The Joplin Globe, Joplin, MO

Farm

Discussion

September 17, 2007

IRS report pinpoints ag trends

By Mike Surbrugg

msurbrugg@joplinglobe.com

Expenses are growing faster than revenue.

That’s one of the trends found after the Internal Revenue Service prepared a report, “Farm Proprietorship Returns, 1998-2004,” to measure economic changes in the different types and sizes of farms.

The data is based on figures collected from income tax returns and does not identify any individual farm. It includes only a national view of agriculture.

In 2004, about 1.4 million farm proprietorship returns were filed with 70 percent showing a net loss. For every farm with a net profit, there were 2.4 returns that had a net loss.

The returns also showed gross farm income in 1998 of $93.3 billion, which increased to $101 billion in 2004, an increase of 8.3 percent. However, in the same time span, farm expenses climbed nearly 13 percent, from $101.2 billion to $114.3 billion.

The report provides only the data, offering no explanations why changes took place.

Based on tax return numbers, the two largest industries in this farm sector in 2004 were those tied to beef cattle and feedlots (700,000) and field crops (400,000).

The number of beef cattle returns dropped by 3.5 percent while the number of crop returns fell by 18.5 percent from 1998.

For 2004, the field crop industry reported the largest amount of gross farm income — $35.2 billion, or about 35 percent of the total. It was followed by beef cattle operations at $18.5 billion, or 18.3 percent of gross income. Dairy farms accounted for only 4 percent of total returns, but had the third largest amount of gross income in 2004 at $16 billion.

Farm economics

The majority of farm proprietorship returns are from small farms with gross incomes of less than $50,000. In 2004 they accounted for more than 82 percent of these types of returns. Farms with $100,000 or more in gross income accounted for 12.2 percent of the returns.

In general, for all farm proprietorship returns in 2004, money obtained outside of farming activities was the dominant source of income.

When it comes to paying taxes, the average farm with less than $50,000 in adjusted gross income paid $1,750; the average taxpayer with income between $50,000 and $100,000 paid $6,088 in taxes.

Government payments and crop insurance proceeds to farms also favored the largest operations. Total taxable agricultural program payments in 2004 reached more than $6.9 billion. Small farms received slightly more than $1 billion while the largest farms received $5.3 billion.

Mike Surbrugg is The Joplin Globe’s farm editor.

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