Speech at the Catholic Rural Life Conference on Corporate Farming Issues | 1973

In other words, they consider the family farm both a valuable and efficient institution and a lost cause.

Similar results came last spring in response to a nationally televised debate on the corporate farming issue.  The producer of “The Advocates,” a public television presentation, reported later that an overwhelming 84 percent of the letters received in response to the program opposed a corporate takeover of agriculture He made a point of saying there was no sign of an organized letter writing campaign and that this seemed to be a genuine public response.

So I believe it is possible to convince the American people that a corporate takeover would be a terrible mistake.  But, I also believe this will be a long, hard job.

One thing we hear so often is that this trend toward bigness and corporate involvement in agriculture is inevitable.  I believe it is inevitable only if we continue to drift along and don’t do anything about it.  The fact is that this is largely a political question and we can have any kind of agriculture we want in this country.

The government tilts the policy balance between favoring the family-type farm and the corporate approach.  The trouble is the government, while issuing policy statements praising the family farm, is doing more than any other institution in America to destroy it.

The Department of Agriculture, which used to be the farmer’s voice in Washington, is under increasing attack for becoming too cozy with agribusiness.  There is ample evidence these attacks are justified.

USDA, for example, consistently plays down the growth of vertical integration and other corporate involvement in agriculture It still promotes an Economic Research Service study on corporate farming that has been repeatedly discredited because of being based on incomplete, misleading and poorly-analyzed data.

That study concluded that corporations account for only about 1 percent of all commercial farms, that they operate only 7 percent of the nation’s farm land, and that they account for only about 8 percent of farm product sales.  It also concluded that two-thirds of these are actually family operations that are incorporated.

A follow-up study by Professor Richard D. Rodefeld of Michigan State University turned up glaring inaccuracies in the basic data. In an analysis of all corporation tax returns filed in Wisconsin (a state where these returns are available to scholars), he found, among other things, that USDA had missed 252 farm corporations altogether.

He also fund that USDA had underestimated the total number of acres actually owned by corporations by 37 percent, acres rented by 269 percent, number of cattle fed by 80 percent, number of milk cows by 54 percent, number of sows by 216 percent, and acres of vegetables by 37 percent.

Since exactly the same research procedures were used by USDA

in surveying corporations in all the other states, Rodefeld concluded similar levels of inaccuracy would be expected for these states as well.

Rodefeld disclosed his findings at a hearing held in connec­tion with the Senate Small Business Committee investigation of corporate involvement in agriculture.  His testimony made these specific and significant criticisms of the USDA corporation farming study:

—It classed corporation farms into two categories, those with 10 or more shareholders and those with less than 10, and then arbitrarily and incorrectly concluded that those with fewer than 1C shareholders were all family farms.

–It failed to include the many large operations with absentee owners, hired managers, seasonal laborers, and all other charac­teristics of corporation farms except the formality of filing incorporation papers.

—It identified corporate farming operations on a county-by-county basis, which failed to reflect large and widespread holdings of those operating in several counties or even in several states.

—And it failed to include in its survey, apparently because of careless research, 252 existing farm corporations.

Rodefeld referred specifically to much-publicized statements by Secretary Earl Butz that less than 1 percent of our total farms are corporate farms and about six out of seven of these are actually family farms. He showed that only 42 percent of those listed by USDA as family farm corporations actually were family farms.

And if the family farm is defined as one owned and managed by an individual or family, who must also do the majority of the work he added, then only 34 percent of these Wisconsin farm corporation: were actually family farms.

Rodefeld concluded that the effect of the USDA study has been to vastly understate the size and impact of corporation farming. And he said flatly that the survey is totally unreliable.

USDA also came under attack at the same time for using 1963 data in its reports on vertical integration.  The Department had done nothing to document this threat to the family farm over an 8-year period.  The Department responded by issuing a new study with the surprising conclusion that vertical integration had remained virtually steady in the last 10 years.

A closer look disclosed that all the Department had actually done was solicit the views of commodity specialists on its Washing staff as to whether vertical integration had increased.  Nothing even resembling research was involved and the report actually conceded that no one at USDA really knew for sure what the facts were.  Yet, that study, too, is passed off as research and farm editors and high USDA officials have given it wide distribution.

We also find that neither USDA nor the land grant universities conduct any significant research on the social consequences of a corporate takeover.  What happens to the people?  What are the costs to our society?

These are the really significant questions on this issue and the area where you, as religious leaders, can play a highly significant role.

I hope all of you are familiar with Professor Walter Goldschmidt’s classic study of Arvin and Dinuba.  This controversial study, completed in the early 1940s, showed the direct relationship between farm size and the rural community.

Arvin and Dinuba, the two California towns involved in the study, were comparable in all economic respects except for the size and type of farming operation in the surrounding area.

The study concluded that communities surrounded by family-type farms were better in every way than those dominated by large-scale corporate farms. That included such factors as more retail business more small businesses, more churches, more civic and youth organi­zations, better schools, less absentee ownership, fewer landless laborers), and better community physical facilities.

Goldschmidt recently told a Senate committee that similar studies should be made now to show the impact of agribusiness on rural communities.

“I am convinced,” he said, “that the results of the earlier study will be substantiated because I believe that the causative forces are inexorable; that corporate farming creates an urbanized and impoverished rural community.”

The Arvin-Dinuba study created a storm of controversy back in the 1940s.  USDA fired Goldschmidt and suppressed the study after it was attacked by powerful interests promoting the movement of big business into farming.

USDA has done virtually no social research since the Arvin-Dinuba episode and appropriation bills for many years carried language specifically banning such research.  The Goldschmidt report, however, has withstood the attacks throughout the years, has never been refuted, and is now considered a classic study.

I am emphasizing research because both Senator Gaylord Nelson and Senator Adlai Stevenson have concluded, after extensive Congressional hearings on this issue, that little reliable research has been done.  The public is demanding more than nostalgic and emo­tional appeals.  We need facts and I am convinced good research would strengthen the case for the family farmer.

Take the ownership of land.  Senator Stevenson’s subcommittee, after holding several days of hearings on this question, concluded that we have no idea who owns the land in this country.

Much of the available information has been put together by reporters and others from public sources.  An excellent example is the land reform series written by Peter Barnes and Larry Casalino of the National Coalition for Land Reform.  It is a detailed report on the vast landholdings of railroads, timber companies, agribusiness companies, and others.

We all know the dangers of a land monopoly and the exploitation and social upheaval associated with concentrated land holdings in other nations and civilizations.  The diffusion of land ownership in this country, and a challenge to the moves toward a land monopoly must have the highest priority.

One official move in remedying this situation is the 1971 lane reporting law enacted in Minnesota.  It requires all corporations

owning or leasing farm land to file a report on these holdings by March 15 of each year.  These reports are filed with the Secretary of Agriculture and made available to the public.

This proposal should be pushed in state legislatures across the nation as a basic first step in determining the extent of corporate involvement in agriculture.

There is ample precedent for state legislation to control corporation farming and court decisions over the years have upheld these controls.

North Dakota has prohibited all types of farm corporations since 1932.  An attempt to legalize closely-held farm companies was defeated there in a referendum in 1968.  It is interesting to note that the vote against corporate farming in the referendum was substantially higher than the original vote in 1932 that put on that ban.

The Kansas Legislature in 1931 approved legislation to bar corporations from producing wheat, corn, barley, oats, rye, potatoes, and milk.  It was amended in 1965 to add grain sorghum to the prohibited list and to provide an exemption for closely-held corpora­tions of less than 5,000 acres.

In Minnesota, corporations engaged in farming may not acquire more than 5,000 acres.  Texas corporations are not allowed to engage at the same time in cattle production and meat packing.

Also needed in all the states is an antitrust law patterned on the Family Farm Act, which was introduced in Congress for the first time last year.  It is an attempt to legislate non-farm corporations out of agricultural production.

This legislation, which had a hearing in Congress last spring, would prevent further movement into food production by corporations and require them to divest themselves of their present farm holdings.

Incidentally, that hearing record, which includes some excellent presentations by opponents of corporation farming, is available from the House Judiciary Committee, House Office Building, Washington, DC  20515.

Specifically, the bill provides that any corporation involved in processing or marketing that has $3 million or more in assets, or any individual owning $1 million of stock in such a corporation, could not be involved at the same time in producing food.

This antitrust bill was written so it would exempt farm cooperatives and certain charitable, educational, and research institutions.  They are exempt as long as their farming activities are related to this work and are not for profit.

It is entirely consistent with our adopted antitrust, anti-monopoly policies to forbid integrating of food production from the soil to the grocery store shelves and to require food processors and distributors to compete and keep their facilities open for the production of independent producers.

Those critics who contend our present laws already provide the necessary restrictions have failed to cite a single instance where either the Justice Department or the Federal Trade Commission has successfully prosecuted a violator.

We also need action in Congress and at the state level to stop] the practice known as tax-loss farming.  What this involves is a way for wealthy investors to avoid taxes by converting normal

income into capital gains taxable at much lower rates.

Government spokesmen in the Treasury Department and elsewhere have been contending that a modification of the 1969 Tax Reform Act took care of this problem.  This doesn’t appear to be supported by the facts, however.  The Agriculture Committee of the National Planning Association, for example, recently issued a report that shows this legislation has had virtually no impact on this kind of tax avoidance.

We also need legislation to limit payments in agricultural and other programs to family-size farms and ranches.  This would include a $10,000 ceiling on government farm program payments.

These are a few examples of legislative changes needed to stop a corporate takeover of agriculture and continued attempts to monopolize the land.

We also need enforcement of laws already on the books that limit government-subsidized irrigation water to 160 acres per person, or 320 acres per family, and which require the recipient to actually live on the land involved.  These restrictions, adopted in 1902, may now be successfully flaunted by wealthy absentee land­owners.

I have not described the many corporations involved in agricul­ture or gone into all the arguments for and against the family farm. You are close to rural people, you have made a public commitment to act, and you know what the arguments are.

I hope you will do everything you can now to push this commitment in the Midwest, where people are less concerned about corporations in agriculture than elsewhere, and not make the mis­take of plowing in too little too late.