Multiple entity farms: a growing and challenging phenomenon

Abstract

Purpose

Understanding complex farming organizations is important in the USA given the rapid consolidation of the agricultural production sector. Multiple entity farms arise from a desire to enhance the ability to transfer the farm from one generation to the next, a desire to affect tax liability, and a desire to affect legal liability. To determine the extent of the multiple entity phenomena and the complications that multiple entities can cause in data collection, the purpose of this article is to address the importance of multiple entities in Kansas.

Design/methodology/approach

An overview of reasons leading to additional organizational complexity are discussed. Two case farms are presented to understand the depth of the complexity and how that complexity has implications for data collection.

Findings

The number of multiple entity farms is expected to continue to increase. Obtaining data through the Agricultural Resource Management Survey (ARMS) will become more difficult as production agriculture increases the use of multiple entities. ARMS must reconsider how multiple entity organizations are handled. Possible solutions include an alternative system for data collection of multiple entity farms. Documenting the prevalence of multiple entity organizations in the production sector and tracing through how those organizations are currently handled is critical to understanding potential impacts on the current data collected.

Originality/value

The National Research Council completed a review of ARMS that addressed challenges in keeping the survey relevant into the future. However, research that examines the construction of financial statements and other information had not been conducted since the early 1990s. This study fills part of that gap.

Citation

Featherstone, A.M., Wood, M.A., Herbel, K.L. and Langemeier, M.R. (2012), "Multiple entity farms: a growing and challenging phenomenon", Agricultural Finance Review, Vol. 72 No. 2, pp. 210-221. https://doi.org/10.1108/00021461211250447