Farmworkers in Rural America, 1971-1972: Who owns the land?

IX. SUMMARY OF REMEDIAL PROPOSALS

Many of the witnesses urged the subcommittee to consider specific proposals to meet the challenge posed by industrial corporations and other nonfarm interests moving into agriculture.

Several of the proposals have been before Congress in one form or another in recent years or considered by the Food and Fiber Commission, the Food Marketing Commission, or other studies authorized by Congress.

The changes proposed generally involve one of two approaches. One is strengthening the farmer and rancher, through such things as bargaining power and credit and better prices, so competition from nonfarm interests can be overcome. The other involves removing tax and other incentives encouraging nonfarm investors and adopting land use restrictions and other roadblocks to corporate entry into agriculture.

Also included are requests for various kinds of investigations into corporation farming and related issues.

Congress clearly has authority to act on many of the proposals (Federal tax policy, disposal of surplus military installations, etc.). Others involve policy decisions reserved to the States (land use regulations, irrigation well permits, etc.). Still others fall into undefined areas or those involving joint government action (soil conservation, air and water pollution, reporting procedures for publicly owned corporations, etc.).

These are the main proposals submitted:

1. Limit use of underground water for irrigation to quantities normally restored to these acquifiers by natural recharge.

2. Control Government sales of large-acreage surplus defense establishments to prevent them from coming under control of corporations for farming, livestock feeding, or other agricultural purposes. 3. Tighten antitrust laws to assure competition, specifically making it illegal for a single corporation to produce, process, and retail farm products.

4. Enforce existing laws limiting use of public irrigation water to a specified number of acres per user and includes a similar limitation on all future Government water development projects.

5. Use the Government's subpena powers to determine (1) the names of stockholders of corporation farms; (2) whether company farms are involved in an effort to monopolize food processing, distribution and production, and (3) whether company farms violate antirust laws in buying equipment, fertilizer, feed, and other production items direct and discounted.

6. Restrict farm size by limiting either the number of acres or volume of sales.

7. Increase the State homestead exemption on agricultural real estate where a farm family makes its home.

8. Require farm and ranch ownership registration (owner's name and address, property size and location, acquisition date and type of ownership) with farm companies required, in addition, to list stockholders with more than a 5-percent interest and report any ties to farm supply, processing or marketing firms.

9. Prohibit obstruction, boycott or intimidation of farmers organizing cooperatives or other collective efforts to increase bargaining power.

10. Provide authority and funds for continuing economic studies of the food and fiber industry structure by Government regulatory agencies, Federal economic research groups, and educational and private research institutions.

11. Enact legislation to assure parity prices and income protection, through Government payments and other assistance, to a family farm level of production with the Department of Agriculture defining family farm units on a county-by-county basis.

12. Enact Federal tax legislation to prohibit persons who are not bona fide farmers from using losses incurred in their farming operations as an offset to income from other sources.

13. Prohibit chain grocery stores and others engaged in food processing and distribution from operating feedlots and other agricultural facilities.

14. Enact a graduated land tax to discourage large land holdings by either individuals or corporations.

15. Enact a law prohibiting purchase of farm land by corporations with stockholders exceeding a certain number.

16. Empower county boards to set up farm land resources commissions directed to (1) regulate farm land transfers; (2) prohibit undesirable forms of agricultural enterprises that represent poor land use or are out of character with those existing in the county; (3) regulate public nuisances resulting from air and water pollution arising from feedlots, egg factories, and confinement types of dairy and livestock operations, and (4) licensing and regulating water use for irrigation. 17. Refine, expand, and adequately fund the farm credit system.

18. Extend and improve restraint of trade, monopoly and unfair trade practices laws that limit capacity and thrust of corporate growth and made at the expense of smaller independent enterprises.

INDIVIDUAL VIEWS OF MR. DOMINICK

I am filing individual views to this report to clarify my position. I essentially feel we do not have sufficient information to reach any conclusions or recommendations and I encourage further hearings, particularly in the field. I am also somewhat critical of the manner that several hearings were held in the past.

I concur that the findings show that nonfarm corporations, including conglomerates, are diversifying by turning to agriculture and are becoming heavily involved in agricultural production. I feel the major reason is favorable tax advantages including capital gains treatment, writeoff of losses against nonfarm revenue and deductions against income as expenses, costs used in production of livestock and crops, which would be capitalized in other businesses and depreciation rates.

I would point out that the House and Senate have passed tax bills making changes in each of these areas.

Some limitations were put in by both houses on deductions of farm losses against non-farm income. Neither would have significant impact on corporate farming. Provisions were also made for recapture of depreciation, limitation on capital gains treatment for sale of farm assets and treatment of expenses for soil and water conservation. I am hopeful the conference committee will retain these provisions in the final bill. I feel a year's experience under these new provisions will yield additional information on the growth of corporate farming or decline of family farms as well as point some directions in which the Committee should proceed.

I strongly agree that there is a decided lack of data, study and research in this area. I am not prepared to agree that the rapid change in ownership and control of land and other production facilities "could easily result in corporate control over production of U.S. food and fiber and ultimately lead to a total merger of production, processing and marketing of food." I state this simply because there is this decided lack of data necessary to reach such a conclusion.

I do agree that "there are serious public policy issues to be questioned and resolved, involving both small business and related economic and social elements in rural America, before corporation farming becomes an irreversible trend in agriculture." The additional policy question is posed whether we should have agriculture made up of independent farmers and ranchers, shift to industrialized agriculture, or some mix of the two. I am not sure the Committee can or should make that decision at this point. I again point out that the hearings held to date have not yielded sufficient information, in my mind, to enable the committee to reach any significant conclusions or recommendations.

On balance I would point out that the decline of the family farm, small farm communities, and the small businesses located therein, and rural to urban migration, existed prior to the dramatic increase in corporate farming. I think it is safe to say corporate farming by large conglomerate corporations will not tend to halt that decline and certainly not reverse it. We should point out, however, that a complete halt to involvement of large corporations or corporate farms in the agricultural economy of the country would not remedy this country's farm problem nor bring about a return of the family farm. I am sure the members of the committee and the Senate would agree with that general conclusion.

I raise this point primarily to support a further study of this phenomenon by this committee and other appropriate committees and to encourage that it be done in the context of the total farm problem. The future of small business in smaller towns and cities across the country is closely tied to solutions to our farm problems. The advent of corporate farming by large unrelated corporations as well as corporations concerned solely with farming are only two of the problems. The advantages and disadvantages of industrialization business management techniques should also be studied.

The growing urban concentration is partially a result of significant changes in the nature of farming in this country. The Congress should move with all deliberate speed to try to solve the problems of

rural America or we will continue to lose ground in our efforts to sove the problems of urban America.

Finally, 18 suggested remedial actions are listed at the conclusion of the report:

1. Limit use of underground water for irrigation to quantities normally restored to these acquifers by natural recharge.

2. Control government sales of large-acreage surplus defense establishments to prevent them from coming under control of corporations for farming, livestcok feeding, or other agricultural purposes.

3. Tighten antitrust laws to assure competition, specifically making it illegal for a single corporation to produce, process, and retail farm products.

4. Enforce existing laws limiting use of public irrigation water to a specified number of acres per user and include a similar limitation on all future Government water development projects.

5. Use the Government's subpena powers to determine (1) the names of stockholders of corporation farms; (2) whether company farms are involved in an effort to monopolize food processing, distribution and production, and (3) whether company farms violate antitrust laws in buying equipment, fertilizer, feed and other production items direct and discounted.

6. Restrict farm size by limiting either the number of acres or volume of sales.

7. Increase the state homestead exemption on agricultural real estate where a farm family makes its home.

9. Prohibit obstruction, boycott, or intimidation of farmers organizing cooperatives or other collective efforts to increase bargaining power.

10. Provide authority and funds for continuing economic studies of the food and fiber industry structure by Government regulatory agencies, federal economic research groups, and educational and private research institutions.

12. Enact Federal tax legislation to prohibit persons who are not bonafide farmers from using losses incurred in their farming operations as an offset to income from other sources.

13. Prohibit chain grocery stores and others engaged in food processing and distribution from operating feedlots and other agricultural facilities.

14. Enact a graduated land tax to discourage large land holdings by either individuals or corporations.

15. Enact a law prohibiting purchase of farmland by corporation with stockholders exceeding a certain number.

16. Empower county boards to set up farmland resources commissions directed to (1) regulate farm land transfers; (2) prohibit undesirable forms of agricultural enterprises that represent poor land use or are out of character with those existing in the county; (3) regulate public nusiances resulting from air and water pollution arising from feedlots, egg factories, and confinement types of dairy and livestock operations, and (4) licensing and regulating water use for irrigation.

17. Refine, expand and adequately fund the farm credit system.

18. Extend and improve restraint of trade, monopoly and unfair trade practices laws that limit capacity and thrust of corporate growth and made at the expense of smaller independent enterprises.

I would emphasize these are not suggested actions of the committee but of witnesses who appeared before the committee. In my mind these are not necessarily the better suggestions nor a representative presentation of the problems. Nor do I, as a committee member, necessarily endorse these suggestions as practicable. We simply do not have sufficient information to make such recommendations at this time.

Finally, as I noted above, I feel we should continue the work of the committee on this matter. Every effort should be made to bring in all spectrums of farming to present their views including the corporations involved in farming. Publicly-available financial data should be compiled and reviewed.

I repeat that we must work to solve our farm and rural problems or we will continue to lose ground in our efforts to solve urban problems.

PETER H. DOMINICK.

INDIVIDUALS VIEWS OF MESSRS. DOLE AND COOK

We have studied the report of the Subcommittee on Monopoly of the Senate Select Committee on Small Business which deals with the impact of corporation farming on small business. We would like to point out that we were not members of the subcommittee when this investigation was undertaken and when hearings were held. We have not had the opportunity to be involved in this effort and to join our colleagues in examining the evidence and hearing witnesses.

We have, however, carefully reviewed the report and considered the evidence and conclusions which were set forth.

The report does deal with an important and relatively recent development in the agricultural community and one in which the Nation has a vital concern. From a reading of the report, some of the remedial proposals appear to be exceptionally harsh if not of questionable con

69-133 O 72 pt. 2 6

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