North Dakota debate paints corporations as good or bad for animal agriculture

BISMARCK — Supporters of a bill to loosen restrictions on North Dakota’s corporate farm law say it’s too difficult to raise the capital needed to start a large livestock operation in a state that is already woefully behind its neighbors in animal agriculture.

Detractors say the bill opens up the state to foreign-owned corporations who don’t care about family farms or small towns.

House Bill 1371 even drew Gov. Doug Burgum to testify in front of the House Agriculture Committee on Jan. 27.

Burgum said he is a partner in a cow-calf ranch in Slope County, and when those cattle are weaned, they go out of state because there aren’t enough feedlots in North Dakota.

“We prevent our family farms from accessing the ability to aggregate capital and protect themselves from risk like every other business does in the state,” Burgum said.

The bill would make it easier for corporate entities to operate dairies and feedlots for cattle, hogs and poultry by changing the way they are defined. The new definition would mean these animal ag operations don’t have to comply with the state’s corporate farming law, which is designed to limit farmland ownership to families and keep corporations on the sidelines.

These animal feeding corporations would be limited to owning 160 acres of land.

“I do believe that we'll have more partnerships created, more investment from those communities and allow some, some people to come into this state that aren't corporations, they're just using a corporate structure to actually complement what we have going on here,” Agriculture Commissioner Doug Goehring told the committee.

While supporters of the change talked about North Dakota falling behind other states in the number of livestock raised, JP Lueck, a farmer from Spiritwood, said he didn’t like what he saw on a recent trip to a conference in Nebraska. The agenda included a tour of Lincoln Premium Poultry, owned by Costco.

“LPP owns the birds, the bird’s genetics, the feed mill and they have control of the whole processing plant and of course the retail out in the Costco stores,” Lueck said. He said the farmer pays for building the barn to LPP specs and gets a 15 year contract to raise birds for the company.

“It seems to me like LPP is just using the farmer for their land and their labor,” Lueck said.

He also noted an Agweek story on North Dakota’s lack of animal ag that included an exception, a farm near Oakes that raises hogs for an “integrator” who owns the pigs, delivers the feed and decides when to market them.

“If this law changes, the integrator could have set up their farm in North Dakota and could eliminate the need for the farmer altogether,” Lueck said. “I guess it's these types of corporate farms that I'm concerned about.”

Mark Watne of North Dakota Farmers Union, which has remained committed to North Dakota’s strict corporate farm law, said the real need is for the state to get behind developing livestock and dairy processing, then the animals will come.

He said North Dakota already produces more livestock than it can process.

“If we want to build better opportunities for livestock production, we have to build out the supply chain,” Watne said. “We have to provide better market opportunities and develop processing in the state.”

Watne, testifying against the bill, and Kenton Holle of the North Dakota Milk Producers Association, agreed on one point, that the Bank of North Dakota could do more to support animal ag.

“We have a state-owned bank that has not been utilized to provide for the growth of our No. 1 industry. The Bank of North Dakota could certainly be the difference that some of these farmers needed to keep the family on the farm,” Holle said.

Among the farmers that testified against the bill was Mary Rude, a senior at Dakota Prairie High School in Petersburg, representing her parents. Her family raises organic turkeys and works with Northern Pride, a grower-owned co-op in Minnesota.

“One of our biggest concerns is that this bill doesn't even require shareholders to be farmers or have any connection to the community. Those corporate investors won't go to our church, their kids won't go to our schools. They won't value our local community the same way … that my family and our neighbors do,” she said. “Our farm is proof that you can have a successful family owned poultry operation.”

The committee took no action, but bill sponsor Rep. Paul Thomas discussed an amendment that would require a corporation buying land to start on construction on a facility within one year and require it to keep it operating as an animal feeding operation.

Goehring said the bill can’t guarantee success.

“We’ve tried to put some safeguards in place, but it doesn't mean that absolutely it's going to work,” Goehring said. “I don't know if you could build safeguards for every scenario. This should complement our grain farming operations in North Dakota, like it does other places.”

Daryl Lies of North Dakota Farm Bureau testified in favor of the bill but argued that the bill doesn’t go far enough.

“Every business that farmers and ranchers do business with — the elevator, the seed salesman, the crop protection sales — can utilize a business in a corporate structure. But yet we are told that our business does not qualify for that corporate business structure,” Lies said. “So do you believe in that freedom that's enshrined in the United States of America?”