Economic Research Service, USDA Policy Analysis with Integrated Rural/Farm Household Data Third...

Economic Research Service, USDA

Policy Analysis with Integrated Rural/Farm

Household Data

Third International Conference on Agricultural Statistics, Cancun Mexico, November 2-4, 2004

Mitch Morehart, Jeffrey Hopkins, and James Johnson


Complexity of Farm Household Structure

Consumption & Savings

Household Money Income

Allocationof

IncomeConsumption

Savings

Allocationof

Savings

HomeAssets

FinancialAssets

Investment Income

FarmAssets

Resources

Labor

Allocationof

Time

EducationHumanCapital

FarmProduction

NonfarmEmployment

Home Production

Production

Wages, Salaries,and Self

Employment Income

EconomicWell-Being

Public Spending

In-KindTransfers

SalesTax

Government Functions

Property Tax

NonfarmSelf

Employment

NonfarmBusinessAssets

Government

Household income share

Adapted from: Thomas, R.William (1977).

Cash Transfer Income

Gifts, Inheritance, etc.


Determinants of ARMS Content

Content of Farm Information System

Organizational and Operating Structure

of Farms

Household Labor and Asset Allocation, Demographic, & Socio-Economic Attributes

Public and Private Farming Issues

Conceptual Requirements of Financial Accounts


Stakeholder Involvement In Production Activities of U.S. Household-Farms

Landlords--209,000 farmers rent land for a share of production; another 633,000 farmers rent land for cash

Lenders--910,000 farmers owe debt at year-end; almost all use debt during the calendar year

Hired Labor--632,000 farmers use hired labor

Contract Entities--50,000 farmers grow agricultural commodities for other firms under a contract arrangement

Partners--93,000 households organized their farm as a partnership

Shareholders--65,000 households organized their farm as a family corporation

Multiple Operator Households--145,000 farms are organized with multiple households providing production assets

Of the 2.1 million U.S. farms:


Modular Design Enables ARMS To Reflect Complex Farm Structure

ProductionPractices andCosts Report(commodity)

Enterprise LinkedFarm-Household

Survey

Phase I: Interview to Screen Participants

Phase II: Provides In-Depth Perspective About Chemical Use, Production Practices, etc…

Phase III: Provides In-Depth Perspective About Farm Economics, Household Finances, Farm and Operator Characteristics

National FocusFarm-Household

Survey

Phase II & IIIversions linked tosupport adoption & cost distribution analyses

Phase III Versions Linked to support income, financial performance, and structural analyses for households and businesses

Phase III & II versions Also support assessment of structure and environmental issues

State-LevelFarm-Household“Core” Survey


ARMS correctly assigns income and expenses to the different stakeholders

Net Farm Income

EmployeeCompensation

InterestNet Rent

Stakeholders’ Share in Value Added

Households

Contractors With Farm Operators

Non-family Farms

Operator Households

Other Households

Households and Other Institutions Share Net Income

Income May be Shared Among Multiple Households

25.2%

14%13.1%

47.7%

62.1%

31.2%

7%

93%

7%

Net Farm Income

EmployeeCompensation

InterestNet Rent

Stakeholders’ Share in Value Added

Households

Contractors With Farm Operators

Non-family Farms

Operator Households

Other Households

Households and Other Institutions Share Net Income

Income May be Shared Among Multiple Households

25.2%

14%13.1%

47.7%

62.1%

31.2%

7%

93%

7%


Household income and wealth come from a variety of sources

Sources of Farm Operator Household Income

Off-farm Business14%

Farm income9%

Social security & other public programs

11%

Net farmland rental1%

Wages & salaries51%

Other off-farm income6%

Interest & dividends8%

Distribution of Nonfarm assets of farm households, 1999Cash, checking,

savings, money market, US savings bonds, and

CDs21%

IRA, Keogh Plan, 401K, and other retirement

plans26%

Corporate stocks, mutual funds, and other

financial assets22%

Other nonfarm assets31%


Policy Example 1: Savings, Income Volatility, and Basic Needs

-30

-20

-10

0

10

20

30

40

50

1967 1972 1977 1982 1987 1992 1997 2002

farm household income nonfarm household income


Policy Example 2: Farm Household Impacts from Policy Reform


Policy Example 3: On-farm Technology Adoption

Farmers' Use of Input Acquisition Management Practices, 2000

0

10

20

30

40

50

60

70

Commercial farms Intermediate farms Rural residences

Using management service for inputs Locking in prices

Shopping for best price Negotiating discounts

Using buying clubs, etc


Implications

ARMS data collection is driven by issues confronting households that operate farm establishments

Data collection reflects measurement concepts for households, farm establishments, and the U.S. farm sector

Issues confronting ARMS measurement system are dynamic

Multiple income and wealth measures and changes in demand for data: imply need to collect data at the item and unit level of measurement

Imply need to store data at item and unit level to enable use over time and across different issues and groups

Household measures are developed within the context of the farm establishment to facilitate use in applied analyses

Economic Research Service, USDA Policy Analysis with Integrated Rural/Farm Household Data Third...

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