Double Dippers

How Big Ag Taps Into Taxpayers' Pockets - Twice

August 3, 2005

Double Dippers: Findings

We the people pay for the water, then pay again for part of the grain and cotton it yields because otherwise there would be too weak a market for them. A man from Mars to whom you tried to explain the system might not understand.

— "Watering the West," editorial, The Washington Post, March 14, 1988

At a time when the federal budget deficit has reached historic levels and California water is increasingly scarce and expensive, taxpayers are providing Central Valley farms with crop and water subsidies that together are worth hundreds of millions of dollars a year, according to an Environmental Working Group investigation that calculated for the first time the cost of providing these inherently conflicting subsidies to 6,800 farms in the Central Valley Project.

These "double dippers" not only get federal irrigation water delivered at cut-rate prices. They then turn around and get cash payments from the government for growing subsidized crops they have irrigated with highly subsidized water. EWG's analysis shows that more than one-quarter of all farms in the CVP got double subsidies for at least one year between the period of 1995 and 2004. In some cases these subsidies totaled millions of dollars.

Previously, EWG calculated that CVP farms received $416 million worth of water subsidies in 2002. † [3] For our new analysis we matched farm names and addresses of CVP water subsidy recipients with names in EWG's nationwide crop subsidy database, which compiles USDA records of cash payments made to farmers since 1995. We were then able to identify the more than 1,200 farms in the CVP that got both water and crop subsidies during 2002, and the more than 1,800 farms that received water subsidies in 2002 and crop subsidies for at least one year between 1995 and 2004.

† Based on studies by the Bureau of Reclamation and the state Department of Water Resources of the projected cost of water from proposed new dams on the San Joaquin River. The actual cost of this water could be twice as high as estimated.

EWG found:

  • In 2002, 18 percent of farms in the CVP got both crop and water subsidies. These 1,228 farms received water subsidies worth $121.5 million and crop subsidy checks totaling another $122.3 million. Combined, the average subsidy payment was almost $200,000 per farm.
  • The pot of gold grows larger when you consider the farms that got water subsidies in 2002 and got crop subsidies for at least one year between 1995 and 2004, as did 27 percent of all CVP farms. These 1,864 farms received more than $152 million worth of water subsidies in 2002. From 1995 to 2004 they also received crop subsidy checks totaling over $891 million. Their total take from federal farm subsidies during this period is at least $1 billion and most likely exceeds $2 billion.

The distribution of crop and water subsidies within the CVP is highly uneven. EWG previously found that the top 10 percent of CVP farms, in terms of total water use, got 67 percent of all the irrigation water delivered by the Project in 2002. Crop subsidies to CVP farmers are almost as unevenly concentrated.

  • For the farms that got double subsidies in 2002, 47 percent of the crop payments went to just 10 percent of the farms. The checks going to these 123 farms averaged more than $468,000 each. The top five percent, or 61 farms, accounted for 31 percent of the crop subsidies in the CVP in 2002, for an average payment worth almost $628,000. The top 25 farms accounted for 18 percent of the total, with the average check reaching $884,874.
  • For the farms that got water subsidies in 2002 and crop subsidies for at least one year between 1995 and 2004, the concentration figures were even more skewed. Ten percent of the farms accounted for 51 percent of all of the crop subsidies, with the average payment per farm for this 10-year period totaling more than $2.4 million. The top five percent, or 93 farms, got 34 percent of the subsidies; their subsidy checks were worth more than $3 million on average. The top 25 farms got 14 percent of total crop subsidies, receiving an average of $5 million each between 1995 and 2004.

To put these figures into perspective, in 2002 the average crop subsidy payment nationwide was $18,321. The average payment to CVP farmers that year was $99,614, more than five times as much. Still, this figure is probably an underestimate. Since EWG matched up water and crop subsidy recipients by comparing names and addresses, discrepancies between either of these two fields would lead to undercounting.

For example, Hansen Ranches — the third largest double dipper that we identified — is listed as only receiving $1,500 in water subsidies in 2002. Yet in our water subsidies database there is also an entry for "Hansen Ranches/Eric, Phil," that got $210,000 worth of subsidized water that year. Both of these farms had the same contact person listed on their pesticide use permit in 2002: Eric Hansen. Although they are almost certainly the same farm, we chose to be conservative and identify only the first farm as a double dipper. In all cases, we considered to be double dippers only those farms with matches in the name and address fields of our farm subsidies database and our water subsidies database. Our figures should therefore be considered underestimates.

In terms of the total crop and water subsidies that went to double dippers in 2002, 41 percent of the $244 million in subsidies went to ten percent of the farms. The average take for these 123 farms was $810,000 — more than four times the already substantial average combined subsidy of $199,000. The top five percent of farms accounted for 27 percent of the total combined subsidy, and the top 25 farms got 15 percent of the crop and water subsidies in 2002.