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Corporate farm law has eased over eight decades

2/26/2013

By AMY BICKEL

By AMY BICKEL

Special to The Telegram

"Kansas sees peril in big wheat farms," the headline read in the Dec. 7, 1930, edition of the New York Times — a story that assessed the concern mounting across Kansas as farmland began to go into the hands of corporations.

The Associated Press reported at the time that 110,000 acres of farmland were held by 11 corporations in 1930 with the largest — 70,000 acres — controlled by an operation based in Hays.

The issue was part of the Kansas Republican Party platform of the day. The party ran a half-page ad in The Hutchinson News a few days before the November election stating its agenda, which included supporting prohibition, opposing bank chains and the denouncing of corporate farming.

In a 1930 speech to the Hutchinson Chamber of Commerce, a Coffeyville lawyer told members that corporate farming would cause absentee landowners and hurt the economy.

"The only way to stop the destruction of Kansas is for the state to prohibit corporations from engaging in corporate farming," he said.

The law was passed during the 1931 legislative session. According to an April 1931 edition of The News, which told of ouster proceedings against the Hays company, the law prohibited corporate farm operations from engaging in wheat, corn, barley, oats and rye production, as well as potato farming and the milking of cows for dairy purposes.

According to the Kansas Department of Agriculture, the Legislature has amended the act since 1931 to add commodities to the list of prohibited agricultural practices but also specifically exempted certain practices.

Meanwhile, according to a U.S. Department of Agriculture study in 1980s on states with corporate farm laws, corporations could engage in farming in Kansas if they had no more than 10 shareholders. The owners were not required to be related to each other, but they could not be owners in another farm corporation. In addition, farm corporations were limited to 5,000 acres of land.

1981

According to the state agriculture department, the 1981 Legislature passed a bill that is the basis of the current law. The act eased limitations, including the 5,000-acre rule.

The law limits farming to corporations composed primarily of members of the same family. At least one member must reside or work on the farm. It also limits corporations to 15 or fewer shareholders, and all shareholders must be Kansas residents.

In essence, the law prohibits corporations, limited liability companies or partnerships other than family farm corporations "from either directly or indirectly owning, acquiring or otherwise obtaining or leasing any agricultural land in Kansas."

The 1981 bill included 13 specific exemptions from the restrictions, among which included an exemption for crop production for research purposes, alfalfa production for alfalfa seed, land for use as a feedlot, a poultry confinement facility or a rabbit confinement facility, as well as a few other exemptions.

1994

The law changed in 1994 to allow corporations to acquire land to build a swine or dairy facility under the specific actions by voters and boards of county commissioners.

However, swine facilities required a vote by county residents, while county commissioners, according to the agriculture department, could approve dairies.

2012

In 2012, the Kansas Legislature passed a bill the loosened swine regulations. The swine section of the law now mirrors dairy regulations — making it possible for the county commissioners to approve a swine facility without a county vote unless a valid petition for a vote is submitted.

The proposal

At issue is an 8th District U.S. Circuit Court of Appeals ruling that Nebraska and South Dakota's laws are unconstitutional. Kansas, however, is in the 10th district, and while these cases are persuasive, opinions in other districts aren't binding.

Kansas Secretary of Agriculture Dale Rodman, however, fears Kansas' law could be unconstitutional. He asked Attorney General Derek Schmidt to issue an opinion on the constitutionality of the law under the Dormant Commerce Clause.

Schmidt issued a letter to Rodman on Jan. 2.

"I would note that your request is quite broad and essentially invites this Office to the unusual task of seeking legal theories under which a Kansas statute might be successfully challenged as unconstitutional," Schmidt wrote.

Schmidt declined to issue a formal opinion, but did say in the letter that the law prohibiting corporations from farming in Kansas is "likely unconstitutional" under the clause, because it is limiting to just Kansas corporations, and thus discriminatory.

He didn't issue an opinion on the rest of the law, saying there were reasonable arguments for both sides.

Senate Bill 191 was introduced earlier this month. The bill amends and repeals the current corporate farm law in Kansas.

The bill was referred to the Senate's Committee on Natural Resources.

Sen. Larry Powell, R-Garden City, the committee's chairman, said he wasn't concerned about repealing the current law.

"I don't think it changes much except perception," he said, adding he didn't think agribusiness giants wanted to start buying up farmland. "The return on investment is small. Farming is a way of life. I don't think I look for it as a fear."

He also hasn't heard concerns from his constituents.

"I was out to five towns (last) weekend, and it didn't come up," he said.

Farm groups like the Kansas Farm Bureau and the Kansas Livestock Association also say the law change could help Kansas' economy.

Mike Beam, senior vice president with the KLA, said it appeared the proposal would clean up the law and allow for business expansion.

"At this point, I don't think it will" hurt anything, he said. "I don't think we'll see much change."

A hearing on Bill 191 is scheduled before the Senate's Committee on Natural Resource with Powell presiding.

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