Increasingly, 'farm' and 'rural' are not synonymous

More and more of America's farmers rely on off-farm income at the same time that agriculture accounts for a smaller share of rural employment nationwide, said a University of Missouri study on Monday. The analysis, commissioned by agricultural lender CoBank, said the majority of principal farm operators worked off the farm and off-farm income accounted for 82% of farm household income.

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"The rural economy has become more diverse and complex than it was even 15 years ago," said Dan Kowalski, of CoBank. "In many cases, the historical concept of 'rural' no long applies."

One in 7 Americans, around 46 million people, lives in rural America. "Agriculture" and "rural" are often used interchangeably but farming is the leading industry in only one-fifth of rural counties. Only 30% of rural counties have diverse economies as service jobs replace agriculture and manufacturing.

"'Rural' America does not fit neatly under one umbrella definition but contains a diversity of places with differing economic characteristics," said the Mizzou study. "The agricultural sector is still a vital, export-oriented industry for rural regions but continued productivity gains diminish the need for workers. In 1970, the ag sector accounted for 15% of nonmetro employment but less than 7% by 2019."

Drawing on USDA data, the report said off-farm jobs "have been the primary occupation for the average farmer/rancher since the late 1990s." For 56% of principal farm operators, meaning the persons who ran the farm or ranch, off-farm employment was their main occupation in 2017, compared to 37% in 1974. Most often, they worked in the construction, manufacturing or education sectors.

"Jobs in other industries are vital to farm households as half of these households have negative farm income in a typical year," said the report. More than 70% of farmers said reliable income was the top reason off-farm work. "Stable income was especially important for small family farms, the vast majority (92%) of all farms."

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Only the largest operations, with gross cash farm income above $350,000 a year, generate enough revenue to provide more than half of family income in a year; many farms are so small they make little or no money at all.

Even so, the median U.S. farm household income was $80,060 in 2020, rising to an estimated $92,250 in 2021 and $93,663 this year, mainly because of off-farm income, said the USDA. By contrast, U.S. median household income was $70,784 and median rural household income was $53,750 in 2021, according to the Census Bureau.

In 2018, 62% of residents of farming-dependent counties and 52% of all rural residents commuted outside of their home county for work, an increase of more than 10 percentage points in two decades.

"Off-farm jobs and income are critically important to farmers and ranchers, as the rural and agricultural economy has evolved over the past half-century to benefit connected and diverse communities," said the University of Missouri analysts. "While growing rural and urban economic interdependence can be hard to see at times, an appreciation of this dynamic relationship is vital to informing policies that strengthen the financial health of communities and agricultural producers alike."