What is an Agricultural Producer?

An agricultural producer is a rancher or farmer. These parties produce crops, or breed livestock, or feed livestock prior to slaughter through day-to-day labor and field operations. Agricultural producers often operate under varying legal and financial arrangements, such as owning their land outright, renting it, or entering into sharecropping agreements. An owner-operator both owns the land and actively works it, while a tenant or sharecropper typically farms land owned by someone else but still participates in the production risks and rewards. Regardless of the arrangement, a key characteristic of a producer is their exposure to agricultural risks such as weather fluctuations, market price volatility, pest infestations, and disease outbreaks. In exchange for bearing these risks, producers are entitled to a portion of the revenues generated from selling their products.

Example of an Agricultural Producer

The following are all examples of agricultural producers:

A rancher located in a high plains area maintains a herd of 500 cattle, which he shifts between pastures depending on the season, and then sells to a slaughterhouse when the cattle reach a target weight. This is an agricultural producer.
A farmer specializes in producing organically-produced eggs, and does so by maintaining several thousand chickens that are free to move throughout his small farm holding. This is an agricultural producer.
A farmer grows wheat on a substantial farm located in the Midwest. He buys and sells futures to lock in the price of wheat at the most advantageous level, and sometimes rents additional land from neighbors to grow additional wheat when the price is right. This is an agricultural producer.