SPECIAL REPORT, by Roger Blobaum
AUGUST 20, 1973
The Family Farm Vs. Agribusiness: Will Corporations Take Over Food Production?
The family farm, an institution that has made American agriculture the most productive in the world and kept the land in the hands of those who work it, is in danger of being wiped out.
Food processors, oil companies, conglomerates and other corporate giants are forcing their way deeper into agriculture, based since the days of the Homestead Act on family-operated units.
Huge corporations are acquiring land, producing crops and livestock, and integrating the food industry forward and backward. They are exploiting farm labor, destroying public markets, and forcing millions of people into the cities (934,000 families driven off the land in the 1960s alone).
The takeover attempt is acknowledged by some of the nation’s biggest corporations. The Agribusiness Accountability Project reports the giant farmers include Tenneco, Incorporated; Boeing Aircraft; Getty Oil Company; Bank of America; Dow Chemical, and Pacific Lighting Corporation.
Tenneco, a huge conglomerate with $3.4 billion in assets, has told its stockholders it is developing a food system based on integration from seedling to supermarket. Tenneco’s holdings include the Kern County Land Company, with more land than the state of Rhode Island.
A recent report issued by the North Central Region of the Cooperative Extension Service suggests these trends, if allowed to continue, could wipe out family farms and all commercial full-time units in the next 25 years.
The public appears unaware of the tremendous social and economic upheaval that would result from a big business takeover of agriculture. Many people are misled by assurances from the Department of Agriculture and others that structural changes taking place in agriculture result from technological change, benefit the public, and are inevitable.
The family farm appears to have many friends. A recent Minneapolis Tribune survey showed 76 per cent consider the family farm efficient, 95 per cent want it preserved, and 57 per cent consider corporation farming a bad development. Yet 71 per cent said corporations will produce most of the nation’s food 25 years from now. In other words they consider the family farm both a valuable and efficient institution and a lost cause.
Badly needed is reliable documentation of what is going on. Much of the corporate activity is shrouded in secrecy. Researchers who have examined documents filed with the Securities and Exchange Commission and other agencies report corporations are required to disclose virtually nothing about their farm operations.
Corporate secrecy as it applies to agribusiness was the subject of a recent investigation by the Monopoly subcommittee of the Senate Small Business Committee. But spokesmen for companies engaged in farming declined to testify, and the subcommittee found out little that was not previously known.
The only national data available is a United States Department of Agriculture survey that Secretary Earl Butz and others use to try to convince the public that no corporate threat exists. The survey, which concluded that corporations operate only 1 per cent of all commercial farms, has been thoroughly discredited because it is based on incomplete, misleading and poorly analyzed data.
The best evaluation was done by Professor Richard D. Rodefeld of Michigan State, who made a systematic study of companies involved in farming in Wisconsin. His research, which exposed glaring errors in the USDA data, included an analysis of more than 50,000 state corporation tax returns.
He found, for example, that USDA researchers had missed 252 farm corporations completely in their Wisconsin survey. He also found that they understated the total number of acres owned by corporations by 37 per cent, acres rented by 269 per cent, number of cattle fed by 80 per cent, number of milk cows by 54 per C2nt, number of sows by 216 per cent, and acres of vegetables by 37 per cent.
Since exactly the same research procedure was used by USDA in surveying corporate farming in 46 other states, one can conclude that the government report understates the problem substantially all across the country.
Since then Rodefeld has developed new data showing a clear, uninterrupted 20-year trend toward a corporate takeover of agriculture. USDA’s own data, he found, is evidence for this conclusion when errors in reporting, inconsistencies in defining farm types, and interpretations of data are accounted for and corrected.
His latest findings, reported at a national conference in San Francisco, showed (1) family farms no longer dominate farm production and sales and have not since at least 1959; (2) there has been a clear, uninterrupted 20-year trend toward a corporate takeover; (3) corporate farms presently account for a significant proportion of all farm sales; and (4) corporate farm numbers and sales increased at a rate substantially greater than those of family farms in the only period for which adequate data is available.
This attack on government data is significant because the federal government tilts the policy balance between favoring the family-type farm and the corporate unit. The government, while issuing policy statements praising the family farm, actually is promoting bigness and pushing people out of farming.
This makes no sense because bigness is not natural in agriculture and even USDA concedes that one-man and two-man farms are the most efficient. Bigness is no more inevitable than a communist nation’s decision to take over the land and create huge state farms. The loss for the individual is the same in either case: lack of incentive loss of power over their own lives.
The government has consistently helped the wrong people. Federal subsidies have made the rich richer and provided little help for most independent farmers. As former Senator Fred Harris puts it, the government should stop encouraging corporate interests to farm the taxpayers and start encouraging farmers to farm the land.
Shocking stories of tax-loss setups, cattle syndicates, land speculation, and other tax dodges used by corporations and wealthy individuals have been related to congressional committees. The University of Missouri reports the cattle-feeding industry in just three years has become so dominated by syndicates, using limited partner and tax shelters, that its livestock specialists no longer recommend cattle feeding by individual farmers.
It is clear that “tax farmers” have the competitive edge over legitimate operator because their objective is converting normal income into capital gains rather than trying to make a profit. In many cases this is combined with land development and speculation.
The Department of Agriculture and the land grant universities have been accused of complicity in the corporate takeover attempt. The have failed to question the trends or to sponsor any meaningful research on the consequences. What happens, for example, to the people driven off the land? What are the real costs of this upheaval to society? What kinds of communities will be able to survive?
An indication of what they would find is seen in Professor Walter Goldschmidt’s classic study of Arvin and Dinuba. This controversial study, completed in the 1940s, showed the direct relationship between farm size and the rural community.
Arvin and Dinuba, the two California towns involved, were comparable in every economic respect except for the size and type of farm operations in the surrounding area. The study concluded that communities surrounded by family-type farms are better in every way than dominated by large-scale corporate farms. That included such fact’ as more retail business, more small businesses, more churches, more civic and youth organizations, better schools, less absentee owner and fewer landless workers.
Goldschmidt recently told a Senate committee that more studies of this kind are needed. “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 findings created a storm of controversy back in the 1940s. USDA fired Goldschmidt and suppressed the study after it was attacked by powerful interests promoting corporate involvement agriculture.
USDA has done virtually no social research since that episode and the land grant universities have a similar record), and appropriate bills for years carried language specifically banning such research. The Arvin-Dinuba report, however, has withstood the attacks through the years, has never been refuted, and is now considered a classic study.
It has been almost as long since the government did any research on land ownership patterns in the country. Hearings held by Senator Adlai Stevenson disclosed that we have no idea who owns the land in this country. Testimony dealt with huge holdings of railroads, utilities, paper companies and others, but documentation was thin.
Experiences in other countries and other civilizations tell us a good deal about the dangers of land monopoly, the exploitation and social upheaval associated with concentrated land holdings elsewhere, and the possibilities still open to us in a democratic society. The importance of widely diffused ownership of land was underlined by Pope John when he declared that “today, more than ever, the wiser distribution of private ownership ought to be forcefully championed.”
The first thing we need in this country is documentation of who owns the land now. A step in this direction is the 1971 land reporting law enacted in Minnesota. It requires all corporations owning or leasing farmland to file a report on these holdings by March 15 of each year. The reports are filed with the secretary of state and open to the public.
That statute was updated in the Minnesota Legislature this spring by adding a ban on company farming (with an exemption for family corporations) and limiting expansion of existing farms to 20 per cent in acreage in a five-year period. A related bill, also passed, curbs tax-loss farming.
There is ample precedent for state control of corporate agriculture. North Dakota has prohibited all types of farm corporations since 1932. An attempt to legalize closely-held farm companies was defeated there in a 1968 referendum. It is interesting that the percentage against corporate farming in 1968 was substantially higher than in 1932 when the ban was put on.
Congress should follow the example of Minnesota and North Dakota and take similar action. The Family Farm Act, a bill of this type introduced by Senator Gaylor Nelson, had a hearing last year and is being pushed again in this Congress. It would curb the movement of corporations into food production and require them to divest themselves of present farm holdings.
It is entirely consistent with our traditional antimonopoly policies to forbid integrating of food production from the seedling to the supermarket and to require food processors and distributors to compete and keep their facilities open for production of the independent farmer.
The Family Farm Act has been attacked by critics who contend that our present federal laws provide protection for the family farmer. However they have failed to cite a single instance where either the Justice Department or the Federal Trade Commission have successfully prosecuted a corporation for attempting to monopolize the production of an agricultural product.
Also needed is enforcement of laws already on the books that limit government-subsidized irrigation water to 160 acres per farmer, or 320 acres per farm family, and which require the recipient to actually live on the land involved. These restrictions, adopted many years ago, have been successfully flaunted by wealthy absentee landowners throughout the West.
Family farmers, even though they produce food more efficiently than anyone else, clearly are in a battle for survival with conglomerates and nonfarm investors. They need help from urban people who make up the majority of the electorate.
If corporate giants do take over, a few Wall Street tycoons will administer food prices and consumers will have no choice but to pay them. Anyone who follows the reports of big profits for supermarket chains will have an idea of what to expect.
Farm and city people alike have everything to gain and nothing to lose by curbing corporate exploiters and taking the steps necessary to retain the farm family as the food production unit in agriculture.
Roger Blobaum of Creston, Iowa, has been investigating and writing about the growing involvement of corporations in agriculture for several years. He is a former legislative assistant to Senator Gaylord Nelson of Wisconsin. Now a private consultant in farm policy, he serves on the board of directors of the National Coalition for Land Reform and coordinates its activities in the Midwest.
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