Low Income Farm Households: Incidence, Characteristics, and Policies

Farm incomes were studied: Incidence, Characteristics and Policies. Despite substantial transfers from public funds, low farm incomes remain a persistent problem. Earnings from farming are extremely skewed with two-thirds of farms having incomes below the average and direct payments from public funds account for 70 per cent of average farm income. A high proportion of farm operators have off-farm jobs and the study breaks new ground by providing estimates of the distribution of income from all sources in households engaged in farming. It reviews policies and shows that price approaches and market-based payments widen farm income differences. Even the Direct Payments tend to favour the better off farm households. The study examines current policies in detail and concludes that in the longer term the best solution lies in the expansion of off-farm employment. It also makes suggestions aimed at making the range of existing schemes more effective.