The Nebraska Legislature has killed the bill to reestablish restrictions on corporate farming. LB 1174 fell four votes short in spite of spirited support from Senator Cap Dierks, Nebraska Farmers Union, the Center for Rural Affairs, churches, and others.

We did establish a fact critical to all states considering corporate farm legislation. It is possible to develop effective corporate farm restrictions that meet the objections of the federal courts that overturned the Iowa, Nebraska, and South Dakota laws.

The court ruled that Nebraska’s longstanding Initiative 300 discriminated against interstate commerce because, the court claimed, only Nebraskans could provide the daily labor required to qualify as an exempt family farm corporation.

The proposed legislation made it clear that a family farm corporation based in another state – on which a family member labored in that state – could buy land and engage in farming or ranching in Nebraska. The legal expert retained by the Nebraska Legislature testified that the bill addressed the courts’ objections and would likely be upheld.

Provisions of LB 1174: LB 1174 would prohibit farming and farmland purchases by corporations and limited liability entities owned primarily by nonfarm stockholders. The prohibition would apply to big companies like Cargill and Murphy Farms as well as smaller corporations owned by nonfarm investors such as Ted Turner and local professionals. Nonfarm investors could buy land or farm only as sole proprietors or general partnerships. They would have to operate by the same rules as most farmers, paying taxes as individuals and assuming full legal responsibility for the liabilities of their operation. Family farm corporations would be allowed. A member of the family that owned majority interest would have to manage and work on the farm. Unrelated investors could own up to 49 percent of the stock in a family farm corporation – to help finance the family farm. In addition, up to five unrelated active farmers could establish a farm corporation.

Legal issues were not the primary barrier. The primary barrier was a coalition led by the Nebraska Farm Bureau. For years, the organization said it only wanted to change the restrictions to enable unrelated farmers to jointly form corporations.

So we were disappointed that Farm Bureau declined our invitation to help shape an exemption for unrelated farmers working together – opting instead to block all restrictions.

By all indications, most farmers support corporate farm restrictions. Most farm areas voted strongly for Initiative 300 in 1982. And a 2004 survey of Platte County farmers by the county Farm Bureau, Farmers Union, Pork Producers, and Center for Rural Affairs found that 80 percent wanted Initiative 300 to remain in force, unchanged.

To win reform, grassroots members of farm organizations must first reform them to represent the rank and file on family farm issues.

We must also set aside our differences and work together where we agree. Following a passionate debate on corporate farming, Nebraska Cattlemen, Farmers Union, Farm Bureau, and the Center for Rural Affairs joined forces to win legislation improving the Nebraska tax incentive for renting land to beginning farmers.

Contact: Chuck Hassebrook, chuckh@cfra.org or 402.687.2103 x 1018 for details.