Off-farm income has been a contributor to farm households for decades, but in many ways the extent and role it plays in the farm business isn’t fully understood.
In the October Canadian Farmer sentiment index conducted by RealAgristudies, we asked questions related to off-farm income in order to better understand the role it plays on Canadian farms. Overall, 43 per cent of producers said that they have off-farm income, but it’s the details that tell more of a story.
One of the findings was that the lower the farm income the more likely that there was a reliance on off-farm income. As you can see in the graph above this point is clearly demonstrated, but there is one exception to the trend….the largest farms.
Based on the RealAgristudies data, as farms reach 1 million in revenue, there is a flattening of the curve. My theory on this is related to more reliance on farm labour. For the smallest farms in terms of revenue it makes sense that off-farm income would be a requirement to subsidize the farming venture.
Our data suggests that 84 per cent of farms with $100,000 or less in revenue had off-farm income, while 33 per cent of farms with $1 million or less of revenue had off-farm income. The highest bracket of over $5 million in revenue featured 26 per cent having off-farm income.
The larger farms show more signs of income diversification with 60 per cent of off-farm business being driven by a non-farm business. In some cases, this could be an agricultural-related business, such as seed retail, or could be non-farm related, such as owning an insurance business or hair salon (examples we gave). Smaller farmers were more likely to have an off-farm job, versus running a secondary business.
When we look at off-farm income probability by age we find another clear trend. The younger the farmer the more likely the farm is to have off-farm income. This isn’t surprising as many young farmers work in the industry as sales reps, for example, while getting started in farming. Our data suggests that 68 per cent of farmers under age 35 have an off-farm job.
If you have any further questions about off-farm income and other findings of this study, please reach out to RealAgrisultudies by emailing [email protected].