Thursday, June 02, 2016

Off-farm income grows more important to farmers, but small-town job creation may be at risk

The importance of farmers' off-farm income is illustrated by a forecast from the U.S. Department of Agriculture: Income from farming is expected to fall 3 percent this year, but farm household income is forecast to rise 5 percent.

Urban Lehner
"For some farmers, off-farm income is literally a life-support system," writes Urban Lehner, editor emeritus of DTN The Progressive Farmer. "Their revenue from farming may cover farm expenses, but it isn't enough to feed, clothe and educate their families. For that, they or their spouses or both work in town."

But what if work in town gets scarce, as may happen "because new business-formation in lightly populated areas is cratering." Lehner notes, citing a recent report in The Washington Post. "New businesses have traditionally been an outsized source of new jobs. It's not surprising, then, that with nearly two-thirds of the rural counties having fewer businesses in 2014 than in 2010, job-creation rates have fallen, as well. These counties accounted for less than a 10th of the nation's new jobs from 2010-2014. In the 1990s, they had accounted for as much as a quarter of the new jobs."

Lehner writes, "What I wondered reading this story was how off-farm income has managed to continue rising in the face of these depressing trends. Not just rising: rising faster than household income nationally. The best theory I could come up with is that farmers these days tend to be well-educated people with strong work ethics, the kind employers like. What jobs there are, farmers have been more likely to get. But even if my theory explains the past, what about the future? Will off-farm income continue strong if rural new-business formation continues to plummet?"

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