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Not just incidentally, this vertical integration will give Wolfe Pecanlands certain competitive advantages over other growers. Though company president Charles Maguire says the corporation is not out to corner the market and proclaims his faith that free enterprise will provide sufficient competition, his company’s own prospectus suggests otherwise. A large percentage of Texas pecan growers, it says, have small, unirrigated orchards because they can’t afford the expense of large-scale cultivation and irrigation during the long, unproductive period before pecan trees reach maturity and start bearing nuts. The yield from such dry-land orchards varies greatly from year to year, so these farmers cannot guarantee delivery of the truckload quantities that command premium prices. Since relatively few producers make up for these weaknesses by marketing through cooperatives, adds the Wolfe Pecanlands prospectus, the company expects to be the biggest marketer in the state as well as the biggest grower. To realize these ambitious aims, Pecanlands promoters needed three awhile for significant returns on their inin the area around the company’s cure supply of water for irrigation. They’ve managed so far to obtain all threethe first harvest from 1972 plantings is expected this falland the way they’ve gone about it says a lot about what family farmers are up against when corporate thinking and corporate money move into agriculture. Improbable farmers The success that the executives behind Wolfe Pecanlands have enjoyed to date has a lot to do with who some of them are. Lending his name to the venture and serving as chairman of its board of directors is Dan Wolfe, former president of Wolfe Nurseries, a Pier 1 Imports subsidiary that is one of the country’s largest growers and merchandisers of bearing-size pecan trees. Pecanlands director Luther Henderson is also a board chairman–at Pier 1. And director Charles Tindall is vice president and treasurer of Tandy Corporation, the big mariufacturer of consumer electronics gadgetry and hobbycraft items \(Tandy, by the way, was the owner of Wolfe Nurseries until Pier 1 bought the garden products subsidiary for $7 million-plus in luminaries such as these three \(all from why 600 investors have joined the original 50 who anted up $1 million for a piece of the Pecanlands action. There’s more, of course, to the Pecanlands pitch than the names that adorn its prospectus. Here’s what well-to-do professionals \(to whom the original prospecuntil judicial reinterpretation of the tax code forced a change recently. Each investor with money to burn and a high tax bracket to fret about bought a fiveto 13-acre tract of Pecanlands, along with 122 pecan trees per acre. Each also signed a contract for 15 years’ worth of farm management services, at a cost of $1,500 per acre, that leaves consolidated control over all farm operations in the hands of the corporation and its hired help. Besides taking title to land which they need never set foot on, these unlikely farmers received in return a promise of 75 percent of any future profits from the sale of pecans andmore importantlya tax write-off on as much as 96 percent of the cost of the management contract. In other words, only $60 out of $1,500 would be ascribed to the purchase of seedlings and the like, and thus be treated as a capital investment: the other $1,440 could he declared as a loss for tax purposes. It was a good deal, and it got Pecanlands well underway, without the need to produce quick returns, before the courts closed the tax-loss loophole. The arrangement that has succeeded it involving the purchase of mortgage bonds and options to buy acreage, and of course retaining the management services contract for those who do opt to buyisn’t bad, either, though the latest Pecanlands prospectus regretfully advised that folks in brackets below 32 percent would find the investment less attractive. Thanks to such tax inducements and the lure of profits to be made from orchard-to-market control over the corporate crop, total Wolfe Pecanlands assets have climbed over the $7 million mark this year. The big squeeze The money has enabled the company to increase its landholdings by a third since then, and it’s being used right now to make land purchase offers that many small-scale farmers in the area cannot afford to refuse. Pecanlands is paying top prices$600 to $750 an acrethat the family farmer next door can’t match. And even if that neighbor manages to borrow enough cash from the local bank to pay such prices, his money isn’t as good as the corporation’s, because sellers have more confidence in Pecanlands’ sophisticated, long-term payment plans \(which reduce the tax bite on the seller’s capital gain from the transJ. W. Sadberry, a farmer from De Leon in Comanche County, reports that current prices are more than double what they were before the corporation started buying land back in 1972. But it’s hard to say how much of the increase is attributable to the company’s buying spree and how much to the land boom of 1973 and the general rise in prices since. Maguire doesn’t think his outfit’s purchases have had much effect at all. He claims that he is paying only $100 per acre more now than in ’72, and adds: “If we’ve driven prices up it’s to our detriment, because we’re buyers, too.” And whatever the effect on prices, he says, most of the land is acquired from retired farmers who have been leasing out their land for years anyway. These arguments won’t wash with J. W. Sadberry and the many other small farmers who lease much of the land they farm. They rely on these leaseholdings to make a go of it, and now they see them becoming part of Wolfe Pecanlands. It may be true that few active farmers are dislodged directly; but they feel that Pecanlands encroachment on acreage they used to lease is squeezing them out just as surely. Jerry Solomon, another Comanche County peanut farmer, can describe the corporate squeeze from personal experience. Just last week, he says, a neighbor from whom he rents a 55-acre parcel told him that the lease could not be renewed next year. Why? “He told me yesterday he’s going to sell out [to Wolfe Pecanlands]. He said he didn’t much want to sell to them. But he’s wanting to retire, and they offered him $750 an acre.” Water and politics Hard feelings among farmers like Sadberry and Solomon came to a head a few years ago when the corporation, nominally acting through its landownerinvestors, set up a water district tailormade to fill its irrigation needs from Comanche County’s Proctor Reservoir. County residents managed to block approval of the district by their own county commissioners, and, according to Solomon, Pecanlands chairman Wolfe assured the farmers that the company would drop the idea. But Pecanlands by-passed them a short while later by getting the go-ahead for its water district in next-door Erath County and then extending it back across the county line to annex the company-controlled area around the reservoir. The move was legal. concedes Sadberry, but he calls it “underhanded,” and it galled Comanche County farmers so much that they took their case against it to the Legislature in 1975. They prevailed upon Rep. Lynn Nabers of Brownwood to introduce a bill forbidding water district annexations across county lines without the consent of county commissioners with jurisdiction over the area annexed. Then they came THE TEXAS OBSERVER 9