FarmPolicy

October 23, 2017

Rural Economic Growth, vs. Farm Income

Recall that DTN Ag Policy Editor Chris Clayton reported last week that, “The National Farmers Union [NFU] is calling on Congress to pass disaster aid and consider starting work early on a new farm bill as they and other ag leaders seek to draw more attention to the state of the farm economy.”

The DTN article went on to point out that, “[NFU President Roger] Johnson added that Sen. Charles Grassley, R-Iowa, and House Agriculture Committee Ranking Member Collin Peterson, D-Minn., have indicated support for writing the next farm bill early.”

(FarmPolicy Note: While speaking at an agricultural forum at the Kansas State Fair last Saturday, Senate Ag Committee Chairman Pat Roberts (R., Kans.) and House Ag Committee Chairman Mike Conaway (R., Tex.) indicated no desire to open the Farm Bill early.)

Also in his DTN article, Mr. Clayton provided executive branch perspective on the ag/rural economy from Sec. Vilsack, who “reminded NFU members that farm income levels over the past five years have been some of the best in recent history. ‘They needed to understand when they talk about tough times, there are a whole lot of people out there who are not doing as well as many farm families are doing,’ Vilsack said.

“The secretary said he told NFU members to consider where they stand relative to the average American family, Vilsack said. The average American farm family has a median income of about $76,282, according to USDA, which is $19,782 higher than average U.S. household.”

In a conference call last week with agricultural reporters, Sec. Vilsack made similar points and noted that, “Over that five-year period we have seen a relatively strong foundation to the agricultural economy. We see continued low debt to equity ratios, notwithstanding the fact that the prices are a little low right now. I think farmers, foundationally, are in good shape to withstand the low commodity prices of today.”

During the conference call, Sec. Vilsack expounded on the fact that overall “farm household” income, which includes “off-farm” income, as well as “farm income,” is significantly above national averages. This is primarily due to the fact that “off farm” income in farm households remains strong. Sec. Vilsack noted that what is done in the policy area of rural development is important because it helps to strengthen “off farm” income opportunities.”

With this background in mind, Quoctrung Bui reported yesterday at The New York Times Online (“Actually, Income in Rural America Is Growing, Too“) that, “Median household incomes in rural America actually grew 3.4 percent in 2015, according to policy experts who study the census numbers very closely.”

Although the primary focus of the Times’ article is a detailed explanation of the way in which the Census Bureau defines, and derives, statistical results for “rural” and “urban” areas; the article concluded by stating that, “In many cases, data further complicates our view of the world, making things murkier instead of clearer. By contrast, the sharp differences in rural and urban income growth suggested by the C.P.S. [Current Population Survey] felt like a gift from the statistics gods.

“But our loss is clearly the American people’s gain, because it shows that the recovery is even more broadly shared than we thought.”

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