General Documentation

Errata: On March 25, 2021, the General Documentation and the Documentation for the Farm Sector Financial Ratios pages in the Farm Income and Wealth Statistics data product were modified to correct formulas and associated text pertaining to value of production and production expenses. These corrections affect the documentation of the data product only, no reported data were affected.

Current Data Sources for Farm Income and Expenditure Estimates

The annual values for crop cash receipts for each State are based on data obtained from both published and unpublished NASS sources, the annual Agricultural Resource Management Survey (ARMS) Phase III, and USDA Farm Service Agency’s Commodity Credit Corporation (CCC) loan data. NASS annual crop quantities produced for each State are converted to quantities sold. Crop quantities are allocated over the 12 months of the calendar year using NASS monthly marketing percentages for that State, which are then converted to monthly open-market cash receipts using monthly average State prices. Monthly CCC loan receipts plus any profits from CCC transactions are added to the open-market sales to create monthly cash receipts. The sum of the State's monthly cash receipts from January through December for each crop obtains its calendar-year annual cash receipts. The U.S. estimate for each crop is the sum of the States' annual estimates.

The annual values for livestock cash receipts are based on NASS' annual Production, Disposition, and Income (PDI) reports and other published and unpublished NASS data. The Meat Animal PDI report contains information on cattle/calves and hogs. Dairy cow data are derived from the Milk PDI. Broiler, turkey, and egg data are provided by the Poultry & Egg PDI. The livestock commodities not accounted for in these reports are presented in other commodity-specific reports such as "Honey" or "Trout." Receipts for commodities not accounted for in individual or grouped reports are collected in a Minor Commodities report. Unlike crop cash receipts, all livestock commodities are measured on a calendar-year basis, so no transformations from commodity year to calendar year are required. The U.S. estimate for each livestock category is the sum of the States' annual estimates.

Annual estimates of home consumption for each State are based on State annual ARMS estimates for the 15 largest agricultural States. Estimates for the remaining States are based on their share of farm operations, reflecting the most recent NASS data, within their particular region. The value of inventory adjustment reflects the sum of each State's inventory adjustments for their respective crop inventories. Inventory adjustments reflect the value of the annual quantity change in inventories. U.S. estimates are a summation of the State estimates.

Most USDA estimates of farm sector production expenses for the 48 contiguous States are derived from annual ARMS results. USDA analysts from ERS and NASS use survey responses to produce estimates of 18 individual production expenses for the United States, 5 geographical regions, and 15 "core" States, as reported in NASS' Farm Production Expenses Annual Summary. The core States are the largest in terms of agricultural production.

Production expenses are first estimated for each production expense category for the United States. Estimates of each production expense and total expenses for 5 regions, the 15 "core" States, and the group of remaining States in each region are then produced. The intraregional distribution of expenses for noncore States are based on data reported in the latest census of agriculture. Since ARMS is conducted only for the 48 contiguous States, estimates for Alaska and Hawaii have to be generated using other sources (when ARMS is the basis for an estimate). Estimates for Alaska are based on the relationship of the State's values to the sum of the 48 contiguous States' values, most often determined via the census of agriculture. Hawaii's expense estimates are based mainly on the State's census of agriculture values in the census year adjusted by the change in its cash receipts in subsequent years. For hired labor, the census value is adjusted by results from the Farm Labor Survey. When no census expense exists, Hawaii's estimates are generated in a manner similar to Alaska's.

Method for Forecasting Cash Receipts

The current ERS method for forecasting farm sector cash receipts relies on a combination of historical commodity production/monthly prices from USDA’s National Agricultural Statistics Service and forecasts of commodity production and crop marketing-year average prices from the World Agricultural Outlook Board’s World Agricultural Supply and Demand Estimates (WASDE) report. However, the marketing-year schedule of the WASDE forecasts does not match the calendar-year (monthly) price data needed for the ERS cash receipt forecast.

Previously, a calendar-year price forecast was developed by ERS commodity analysts using a number of different methods. To increase transparency and replicability, a new method was developed and implemented. Beginning in August 2016, farm income forecasts for the August and November releases will use the August and November WASDE midpoint price for the eight WASDE crop commodities (barley, corn, upland cotton, oats, rice, sorghum, soybeans, and wheat). The February forecast will use the current year’s commodity price forecast from ERS’ agricultural baseline report.

The calendar-year price approach described above was adopted after consideration of several alternatives for forecasting monthly commodity prices. We evaluated the performance of rolling forecasts created using different methods over the 2006-2014 period. The performance of each method was compared using contemporaneous WASDE prices against a forecast using actual prices, holding constant other parameters such as production, marketing percentages, production used on farm, and CCC loan activity. Our analysis suggested that the WASDE price forecasts deliver substantial value in terms of forecast accuracy compared to alternatives that rely on recent and seasonally adjusted historical data only. Among the WASDE-based methods that we considered, the method that applied the WASDE midpoint price for all months in the crop year had the lowest mean absolute scaled error (i.e., not statistically different from the best-performing method).

NASS Statistical Bulletins Currently Used in USDA's Net Farm Income Estimates

1. Citrus Fruits
2. Crop Production - Annual Summary
3. Noncitrus Fruits and Nuts
4. Vegetables - Annual Summary
5. Potatoes - Annual Summary
6. Crop Values - Annual Summary
7. Land Values
8. Farms, Land in Farms, and Livestock Operations
9. Cattle
10. Hogs and Pigs
11. Milk Production
12. Sheep and Goats
13. Chickens and Eggs - Annual Summary
14. Honey
15. Meat Animals Production, Disposition, and Income - Annual Summary
16. Milk Production, Disposition and Income - Annual Summary
17. Poultry Production and Value
18. Mink

Assets, Debt, and Wealth Data Sources and Definitions