In the United States, a small farm is officially defined as one that brings in less than $350,000 per year in gross cash farm income. That’s the threshold the USDA uses, and by that measure, about 86 percent of all U.S. farms qualify as small. But income is only one way to draw the line. Acreage, what you grow, and whether farming is your day job all shape how the label applies in practice.
The USDA Income Threshold
The USDA classifies farms primarily by gross cash farm income, or GCFI, which includes everything the farm brings in before expenses. Any operation that produces and sells at least $1,000 worth of agricultural products in a year counts as a farm. From there, the breakdown looks like this:
- Small farm: less than $350,000 in GCFI
- Large farm: between $350,000 and $1 million
- Very large farm: more than $1 million
That $350,000 figure can be misleading. Gross income is not profit. A farm grossing $300,000 may spend the vast majority of that on seed, equipment, fuel, labor, and land costs. Many small farms by this definition are barely breaking even or losing money each year.
How Much Land Small Farms Cover
Acreage is a less formal but equally common way people think about farm size. According to USDA data, small family farms average about 231 acres. That’s a wide average, though, covering everything from a 5-acre vegetable plot to a 500-acre cattle operation. Large family farms average around 1,421 acres, and very large operations average 2,086 acres.
There’s no official acreage cutoff that makes a farm “small.” A 50-acre orchard in California can generate more income than a 500-acre hay operation in Montana. That’s why the USDA relies on income rather than land area as its primary measure.
Not All Small Farms Are the Same
The USDA breaks small farms into several distinct types, because a retired couple keeping a few head of cattle and a full-time farmer selling produce at markets are living very different lives, even if both fall under the same income threshold.
Retirement farms are run by operators who list “retired” as their primary occupation. The farm may generate modest income, but it’s not the household’s main livelihood. Residential or lifestyle farms are owned by people whose primary job is something other than farming. They might work in town and run the farm on evenings and weekends, or lease most of their land. These two categories make up a large share of all small farms in the U.S.
Primary occupation farms are where farming is the operator’s main job. The USDA splits these further into low-sales farms (under $100,000 in gross sales) and moderate-sales farms (up to $250,000). These operators depend more heavily on the farm itself for household income, and the financial pressures they face are correspondingly higher.
The Financial Reality for Small Farms
Small farms dominate American agriculture by sheer number but produce a relatively thin slice of the nation’s food. As of 2023, small family farms operated on 41 percent of U.S. agricultural land yet generated only 17 percent of total production value. By contrast, large-scale family farms (those above $1 million in income) represented just 4 percent of farms but accounted for 48 percent of production value.
The financial picture for most small operations is tight. USDA economists measure financial health using operating profit margin, the ratio of profit to gross income. In 2022, between 52 and 79 percent of small family farms fell into the “high financial risk” category, meaning their operating profit margin was below 10 percent. The exact percentage depended on the type of small farm: retirement and lifestyle farms tended to fare slightly better because their operators weren’t relying on farm income to pay the bills, while low-sales primary occupation farms were hit hardest.
This is why off-farm income matters so much. For the majority of small farm households, a spouse’s job, a pension, or the operator’s own off-farm employment covers the gap between what the farm earns and what the family needs.
How the U.S. Definition Compares Globally
Outside the United States, “small farm” means something very different. The Food and Agriculture Organization of the United Nations uses a land-based threshold of 2 hectares, roughly 5 acres, to define small-scale farms worldwide. By that standard, the average U.S. small farm at 231 acres would be enormous.
The global definition reflects the reality that most of the world’s farmers work plots of land that would barely register as hobby gardens by American standards. In sub-Saharan Africa and South Asia, farms of 1 to 2 hectares are the norm, and they produce a significant share of the food supply. So when you encounter the term “smallholder farmer” in an international context, it refers to a scale of farming far below what the USDA considers small.
Why the Definition Matters
How a farm gets classified affects what programs, grants, and loans it can access. Many USDA programs specifically target small and beginning farmers, offering lower interest rates, mentorship, and cost-share assistance. State programs often have their own income or acreage thresholds that may differ from the federal definition. If you’re starting a farm or trying to determine whether yours qualifies, the $350,000 GCFI figure is the number that matters most for federal purposes, but it’s worth checking your state’s agricultural department for local definitions that may apply to tax incentives or conservation programs.
The label also shapes public perception. Knowing that 86 percent of U.S. farms are classified as small, yet they produce only 17 percent of the country’s agricultural output, gives a clearer picture of how concentrated American food production has become. The vast majority of farms are small. The vast majority of food comes from the ones that aren’t.