Families are the Core of Corporate Farming
Wednesday, June 22, 2016 - 9:40am
North Dakota Family Farmer
What do you notice when you look at an apple? Perhaps it’s the color or variety. How do you choose which to buy at the market? Pink Lady? Gala? Granny Smith? Do you prefer tart over sweet? There may seem to be no end to your choices, but in the end, you go home with a bag of apples.
Now, you may be wondering why I am talking about apples in a piece titled “corporate farming,” but the two are more similar than you may think. Although apples come in many different varieties, their basic parts are the same: core, seeds, flesh and skin. Similarly, every farm or ranch has the same core parts—land, farmer, workers, crop or livestock, equipment and supplies—but farmers and ranchers differ in how they use those core parts to run their business to its highest potential. This includes the right to choose the business structure that meets their needs.
Having the opportunity to choose to be a corporation should be an option for all, not just some, but for many farmers the corporate business structure is not available. Some states have restricted or eliminated this option out of concern over the unknown about how corporate farming would fully play out. Corporate farming options do need to be weighed carefully, and when done right, the benefits can be significant. With the tough economic times America’s farmland is now facing, it makes good business sense to open the door for investors or partnerships that would assist farmers in their ability to persevere and possibly boost their businesses and rural economies.
Corporate farming often gets played as an emotional issue, one that many fear will take away the “family” aspect of farming. The concern is real and needs to be taken into consideration. Consumers hear the word “corporate” and think of suits and ties and hundreds of employees. They don’t want to lose the nostalgic image they have of the small mom-and-pop farm with one field, a cow and a few chickens. But most people are at least three generations removed from farming or ranching, and don’t fully understand the business side of agriculture. A few quick numbers reveal the majority of “corporate farms” are actually family businesses. Of the 2.1 million farms in the U.S. in 2015, 5 percent were incorporated, and from that 5 percent, 4.5 percent were family-owned. And 98 percent of those family corporations had fewer than 10 shareholders.
Creating farm corporations opens up more opportunities for direct family involvement in farming, and allows for non-blood relatives to take up the business as well. Younger generations will not have to walk away from farms that have been in their families for decades. Corporate farming can make it more attainable for young farmers and ranchers to get their start. It is very difficult, if not impossible because of initial capital investments, to be a first-generation farmer or rancher. The ability to use the corporate structure is one way to bring upcoming generations back into production agriculture and ranching instead of pushing them away.
As you can tell, I am a believer in opportunity, but opportunity must come with protection. Protections need to be in place to make sure that large industrial businesses do not overtake agriculture. We don’t want to lose the heritage and work of previous generations in agriculture. Corporate farming options need to stay in the hands of those working in the soil to raise crops and livestock, rather than allow for energy- and product-based companies to control or impede the daily work of a farm or ranch. By providing all business structure options for farms and ranches, we can preserve an agricultural heritage that we, U.S. farmers, so proudly stand for. But with limited business options, we run the risk of losing our family farms and reducing the number of people directly involved in agriculture.
As I sit reflecting on all that I have been blessed with and desire to pass on to future generations, I recall our farm’s motto: “Honoring the past, working today, preparing for the future.” The time is now to prepare for the future, to keep farms and ranches up and running, and to bring new farmers in, maximizing agriculture’s potential to build businesses that last for generations to come.
Katie Heger, dedicated advocate for agriculture, blogs at hegerfamilyfarms.wordpress.com and shares at Heger Farms on Facebook. Katie and her husband farm corn, soybeans and wheat in central North Dakota.