Iowa Public Television

 

Premium Standard Farms

posted on June 2, 2000


TWO OF THE HOT BUTTON ISSUES IN THE POLITICS OF RURAL AMERICA ARE THE SIZE OF FARMING OPERATIONS AND THE NATURE OF OWNERSHIP.

OVER THE PAST FIVE DECADES, MORE FARMS HAVE EVOLVED INTO THE HANDS OF ABSENTEE OWNERS. MANY TIMES THE OWNERS ARE URBAN DESCENDENTS OF FARMERS WHO INSIST ON MAINTAINING THEIR ROOTS WITHOUT ACTUALLY TOUCHING THE SOIL. BUT GENERALLY THOSE OPERATIONS HAVE REMAINED CLOSE TO TRADITIONAL SIZE. TO MANY RURAL AMERICANS, A MORE ONEROUS DEVELOPMENT IS THE COMBINATION OF OFF-FARM, MONEY FINANCING MEGA-SCALE FARMS THAT ARE VERTICALLY INTEGRATED. THE SIZE AND INFLUENCE OF SUCH OPERATIONS CAN, IN SOME INSTANCES, VIRTUALLY ENVELOP A RURAL COMMUNITY. A CLASSIC EXAMPLE OF THE TREND IS THE BRIEF BUT CONTROVERSIAL HISTORY OF A MIDWESTERN PORK PRODUCER.

PREMIUM STANDARD FARMS BURST ONTO THE NORTHERN MISSOURI LANDSCAPE IN 1989.

BOLSTERED BY HUNDREDS OF MILLIONS OF DOLLARS WORTH OF WALL STREET FINANCING, THE COMPANY GREW RAPIDLY, ADDING 80,000 SOWS AND A STATE-OF-THE-ART PROCESSING FACILITY IN MILAN.

BUT IN 1995, THE HIGHLY LEVERAGED COMPANY FILED FOR BANKRUPTCY. CONTINENTAL GRAIN BECAME THE MAJORITY SHAREHOLDER OF THE PRIVATELY HELD FIRM IN 1986, PURCHASING A 51% STAKE IN THE OPERATION.

DESPITE THE RENEWED FINANCIAL STABILITY THE COMPANY HAS PROBLEMS ON ANOTHER FRONT. IT IS VIEWED BY MANY AS AN EXAMPLE OF THE DANGEROUS CONSOLIDATION OF AGRICULTURE INTO FEWER AND MORE DISTANT HANDS.

Charlie Arnot: I think people need to understand that this is part of an on-going changing structure in agriculture, and Premium Standard Farms is more effect than cause. It's a different model than we've ever seen before. It's not based on independent agricultural production. Is it the right model? Not for everybody. Uh, but I think communities that want to continue to sustain a quality rural way of life, have to begin to look beyond what we've always looked at in the past."


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