Far From Dead, Subsidies Fuel Big Farms
By Elizabeth Becker
May 14, 2001
DALHART, Tex. — By any measure, Lanny Bezner is a successful family farmer. His eldest son, John, rides herd over his cattle, spread out on pastureland from here to nearby New Mexico. A younger son, Brian, looks after the farm's heavily irrigated cornfields, with help from the husband of Mr. Bezner's daughter, Virginia. As a Texas patriarch, Mr. Bezner rigorously sticks to the principle that economy of scale is the only way to survive in modern farming. The bigger the farm, the better likelihood of turning a profit, he says.
By buying adjacent fields, he has expanded his cropland from its original 700 acres to more than 8,000. In five years he has doubled his grazing land by leasing 90,000 acres of pasture. He owns a fleet of tractors and heavy farm equipment; he fills their tanks with fuel from his own gas pumps. He dries and stores his harvest in his own imposing grain elevators, which hold more than a million bushels of corn.
Surveying the farm that he carved out in the Panhandle landscape of dry mesquite and sagebrush, Mr. Bezner says the key to his family's prosperity is federal farm subsidies.
"We're successful primarily because of government help," said Mr. Bezner, 59, an entomologist who grew up on a farm outside Amarillo.
Although Mr. Bezner hesitated to discuss the size of those subsidies (and refused to divulge how much he makes without federal help, or what his expenses are), government documents show that in the last four years of the 1990's, he received $1.38 million in direct federal payments.
Most remarkably, Mr. Bezner and the other big farmers here in Hartley County and across the country received those record-breaking payments in an era when farm subsidies were slated for extinction.
Under the Freedom to Farm Act of 1996, swept up in the language of the Republican revolution under Speaker Newt Gingrich, farmers who planted row crops — corn, wheat, soybeans, rice or cotton — were freed from government production controls. In exchange for being able to plant what they wanted, they were told, they would have their subsidies gradually phased out.
While farmers embraced their new freedom to decide what to plant, they balked at accepting the rigors of the free market. When prices for their crops held stagnant and their costs rose, farmers lobbied Congress for "emergency" payments.
Their friends in Congress relented. Instead of diminishing, the subsidies have nearly tripled with steep emergency payments that reached $22 billion last year, according to Keith Collins, the top economist at the Agriculture Department.
Supporters of farm subsidies, which were enacted in the Depression, argue that they are needed to save the family farm. But government documents indicate that the prime beneficiaries hardly fit the image of small, hardscrabble farmers. Because eligibility is based on acreage planted with subsidized crops in the past, the farmers who have the biggest spreads benefit the most, according to the Environmental Working Group, a nonprofit advocacy organization that obtained government records of farm subsidies through the Freedom of Information Act.
"The data shows that government subsidies are tilting the playing field in favor of the largest farms," said Clark Williams-Derry, the senior analyst at the Environmental Working Group who created a national database of subsidies.
Mr. Bezner, who saw his direct federal payments balloon from $164,621 in 1996 to $741,839 in 1999, is one of the elite 10 percent of American farmers who receive 61 percent of the billions of dollars the program distributes. The subsidies have been a chief source of capital for large operators to expand their holdings, often by buying out their smaller neighbors.
And unlike other federal entitlement programs, farm subsidies have no requirements of income, assets or debts.
Friends in High Places
As Congress considers reauthorizing the Freedom to Farm Act, lawmakers have already made one fundamental decision: they will keep the subsidies. The phaseouts are a thing of the past.
The cost, and the fact that the money goes mostly to a select few, will be at the crux of the debate over how to reshape subsidies.
"The cost of this program is astonishing," Mr. Collins said. "Any person engaged in small business in America would be amazed looking at this. Their jaws would drop at the money farmers receive."
Mr. Bezner makes no apologies for accepting the money. To his mind, government subsidies help the American consumer by making sure grocery stores are stocked with inexpensive food.
"That government money is keeping cheap cereal on the shelves in New York City," he said.
And no one expects farmers to lose their subsidies — not with the friends they have in Congress.
The top leaders of both parties represent farm states that rely on subsidies. In the Senate, the majority leader is from Mississippi and the minority leader from South Dakota. In the House, the speaker is from Illinois and the minority leader from Missouri. The relevant committees are headed by representatives from farm states; the chairman of the House Agriculture Committee is Representative Larry Combest, a Republican who represents Mr. Bezner's district in the northern plains of Texas.
"Look at the Nasdaq: those companies are going out of business and we don't open up the Treasury to them," Mr. Collins said. "But Congress chose not to let farmers bear that kind of pain."
Like their counterparts in Hartley County, large farmers around the country have complained to Congress that Freedom to Farm is not working because their crops are selling at the same low prices their grandfathers' crops fetched 40 years ago.
When lawmakers passed the act in 1996, they approved generous subsidies for the first two years in order to give farmers a cushion to prepare for their independence. But when the world market pushed prices down, farmers asked for emergency payments.
In 1998, Congress approved additional money, adding 50 percent to the core subsidy payments. In 1999 and 2000, the lawmakers doubled the core payments. This month, with the strong backing of the White House, Congress added $5.5 billion to next year's budget blueprint to cover potential emergencies.
The concentration of payments will remain the same: the wheat-growing plains states from the Texas Panhandle through North Dakota; the Corn Belt across the Midwest; and the rice and cotton states of the Mississippi Valley from Missouri through Louisiana.
While there are other subsidy programs, like those for dairy farmers and sugar producers, the row-crop payments are by far the biggest. Ranchers, and farmers who produce fruits and vegetables, receive virtually nothing from this program.
Representative Combest said he had concluded that the subsidy system should remain intact. His one minor proposal is to cut subsidies when farmers receive higher prices for their crops — what he calls a "countercyclical" approach.
Who Benefits?
Even though President Bush has promised to eliminate what he calls corporate welfare, Mr. Combest and some Republican leaders see no contradiction between the farm payments and Republican free-market orthodoxy. They contend that the subsidy is meant to help the consumer, not the farmer.
"The consuming public has been the beneficiary of this program that gives money to farmers to produce low-price commodities," Mr. Combest said in an interview. "We don't want to become as dependent on foreign food as foreign oil."
Those emotional appeals fall flat with his counterpart, Senator Richard G. Lugar, the Republican from Indiana who is chairman of the Senate Agriculture Committee.
"Let's not make a mistake that these subsidies are pro-consumer; they are pro-producer," Senator Lugar said in an interview. "There would be extraordinarily adequate supplies of food in America if you had no control and no subsidies."
Senator Lugar said he wanted a revised farm policy to provide more money to conserve land, improve rural communities and help farmers who are not doing well.
He also said he was under no illusion about the effect of the multibillion-dollar payments.
"The rhetoric of failing farms doesn't always match the reality, because large commercial farmers are doing well with their subsidies; their land values have gone up and so have land rents," Mr. Lugar said.
Eight percent of the country's farms produce 72 percent of the country's harvest. Most of the rest of the two million American farmers earn their incomes from jobs off the land.
Instead, Senator Lugar said, these crop subsidies are a direct transfer of taxpayers' money to rural landowners. "Is the American public willing to spend money each year and every year providing a transfer payment from the taxpayers to the agricultural sector?" he asked. "And how much — 5 billion, 10 billion, 15 billion?"
What no lawmaker is expected to do is ask farmers to prove they need the subsidies.
"This is not meant to be a welfare program, and it won't be — not if I have anything to do with it," Representative Combest said.
Agriculture economists say such an argument misses the point. "In our food stamp program we means-test the working poor with strict requirements, but we ask nothing of farmers," said Mr. Collins, the Agriculture Department economist, who called the subsidies "an income supplement from the government."
Where the Money Goes
Even in Mr. Combest's Congressional district, where federal subsidies make up more than one-third of the total farm income, Hartley County holds a special place. The top 10 percent of the county's subsidy recipients were paid an average $396,131 from 1996 to 1999 — more than double the national average.
And in the pecking order, Lanny Bezner ranks third. Two other Hartley County farmers received more money: John Cover, whose subsidies totaled $2.3 million over that period, and Carl Kupyer, who received $1.9 million.
With subsidies of that size, those families rank among the top 10 recipients in Texas and the top 100 in the country.
Yet the Kupyer family considers the subsidies barely large enough to keep it in business, according to J. C. Kupyer, who works with his father, Carl.
"We do make a living as farmers," J. C. Kupyer said. "But actually it would be hard to farm without subsidies."
For three generations the Kupyers have been adding to their property, building their farm from less than 700 acres to a 16,000-acre spread that they now own free and clear. Yet with spiraling energy costs, Mr. Kupyer said, the family would sell the farm if someone offered to buy it. Mr. Cover refused to discuss his subsidies.
Andy Michael, the Hartley County commissioner and a rancher, said he discounted many complaints from big farmers like Mr. Kupyer. In his view, farmers complain to cover up how much money they are receiving from the government.
"The farmers are very closemouthed about getting help from the government — they never, never talk about it," Mr. Michael said. "Farmers work the system. There's no system for us to work."
In the last five years, he said, the classic divide between farmers and ranchers, exploited in generations of cowboy movies, has gotten worse, because farmers are receiving bigger subsidy checks while ranchers get nothing.
"Any time I'm around farmers they say farming doesn't pay, but then they go out and buy those $150,000 tractors with their government checks," Mr. Michael said. "When times are tough for us, the rancher just tightens his belt."
Business is good for Mr. Michael and many other farmers and ranchers in Dalhart, a town of more than 7,000 people midway between Dallas and Denver. Local farm equipment dealers report that despite the downturn in crop prices, their sales of tractors and other equipment are among the best in the country.
At the John Deere dealership, farmers have spent $13 million to $21 million on agricultural equipment every year since Freedom to Farm was enacted. "This is one of Deere's strongest markets," said Mark Miller, finance manager at the Dalhart dealership.
Ralph Link is a Hartley County farmer who cannot afford new tractors. He works his 845-acre spread himself with used equipment and received $173,787 in subsidies the first four years of Freedom to Farm. But unlike his neighbors with larger farms, Mr. Link has nothing but praise for the prosperity that comes with federal checks. With his new freedom, Mr. Link has been able to take advantage of the region's shift toward agribusiness and plant all his cropland in corn, selling it to one of the huge cattle feedlots.
In bad times, he says, the checks provide a safety net. In good times, like the current season, the subsidies will provide him with a good profit — this season, he says, it will be 18 percent.
"The government payments are bigger since Freedom to Farm, so I don't understand why you wouldn't like it," Mr. Link said. "Things couldn't be better."
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