A significant portion of energy production in the United States takes place on farmland, which can have substantial economic implications for the farmers who host such developments.
A report issued today by USDA’s Economic Research Service, The Role of Commercial Energy Payments in Agricultural Producer Income, analyzes energy payments made to farmers for the production of oil, natural gas, and wind energy on their land. The study uses 10 years of data (2011–20) from the USDA’s Agricultural Resource Management Survey (ARMS).
Here are a few findings from the report:
- Approximately 3.5% of farm operators reported receiving payments for energy production on their operation between 2011 and 2020. The share of farmers receiving payments did not dramatically differ from year to year.
- For those who received energy payments, the average annual payment (in 2020 dollars) over the period was $30,482, but it varied significantly from year to year. Average annual payments were as high as $62,944 in 2013 and as low as $14,032 in 2020. Payment amounts tracked closely over time with the price of oil.
- Average annual energy payments were the most common (7.4% received payments) and largest ($39,087) in the Plains region (Kansas, Nebraska, North Dakota, Oklahoma, South Dakota, and Texas), where energy production is most abundant. They were least common (1.45% received payments) in the South (Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, and South Carolina) and smallest ($10,953) in the Midwest (Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin).
- Both the likelihood of and size of energy payments increased with the size of the farm. Midsize family farms (with gross cash farm income between $350,000 and $999,999) were more likely to receive energy payments; nonfamily farms were less likely. Controlling for other factors, payments were larger for midsize and large-scale family farms (with gross cash farm income of $1 million or more).
For more information, please refer to the full report.
USDA press release
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