Progress 06/15/01 to 06/14/04
Outputs
The study found no statistical difference between how the size of feedlots has evolved in Nebraska, a state with restrictions on corporate cattle feeding, and how they've evolved in other major cattle feeding states (Colorado, Kansas, and Texas) that have no restrictions. All four states studied have seen a trend of larger feedlots supplanting small-scale operations. For any who might have hoped that Initiative 300 would slow the trend toward larger size feedlots, and increase the role played by small-scale feedlots, the results of the study are discouraging: The Initiative does not seem to have made a difference. For those indifferent between large and small feedlots, as long as they are family-owned, the findings of the study are encouraging: It is possible to regulate the structure of ownership without having the (potentially adverse) impact on size structure that the critics of anti-corporate farming laws claim. Also, if one believes that the prevailing trend
toward large-scale operation is cost-efficient, the findings could be good news for consumers concerned about higher beef prices. Keep in mind, however, that there may be other implications of size structure, beyond cost efficiency, about which the public might be concerned. The environmental impact of large vs. small feedlots is one example. Concerning the reasons for finding of no statistical difference between the feedlot size distribution trends in Nebraska, on the one hand, and in the other three states with no applicable anti-corporate farming restrictions, on the other, the study mentions three possibilities: 1. The kind of corporate investments that are barred in Nebraska are not attractive and, in fact, are not occurring in other states either. Anecdotal evidence suggests, however, that non-family farm corporations are major players in the cattle feeding industry in other states. 2. It may be that Initiative 300 restricts entry of new corporate-owned feedlots but does
relatively little to constrain incumbent feedlots. A grandfather clause exempts corporate-owned feedlots that were already in operation in November 1982. It is likely that many feedlots currently operating in Nebraska are grandfathered corporations and the only restriction to which they are subject is a prohibition of additional land acquisitions. Some of these grandfathered corporations may have been able to expand their operations without adding new land. 3. Initiative 300s definition of authorized family-farm corporations allows for sale of up to 49 percent of the firm's stock to non-family-member investors. This feature improves the access to capital for family-farm corporations and may offset at least part of any capital-raising disadvantage, relative to non-family-farm corporations, that they otherwise would have faced.
Impacts
To dispel the notion that corporate farming restrictions can be used as a legislative instrument to affect the size distribution of cattle feeding operations.
Publications
- No publications reported this period
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Progress 10/01/02 to 09/30/03
Outputs
We test whether the implementation of the Nebraska law had an impact on the stochastic process governing the evolution of the firm size distribution. To the extent possible, the model controls for the effects of other factors that might influence industry structure. And, to help establish a baseline for comparison, we use data from other major cattle-feeding states (Colorado, Kansas, and Texas) in which the feedlot industry was subject to no corporate restrictions. We found that if Initiative 300 had an impact on the dynamics of feedlot industry market structure, it is not evident in these data.
Impacts
To dispel the notion that corporate farming restrictions can be used as a legislative instrument to affect the size distribution of cattle feeding operations.
Publications
- Azzam A., J. R. Schroeter, D. Aiken. 2003. Anti-Corporate Laws and Industry Structure: The Case of Initiative 300 and Cattle Feeding. Focus (Economic Issues for Nebraskans) 4-7.
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Progress 10/01/01 to 09/30/02
Outputs
Nine mid-western states have laws that restrict the involvement of publicly-held corporations in agriculture. The goal of these ''anti-corporate farming laws'' appears to be the preservation of the family farm as the basic unit of production. Opponents argue that the laws' direct efforts to regulate the ownership structure of agriculture may have an adverse indirect impact on the size structure of agriculture. Restricting corporate involvement might bias the size distribution toward inefficiently small firms if corporations have advantages over other organizational forms in meeting the capital requirements of large-scale operation. In this paper, we examine the impact of anti-corporate farming laws on size structure in the cattle feedlot industry. Since 1982, Nebraska, a leading cattle feeding state, has had an anti-corporate farming law that prohibits corporate ownership of feedlots. We test whether the implementation of the Nebraska law had an impact on the
stochastic process governing the evolution of the firm size distribution. To the extent possible, the model controls for the effects of other factors that might influence industry structure. And, to help establish a baseline for comparison, we use data from other major cattle-feeding states (Colorado, Kansas, and Texas) in which the feedlot industry was subject to no corporate restrictions. What we find is that, if Initiative 300 had an impact on the dynamics of feedlot industry market structure, it is not evident in these data.
Impacts
Enhance public understanding of the effects of anti-corporate farming laws on the structure of the cattle feeding industry and contribute an empirical methodology for estimating the impact of anti-corporate farming laws on the structure of agricultural production in general.
Publications
- Schroeter, J., A. Azzam, D. Aiken. (2002) "Anti-corporate farming laws and industry structure: The case of cattle feeding. (Unpublished)
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Progress 10/01/00 to 09/30/01
Outputs
We have been studying the various Anti-Corporate Acts to identify the candidate states for our investigation. Up to this point, we identified three states: Kansas, Iowa, and Nebraska. Kansas has corporate restrictions on ranching but not on feeding; Iowa has corporate restrictions on ranching and also restricts packer feeding; and Nebraska has corporate restrictions on ranching, feeding and cattle ownership.
Impacts
(N/A)
Publications
- No publications reported this period
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