Tuesday, January 17, 2012

The Concept of "Corporate" Farms

This is an issue that has been festering inside of me lately - farmers being labeled as "corporate" farmers. It seems to me that this has become a bad word. Instead of saying "a**hole" farmers, or "d*mn" farmers, people use the term "corporate."

What does that word even mean to the people that use it? Do they see farmers as people that sit around in suits while their poorly paid workers do everything? Or do they see us as people that get bailed out by subsidy payments? Maybe as lunatics that only care about making money, and would do anything necessary to make that happen? That might be true in a few cases, but I'm not aware of any in my neighborhood.

My parents farm around 1,200 acres. Their farm is incorporated. If you know my parents, do you think that they are evil people? Why did my parents, and lots of other farmers, incorporate, you wonder?

Well, lots of reasons.

Protection - If a farmer isn't incorporated, and for some reason is involved in an accident (car runs into a tractor is a good example), the other person involved in that accident can come after anything the farmer owns, including his home, personal vehicles, etc. With a corporation, that person can only come after what the corporation owns, which would most likely be equipment and land. Yes, it would be terrible to lose those things, but at least you would still have a house to live in. If you were not incorporated, in this example, you could lose everything that you own to settle, which could leave you and your family scrambling for housing.

Passing on the farm - Being incorporated makes it much easier to pass land from one generation of the family to the next. A son can buy land and equipment much easier from the corporation than he might from his sisters that live 2 states away and have not been on the farm since last Christmas. It is a way for parents to ensure that their land will stay with their child that wants to continue to work it, instead of seeing their children squabble over it while settling the estate. If a son wanted to buy out 3 or 4 siblings after their parents died, the taxes might be so high that it wouldn't be feasible. In a corporation, that son can buy shares, making the tax burden a lot lighter on everyone involved.

Tax breaks - Incorporating also offers tax incentives for farmers. Why wouldn't we want to save money on taxes? Everyone else wants to pay the least amount of taxes possible - we aren't any different.

Another thing I'd like to point out is that almost every business that you work with is most likely incorporated - the bank, the gas station, the grocery store, the dentist, the doctor, etc. You don't get your teeth cleaned by a "corporate dentist" do you?

Your food comes from a farmer, not some evil entity. A farm corporation usually involves family members - parents and children, brothers, uncles, nephews, nieces, etc. According to the USDA, the average farm size in 2010 was 418 acres. In 2007, there were 2,205,000 farms in the U.S. Of those farms, only 96,000 were incorporated. Here is a chart that breaks down the different types of farms and how many there were in 2007: http://www.census.gov/compendia/statab/2012/tables/12s0829.pdf

Here's another source of some of my info: http://www.census.gov/compendia/statab/2012/tables/12s0826.pdf

And if you really want to wade through all of this, here is where you can find all kinds of charts and statistics: http://www.census.gov/compendia/statab/cats/agriculture.html


  1. "Corporate" has become a dirty word in all arenas. It’s kind of like "capitalism" being trashed, despite its methods making this country one of abundance and high standards of living.

    With all the restrictions/rules the government keeps imposing on the farming (and every other) industry combined with our hyper-litigious society, you need all the protection you can get--and that certainly doesn't make you evil.

    Just know you and all the other farmers like you are still appreciated by many of us!

  2. I always thought "corporate" was a term reserved for really large farms that would have at least ten or more (non-related) employees. All the farmers I know are incorporated but I wouldn't refer to their operation as a "corporate farm."
    I also thought that the main reason that smaller farms like yours and my dad's still exist is because the government helps them out with subsidies. There's nothing wrong with this and I might be wrong about it but that's the way I've seen it.

    1. Actually, you can look up subsidy payments for your county. You'd be surprised who's at the top of the list. The bigger farms usually get the most money. I'm in favor of getting rid of them when we have high prices, and bringing them back when the market crashes. Not sure how they would legislate that, though. I think people use the term "corporate" instead of "large." It's used in the media quite a bit, so I don't think people do it on purpose - they just repeat what they hear or read.