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F3/3 Federal Reserve Dank of Chicago March 26, 1965 REALIZED NET INCOME of the nation's farmers totaled $12.6 billion in 1964, up slightly from a year earlier and about the same as in the two previous years. The slight increase was the result of stepped up Government payments to farmers which more than offset the small decline in cash receipts and the somewhat smallerthan-usual rise in farm production expenses. • Cash receipts from farm marketings edged down from $36.9 billion in 1963 to about $36.7 billion as lower prices for many farm commodities canceled the effects from the larger volume of marketings. Total gross income to farmers, however, rose from $41.7 to $42 billion reflecting the sharply increased Government payments. These cash payments in 1964 totaled about $2.2 billion-up nearly $500 million from a year earlier. Wheat program payments to participating producers were about double the $214 million paid out in 1963, due mainly to payments for marketing certificates. Payments under the feed grain program totaled nearly $1.2 billion-up about $320 million from the previous year. (Other sizable expenditures to support farm income -subsidized exports and domestic consumption, storage, etc.-are not included in these figures.) Farm operating expenses continued their upward trend reflecting somewhat higher prices for manufactured items and the further substitution of farmers' capital for farmers' labor. The increase during the past year of about $150 million, however, was well below the 1954-63 annual increase of $750 million and the smallest in ten years with the exception of 1960. Net income per farm rose about $138 during 1964, to a new high of $3,642, primarily reflecting the continued decline in number of farms. In the Seventh District, realized net income per farm varied by states-Iowa, Michigan and Wisconsin showed gains while Illinois and Indiana experienced declines. Cash receipts were lower in each of the Corn Belt states but higher Government payments more than offset the decline in Iowa. In Michigan and Wisconsin incomes were bolstered by larger receipts from dairy as well as increased Government payments. Net incomes of farmers appear relatively low compared with nonfarm earnings but these figures do not take into account the earnings many farmers receive from nonfarm pursuits. Furthermore, the use of average or aggregate farm income figures obscures the wide disparity of family incomes in agriculture. Recently published estimates by the U. S. Department of Agriculture, however, serve to give a better insight into the farm income situation. • In 1963 total net income of the farm population from all sources was $21.2 billion compared with $19.8 billion in 1959. Income received from agricultural sources rose from $11.3 to $12.5 billion and off-farm income increased from $8.5 to about $8.7 billion. While total income rose slightly during this period, the steady decline in farm population boosted net income Number 797 per farm substantially and affected the number of farm families in both low- and high-income groups. Average personal income of farm families from all sources increased from $4,826 in 1959 to $5,935 in 1963. In turn, the number of low-income families was significantly reduced. Income Distribution by Class of Farm, 1963 Value of sales Realized OffTotal Farms Sales net farm farm net Thous. Per cent Per cent income income inesum (dollars per farm) Commercial $20,000 and over 10,000-19,999 5,000- 9,999 2,500- 4,999 384 594 609 463 10.7 16.6 17.0 13.0 54.5 23.6 12.6 4.8 10,180 6,207 3,731 2,337 Non-commercial Part-time Part-retirement Other 903 418 202 25.3 11.7 5.7 2.3 1.4 0.8 919 1,086 1,406 4,450 5,369 1,880 2,966 510 1,916 3,573 100.0 100.0 3,504 2,431 Total 2,177 1,512 1,778 2,080 12,357 7,719 5,509 4,417 5,935 Farms with agricultural sales of less than $2 500 declined about one-fifth in number from 1959 to 1963, and the proportion of all farms with sales less than $2 500 fell from about 47 to 43 per cent. On the other hand, those farms with sales of $10,000 and over increased 18 per cent in number and rose from 20.2 to 27.3 per cent of the total. Although "noncommercial" farms continue to make up the bulk of the total number-despite the sharp decline-sales from these farms accounted for only about 5 per cent of the United States total in 1963. Cash farm income for these farms averaged about $1,030 while offfarm income averaged about $3,222. Those commercial farms with sales of $2,500 to $4,999 had an average farm income of $2,337 but other sources raised total income to an average of $4,417. At the other end of the scale, those farms with sales of $5,000 and over constituted only 44 per cent of all farms but had average incomes from farming alone of well over $6,000 and accounted for 91 per cent of farm sales. At the very top of the scale, farms with sales of $20,000 and over accounted for less than 11 per cent of all farms but had sales accounting for well above half of the total. In 1963, income for these farms from all sources averaged $12,357. Roby L. Sloan Agricultural Economist FARM BUSINESS CONDITIONS JANUARY 1965 WITH COMPARISONS . , 1965 ITEMS , PRICES: Received by farmers (1957..59=100) Paid by farmers (1957-59=100) Parity price ratio (1910.14=100) Wholesale, all commodities (1957-59.100) Paid by consumers (1957-59=100) Wheat, No. 2 red winter, Chicago (dol. per bu.) Corn, No. 2 yellow, Chicago (dol. per bu.) Oats, No. 2 white, Chicago (dol. per bu.) Soybeans, No. 1 yellow, Chicago (dol. per bus) Hogs, barrows and gilts, Chicago (dol. per cwt.).. Beef steers, choice grade, Chicago (dol. per cwt.)... Milk, wholesale, U. S. (dol. per cwt.) ' Butterfat, local markets, U. S. (dol. per lb.) Chickens, local markets, U. S. (dol. per lb.) Eggs, local markets, U. S. (dol. per doz ) Milk cows, U. S. (dol. per head) , Farm labor, U. S. (dol. per week without board) Factory labor, U. S. (dol. earned per week) PRODUCTION: Industrial, physical volume (1957.59=100) Farm morketings, physical volume (1957-59=100).... , January 1964 December 97 98 108 714. 107 101 109 1.53 1.29 101 109 1.52 1.27 75 .79 .76 2.96 16.33 24.28 2.91 1964January 101 107 78 101 108 2.24. 1.24 .76 278 15.86 14.81 214..01 22.61 4.41 .59 .14 .31 4.48 4.34 .60 .58 204 203 50.00 105.52 106.81 .13 .33 -- .14 .38 209 48.00 99.90 138 137 128 127 137 128 INCOME PAYMENTS: Total personal income, U. S. (annual rate, bil. of dol.) Cash farm income, U. S.1 (annual rate, bil. of dol.) .. 510 38.9 506 39.6 479 11-1.0 . EMPLOYMENT: Farm (millions) Nonagricultural (millions) 3.7 65.3 3.8 66.6 4.o 63.2 115 110 115 117 110 102 190 210 187 204 168 183 FINANCIAL (District member banks): Demand deposits: Agricultural banks (1957-59=100) Nonagricultural banks (1957-59=100) Time deposits: Agricultural banks (1957-59=100) Nonagricultural banks (1957-59=100) - 1 Based on estimated monthly income. Compiled from official sources by the Research Department, Federal Reserve Bank of Chicago. ,
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