News Coverage
Mega-farms, government agencies and the rich get bulk of federal farm aid, AP survey shows
Published September 8, 2001
Almost two-thirds of the $27 billion in federal farm subsidies doled out last year went to just 10 percent of America' s farm owners, including multimillion-dollar corporations and government agencies, a review of Agriculture Department records by The Associated Press shows.
Rules that base subsidy payments on farm acreage, rather than financial need, also mean that taxpayer money flowed to people like media mogul Ted Turner, pro basketball star Scottie Pippen and an heir to the Rockefeller fortune. They also mean some of the wealthiest members of Congress received aid from farm programs they voted for.
At least 20 Fortune 500 companies and more than 1, 200 universities and government farms, including state prisons, received checks from federal programs touted by politicians as a way to prop up needy farmers. Subsidies also went to real estate developers and absentee landowners in big cities from Chicago to New York.
Sen. Tom Harkin, an Iowa Democrat and chairman of the Senate Agriculture Committee, called such examples an " embarrassment, a black eye that can only undermine public and taxpayer support for the programs."
The American Farm Bureau Federation, the nation' s largest farm group, supports the rules, passed by Congress since 1996. But many individual farmers and other critics question a system that gives the country' s biggest farmland owners the fattest checks.
" There have to be limits, " said Mike Korth, who received about $73, 000 in payments last year to help keep his Nebraska corn farm afloat. " Why are we giving millions of dollars to millionaires?"
Government aid made up almost half of total farm income nationwide last year, most of it parceled out through programs aimed at making sure farmers don' t go under when the price they get for crops is not enough to pay their bills. But recipients don' t have to be cash-strapped farmers, or even farmers at all. The subsidies flow to anyone with a stake in farmland and the crops that land produces.
The AP analysis of more than 22 million checks sent out by the Agriculture Department in fiscal year 2000 shows that 63 percent of the money went to the top 10 percent of recipients, including many that don' t fit the image of the struggling family farmer.
That' s how the heirs of billionaire John R. Simplot, a retired tycoon worth $4.7 billion by Forbes magazine' s last tally, received $167, 000 in aid through the family' s Idaho farming empire. A trust in Simplot' s name got another $92, 000.
The Simplots got help even though their firm, J.R. Simplot Co. of Boise, which sells millions of pounds of French fries to McDonald' s, recorded $2.7 billion in sales last year.
Not all the Simplot farms do so well, family spokesman Fred Zerza explained.
" Each of these farm operations is a separate entity that has to stand on its own, and farming has been a tough business lately, " Zerza said.
The crop programs were written to support commodity production rather than the people who produce commodities, ensuring the viability of the entire industry, not just small farms. That' s why big operators received most of the money.
In the last three years, with prices for corn, rice and other crops tumbling to near-record lows, Congress passed a series of bailouts, sending billions of dollars in extra aid to rescue farmers from mounting debt, foreclosure and bankruptcy.
The result? Farm subsidies that politicians predicted would decline under the so-called Freedom to Farm bill of 1996 instead exploded.
In July, the Government Accounting Office reported that the subsidies were providing incentive for established farm owners to buy more land, driving the price out of reach of younger, less affluent farmers.
" We must question whether the heavy concentration of payments to very large producers is actually defeating the stated purpose of farm programs: to help family farmers stay in business, " Harkin said in a written statement to the AP. " The reality of the past few years is that Freedom to Farm has unfairly benefited large farms while disadvantaging small farmers."
Of the 1.6 million farm aid recipients last year, the average recipient got about $16, 000. About 57, 500 recipients got more than $100, 000, and at least 154 got more than $1 million. Because recipients can receive payments under several different names, it is likely there are many more who passed the million-dollar mark.
" It' s one thing to help a guy farming 2, 000 acres in central Illinois, trying to make a full-time job of it and support his family, versus helping someone with 10, 000 or 12, 000 acres to get bigger and bigger and bigger, " said Tom Buis, vice president of the National Farmers Union, which supports limiting payments.
" A disproportionate benefit seems to go to the large operators, " said Craig Gunderson, an economist with the USDA' s research arm. " That' s very different from what people think of as a safety-net program."
More than 90 percent of the money is simply income support -- fixed payments based on how many acres a landowners has in agriculture production, or benefits triggered when the market price for crops drops below a certain point. The largest of the remaining programs pay owners to protect environmentally sensitive land or when disasters wipe out their crops.
Bruce Gardner, the USDA' s chief economist in the administration of the first President Bush, said Congress should reconsider the goals of the farm subsidy programs when it takes up the next farm bill this fall.
Gardner, now an agricultural economist at the University of Maryland, said most subsidies ought to be directed at people who need the most help, in the mold of other government safety-net programs. Yet he and others familiar with decades of farm policy debates said the agriculture lobby repeatedly turns back attempts to limit subsidies.
The American Farm Bureau Federation, which has 5 million families as members, opposes any limits on how much individual farms get. Lobbyist Mary Kay Thatcher and others who oppose limits say big farms take bigger risks, log higher expenses and produce more of the crop.
" It' s not like these guys are getting rich from government payments, " Thatcher said. " They' ve had to have them in order to survive."
Yet among last year' s recipients are people, companies and organizations that clearly did not need taxpayer handouts.
In New York' s Hudson Valley, former Chase Manhattan Bank chairman David Rockefeller, grandson of famed oil tycoon John D. Rockefeller, received $146, 000 in subsidies. Employees said the money goes into running the family' s 3, 000-acre farm, not into Rockefeller' s pocket.
IBP Inc., a meatpacking company based in Dakota Dunes, S.D., that reported $1 billion in profits last year, received $128, 000 in aid for land it owns in three states.
Agriculture Department records show checks sent to at least 20 Fortune 500 companies, including IBP, Chevron ($100, 770), Archer Daniels Midland ($17, 793) and Caterpillar ($59, 184).
" Us being profitable or not profitable really has no bearing on the issue, " said spokesman Ed Spaulding of Chevron, which hires tenants to farm some of the oil-bearing land it owns in central California and then collects government crop payments to maximize its return on the property.
" The price support program is to encourage production of the crops, and we are just as much a part of that program as anyone else, " he said.
U.S. Rep. Doug Ose, R-Calif., a developer ranked 22nd on Roll Call magazine' s list of the richest members of Congress with a net worth of $12.5 million, owns part of two companies that got about $149, 000 in rice subsidies.
Ose, who sits on the House Agriculture Committee, gave up his decision-making roles in the two companies when he took office, spokesman Yier Shi said.
U.S. Sen. Mike Dewine, R-Ohio, who Roll Call estimates is worth $7 million, and DeWine' s wife own shares in two family companies that collected just under $50, 000 in subsidies combined.
" The amount they derive from this is fairly insignificant, " said Dewine spokesman Mike Dawson, who also noted that Senate rules require Dewine to report his stake in the companies on financial disclosure forms, but do not require him to abstain from voting on farm issues.
Scottie Pippen, whose contract with the Portland Trailblazers pays him about $14 million a year, received $26, 000 for growing hardwood trees on an environmentally sensitive plot in his native Arkansas.
And Ted Turner, one of the largest private landowners in the United States, and Turner' s companies collected at least $190, 000 in subsidies last year for ranches he owns in Montana, South Dakota and Florida.
At least $17 million in crop subsidies went to government agencies of all stripes -- airports, wildlife departments and prisons. Colleges and universities got another $6.3 million on research crops or farmland bequeathed by benefactors.
Montana got $5.4 million for land set aside for the state in its constitution to help pay for public schools. Montana' s Department of Natural Resources partners with tenant farmers, then shares in the subsidies paid for the crop. Louisiana was among at least 14 states to get subsidies on crops grown by convicts on prison farms.
The University of Illinois tops the list of colleges and universities with about $710, 000 in subsidies. Most of that money is for crops grown on donated land, farmed by tenants who split the crop -- and the subsidy dollars -- with the school at harvest.
In Champaign, Ill., developer Clint Atkins has bought up about 10, 000 acres in three counties. He hires farmers to tend the ground and collects his share of the subsidies on the resulting crop -- about $266, 000 in farm program payments last year.
Atkins, who built a real estate empire by turning farmland around Champaign into houses, factories and shopping centers, declined to directly answer questions about the subsidies. But his farm property manager, Jim Goss, said his boss' wealth should not disqualify him.
" He' s not owning it for the joy of ownership, " Goss said. " Farming is a business. It' s an investment just like a CD or the stock market."
In Shawneetown, Ill. Stephen Scates and his kin have amassed a 10, 000-acre spread. They got $951, 000 in subsidies last year, the second-most in Illinois. But Scates said the size of the payment, and his farm, is misleading because it supports 13 families.
" As a partnership, we would be near the top, but I have four brothers, two sons and seven nephews involved in farming this land, " Scates said.
The House Agriculture Committee already has endorsed a package that funnels more money into the existing system and adds some new subsidies, but critics say it does not curb payments to mega-farms or the rich.
Agriculture Secretary Ann Veneman has said only that the Bush Administration will offer Congress guidelines for " ensuring a strong income safety net, pursuing a more market-oriented U.S. farm policy and opening up new trade opportunities abroad."
