NFO-187 (AV10687): Deciding the Future

us farm reports a public information program brought to you in the interest of agriculture rural business and the well-being of our nation by members of the national farmers organization in this area and others interested in having American agriculture received cost of production plus a reasonable profit the American farmers and ranchers are building a brighter future for agriculture through the national farmers organization the organization that awoke America and represents the leadership of agriculture u.s. farm report presents deciding the future with special guests Sharon booth a young Franklin County Kansas dairy producer and James Buchele state representative from the state of Kansas here now for us farm report is Ellis Kitchen I'm a member of the national farmers organization from Osage County Kansas I have with me today a mr. Sharon booth from Franklin County and mr. James Buchele from Representative from a 42nd district in Kansas Sharon how is the dairy business down then your part of the country well it's been a little better it's grade a [unclear] I believe since the holding action but the milk I'm selling has dropped a nickel since then it could be a whole lot better okay thank you Jim you've had considerably experience with corporate farming laws and legislative matters pertaining to farming and I believe you also had a bill introduced last session would you tell me about that a little bit I think Ellis that to so that everyone will understand exactly the involvement that we have had in the Kansas Legislature concerning corporate farming I'd like the first should give a background as to what has happened in the Kansas Legislature the 1967 legislature in the Senate passed a bill which would permit- permit corporate farming on a very large scale in the state of Kansas this award many organizations farm organizations and many farmers themselves became very much concerned about this type of legislation in Kansas and whether or not it was in the best interest of agriculture so far as public policy is concerned a very concentrated effort was begun to see that this measure did not pass in the House of Representatives and as a matter of fact it was stopped so far as the 1967 legislature is concerned the bill was carried over and again an attempt was made to generate some enthusiasm for the measure but it was killed in the 1968 legislature after our Governor Robert Docking had announced publicly that he intended to veto the bill if it were passed many people then became concerned and due to the information and the facts that were brought out while this expanded corporate farming bill was being discussed in order to keep discussion alive I introduced a bill it was House bill number 2008 the intention was to give people something new to think about and that being that maybe we should eliminate corporations from agriculture the bill very simple in its language provided that all corporations who derive less than 25% of their income from agriculture are prohibited from owning land which is suitable for agricultural purposes in the state of pen it provided for ten year period in which they could sell the land we further provided that in the event that a corporation became an owner of agricultural real estate such as an insurance company on a mortgage foreclosure or a bank that they were allowed five years in which to dispose of this land it is my feeling and the feeling of many Kansans I believe that though we do not have corporate farming on a large scale ownership of our agricultural land is slowly drifting into the hands large corporations and through the backdoor we in effect have corporate farming in Kansas [unclear] you mentioned Governor Docking stand on the corporate farming bill Jim we were real happy that he chose our convention last year to announce you stand on our 1967 convention I believe that Sharon you mentioned something about the lower price of milk how does other farm products such as hogs fit into the picture well alright now they're they're not bringing what they should be the the modernized parity of hogs should be $24.85 do you have any information on what producers are getting another parts of the world yes and now West Germany home to bringing $29.95 and Australia they're bringing $28.51 in the Philippines they're bringing $28:22 in Italy they're bringing $26.93 France they're bringing $26.60 in Sweden they're bringing $26.01 in Japan they're bringing $25.00 in Spain they're bringing $25.00 and I'll share they're bringing $24.59 in United Kingdom they're bringing $21.97 in Canada they're bringing $19.65 this has been an average from 1960 - 1966 that's very good information of course today farmers know the prices they're receiving for hogs in the Agriculture Department figures a modernized parity can you tell me what that is $24 85 well that's a long ways from the price that the farmers are receiving in this area however Kansas is noted for its wheat and production of wheat what about the world prices of wheat to the producers how do they compare with our price well about the same really as hogs and in England they're bringing $5.10 In Switzerland it's $4.33 Norway is $4.15 Japan is $3.80 Spain is $3.17 Sweden is $3.02 India is $2.83 Italy is $2.67 France was $2.46 turkey is $2.42 New Zealand is $2.02 Mexico it's $1.99 United Kingdom there's $1.91 Australia's $1.74 Argentina's $1.50 to Canada $1.38 in the United States is $1.25 it's a support the prices to the producer know our market price your runs around the dollar 18 to 20 I believe today's market so they're young those figures are real important that the farmers the one question enters my mind there is how can we price ourselves out of the market when we're at the bottom of the totem pole on these various products this seems to me to kind of hinge back to some of the things mr. Buchele mentioned a while ago Jim how does corporate farming structures affect the communities and the churches and the schools and things like this in the community well of course this is the part of the reason that I and many other people who are interested in our in maintaining our small communities in Kansas one of the reasons that we have become concerned about corporate farming and what it means I think that the economists will back back anyone up with the statements that the family farm and by family farm I define as a unit of which a man his family and no more than two hired men can earn a satisfactory living and operate the farm without additional manpower that the family farm is the most efficient either the production which we have in the United States and the concern is that as our land drift into the holdings of large corporations are being run by hired managers and being worked by men and punch time clock that the productivity will decline to such a point that in a short number of years when we must maximize our agricultural production now we are going to find our agricultural land in the hands of people who aren't really farmers and and aren't willing to make the sacrifices and do the things that are necessary to be an efficient farmer and it's this decline of productivity which affects the small agricultural communities a study was authorized by the 90- excuse me the 79th Congress to study the family farm and its relationship to free enterprise and its influences upon community life and the democratic institutions the study was conducted by a man by the name of goldsmith in the San Joaquin Valley in California and he reached several conclusions in this study which are generally support what I have said but he made three particular findings and I would like to to read them so that that everyone will will know what they are the first one was that the small farm well first I must explain that they compared to communities run a small farm locally owned and operated farm as compared to another community in the same Valley in which large corporations owned the farm land and the people who worked in these particular farms the farm managers and the hired laborers were paid by the corporation in other words they had no investments on their part in the in the operation of the farm other than men their job he first that he made was that the community in which was supported by small farms but there were 62 separate businesses establishments and in the large farm community there were 35 business establishment a ratio of almost two to one and these two communities were equal in almost every respect so far as they could make them the second finding is as the volume of retail trade in the small farm community during a 12-month period was almost 5 million dollars as against about two and a half million dollars in the large farm community the retail trade then was was greater by almost 61 percent the third observation that that they made was that the expenditure for household supplies and building equipment was over three times as great in the small farm community as it was in the large farm community and this study and the conclusions that we've drawn are part of the reason that many of us are concerned because as you know Kansas has is not a metropolitan state we do have four large counties but other than this our state is composed of many small farm communities and it appears to me that that with these conclusions that is evident as they are that the decline in retail trade and business activity in these communities would be much greater with corporation farming than the individual private enterprise farming which we now have thanks Jim I'm gonna put you on a spot with a question Jim also as a lawyer here in town as well as his representative districts how does corporate structures affect the tax base Jim do they pay as much taxes as we as individuals do well this is a difficult question to answer one of the major reasons that corporation farming has been advocated is that the statement has been made that there is a tax saving my information that I have been able to learn is that there is no tax savings from the corporation structure until we are talking about a net profit of thirty thousand dollars a year now if you are a farmer that nets more than thirty thousand dollars a year then there might be some benefit in the corporate tax structure other than this I can find no tax advantage for the corporation for now the advocates of corporation farming also point out the that the corporate structure will allow the children to inherent and pass on the farming- farms much easier than under an individual ownership but I would submit that by careful estate planning by an estate planner experienced some part in farm matters and and understanding the problem that an individual farmer can pass his farm on in the unit to his children and see that it continues to operate as a effective unit so to my estimation that the average farmer and has no benefit from from the corporate structure that the only people who would benefit are the persons who have large and extensive holdings which gets them into tax trouble at the present time but I think that that the number of farmers in this country who they're making more than $30,000 a year are few and far between and that anyone who sells the small ten and twelve thousand dollar-a-year a farmer that the corporation is going to save him taxes is is misleading thank you Jim let's go a little farther on that don't some individuals benefit by having a farm loss where they're involved in other businesses that have a loss of the farm to offset other losses well of course all business losses are deductible so long as the loss is directly related to the business by investing money in a corporation which can lose money and yet old cattle or livestock or even real estate to a certain extent which appreciates in value but is not taxable until the time the the gain has realized can actually benefit by sustaining and a loss on the farm for several years and then at the end of this period when they sell their cattle or land or whatever it is that the corporation owns then they can realize the income at fifty percent of the normal tax that they would say by using the capital gains what does history show us that has happened to a country where the land is gathered together in the large chunks well I think that that history is important and I'd like to get to that in a minute the first thing I think that we should realize is that the present form of agriculture that we have in this country is the greatest form of agriculture in the world and this is is easily supported by the figures on our productivity upon the man-hours that we take to to produce farm products so I think that we should start out by saying I know of no forum or type of Agriculture that is better than what we have and I think then we try to analyze why it is better we look at the countries that have allowed large segments of land to be operated as as a unit and on a employee basis rather than an owner operator basis such as Russia South America I think that the history of England is very interesting when the people became apathetic and complacent concerned more about their own problems which were not the problems of the farm in which they were working so the countries which have allowed their agriculture to be operated in large unit says certainly not been successful and I think this is the success story of American agriculture is significant enough that some people should be somewhat concerned about the overall agricultural policy and the and where we're going in this country before they get too excited about corporation farming sure would you say that farmers income had an effect on the community of the business people in that community yeah one every dollar with a farm was spent by the time it goes through the nation makes it seven we had a recent study by a K State professors on that that affected wheat what was that the gross farm incomes for Kansas in 1965 was 1048 point seven billion through the income multiplier this farm income generated almost 6 billion there's a common enemy activity in the state ok state economists estimated the Kansas farm income multiplier for 1965 at three point 98 and all-time high this is almost triple the estimated number five income multiplier of 1.34 Jim what direct effect would you say that that had on the businessman in town and the man that worked for wages they in a factory or something like that well this is of course another of my concerns I am not a legislator that has a large part of rural Shawnee County in his legislative district I only have two townships approximately 10% of the total population of my district but being raised on a farm and having a degree in agriculture I am concerned because Topeka in its particular location is surrounded by a very fertile valley and we call River Valley we are dependent on on any of the small communities around you come to Topeka to to shop and buy things that they use on their farm in my particular district if if the farmer doesn't prosper and he makes best buy a new car he doesn't buy tires as soon as he can and so the my constituent who works at Goodyear my constituent that works for the railroad is hurt and it hurts the big cities as well as the small cities when especially in a type of economy which we had in Kansas when agriculture doesn't prosper I talk to businessmen last night in a small community and he made two remark that a poor crop year in his community or compared with a good crop would make fifty percent in the difference of his business that he did that year do you think that's fairly general in that comparison I don't think that the impact of a bad crop is felt as hard in Topeka or Wichita or any of our large Kansas cities as much as it is directly in the small community however we do feel it and it is significant then you would agree that the figures that Sharon used showing that weak dollar out in our rural district in western Kansas generated four dollars within the state and because that meant business to be done in the state is suggested by the Kansas State University I think that I think that the figures are accurate Sharon on business as a hold you have any information showing what percent of parity that the business segments of our economy is failing to receive because the underpayment to agriculture it's the shortage the national income in 67 was a hundred and ten point five million dollars which is 83 percent of parity what the effect today that they have on the corporation's on their profit well shortage on corporate profits before taxes was 38 billion dollars which is 68 percent they were working direct relationship in your figures show as the farmers who failed to receive a fair price in the first place where would that be the conclusion that you draw yes it would and where did you get those figures it was in the 1968 economy report of Congress in the US Department of Congress for data in regard to gross debt expansion Jim at a rural area in Cowley County and home town area where the farmers very happy with the price they're getting today well no they're not the price of wheat of course is is as low as it has been for several years and the general agricultural economy has as you well know probably better than I as a lawyer the general farm economy prices are being down and yet the the cost of items that they have to buy being up and that I believe that from my observation is the times there is hard on the farmers they have ever been well you mentioned wheat then you as a consumer here in town is your bread price lower than relative to the price of wheat no it's not and matter of fact that it is higher is not only bread but milk and meat and most of the items that we buy we have experienced a substantial increase in price over the last few years this law that was passed in 1922 by our own senator capper senator capper being from Kansas Jim are you familiar with the capper-volstead Act just generally does it give a solution to the farm problem I don't know whether that it is a complete solution in its present form however I think that it has recognized one of the basic principles of which can be the salvation of American agriculture and that is collective bargaining collective bargaining has brought the labor people in the labor movement out of the dark ages and has not only given to them the gift the ability to organize has not only given them the the standard of living higher than what they wanted but now I think that they can be classed as little class citizens and I feel that the the basic tools are there and was some modification that the capper-volstead Act and the principle that that was being aimed at could be used very effectively by partly our senator capper found this out some forty some years ago and come to the conclusion that farmers needed a law to been able to do this to group their production together and sell it as a group for a price that law wasn't used for seven forty years that laid on the books mr. Volstead also of Illinois was co-author of that how do you care for the fact that they didn't use this law for such a long time after was written I think not being completely familiar with which the bill and in American agriculture but I think probably the probably the main reason was is that no particular farm organization believed enough in collective bargaining to want to try to use it and therefore aside from all the other constitutional issues that have been raised and so forth I feel that that it is until recently that an organization of a substantial nature has decided to use the capper-volstead Act as it was originally intended to be used in that organization is the National Farmers Organization yes this Sharon in some way what would you say I'd say that the only organization that will and can help the farmer Jim what would you say in summary of our discussion here well just in summary I would like to say that my first contact with the North's National farmers organization came during the legislative session when we were embroiled in the corporation farming matter I feel that the position that they have taken on this issue is the correct one and the and the position will I think in time bear out regardless of which way it goes if we continue to incorporate and allow our lands to be brought up by large corporations I think it will be borne out as right when one of these days we are going to start wondering how we can get our farmland back into the hands of an individual entrepreneur if they are successful and prevent further incorporation of farming I think that in a few years as soon as the we get some of our problems solved that we have now in agriculture mainly one of distribution of our farm products but they're going to also be borne out as that they were right as agriculture has ahead of it probably the most prosperous period of history in this country thank you Jim us farm report as featured deciding the future with Sharon booth a young Franklin County Kansas dairy producer and James Buchele state representative from the state of Kansas doing the questioning for US farm report was Ellis kitchen members of the national farmers organization invite you to tune in again next week at the same time for more facts on agriculture and rural America which is the gear wheel in our economy that produces the majority of our nation's new wealth the farm income pattern sets the nation's prosperity and the national farmers organization represents new thinking in a new generation of agricultural producers