When is a Farm a Farm?

We all know what a farm is.  A small white cottage with a big red barn out back, one or two silos and grain bins, cows & horses grazing contentedly in a fenced pasture.  Maybe a chicken coop, hog wallow and a machine shed.

That was my grandpa’s farm 50 years ago and it looks alot different today.  In the 21st Center, when exactly is a Farm a FARM?  How many chickens have to be in that coop?  How many cows in the barn?  How about the over-sized vegetable garden supplying the Farmer’s Market in town?  Or the place gone dormant with the fields resting in CRP?  Does a 4-H or Scout project count if it sells well at the County Fair? 

It’s a complicated question, as discussed (here, here, here and here) when we looked at the US Dept of Agriculture’s Census of Agriculture returns.  Currently, USDA considers a farm as any place with $1,000 in sales, or the potential for $1,000 in sales.  This is more than an academic question, as our understanding of many issues in the rural economy depend on how we define our units.

The Economic Research Service at USDA released a report today, Exploring Alternative Farm Definitions, that looks at how we classify agricultural operations for ag statistics and programs.

Abstract
Meeting agricultural policy and statistical goals requires a definition of U.S. agriculture’s basic unit, the farm. However, these goals can be at odds with one another. USDA defines “farm” very broadly to comprehensively measure agricultural activity. Consequently, most establishments classifi ed as farms in the United States produce very little, while most production occurs on a small number of much larger operations. While desirable for obtaining comprehensive national coverage, measurement and analysis based on the current definition can provide misleading characterizations of farms and farm structure in the United States. Additionally, more stringent requirements have been proposed for farms to qualify for Federal agricultural program benefits. This analysis outlines the structure of U.S. farms, discusses the current farm definition, evaluates several potential criteria that have been proposed to defi ne target farms more precisely, and examines how these criteria affect both statistical coverage and program eligibility.

Keywords
: Agricultural statistics, Agricultural Resource Management Survey (ARMS), farm businesses, farm definition, program eligibility

Politicians, ag economists and other interested parties are unlikely to agree on a single “best” defnition of farm, rural, or economy.  I try to take all of their numbers with a degree of skepticism.  Sometimes it’s just as important to understand the data behind the data—to know the metadata—as it is to understand the meaning of the data itself.