Small family farms were more likely to have greater financial vulnerability than other farms, according to data from USDA’s Economic Research Service.
Researchers calculated the operating profit margin by taking the ratio of profit to gross farm income to find that in 2022, between 52 and 79 percent of small family farms, depending on the farm type, were at the high-risk level. If the operating profit margin is less than ten percent, the operation is considered at high financial risk. When the measure is between 10 and 25 percent, the operation is considered at medium financial risk, and if above 25 percent, the operation is at low financial risk.
A majority of small-scale family farms, which have a gross cash farm income of up to $350,000, earn most of their income from off-farm sources. For these farms, farm profitability is not necessarily essential to the survival of the household. Small family farms make up 88 percent of all farms but account for only 19 percent of the total value of production.