Farming and Economics

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IRS Form 1040, Schedule F: “Profit or Loss From Farming.
IRS Form 1040, Schedule F: “Profit or Loss From Farming."
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Fruitful Labor by Mike Madison
Fruitful Labor by Mike Madison

According to Fruitful Labor (Chelsea Green Publishing, 2018) as the average age of America’s farmers continues to rise, we face serious questions about what farming will look like in the near future, and who will be growing our food. Many younger people are interested in going into agriculture, especially organic farming, but cannot find affordable land, or lack the conceptual framework and practical information they need to succeed in a job that can be both difficult and deeply fulfilling.

There is a widespread tendency in our culture to view all human activity in financial terms—dollars acquired and dollars disbursed. At no other period in history have human values been so thoroughly monetized. I reject that view. For me, farming is not primarily about money. It has more to do with an interesting and enjoyable way of living, and with having a useful role in my community (a community that includes not only humans, but also the other organisms with whom we share the region). Nonetheless, I am forced to deal with the economics of farming as part of the reality of 21st-century life. The farm is our sole source of household income, and there have been years when an insufficiency of income has been inconvenient and stressful.

A good way to get a snapshot of the economic status of the farm is to look at the income statement that is submitted each year to the Internal Revenue Service. This is reported on Form 1040, Schedule F: Profit or Loss from Farming. An example is given in the accompanying figure, and it is worth going over it line by line, as this will illuminate many of the economic aspects of farming.

Line 2: This is the gross income from sales, both retail and wholesale, of products produced on the farm.

Line 4a: According to the USDA census of agriculture, farms with gross incomes similar to mine receive, on average, $6,500 each year in direct subsidies from the federal government. The subsidies are not distributed equally. They are as much political as economic, and they are heavily slanted toward commodity crops. Specialty crops such as those that I grow are not subsidized.

  • Published on Feb 23, 2018
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