"[W]e're Doing This to Ourselves": South Dakota's Anticorporate Farming Amendment

By Pietila, John C. | Journal of Corporation Law, Fall 2001 | Go to article overview

"[W]e're Doing This to Ourselves": South Dakota's Anticorporate Farming Amendment


Pietila, John C., Journal of Corporation Law


I. INTRODUCTION

In the fall of 1998, the people of South Dakota were placed on the front lines of the national debate over control of agricultural production in the new millennium. On one side of the conflict stood multi-billion dollar agricultural corporations pushing for the continued integration of the state's agricultural industry. On the other side stood rural activists and traditional family farmers fighting to halt the expansion of global conglomerates in the field of agricultural production. Many young farmers and rural communities were caught in the middle of this complex debate, forced to choose between desperately-needed financial options and a traditional way of life.

Following in the footsteps of their neighbors in Nebraska, the voters of South Dakota initiated and overwhelmingly approved a constitutional amendment that severely restricts corporate investment in agricultural production. The measure simultaneously reaffirms South Dakota's commitment to family-controlled agriculture by carving out important exceptions for family farm corporations and cooperatives controlled by family farmers. Proponents of the anticorporate farming amendment welcome the restrictions as the last, best hope for the continuing viability of South Dakota's family farms and rural communities. Opponents of the measure claim that it unwisely and unconstitutionally discriminates against nonresident agricultural investment and impermissibly interferes with interstate commerce. They condemn the anticorporate farming amendment as a desperate, isolationist measure that will only exacerbate the economic crisis threatening South Dakota's agricultural economy.

Part II of this Note explains, to the extent possible, the social, economic, and legal circumstances that preceded the adoption of South Dakota's anticorporate fanning amendment. Part III is broken down into three distinct sections. The first section analyzes South Dakota's anticorporate farming amendment and explore the amendment's heightened restrictions on corporate farming. The second section analyzes the constitutional objections made by opponents of South Dakota's anticorporate farming amendment, focusing on claims raised under the equal protection and commerce clauses. Finally, the third section addresses the measure's probable impact on agriculture in South Dakota and concludes that the long-term effects of the state's anticorporate farming amendment, if any, will depend in large part on the measure's influence on the ongoing debate over the direction of national farm policy.

II. BACKGROUND

South Dakota is a state largely defined by its agricultural economy and rural tradition. While the state has been able to attract and retain some degree of nonagricultural industry,1 South Dakota's greatest national significance is as a leading producer of farm commodities.2 Even today, slightly more than fifty percent of South Dakota's residents live in rural communities.3 Consequently, many South Dakotans rely on agriculture as the cornerstone of educational, economic, and social stability. Not surprisingly, prolonged downturns in the national farm economy have been especially troublesome for South Dakota.

In recent decades, traditional family farms have encountered hard times. In the 1980s, adverse weather conditions, depressed land values, and high interest rates combined with falling commodity prices to create a farm debt crisis of national proportions.4 New and expanding family farms were particularly vulnerable to this financial calamity.5 Faced with perceived indifference at the federal level, many state governments reacted to the farm debt crisis by enacting programs designed to alleviate debt, subsidize commodity production, and otherwise support traditional family farms.6 By 1986, these state programs had combined with renewed federal support to spur a reverse of the farm debt crisis and stem the tide of farm foreclosures.7 While the negative fiscal effects of the debt crisis lingered for some producers, the next decade was marked by a general improvement in the overall financial condition of family farmers. …

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