Corporate Control
Some people believe that agriculture itself will be able to regu-
late its output decisions, eliminating the need for government con-
trol of output. Bargaining power is widely discussed as a possible
alternative to continuation of government controls.
Corporate management is expected by these writers to increase
and to be more politically astute than many of our farm managers
of the past. Thus, they should be able to bargain among themselves
concerning the production rights and rewards of feeding and clothing
our population.
Without passing judgment on the relative levels of political astute-
ness of different types of managers, let us examine the trends which
may help to determine the ownership form of the future. First, farm
family incomes are below those of nonfarm families. Excess capacity
in agriculture argues that the incomes of farm families will remain
relatively low for some time, particularly so if the output controls,
now exercised by government, are reduced. Several researchers also
foresee an increase in the relative costs of social and commercial
services for rural America. A 94 percent increase in agriculture’s
needs for capital between 1964 and 1980 has been projected. This
increase apparently will have to be borne by 30 to 50 percent fewer
operators. There is thus some basis for believing that present farm
operators will be unable to divert enough of their cash flows into new
technology and land purchases to finance this growth. While land
value increases since the 1930’s probably have financed much of our
present scale of use of land and technology, land value increases of
the next two decades or so may not be adequate. Outside venture
capital may become necessary to install new technology.
A more basic reason why present farm operators may not be
able to provide the capital to install new technology is that a sig-
nificant proportion of today’s operators are at or near retirement age.
They will disinvest. But present land values and known economies
of scale in land operation are already of such magnitude that new
entrants may find themselves heavily encumbered with debt for less
than economic sized units, unless these new entrants undertake man-
agement as nonresident owners. The corporation is the best under-
stood and most widely used form of nonowner management of cap-
ital, and also has the advantage of making intergeneration transfer
of both ownership rights and management roles easier. Corporation
farming may well be expected to grow in importance, but we are as
yet unable to specify how rapidly or how far it may expand.
A factor which may tend to retard the progress of corporate
103