Income disparities related to part-time and full-time farming

On the basis of income data, farms owned by natural persons have been classified into part-time, subsidiary and full-time farms in the study. On part-time farms net income from agriculture and forestry accounts for less than a half of the total income of the farmer and spouse that is liable to state taxation, on subsidiary farms for 50-75 %, and on full-time farms for 75 % of the total income. Besides the farm size, the production line distribution is different on part-time, subsidiary and full-time farms, partly due to their definitions. About 75 % of full-time farms, 63 % of subsidiary farms, and 35 % of part-time farms are engaged in livestock production. Correspondingly, crop produc-tion is mainly practiced on time farms. In the study the results concerning part-time/full-time farms are presented only from years 1983-1986, and they have been examined more in detail earlier in the publications this study (PUURUNEN 1987, p.

123-128 and 1989, p. 26-31). The choice of the period to he studied has partly been

determined by the fact that in 1983 the national pensions became, for the most part, taxable income (ANON. 1986a, p. 92), and, consequently, they are included in the total income. Earlier farmers who gained their livelihood from e.g. old-age pensions were mainly included in full-time farmers in the Enterprise and Income Statistics of Agriculture and Forestry.

It has not been possible to take account of the corrections of the weigh coefficients of the sample data in the results of 1986 in the Enterprise and Income Statistics of Agriculture and Forestry, made afterwards by the Central Statistical Office, in the results concerning part-time/full-time farms and the farm classification according to the farmer's age in this study. On the basis of the results according to the region, production line and farm size class, it can be noted that the corrections have mainly affected small crop producing farms, and, consequently, mainly part-time farms and farms owned by the oldest farmers. The number of farms estimated on the basis of the sample has increased most in the two smallest farm size classes, whereas in the groups of farms with over 10 hectares the increase has been 2.2 % at the most.

As a result of the correction of the farm distribution, the weigh of the smallest farm size class has increased by over 4 %-points and that of other farm size classes has decreased by 2 %-points at the most. The correction is most notable in the average results of different regions and production Iines, whereas in individual farm size classes its effect is smaller. Proportionally the biggest change has occurred in incomes that are small in terms of their money value; in the classes of farms with less than 10 hectares agricultural income decreased by 5-10 %, and on larger farms the change was less than 2 %. The maximum effect of the correction on primary incomes is -1.6 - +0.3

% and on the total income -0.9 - +0.6 %.

Consequently, the results of part-time, subsidiary, and full-time farms are mainly examined on the basis of the years 1983-1985. The most central indicators concerning the numbers of farms and the farm size in 1985 were as follows:

Number of Arable land area Forest arca

farms ha/farm ha/farm

Part-time farms 62 528 47.4 9.63 29.11

Subsidiary farms 20 057 15.2 16.04 38.94

Full-time farms 49 364 37.4 19.62 44.24

Ali farms 131 949 100.0 14.41 37.89

Due to the smaller farm size, the primary incomes of part-time farms are, on the average, smaller than those of full-time or subsidary farms. Using the ratio 100 for the average primary income per person on ali farms, the ratio for part-time farms in 1983-1985 is 83-85, for subsidiary farms 96-98, and for full-time farms 118-120. For the part of agriculture, the period under consideration was more favorable than the aver-age, and, correspondingly, agricultural income was higher. On full-time farms most of the income comes from agriculture, whereas on part-time farms the variation in agri-cultural income has less effect. Consequently, in this study the disparities in primary incomes between part-time and full-time farms appear bigger than they might be when

Part-time farms Subsidiary farms Puhl-time farms

ffi 111111111

140 120-

80- 60- 40-20-

0

examined over a longer period of time.

In different farm size groups, the relation of the primary income per person to the average of ali farms of the same size (= 100) during the three years under considera-tion varied between 95-119 on part-time farms, 88-103 on subsidiary farms, and 96-118 on full-time farms. The primary incomes of full-time farms have deviated most from the incomes of ali farms in the smallest farm size group. In other farm size groups the ratios indicating the primary incomes on full-time farms have varied be-tween 97-105. Income formation has been better outside agriculture than has been possible to achieve in agriculture, especially on small farms. On the other hand, in small farm size groups there are more income earners (i.e. income dividers) on part-time and subsidiary farms than on full-part-time farms, which for its part may have made it easier for small part-time farms to take advantage of the income earning possibilities outside agriculture. On farms with less than 10 hectares the number of persons can-cerning the farmer and spouse was 1.75-1.85 on part-time and subsidiary farms, and 1.57-1.66 on full-time farms. On large farms the differences in the number of persons are smaller.

In 1983-1985 the net incomes ratios varied between 102-120 on part-time farms with under 50 hectares, and between 125-140 on farms with over 50 hectares (Fig-ure 8). On subsidiary farms the range of ratios concerning the net incomes in different farm size groups is 88-101, and on full-time farms 73-81 in the smallest farm size group and 86-100 in the other groups. Farmers that get their livelihood mainly from pensions are included in part-time farmers in this study. Even if the primary incomes in different farm size groups are about the same on part-time and full-time farms, as a result of pensions net incomes are higher on part-time farms. It is to be noted that, apart from farms with less than 10 hectares, the corresponding uncorrected results from 1986 deviate very little from the results of the earlier years presented here.

Ratio

2-5 5-10 10 20 20 30 30-50 50- ha

Figure 8. Net incomes of part-time, subsidiary and full-time farmers according to the farm size group in relation to incomes of all farmers (= 100) in 1985.

Table 5. Net incomes per person on part-time, subsidiary and full-time farms in the most central farm groups in 1985 .Ratios, income of ali farms in the same farm size group = 100.

5-10 10-20 20-30 30-50 50-100 ha Cattle farms

Part-time farms 107 107 108 129

Subsidiary farms 101 98 97 90 ...

Full-time farms 90 99 100 99 98

Grain farms

Part-time farms 102 104 113 109 131

Subsidiary farms 94 96 99 103

Full-time farms 80 85 95 91

Versatile production farms

Part-time farms 104 99 106 100 122

Subsidiary farms 93 103 98 106 97

Full-time farms 81 99 97 98 95

The numbers of farms in the sample of the Enterprise and Income Statistics of Ag-riculture and Forestry are sufficient for the study of part-time, subsidiary and full-time farms only for the part of the most central production Iines and farm size groups. On cattle farms, grain farms and farms engaged in versatile production, the net incomes of 1985 were highest on part-time farms and lowest on full-time farms in most farm size groups. Income disparities are most notable on grain farms, where the ratios indicating net incomes were 104-131 on part-time farms and 80-91 on full-time farms. On cattle farms and farms engaged in versatile production income disparities between part-time and full-time farms were only slight (Table 5).

Regionally, farms are divided into part-time, subsidiary and full-time farms very much in the same ratio in terms of, besides the number of farms, the farm size as well.

The results of these farm groups in different regions are examined from 1984 onwards.

From the viewpoint of a sample-based study, there are too few part-time and subsidi-ary farms with over 20 hectares, except in southem Finland. Also, the number of subsidiary and full-time farms is too small in the two smallest farm size groups. In the most central farm size groups, regional differences in the net incomes of part-time, subsidiary and full-time farms were only slight, except in northem Finland. On part-time farms in the farm size groups of less than 20 hectares the ratios indicating the net incomes of 1985 were 102-105 in southem Finland and 92-97 in northem Finland. On subsidiary farms in the farm size group of 10-30 hectares the corresponding ratios were 98-107 and 83-92. On full-time farms in the farm size groups of 5-50 hectares the range of ratios is 89-108, the smallest ratios indicating the incomes on the smallest farms in southern Ostrobothnia and northern Finland.