Which Farms Receive Government Payments?
According to the 2006 Agricultural Resource Management
Survey (ARMS), 44.3 percent
of all farms received government payments in 2006 (see
table).
This was an increase from 2005 when 42.7 of farms reported
receiving government payments. For farms that received
a payment, the average payment per farm was $12,672. This
payment represents, on average, 8.2 percent of a farm's
gross cash income or 38.9 percent of its net cash income—again
among farms receiving payments. In 2005, average payment
per farm was $17,936.
| This analysis is based on ARMS 2006
Phase III, version 1 only. Version 1 provides the
most complete specification of direct government payments
to producers by program, and this analysis is about
the effects of government payments by program. There
was not enough information collected to generate estimates
for all of the programs that are collected on version
1. Marketing loan gains and net value of commodity
certificates, which were collected as separate line
items, were combined with all other Federal program
payments. Wetlands Reserve Program, Environmental
Quality Incentive Program, Conservation Security Program,
Conservative Reserve Enhancement Program, and Conservation
Reserve Program are combined as Conservation Program
Payments. Since analysis here is based on version
1 only, these estimates may not be identical to other
analyses of government program payments that are based
on ARMS 2006 Phase III, all versions. |
Gross cash income of farms receiving government payments
averaged $154,835 in 2006, more than twice that of farms
not receiving government payments (see table).
Direct payments comprised the majority of total government
payments, and more farms received direct payments than
other program payments. Direct payments accounted for
almost 40 percent of total government payments to farms.
Fewer farms received countercyclical or loan deficiency
payments because the level of market prices exceeded marketing
assistance loan rates for some of the program crops in
2006.
A much higher share (71.2 percent) of commercial farms
received payments relative to other types of farms. Fifty-one
percent of intermediate farms and 36.8 percent of rural
residence farms received government payments.
Fifty-one percent of the farms receiving government
payments in 2006 were classified as rural residence farms.
They received 18.7 percent of total government payments
and 41.7 percent of conservation program payments (CRP,
CREP, WRP, EQIP, and CSP). About 76.2 percent of commercial
farms received government payments in 2006. Commercial
farms accounted for 17.7 percent of the farms receiving
government payments, but received 56.3 percent of total
government payments.
Although most of the payments went to larger operations,
government program payments contributed a larger share
of gross cash income for smaller farms. The average payment
for rural residence farms was $4,610, representing 16.1
percent of gross cash income. The average payment for
commercial farms was $41,642, representing 6.4 percent
of gross cash income.
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For the 46.3 percent of retirement farms that received
payments in 2006, 20.9 percent of the farms' gross cash
income came from payments (see table).
For the 24.2 percent of retirement farms that received
conservation program payments, such payments accounted
for 35.6 percent of their gross cash income. The average
gross cash income of retirement farms that did not receive
government payments was half that of retirement farms
that did receive payments. Residential/lifestyle farms
represented 30.7 percent of payment farms, and received
10.5 percent of total payments. Very large family farms
accounted for 5.5 percent of farms that received payments,
and they received 26.9 percent of total payments.
Direct payments contributed about 37 percent the total
payments to all farms. Loan countercyclical and deficiency
programs contributed 23.8 and 4.3 percent. Retirement,
residential lifestyle and farming occupation/lower sales
farms received larger payments from conservation programs
than from the other programs. For retirement farms, more
than 57 percent of government payments were conservation
payments. Direct program payments were the largest payment
for all other farm types.
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Payments by Farm Specialization
A farm's commodity specialization is determined by the
one commodity or group of commodities that makes up at
least 50 percent of the farm's total value of production.
Using this definition, about half of all U.S. farms can
be classified as a particular type. Because this definition
depends on yearly prices and quantities, an individual
operation may be classified as one type one year and another
type the next.
Over 90 percent of other cash grain, wheat, rice, corn,
and cotton farms received payments than, a higher share
than other types of farms (see table).
These farms, which represented 23.2 percent of farms receiving
payments received 47.9 percent of total payments in 2006.
About 83.9 percent of the total payments to these farms
were direct, countercyclical, and loan deficiency payments.
Farms specializing in corn, representing 12.1 percent
of payment farms, received 21.1 percent of all government
payments in 2006. The average payment received by corn
farms represented 9.8 percent of gross cash income. About
87.2 percent of the total was from direct, countercyclical,
and loan deficiency payments.
Farms specializing in cotton received $93,663, on average,
in 2006, by far the highest average payment of any farm
type. This average payment represented 15.1 percent of
gross cash income. The next highest payment was to rice
farms, which received $40,987 on average. For both cotton
and rice, 93.8 percent of total payments were direct,
countercyclical, and loan deficiency payments. Together,
cotton and rice farms represented 1.7 percent of the total
payment farms and received 10.4 percent of all payments.
Of the farms that specialize in livestock and products,
85.9 percent of dairy farms and 55.3 percent of hog farms
received program payments. For dairy farms, 44.9 percent
of the payments were Milk Income Loss Contract payments.
For these farms, government payments contributed 3.5 percent
of gross cash income. For hog farms, 85..9 percent of
their payments were direct, counter-cyclical, and loan
deficiency payments by means of their program crop activities.
For these farms, government payments were 4.5 percent
of gross cash income.
More than a third of wheat, corn, other field crops,
and hog payment farms received conservation program payments.
For other field crops, conservation programs represented
79.7 percent of average payments. The largest average
conservation program payment ($16,700) were received by
9.7 percent of dairy program farms.
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Payments by Resource Region
Regionally, the largest average government payment($22,629)
was realized by the Fruitful Rim region, where 18 percent
of farms received payments in 2006 (see table).
These farms represent about 4.5 percent of all farms receiving
payments, and they received about 8.1 percent of all payments.
About 55.8 percent of their payments were direct, countercyclical,
and loan deficiency payments. Another 21.7 percent of
their payments were conservation program payments.
The smallest average government payment ($1,461) was
realized by the Eastern Uplands region, where 37.7 percent
of all farms received payments. These farms represent
about 13.5 percent of all payment farms, and they received
about 4.1 percent of all payments.
With 62.6 percent of these farms receiving payments,
the Heartland has the largest share of payment farms.
These farms represent 30.8 percent of all farms receiving
payments, and they received 32.8 percent of all payments
in 2006. About 71.6 percent of their payments were direct,
countercyclical, and loan deficiency conservation payments
contributed another 22.2 percent of total payments. Thirty-one
percent of farms in the Heartland received conservation
program payments. In the Northern Great Plains, 46.9 percent
of farms received conservation program payments. For these
farms, conservation program payments contributed 46.3
percent of average government payments.
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Payments by Production Region
In 2006, the distribution of program payments to payment
farms was consistent across production regions. The production
region with the highest rate farms receiving government
payments was Northern Plains at 77.9 percent, followed
by Corn Belt at 60.2 percent and Lake States at 55.6 percent
(see table).
Farms in these regions realize most of their payments
from direct, counter-cyclical, and loan deficiency payments.
These regions also have the highest participation in conservation
programs.
The Corn Belt has the largest share of government payment
farms at 25.3 percent, which received 26.7 percent of
all payments. About three-quarters of their payments were
direct, counter-cyclical, and loan deficiency payments.
Twenty-seven percent of farms in the Corn Belt received
conservation program payments. For these farms, conservation
program payments contributed 41.4 percent of average government
payments. In the Northern Plains, 38.7 percent of farms
received conservation program payments. For these farms,
conservation program payments contributed 43.5 percent
of average government payments.
The largest average government payment of $23,192 was
realized by program farms in the Pacific region, where
15.3 percent of farms received payments. These farms represent
about 2.6 percent of all farms receiving payments, and
they received about 4.7 percent of all payments. Fifty-seven
percent of their payments were direct, countercyclical,
and loan deficiency payments. Another 30 percent of payments
were from conservation programs.
The smallest average government payment of $7,163 was
realized by the Appalachia region, where 48.1 percent
of all farms received payments. These farms represent
about 16.1 percent of all payment farms, and they received
about 9.1 percent of all payments. Thirty-one percent
of the farms in Appalachia did receive Tobacco Transition
Program payments. For these farms, Tobacco Transition
Program payments represented 72.3 percent of average payments.
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Payments by Number of Acres Operated
With respect to number of acres operated, 4.0 percent
of farms fell into the largest size category of 2,000
acres or more while 47.7 percent had less than 100 acres.
However, 80.2 percent of the largest farm category received
government payments in 2006, while only 23.6 percent of
the smallest category received payments. Since much of
the payments are tied to either program acreage or program
production, the magnitude of the payments is directly
correlated to the number of acres operated (see table).
Farms in the largest farm category received 26.9 percent
of all payments. More than 78 percent of their payments
were direct, countercyclical, and loan deficiency payments.
However, these farms, on average, also received 12.3 percent
of their payments from conservation programs. About 25.3
percent of all farms receiving payments were in the smallest
farm category, and they received 4 percent of all payments.
Nearly 40 percent of their payments were conservation
program payments.
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Payments by Value of Sales
With respect to value of sales, 1.7 percent of farms
fell into the largest size category of $1,000,000 or more
in sales in 2006, while 57.3 percent of farms were in
the smallest category with less than $10,000 in sales.
Of farms in the largest category, 64.8 percent received
government payments, while only 26.7 percent of farms
in the smallest category received payments. Generally,
the size of the farm is directly correlated with the value
of sales. Larger farms receive more payments and payments
increase with the size of the farm. About 2.5 percent
of all farms receiving payments were in the largest farm
category, and they received 15.2 percent of all payments
(see table).
About 79.1 percent of their payments were direct, countercyclical,
and loan deficiency payments.
Farms in the smallest category received 6.5 percent of
all payments. About 77.1 percent of the average payment
represented payments from conservation programs. The largest
average conservation payment was realized by 31.8 percent
of farms in the $500,000—$999,999 size class. For
these farms, conservation program payments contributed
20.5 percent of average government payments.
Payments by Net Cash Farm Income
With respect to net cash farm income, 5.9 percent of
farms fell into the largest size category earning $100,000
or more in 2006, while 3.6 percent of farms realized losses
of $40,000 or more. About 53.7 percent of all farms realized
negative net cash farm income up to $40,000 in 2006. For
all farms, 42.6 percent realized positive net cash farm
income. Nearly two thirds of farm's receiving payments
realized positive net cash income. The largest government
payments were realized in the largest size category, and
64.8 percent of the farms in this category received payments
(see
table). Representing 2.5 percent of farms receiving
payments, the largest net cash income farms received 15.2
percent of all payments. More than 73.4 percent of their
payments were direct, countercyclical, and loan deficiency
payments. About 23.7 percent of farms receiving payments
earned positive but less than $10,000 in net cash income,
and they received 9 percent of all payments. More than
half of these payments were attributed to conservation
programs.
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Payments by Operator Household
Income
By operator household income, 6.4 percent of farms fell
into the largest size category of $200,000 or more, while
14.7 percent of farms had positive income of less than
$25,000. The largest average government payment was realized
by the largest size category, where 7.1 percent of payment
farms received 19 percent of all government payments (see
table).
About 76.5 percent of their payments were direct, countercyclical,
and loan deficiency payments. More farms receiving government
payments fell into the $50,000-$99,999 category than any
other income size. About 59.2 percent of their payments
were direct, countercyclical, and loan deficiency payments.
Operator household income is not available for the 3.9
percent of farms classified as non-family farms.
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Payments by Size of Payment
About 86.3 percent of payment farms received payments
less than $25,000 in 2006, while 0.5 percent received
payments of $150,000 or more (see table).
The lowest payment class received 37.3 percent of all
payments. Fifty-five percent of their payments were direct,
countercyclical, and loan deficiency payments, and 28.7
percent were conservation payments. The highest payment
class received 10.4 percent of all payments. Seventy percent
of their payments were direct, countercyclical, and loan
deficiency payments, and 7.7 percent were conservation
payments.
Payments by Operator Age
Operator age had little influence on a farm's receipt
of government payments (see table),
share of farms receiving payments ranging from 41.2 to
48.3 percent. Farms with operators 65 years or older generally
received much smaller payments ($9,375) than other age
groups did in 2006, but these payments contributed more
toward their average gross cash income (11.9 percent).
These farms were more likely to participate in conservation
programs and also received more of their payments from
conservation programs relative to other farms. About 4.6
percent of farms receiving government payments were run
by operators younger than 35 years of age. They received
about 5.9 percent of total government payments. Operators
age 65 or older ran 30.4 percent of farms receiving payments
and received 22.4 percent of total government payments.
The largest share of payments was received by operators
45 to 54 years of age.
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Payments by Operator Education
Forty percent of farms with primary operators who did
not complete high school received government payments
in 2006 (see table).
The highest participation rate of 43.4 percent occurred
among primary operators with high school and some college
education. Larger average payments were received by operators
who were college graduates and beyond. The contribution
of government payments to gross cash income, however,
was about the same (8.2 percent) across all education
categories.
Farms with primary operators who did not complete high
school and farms with operators with high school received
less than average amounts of direct, countercyclical,
and loan deficiency payments. Payments were slightly skewed
toward payment farms with primary operators with some
college education and primary operators with college degree
and beyond.
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Payments by Operator Occupation
Eighty-three percent of primary operators reported their
occupation as farming/ranching, 14.2 percent reported
work other than farming/ranching, and 2.8 were currently
not in the work force (see table).
Fifty-six percent of the payment farms reported the primary
operator's occupation as ranching/farming, and they received
82.9 percent of total payments. Thirty-eight percent of
these farms received direct payments, 31.4 percent received
countercyclical payments, and 6.8 percent received loan
deficiency payments, all about double the averages for
all farms receiving payments. Farms with operators reporting
a primary occupation as either work other than farming/ranching
or currently not in the work force relied more on conservation
payments than other operators.
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