There seems to be a lot of myths in print and the Internet about farm corporations. First, let’s look at what is a farm corporation? According to the Minnesota Department of Ag, a farm corporation is:
“Family farm corporation” means a corporation founded for the purpose of farming and the ownership of agricultural land in which the majority of the stock is held by and the majority of the stockholders are persons, the spouses of persons, or current beneficiaries of one or more family farm trusts in which the trustee holds stock in a family farm corporation, related to each other within the third degree of kindred according to the rules of the civil law, and at least one of the related persons is residing on or actively operating the farm, and none of whose stockholders are corporations
So what are the top 5 myths of farm corporations?
1. Farm corporations are controlled by large corporations.
You may be surprised to know the vast majority of farm corporations are family farms and are not controlled by large corporations. That’s right, 98% of all farm corporations are owned by farm families. Yes, some are big and some are small, but we are farm families.
And we are one. We are a farm corporation.
But you would never know it by looking at our farm. We still care for our animals daily by feeding them, making sure they have water and caring for the sick. We look and operate just like a family farm–because we are.
2. Farm corporations are polluting our land, water, and air.
Nothing could be further from the truth. Farmers follow numerous environmental regulations and are strictly regulated by the EPA. We have land setbacks to prevent herbicides from entering the waterways. Soil tests are taken regularly to monitor the soil nutrients. Farmers also need to be certified and recertified to apply pesticides to their farmland.
3. Farm corporations are heavily subsidized by the government.
In all reality, the amount we receive in government subsidies is very small. Our subsidies consist of a reduced amount we pay for multi-peril crop insurance. And if you knew the premium we pay, you would have a hard time believing they are subsidized.
4. Monsanto controls farm corporations by telling farmers what they can and cannot grow.
I hear this a lot. And it cannot be further from the truth. We grow whatever crop we want, in the quantities that we want and where we want. Enough said. No, we cannot save our seed from the previous year(s), nor would we want to. It benefits us to plant quality seed with the best technologies and we get that by purchasing new seed yearly.
5. Animals that are raised in farm corporations are factory farms that only care about profits.
It makes no sense for farm corporations to treat their animals in ways that are unhealthy. Modern housing is well-ventilated, warm, well-lit, clean, and scientifically-designed to meet an animal’s specific needs – including temperature, light, water, and food. An animal’s well-being is the top priority for any farm corporation or family farm.
Part II – Farm Corporations vs. Family Farms
It seems there is always a debate about how big ag corporations are involved in farming. When people think about corporations, they are not thinking about family farmers–but more like “big fat ‘cats’ wearing suits sitting in a corner office.” The concerns are usually shaped around this type of comment:
Farm Corporations are reckless.
They will do anything to make profits.
No matter what.
I personally have had numerous conversations about what we do on our farm. It never fails that I hear, “Well, I am sure you take care of your animals. But I know big ag corporations do not.”
It’s all about peoples’ perception of corporations: Uncaring, reckless and greedy
But then I continue, “even though we are a family farm, we are also a farm corporation.” That usually stops them dead in their tracks and they don’t know how to respond. Either they don’t believe me or completely ignore me. It’s like they don’t want to hear anything contrary to their beliefs. Simply, a family farm does not fit their definition of a farm corporation. So let’s take a deeper look into the issue of the “Family Farms vs. Farm Corporations” debate:
Farm corporations are family farms
The fact is the vast majority of farm corporations are family farms. USDA classifies family farms as “any farm organized as sole proprietorship, partnership or family corporation.” And therein lies the confusion. Many farm corporations are family farms.
How big are farm corporations?
Farm corporations come in all sizes. Some big, some small. In fact, our farm corporation is a small family farm. Our “corporation” has two stockholders–me and my husband. We have one full-time employee who is employed by our corporation. In addition to our corporation, we are also a stockholder in another local sow farm corporation. The sow farm is owned by us and another 8-10 local farmers.
For an outsider, it is easy to assume that “big ag corporations” own these farms because they see farm “corporation” names such as ours in the picture. But it’s just the two of us.
So, why did we incorporate?
In a nutshell, there are business advantages. Even though we are a family farm, we are also a business. Being a family farm and a business is a very unique has a special relationship. It was not an easy decision to incorporate — it took us a lot of time, thought and analysis. But in the end, we chose to incorporate. It’s not a choice for everyone but it was a choice for us. And this is what I love about farming:
Farmers can choose what works best for them, whether it is the business structure, the size of their farm, the way they raise their animals or farm their land. They do what they believe in, know, and love.
What are the business advantages to incorporate?
One advantage of a family farm corporation is the ability for our farm to continue seamlessly if another family member decides they want to enter our farming business, exit the business or if there is a death of a stockholder. At the time of incorporation, we didn’t know the future of our farm, but we knew we wanted the flexibility of continuity. Incorporating gave us the reassurance. Another business advantage is additional business deductions that were not available to us prior to incorporating.
What other changes happened as the result of incorporation?
The day after we incorporated, NOTHING changed on our farm in regards to day-to-day activities. We woke up in the morning, walked out to the barn and made sure the pigs had feed, just like every other day. Where things did change was in the farm office. Going to be honest here – we have more bookwork because of the corporation. We are “lucky” now to have two income tax appointments each year. (Don’t be jealous!) We have no regrets and are glad we incorporated.