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. This report analyzes energy payments made to farmers for the production of oil, natural gas, and wind energy on their land. The authors used 10 years of data (2011–20) from the USDA’s Agricultural Resource Management Survey (ARMS) in their analysis. Results show that 3.5 percent of farm operations received energy payments and that the average annual payment to the operators was more than $30,000 (in 2020 dollars), contributing substantially to farm household income and exceeding government payments to these operations. Energy payments were more common in counties producing oil and natural gas than in those with wind energy development. Larger farms were significantly more likely to receive energy payments and received higher payments on average. Further, Hispanic producers and those with less education were significantly less likely to receive energy payments. Although the average energy payment varied by ethnicity and education status, this report did not find a statistically significant difference after accounting for farm location and size.
Details
Title
The Role of Commercial Energy Payments in Agricultural Producer Income
Record Identifier
https://ageconsearch.umn.edu/record/342468
Language
English
Total Pages
46
Note
This study performed descriptive and regression analyses using data from the USDA’s Agricultural Resource Management Survey (ARMS), a national survey of farm operators conducted by the USDA’s National Agricultural Statistics Service (NASS) and USDA, Economic Research Service (ERS). Specifically, this report uses data from the Costs and Returns Report (CRR), ARMS Phase III, for 2011 through 2020. In the survey, farm operators were asked how much income they received from “royalties from or leases associated with energy production (e.g., natural gas, oil, and wind turbines).” For this analysis, energy income information was combined with additional ARMS data on farm characteristics, size and type, and farm operator demographics, race/ethnicity, and educational attainment. This report merges ARMS data with two external sources: the USDA, ERS County-Level Oil and Gas Production in the United States dataset, which includes oil and natural gas production from 2000 to 2011, and the U.S. Wind Turbine Database (USWTD), a quarterly database of all utility-scale wind turbines in the United States (USDA, ERS, 2014; Hoen et al., 2018). These two data sources were used to determine if operators surveyed in ARMS were in counties with oil or natural gas production or wind.
Series Statement
Economic Information Bulletin No. 271