NFO-202 (AV10704): Corporate Farming

corporate farming what has caused corporate farming who is entering the corporate farming picture and vertical integration what will it take to save the family farm system and it contains these are some of the questions that will be answered on u.s. farm report a public information program brought you an 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 corporate farming with special guest Reverend Lester Moore pastor of the Methodist Church at Corning Iowa and Lloyd Fairbanks an administrative assistant for the national farmers organization here to do the questioning for US farm report is W. W. Butch Swaim director of NFO public information it's a pleasure to have this opportunity to express our views on one of the great subjects in the day corporate farming and what has caused it and what it's brought it about and I know that these two gentlemen that we have today have studied this situation long and hard and what is bringing it about who's entering farming corporate farming and what it's going to take to solve the problem so we're going to start right in with asking mr. Fairbanks our legislative representative an administrative assistant to our national president some questions about what has caused corporate farming to come about very well but one of the vacuums has been created in agriculture by the low income of farmers and has allowed the corporate type structures to come in is the income that farmers have received over the past few years and here I have a chart that I would like to show the audience for the investment in agriculture has been 269 billion dollars in 1967 now then from this the farmers realized four hundred and twenty eight million dollars a billion dollars gross from this investment and also they had an expenditure against this thirty four point eight billion dollars now then if you'll do a little calculation you'll find that they had eight billion dollars left net income left before taxation after they had from the products that they produced on their farm now I want you to understand that this is products that they produced on their farm and not government payments and the housing allowance and the food allowance and others that has been figured in as income to farmers now again with a simple calculation and it's very simple you find out that the farmers only received three percent return on their investment now how many farmers can pay the income they're the investment they have today the interest on it at six to eight percent or more as they are having to today for operating capital and also for their land investment and stay in business so the here right now is one of the reasons why farmers are leaving the farm at the rate of five one every five minutes they've done this since 1959 through 1967 but and so this has left a quite a vacuum here for industry to get in doesn't that figure out 2500 farms per week that's right over a week are leaving the land folks just think of that twenty five hundred a week are leaving the farm now let's take a look at industry up here at the top of the card industry has an investment of three hundred and seventy billion dollars that is just a third more than what farmers have invested in their industry now they made a profit of 92 billion dollars this is before taxes and that profit before taxes now if you do again a little simple calculation you'll find that this is 25 percent return on their investment now this is will point out to you that they have this income that they are charged off at about 70 percent on the in tax returns that they have today they have corporate the index return but 70 percent of this is figured in as in taxes but they've found that they can plow this into agriculture and they can save 70 cents on the dollar by pound it into agriculture later on also taken losses continue to save this butch and then later on they're also they can return this back as a capital gains and only have paid 25 cents on the dollar then on their income that they got from their conglomerate industry in other words what you pointed out the low income received by the family farmer is forcing him out of business while the same time that corporate structure can take advantages a tax write-off and grab agriculture almost for free without any money out of their pocket Reverend do you have some comment on this subject well it seems to me that from our point of view our concern of course is what's happening to the farmer in the rural areas of our country but we need to also be thinking in terms of what kind of social readjustments have to be made as a result of this kind of a loss on the family farm we're losing 2,500 farmers a week according to your figures this means that we are losing the approximate number of a full county seat town every week from our rural communities if we're going to really face up to the realities of the problems that face us then we must recognize this problem and begin to deal with it not only from its cost factor but from its social cost factor one other thing that pointed out by mr. Fairbanks on this chart here that corporations are going to get that profit when they get control of agriculture and they're making over five times as much return on their investment should they apply that much to agriculture commodities the food bill at the grocery store folks could conceivably go up at least five times what it is now what would keep them from asking 25 cents for one potato and getting it if a few corporations gets control think of that right but I also want to point out that the Council of Economic Advisors have pointed out that these conglomerates and non farm investors now have 26 billion dollars of undivided assets here that can be plowed into agriculture you know I think one of the problems that we face in this matter is that there are so many people who are not aware that it is as drastic a problem as it is today in the United States according to a statement made by senator Metcalf just a week or so ago the average age of our farmers in the United States is 59 this means frankly speaking that we have less than seven years to solve the problem because once the farmers reach the age of 65 they're going to quit fighting the battle because they can retire on Social Security benefits they can take their money out of agriculture and when this happens it's gonna leave the big bulk of the land available for development on a commercial basis I was talking with a friend of mine not too long ago and he said well this is a great thing cuz he said here I am ready to retire how am I gonna get rid of my farm we don't have any young people who are willing to come into farming today and the figures which we see in terms of age is a is a real problem in one of the counties we are close to mine the average age of the farmers in that County this is young and older like the average age is 70 70 now you can see what this means in terms of of the availability not only of land for corporations buying but in terms of what happens to community organizations to community patterns and in terms of the future it means that the young people who should be out there becoming involved in the farmer no longer there Reverend Leah we as in a bow I've talked about the corporate farming getting into agriculture for some time and by the way we had a very difficult task of trying to prove to the people in local areas that there was corporate agriculture entering but today we find from a survey and the Agriculture Department that from 1960 through now this has increased by 57% with this is a survey just in 22 states with seven million acres that they have acquired now every rural town businessman church leader and farmer is in driving distance today of one of these torpid type farms Lloyd I believe that the 57 percent 50% of all of them and business have come about since 1960 this means that it's more than double so it would be up over a hundred percent of what it was at that time now mr. Fairbanks I think we should discuss who was entering General Corporation farming and in your opinion why our corporations willing to put their money in when they get 25 percent your corporate investment the record shows that they they get this much up to this much anyway and why would the inter agriculture with that's spread and time only making about 3 percent return for marking on their investment well butch as I pointed out here earlier that they have about a 70 percent tax structure in Corporation and of course in agriculture they can plow this into agriculture and they can take this off as a tax write-off and then in turn after they do capitalize this in capital gains they still only have to pay about 25 percent on it so as long as they can take this on a write-off this way they don't have to profit informant to still make a profit off of their industry because of this but what you're saying is that the corporations who are going into farming are using the tax write-off to save them tax dollars and it costs me and you extra tax dollars to make up what they're making on agriculture while they're still destroying the family farm that's right and furthermore I'd like to see this in my opinion that they are trying to get control of the agricultural industry they've got control of all the other natural resources now and and the land is one of the last and I think they're out to get the land well I think this is partly because there's only three regions in the world since 1960 could feed themselves this is Australia New Zealand and North America from the Mexican border on north so they're no wonder that they're out trying to get control of American agriculture and the results of a survey showed the tax surveys I'm talking about that the higher profits the corporations made in their other business the more they lost in agriculture so it was definitely according to senator Metcalf a cover-up on their part to get this done now let's discuss a little bit more about who's going into corporate farming well of course the chain stores for a number of years now have worked and in 1964 already at their convention in October we have a report here it was in in 1964 in November when this was written up in surveys Journal that their principal spokesman who was vice president of the chain store organization clearance enemy he called for the Polish Minh of the family phone he said to make it write down he said I am opposed to the maintenance of the family farm folks this didn't receive much coverage because the chain store do lots of advertising in America but there are many more besides this but think of it the chain stores calling for the abolishment of the family farm system in America and it went on to say that from range to range the chain still wear seat control and they met meaning from the range where the cattle are produced to the cook stove range they want to control the whole thing and other companies that would like to get in other concerns are the big feed companies the feed companies now I've totally integrated her almost totally so providing about 85% of the broilers this is chickens frying chickens of course the price is low now but the only reason they keep it low in my honest opinion is because they make their brags that they want to get control of the red meat business they get control of red meat business then the family farms in a bad way so Reverend I know that that you see this taking part all over America what's this going to do and then there's a lot more there some would like to see the government take control some would like to see others take control and everybody is edging in on agriculture they're trying their best now to get people on the streets of New York to buy cattle so that they can write it off as a tax dodge and the farmer don't have any tax to provide for he doesn't make any money in the first place you're out here in rural America what's going to be the effect of this overall whole thing this is one of the things that I talked about when I said that I am deeply concerned about the social effects of the loss of the family farm I think it has some moral effects too but I think in terms of the social problems that a result we see a corporation moving into a community buying up the land and then bypassing that community because it does not have to deal with the merchants on Main Street as I've watched this operate these corporation farms come in and then they can say to the wholesaler not to the retailer on their on the Main Street they can say to the wholesaler you sell us at our price or we'll go somewhere else and they can get their price this means that we cut out the middleman now there's a lot of people who don't like the middleman but frankly speaking the economic generation that comes about by the retailer on Main Street makes a great deal of difference in the total economic health of the United States and once we permit this to be destroyed which is exactly what's happening as we lose our family farms then we will be dropping our generation factor economically and this will create more problems in terms of how we're going to solve the problems of the slums in the city how we're going to solve our welfare problems what we're going to do in terms of poverty what we're going to do in terms of housing what we're going to do in terms of education because if we do not have the economic generation we cannot raise tax funding funds to support this kind of a an enterprise and as I've watched this happen what we see in the small community is that when the commercial farmer comes in he takes over because he doesn't have to worry about what happens in the local community the commercial farmer can see the educational facilities deteriorate he can see the religious institutions disintegrate he can see the social organizations evaporate and he's not affected at all because he's not there the investor or his investment are just as good without any of these things in the community even I like to bear out what you're saying there in an illustration which is close to my home in Missouri there a lumbermen was contacted by one of these corporate farms to draw up plans for his barn well in a short time why the lumbermen wondered about what they were going to do on this and the next thing he knew though this barn was in construction but the lumber had been bought from a one of the large cities at a wholesale rate rather than buying it from the lumbermen and we're using his plans and furthermore on this same corporate farm a huge trailer truck was stuck one day and they found on this that was loaded with iron posts that had also been purchased not in that rural community but from a wholesaler from far away right from the factory I believe rail post right and this is what's taking place so what you gentlemen are pointing is that it's everybody's concerned go ahead there ever well I was gonna say some people would say then this proves that the corporation farm can operate more efficiently and more cheaply they can produce food more cheaply than you can on the on the family farm and and I think it's important for us to say to people these are factors which you have to take into consideration of course but once you allow a monopoly or large corporations to take over supply and demand isn't going to determine what's price is going to be because they'll control supply and they'll just create their own demand and this will create their own price they'll control it on both ends now by the same token the chains to work and sell much cheaper than they do if they wanted to what they don't want to they don't choose to they set the price on the farmer at a low price on the buying end and they set the price on the public and I'm telling you folks if they control it all the way through I want to repeat the statement that I made before what would keep them from asking 25 cents for one potato and getting it and if they're going to get the return that was pointed out that the average of industry gets our food bill could be many many times higher than it is now so don't kid yourself boy do you have anything else to to add at this point well one thing about you certainly do not find this interest though in the corporate farming by the people that are working there that you have in the family type farm so I think when it eventually gets down to a full corporate type structure you may not find this as quite as economical as you think it it but they don't have to worry about whether they can produce it for less than the family type farmer does or not when they once get in control of the agricultural production and take it through a vertically integrated route clear on to the consumer then they can charge this cost of production off and get their profits huge corporate profits not the the family type farmer profits that they will want to realize on this as what says on the 25 cents for one potato I think this is an important matter because so many people get the idea that simply because your big business you can operate more efficiently but on the family type farm if it rains on Monday Tuesday and Wednesday you can work Thursday Friday Saturday and maybe Sunday to catch up but on corporation farm if it rains Monday Tuesday and Wednesday the man is going to work Friday and Thursday and Friday but they're gonna pay time and a half for Saturday and double time for Sunday and this is gonna add to his costs all the way down the line they may even have to pay him for those other days too well I I'm in favor of organized labor on the farms too Reverend Moore I know that you've done a lot of studying on this and your opinion what do we need to do about this whole thing we've laid out the plan and what's happening what do we need to do about it well there are several things that can be done I'm quite sure certainly we need to talk in terms of legislation to stop the tax write-off but we ought to say to ourselves why is it that it's worth saving what difference does it make whether or not the family farm stays in the American scene now we have not had any real good studies done by our agricultural colleges in recent years but the gold Smith study which was authorized by the 79th Congress gave us some figures which while they are still old figures they were pretty impressive according to the Goldschmidt report the family farm has over against corporation farming and studied in two different communities in California showed some very interesting factors for instance the family farming community had twice as many churches as a corporation farming community its business generation was sixty-two million to 35 million I will double almost double its retail trade sixty one percent higher in the family farming community and then the corporation community there were two newspapers as over against one in the corporation farming and of course we who and I are will get used to one large newspaper dominating us we know how easy it is for that one newspaper to affect the thinking and the feeding of the people in that area one of the most important factors that seem to me with the schools it was discovered that in the family farming community not only did they have more schooling opportunity but the values and the quality of education was much higher there were four elementary schools in one High School in the farming community as over against one elementary school alone in the corporation farming community and of course democracy comes in here too or in the family farming community there were popular elections to make decisions in terms of community procedures whereas an ax corporation farming the corporate leaders did all the decision-making it seems to me that this is a good indication that the family farm does have some very important factors to give to to our society into our social structure now some people say well yes but we've got progress Automation brings new progress and I submit that it's not progress to treat land as a mining operation it's not progress to to cut off our economic strength and bypass the community it just doesn't seem to me to make any sense to call this progress I don't think it's progress to force the relocation of rural citizens in in urban areas and give them a nothing ready to prepare them for this kind of life and in a real sense you rob them of their self-esteem you D personalize their lives and you create more of the problems that we are now seeing as a great major urban crisis in America today other words you create poverty faster than you can solve it with this method exactly it doesn't seem to me that says any sense at all and trying to replace the values and the strengths and the efficiencies of the family farm with a depersonalized and what I feel to be an inefficient and socially destructive corporation farm well there's nothing more efficient than the family farm adequately of adequate size now they've studied this you're in and you're out and a diversified farm and there's nothing found more efficient so if they're wanting efficiency most certainly we should protect the family farm Lloyd years spend a great deal of time in Washington what seems to you to be the way that we can best deal with this problem well Reverend right now I think you've touched on it I think senator Metcalfe's bill is one that should be supported very strong tax write-off right this is one and of course I think really you're gonna have to bring it back to the states and for the states like Kansas Oklahoma Minnesota North Dakota have corporate tax laws there to where they can keep these corporations from coming in in the large sizes and even entering the states and a lot of cases under their law from getting started into agriculture and of course of course the one that I feel that would slow down and keep industry from getting into agriculture in the fast pace at they are today and that is to give the farmers of price along with efficiency that he has in other words paying for the fishing that he produce over the year right and as Reverend pointed out here I liked your term mining the soil what we've been doing in America is bleeding the United States of its natural resources at less than cost of production to the American farmer and now they hope to bleed us of the last natural resource by shifting out the people and this cannot continue and keep our economic society going and imbalance we've underpaid agriculture enough that we've had to have a debt fuel economy to keep this thing going and with the tax dodge and the write offs that they've given different interests I should say some people call them selfish interests but call them what you may whether it's on purpose or whether it's accidental we have the it amounts to the same thing and we've been on the road to the same point and we must work together everybody as we pointed out here in this program it's everybody's concern you pointed out very aptly that the merchants out here in rural America has a stake you pointed out Lloyd to in your citing of these things so there's something in this for everybody and if we're going to have a fully operating economy we need the return the turnover the economic base that you talk about we need this to keep the thing going the family farm structure of agriculture has built the greatest nation on earth and we did this by working together the church the country schools the other schools in all of society now let's don't destroy what we've built would you want to add something to this about the great thing in America you've seen it grow for a long time whether you rate at the present one of the things that's bothered me I think is that we keep talking about the farm problem in a nation that's been able to develop the kind of scientific know-how that send a man to the moon ought to be able to find some kind of minds or at least to use these great minds that we've got to work on this problem it seems to me that the time has now come when the problem is so severe that the American people are going to have to see this in terms of its total growth right and we're calling on all of America to get concerned now and especially the farmers to bargain together and sell together because we know that better farm prices is a must to keep the family farm in business and we know it's the greatest thing that could be brought about join the NFO and support our efforts u.s. farm report has presented corporate farming a special guest Reverend Lester Moore pastor the Methodist Church at Corning Iowa and Lloyd Fairbanks administrative assistant for the national farmers organization doing the questioning for US farm report was W.W. Butch Swaim director of NFO public information 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 a 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 a brighter day for American agriculture