Frequently Asked Questions:
Family Farmers & the U.S. Economy
How do family farmers contribute to the U.S. economy?
In 2008, the agriculture sector is projected to have contributed more than $130 billion(1) to the U.S. economy and estimates indicate that it employs 14 percent of the total workforce and accounts for nearly 5 percent of the total U.S. gross domestic product(2). As important as the financial contributions family farmers make at the national level are the investments they make in their local communities — the impact of which is tracked in more than 30 states(3). Family farmers grow high quality food, are active in civic life, and are essential to the economic vitality of both their hometowns and the nation. As stewards of the land, family farmers work to protect the soil, air, water, and biodiversity in addition to producing high-quality, healthy food.
What role can family farmers play in building the road to economic recovery?
Our family farmers are a national resource with incredible potential to help solve the challenges we currently face. Family farmers are on the cutting edge of thriving local food systems and economies, alternative energy production and environmental stewardship. Family farmers are marketing the fruits of their labor close to home at farm stands, farmers markets and Community Supported Agriculture programs, helping local money circulate in local communities where it can do the most good. Family farmers are growing green energy and harnessing the power of the sun and wind. They are transitioning to sustainable production methods to grow food that is good for our health and our planet. These steps are strengthening our local economies, reducing our reliance on fossil fuels, protecting our natural resources and increasing our national security.
How have family farmers been affected by the decline in U.S. economy?
Farmers, like many other businesses, are suffering from the dramatic economic downturn. With ever increasing operating costs and now declining prices for their agricultural products, many farmers and ranchers will find it difficult or impossible to keep up with their regularly scheduled farm loan payments. At the same time, the availability of affordable, long-term credit is also uncertain, which poses even more threats to family farmer business operations. Farmers depend on loans to get them through their initial investment — to pay for the seed and feed and other inputs needed to get things in the ground and growing. But because of instability in market prices for their products and threats from weather-related disasters, the security of that initial investment isn't guaranteed. Since most family farmers and ranchers live on their farms, their homes also are listed as security for their farm loans. This means that if they fall behind on their farm loan payments they are threatened not only with the loss of their farming operations but also their families’ homes.
Weren’t 2007 and 2008 record years for the agriculture sector?
While data from the U.S. Department of Agriculture indicate that 2007 and 2008 were record years for some agriculture segments, the same is not true for all family farmers and is not an indication of future income stability. In 2008, the average household income for farmers generated by their farming businesses alone is projected at $5,900, which is down more than 30 percent from 2007 estimates and accounts for less than 10 percent of total income projections for family farmers(4).The overall decline in the U.S. economy will only further exacerbate instability in family farm income as they rely more and more on off-farm sources of income. Volatile market prices for commodity crops and rising production costs, including fertilizer, seeds, feed and other farm inputs, will continue to put farmers in a tough situation financially as they have little control over the supply or demand of their product. For example, while corn made news for hitting a high of $7 in 2008, it was at a time of year when most corn farmers had no corn to sell and while dairy and livestock farmers faced escalating feed costs. Unfortunately, food prices don’t come down to reflect commodity prices, causing concerns that grain buyers and others are profiting at the expense of family farmers and consumers.
How will Americans be affected if farmers lose their businesses and their homes and if new farmers aren’t able to enter the industry?
American family farmers are the backbone of the nation and the first rung on the economic ladder. When farms fail, Main Street businesses fail. The opposite is also true — when farms thrive, Main Street businesses and local communities thrive. Far from Wall Street, family farmers are creating real wealth, producing real value, growing from seeds and sunlight a product that nourishes us both physically and economically. Supporting diverse decentralized family farming is necessary to the stability and vitality of our country. If we lose even one family farmer or make it increasingly difficult for new or beginning farmers to get on the land, we put our environment, our food security and our local economies at risk.
This fact sheet was developed in cooperation with National Family Farm Coalition, Rural Advancement Foundation International, Federation of Southern Cooperatives, and Missouri Rural Crisis Center.
. Agriculture Outlook: Statistical Indicators.” Economic Research Service, December 2008.
Visions of the Rural Milieu: United States.” Dabson, B. Rural Policy Research Institute, July 2008.
. What is Agriculture and Its Contribution to the U.S. Economy.” Hornbrook, E. and Hoag, D. July 1997.
. Forecasts of Average Incomes of U.S. Farm Households, 2008.” Economic Research Service.