The Distribution of Income and Wealth of Farm Operator Households

Abstract

Because of the relatively low incomes of people associated with farming in the past, income maintenance has been a major focus of farm policy. The average money income of families earning farm self-employment income in 1983 was 93% of the average money income of other U.S. families (USDC). However, an average income of farm households has lost much of its meaning because it masks a great deal of variation. Compared to the past, farm households represent a heterogenous population, presenting a new challenge to policy makers concerned about framing income maintenance policies. The current farm bill debate began in 1984 amidst piecemeal information on increased bankruptcies and general financial stress of farms. Analysis of the financial leverage and cash flow positions of farm businesses has since been forthcoming (Johnson, Baum, and Prescott). However, information on the financial well-being of those households associated with farming has remained limited. The purpose of this paper is to describe the financial well-being of farm operator households by measuring their size distribution of personal income and farm equity in 1984. The contribution of each source of income to the total inequality of incomes is also analyzed.