Review of Agricultural Economics—Volume 31, Number 3—Pages 604–626 Farm Business and Household Expenditure Patterns and Local Communities: Evidence from a National Farm Survey

Farm operators are an integral part of some rural economies. The businesses they operate support jobs and purchase goods and services from local implement and input suppliers. Farm household spending on food, furniture and appliances, trucks and automobiles, and a range of consumer goods also supports local jobs and retail businesses. Based on the 2004 Agricultural Resource Management Survey, the linkages between farm household and business expenditures and communities are explored. Farms in urban areas purchase household goods in markets closest to the farmstead, but traveled further to purchase farm business items. The opposite pattern was observed in rural locations. Farming is an important industry in many rural communities, directly employ-ing 1.9 million residents as primary operatives. Total farm business operating and capital cash expenditures amounted to more than $146 billion nationwide in 2006. Farm households spent an additional $66 billion for consumer goods and services. While perhaps only a portion of these expenditures were spent on locally produced goods and services, farm and farm household spending still creates significant economic activity in some communities. The degree to which these purchases influence local economies depends on the nature of the spending, the origin of the goods purchased, the size and diversity of the local economy, and the extent to which goods available in local markets meet farm household and business needs (Foltz and Zeuli). Local impacts of farm business and house-hold spending are larger if spending is for hired labor, local services, or locally produced goods (Shaffer, Deller, and Marcouiller; Kraybill and Johnson). The im-portance of farm business expenditures and farm household spending to the loca