INCOME AND WEALTH ISSUES IN COMMERCIAL FARM AND AGRICULTURAL POLICY

This workshop addresses the subject of income and wealth issues in commercial farm and agricultural policy. The focus is on broad defi-nition of the issues, and broad definitions of the possible policy inter-ventions. In their broadest sense the policy issues are: (1) What are the income and wealth situations of farmers? Is the farm sector still disavantaged? (2) Are these situations anomalies? Or are there phenomena which make normal economic performance look poorer than it ac-tually may be? (3) Can policy interventions cure such anomalies? Do they have side effects? (4) Finally, where does all this leave us? What are the Income and Wealth Situations of Farms? It is almost a truism that farms vary widely in sizes, sales classes, incomes, and wealth positions, and that off-farm income sources are highly negatively correlated with farm sales classes. Because population averages tend to be meaningless across such a diverse population as farms of all sizes, an initial classification of farms into descriptive size classes is necessary. The diversity of the farm sector in terms of concentration of farm numbers and total farm product sales is shown in the concentration chart (Fig-ure 1). Approximately half of all farms have sales of less than $10,000, but account for only 5 percent of total agricultural product sales. At the other end of the distribution, the largest 5 percent of farms account for almost 50 percent of total agricultural product sales. The most meaningful descriptive sales classes grouping farms of similar sizes for 1982 appear to be as follows in Table 1. At the small end, rural residences and small family farms have ex-perienced negative net farm income since the beginning of the 1980's (Figure 2), but have off-farm incomes roughly comparabl