Agricultural Profits and Farm Household Wealth: A Farm-level Analysis Using Repeated Cross Sections

Abstract

This study examines the relationship between agricultural profits and farm household wealth across locations and farm sizes in U.S. agriculture. A multiperiod household model is used to develop hypotheses for testing. Results indicate that farmland has out-performed nonfarm investments over the past decade. Thus, households may want to keep their farmland to build wealth, even if it requires them to earn off-farm income. The analysis implies that decision will be made based on farm household wealth factors having little to do with agriculture.