Off-Farm Income a Major Component of Total Income for Most Farm Households in 2019

Off-farm income—such as pensions, investment income, or wages and salary from an off-farm job—is an important source of total income for U.S. farm households. In 2019, 96 percent of farm households derived some income from off-farm sources. On average, off-farm income contributed 82 percent of total income, or $101,638, for all family farms in 2019.

Smaller farms tend to rely more on off-farm income than larger farms. On average, small family farms, those with an annual gross cash farm income (GCFI) under $350,000, derived more than half of their total household income from off-farm income in 2019. By comparison, on average, very large farms, those with a GCFI of $5 million or more, earned 7 percent of their total income from off-farm sources that year. However, those are averages, and some households operating small farms rely primarily on farm income, while some households operating larger farms rely on income from off-farm sources.

Off-farm income can be broadly classified into earned and unearned. Earned income sources are those that require a household member to allocate labor or time to the activity. These sources include nonfarm business income and off-farm employment of the operator and other members of the household. On average, earned income made up 72 percent of total off-farm income (61 percent from wages and salaries and 11 percent from nonfarm businesses) in 2019. In contrast, unearned income sources are passive or transfer income, such as from interest, dividends, private pensions, Social Security payments, veterans’ benefits, and payments from other public programs. These sources accounted for 29 percent of off-farm income in 2019: 19 percent from transfers, 6 percent from miscellaneous sources, and 4 percent from interest and dividends (Because of rounding, numbers may not add up to 100).

For most farm household types, earned income made up the majority of off-farm income, except for retirement farms (where the principal operator reports being retired from farming) and low-sales family farms (where the GCFI is less than $150,000). For these two farm types, earned income comprised 49 percent of off-farm income in 2019. Not surprisingly, off-farm occupation farms (where farming is not the main occupation of the principal operator) had the highest share of off-farm income from earned sources at 84 percent in 2019.

Income from farming and off-farm sources varied by the type of farm in 2019

Farm type	Average total income ($)	Farming income		Average income from off-farm sources ($)
		Average income from farming ($)	Percent of households with negative farm income	Earned	Unearned	Total
Small family farms
Retirement farms	77,948	11,467	40.9	32,679	33,802	66,481
Off-farm occupation    farms	153,185	855	58.2	127,778	24,553	152,330
Farming-occupation farms
Low sales	64,055	-1,427	50.9	31,848	33,634	65,482
Moderate sales	98,305	42,170	24.1	33,158	22,976	56,135
Midsize family farms	169,831	110,512	16.9	38,901	20,418	59,319
Large-scale family farms
Large	415,525	350,839	15.0	39,420	25,266	64,686
Very large	1,370,225	1,269,171	9.3	68,443	32,611	101,053
All family farms	123,368	21,730	48.6	73,320	8,318	101,638
Notes: Operator household income is not estimated for nonfamily farms. Small family farms are those that have annual gross cash farm income (GCFI) of less than $350,000 and can be further divided into 4 groups: retirement farms, whose principal operators report they are retired, although they continue to farm on a small scale; off-farm occupation farms, whose principal operators report a primary occupation other than farming; and two groups of farming-occupation farms (where the principal operators report farming as their primary occupation): low-sales farms, which have GCFI less than $150,000, and moderate-sales farms, which have GCFI between $150,000 and $349,999. Midsize family farms are those that have GCFI between $350,000 and $999,999. Large-scale family farms are those that have annual gross cash farm income of $1 million or more and are broken out into two groups: large farms, with GCFI between $1 million and $4,999,999 and very large farms, with GCFI of $5 million or more. Source: USDA, Economic Research Service and USDA, National Agricultural Statistics Service, 2019 Agricultural Resource Management Survey.