What is Farm Income
Farm income refers to profits and losses incurred through the operation of a farm. A farm income statement (sometimes called a farm profit and loss statement) is a summary of income and expenses that occurred during a specified accounting period. This period is usually the calendar year for farmers (January 1 - December 31). Some farms are eligible for special farm tax credits and other tax breaks.
BREAKING DOWN Farm Income
In U.S. agricultural policy, farm income can be divided as follows:
Gross Cash Income: the sum of all receipts from the sale of crops, livestock and farm-related goods and services, as well as any direct payments from the government.
Gross Farm Income: the same as gross cash income with the addition of non-money income, such as the value of home consumption of self-produced food.
Net Cash Income: the gross cash income less all cash expenses, such as for feed, seed, fertilizer, property taxes, interest on debt, wagers, contract labor and rent to non-operator landlords.
Net Farm Income: the gross farm income less cash expenses and non-cash expenses, such as capital consumption and farm household expenses.
Net Cash Income: a short-term measure of cash flow.