Farm Households Depend on Non-Farm Income

Sep 23, 2022

It’s no surprise that the vast majority of farm households rely on off-farm income sources—but the number may shock you.

A study commissioned by CoBank and facilitated by researchers at the University of Missouri recently found that 82% of farm household income comes from off-farm sources.

How did we get here? We’ve been traveling down this path for a while now. In 1974, only 37% of farmers cited off-farm employment as their primary occupation. But fast forward to 2017, and this number shot up to 56%.

Off-farm jobs have been the main occupation for the average farmer/rancher since the late ‘90s.

Half of farm households have a negative farm income, which has made them reliant on off-farm income streams to pay down substantial ag investment debts. The desire for a reliable income and healthcare benefits are the top two reasons folks seek off-farm income.

The harsh reality is that only the farms and ranches with gross cash farm income above $350K per year are actually generating enough revenue to provide more than half of the family income during a 12-month period. Many farms are so small they hardly make anything.

Rural does not mean isolated. The majority of rural dwellers commute to nearby cities for employment. These cities rely on the rural areas for labor and spending. Both are dependent upon each other for success.

Soundbite: “While growing rural and urban economic interdependence can be hard to see at times, an appreciation of this dynamic relationship is vital to informing policies that strengthen the financial health of communities and agricultural producers alike,” University of Missouri analysts said.