Farming

Corporate Farming Laws a Bad Deal for Farmers

A farmer in Kansas who wants to sell his property challenges the state's law.

|

farmer
Sebastian423 / Dreamstime.com

Ever since the awful Supreme Court decision in Wickard v. Filburn—a 1942 case in which the Court upheld a New Deal USDA program that prohibited farmers from growing more wheat than the USDA said they could, even if the purportedly excess portion did not enter the stream of commerce—the question of just how much the federal government could meddle in farming (and other non-commerce commerce) has been an open one.

But if the federal government can clamp down on what and how much farmers can farm, state governments are also in on the act, determining even who may farm, and to whom farmers may sell their farms.

The issue is corporate farming: farms owned not by Old MacDonald but instead by a company. Critics paint corporate farms as bigger, sometimes foreign-owned, insular, pollution machines.

"Large chunks of our food are controlled by foreign, multinational corporations who don't have the best interests in mind of U.S. families or family farmers," said Tim Gibbons of the Missouri Rural Crisis Center, in comments to the St. Louis Post-Dispatch in 2015. Supporters, not surprisingly, argue against such characterizations.

Corporate farms buck the pastoral image of the American small family farm—even if most Americans who actually visited the average small family farm in this country would find it larger and far more modern and dependent on technology than they'd expect.

Several states—nine at last check—simply don't permit or severely restrict corporate ownership of U.S. farms and farmland. (These laws are invariably referred to as "corporate farming" or "anti-corporate farming" laws.)

One such state is Kansas, where a farmer was banned under state law from selling his farm to a Colorado company. He and the Colorado company recently sued to overturn the law. The Kansas law, reports Courthouse News Service, "require[es] farm corporations be made up entirely of Kansas residents."

The plaintiffs argue that the Kansas law is unconstitutional because it impermissibly discriminates against out-of-staters who want to engage in farming in Kansas, and because it prohibits the sale of farmland only for the purpose of continued farming (but not, say, for the purpose of erecting condominiums). In the lawsuit, the plaintiffs allege among other things that the Kansas law "provides strong incentives to remove Kansas agricultural land from agriculture[.]" Again—more condos.

As I noted, other states have similar laws on the books.

Missouri, for example, limits foreign ownership of farms to just one percent. That's actually an increase from an earlier law, which banned the practice. A 2004 report detailed how Minnesota prohibits farm ownership in most cases by those who aren't American citizens. Other states are slightly less restrictive. Corporate farming rates in Iowa—where corporate farm ownership is limited by law to companies with no more than 25 shareholders—have risen slowly—by just 11 percent from 2007 to 2012—the Des Moines Register reported in 2014. Only one of about every 12 farms in Iowa was, at the time, a corporate farm, according to the report.

Some suggest corporate farming laws may slowly be on their way out. That would be a welcome development. Selling to an interested buyer—corporate or not—is a right all farmers should have. But it also shouldn't be the only way farmers can profit from their land.

As I describe in my recent book, Biting the Hands that Feed Us—and as others have also described—increasingly strict regulations threaten many small family farms. Big corporations are far better situated to comply with the stricter regulations—and to buy out the small farmer for whom regulatory compliance is a financial impossibility.

"For farmers and ranchers, the freedom to operate is [as] important" as a writer's freedom of speech, wrote Beef magazine's Amanda Radke last year. "In the last eight years, agriculturalists have faced plenty of challenges in that arena as an extremely regulatory administration has slapped plenty of burdensome and unnecessary rules and restrictions on our abilities to grow food in this country."

Wickard taught us that farmers who are restricted from productive farming aren't free. They're no longer farmers, either. Laws that restrict farmers from selling their land to a buyer of their choice also hurt farmers. Hopefully the Kansas farmer's lawsuit will hasten the demise of corporate farming laws.

Advertisement

NEXT: A City in Ohio Treats Seeking Medical Help When Suffering an Overdose as a Criminal "Public Inconvenience"

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Hopefully the Kansas farmer’s lawsuit will hasten the demise of corporate farming laws.

    Next thing you know states won’t be able to dictate what and how much farms can produce. Look, farming is essential to the nation’s survival and therefore it’s a national security issue. I say we nationalize farmlands so that states who are lax controlling their crops don’t let corporations bring us all down with GMOs and shit.

    1. Settled law, FYTY

  2. Speaking of corporate manure:

    America Trusts Fox News

    This scorecard shows the ratings for statements made on air by Fox, Fox News and Fox Business personalities and their pundit guests:

    True 17 (10%)
    Mostly True 20 (12%)
    Half True 31 (19%)
    Mostly False 35 (21%)
    False 49 (29%)
    Big Fat Liars 15 (9%)

    Republican Propaganda. You decide.
    https://tinyurl.com/l4aa6qd

    1. “”””Angie Drobnic Holan, PolitiFact Editor””””

      “”””a master’s of library science from the University of South Florida.”””

      So she knows the Dewey Decimal System and how to say Shhhhhhh.

      1. I wondered what was hiding behind that tiny url.

      2. ^ Might be a Republican dunce.

  3. Limited liability corporations only exist due to the special treatment they receive from the government

    Even their name is a lie, they don’t limit liability, they transfer the debts they owe to others by limiting the owners liability.

    1. Limited Liability corporations exist so that people can limit their exposure if things go south. It is really one of the most amazing ideas in the course of human history.

      1. It’s important to shield children from the consequences of their actions. Adults, less so.

      2. But it does not limit liability. It transfers the liability to someone who does not have special protection via laws

        Its also not an amazing idea, its an idea as old as government, where the government is used top protect one favored group of people at the expense of others

        Its the same idea that government has of protecting its self using sovereign immunity. They are too important to suffer from liability for their actions

  4. The commerce clause was written to keep states from erecting trade barriers between them..Then along came FDR. My grand parents had to destroy some of their crops.They hated the man and voted R till they died due to that..They needed extra feed the family. My mother said life was very hard after.I can not imagine..

  5. “”Large chunks of our food are controlled by foreign, multinational corporations who don’t have the best interests in mind of U.S. families or family farmers,” said Tim Gibbons of the Missouri Rural Crisis Center, in comments to the St. Louis Post-Dispatch in 2015. ”

    Make that the Missouri Rural ‘My But It’s Getting Deep In Here’ Center.

    Any ‘Family farmer’ who retains possession of the majority of his marbles, and who wants to pass the farm to his children, will have incorporated his farm. So any public appeal that uses the “Family Farm’ vs “Corporate Farm’ trope is utter bullshit.

    1. Like it or not, corporations do not farm. They merely own land. Farmers are both farmers and landowners and they earn their income from a combination of farming and imputed rent from the land they own. Over time, the returns from farming devolve to the level of boss of a day laborer while rents rise with inflation. Separate the two and at some point, inevitably, a combo of falling crop prices and drought/weather is gonna turn farmers into Okies – while the landowners take tax writeoffs and get bailouts.

      Corporate ownership of land is appalling. Land should only be owned by humans who live and die. Thomas Jefferson understood this – Earth belongs in usufruct to the living not the dead – http://bit.ly/1rHOhab . It was the entire economic function of the original 50-year Jubilee in the Bible – to ensure that the living cannot be forced off the Earth by the debts of the dead.

      How in the hell did economics get so off-track that it no longer even understands that land is NOT capital and it is NOT labor. It is a unique and separate factor just like everyone understood until the 1880’s.

      1. I think most Libertarians would disagree with you. They support rentier income, that is income ‘earned’ from the mere ownership of something, and nothing else. Like income from renting property or income from a debt, or skimming a percentage from the nightly take of a Vegas casino. A lot of non Libertarians have problems with this because the word ‘earned’ connotes ‘deserved,’ which makes for some dispute.

        1. Well I support interest earned from ownership of capital – and profits earned from the mix of land/labor/capital by the entrepreneur (which is the usus and fructus part of usufruct). I don’t have a problem with rent to someone with usufructuary rights. But usufructuary rights are not the same thing as ‘ownership’.

          ‘Ownership’ also includes abusus – the right to alienate or destroy the property. You have the right to abusus your labor (go on vacation, go on strike, sleep, commit suicide) and your capital. You don’t have the right under usufructuary to salt the land, pour mercury in the rivers, or destroy the air because that is a theft from future generations – iow when you die and they receive the land they will be obliged to fix what you destroyed at the expense of their own usufruct and the earth will belong to the dead. With ‘ownership’ you do have the right to do all that.

          So many issues today – environment and public debt for two – would be much easier to get a handle on if land was again its own economic/legal factor.

          1. Interesting comment. I think a lot of communal property in small villages enjoys the same protections. A few imposing trees can stand at the centre of a village for generations because of the protection afforded to them by your usufructuary rights. (I’m thinking rural China, but it must be similar the world over.) Still not sure if ‘theft from future generations’ would hold much water here.

            1. India has four different kinds of mortgage – one is a usufructuary mortgage and one is an ‘English’ mortgage (where title is transferred and ownership made absolute so that the bank can then rehypothecate it to anyone they want while the borrower is still paying on the loan). Because they were a colony with preexisting institutions for lending/etc, they recognized that what the English were imposing was destructive of previous stuff. We ourselves were English so we didn’t recognize or know anything else. We just brought over those precedents from England. And I suspect the whole neoclassical marginalist stuff in economics was just academic cronyism (banks/govts are the only ones who hire economists – so economics avoids pissing them off and raising uncomfortable issues).

  6. How utterly bizarre. Every time I think government and Progressivism have reached new peaks of derpitude, along comes something like this to leave me gobsmacked.

    Why on earth would anyone care if foreigners own farms? Or corporations? Or foreign corporations? Yes, I know the answer, but it still astounds me that people actually think it matters, that somehow foreigners will buy farms so they can turn it into … I dunno, salted earth? Airstrips for foreign bombers?

    I will never understand the minds of statists.

    1. Why on earth would anyone care if foreigners own farms?

      Yes, if there’s been one underlying theme to politics lately, it’s the deep abiding love rural Americans hold toward foreigners.

      1. So much hatred that the legislators have to forbid them from showing their hatred by not letting them take foreigners’ greenbacks. What were those filthy foreigners doing with American greenbacks to start with? They must have been stolen!

      2. A lot of foreigners live in rural America.

  7. “Large chunks of our food are controlled by foreign, multinational corporations who don’t have the best interests in mind of U.S. families or family farmers,” said Tim Gibbons of the Missouri Rural Crisis Center, in comments to the St. Louis Post-Dispatch in 2015. Supporters, not surprisingly, argue against such characterizations.

    Multinational corporations don’t have the best interests of U.S. families or family farmers in mind. They have the best interests of their shareholders in mind. That doesn’t mean they should be banned from buying land, but any “supporter” who argues otherwise is either a fool or a liar.

    1. That’s a very idiotic statement.

      *No one* has the best interests of US families or family farmers in mind. No one. Seriously, no one. I don’t. You don’t. Their political representatives don’t. Walmart doesn’t. The plumber doesn’t. The locksmith opening up a car you’ve locked your keys in, at 1 in the morning doesn’t. The baker doesn’t. The FedEx delivery guy doesn’t – nobody in FedEx does.

      Every single person in every single country is out for themselves.

      That’s *why* capitalism works and socialism and communism don’t – capitalism understands that and harnesses that single fact for the public good while socialism and communism require special people in order to work properly.

      1. So how does that make it idiotic? Stormy Dragon was just confirming what Tim Gibbons said. Trivially true is still true.

      2. And yet is Reason is pointing us to Monsanto agitprop about how they’re really a giant charity and totally don’t care at all about making money.

  8. A problem with corporate ownership is its trend to giganticism which encourages monoculture and diminishes diversity. Family farming encourages diversity, which I think is a goal to work towards. Also putting the control of agriculture into the hands of a very few is unsound, regardless of their motives.

  9. If someone or a company owns land then it theirs to do with as they please, as long as they don’t harm other people and other land owners (i.e. pollution).

    The fear is that entities besides American family farmers will use the farmland to send food to foreign countries and starve Americans. That is the fear. This fear comes from a different place than simply selling food products to foreigners because you can simply stop selling to foreigners. If non-Americans own the land, then you have a dilemma between retaining American property rights and wanting to take the land back.

    1. If you don’t want non-Americans to own land in America, don’t sell the land to foreigners.
    2. If other countries work together to use land in America to attempt to starve Americans, then you might have a reason to declare war and debate that.

    If there is money in farming, people will do it. On the other hand, farming is more dependent than most other businesses on nature growing the products.

    1. The fear is more rational. Corporate ownership of land means the land is more subject to asset price bubbles due to credit availability, manipulation of interest rates, etc. Those rising land prices can – and always will – force imputed rents for the use of that land up and if that asset inflation is not linked to productivity changes in the local area, then it can force a different land usage – eg ranchland (the lowest value land) must be forced into grain production. WW1 increased grain prices which collapsed during the 20’s and into the 30’s. The 1920’s created land speculation bubble. The result was that ranchland in CO/panhandle was turned into grainland (the prairie was broken for the first time) and falling grain prices forced an overproduction frenzy to pay the higher rents. When a drought hit – whoosh Dust Bowl and the topsoil is gone.

      My guess is that the fear of ‘foreign’ ownership is specifically the fear that land prices will disconnect from the Ogallala Aquifer overuse which drives local farm productivity and align more with stock/asset prices everywhere else. Not to defend those specific state laws cuz I’m sure there’s a lot of BS in there too.

      1. And I’ll bet money that the Kansas farm that is being sold is in the middle of the most overused part of the Ogallala Aquifer. I won’t go so far as to say that the farmer is also a)old and b)been overusing the aquifer himself – well I guess I just did – but it wouldn’t surprise me either. The land has been diminished (abusus) and now people want to be the first to cash out in a general land bubble and stick their neighbors with the future problem because we don’t understand usufruct in this country.

    2. “If someone or a company owns land then it theirs to do with as they please, as long as they don’t harm other people and other land owners (i.e. pollution).”
      Except we have centuries showing that corporations are pretty shitty at not polluting. When people are shitty stewards, folks wonder if we should let them.

Please to post comments

Comments are closed.