AgDM newsletter article, December 2003

Farm family financial situation

Paul LasleyBy Paul Lasley, extension sociology, 515-294-0937,

The Iowa Farm and Rural Life Poll provides insight into farmers perceptions on a variety of topics relevant to their communities. The information is based on a random survey of over 2,200 farm operators, of which 1,700 useable surveys were returned.


An important issue for farm families is their current financial situation and its impact on long-term financial security. Table 1 shows that the expected retirement age for Iowa farm operators has increased from 65 in 1984 to 69 in 2003. When asked whether they were setting aside money for retirement, about four-fifths (79 percent) said yes. For those who said they were setting aside money for retirement, just over one-half indicated it would be just adequate, 17 percent said it would be more than adequate, and nearly one-third said it would not be adequate (Table 2).

Table 1 and 2.


Of the farmers in the sample, 71 percent reported they have a savings account. Of those with a savings account, just over one-half (54 percent) regularly contribute to the account. The average proportion of total family income contributed to a savings account was 10 percent. Of those having a savings account about one-third of farm families had a balance that increased over the last year, one-third remained the same, and one-third decreased (Table 3). Three percent of farm families had balances that increased substantially whereas nine percent had balances that decreased substantially.

Table 3 and 4.

Credit card use

Average number of credit cards held by this sample of Iowa farmers was just over three. Among farmers with credit cards 89 percent stated they pay off their credit card balances nearly every month whereas the remaining 11 percent do not. In response to the types of purchases for which they used their credit cards (Table 4), the top two uses were vacation/travel and gasoline with 54 and 42 percent respectively always or usually using their credit cards for those types of purchases. Clothing purchases was next with 25 percent, followed by eating out/entertainment (17 percent), appliances and furniture (13 percent), and groceries (9 percent).

Farming financial conditions

Table 5. Farmers' opinions on the financial conditions in farmingFarmers were asked about the current financial well-being of farmers, agribusiness firms and financial institutions in their area as well as their own farm (Table 5). The same question also had been asked in 1996 and 1986. Several patterns emerge. Of the three points in time represented by the data the most difficult period for agriculture was in the mid 1980s. Financial well-being improved in the mid 1990s when a greater number of respondents answered that financial well-being was not a problem. For 2003 there again was a considerable decline in the percentage of farmers responding financial well-being was not a problem. Although in 2003 there was an increase over 1996 in the percentage responding it was a problem, the percentage was substantially smaller than in 1986. Another pattern in the data is that the responding farmers perceived the greatest impact of poor economic conditions was felt by their farmer neighbors, somewhat less by agribusinesses, and the least impact was on the financial institutions. Responding farmers also tended to assert their own situation was better than other farmers and the agribusiness firms. In the spring of 2003, just under one-third of the farmers felt they had a moderate or serious financial problem whereas about twice as many (61 percent) believed their neighbors had a moderate or serious problem. Just under one-half believed that agribusiness firms in their area had a moderate or serious problem and only 16 percent perceived financial institutions were in financial straits.

Iowa farmersí non-farm business operations

Many farmers have turned to operating a non-farm business to bring in additional income. Twenty-one percent of the sample of farm operators stated they also operated a non-farm business. Table 6 shows that the predominant type of non-farm business operated was a farm related business, such as seed sales or custom work (26 percent). Additional common types of non-farm businesses are crafts or homemade items such as woodworking or pottery and repair and maintenance such as welding or auto repair.

Table 6. Types of non-farm businesses operated by Iowa farmers


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