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This report examines literature concerning (1) the link between farm scale and community welfare, and (2) the economic interface between agriculture and rural industrialization. Several farm region case studies conclude that employment and social services are more varied where smaller, family farms prevail, in other words, where agriculture is less "industrial". Other studies, undertaken in rural areas where industry has located, indicate that part-time farmers may benefit from greater employment opportunities if their skill levels match industry's demand.

In 1968, of the total of 3.1 million farm tax returns filed, only 20,000 were from farm corporations. Even this small number represents an increase, but most of this increase is in corporations using the subchapter S option. These are closely held corporations, taxed like partnerships. Farm corporations as a group tended to have more losses and lower returns, with greater variability than certain other corporate industries. The 1963-68 average rate of earning on assets (cost or acquisition value) was 4.5 percent and the rate of return on equity was 5.3 percent. Farm corporations had moderate financial strength. Equity capital was 39 percent of the total. More than half of the assets of farm corporations were invested in land and depreciable assets. The slow turnover rate on these assets and low profit margin on receipts contributed to the low returns on assets and equity. In 1968, farm corporations averaged $317,000 in assets, produced $260,000 in receipts, and earned $17,000 net income.

In 1968, some 13,300 farming corporations accounted for 1 percent of all commercial farms and operated 7 percent of the farmland. California and Florida had about one-fifth of the total number and some of the largest corporate farming operations. Nearly two-thirds of farming corporations were family owned and controlled. Since farming corporations tend to be closely held, the owners were usually involved in management. However, only one-third of the 12 average employees were either stockholders or stockholder relatives. Farming was the only business activity for the two-thirds of the corporations. Others had farm-related business and nonfarm-related business. The farm product sales of corporations was about $3.3 billion or 8 percent of total sales from all farms in 1967.