Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana    
March 31, 1969
Viewpoints on
by /. H. Atkinson and R. N. Weigh * Agricultural Economics
THE THREAT OF CORPORATE FARMING
THE AGRICULTURAL AND business presses have indicated for a couple
of years that there is growing concern in some quarters about the entry
of corporations into agricultural production. Some legislators, political
leaders, and farm policy leaders have
expressed interest and, in some cases,
alarm. Little is known of the extent
of this concern among farmers themselves, but it appears that their concern
has been intensified over the last year
or so by news of large corporations
which plan to purchase farm and
ranch lands. The integrated poultry
operation owned by a large corporation is of concern to the poultry farmer, but may not bother other farmers;
however, when there is talk of large
scale purchase of farm land by corporations, this is apt to cause farmers of
all types to sit up and take notice.
Some of those who have expressed
concern about corporate farming have
not been very explicit in defining the
term, but we shall assume that they are
not talking about a change in form of
business organization by family farms
—the change from a proprietorship to
a family-owned corporation. Farm corporations in Indiana, although tending
to be larger than average, could be
defined as family farms, that is, farms
where the management and a sizable
proportion of the labor is supplied by
a single farm family or a couple of
related families. There are some interesting aspects to this type of farm
incorporation, but they are not the
concern of this article.
What we are talking about is the
entry into agricultural production of
large or "giant" corporations, some of
* Weigle is now an extension economist at
the University of Wisconsin.
which may have agricultural interests,
but others of which have had no previous connection with agriculture in
any way.
Corporate Farming Examples
The involvement of large corporations in agricultural production has
been going on for at least two or three
decades. This supports the contention
that recent expressions of fear of corporate farming are, to a considerable
degree, fears that farm and ranch land
will pass into the hands of large corporations. Farmers and farm people
view land ownership and control as
something more than a property right
created by society. For many years,
we have had in this country a philosophy and, to some extent, a public
policy revolving around the idea that
those who work the land should own it
or that ownership of the land should
be an attainable goal. The prospect
of land moving out of the hands of
mortal beings and into the hands of
a perpetual legal person (the corporation) poses a threat to our historical land settlement policy and our
philosophy of land ownership.
Examples of corporate farming
which have been going on for some
time are pulp and timber production
in the southeastern United States,
poultry production, canning and fresh
vegetable production and some other
specialty crops. In addition, we have
seen agricultural production carried
on as sidelines to coal or oil production. Corporations have operated experimental farms and those acquired
by foreclosure. In recent years, cattle
feeding and dairying have reached
large scale proportions in some areas
although "outside" corporations may
or may not have been involved.  Also,
in the past year or so we have seen
increasing interest in custom farming
in the Midwest as well as in the
Southeast. Finally, large corporations
have indicated interest in entering
what we might call general farming
and ranching.
Corporate Incentives
Exploitation of new technology has
been one of the incentives in the past
in entry of corporations into agricultural production, especially exemplified
by the poultry industry. In these situations there is a "package" of new
technology, much of it inter-related
so that the profit potential from integration and coordination appears high.
Management skills not existing in the
farming sector may be required. The
corporation may have these skills or
be able  to  supply  them.
Economies of size must be listed
as a separate incentive although it
is involved in several of the incentives mentioned here. In production of agricultural products, we know-
that there are considerable economies
in expanding from average or below
average size farms to the level of
our larger commercial family farms.
However, several studies indicate that,
under existing management, these
economies tend to disappear before
we reach the levels which could not
still be considered a family farm. In
much of the Midwest, wc are talking
about farms with a total labor force
of three or four men and an acreage
under 1,000. A study of dairy farms
in Indiana found the lowest cost production on herds of about 40-45 cows,
regardless of management level. However, on farms which had superior
management, expansion to 70 or more
cows in milk would have been profitable  under  existing  milk  prices.  On