Receipts from custom work, machine hire, livestock grazing fees, 

timber sales, outdoor recreation, production contract fees, etc.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 1

Introduction

USDA’s Economic Research Service (ERS) developed its farm typology in 1998. 

It sorts farms into seven groups based on annual farm sales, the primary occupation of the principal operator, and whether or not the farm is a family farm. Broad 

descriptions of U.S. farms based on national averages obscure variations among 

different sizes and types of farms. The ERS typology sorts farms into more homogeneous groups for reporting and evaluation purposes. The most recent version of the 

original typology identifies four groups of small family farms: retirement, residential/lifestyle, farming occupation/low-sales, and farming-occupation/medium-sales 

(see box, “Original Farm Typology”). That version also includes large family farms, 

very large family farms, and nonfamily farms. The typology originally included 

an additional small-farm category called limited-resource farms, but it was subsequently dropped, as explained later.

The typology has been used extensively in ERS publications—including the last five 

editions of the Family Farm Report—and in various journal articles and conference 

papers prepared by analysts at ERS, academia, and elsewhere. A widely used ERS 

Web tool also provides detailed farm financial and structural data for the types of 

farms laid out by the typology (see http://www.ers.usda.gov/data-products/armsfarm-financial-and-crop-production-practices/tailored-reports.aspx). 

The ERS farm typology is not the only way to classify farms for analyses. USDA’s 

National Agricultural Statistics Service (NASS) published its own modified version 

of the farm typology in the 2007 Census of Agriculture (USDA, NASS, 2009, pp. 

234-261). The census also provides further reporting with classifications based on 

acreage, market value of agricultural products sold, and farm specialization.

Some ERS analyses also sort farms into sales classes and do not use the family farm 

and occupational categories featured in the typology. For example, an ERS study 

of million-dollar farms grouped all farms with sales less than $250,000 into one 

category and focused on larger farms, particularly those with sales of $1,000,000 

to $4,999,999 and those with sales of $5,000,000 or more (Hoppe et al., 2008). 

Another ERS study focused on small farms, using five sales classes for farm with 

less than $250,000 in sales (Hoppe et al, 2010). 

In another approach to classifying farms, university and ERS researchers developed 

a farm household typology using cluster analysis (Briggeman et al., 2007). They 

formed groups of farm households considering—among other characteristics—how 

both the principal operator and spouse allocated work time between farming and 

off-farm work. 

There are different ways to classify and report farm statistics because users need 

different types of information. The ERS farm typology provides one useful 

approach to farm classification, based on (1) a transparent and measurable definition 

of a family farm, (2) a sales-based approach to sorting by farm size, and (3) the principle that occupation can be an informative way to further sort small farms. ERS has 

already changed the typology to take account of changes in survey methods and user 

needs. The substantial increase in commodity prices since 2007 spurred this current 

evaluation and revision.
2 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Enough time has passed—nearly 15 years—since the release of the farm typology 

for ERS to re-examine and update its original classification scheme, particularly 

since it is sales-based and sensitive to price changes. This report explains the 

update. Specifically, we update the typology to accommodate two recent trends: 

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

or more. After updating for these trends, we introduce a technical change in the 

measurement of farm size, shifting from gross farm sales to gross cash farm income 

(GCFI). (See box, “Measuring Farm Size.”) 

Farm and Operator Household Data

Farm and operator household data in this report come from two annual farm 

surveys: 

• Phase III of the Agricultural Resource Management Survey (ARMS) for 1996 

through 2010.

• The Farm Costs and Returns Survey (FCRS) for 1995. The FCRS was a predecessor to ARMS.

ARMS is jointly designed and conducted by ERS and NASS. For more information 

about ARMS and FCRS, see ARMS Farm Financial and Crop Production Practices

at: http://www.ers.usda.gov/data-products/arms-farm-financial-and-crop-production-practices.aspx.

Original Farm Typology

The farm typology focuses on the “family farm,” or any farm where the majority of the business is owned by the operator and 

individuals related to the operator, including relatives who do not live in the operator’s household. The USDA defines a farm as 

any place that produced and sold—or normally would have produced and sold—at least $1,000 of agricultural products during 

a given year.

Small family farms 

(gross sales less than $250,000)

Large-scale family farms 

(gross sales of $250,000 or more)

Retirement farms. Small farms whose operators report they 

are retired, although they continue to farm on a small scale. 

Residential/lifestyle farms. Small farms whose operators 

report a primary occupation1 other than farming. The category 

also includes a small number of farms whose operators are not 

in the labor force.

Farming-occupation farms. Small family farms whose operators report farming as their primary occupation.1 

•	 Low-sales farms. Gross sales less than $100,000.

•	 Medium-sales farms. Gross sales between $100,000 

and $249,999.

Large family farms. Farms with gross sales between 

$250,000 and $499,999.

Very large family farms. Farms with gross sales of $500,000 

or more.

Nonfamily farms

Any farm where the operator and persons related to the 

operator do not own a majority of the business.

Note: There also is a three-category version of the typology, the collapsed farm typology. It consists of residence farms (retirement and 

residential/lifestyle farms), intermediate farms (low- and medium-sales farms), and commercial farms (large, very large, and nonfamily farms).

1Occupation at which the operator spent 50 percent or more of his or her work time.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 3

Measuring Farm Size

Farm size is most commonly measured by acreage operated or by sales. Farm sales is a better 

measure of economic activity because it reflects the use of all inputs—labor, structures, equipment, and intermediate inputs—and not simply land. Farmland varies in quality, can be farmed 

at various levels of activity, and can produce a variety of products. Thus, output and sales per 

acre vary widely. 

There are several ways to measure sales, however, and the choice among them matters (Hoppe et 

al., 2010, pp. 2-4). We consider two measures in this report:

• Gross farm sales. The gross market value of the agricultural products sold or removed 

from a farm, regardless of who receives payment for the products. It is the sum of the 

revenue received by the farm for crop and livestock sales, the share of production received 

by any share landlords, the revenue received by production contractors for their products 

raised on the farm, and all Government payments received by the farm and its landlords.

• Gross cash farm income (GCFI). GCFI focuses on the revenue actually received by 

the farm business. It is calculated as the sum of the farm’s crop and livestock sales, 

Government payments received by the farm, and other farm-related income including fee 

payments from contractors.

The two measures can differ substantially for farms with production contracts, primarily used in 

livestock production—particularly in hog and poultry production. In such contracts, a contractor, 

often called the integrator, provides piglets or chicks, feed, and veterinary services to a farmer, 

who provides labor, housing, and utilities and raises the animals to maturity. The integrator owns 

the animals and removes them from the farm for sale or shipment to the integrator’s processing 

plant. The integrator pays the grower a fee for the grower’s services; the fee is usually a fraction of the value of the animals and reflects costs borne by the grower. For example, total U.S. 

contract fees amounted to 11 percent of the total value of U.S. contract production for broilers 

and 9 percent for hogs in 2010. Feed—the largest production expense—is produced off the farm 

and provided to the grower by the integrator.

The gross farm sales for a contract hog or poultry operation reflects the value of the animals 

being removed from the farm, often in excess of $1 million. But the actual revenue received by 

the farm—the fee for its services—is much less than gross farm sales. As a result, gross farm 

sales will usually greatly exceed GCFI for farms with production contracts.

GCFI includes some receipts that are not included in gross farm sales, and therefore GCFI will 

exceed gross farm sales for some farms. Specifically, GCFI includes farm-related income, such as 

rentals of land and equipment, income from the provision of custom services (like harvesting or 

spraying), and income from agricultural tourism (like hunting fees or farm tours). 

We chose 1995 as our initial year because the earliest analyses using the typology 

were based on FCRS data for that year. We use 2010 as our terminal year because 

the 2010 ARMS data were the most current available when this report was 

produced. Most of the discussion focuses on 2010, but we also compare 2010 with 

1995. In some cases, we examine the whole period from 1995 to 2010.
4 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Earlier Changes in the Farm Typology

Two earlier changes were introduced after the original typology was developed 

(Hoppe and Banker, 2010, p. 2). First, until 2005, ERS used ARMS information on 

business organization to classify family farms as those organized as sole proprietorships, partnerships, or family corporations. Nonfamily farms included farms organized as cooperatives or nonfamily corporations, farms held in estates or trusts, and 

farms with a hired manager. Some of these terms caused ambiguities for respondents, so in 2005 ERS introduced new ARMS questions that allowed a family farm 

to be identified simply as any farm where the majority of the farm business was 

owned by the operator and relatives of the operator. 

Second, limited-resource farms were dropped as a separate category from the 

typology in 2005. The USDA-wide definition of limited-resource farms is based on 

low gross farm sales and low operator household income in both the current year 

and in the previous year. The definition of limited-resource farms is inconsistent 

with the definitions of the other groups, which focus on sales class and the operator’s occupation in the current year.1 Although limited-resource farms have been 

dropped from the typology, ERS still analyzes them and reports on them separately, 

and will continue to do so (Hoppe and Banker, 2010, pp. 40-45 and 48).

1 The USDA-wide definition was incorporated into the typology in the 2003 ARMS. Prior 

to that time, limited-resource farms were identified on the basis of low levels of household 

income, sales, and farm assets (Hoppe and Banker, 2010, pp. 40-42).
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 5

Addressing Recent Trends

We now examine the two recent trends in agriculture that have not been addressed 

in previous adjustments to the farm typology. First, prices received by farmers 

increased by 41 percent between 1995 and 2010, with most of the increase occurring 

after 2002 (fig. 1). Inflation in commodity prices—for farm products and for inputs, 

such as feed, fuels, and fertilizers—can increase gross farm sales and expenses for 

a farm, even when no change occurs in production. As a result, a family farm might 

move from the original small-farm category (gross farm sales less than $250,000) 

in 1 year to the large-farm category the next year without any increase in actual 

production. Over a longer period, persistent increases in commodity prices can 

move many farms into larger farm categories, without any changes in production or 

farm practices. Periodically adjusting for such inflation over time, when using salesbased size measures, provides more consistent size categories.

Second, production has been shifting to larger farms, and by building more detail 

into the large-scale categories in the typology, we can better capture the implications of this shift. Farms with gross farm sales of $1 million or more have grown 

rapidly in number and increased their share of production, even when sales are 

adjusted for price inflation and measured in 2010 dollars. Between 1995 and 2010, 

the number of these “million-dollar farms” and their value of production grew by 60 
6 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

percent and 64 percent, respectively (table 1).2 Except for farms with sales between 

$500,000 and $999,999, no other sales class grew as rapidly in number and production. By 2010, million-dollar farms accounted for 52 percent of the sales of agricultural products—up from 39 percent in 1995—although their share of U.S. farms 

was just over 2 percent. 

Table 1 

Farms and value of production by constant dollar sales class,1 1995 and 2010

Constant dollar sales class 

(2010 dollars1)

Year Change, 

1995 to 

1995 2010 2010

Number of 

farms

Percent of 

farms

Number of 

farms

Percent of 

farms

Percent 

change

Farms by sales class:

 Less than $10,000 901,281 43.6 1,306,521 59.6 45.0

 $10,000 to $99,999 727,322 35.2 514,042 23.4 -29.3

 $100,000 to $249,999 242,645 11.7 146,788 6.7 -39.5

 $250,000 to $499,999 116,785 5.6 99,179 4.5 -15.1

 $500,000 to $999,999 48,897 2.4 76,569 3.5 56.6

 $1,000,000 or more 31,068 1.5 49,675 2.2 59.9

 $1,000,000 to $4,999,999 28,316 1.4 44,732 2.0 58.0

 $5,000,000 or more 2,752 0.1 4,943 0.2 79.6

 All farms 2,068,000 100.0 2,192,774 100.0 6.0

Mil. 2010 

dollars1

Percent of 

production

Mil. 2010 

dollars1

Percent of 

production

Percent 

change

Value of production by sales class:

 Less than $10,000 3,426 1.5 3,973 1.4 16.0

 $10,000 to $99,999 26,783 11.5 19,373 6.8 -27.7

 $100,000 to $249,999 40,012 17.2 24,187 8.4 -39.6

 $250,000 to $499,999 39,502 17.0 36,691 12.8 -7.1

 $500,000 to $999,999 33,198 14.2 54,498 19.0 64.2

 $1,000,000 or more 90,064 38.7 148,031 51.6 64.4

 $1,000,000 to $4,999,999 50,964 21.9 90,560 31.6 77.7

 $5,000,000 or more 39,100 16.8 57,471 20.0 47.0

 All farms 232,986 100.0 286,753 100.0 23.1

Note: Sales class is based on gross farm sales. 

1Sales class and value of production are expressed in 2010 dollars, using the Producer Price Index (PPI) for farm products 

to adjust for price changes. Both family and nonfamily farms are distributed among the sales classes.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 1995 Farm Costs and Returns 

Survey and 2010 Agricultural Resource Management Survey.

2The value of production measures the value of commodities produced in a given year 

whether or not they were sold that year. It is calculated by multiplying the amount of each 

commodity produced by the market price of the commodity. It includes the farm, production 

contractor, and landlord shares of commodities produced. To avoid double counting, value of 

production excludes the value of crops grown to feed livestock on the same farm. For more 

information, see Hoppe et al. (2010, p. 3).
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 7

Price Changes

In the original farm typology, three sales levels were used to create the size categories, and they have never been adjusted for price inflation:

• $100,000. This is the dividing line between low-sales farms (gross farm sales 

less than $100,000) and medium-sales farms (gross farm sales of $100,000 to 

$249,999) in the original typology. Selection of the $100,000 cutoff was somewhat arbitrary, but the characteristics of farms with sales less than $250,000 do 

differ by sales class. For example, low-sales farms are more often operated by 

older farmers than is true of medium-sales farms. They also are more likely to 

specialize in beef cattle and less likely to specialize in cash grains than mediumsales farmers (Hoppe and Banker, 2010).

• $250,000. Earlier research at ERS by Reimund et al. (1986, p. 1-2) established 

this level of sales to differentiate between large family farms and smaller family 

farms. Analyses performed by ERS for the National Commission on Small Farms 

(NCSF)—based on 1995 price and sales data—also determined that sales near 

$250,000 were necessary to generate net cash income near the mean income for 

all U.S. households, which was $44,900 in 1995 (USDA, NCSF, 1998, p. 28-29; 

U.S. Department of Commerce, Bureau of the Census, 2012b). Using a 20-percent 

gross cash margin3 and applying it to the $250,000 cutoff results in $50,000 of net 

cash income, reasonably close to U.S. mean household income at that time.

• $500,000. Sales of $500,000 divide large farms (gross farm sales between 

$250,000 and $499,999) from very large farms (gross farm sales of $500,000 or 

more) in the original typology, as used in Reimund et al. (1986), cited earlier. 

Sample size was also a consideration in selecting this cutoff. The sample in 

1995 was only 8,800 records, compared with 21,600 in 2010. Selecting the 

$500,000 cutoff ensured an adequate sample of very large farms.

Adjusting the three cutoffs for price inflation is straightforward. The Producer Price 

Index for farm products (farm PPI) rose 41 percent from 1995 to 2010, and we 

adjusted the original cutoffs accordingly. The new cutoffs are the adjusted cutoffs 

rounded to the nearest $25,000. The new $350,000 small-farm cutoff can be interpreted as roughly the same physical production generating $250,000 of sales in 

1995, but valued using 2010 prices for farm products. 

Original cutoffs 

(1995 prices)

Adjusted cutoffs 

(2010 prices)

New cutoffs used to 

revise the typology

 $100,000 $140,596 $150,000

 $250,000 $351,490 $350,000

 $500,000 $702,980 $700,000

3As used here: Gross cash margin = 100% (net cash farm income ÷ GCFI). The margin 

increases with sales. For example, the margin was 20 percent for farms with gross farm sales 

of $50,000 to $250,000 in 1995 and 22 percent for farms with sales of $250,000 or more 

(USDA, NCSF, 1998, p. 29). By 2010, it was 22 percent for farms with sales of $50,000 to 

$249,999 and 27 percent for farms with sales of at least $250,000. The gross cash margin 

for all farms fluctuated from 15 to 24 percent between 1995 and 2010. It averaged 20 percent 

over the 16-year period.
8 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

The first two new cutoffs ($150,000 and $350,000) are actually used in the final 

form of the revised typology. The third cutoff ($700,000) is only used in an intermediate step while constructing the revised typology, as discussed later.

While the net cash income generated by a given level of farm sales varies by the 

commodities produced, $350,000 of gross farms sales in 2010 generates net cash 

income near the mean income for all U.S. households that year, just as $250,000 did 

in 1995. Applying the 20-percent gross cash margin to $350,000 yields $70,000—

only 4 percent higher than the $67,400 mean income for all U.S. households in 

2010 (U.S. Department of Commerce, Bureau of the Census, 2012b).

Shift to Larger Farms

The simplest way to address the shift to larger farms is adding one or more categories to the classification for farms with sales of $1 million or more. Sales at that 

level are a reasonable indicator of the upper end of the farm size distribution. For 

example, 37 percent of farmers chose gross farm sales of $1 million as the point at 

which a midsize farm becomes a large farm, according to a survey by the magazine 

Successful Farming (Tevis, 2012). Other frequent responses were $500,000 (17 

percent) and $250,000 (14 percent). 

Million-dollar farms can be divided further into two groups, those with sales of $1 

million to $4,999,999 and those with sales of $5 million or more. Farms with sales 

of $5 million or more represent really large farms by current standards.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 9

Applying the New Cutoffs and Adding New Categories 

We now apply the new cutoffs to generate an updated version of the ERS typology. 

The first step is presented in the top panel (step 1) of table 2. The procedure is 

straightforward:

• The new $150,000 cutoff replaces the original $100,000 cutoff between lowsales and medium-sales small farms.

• The new small-farm cutoff ($350,000) replaces the original cutoff ($250,000).

• The new $700,000 cutoff replaces the original $500,000 cutoff between large 

and very large farms in this intermediate step.

New Categories

Note that the very large group tops out at $999,999 due to the introduction of two 

new categories of million-dollar farms—group 1 for those with gross farm sales of 

$1 million to $4,999,999 and group 2 for those with gross farm sales of $5 million 

or more. These groups have already been used by ERS in Million-Dollar Farms in 

the New Century (Hoppe et al., 2008) and by NASS in its annual Farm Production 

Expenditures summary (USDA, NASS, 2011b).

The sample size for family farms with sales of $5 million or more is rather thin—

only 338 observations in 2010. The ERS and NASS reports cited in the preceding 

paragraph considered both family farms and nonfamily farms, so their sample sizes 

for $5-million farms were larger, 412 for Hoppe et al. (2008) and 457 for USDA, 

NASS (2011b).4 We intend to use the two groups of million-dollar farms in the new 

typology, but may need to reconsider the $5-million cutoff—and substitute a lower 

one—if sample sizes fall in the future. In practice, that concern will be lessened if 

production continues to shift to larger farms and the number of million-dollar farms 

continues to grow (see table 1). 

 Combining and Renaming the Categories

The typology in the top panel (step 1) of table 2 has nine categories, compared 

with seven categories in the original typology. The number of categories could 

be reduced to eight by merging large farms (sales of $350,000 to $699,999) and 

very large farms (sales of $700,000 to $999,999) in step 1 of table 2 into a single 

category, midsize farms, in step 2.5 This merged group includes all family farms 

with sales between $350,000 and $999,999 and accounts for 6 percent of farms and 

26 percent of production. Creating the midsize group allows us to apply the term 

“large” to farms with sales of $1 million to $4,999,999 and “very large” to farms 

with sales of $5 million or more. Large-scale farms now include large and very 

large farms under the new definitions, or any farm with sales of $1 million or more.

4Hoppe et al. (2008) used 2006 ARMS data while USDA, NASS (2011b) used 2010 

ARMS data.

5 The first version of the original typology—which included limited-resource farms—also 

had eight categories.
10 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Table 2

Revising the farm typology, 2010

Distribution of...

Type of farm

Includes farms with 

gross farm sales of...

Sample 

size Farms Farms

Value of 

production

Number Percent of U.S. total

Step 1—Applying New Cutoffs

Small farms:

 Retirement Less than $350,000 1,932 364,639 16.6 1.3

 Residential/lifestyle Less than $350,000 4,808 953,151 43.5 4.9

 Farming-occupation:

 Low-sales Less than $150,000 5,133 557,107 25.4 6.3

 Medium-sales $150,000 to $349,999 2,541 100,489 4.6 8.5

Large-scale farms:

 Large $350,000 to $699,999 2,412 88,076 4.0 15.4

 Very large $700,000 to $999,999 1,068 35,671 1.6 10.4

 Million-dollar farms:1

 Group 1 $1,000,000 to $4,999,999 2,429 40,456 1.8 28.2

 Group 2 $5,000,000 or more 338 3,473 0.2 12.7

Nonfamily No sales criterion 917 49,711 2.3 12.3

 Total 21,578 2,192,774 100.0 100.0

Step 2—Combining Large and Very Large Farms from Step 1 & Renaming

Small farms:

 Retirement Less than $350,000 1,932 364,639 16.6 1.3

 Off-farm occupation2 Less than $350,000 4,808 953,151 43.5 4.9

 Farming-occupation:

 Low-sales Less than $150,000 5,133 557,107 25.4 6.3

 Moderate-sales3 $150,000 to $349,999 2,541 100,489 4.6 8.5

Midsize4 $350,000 to $999,999 3,480 123,748 5.6 25.8

Large-scale farms:

 Large5 $1,000,000 to $4,999,999 2,429 40,456 1.8 28.2

 Very large6 $5,000,000 or more 338 3,473 0.2 12.7

Nonfamily No sales criterion 917 49,711 2.3 12.3

 Total 21,578 2,192,774 100.0 100.0

1The number of million-dollar farms in table 2 (43,929) is 5,746 less than the corresponding number in table 1 (49,675). 

The difference occurs because the tables treat nonfamily farms differently. Table 2 places nonfamily farms in a separate 

group while table 1 distributes them among the various sales classes. Differences between the tables for smaller farms are 

not obvious because the two tables use different sales classes for farms with sales less than $1 million.

2Residential/lifestyle farms from step 1.

3Medium-sales farms from step 1.

4Formed by combining large and very large farms from step 1.

5Group 1 million-dollar farms in step 1.

6Group 2 million-dollar farms in step 1.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 2010 Agricultural Resource 

Management Survey.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 11

The residential/lifestyle group was renamed “off-farm occupation” in the updated 

typology. The term “residential/lifestyle” was originally selected because many of 

the operators on these farms view their farms largely as an avocation or a place to 

live where they can enjoy a rural lifestyle (Hoppe, 2001, p. 49). These operators 

typically do not rely on their farms for a substantial share of their income, since 

their main occupation is something other than farming. 

On the other hand, a large majority of all farms—even commercially oriented 

farms—could be considered residential, since operators generally live on their 

farms. Also, beginning farmers in the group may look at their farms as more than a 

residence or lifestyle, but still need an off-farm job, at least in the short run. Other 

farmers in the group may receive most of their income from off-farm activities, but 

supplement it with income or home consumption from the farm. Giving these farms 

an off-farm-occupation label is more accurate and focuses on a characteristic they 

have in common.

Finally, the small-farm, medium-sales category was renamed “moderate-sales.” 

“Medium” and “midsize” sound similar, which could lead to readers confusing the 

medium-sales and midsize categories. Substituting “moderate” for “medium” should 

reduce potential confusion.
12 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Changes in the Classification of Individual Farms

Changing from the original to the updated typology affects the number of farms 

in the various farm types. Among the small-farm groups, the only meaningful 

changes occur in the low-sales and moderate-sales groups. The number of low-sales 

farms increases by about 9 percent after the update, the result of the reclassification of former medium-sales farms with sales between $100,000 and $149,999. The 

number of moderate-sales farms, however, actually declines by 7 percent because 

the loss of former medium-sales farms to the low-sales group is larger than the gain 

of formerly large farms with gross sales between $250,000 and $349,999. 

The new large and very large farm types have relatively few farms, reflecting the 

high level of the groups’ sales criterion. Midsize farms combine substantial shares 

of the farms formerly classified as large or very large. 

Table 3 sorts farms by their places in the original and updated typologies and shows 

specifically how many farms are reclassified by the update. The row for all farms 

at the top of the table shows the number of farms in each group in the original 

typology. The all-farms column at the right side of the table shows the number of 

farms in each group in the updated typology. Individual cells sort farms by their 

position in both the original and updated typologies. 

Small Family Farms

The numbers of retirement and off-farm occupation farms are affected very little by 

the update. The number of retirement farms grows by 944, from 363,695 under the 

original typology to 364,639 under the update, while the number of off-farm occupation farms grows by 5,728, from 947,423 to 953,151 (table 3). In both cases, the 

increase is less than 1 percent, because there are few farms with gross sales between 

$250,000 and $349,999—classified as large farms under the original typology—

whose operator is retired or reports a nonfarm occupation.

In contrast, the number of low-sales farms increases by 9 percent, growing from 

510,072 under the original typology to 557,107 under the update. The increase 

results from a shift of 47,035 farms with sales of $100,000 to $149,999 from the 

former medium-sales group to the low-sales group.

The number of moderate-sales farms actually falls by 7 percent, from 107,804 mediumsales farms under the original definition to 100,489 moderate-sales farms under 

the update. The loss of former medium-sales farms to the low-sales group (47,035) 

outweighs the moderate-sales group’s gain from the large farm group (39,720).

The Remaining Family Farms

A comparison of the size of the remaining farm types in the original and updated 

ERS typologies is difficult because the number of groups increases in the updated 

typology. Also, the bulk of the former large and very large farms end up in the 

midsize group in the updated typology. We can, however, show which groups in the 

original typology contributed to a given group in the updated typology.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 13

Table 3

Distribution of farms by the original and updated farm typologies, 2010

Original typology

Small farms

Large-scale 

farms

Farming-occupation

Updated 

typology1

Includes farms with 

gross farm sales of...

RetirementResidential/ 

lifestyle

LowsalesMediumsales LargeVery 

large

Nonfamily All farms

Number

All farms 363,695 947,423 510,072 107,804 96,433 117,637 49,711 2,192,774

Small farms:

 Retirement Less than $350,000 363,695 944 364,639

 Off-farm 

 occupation2 Less than $350,000 947,423 5,728 953,151

 Farming-

 occupation:

 Low-sales Less than $150,000 510,072 47,035 557,107

 Moderate-

 sales3 $150,000 to $349,999 60,768 39,720 100,489

Midsize $350,000 to $999,999 50,040 73,707 123,748

Large-scale farms:

 Large 

$1,000,000 to 

$4,999,999 40,456 40,456

 Very large $5,000,000 or more 3,473 3,473

Nonfamily No sales criterion 49,711 49,711

1Updated for commodity price changes and shift of production to larger farms, from step 2 of table 2.

2Formerly residential/lifestyle farms.

3Formerly medium-sales farms.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 2010 Agricultural Resource 

Management Survey.

The revisions classify 123,748 farms as midsize. The midsize category consists 

of large-scale farms under the original typology that did not move to a small-farm 

category because of price adjustments nor move into one of the groups with sales 

of $1 million or more. Most of the midsize farms—73,707 farms—were formerly 

classified as very large farms with sales between $500,000 and $999,999. Another 

50,040 farms were formerly classified as large farms with sales between $350,000 

and $499,999 under the original typology. 

The remaining very large farms from the original typology—all with sales of 

$1 million or more—form the large and very large farm groups in the updated 

typology. These groups have relatively few farms, 40,456 and 3,473, respectively, 

in the updated typology. The very large group in the updated typology (gross farm 

sales of $5 million or more) is much more exclusive than the group with the same 

name in the original typology (gross farm sales of $500,000 or more).
14 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Shifting to Gross Cash Farm Income

Up to this point, we have measured farm size using sales classes based on gross 

farm sales, which measures the value of commodities leaving a farm, regardless of 

who has a claim on those commodities. It is the sum of the farm’s crop and livestock sales, the share of production received by any share landlords and production 

contractors, and all Government payments received by the farm and its landlords.

Components of gross cash farm sales and gross cash farm income

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

1Receipts from custom work, machine hire, livestock grazing fees, timber sales, outdoor recreation, 

production contract fees, etc.

Defining Gross Cash Farm Income

Gross cash farm income (GCFI), an alternative measure of farm sales, focuses on 

the revenue actually received by the farm. GCFI is calculated as the sum of the 

farm’s crop and livestock sales, Government payments, and other farm-related 

income. Landlords’ and contractors’ shares of production are excluded from 

GCFI—as is the landlords’ share of Government payments—because these items 

are not revenue to the farm business. 

The value of gross farm sales is a reasonable measure of the value of commodities 

leaving a farm. The farm operator, however, does not have access to gross farm sales 

accruing to landlords or production contractors. If a farmer has a production contract 

to produce broilers, he or she can use the fee received from the contractor to pay 

bills. Receipts from the disposal of the broilers—on the other hand—belong to the 

contractor and are not available to the farm business to cover expenses and generate 

net income. If the focus is on revenues received by farm businesses that can be spent 

as necessary, GCFI is a better indicator of farm size than gross farm sales. 

The difference between GCFI and gross sales can be large for some farms. For 

example, broiler producers with production contracts generally receive contract 

fees (a component of GCFI) that are far less than the value of the birds removed 

(a component of gross sales). A broiler operation with four houses typically would 

deliver $1.1 million of broilers—its gross farm sales—to its contractor (see box, “A 

Four-House Broiler Operation”). The operation’s GCFI is only $175,000, including 

fees for contract production. The contractor provides the grower with feed, chicks, 

and veterinary services, while the grower provides labor, utilities, and housing. 
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 15

Since feed is by far the largest share of broiler production costs, the grower’s 

services account for only a fraction of the costs of producing broilers, and the grower’s fees therefore are only a fraction of the value of the broilers. The fee is revenue 

to the producer, but the broilers belong to the contractor. 

A Four-House Broiler Operation

To show how a farm could be classified as small or large depending on how sales are measured, consider a 

contract broiler operation with four broiler houses—the average for broiler producers in the United States. An 

average operation delivers about 460,000 birds in a year and is paid contract fees of around $152,000. The value 

of those birds—the operation’s gross farm sales—is about $1.1 million. From the $1.1 million, the contractor 

covers the value of the feed and chicks delivered to the operation as well as the fees for services provided by 

the operation. A typical broiler farm has some activities aside from poultry, but it is still quite specialized, 

and contract fees amount to most of its gross cash farm income (GCFI) of $175,000. In term of GCFI, assets, 

total household income, and operator’s hours worked on the farm, broiler operations are similar to other small 

farms with GCFI between $150,000 and $200,000, but much smaller than other farms with gross sales between 

$800,000 and $1,200,000.

Do we classify this farm as a large farm because of its production—which it does not own and cannot sell—or 

do we classify it as a moderate-sales farm because its GCFI is between $150,000 and $349,999? For use in 

the farm typology, GCFI is a better indicator of the size of the farm business than gross farm sales because it 

focuses on the revenue actually received by the farm business that can be used by the farm business. Income 

that the farm household receives from the farm is also derived from GCFI, and level of household income was a 

criterion when selecting the original small-farm cutoff.

Characteristics of contract broiler farms and selected other farms, 2011

Item

Type of operation

Contract broiler growers, 

four broiler houses

No poultry, GCFI from 

$150,000 to $200,000

No poultry, gross farm 

sales from $800,000 to 

$1,200,000

Median values

 GCFI $175,000 $170,700 $928,505

 Gross farm sales $1.09 million $169,950 $914,673

 Farm assets $1.10 million $1.13 million $2.98 million

 Total operator household income $69,000 $84,414 $189,299

 Total off-farm income $27,500 $27,500 $29,296

 Farm work by principal operator 42 hours (all)/

30 hours (broilers)

50 hours 57 hours

Number

Observations 415 721 1,122

GCFI = Gross cash farm income.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 2011 Agricultural Resource Management Survey.

The estimates presented are based on data from the recently released 2011 ARMS, which included a version 

(version 4) focused specifically on broiler producers. For purposes of classification by the typology, we assume 

the broiler operation is a family farm.
16 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

The four-house broiler operation would be classified as a large farm using gross 

farm sales, but as a moderate-sales small farm using GCFI as the measure of sales 

because its GCFI falls in the $150,000-to-$349,999 range that defines the category. 

In addition, the broiler operation is similar to other farms with GCFI between 

$150,000 and $200,000 in terms of farm assets, household income, and operator’s 

hours devoted to farming.

For most family farms (66 percent), farm sales and GCFI were equal in 2010 (table 

4). These farms (1) have no production contracts, (2) do not share production or 

Government payments with landlords, and (3) do not receive other farm-related 

income. In this case, gross farm sales and GCFI are calculated exactly the same 

way: the sum of the farm’s crop sales, livestock sales, and Government payments. 

On another 27 percent of family farms, GCFI was greater than gross farm sales, 

due to the receipt of other farm-related income. Gross farm sales can be larger 

than GCFI for farms with production contracts or for farms sharing production 

or Government payments with landlords. Farms with gross farm sales larger than 

GCFI, however, amounted to only 9 percent of family farms in 2010. 

Effects of Using Gross Cash Farm Income

Using GCFI instead of gross farm sales to measure size has little impact on the 

overall share of U.S. farms classified as small. Ninety-one percent of U.S. farms are 

classified as small family farms using GCFI for the cutoff versus 90 percent using 

gross farm sales (fig. 2). The largest impacts of using GCFI instead of gross farm 

sales occur among poultry farms and—to a lesser extent—hog farms. Although 55 

percent of poultry farms are classified as small using gross farm sales, the share 

increases to 94 percent using GCFI. Similarly, the small-farm share for hog farms 

increases from 65 to 78 percent. 

In addition, using GCFI rather than gross farm sales greatly increases the number 

of farms with contracts classified as small. The share of contract producers classified as small triples from 26 percent to 77 percent when GCFI is used to measure 

farm size (table 4). 

Approximately 17,900 farms—less than 1 percent of all farms—move from 

the midsize and large-scale categories to small-farm categories in the updated 

typology based on GCFI (table 5). The only small-farm category to increase 

substantially is moderate-sales farms, by about 10 percent. Of course, if the 

number of small farms increases, the number of midsize and large-scale farms 

declines by an equal amount. The rates of decline are fairly large, ranging from 9 

to 16 percent, depending on the group.

The 17,900 farms estimated to change their status from midsize or large-scale to 

small under the revised typology, however, is a net estimate with two components:

• The movement of 30,300 farms from midsize and large-scale groups to 

small-farm groups. The gross farm sales of these farms amounts to $350,000 

or more, but their GCFI is less than that amount. Three-fourths of these farms 

have production contracts, largely specializing in poultry or hogs.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 17

• The movement—in the opposite direction—of 12,400 farms from smallfarm groups to midsize and large-scale groups. The gross farm sales of these 

farms amounts to less than $350,000 but their GCFI is at least that high, due to 

the receipt of significant other farm-related income. 

Another 42,800 farms move from one category to another, but the difference 

between GCFI and gross farm sales is not large enough to change their classification 

from a small farm to a midsize or large-scale farm (or vice versa).

Table 4 

Comparing gross farm sales and GCFI for family farms with and without production contracts, 2010

Item

Farms without 

production contracts

Farms with 

production contracts All family farms

Number

Total farms and households 2,099,430 43,633 2,143,063

Percent of farms

Gross farm sales compared with GCFI:

 Gross farm sales and GCFI are equal 66.1 0.0 64.8

 Gross farm sales is larger 6.8 96.6 8.6

 GCFI is larger 27.1 3.4 26.6

 Total 100.0 100.0 100.0

Ratio of GCFI to gross farm sales1 106.9 33.3 92.8

Share of production under a 

production contract 0.0 83.4 16.9

Gross farm sales less than $350,000 93.6 25.5 92.2

GCFI less than $350,000 93.3 77.3 93.0

Farms by specialization:

 Cash grain 14.2 7.5 14.1

 Other field crops 24.4 d 24.0

 High-value crops2 6.6 d 6.5

 Beef 31.2 12.7 30.8

 Hogs 0.9 20.0 1.3

 Poultry 1.0 52.8 2.1

 Dairy 2.2 1.5 2.2

 Other livestock 19.5 d 19.1

 Total 100.0 100.0 100.0

Note: This table includes only family farms, because no size criterion is used to identify nonfamily farms.

GCFI = Gross cash farm income. 

d = Data suppressed due to insufficient observations.

1Total GCFI for a given group divided by total gross farm sales for the group, expressed as a percentage.

2Vegetables, fruits and tree nuts, and nursery and greenhouse products.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 2010 Agricultural Resource Management Survey.
18 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Table 5

Farms by the updated farm typology based on two size measures, 2010 

Updated typology1

Type of farm

Based on gross 

farm sales Based on GCFI Change2 Rate of change

—-——-—Number—-——-— Percent

Total farms 2,192,774 2,192,774 0 0.0

 Small farms 1,975,386 1,993,266 17,880 0.9

 Retirement 364,639 364,829 190 0.1

 Off-farm occupation 953,151 955,625 2,474 0.3

 Low-sales 557,107 561,871 4,764 0.9

 Moderate-sales 100,489 110,941 10,452 10.4

 Midsize farms 123,748 112,817 -10,931 -8.8

 Large-scale farms 43,929 36,979 -6,950 -15.8

 Large 40,456 33,823 -6,633 -16.4

 Very large 3,473 3,156 -317 -9.1

 Nonfamily 49,711 49,711 0 0.0

GCFI = Gross cash farm income.

1Updated for commodity price changes and shift of production to larger farms.

2Column 2 minus column 1.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 2010 Agricultural Resource 

Management Survey.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 19

Results: The Revised Farm Typology

So far we have adjusted sales cutoffs to account for increases in commodity prices, 

added new typology categories to reflect the shift in production to larger farms, and 

changed the measure of farm size from gross farm sales to GCFI. The revised farm 

typology incorporates all these elements and is summarized in table 6, which also 

summarizes differences between the original and revised typologies. The next step 

is to examine the effects of these changes on the distribution of farms and production and on estimates of household income.6 

Table 6

Comparing the original and revised typologies 

Farm type

Operator’s primary 

occupation1

Farm size

 Original typology Revised typology

Farm size measured 

by gross farm sales

Farm size measured 

by GCFI

Small 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

1Occupation at which the operator spent 50 percent or more of his or her work time.

2Family 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.

3Formerly residential/lifestyle farms.

4Formerly medium-sales farms.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 2010 Agricultural Resource 

Management Survey.

Changes in the Distribution of Farms and Value of Production

Revising the typology alters the distribution of farms between the small-farm and 

other farm groups in 2010. The share of farms classified as small increases by 3 

percentage points—from 88 percent to 91 percent—after the revisions. In contrast, 

6Whether GCFI can be approximated from information collected by the census of 

agriculture is a relevant question, if the revised typology is to be applied to the census. 

Inconsistencies between the census and ARMS affecting the calculation of GCFI appear to 

be relatively minor. See “Appendix: Calculating GCFI from the Census of Agriculture.”
20 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

the small-farm share of production increases from 16 percent under the original 

typology to 29 percent in the revised typology. 

Table 7 compares the distribution of farms and value of production in 2010 under 

the original typology and the revised typology. All four types of small farms are 

shown, because most of the farms in each revised type are in the same type under 

the original typology. To make comparisons over time, we include a column for 

1995. We do not adjust the cutoffs used prior to 2010 for price inflation, but use 

the nominal-dollar cutoffs in effect since the creation of the original typology. This 

helps us to gauge the effects of price inflation through comparisons with the revised 

typology, since the revised typology does use cutoffs adjusted for price changes.

Revisions to the original large-scale family farms categories result in a midsize 

group in addition to the original large and very large groups. As a result, the 

original and revised typologies are not comparable once the $350,000 cutoff is 

exceeded. We can, however, examine midsize and large-scale farms as a whole in 

table 7, rather than as individual farm types.

Distribution of Farms

In 2010, small family farms accounted for 91 percent of all farms under the revised 

typology, or 3 percentage points more than under the original typology (table 7). 

The 3-percentage-point increase comes from two sources: 2 percentage points from 

updating for commodity price inflation and another 1 percentage point from shifting 

to GCFI. Low-sales farms also increase their share of farms by 2 percentage points 

under the revised typology, reflecting the 9-percent increase in the number of lowsales farms after raising the $100,000 cutoff to $150,000. Other differences between 

the original and revised typologies for small farms are minor.

Although the revised typology increased the low-sales share of all farms, a larger 

share of farms was classified as low-sales in 1995 (29 percent) than in 2010 under 

the original typology (23 percent) or under the revised typology (26 percent). 

Among small farms, only the off-farm occupation group increased its share of 

farms meaningfully over the 1995-2010 period.

The midsize and large-scale share of farms declines by 3 percentage points under 

the revised versions of the typology—the mirror image of the increase in small 

farms. This reflects: 

• Reclassification of 46,400 formerly large farms with sales between $250,000 

and $349,999 that were moved into various small-farm groups by the revised 

typology based on the higher sales cutoff.

• The net movement of 17,900 farms to small-farm groups when using GCFI 

instead of gross farm sales.

Nonetheless, the share of all farms in the midsize and large-scale categories is about 

1 percentage point higher in 2010 using the revised typology than it was in 1995 

using the original typology.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 21

Table 7

Farms and the value of production by the original and revised farm typology, 1995 and 2010

Typology Change in distribution from revisions

Original Share from

Type of farm 1995 2010

Revised, 

2010 Total1 Update2

 Using 

GCFI

(Column 1) (Column 2) (Column 3)

Number

Total farms 2,068,000 2,192,774 2,192,774 na na na

Percent of U.S. total Percent change

Distribution of farms:

 Small farms 92.9 88.0 90.9 2.9 2.1 0.8

 Retirement 16.2 16.6 16.6 0.0 0.0 0.0

 Off-farm occupation3 38.3 43.2 43.6 0.4 0.3 0.1

 Farming-occupation:

 Low-sales 29.1 23.3 25.6 2.3 2.1 0.2

 Moderate-sales4 9.3 4.9 5.1 0.2 -0.3 0.5

 Midsize and large-scale farms 5.6 9.8 6.8 -3.0 -2.2 -0.8

 Nonfamily 1.5 2.3 2.3 0.0 0.0 0.0

 Total 100.0 100.0 100.0 0.0 0.0 0.0

Distribution of the value of production:

 Small farms 38.4 16.0 28.6 12.6 4.9 7.7

 Retirement 1.6 1.2 1.6 0.4 0.1 0.3

 Off-farm occupation3 6.1 4.3 6.3 2.0 0.6 1.4

 Farming-occupation:

 Low-sales 12.1 4.1 8.6 4.5 2.2 2.3

 Moderate-sales4 18.7 6.5 12.1 5.6 2.0 3.6

 Midsize and large-scale farms 47.1 71.6 59.1 -12.5 -4.9 -7.6

 Nonfamily 14.5 12.3 12.3 0.0 0.0 0.0

 Total 100.0 100.0 100.0 0.0 0.0 0.0

GCFI = Gross cash farm income.

na = Not applicable.

1Column 3 minus column 2.

2Updated cutoffs for commodity price changes.

3Residential/lifestyle in the original typology.

4Medium-sales in the original typology.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 1995 Farm Costs and Returns Survey and 2010 

Agricultural Resource Management Survey.
22 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Distribution of Production

Small farms’ share of the value of production increases by 13 percentage points, 

from 16 percent under the current typology to 29 percent under the revised typology 

(table 7). The midsize and large-scale farms’ share decreases by the same amount. 

Most of the increase in the small-farm share occurs in the low-sales and moderatesales groups, which increase their shares of the value of production by 5 and 6 

percentage points, respectively.

About 5 percentage points of the 13-percentage-point increase in small farms’ 

share of production results from updating the cutoffs for commodity price inflation. 

Shifting from gross farm sales to GCFI increases the small-farm share by another 8 

percentage points, with most of the increase occurring on low- and moderate-sales 

farms. This increase in the small-farm share of production reflects the net reclassification of 17,900 midsize or large-scale farms to small-farm groups. Many farms 

with contracts to produce poultry or hogs—classified as midsize or large-scale by 

gross value of sales—are reclassified as small when we use GCFI. These farms are 

more appropriately classed as small given the revenue and net incomes they receive 

as well as the fact that many of their operators also hold off-farm jobs (MacDonald, 

2008, pp. 23-24).

Using GCFI in the revised typology moves $22 billion of production to small family 

farms, mostly from formerly large-scale family farms, and virtually all of this shift 

is associated with production contracts. The distribution of production by those with 

claims on the production—i.e., farms, share landlords, and production contractors—

is also affected on small farms, with contractors’ share increasing from 2 percent 

under the original typology to 29 percent under the revised typology (fig. 3).
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 23

Small farms’ 29-percent share of production under the revised typology is not 

high by historical standards (fig. 4). Their share has trended downward from 35-40 

percent in the mid-1990s to 16-17 percent from 2007 to 2010, before the introduction of the revised typology. This downward trend reflects the shift of production from small farms to larger farms as well as a lack of price adjustments in the 

typology. Farms near the $250,000 cutoff moved out of the small-farm category 

when prices increased, taking their value of production with them.

Changes in Household Income

Inflation-adjusted median operator household income (see box, “Defining Operator 

Household Income”) is higher for each typology group in 2010 than in 1995, under 

both the original and revised typologies (table 8). In aggregate, farm operator households experienced a 23-percent increase in their inflation-adjusted income over that 

span, with some variation by type of farm. In contrast, inflation-adjusted income for 

all U.S. households increased by only 1 percent from 1995 to 2010.

Median income for operator households is similar in 2010 under the original 

typology and the revised typology, with two exceptions. Households operating 

moderate-sales farms or midsize and large-scale farms have higher incomes under 

the revised typology than under the original one. 

Under the revised typology, the moderate-sales group gains 39,700 formerly large 

farms with sales between $250,000 and $349,999 while losing 47,000 smaller farms 

with sales between $100,000 and $149,999. In addition, measuring size with GCFI 

moves another 10,500 larger farms into the group. As a result, the average size of 

moderate-sales farms increases, which is associated with higher operator household 

income from farm sources. 
24 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Defining Operator Household Income

Operator household income measures the income available to the household of 

the principal operator. It includes any income received by household members. As 

measured in the Agricultural Resource Management Survey (ARMS), it has three 

components:

1. Farm business income. In the case of unincorporated businesses and 

S-corporations, the household’s farm business income is calculated as its share of 

net cash income generated by the farm. Net cash income is gross cash income—

the sum of the sales of commodities, other miscellaneous farm-related income, 

and Government payments—less cash expenses and depreciation.1 The household 

of the principal operator does not necessarily receive all the business income 

generated by its farm. For example, business income may be shared with partners 

or relatives who hold an interest in the farm. In the case of C-corporations, farm 

business income is the dividends paid to household members. Wages paid to the 

operator by farms organized as S- or C-corporations are also included in farm 

business income.

2. Income from other farming activities. This component consists of net income 

from a farm other than the one being surveyed, wages paid to household members 

other than the operator, and net income from farmland rental.

3. Off-farm income. Off-farm income can come from earned sources—such as 

wages, salaries, and self-employment income—or from unearned sources, such as 

interest, dividends, and transfer payments, such as social security.

Income received from farming is the sum of the first two components.

1Depreciation is not a cash expense, but it is deducted to be consistent with accounting conventions 

used in the Current Population Survey (CPS). The CPS is the source of official income statistics for the 

United States.

Households operating moderate-sales farms also receive a much larger share of their 

income from farming under the revised typology—49 percent versus 35 percent 

under the original typology. Historically, households operating medium-sales 

farms—the predecessors to moderate-sales farms—received 40 to 50 percent of 

their income from farming most years prior to 2006 (fig. 5). The farm PPI jumped 

upward after 2006 (see fig. 1), which moved medium-sales farms just under the 

$250,000 cutoff into the large-scale group when their sales—measured in nominal 

dollars—exceeded $250,000. As a result, the share of income from farming fell, 

since the remaining farms in the moderate-sales group in the revised typology were 

smaller in terms of physical production.

Adjusting the cutoffs for price inflation under the revised typology puts many of 

those farms back into the moderate-sales group (the equivalent to medium-sales 

farms in the original typology). This, in turn, helps raise farming’s share of operator 

household income back to its pre-2006 level. Switching from gross farm sales to 

GCFI also increases the share of income from farming, but only marginally (not 

shown separately).
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 25

Table 8

Operator household income by the original and revised farm typologies, 

1995 and 2010

Original typology

Revised 

typology, 

Type of farm 1995 2010 2010

Number

Total operator households and family farms 2,036,810 2,143,063 2,143,063

2010 dollars per household1

Median operator household income 43,938 54,162 54,162

 Small farms 42,786 51,194 51,522

 Retirement 33,785 37,907 38,080

 Off-farm occupation2 56,421 69,806 70,107

 Farming-occupation:

 Low-sales 27,494 40,684 40,933

 Moderate-sales3 50,086 60,455 75,757

 Midsize and large-scale farms 98,580 117,758 160,045

Median income, all U.S. households 48,766 49,445 49,445 

Percent of total household income 

Share of income from farming4 10.6 13.9 13.9

 Small farms -0.8 -2.6 -1.3

 Retirement 4.1 1.9 1.7

 Off-farm occupation2 -9.3 -5.7 -5.7

 Farming-occupation:

 Low-sales -4.5 -6.4 -5.7

 Moderate-sales3 46.3 35.2 49.2

 Midsize and large-scale farms 76.5 72.8 76.8

GCFI = Gross cash farm income.

Note: Operator household income is calculated only for family farms. 

1Household income is expressed in 2010 dollars, using the Consumer Price Index, all urban consumers 

(CPI-U) to adjust for price changes.

2Residential/lifestyle in the original typology.

3Medium-sales in the original typology.

4Income from farming is the sum of farm business income and income from other farm activities (see 

box, “Defining Operator Household Income,” p. 24). The share of income from farming is negative if the 

household experienced a loss farming.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 1995 Farm 

Costs and Returns Survey and 2010 Agricultural Resource Management Survey for farm households. 

U.S. Census Bureau, Current Population Survey for all U.S. households.
26 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

The increased median household income for midsize and large-scale farms (table 

8) also reflects the reclassification of farms. Under the revised typology, the former 

large-scale group loses its smallest farms—46,400 farms with sales between 

$250,000 and $349,999—and experiences a net loss of 17,900 farms (mostly farms 

with production contracts) after the switch from gross farm sales to GCFI. The 

remaining midsize and large-scale farms are larger, generating more farm-related 

household income. Nevertheless, the share of income from farming for households 

operating these farms remained in the longstanding 66- to 80-percent range (fig. 5).
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 27

Effects on Midsize and Large-Scale Farms

Although the midsize and large-scale categories in the revised typology are not 

directly comparable with any categories in the original category, we can classify 

farms in earlier years according to the revised typology. When doing this, we also 

adjust the cutoffs for price changes, using the farm PPI. This allows us to examine 

shifts in the value of production to larger farms, similar to those shown in table 1. 

Changes in the Distribution of Farms and Production

Differences in the distribution of farms were modest (table 9). The 1995 and 2010 

estimates of the midsize, large, and very large shares of all farms differ by no more 

than 1 percentage point. This reflects the small number of midsize and large-scale 

farms, which total 106,600 in 1995 and 149,800 in 2010.

Changes in the distribution of production were more pronounced. Midsize farms’ 

share of production increased by 6 percentage points between 1995 and 2010. 

Increases for the large and very large farms were 8 and 5 percentage points, respectively. These changes are consistent with the production shifts presented in table 1.

Changes in Household Income

Inflation-adjusted median household income was higher in 2010 than in 1995 for 

midsize farms under the revised typology, but this was not true for the large-scale 

categories (table 10). Median household income was about the same both years 

for large family farms and about 9 percent lower in 2010 for very large farms. The 

smaller increases for large-scale farms may reflect specialization in commodities that 

did poorly in 2010. In addition, households that operate large-scale farms would not 

benefit as much from growth of off-farm income as households operating smaller 

farms. The share of total income from farming was fairly constant for a given category—69 percent in both years for midsize farms, 86 percent in 1995 and 83 percent 

in 2010 for large farms, and 94 and 96 percent, respectively, for very large farms. 
28 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Table 9

Farms and their value of production by the revised typology, 1995 and 2010

Revised typology1

Change in

distribution2 Type of farm 1995 2010

Number

Total farms 2,068,000 2,192,774 na

Percent of U.S. total

Distribution of farms:

 Small farms 93.3 90.9 -2.4

 Midsize farms 4.1 5.1 1.0

 Large-scale farms 1.0 1.7 0.7

 Large 0.9 1.5 0.6

 Very large 0.1 0.1 0.0

 Nonfamily 1.5 2.3 0.8

 Total 100.0 100.0 0.0

Distribution of the value of production:

 Small farms 44.8 28.6 -16.2

 Midsize farms 19.3 24.8 5.5

 Large-scale farms 21.4 34.3 12.9

 Large 14.5 22.8 8.3

 Very large 6.9 11.6 4.7

 Nonfamily 14.5 12.3 -2.2

 Total 100.0 100.0 0.0

GCFI = Gross cash farm income.

na = Not applicable.

1GCFI in 1995 was converted to 2010 dollars using the Producer Price Index (PPI) for farm products.

2Column 2 minus column 1.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 1995 Farm 

Costs and Returns Survey and 2010 Agricultural Resource Management Survey.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 29

Table 10

Operator household income by the revised typology, 1995 and 2010

Revised typology1 Change in

income, 

Type of farm 1995 2010 1995 to 2010

Number

Total operator households and family farms 2,036,810 2,143,063 na

2010 dollars per household % change

Median operator household income2 43,938 54,162 23.3

 Small farms 42,733 51,522 20.6

 Midsize farms 111,047 146,450 31.9

 Large-scale farms 276,227 269,774 -2.3

 Large 256,203 255,643 -0.2

 Very large 854,046 776,936 -9.0

Median income, all U.S. households 48,766 49,445 1.4

Percent of total 

household income

Share of income from farming3 10.6 13.9 na

 Small farms -2.1 -1.3 na

 Midsize farms 68.6 68.8 na

 Large-scale farms 87.7 86.7 na

 Large 85.7 83.3 na

 Very large 93.7 95.8 na

GCFI = Gross cash farm income.

Note: Operator household income is calculated only for family farms.

na = Not applicable.

1GCFI in 1995 was converted to 2010 dollars using the Producer Price Index (PPI) for farm products.

2Household income is expressed in 2010 dollars, using the Consumer Price Index, all urban consumers (CPI-U) to adjust for price changes.

3Income from farming is the sum of farm business income and income from other farm activities (see 

box, “Defining Operator Household Income,” p. 24). The share of income from farming is negative if the 

household experienced a loss farming.

Source: USDA, National Agricultural Statistics Service and Economic Research Service, 1995 Farm 

Costs and Returns Survey and 2010 Agricultural Resource Management Survey for farm households. 

U.S. Census Bureau, Current Population Survey for all U.S. households.
30 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Conclusions and Discussion

Updating the ERS typology encompasses raising the income cutoffs, adding categories for million-dollar farms, and changing the farm size measure from gross farm 

sales to GCFI. These considerations beg the question as to how often the typology 

will need to be updated in the future. 

Raising the Cutoffs and Adding Categories

The effects of revising the ERS typology differ by type of farm. Increasing the 

small-farm cutoff from $250,000 to $350,000 has practically no impact on the 

number of retirement and off-farm occupation farms. Most farms in these groups 

have sales so low compared to the original $250,000 cutoff that increasing the 

cutoff by another $100,000 has no effect. In contrast, increasing the boundary 

between low- and moderate-sales farms from $100,000 to $150,000 increases the 

number of low-sales farms by 9 percent, due to a shift of farms formerly classified as moderate-sales to the low-sales group. The number of moderate-sales farms 

decreases after the update because gains in the number of farms formerly classified 

as large are smaller than the losses of farms to the low-sales group. Operators of 

moderate-sales farms under the revised typology, however, received nearly half of 

their income from farming in 2010, similar to the share before the recent run-up in 

commodity prices.

Raising the $250,000 small-farm cutoff to $350,000 shifts 46,400 formerly large 

farms into various small-farm groups. As a result, the small-farm share of farms 

increases by 2 percentage points and the small-farm share of production increases 

by 5 percentage points. 

The distribution of production will likely continue shifting upward toward larger 

farms, particularly those with sales of $1 million or more. Adding categories for 

million-dollar farms will help in monitoring these shifts. Using two categories of 

million-dollar farms rather than one category is reasonable because farms with 

sales of at least $5 million are markedly different from those with sales between $1 

million and $4,999,999. 

Switching From Gross Farm Sales to GCFI

The overall effects of switching from gross farm sales to GCFI on the small-farm count 

are small. The net increase in the count of small farms is 17,900, and the small-farm 

share of all U.S. farms increases by less than 1 percentage point. The switch, however, 

does make a difference in the distribution of the value of production, increasing the 

small-farm share by 8 percentage points to 29 percent. The increase is largely due to the 

production under contract associated with farms reclassified as small.

Whether farm size is measured by gross farm sales or GCFI makes no difference 

for most farms, because the measures are equal for two-thirds of U.S. farms. The 

situation is different for farms with substantial discrepancies between gross farm 

sales and GCFI. When using GCFI to classify farms, there will be cases where 

small farms have substantial production under contract but low revenues and other 
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 31

cases where midsize or large-scale farms have substantial revenues from other farmrelated income but low production. 

Note, however, that discrepancies between GCFI and gross farm sales also exist 

when using gross farm sales to classify farms. Small-farm businesses with modest 

receipts from contract fees may be classified as large based on their production 

under contract, while other farms with substantial other farm-related income may be 

classified as small based solely on their production of farm commodities.

The Next Revision?

We will update the typology again when warranted by changes in commodity prices 

and farm structure. The cutoffs in the farm typology could be revised annually, 

since the farm PPI is available each year. Changes in commodity prices, however, 

differ from changes in the general price level, which affects how frequently it would 

be advisable to make adjustments based on the farm PPI. Farm commodity prices 

do not increase as steadily as the general price level (fig. 6).7 In addition, there was 

an extended period from 1979 to 2002 when commodity prices were relatively 

stable, showing no clear trend. The average annual increase in commodity prices 

during this period was 0.1 percent, compared with 3.3 percent for the general price 

level (table 11), although there still were large annual swings in the farm PPI. The 

subsequent increases in the PPI between 2002 and 2010—which triggered the 

revisions discussed in this report—averaged 6.1 percent per year, compared with 2.4 

percent for the general price level. 

7Figure 6 is similar to figure 1, except it adds a line for the GDP chain-type index to 

measure the general price level. It also uses 1965 as the base year, which facilitates 

comparing accumulated changes in general and commodity prices.
32 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Table 11

Changes in farm prices and the general price level, various periods

Item

Commodity prices 

(farm PPI)

General price level 

(GDP chain-type 

price index)

Percent

Change in index from 1965 to 2010 271.0 456.5

 Average annual change 3.3 3.9

 Minimum change -16.6 1.1

 Maximum change 40.9 9.5

Change in index from 1979 to 2002 -0.6 110.4

 Average annual change 0.1 3.3

 Minimum change -9.9 1.1

 Maximum change 14.0 9.4

Change in index from 2002 to 2010 52.5 20.4

 Average annual change 6.1 2.4

 Minimum change -16.6 1.1

 Maximum change 22.6 3.3

Source: Compiled by the Economic Research Service from Bureau of Labor Statistics and Bureau of 

Economic Analysis data (U.S. Office of the President, 2012, pp., 326-327 and 396-397).

Given the extended period when commodity prices were relatively stable, annual 

adjustments in the farm typology should not be necessary. Annual adjustments 

when the PPI changes only marginally could result in a small changes in the smallfarm cutoff—perhaps only $10,000—that go up one year and down the next. 

Cutoffs expressed as stable, round numbers are more appropriate for the audiences 

ERS targets in its publications, simplifying comparisons across years. Periodic 

adjustments—after several years of substantial price changes in the same direction—are likely to be more appropriate. 

The extended period of relatively stable commodities prices may also help explain 

why historical tables from the census of agriculture typically show the distribution 

of farms by sales class based on current dollars rather than constant dollars (USDA, 

NASS, 2009, pp. 7-8). Annual price adjustments make the most sense for items 

affected by steadily increasing prices. For example, families are classified as poor 

if their income is less than the applicable poverty threshold, which varies by family 

size and age of the householder (U.S. Department of Commerce, Bureau of the 

Census, 2012a). Poverty thresholds are adjusted annually for inflation as measured 

by the research series of the Consumer Price Index (CPI-U-RS), a price index that 

consistently trends upward over time, much like the GDP chain-type index. Without 

the annual adjustments, the purchasing power represented by the poverty thresholds 

would erode from year to year.

Finally, production is likely to continue to shift to larger and larger farms over 

time. These changes occur steadily over years, so additional classes at the upper 

end of the size distribution, if needed, can be added at the same time the cutoffs are 

adjusted for price changes.
Economic Research Service, USDA Updating the ERS Farm Typology, EIB-110 33

References

Briggeman, Brian C., Allan W. Gray, Mitchell J. Morehart, Timothy G. Baker, and Christine A. 

Wilson. 2007. “A New U.S. Farm Household Typology: Implications for Agricultural Policy,” 

Review of Agricultural Economics, Vol. 29, No. 4, Winter, pp. 765-782.

Hoppe, Robert A. 2001. “Farm Households Are Often Dual Career,” Rural America, Vol. 16, Issue 

2, Summer, pp. 41-51.

Hoppe, Robert A., Penni Korb, and David E. Banker. 2008. Million-Dollar Farms in the New 

Century. EIB-42. U.S. Dept. Agr., Econ. Res. Serv., Dec.

Hoppe, Robert A., James M. MacDonald, and Penni Korb. 2010. Small Farms in the United States: 

Persistence Under Pressure. EIB-63. U.S. Dept. Agr., Econ. Res. Serv., Feb. 

Hoppe, Robert A., and David E. Banker. 2010. Structure and Finances of U.S. Farms: Family Farm 

Report, 2010 Edition. EIB-66. U.S. Dept. Agr., Econ. Res. Serv., July.

MacDonald, James M. 2008. The Economic Organization of U.S. Broiler Production. EIB-38. U.S. 

Dept. Agr., Econ. Res. Serv., June.

Reimund, Donn A., Nora L. Brooks, and Paul D. Velde. 1986. The U.S. Farm Sector in the 

Mid-1980’s. AER-548. U.S. Dept. Agr., Econ. Res. Serv., May. 

Tevis, Cheryl. 2012. “Sizing It Up,” Successful Farming, Vol. 110, No.1, Jan., pp. 44-47.

U.S. Department of Agriculture, National Agricultural Statistics Service (USDA, NASS). 2009. 

2007 Census of Agriculture, United States Summary and State Data. Vol. 1, Part 51. AC-07-A51. Dec.

U.S. Department of Agriculture, National Agricultural Statistics Service (USDA, NASS). 2011a 

2010 Agricultural Resource Management Survey (ARMS): Phase III—Costs and Returns Report, 

Interviewer’s Manual. Jan.

U.S. Department of Agriculture, National Agricultural Statistics Service (USDA, NASS). 2011b. 

Farm Production Expenditures: 2010 Summary. ISSN: 1949-0895. Aug.

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Time to Act: A Report of the USDA National Commission on Small Farms. MP-1545. Jan.

U.S. Department of Commerce, U.S. Census Bureau. 2012a. Income, Poverty, and Health Insurance 

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34 Updating the ERS Farm Typology, EIB-110 Economic Research Service, USDA

Appendix: Calculating Gross Cash Farm Income From the 

Census of Agriculture

In the 2007 Census of Agriculture, NASS published a variation of the ERS 

farm typology based on the market value of agricultural products sold (USDA, 

NASS, 2009, pp. B-8 and B-9), which is conceptually related to gross farm sales. 

Market value of sales differs from gross farm sales in that it excludes Government 

payments received by farms and their landlords.

When ERS starts to use gross cash farm income (GCFI) rather than gross farm 

sales in its typology, could the revised typology be replicated from the census? The 

answer is yes, since the components of GCFI—the farm’s sales of crops and livestock, Government payments, and other farm income—are collected by the census. 

Switching from the market value of sales to GCFI, however, would require NASS 

to introduce a new income concept to census users. 

Sales

The census collects the value of sales (see section 21 in the 2007 questionnaire), 

which is equivalent to crop and livestock sales from ARMS. Both ARMS and 

the census exclude the value of production going to production contractors from 

sales. The census includes the landlord share in the sales of each commodity, while 

ARMS excludes it. The census, however, does ask for the share of total sales going 

to landlords, which could be subtracted from total sales to be more consistent 

with ARMS. One relatively minor inconsistency between ARMS and the census 

remains: ARMS measures sales net of marketing charges, but the census makes no 

deduction for these charges.8

Government Payments and Other Farm-Related Income

The census also collects information on Government payments (sections 4 and 

24) and other farm-related income (section 25), both of which are necessary to 

calculate GCFI. The census collects information on contract fees separately in the 

section on production contracts (section 20). Whether the receipt of Government 

payments excludes payments to landlords is unclear from census publications or the 

questionnaire.

8Operations that sell agricultural commodities typically have some marketing charges, 

usually deducted by the purchaser from the gross payments to the producer (USDA, NASS, 

2011a). Some specific examples include commercial crop drying expenses, refrigeration during storage for perishable products, and check-off fees.