How Much Money Do Farmers Make in the USA

Farming is the foundation of the well-being of all mankind. Thanks to farmers and the agricultural industry the entire population on the planet is provided with food. It is not for nothing that governments of different countries seek ways to encourage and help farmers. Let’s look at the United States as an example of a farmer’s income.

Let's Start with Statistics

At the end of 2019, the USDA agency predicted an increase in the profit of American agriculture: not only growth but a sevenfold increase in the profit of agricultural enterprises. If we consider macroeconomic indicators, then this increase is facilitated by the following factors.

  • Supply chain disruptions during a pandemic,
  • A short-term decline in grain prices while meat prices rise,
  • Double increase in payments from the state.
If the first indicators are global, then the growth in profits due to payments from the US government is a purely internal trend. So, in 2020, state aid accounted for 39% of the total farmers’ profit. Net profit is 46.5 billion US dollars.

The profit of the agricultural sector in 2020 will amount to $119.6 billion.

But we examined the situation in general. What about calculating and finding the factors that affect the profit of each particular farmer? Let’s take a look at what makes American farming profitable.

Modern Technologies Are the Basis for the Profitability of the Agricultural Sector

In the United States, a farmer is an entrepreneur with agricultural profits of more than $ 1000 per year in sales. If the farm does not sell anything, or its annual turnover does not reach this amount, then this is considered a kitchen garden. At the same time, there is a clear division of farmers according to their farming method:

  • Owners of small farms, most often of elderly age, who are engaged in farming purely as a hobby.
  • Organic farms, specializing in high-quality products and, accordingly, applying new technologies in their business.
  • Large agricultural holdings that produce the vast majority of products for the United States and for export.
The latter two types of farms receive the lion’s share of the profits. Accordingly, the difference in the concept of a farmer’s profit in each category will vary. Large farms and organic agricultural enterprises often use the principles of precision farming, which can increase profits quickly and efficiently, primarily by reducing costs and increasing the speed of harvesting. These technologies include:

  • GPS for automatic steering on tractors.
  • Drawing up accurate weather maps and forecasts, landscape maps.
  • Applying automatic fertilization and insecticide application.
  • The use of drones for monitoring fields and spraying fertilizers.
  • ·Introduction of new types of agricultural machinery for harvesting and field processing.
All of them require initial considerable costs, but subsequently, they pay off in full. A reasonable economy is always a part of a business. But the statistics show that farmers in Iowa (this state is one of the leaders in the agro-industrial complex in the country) are more financially successful. They buy new combines, tractors, and cars every two or three years. Recently, money has no longer been spent with such ease. Nevertheless, about 40% of farms bought a new tractor in 2015.

Marketing Methods to Increase Profits

Another factor that increases profits is the well-organized marketing of a farm. Searching for potential buyers, advertising your own products, working with social networks and individual buyers – all these also contribute to the popularization and sale increase of an individual farm.

But if marketing is more of an auxiliary tool, then new technologies of precision ag are the main one. Precision agriculture is the one to influence the growth of farm profits in the United States.

Agriculture in the United States is on track for the last three most profitable years in half a century. Adjusted for inflation, since 1973, projected farm net income for 2020 will only be exceeded compared to 2011 and 2013.

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