HI 3U

r -, states

\^J> iment of

Agriculture

Economic

Research

Service

Rural Development

Research Report

Number 72

The Fafm

Entrepreneurial

Population, 1987

Margaret A. Butler
«WWMnWIWWWMUW^^

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The Farm Entrepreneurial Population, 1987. By Margaret A. Butler, Agriculture and

Rural Economy Division, Economic Research Service, U.S. Department of Agriculture.

Rural Development Research Report No. 72.

Abstract

About 5.7 million people lived in households tied to the farm business in 1987, compared

with 5.0 million in the farm population as conventionally defined by place of residence.

The new economically defined group, called the farm entrepreneurial population, includes

people who depend on farming but do not necessarily live on the farm. This report

analyzes census data on income, education, and other characteristics ofthe group identified by farm occupation and farm self-employment income criteria.

Keywords: Farm entrepreneurial population, farm operator population, farm-incomeonly population, demographic characteristics, social characteristics, economic characteristics, households, families

Acknowledgments

The author thanks Calvin Beale for his guidance, critical review, and comments.

Appreciation is also extended to Fred ffines, Judith Kalbacher, David McGranahan, and

Linda Swanson for constructive comments and review; and Vicky Salin for editorial

assistance.

1301 New York Avenue, NW.

Washington, DC 20005-4788 June 1989
Contents

Summary üí

Introduction . . . . . ^ . I

Method of Identification ... , . 1

Regional Distribution . . . ... 2

Racial and Ethnic Characteristics ....... 2

Sex and Age ....... 2

Education ............................... 4

Labor Force Participation . . ....... 4

Agricultural vs. Nonagricultural Employment . ... . . ... . . . . . . 5

Nonagricultural Industries . ......... .... . ..... ... . 6

Nonagriculîural Occupations ....................... 6

Unemptoyment . . . . . . . ..... ... ... . . . ... . ... ' 6

Household and Family Structure .......... . . 6

Farm Entrepreneurial Households . , . 7

Farm Entrepreneurial Families ...................... 7

Household and Family Income .................... 8

Household Income . . .... . . . . . . 8

Family Income ............................. 9

Poverty ..... . . ........ . . ................! 12

Sources of Income . . . . ........ . . 12

Conclusions ........... ..... 14

References ............. ..... .14

Appendix I: Definitions and Explanations ............... 15

Appendix 11: Source and Reliability of Estimates . . . ... te

Appendix III : Characteristics of Farm Operators and

Farm Income Recipients . . ................. I6
Summary

About 5.7 millicHi people lived in households tied to the farm business in 1987vcompared

with 5.0 million in the fann population as conventionally defined by residence. The new

economically defined group, called the farm entrepreneurial population, includes people

who depend on fanning but do not necessarily live on the farm. This report analyzes data

from the Census Bureau's March Current Population Survey for 1987 on income, education, and other characteristics ofthe farm entrepreneurial population.

Since first counted in the 1920 census, the farm population has been defined as people

who live on farms or ranches, regardless of occupation or income. Today, some people

live on farms but woric in nonagricultural oeci5)ations, and some people who operate

farms or derive income from their farms do not live there. This report quantifies and

describes the characteristics of those who have business ties to farming but do not necessarily live on farms.

The farm entrepreneurial population consists of people who live in households in which

someone's primary occupation is operating or managing a farm, or in which someone

receives income from self-employed farming.

Some details for 1987:

•

•

#

•

•

Most farm people were white males. The median age of the farm entrepreneurial

population was 35.9 years, which was older than the national median age.

Education among farm people varied with age. As in the national population,

persons age 45 years and older were not as well educated as those age 25-44.

The farm population ranked high in labor force participation but laggedbehind in

income. About 3.3 million farm entrepreneurial people were in the labor force,

with an unemployment rate ofjust 2.8 percent. Over 50 percent of people in the

households classified as farm entrepreneurial worked in nonagricultural industries.

The farm population's social structure was more traditional and homogeneous than

the total population. Of the 1.7 million farm entrepreneurial families, 93 percent

were married couples. Only 3.7 percent offamilies were headed by women. Over 56

p^cent offarm families had no children of their own living at home.

The median income offarm entrepreneurial families was $26,558 in 1986, about 10

percent below the national average. The poverty rate for farm families was almost 14

percent, but fewer than 1 percent received welfare benefits. The national poverty rate

was 11 percent with 6 percent on welfare. The main sources of income for farm

entrepreneurial families were farm self-employment and wages and salaries earned

from farm or nonfarm jobs.

Ill
The Farm Entrepreneurial Population, 1987

Margaret A. Butler^

Introduction

In March 1987, approximately 5.7 million persons, or 2.4

percent ofthe total population, lived in households associated with the operation of farms, as indicated by a

household member's occupation or source of income. In

contrast, an estimated 5 million persons were in the farm

population based on the conventional farm residence definiüon (11)}

Since first separately counted in the 1920 census, the farm

population has been defined as people living on farms or

ranches, regardless of occupation or income. At that time,

the vast majority of people tied to farming lived on farms.

But rural life became more diverse, as agricultural science

and technology cut labor requirements, and off-farm job

opportunities grew. As a result, people who live on farms

today are not necessarily employed in agriculture, and those

employed in agriculture often do not live on farms. Thus,

the farm residence approach has lost some of its former

validity. Alternative criteria for identifying farm-related

people and the differences in the criteria used are detailed

elsewhere (i).

To provide more complete coverage and a more precise concept, this report identifies the farm population based on farm

operator or manager occupation and/or self-employment

income from farming. This new category is called the farm

entrepreneurial population. Data are presented on the social,

economic, and demographic characteristics of the total farm

entrepreneurial population and its components for 1987.

Data for 1986 also appear where notable differences exist

between 1986 and 1987.^

No attempt is made here to identify the population associated with hired farmworkers. Many persons who do hired

farmwork have only a tenuous connection with farming

based CKI short-term seasonal work, and are also incompletely identified by occupational survey questions unless the

questions relate to an entire year. Such questions were asked

in the Agricultural Work Force Survey for 1985. which

The author is an economist in the Agriculture and Rural Economy

Division, Economic Research Service. U.S. Department of Agriculture.

Italicized numbers in paroiiheses refer to sources listed in the References

section.

Tables presented in this report for 1987 are also available for 1986 upon

request.

estimated the population of hired farmworker households

(5). But, the objective here is to define and characterize in

its own right the population of farmer households.

Method Ofidentification

Data used to identify the farm entrepreneurial population in 1986 and 1987 were drawn from the public-use

computer files of the March Current Population Survey

(CPS), conducted annually by the Bureau of the Census.

The household is the unit of observation and consists of all

persons who occupy a given housing unit. A house, an apartment, a group of rooms, or a single room are all considered

housing units when occupied as separate living quarters.

People who fell into the CPS farm occupation and farm selfemployment income categories were combined to form the

farm entrepreneurial population analyzed in this report.

Definitions of these CPS categories follow:

• Farm operator population. The farm operator population is defined as all persons living in households

where at least one member is employed primarily as a

farm operator or farm manager. A household is also

included if at least one unemployed member indicated

that his or her last full-time job was farm operator or

farm manager. An advantage in using occupation as a

criterion is that there is no residence requirement, enabling those who farm but live off-farm to be included.

A shortcoming is that, except for die CPS December

supplement, which lacks detailed demographic data,

employment data refer only to a respondent's primary

occupation. Households in which one or more members

have only part-time, secondary jobs in farming are

missed, unless another member works primarily as a

farmer.

• Farm income population. Persons in households witii at

least one member who receives farm self-employment

income make up the farm income population. Farm

self-employment income is net money income (gross

receipts minus operating expenses) from the operation

of a farm received by a person on his or her own

account, as an owner, renter, or sharecropper. This

criterion also has no residency requirement but misses

households of people who run incorporated farms.
The total farm entrepreneurial population consists of all

persons in households identified by either or both of the farm

occupation and farm income criteria. The two populations

heavily overlap; households often qualify under both criteria.

Because most farm operators are self-employed, about 51

percent of the total farm entrepreneurial population is in

households with both a farm operator or manager and a farm

self-employment income recipient. Thirty-eight percent of

the farm entrepreneurial population is in households where

one or more persons receive farm self-employment income

and no one is primarily employed as a farm operator or farm

manager. The remaining 11 percent reside in households

with an operator or manager, but no reported farm selfemployment income.

It might seem that identifying households with farm selfemployment income would also fully identify those containing a farm operator. This is not always the case, however,

because new operators would not have had farm selfemployment income in the preceding year. In addition,

managers are included in the operator class in this report and

are not self-employed unless they had some secondary

activity on their own account.

This report focuses on characteristics of the entire farm

entrepreneurial population. The components of the population are farm operators or farm self-employment income

recipients, their families, and their households. Some data

are available on characteristics of farm operators and farm

income recipients alone (see appendix III).

Regional Distribution

Slightly more than half of all farm residents lived in the

South in 1950, and about one-third lived in the Midwest

(10). But mechanization of cotton production and the near

abandonment of the share-tenant system offarming resulted

in heavy movement of people off the farm and a smaller

southern share of the farm population total (2).

Table 1—Regional distribution of the farm entrepreneurial

population, 1987^

Farm Farm Farm Farm

Region Total operator income

only

Total operator income

only

Thousands . Percent

Total 5,700 3,557 2,143 100.0 100.0 100.0

Northeast 367 265 102 6.4 7.5 4.8

Midwest 2,652 1,743 909 46.5 49.0 42.4

South 1,792 939 853 31.4 26.4 39.8

West 889 611 278 15.6 17.2 13.0

'Totals may not add due to rounding.

Source: (7).

As measured by the entrepreneurial definition, more than

two-fifths of the farm entrepreneurial population lived in the

Midwest in 1987 (table 1). The South had the second largest

share, with somewhat less than a third of the farm population, although in total population, it was the most populous

U.S. region (ñg. 1).

Southerners in the farm entrepreneurial population were

more likely to receive farm self-employment income without having a farm occupation, compared with their counterparts in other regions. The farm-income-only population in

the South totaled 39.8 percent compared with the farm

operator population at 26.4 percent. This reflects the more

frequent small-scale nature ofsouthern farming and the

greater reliance on off-farm work as the chief source of

employment.

Racial and Ethnic Characteristics

Few minorities operated farms in the United States. Only

1 percent of the farm entrepreneurial population was black,

and 1.9 percent was of Hispanic origin (table 2). Most

minorities in agriculture were hired farm wage and salary

workers.

Sex and Age

Males outnumbered females in the farm entrepreneurial

population, with 113 males for every 100 females, compared

with about 94 males per 100 females in the total U.S. population (7). The sex ratio was even higher in the farm operator

population, where there were 119 males per 100 females.

The farm entrepreneurial population was older than the

population nationwide. The median age of the farm

entrepreneurial population was 35.9 years in 1987 (table 2),

compared with a median for the total population of 32.0

years (7).

The historic movement of young adults off farms has significantly altered the age structure of farm people. Persons

of prime working age (25-44 years old) constituted only 26.5

percent of the farm entrepreneurial population in 1987. In

contrast, 32 percent of the total U.S. population was in this

age group (fig. 2). The drop in the number of farms brought

about by productivity gains and the initial capital investment

needed for modem farming have slowed the entry of young

people into farming. There were 3.4 million farms in 1965.

By 1987, the number of farms had fallen to 2.2 million (6).

Young people have left farms, leaving an older but still

economically active group in the farm entrepreneurial

population. The older group (45-64 years old) constituted a

much higher share of the work force in the farm population
Figure 1

Regional distribution of the population, 1987

Farm entrepreneurial United States

West

Northeast

South

Source: {Tj.

Table 2—Characteristics of the farm entrepreneurial population, 1987*

Characteristic

Total

Male

Female

Race ¡2

White

Black

Hispanic origin^

Age:

Under 18 years

18-64 years

18-24 years

25-34 years

35^4 years

45-54 years

55-64 years

65 years and over

Median age

— = Not applicable.

^Totals may not add due to rounding.

^Does not include category "other races."

^Persons of Hispanic origin may be of any race.

Source: {7).

Farm Farm

Total operator mcome

only

... Thousands...

5,700

3,023

3,557

1,936

1,621

2,143

1,087

1,056

5,576

59

3,514

16

2,062

43

111

35.9

Total

86

35.5

25

100.0

53.0

47.0

97.8

1.0

1.9

Years

36.5

Farm

operator

. Percent.

100.0

54.4

45.6

98.8

.4

2.4

Farm

income

only

100.0

50.7

49.3

96.2

2.0

1.2

1,472 890 582 25.8 25.0 27.2

3,734 2,318 1,416 65.5 65.2 66.1

587 385 202 10.3 10.8 9.4

723 482 241 12.7 13.6 11.2

786 474 312 13.8 13.3 14.6

792 442 350 13.9 12.4 16.3

847 537 310 14.9 15.1 14.5

495 349 146 8.7 9.8 6.8
than in the total population (28.8 percent versus 18.8 percent). Retirement age people, those 65 years and older,

accounted for only 8.7 percent of the farm entrepreneurial

population and 11.7 percent of the total population. This

lower representation of retirement age people in the farm

population is forced partly by the employmentnoriented

definition used in this report To be counted among the farm

entrepreneurs, a person needed current or recent employment

as a farm operator or manager, or farm self-employment

Income.

Education

Farm people were just as well educated as the general population. Of the farm entrepreneurial population age 25 years

and older, 32 percent had attended college (table 3). An additional 46 percent had completed high school only. In comparison, 37 percent of the U.S. population had attended

college and an additional 39 percent had completed high

school. A further age breakdown indicates that the younger

farm entrepreneurial population <25-44 years old) and those

age 45 years and older were both more likely than their U.S.

counterparts to have completed high school and were just as

likely to have attended at least 1 year of college (fig. 3).

Younger farm people were better educated than their elders.

Although this is true for the population as a whole, the difFigure 2

Age distribution of the population, 1987

ference was strongerfor the farm population. Nine percent

of the farm entrepreneurial population age 25-44 had not

completed high school. In contrast, 30 percent of those age

45 years and older were not high school graduates. Not long

ago, more human labor was required to operate the family

farm and children often left school at an early age to work

the farms.

Advanced study has become common in the younger farm

population. Nearly 45 percent of die farm entrepreneurial

population age 25-44 had attended college for at least 1 year,

but only 25 percent of those age45 years and older had some

college education. With advancement in technology and

sciences, farming has become more of a business and the

need for higher levels of education is greater now. But some

ofthe higher education may be used in nonfarm jobs. The

farm-income-only population, the subgroup most commonly

working outside farming, shows the highest education within

the farm population.

Labor Force Participation

Seventy-five percent ofthe farm entrepreneurial population

age 16 years and older was in the labor force in 1987 (table

4). The labor force participation rate for males (88.4 percent) was significantly higher than that for females (59.6 percent). Among men, farm operators were more likely to

65 and

over
participate in the labor force than those with farm-incomeonly.

Agricultural vs. Nonagricultural Employment

As expected, employment of the farm operator population

was overwhelmingly concentrated in agriculture. But farmincome-only persons were more likely to work in nonagricultural industries (fig. 4). About 86 percent of males in the

farm operator labor force were employed in agriculture versus only 4 percent of males in üie farm-income-only labor

force. Only 34 percent of the females in the farm operator

population worked in agriculture. By definition, each

household in the farm operator population had at least one

member with a farming occupation. Therefore, the farm

Table 3—Education of the farm entrepreneurial population age 25 years and over, 1987*

Education level Total

Farm

operator

Farm

income

only

Total

Farm

operator

Farm

income

only

... Thousands... Percent...

Total

Not high school graduate

High school graduate

Some college

3,641

793

1,673

1,176

2,284

528

1,082

673

1,357

265

591

503

100.0

21.8

45.9

32.3

100.0

23.1

47.4

29.5

100.0

19.5

43.6

37.1

Persons age 25-44

Not high school graduate

High school graduate

Some college

1,508

143

723

642

954

97

483

375

554

46

240

267

100.0

9.5

47.9

42.6

100.0

10.2

50.6

39.3

100.0

8.3

43.3

48.2

Persons age 45 and over

Not high school graduate

High school graduate

Some college

2,133

649

949

534

1,328

431

599

298

805

218

350

236

100.0

30.4

44.5

25.0

100.0

32.5

45.1

22.4

100.0

27.1

43.5

29.3

^Totals may not add due to rounding.

Source: (7).

Figure 3

Educational level of persons age 25 and over, 1987

^^^ High school graduate ^^ Not high school graduate Some college

Farm

entrepreneurial

United

States

Age

45 and over

Totals may not add to 100 due to rounding.

Source: {7}.
operator population would have a higher representation in

agriculture than the farm-income-only population, which

includes many people with only secondary work in fanning.

Nonagricultural Industries

Farm entrepreneurial persons in nonagricultural industries

worked primarily in professional and related services, trade,

and manufacturing industries (table 5), Women were far

more likely than men to be employed in professional and

related services (40.5 percent versus 15.5 percent, respectively). Trade was the leading industry for men.

Nonagricultural Occupations

The occupational distribution of farm entrepreneurial persons who had a nonfarm residence and were employed outside agriculture shows that 64 percent held white-collarjobs,

24 percent were in blue-collar occupations, and only 12 percent were in service occupations (7). In contrast, 58 percent

of the total labor force worked in white-collar occupations.

People in the total labor force were just as likely as the farm

entrepreneurial labor force to be employed in blue-collar and

service occupations.

Unemployment

The rate of unemployment was relatively low among farm

people compared with the total population. Only 2.8 percent

ofthe farm entrepreneurial labor force was unemployed

(table 4), while unemployment for the total population was

7.0 percent.

Men and women in the farm entrepreneurial labor force had

similar unemployment rates. At the national level, more

men than women were unemployed (7.4 percent versus 6.6

percent, respectively).

Unemployment was higher in the farm-income-only population than in the farm operator population. This was true for

both men and women.

Household and Family Structure

^ White-collar occupations include managerial, professional, technical,

sales, and administrative support. Blue-collar occupations include precision

production, craft, repair, operators, fabricators, and laborers.

Two percent of U.S. households were classified as farm

entrepreneurial households. Farm households generally fit

traditional family patterns, although because of a lower

Table 4—Labor force participation of the farm entrepreneurial population age 16 years and over, 1987*

Labor force status Total

Farm

operator

Farm

income

only

Total

Farm

operator

Farm

income

only

Total

In labor force

Not in labor force

In labor force

Employed

Agriculture

Nonagriculture

Unemployed

Males

In labor force

Not in labor force

In labor force

Employed

Agriculture

Nonagriculture

Unemployed

Females

In labor force

Not in labor force

In labor force

Employed

Agriculture

Nonagriculture

Unemployed

... Thousands... Percent

4,451

3,333

1,118

2,793

2,169

624

1,658

1,164

494

lOO.O

74.9

25.1

100.0

111

100.0

70.2

29.8

3,333

3,240

1,527

1,713

93

2,169

2,122

1,480

642

47

1,164

1,118

47

1,071

46

100.0

97.2

45.8

51.4

2.8

100.0

97.8

68.2

29.6

2.2

100.0

96.0

4.0

92.0

4.0

2,365

2,090

275

1,521

1,413

108

844

677

167

100.0

88.4

11.6

100.0

92.9

7.1

100.0

80.2

19 8

2,090

2,030

1,248

782

60

1,413

1,382

1,221

161

30

677

648

27

621

30

100.0

97.1

59.7

37.4

2.9

100.0

97.8

86.4

11.4

2.1

100.0

95.7

4.0

91.7

4.4

2,086

1,243

843

1,272

756

516

814

487

327

100.0

59.6

40.4

100.0

59.4

40.6

100.0

59.8

40.2

1,243

1,210

278

932

33

756

739

259

480

17

487

471

19

452

16

100.0

97.3

22.4

75.0

2.7

100.0

97.8

34.3

63.5

2.2

100.0

96.7

3.9

92.8

3.3

^Totals may not add due to rounding.

Source: (1).
proportion of adults under age 35, they had fewer young

children at home.

Farm Entrepreneurial Households

An average of 3.07 persons lived in each farm entrepreneurial household in 1987 (table 6). This was small by

historic standards for farm households, but farm households

remained somewhat larger than the national average of 2.7

persons (S).

Farm households numbered almost 1.9 million, accounting

for about 2.1 percent of all U.S. households (table 6). Farm

entrepreneurial households were more likely than households in general to be classified as family households.

Nonfamily households accounted for 10 percent of all farm

entrepreneurial households compared with 28 percent of all

U.S. households.

Farm Entrepreneurial Families

Of the approximately 64.5 million U.S. families in 1987,

farm entrepreneurial families accounted for 2.7 percent (8).

The average size of farm entrepreneurial families (3.41 persons) did not differ significantly from that of all families

(3.19 persons) (table 7) (8).

The married-couple family remains the dominant household

type in the United States, despite substantial increases in

other family types during the 1980's. The structure of farm

families seems to be even more stable and traditional than

that of U.S. families overall (fig. 5). Married-couple

fanilies accounted for 93 percent of farm entrepreneurial

families in 1987 (table 7); 80 percent of U.S. families were

married couples (8), Females headed 3.7 percent of farm

families and 16.2 percent of all U.S. families.

Despite the predominance of married-couple families,

children were scarce among the farm population. This is

consistent with its older age structure. Fifty-six percent of

all farm entrepreneurial families had no children of their

own under 18 years of age living at home (table 7). Of the

farm families that had one or more of their own children,

more than half had only older children (age 6-17 years). Just

22 percent of farm entrepreneurial families had only preschool age children.

Families in the general population are more likely to have

children. Fifty percent of all U.S. families had children

under 18 years of age (S). Among U.S. families with

children, the proportion of children in the two age groups,

school-age and younger, was about the same as for those in

farm families.

Figure 4

Employment status of the farm entrepreneurial labor force, 1987

Percent

100

80

60 -

40

20 -

Males Females

Farm entrepreneurial

^ Employed In agriculture

Males Females

Farm operator

Males Females

Farm-income-only

Employed in nonagricultural industries B Unemployed

Source: (7).
Household and Family Income

Income of farm entrepreneurialfamilies lagged behind the

rest of the Nation. Farm families and households differed

from those in the general population in the amount and

source of income received. Income data are shown separately for households and families.

Household Income

Household income includes the income of all related persons

plus the income of any unrelated persons in the household.

In the CPS, income data show gross money income r^eived

before payments of Federal, State, local, or Social Security

(PICA) taxes and before deductions, such as union dues or

Medicare premiums.

Tlie median income for farm entrepreneurial households was

$25,605 in 1986 (table 8). No significant difference was

found between the median income of farm households and

that of $24,897 for all U.S. households (9).

However, median income was not evenly divided between

farm household subgroups. The median income of farm

operator households ($21,024) was far lower than that of

farm-income-only households ($34,344). Thus, the

households with at least one person working solely or

primarily as a farm operator or manager in 1987 did not fare

nearly as well in 1986 income as those households wiäi

some farm income but no primary occupational commitment to the farm business. This was true despite the fact

that 1986 was by far the best year for farm income since

1979(5).

Table 5—Employment in nonagricultural industries of the farm entrepreneurial population age 16 years and over, 1987^

Farm Farm Farm Farm

Nonagricultural industries Total operator income

only

Total operator income

only

... Thousands... .. . .Percent...

Total 1,713 642 1,071 100.0 100.0 100.0

Forestry and fisheries 7 5 2 .4 .8 .2

Mining and construction 119 33 86 6.9 5.1 8.0

Manufacturing 265 86 179 15.5 13.4 16.7

Transportation, communications.

and other public utilities 94 25 69 5.5 3.9 6.4

Trade 345 120 225 20,1 18.7 21.0

Finance, insurance, and

real estate 122 53 69 7.1 8.3 6.4

Professional and related

services 498 239 259 29.1 37.2 24.2

All other services 168 55 113 9,8 8.6 10.6

Public administration 96 27 69 5.6 4.2 6.4

Males 782 161 621 100.0 100.0 100.0

Forestry and fisheries 5 5 0 .6 3.1 0

Mining and construction 107 28 79 13.7 17.4 12.7

Manufacturing 169 31 138 21.6 19.3 22.2

Transportation, communications,

and other public utilities 59 11 48 7.5 6.8 7.7

Trade 175 32 143 22.4 19.9 23.0

Finance, insurance, and

real estate 42 8 34 5.4 5.0 5.5

Professional and related

services 121 35 86 15.5 21.7 13.8

All other services 49 7 42 6.3 4.3 6,8

Public administration 55 5 50 7.0 3.1 8.1

Females 932 480 452 100.0 100.0 100.0

Forestry and fisheries 1 0 1 .1 0 .2

Mining and construction 12 5 7 1.3 1.0 1.5

Manufacturing 96 54 42 10.3 11.3 9.3

Transportation, communications,

and other public utilities 35 15 20 3.8 3.1 4.4

Trade 170 88 82 18.2 18.3 18.1

Finance, insurance, and

real estate 80 45 35 8.6 9.4 7.7

Professional and related

services 377 204 173 40.5 42,5 38.3

All other services 119 48 71 12.8 10.0 15.7

Public administration 41 22 19 4.4 4.6 4.2

^Totals may not add due to rounding.

Source: (7).

8
Family Income

As a group, farm families had lower income than families in

general. The median income of fann entrepreneurial

families was $26,558 in 1986, about 10 percent below the

median of $29,410 for families nationwide (table 9) (7).

Farm families were just as likely as families nationwide to

be in the middle income category (fig. 6). However, a larger

proportion of farm families (6.9 percent) than families

nationwide (4.6 percent) reported income of less than

$5,000. Farm families were also underrepresented in the

$40,000 and over income groups. About 27 percent of farm

entrepreneurial families and 33 percent of U.S. families

reported income of $40,000 or more. However, these statistics mask wide variation within the farm population.

The median income for farm-income-only families was significantly higher than that for both farm operator families

and families nationwide. Farm operator famiUes were more

likely than farm-income-only famiUes to be in the lower income categories (fig. 7). Only one-fourth of farm operator

families reported income of $35,000 or more versus one-half

of farm-income-only families.

The early and mid-1980's were years of heavy financial

stress among U.S. farmers. In 1986,21 percent of all farm

entrepreneurial families who received farm self-employment

income reported a net loss fi^om farming. This was an improvement over 1985, when 28 percent had a net loss due to

farming. Most farmers by 1986 earned enough to meet prinTable 7—Characteristics of farm entrepreneurial families, 1987*

cipal and interest payments, reduce debt outstanding, and

meet other financial commitments (4), But continued

foreclosures and debt restructuring by lenders showed that

not all farmers shared equally in the recovery.

However, a loss from farming was not necessarily a reflection of the overall socioeconomic well-being offarm

Table 6—Farm entrepreneurial households by type and size,

19871

Farm Farm Farm Farm

Type and size Total operator income

only

Total operator income

only

Thousands.... . Percent

Total households 1,856 1,152 704 100.0 100.0 100.0

Family households

Nonfamily

households

1,671

185

1,033

119

638

66

90.0

10.0

89.7

10.3

90.6

9.4

Number of persons

in households:

One 161 99 62 8.7 8.6 8.8

Two 656 414 242 35.3 35.9 34.4

Three 390 231 159 21.0 20.1 22.6

Four 372 242 130 20.0 21.0 18.5

Five or more 276 166 110 14.9 14.4 15.6

Number

Average number

of persons

per household 3.07 3.09 3.04 — — —

— = Not applicable.

'Totals may not add due to rounding.

Source: (7).

Characteristic Total

Farm

operator

Farm

income

only

Total

Farm

operator

Farm

income

only

.. . Thousands... Percent...

Total families

Married-couple family

Other, male householder

Other, female householder

1,671

1,560

49

62

1,033

969

34

30

638

591

15

32

100.0

93.4

2.9

3.7

100.0

93.8

3.3

2.9

100.0

92.6

2.4

5.0

Own children under 18 years:

None

One or more

937

733

603

430

334

303

56.1

43.9

58.4

41.6

52.4

47.5

One or more own children

All under 6 years

Some under 6 years,

some 6-17 years

All 6-17 years

733

159

150

424

430

100

91

239

303

59

59

185

100.0

21.7

20.5

57.8

100.0

23.3

21.2

55.6

100.0

19.5

19.5

61.1

Number of persons in families:

Two

Three

Four

Five or more

656

388

361

266

409

228

235

160

247

160

126

106

39.3

23.2

21.6

15,9

39.6

22.1

22.7

15.5

38.7

25.1

19.7

16.6

Average number of

persons in families

XT ^ !• , ,

3.41 3.44 3.36

Number

— —

'Totals may not add due to rounding.

Source: (7).
families. Income from other sources helped compensate for

losses in agriculture. The percentage offarm families who

lost money from all income sources did not change significantly between 1985 and 1986. Total income was negative for 3.5 percent of farm entrepreneurial families in 1986

versus 5.1 percent in 1985 (table 9) (7).

Figure 5

Family households by type, 1967

Farm entrepreneuria! United States

Female householder

3.7%

Male householder

2.9%

Source: (Z).

Table 8—Income of farm entrepreneurial households, 1986*

Household income Total

Farm

operator

Farm

income

only

Total

Farm

operator

Farm

income

only

Total households

Household income:

Loss

$1-$2,499

$2,500-$7,499

$7,50049,999

$10,000-314,999

$15,Ö00-$19,999

$20,000-$24,999

$25,000-$29,999

$30,000-339,999

$40,000-$49,999

$50,000 and over

Median household income

... Thousands Percent

1,856 1,152 704 100.0 100.0 100.0

77 70 7 4.1 6.1 1.0

34 29 5 1.8 2.5 .7

116 90 26 6.3 7.8 3.7

69 52 17 3.7 4.5 2,4

200 159 41 10.8 13.8 5.8

222 151 71 12.0 13.1 10.1

191 122 69 10.3 10.6 9.8

157 94 63 8,5 8.2 8.9

300 178 122 16.2 15.5 17.3

176 75 101 9.5 6.5 14.3

314 133 181 16.9 11.5 25.7

Dollars

25,605 21,024 34,344

— = Not applicable.

^Totals may not add due to rounding.

Source: (7).

10
Table 9—Income and poverty among farm entrepreneurial families, 1986^

Income and poverty Total

Farm

operator

Farm

income

only

Total

Farm

operator

Farm

income

only

Total families

Family income:

Loss

$1-$2,499

$2,500-$4,999

$5,{)00-$7,499

$7,500-$9,999

$10,0(X)-$14,999

$15,000-$19,999

$20,000-$24,999

$25,000-$29,999

$30,000-$34,999

$35,000-$39,999

$40,000-$49,999

$50,000 and over

Below poverty level

Median family income

... Thousands.... .... Percent

1,671 1,033 638 100.0 100.0 100.0

58 51 7 3.5 4.9 1.1

24 19 5 1.4 1.8 .8

34 29 5 2.0 2.8 .8

61 49 12 3.7 4.7 1.9

62 49 13 3.7 4.7 2.0

176 141 35 10.5 13.6 5.5

197 134 63 11.8 13.0 9.9

178 118 60 10.7 11.4 9.4

146 88 58 8.7 8.5 9.1

160 96 64 9.6 9.3 10.0

123 69 54 7.4 6.7 8.5

160 66 94 9.6 6.4 14.7

292 124 168 17.5 12.0 26.3

229

26,558

195

21,885

34

34,765

13.7

Dollars

18.9 5.3

— = Not applicable.

^Totals may not add due to rounding.

Source: {7}.

Figure 6

Income distribution of U.S. families and farm entrepreneurial families, 1986

Percentage of families

25

20

15

10

Farm entrepreneurial

iii»»»**%

f

j_ -L J- -L

Under

5.0

5.0-

9.9

10.0-

14.9

15.0-

19.9

20.0-

24.9

25.0-

29.9

30.0-

34.9

35.0-

39.9

40.0-

49.9

50.0

and over

$ thousand

Source: (7).

11
Poverty Sources of Income

Poverty thresholds are based solely on money income and

vary by family size. The average poverty threshold for a

family of four was $11,203 for income received in 1986 and

$10,989 in 1985 (9). Farm enirep-eneurial families were

somewhatmore likely than all U.S. families to live in poverty. In 1986, almost 14 percent of farm families had incomes

below the poverty level, compared with approximately 11

percent of families nationwide (table 9) (9).

Although the 1986poverty rate forfarm families was high, it

was significantly lower than their 1^85 rate (18 percent).

The 1985 rate for families nationwide was slightly more than

11 percent (9).

Poverty was more prevalent among farm operator üian farmincome-only families in both 1985 and 1986 (fig. 8). One

out of every 4 farm operator families and only 1 out of every

20 farm-income-only families were below the poverty level

in 1985. The poverty rate for farm operator families had

declined significantly by 1986,but the rate for farm'-incomeonly families did not change significantly between 1985 and

1986.

Farm enirepreneurial families received income from various

sources, but as expected, most families (88 percent) received

fann self-employment income (or loss) in 1986 (table 10).

About 20 percent of farm operator families reported no farm

self-employment income. Families without farm selfemployment income could be families with farm managers

or new operators. Almost 28 p^cent of the total income of

farm operator families came from farming compared with

less than 8 percent for farm-income-only families (7).

Wage and salary income was úie most fi^equently reported

income source, after farm self-employment income, for farm

entrepreneurial families. Wage and salary income was also

the main source of income for families nationwide. M 1986,

78 percent of farm families and 82 percent of families nationwide received wage and salary income (5). Nine out of 10

farm-income-only families versus 7 out of 10 farm operator

families reported wage and salary as a source of income.

Interest, Üie third most frequently reported income source, is

widely received by farm entrepreneurial families. Farm

Figure 7

Income distribution of farm operator and farm-income-only families, 1986

Percentage of families

30

25

20

15 -

10

5 -

Farm operator

J- J- JUnder

5.0

5.0-

9.9

10.0- 15.0-

14.9 19.9

20.0-

24,9

25.0-

29.9

30.0-

34.9

35.0-

39.9

40.0-

49.9

50.0

and over

Source: (7).

$ thousand

12
families were more likely than families nationwide to have

savings or investments that earned interest. About threefourths of farm families and two-thirds ofU.S. families

reported income from interest in 1986 (table 10) (<S). A third

of the farm families received other property income, such as

dividends and rents. This, too, is a larger proportion than

found among U.S. families as a whole. The higher

likelihood offarm entrepreneurial families to earn rental

income, which is included in the dividend category, may

partially explain the difference in receipt of dividends (7).

Some farm families received income from pubhc assistance,

unemployment compensation, and retirement programs, but

these were exceptions. This report classified people as members ofthe farm population if they had farm-related jobs or

farm self-employment income. Thus, few people in farm

entrepreneurial families would be expected to receive these

kinds of payments, which go to people who are not working.

Welfare benefits ranked at the bottom of the list of income

sources for farm entrepreneurial families. Less than 1 percent offarm families received public assistance compared

with almost 6 percent of families nationwide (<S). One

reason for this difference is that farm families tend to have

more assets than families nationwide. Another explanation

is that the farm population has far fewer female-headed

families with minor children. Thus, a smaller proportion of

farm famihes qualify for assistance.

People in farm entrepreneurial families may have received

other types of benefits less often than families in the general

population because they chose not to participate. Wage and

salary workers and/or their employers are required to enroll

in unemployment compensation and retirement benefit

programs. But the self-employed have an option not to enroll. The higher proportion of self-employed persons in farm

entrepreneurial families explains part of the difference in tiie

rate at which farm families receive these benefits compared

with tiie rate for families nationwide. Eight percent of farm

entrepreneurial families, and 14 percent of all families,

received unemployment compensation, veterans payments,

and workers' compensation in 1986 (8). Farm families were

also less likely to collect retirement income (10.6 percent

versus 14.4 percent).

Income sources differed between the two subgroups in the

farm population. Farm operator families were less likely

than farm-income-only families to get interest, dividends, or

rent. This was consistent with the lower median income for

farm operators/managers. And, the operator families were

more likely to receive Social Security payments, an indication of their older average age.

Figure 8

Poverty among farm operator and farm-inoome-only families, 1985 and 1986

1985 1986

Source: (7).

13
Conclusions

The use offarm oecupatíon and farai self-employment

iiKome as criteria for identifying fain pK)pleemphasi^s

fanning as a business raAerthan a place ofresidence. The

business emphasis of our farm population definition isinôtiçeable in some of the demograpMc and scKiceeonomic characteristics ofthe farm entrepreneurial population:

Males outnumbered females, particularly in the farm

operator popiüation, where someone had to be actively

working in the occupation.

• Education has improved for younger persons. The

proportion ofthe population age 2544 who have

completed high school is signiñcantíy higherthan for

tho^ ajge 45 years and oldter. Modem technology has

increased the need for more education.

• Unemployment was low for both males and females.

Self-employed persons are still considered employed

even when profits are low or negative.

Table lO-^Source of income of farm entrepreneurial families,

1986

Farm Farm

Source of income Toml operator income

only

Thousands

Total families 1,671 1,033

Percent

638

Percentage of families receiving:

Wage and salary income 77.6 70.5 89.2

Nonfarm self-employment income 18.2 14.4 24.5

Farm self-employment income 87.7 80.4 100.0

Interest 73.7 70.7 78.6

Dividends* 35.5 320 41.1

Social security and railroad

retirement income 22.7 26.Ö 17.4

Supplemental security

inèonrè^ 1.3 1.5 .8

Public assistance and

welfare^ .6 .7 .4

Unemployment compensation,

veterans payments, and

workers'compensation 8.4 7.5 10.0

Retirement* 10.6 9*.9 11.6

Alimony and child support^ 11.Ö 9.0 14.5

^Includes dividends, net income from estates or trusts, net rental income,

or royalties.

^Includes payments made by Federal, State, and local welfefe agencies

to low-income f^rsons who are aged (65 years old and over), blind, or

disabled.

^Includes Aid to Families with Dependent Children and general

assistance.

Includes private pensions and annuities, miHtary retirement, and

Federal, State, or local government pensions.

^Includes other regular contributions from persons not in the household.

Source: (7).

Farm entrepreneurial families were distinctive in several

ways wten compared with famiUes at th^^

TTiey were more traditional in the sense llmtt^

significantly higher prejxmion ofinarried-eotq)le ianiilies

Although farm families had lower inconie and higher

poverty rates, they also were more self-reliant/ Only a veiy

small proportion reportedpublic assistance and welfare as a

source of income. More tfianthiee-fourüís of farm families

received income from farm self-employment as well as wage

and salmy income.

Although farming can still be considered a lifestyle, people

who mafce their living by farming must have appropriate

skills fix the farm^siness* Technological change means

thatfarmersneed advanced skillstobe coi^^ The

people responding to these advanced requirements sufficiently to maintain their farms should be measured as the unique

group they are.

This report is the first of an annual series that will

monitor farm people using farm occupation and farm

self-employment income criteria.

References

1. Banks, Vera J., Margaret A. Butler, and Judith Z. Kalbacher. Alternative Définitions ofFarm People. AGES 89-

9. U.S. Dept. Agr., Econ. Res. Serv., Mar. 1989.

2. _________ and Judith Z. Kalbacher. Farm Income

Recipients and Their Families: A Socioeconomic Profile,

RDRR-30. U.S. Dept. Agr.. Econ. Res. Serv., Sept. 1981.

3. Cox, E. Jane, and Victor J. Oliveira. Agricultural Work

Force Households: How Much Do They Depend on Farmingl AIB.547. U.S. Dept. Agr., Econ. Res. Serv., July 1988.

4. U.S. Department of Agriculture, Economic Research Stxvic^: Financial Characteristics ofUS. Farms» January 7,

79S7. AIB-525. Aug. 1987.

5. _, National Agricultural Statistics Service.

Agricultural Statistics, 1987,

6. ., National Agricultural Statistics Service. Crop

Production, CrPr2-2. Aug. 1987 and earlier years.

7. US. Department ofCommerce, Bureau of the Census.

March 1986 and 1987 Current Population Survey. Unpublished tabulations developed by the U.S. DepL Agr.,

Econ. Res. Serv.

8. __ _, Bureau of the Census. "Household and Family Characteristics: March 1987," Current Population

Reports, Series P-20, No. 424, May 1988.

14
_, Bureau ofthe Census. "Money Income and

Poverty Status of Families and Persons in the United States,

1986," Current PopulationReports (advanced report), Series

P-60.No. 157, July 1987.

10. _ .»Bureau of the Census, and U.S. Department

of Agriculture, Economic Research Service. "Farm Population ofthe United States: 1986," Current Population

Reports, Series P-27, No. 60, Nov. 1987.

11. . Bureau of the Census, and U.S. Department

of Agriculture, Economic Research Service. "Rural and

Rural Farm Population: 1987," Current Population Reports,

Series P-27, No. 61, June 1988.

Appendix I: Definitions and Explanations

Population coverage. Estimates in this report are based on

data tabulated from the March 1986 and 1987 Current

Population Survey (CPS) of the Bureau of the Census. They

relate to the civilian noninstitutional population of the

United States and members ofthe armed forces living off

post or with their families on post.

Race. The population is divided into three groups on the

basis ofrace: white, black, and "other races." The last

category includesIndians, Japanese, Chinese, and any other

race except white and black. Data for "other races" are not

shown in this report.

Hispanic origin. Persons of Hispanic origin are those who

indicate that their origin is Mexican, PuertoRican, Cuban,

Central or South American, or some other Hispanic origin.

Persons of Hispanic origin may be of any race.

Age. The age classification is based on the age of the person

at last birüiday.

Median. The median is the value which divides a distribution into two equal parts, one-half of the cases falling below

this value and one-half ofthe cases exceeding this value.

Labor force. Persons are classified as in the labor force if

they were employed or unemployed during the survey week.

Employed. Employed persons include all civilians age 16

and over who, during the specified week, ( 1) did any work

as paid employees or in their own business or profession, or

on their own farm, or who worked 15 hours or more as unpaid workers on a farm, or in a business operated by a member ofthe family, or (2) were not working but who had jobs

or businesses from which they were temporarily absent because of illness, bad weather, vacation, or labor management dispute, or because they were taking offfor personal

reasons, whether or not they were paid by their employers

for time off, and whether ornot they were seeking other

employment

Unemployed. Unemployed persons are those civilians age

16 and over who, during the survey week, had no employmentbutwere avmlable for work and <l)^^h^^^^

specific job-seeking activity within the past 4 weeks; (2)

were waiting to be called back to a job from whicb they had

been laid off; or (3) were waiting to report to a new wage or

salary job within 30 days.

Not in the labor force. All civilians age 16and over who

are not classified as employed or unemployed are defined as

"not in the labor force," This group includes persons engaged only in own-home housework, attending school, or unable

to work because oflong-term physical or mental illness; persons who are retired; ^asonal workersfor whom die survey

week fell in an off-s»ascÄi, and the voluntarily idle.

Industry and occupation. Data on industry and occupation

refer to the job held during the survey week. Persons with

more than one job during the survey week were classified as

employed in the industry or occupati<Mi in which they

workedthegreatestnumbef of hours during the week. The

industiy and occupation groups are bas^ on the classification system used in the 1980 Census of Population.

Family. A family is a group oftwo or more persons (one of

whom is the householder) related by birth, marriage, or ^option and residing together; dl such persons are considered as

membersof one family.

Family household. A family household isa household

maintained by a family (as defined above). A marriedcouple family household consists of a husband and wife,

with or without children. Other family households consist of

a male or female householder with dependents but no spouse

present

Nonfamily household. A nonfamily household consists of a

householder who lives alone or with one or more nonrelatives. It may also contain subgroups of {arsons who are related to each other but not to the householder.

Own children. Own children in a family are sons and

daughters,including stepchildren and adopted children of the

householder. The count of own children under 18 years old

is limited to single (never married) children.

Family income. The total income of a family is die sum of

the amounts received by all income recipients in the family.

Rounding. Tlie individual figvu'es in this report are rounded

to the nearest tiiousand and have not been adjusted to group

totals, which are independently roun<fed. Percentages ffl*e

15
rounded to the nearest tenth of a percent; therefore, the percentages in a distribution do not always add to exactly 100.0

percent The totals, however, are always shown as 100.0,

Appendix II: Source and Reliability

of Estimates

Estimates in thisreport are based on data obtained from the

March 1986 and 1987 CPS conductedbytíie Bureau ofthe

Census, The monthly CPS deals mainly with labor force^

data for the civilian, noninstitutional population of the

United States and members of the armed forces living off

post or with their families on post. Questions relating to

labor force participation are asked about each member 14

years old and over in every sample household. Supplementary questions are also asked every March about household

and family characteristics, and about money income and

work experience for the previous year. For a more detailed

description of the CPS, its sample size, and the estimating

procedure, see (5,77).

Since the CPS estimates in this report are based on a sample,

they may differ somewhat from the figures obtained if a

complete census had been taken using the same schedules,

instructions, and enumerators. There are two types of errors

possible in an estimate based on a sample-sampling and nonsampling. Standard errors that primarily indicate the magnitude ofthe sampling errors for data presented in thisreport

are published in (5). Standard errors also partially measure

the effect of some nonsampling errors in response and

enumeration, but do not measure any systeniatic biases in the

data. The full extent of nonsampling error is unlaiown. Particular care should thus be exercised in the interpretation of

figures based on a relatively small number of cases or on

small differences between estimates.

Appendix table 1—Selected characteristics of farm operators

and farm income recipients, 1987*

Farm Farm income Farm Farm income

Characteristic operators recipients operators recipients

_^^^ only only

. . .Thousands .,, ... .Percent....

Total 1,286 761 100.0 100.0

Male 1,129 641 87.8 84.2

Female 157 120 12.2 15.8

Residence:

Farm 865 290 67.3 38.1

Nonfarm 421 471 32.7 61.9

Race:2

White 1,267 732 98.5 96.2

Black 9 16 .7 2.1

Hispanic origin^ 25 6 1.9 .8

Age:

Under 18 years 6 10 .5 1.3

18 to 64 years 1,085 674 84.4 88.6

18-24 years 57 23 44 3.0

25-34 years 231 113 18.0 14.8

35-44 years 254 154 19.8 20.2

45-54 years 248 188 19.3 24.7

55-64 years 294 196 22.9 25.8

65 years and

over 195 77 15.2

Years

10.1

Median age 48.8 49.3 ~ —

— = Not applicable.

^Totals may not add due to rounding.

^Does not include category "other races. "

^Persons of Hispanic origin may be of any race.

Source: (7).

All major statements of comparison made in the text of this

report are statistically significant at the 90-percent confidence level. This means that the chances are at least 9 in 10

that a difference identified in the text indicates a difference

in the populations that is greater than chance variation

arising from the use ofsamples.

Appendix III: Characteristics of Farm

Operators and Farm Income Recipients

About 1.3 million individuals were primarily employed as

farm operators or farm managers (app. table 1). Around

761,000 individuals received farm self-employment income.

Farm income recipients were less likely than farm operators

to reside on farms. The median age for both farm operates

and farm income recipients was about 49 years.

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