The Washington Post | January 24, 2002 | John Lancaster, Washington Post Staff Writer
David B. Griffin is a man of undeniable means, a prominent and well-respected businessman who lives in a million-dollar home, sits on the local bank board and serves as president of a tractor dealership with sales last year of $ 30.8 million. He is also, by some definitions, a farmer -- the principal landlord of a 61,000-acre spread known as Tyler Farms.
But Griffin did not get where he is without government help. From 1996 through 2001, records show, Tyler Farms received more than $ 38 million in federal crop subsidies for its bountiful yield of cotton, rice, corn, sorghum, soybeans and wheat.
Griffin's story and others like it suggest that federal crop programs -- ostensibly aimed at struggling family farms -- do not always hit their intended targets. For all the congressional hand-wringing about the plight of the hardy souls who scrape their living from the soil, the hugely expensive New Deal-era subsidies for grain and cotton producers -- which Congress only six years ago voted to phase out altogether -- are funneling more money to fewer farms than ever before.
Numbers tell a story of unintended consequences: According to the Department of Agriculture, 47 percent of commodity payments now flow to large commercial operations with average household incomes of $ 135,000. These farms make up 8 percent of the nation's 2.2 million farms. Sixty percent of American farms get no crop subsidies.
"A lot of these payments, the majority of them, are going to big farms, and these big farms are wealthy farms," said Bruce L. Gardner, an agricultural economist at the University of Maryland and a former assistant secretary of agriculture in the first Bush administration. "This is not a poverty program in any way."
The skewed distribution of farm benefits is sure to receive more scrutiny when the Senate next month resumes debate on a bill to chart farm programs for the next decade. Embarrassed by revelations about the amount of money some farmers are reaping from federal farm programs -- information recently made available on the World Wide Web -- some lawmakers are calling for much lower limits on payments to individual recipients.
But new payment limits would address only one aspect of the "Alice in Wonderland" system that underpins much of the nation's farm economy -- a system that Congress thought it had junked six years ago in favor of the free market but that has since proved impossible to kill.
Established in 1933 as a rural antidote to the Depression, crop payments have mushroomed into a $ 21 billion-a-year entitlement program that almost everyone agrees is broken but that no one can agree how to fix. It is a system that reserves almost half of its benefits for just six states; lavishes subsidies on grain and cotton farmers while excluding most ranchers and growers of fruits and vegetables; and -- according to the USDA's own studies -- worsens the very problems it seeks to correct by encouraging overproduction, thereby depressing crop prices while driving up the cost of land.
Yet farm subsidies endure, underscoring the daunting challenge faced by those who would dismantle entitlements for groups with special stature on Capitol Hill -- in this case, mostly middle-class white men and their families.
Notwithstanding the return of budget deficits, to say nothing of its stated commitment to free trade, the Bush administration has bowed to congressional demands for $ 73 billion in new farm spending over the next decade. That is almost three times the $ 26 billion cost of the landmark education package President Bush signed into law this month. More than $ 40 billion would go for crop subsidies, with the rest reserved for conservation, nutrition and rural development.
"We kind of hit this farm thing with a sledgehammer just by throwing dollars out without really analyzing where the dollars are going," said Dan Glickman, who was agriculture secretary in the Clinton administration. "This is an area where an awful lot of members of Congress kind of view these programs as out of sight, out of mind."
Congress has been more aggressive when it comes to addressing other entitlement programs. In 1996, Congress passed -- and President Bill Clinton signed -- a massive revision of welfare that ended the six-decade-old cash-assistance program known as Aid to Families with Dependent Children.
The new law also trimmed food stamp benefits, which are funded under the farm bill.
During debate on the farm legislation in December, Sen. Richard G. Lugar (R-Ind.) proposed to double spending on food stamps by throwing out crop programs in favor of a much less costly voucher system that would help farmers buy crop insurance. Farm lobbyists rallied in opposition to Lugar's proposal, and it failed 70 to 30.
With prices for some crops at their lowest level in more than a decade, many farmers are in genuine distress, and even the harshest critics of farm programs acknowledge the need for some form of government safety net.
Farmers themselves are divided on the issue. Some, especially those on smaller acreage, want a reallocation of benefits. But owners of larger operations generally defend the current system. They say it is natural for big farms to claim the majority of subsidies, since they grow the most food with the greatest efficiency. They note that many foreign governments provide far more support to their farmers, creating barriers to American exports.
"No one would disagree that the largest farms are getting the bulk of the benefits," said Robert G. Serio, a colorful country lawyer in Clarendon, Ark., who makes his living setting up partnerships -- including Tyler Farms -- that allow farmers to maximize those benefits. "Are you going to penalize Wal-Mart for being bigger than the Family Dollar store? In America, everyone is rewarded, supposedly, for being bigger and more efficient."
Congress has been trying for more than a decade to wean farmers from the federal treasury. The effort peaked with the 1996 Freedom to Farm Act, which provided transitional payments to farmers with the aim of phasing out subsidies by this year.
But a combination of factors -- including worldwide recession and a global oversupply of food -- pushed crop prices lower, and Congress has rushed in to fill the breach with a series of "emergency" supplemental appropriations bills.
In 2000, crop subsidies reached a record high of $ 22 billion. That is nearly as much federal assistance in one year as Amtrak has gotten in the last quarter century. But in some respects, the farm subsidies have made matters worse, encouraging farmers to grow more crops without regard to market demand. Rice is a good example.
Citing weak global demand for rice, Congress has sharply increased direct assistance to the farmers who grow it. Rice subsidies rose from $ 448 million in 1997 to more than $ 1.3 billion in 2000, according to USDA's Economic Research Service. The normal response to soft markets would be to cut production. In this case, however, farmers have no incentive to do so because Congress has guaranteed a set price for every bushel of rice they grow.
As a result, the amount of American farmland devoted to rice swelled from 2.5 million acres in 1997 to 3.3 million acres last year -- the same year rice prices hit a 15-year low.
The Bush administration has sharply criticized farm programs, and Agriculture Secretary Ann M. Veneman last year initially expressed support for Lugar's far-reaching proposal. At the same time, the largest share of farm subsidies flows to the same midwestern and southern states that Bush won in the 2000 election. That limits the administration's political maneuvering room, especially with midterm elections looming in the fall.
The administration last year ultimately threw its support behind an alternative farm bill offered by Sens. Pat Roberts (R-Kan.) and Thad Cochran (R-Miss.). Among other things, the measure would establish 401(k)-style savings accounts for all farmers -- not just those who participate in commodity programs -- with matching government contributions of as much as $ 10,000 a year.
But the GOP bill is not the radical departure some had hoped for. It preserves most major subsidy programs, including one that pays farmers a set amount based on historical production, even if they let their fields lie fallow.
Farm groups hold enormous sway on Capitol Hill; the largest and most influential, the American Farm Bureau Federation, spent $ 3.2 million on lobbying in 2000, according to a federal disclosure report. Moreover, many key leadership positions in Congress are occupied by farm-state lawmakers, such as House Speaker J. Dennis Hastert (R-Ill.) and Senate Majority Leader Thomas A. Daschle (D-S.D.).
The politics of farm subsidies was much in evidence in December, when a bipartisan group of senators led by Byron L. Dorgan (D-N.D.) and Charles E. Grassley (R-Iowa) floated a proposal to reduce the ceiling on annual crop payments to individual farmers from $ 460,000 to $ 275,000. The measure has considerable support among farmers of more modest means, many of whom are in the upper Midwest. It is bitterly opposed by owners of large cotton and rice farms in southern states such as Arkansas. Both Arkansas senators -- Blanche Lincoln (D) and Tim Hutchinson (R) -- share that opposition.
After Daschle came under pressure from Lincoln and other southern lawmakers, the majority leader prevailed upon Dorgan to drop his sponsorship of the amendment, if not his support for the idea. Aides from both parties say they expect it to resurface next month.
The outcome of the debate is especially important to Arkansas, where the top 10 percent of subsidy recipients -- or 4,822 of the total -- received more than 73 percent of federal farm subsidies, with an average payment of more than $ 430,000 per recipient, according to an analysis of USDA data by the Environmental Working Group, a Washington nonprofit organization that wants more money shifted to conservation. The group has caused a stir in Congress by posting subsidy data -- including farmers' names and how much they receive -- on its Web site, ewg.org.
A number of the state's largest farms can be found in the fertile but economically depressed Mississippi Delta region of eastern Arkansas. Tyler Farms is headquartered in Phillips County, which borders the Mississippi River about 80 miles east of Little Rock.
From 1996 to 2000, the county of about 26,000 people received more than $ 101 million in federal farm subsidies, according to the environmental group's analysis. Farm groups say such subsidies help sustain rural communities. But the picture in Phillips County is anything but prosperous.
According to Arkansas state figures, 8,319 county residents -- 31.5 percent of the population -- received food stamps in December 2001.
Griffin is one of the county's biggest private employers. His other interests include Producers Tractors Co. (which operates five John Deere dealerships), a cotton-gin company and a petroleum distributorship, according to Dun & Bradstreet and his attorney. Griffin lives just south of Elaine, a tiny crossroads town in an ocean of flat cultivated fields, in a 13,233-square-foot mansion on 15 acres with an estimated market value of $ 964,750, according to county records.
Griffin did not respond to several requests for interviews, but Serio, his lawyer, said it was wrong to assume that Griffin owed his success to government subsidies. He emphasized that Griffin merely leases his land to Tyler Farms -- a complex partnership involving 39 local investors -- and receives no direct government payments. Serio said Griffin owns 33,500 acres of the farm; his father owns 14,000; and the rest is leased from other landowners.
Griffin set up the farm in 1993 with landowners and local farmers "who were going out of business" because they could not get financing, Serio said.
Like other large operations, Tyler Farms was structured to get the most from government programs. Its 39 owners are organized into 66 separate "corporations," an arrangement that allows the farm to maximize benefits under allowable payment limits and also limits owners' liability, Serio said.
To qualify for federal payments, which are supposed to benefit family farmers, each of the owners is supposed to be "actively engaged in farming."
Serio said 22 of the owners perform management duties and therefore meet that requirement. Griffin puts his assets at risk, Serio said, by guaranteeing 40 percent of the farm's annual crop loan.
With crop prices so low, the lawyer said, "farms are getting bigger for the sake of survival."
Staff researcher Lynn Davis contributed to this report.The Washington Post:
