What is in this article?:
- Cow-Calf Production Is Largely A Part-Time Business
- Few full-timer producers
- Off-farm income is the rule
Off-farm income is the rule
“The amount of off-farm income earned by beef cow-calf producers in 2008 dwarfed farm income,” say McBride and Mathews. “Average off-farm income was about $72,000 among all beef cow-calf farms, nearly three times higher than net cash farm income, and $20,000 more than gross cattle sales.” They explain average gross cash income in 2008 was $600,000 for commercial farms, $77,000 for intermediate farms, and $34,000 for those classified as a rural residence (RR).
ERS analysts divided ARMS participants based on what they term “farm typology.” RR farms are defined by less than $250,000 in gross annual sales and operators who consider the agricultural operation to be a secondary activity. Intermediate farms report farming as their primary occupations and have annual gross sales of less than $250,000. Commercial farms are large family farms or non-family enterprises with annual gross sales of more than $250,000.
“Net cash and net farm incomes in 2008 were about $174,000 and $136,000, respectively, on commercial farms,” McBride and Mathews say. “In contrast, intermediate farms earned about $11,000 and $7,000 in net cash and net farm income.”
For RR farms, net cash and farm incomes in 2008 were negative.
“Operators of RR farms often have goals other than profitability, as most work off-farm or are retired, and farming may be regarded as a lifestyle choice,” say McBride and Mathews. Off-farm earnings on RR farms averaged nearly $90,000/farm in 2008.
With profit a secondary motivation for so many, it’s little wonder the knowledge gap is growing between participant groups, or that there is so little progress in cow productivity on average (based on Standardized Performance Analysis data). It also helps explain the lack of what some would consider essential management in some parts of the sector.
For instance, according to the National Animal Health Monitoring System’s (NAHMS) “Beef 2007-2008 Reference of Beef Cow-Calf Management Practices in the U.S.” report, 46.1% of cow-calf operations calve year-round, 31% didn’t vaccinate any calves or cows within the previous 12 months of the survey, and 60% didn’t vaccinate for bovine respiratory disease from the time calves were born to the time they were sold, etc.
Industry Resource: Tools & Programs Exist To Help New Ranchers
Then there’s the age thing. The average age of RR farm operators in the ARMS survey was 60 years old, and 25% of those said they planned to exit the business within five years. Meanwhile, the average age of intermediate farm operators was 62, and 24% of those planned to exit. And the average age for commercial farm operators was 55, with 14% of them indicating they planned to exit within five years.
These realities help explain why, more than drought, the commodity bubble or the Great Recession is behind the ongoing reluctance of producers to expand the nation’s cowherd.