Sitting in the kitchen of the remote country spread where they raise cattle and hogs, Ken and Helen Engelmeyer haul out photographs of the future and begin to fret that it won't include a place for them.
The photographs do not depict their own farm. Rather, they show a huge hog-production operation at Atkinson, Neb., run by a company called National Farms and owned by the Basses of Texas, one of the wealthiest families in the nation.
The Engelmeyers send about 1,900 hogs to market every year from their farm; National markets about 350,000 hogs annually. Where every extra cent of price makes a difference to the Engelmeyers, it means less to farms like National, which sends its profits elsewhere and expands through tax code benefits.
The Engelmeyers, both in their early 30s, children and grandchildren of farmers, drove to Atkinson a couple years ago to see the National operation firsthand. They took photographs. They came away scared.
"These big corporate operations keep producing the numbers, whether they make a profit or not," Engelmeyer said. "They need a market for their tax break and they provide it with their buildings, which they can write off in five years. There's no way that smaller farmers like us can compete with that."
Factory-style hog production, made possible in part by tax code provisions that give investors handsome shelters for nonfarming income, is seen by many as another of the developments in agriculture that makes it more and more difficult for small, family farmers to survive.
Key changes in tax law in 1981 measurably changed the hog industry. Hog-raising buildings were made eligible for investment tax credits and accelerated depreciation that allowed them to get their tax write-off savings in five years instead of 15, letting them use their money now instead of in the future.
For farmers on the margin with little or no extra money, it didn't mean much. For farmers with some capital, it was a big break. For nonfarmers with money, it was an invitation to a field day in agriculture.
Chuck Hassebrook, an analyst at the Center for Rural Affairs in nearby Walthill, has found that investors in the 50 percent tax bracket get more than triple the tax benefits that low-income hog farmers in the 20 percent bracket get. "The smaller operators are weakened as competitors," he said.
"There is real reason for concern in hogs. Between 1980 and 1982 we lost 30 percent of our pork producers in the United States, and the Agriculture Department has said we'll lose 80 percent of our hog farmers by the year 2000," he added. "Yet six major corporations have announced expansions that will send over 1 million more hogs to market this year."
Using the standard benchmarks, the price depression of a million more hogs on the market would translate to about $4,500 less income for the Engelmeyers in 1985. That may not break them, but for other less diversified farmers such a drop could be fatal.
Dramatic shifts in hog production, spurred in part by the 1981 tax changes, are showing up throughout the Midwest. No one is sure how widespread this is, but more and more farmers teetering on the edge of solvency now raise hogs on contract for investors or large corporations.
"Guys around here are doing this to keep groceries on the table," Engelmeyer said, "but after five, six, seven years they'll have nothing. Their equipment and facilities will wear out and they'll be stuck, having used it up to raise hogs for someone else who gets a tax break."
"The feed store in which we have an interest now survives by placing hogs into family-farmer hog lots. It's a Catch-22 situation. We don't like it, but it's that or no income."
Helen Engelmeyer said: "Statistics show the family-farm-sized operation is more efficient and that the smaller operators take more care. We think dropping that short term five-year write-off on hog buildings would bring some balance back into the picture for farmers like ourselves."
"As long as outside money can come in, the little family farmer can't compete," her husband added. "We've had a rough time economically and with the recent years of bad weather. We're working harder and trying to do more things. But the outside money takes the profitability out of what we do . . . We're sitting out here pretty defenseless."