A New U.S. Farm Household Typology: Implications for Agricultural Policy

Abstract

Changes in U.S. agriculture have yielded a diversity of farm types. These changes have extended beyond the farm business and into the farm household. The objective of this research is to motivate, develop, and discuss the policy implications of a new typology of U.S. farm households, which is based on household economic theory. Using the 2003 Agricultural Resource Management Survey and statistical analysis, the U.S. Farm Household Typology identifies six mutually exclusive groups of U.S. farm households. This typology is then compared to the current Economic Research Service Farm Typology and used to investigate the distribution of government payments. T he debate concerning U.S. farm programs and farm policy encompasses a number of issues that are broader than whether the specifics of the 2002 legislation should be continued or changed. These issues include U.S. competitiveness in the international marketplace; the potential conflict between U.S. domestic and international trade policy; the impact of farm program payments on land and other resource values; the distribution of farm program benefits; and whether price and income support programs are an effective and efficient mechanism for enhancing the economic well-being of farm families. Analyses to date have three fundamental deficiencies. First, they ignore the fact that a vast majority of farms receive substantial income from non-farm sources and that the decision nexus for most farms with respect to resource allocation