Twenty-five years ago, Dale Thorenson took over the farm he grew
up on near Newburg, N.D., from his father. Full of youthful enthusiasm
and desire to carry on the family tradition, Thorenson almost never
got the chance to run the family farm.
"Dad used to threaten to sell the farm all the time. It used to
really bother me. I did not see how he could be so down about things
at times," Thorenson said. "Once I had to run the financial part
of the farm, I understood why he had felt that way... . The last
three or four years, I fully understand where he was coming from."
This past summer, Thorenson's farm stood idle after spring rain
flooded land that should have been growing wheat. Now at age 43,
with debt rising and income falling, Thorenson has had thoughts
of getting out, of stopping the bet-the-farm roller coaster he and
countless other farmers have had to endure as part of the modern-day
farm economy. But doing so brings the added dilemma of whether he
should allow an eager and willing son to take the farm reins from
"He is bound and determined to farm," Thorenson said of Kelly,
21, a senior working on an agronomy degree at North Dakota State
University. "I cannot in good conscience discourage him. We as a
society need people like him to continue in this profession. But
sometimes I feel like saying, 'I'm going to sell this damn place.'
But I owe it to him, to his late grandfather and great-grandfather
Many farmers are staring at a similar decision today in the midst
of the worst farm recession in 15 years. As with past recessions,
pleas to "save the family farm" are commonplace. In August, North
Dakota Sen. Byron Dorgan told a U.S. Senate committee looking at
current farm conditions, "If we don't take action soon, we won't
have many family farmers left across the bread basket of the country."
One day later, Sen. Paul Wellstone of Minnesota told the same committee,
"Family farmers are going under, and time is not neutral."
The push to save family farms has been omnipresent since the mid-1930s,
when the number of U.S. farms peaked at about 7 million and began
a steady consolidation to about 2 million today. Wisconsin saw its
farm numbers drop from 200,000 in 1935 to 78,000 today; Minnesota's
experience has been almost identical.
But when the whole farm economy goes south, family farm rhetoric
is put into action. Farm advocates bemoan the loss of farmsteads
and farmland, the increasing size of farms, the dominance of "corporate
farms," and the general intrusion of corporate interests into farming.
While there are very real threats facing farmers today, some of
the family farm rhetoric overlooks a few basic points. In some cases,
legislation to save family farms has even undermined farmers' ability
to compete in a new ag economy.
Big farms are bad farms
Still rooted in the nation's nostalgia-driven psyche, the perception
of the small family farma single farmer providing for his
family on a couple hundred acresand its place in the ag economy
has not kept pace with reality. If the idea of "saving the family
farm" is to save all small farms, or to make the small farm economically
viable and competitive with larger farms, then the family farm has
been dead for some time.
More than 70 percent of all Ninth District farms are considered
small, having less than $100,000 in crop or livestock sales. Many
of these are not full-time, commercial farms and fall well below
that revenue cutoff. More than four of 10 Wisconsin farmers34,000had
revenue of less than $10,000 in 1997.
Small farms have typically been under the greatest economic pressure.
Five of six Minnesota farmers who went out of business from 1993
to 1998 were small farmers. In North Dakota, the number of small
farms dropped by almost 7,000 from 1989 to 1997, while large farms
grew by 4,200.
Despite the persistent loss of farmers and a small erosion of
total land in farms, the number of harvested acres has held relatively
stable, which means surviving farms are getting bigger. In Minnesota,
the average farm has grown from 180 acres in 1950 to 290 acres in
1975, and is now at 360 acres.
But not all farms are created equal. The average size farm in
Montana, where cattle operations demand significant grazing lands,
is over 2,000 acres (a decline of some 500 acres in the last 25
years due to the popularity of smaller hobby farms). Average farm
size in South Dakota is 1,400 acres, while the traditionally smaller
size of dairy operations has kept Wisconsin's average farm to just
Mechanization and other technology advancements have dramatically
improved farm productivity, allowing the individual farmer the opportunity
to grow more crops or raise more livestock than in years past. It
is to the full-time farmer's advantage to expand operations as (nonlabor)
production capacity increases. But some believe mechanization has run its course
in expanding production given today's farm structure. "The treadmill
of getting bigger to survive is self-defeating," Thorenson said.
"One individual can only do so much."
Farm advocates have used ballooning farm size as evidence of food
consolidation. They point out that just 4 percent of farms and ranches
produce 50 percent of all agricultural output. But U.S food and
fiber has never been evenly produced by all farmers, and has always
been in the hands of a minority number of farmers. As early as 1900,
just 17 percent of farmers produced half of the nation's food basket,
according to the U.S. Department of Agriculture.
Many people erroneously think the family farm ceases to exist
as farms get bigger. By that definition, Dale Thorenson could be
considered Farming Enemy #1. He farms 3,400 acres and decided to
incorporate his operation three years ago because it allows him
to see "exactly what the farm is doing." He pays himself a salary,
and pays rent on the land he already owns.
The switch made him "one of those" corporate farms, despite the
fact that he is a third-generation farmer, and his son hopes to
continue the tradition. "It does make business sense" to incorporate
farms because of the tax advantages, Thorenson said, but only if
a farm can turn a profit. With marginal income, "the move to the
family farm corporation may have been a case of zigging when one
should have been zagging," Thorenson said. "I am not sure if I would
do it over again if the clock could be turned back."
Still a lot of family farms
Without doubt, the nature and operation of the family farm today
has changed, as it has for most of this century. But in fact, family-controlled
farms still make up 99 percent of all farms. Close to nine of 10
farms in the Ninth Federal Reserve District (except in Montana,
with eight of 10) are operated by an individual or family as a sole
proprietorship (the "traditional" family farm). The remaining farms
are mostly either partnerships or corporate farms, which despite
being vilified by many, are predominantly operated and controlled
Corporate farms made up just over 4 percent of all farms nationwide
in 1997double the percentage two decades agoand are
grabbing a bigger chunk of the production and sales pie. But contrary
to the glass-building image of corporations, 90 percent of the 84,000
corporate farms in the United States are family owned, whose shareholders
(usually capped at 10 or fewer) are usually required to have close
kinship to the farm operator (e.g., brother, father, grandmother).
What's more, since 1978, sales from nonfamily corporate farms have
dropped while sales by family-owned corporate farms have surged
by 50 percent.
North Dakota, for example, has about 30,000 working farms, meaning
they have crop or livestock sales of more than $1,000. Of this total,
87 percent (26,600) are sole proprietorships, with another 10 percent
in family-based partnerships. The state has just 550 corporate farms
(less than 2 percent), and only 29one-tenth of 1 percentare
nonfamily corporations, whose average size of 930 acres is smaller
than the state average of 1,200 acres for sole proprietorship farms.
The continued control of farming by families comes through very
deliberate design. State laws in the Dakotas, Minnesota and Wisconsin,
for example, expressly forbid corporations or limited liability
companies from having much of any stake in a farming operation.
Were farm ownership opened up to all comers, the average farmer
wouldn't have the resources to compete with cash-flush corporations,
farm proponents argue. Family farm lawsmany of which have
been on the books for decadeskeep multi-national and other
corporations "from gaining control of those [farm] resources," according
to Paul Germolus, an assistant attorney general for North Dakota.
The few existing nonfamily corporate farms can be attributed to
various loopholes in state regulations, he said.
Such laws do not always hit their mark, however. While controlling
the number of nonfamily farms, laws have been powerless against
increasing farm size. The average family farm has been getting bigger
as a matter of survival, yet is often the smallest of the farm litter
by a considerable amount. Many corporate farms are "family" in ownership
but not in operation, farming many thousands of acres with the help
of additional hired hands, making relative dwarfs out of even farm
partnerships and nonfamily corporate farms.
Family farm laws also have unintended consequences. For one, laws
preventing nonfamily involvement in farming can be an obstacle to
farmers looking to organize cooperatives or other activities that
might open up new markets and leverage greater selling power for
farmers, Germolus said. This is exactly what has happened in South
Dakota, where well-intentioned lawmakers passed a constitutional
amendment, known as "Amendment E," about a year ago that prohibits
most limited liability companies and partnerships from owning any
interest in farmland, ranchland or livestock within state borders.
"Proponents are trying to stop some of the concentration going
on, particularly in livestock production," said Michael Held, administrative
director of the South Dakota Farm Bureau. While the bureau shares
concerns over the consolidation in agribusiness, Held said, it nonetheless
has filed suit against Amendment E.
"Things are changing and farmers are interested in forming alliances,"
particularly with other local farmers, Held said. Some farmers have
found that they have "a little more market power by three, four,
five farmers doing it together."
Amendment E outlaws such activity unless all members of an alliance
are related. The new law actually made criminals of some existing
South Dakota ranchers whose operations "are now in violation of
the state's constitution," Held said.
Acknowledging legislators' good intentions, Held said that instead
of using a "rifle approach" to target their objective, "they used
a shotgun blast."
Contracts and farm (in)dependence
Some of the hand wringing over family farms is rooted in the traditional
notion of the family farm as wholly independent, which many believe
is being eroded by vertical integration of food processing.
Consumer food companies are using vertical integration to control
more facets of the food production process, from seed sales to feed
mills to grain elevators to processing plants and distribution networks.
The final step in fully integrating this seed-to-shelf structure
is to control the animal or crop commodity itself. Despite anti-corporate
farming laws in many states, commodity control can still be accomplished
through forward contracts, where a buy-sell agreement is made in
advance between a farmer and buyer for a particular volume and quality
Critics of contracting believe it undermines the independence
and decision-making of individual farmers. Only open market cash
sales provide true independence, they contend-despite the fact that
many areas of agriculture have been contracting for decades.
The federal government does not have up-to-date data on contracting,
but as of 1993, roughly one-third of the total value of U.S. ag
production was produced under contract. Contracts are believed to
be even more popular today because they provide farmers with price
and income stability unavailable through the open market.
Dairy, vegetables, fruit, nursery, cotton, and cattle and poultry
have at least one-third of their total product value generated under
contract. Corn, wheat and soybeans generate significantly less of
their total value from contracts, according to various sources,
despite evidence that some contracts paid corn and wheat farmers
significantly more than the open market last year.
Many remain wary of forward contracts and what it means for the
average farm. Production contracts, for example, remove the farmer
from virtually all risk, but all decision-making as well. The contractor
supplies or pays for most inputs, owns the commodity being produced
and essentially rents a farmer's growing skills. Held said opponents
"think of contract production as slave labor."
But at least some farmers see contracting as a means for remaining
viable given today's low commodity prices. "People see [contracting]
as a risk management tool," Held said, adding most farmers using
contracts were in their mid-30s to age 50 and operating large farms.
"It's an option for some [farmers], and not for others."
The best farming option for Thorenson right now is in Washington.
A regular columnist on farm issues and vice chairman of the North
Dakota Democratic-NPL Party, Thorenson recently accepted a farm
policy position with Sen. Dorgan's office. With all the circumstances,
Thorenson said, "It seemed like the right thing to do." Thorenson
and his wife, Cindy, are moving to Washington-ironically, something
they'd be unable to do at this time of harvest were it not for the
hard luck that hit last spring-and Kelly will take over the farm.
When Dale first mentioned the job in Washington, Kelly said he
wanted to run the farm with his father. Dale said that was not feasible.
"There is enough work for three of us, but hardly enough pay for
Dale's new job will give his son the opportunity to fulfill a
dream. "He's excited," Thorenson said of Kelly, "but it's kind of
a daunting thing."