Kafir (Arabic: كافر kāfir; plural كفّار kuffār) is an Arabic word meaning "rejecter" or "ingrate," also the term "Kuffar" the plural of the word "Kafir" is used to refer to peasants (أَعْجَبَ الْكُفَّارَ نَبَاتُهُ) Surah 57 Al-Hadid (Iron) Ayah 20; as they till earth and "cover up" seeds. The term "Kufr" means "to cover up" this is why earth tillers are referred to as "Kuffar."
In the Islamic doctrinal sense, the term refers to a person who does not recognize God (Allah) or the prophethood of Muhammad (i.e., any non-Muslim) or who hides, denies, or covers the "truth". Please keep in mind that the spirit of Quran uses the word equaly for Muslims, in Sura 2 Verse 256, it is asking Muslims to take upon themselves the action of "Kofr" of all unjust idols, persons or powers.
It is usually translated into English as "unbeliever" "ungrateful" or "obliterator." In recent times, the term is seen as derogatory, which is why some Muslim scholars discourage its use and suggest the term "non-Muslim" instead.
http://en.wikipedia.org/wiki/Kafir