Local farms dip into federal subsidies

Posted by Christine, November 27, 2011

Jonah Owen Lamb of the San Luis Obispo Tribune takes a look at local farms that collect federal subsidies, see below. The newspaper editorialized about the issue the following week. The report is welcome, now that we have a chance to spend time examining the Farm Bill, which had been shrouded in secrecy during SuperCommittee negotiations. “The secret farm bill hammered out between the chairmen of the congressional agriculture committees faces stiff opposition and possible doom in the aftermath of the collapse of the supercommittee this week,” blogged Erik Wasson in On the Money, The Hill’s Finance and Economy Blog.

Food+Tech Connect posted its picks for the first 6 Farm Bill Media Sensations of 2011.

Lamb’s story:

An annual check in the mail is more of a sure bet than the winter rains for some farmers in San Luis Obispo County.

Take one farm in Shandon, which pocketed 17 percent of the $761,000 in federal farm subsidies distributed in San Luis Obispo County in 2010. Over the past 15 years that same farm, White Ranch Co., received more federal subsidies than any other agricultural operation in the county — $3.6 million. More than $2 million of that came from growing — or not growing — wheat and barley, a Tribune review of Farm Service Agency records found.

White Ranch owners, who did not reply to numerous requests for comment, are part of a small group of farmers in the county who collect the lion’s share of agricultural subsidies.

Over the past 15 years, $125 million in subsidies have been paid out to San Luis Obispo County farmers, yet only 10 percent of the county’s farmers got the lion’s share of that money — 68 percent.

More than half of those recipients made it to the top of the list by cashing in on commodity subsidies, a program most farmers in the county cannot participate in.

The subsidies are part of the nation’s massive farm bill — $307 billion in 2008 — that’s passed every five years by Congress and which effectively drives the nation’s agricultural policy.

The bill includes subsidies for commodity crops, insurance and conservation programs, as well as disaster relief, rural development and research, among other things. Who gets the subsidies and why can impact everything from the price of food to what is grown and which farmers prosper.

Local growers, like others in California, believe the bill favors farms, primarily those in the Midwest, that grow wheat, barley and other grain commodities such as corn and oats.

Because local agricultural producers grow more specialty crops — from wine grapes to lettuces to strawberries — they don’t qualify for as many subsidies. Many of the roughly 2,700 farms in the county receive few, if any, subsidies.

“We don’t have crop subsidies. It’s a totally free-market situation,” said Richard Quandt, president of the Grower-Shipper Association of San Luis Obispo and Santa Barbara counties. “I don’t know anything about subsidies, since we don’t have them.”

Tom Ikeda, a South County vegetable grower, agreed.

“We probably get a lot less benefit out of it (farm subsidies) than Midwestern farmers,” he said. Because there is such a large congressional contingency from the big corn and wheat states, he said, California growers enjoy few of the farm bill’s benefits. While there are grant programs for specialty growers such as Ikeda, they do not get the kind of aid commodity growers receive.

Jackie Crabb, executive director of the county’s Farm Bureau, said the commodity program is controversial precisely because it goes only to farmers who grow grains like wheat, oats and barley.

A report on farming subsidies in California by the Environmental Working Group, a liberal organization critical of big ag, was unequivocal in its critique of the status quo. It said that federal farm subsidies are “out of step” with the state’s agricultural economy. The current system, the report noted, benefits a few big farmers who grow mostly thirsty, chemical-dependent crops.

Jennifer Andersen, San Luis Obispo County’s executive director of the Farm Service Agency, the federal program that administers most agricultural subsidies, contends that the system works as it should. “I don’t think it’s ill-fitting,” she said. The farms benefiting from subsidies are getting what they should receive under the law, she said. It might sound like a small group of farmers are receiving payments for commodities they may not be growing, she said, but in general, the county’s top earners are actively ranching and growing. “They are using the program as it was designed.”

The programs

Subsidies in San Luis Obispo County fall under four areas: conservation, commodity, disaster and livestock. All of the data for each farm is self-reported.

But specific information on each farm could not be obtained because almost all of the data on subsidy recipients are not public. The 2008 farm bill included a provision that kept all data, except for names and the amounts paid for each program, from public scrutiny. Before that, such information had been public.

Here’s a closer look at each program:

Conservation

The largest program, in terms of a dollar amount, has paid out more than $41 million since 1995 to 393 San Luis Obispo County farms. There are a total of 2,784 farms in the county, according to the USDA’s 2007 agricultural census. Open to all farmers, the program is meant to encourage growers to stop farming on environmentally sensitive land, according to Andersen.

Under the largest of these programs, farmers get paid a certain amount per acre, ranging from $14 to $50 depending on the kind of soil and other variables. There are more than 65,000 acres under these contracts in the county.

The Williamson Act is a similar program administered by the state.

The county’s top recipient of such aid was Lacey Livestock in Paso Robles, which has received more than $1.9 million since 1995, according to data.

Dee Lacey, one of the owners of Lacey Livestock, said they received those conservation subsidies more than 10 years ago for setting aside about 4,000 or 5,000 acres in the east side of the county. They have since sold that property. At the time they got the subsidy, they were part of a large group of ranchers and farmers in the county who participated in the program.

“This county really participated in it really strongly.”

Disaster aid

The second largest group of programs in terms of dollars, and the largest for participants — more than 1,000 farms — is disaster relief. From 1995 to 2010, the Farm Service Agency gave more than $38 million to 1,016 San Luis Obispo County farmers whose crops were damaged by extreme weather, among other things.

Since 1995, the county’s top recipient from this program was Servando Eguiluz of Arroyo Grande, who received more than $900,000, according to the data. No further information is known about the reasons for the aid or what losses were incurred. Eguiluz did not respond to requests for comment.

Commodity subsidies

Commodity subsidies, which only apply to wheat, barley and oat growers in San Luis Obispo County, have paid out more than $17 million to 650 local growers since 1995.

These specific subsidies are meant to stabilize prices of such commodities as wheat and barley.

There are essentially two kinds of payment — direct payments and price support. Direct payments are those made to longtime growers of commodities whether they actually grow commodities in any given year or not. Price support pays growers the difference when crop prices sink below a certain level. These programs were set up to protect farmers from market fluctuations and keep a stable supply of commodities.

Since 1995, 10 percent of participants in commodity subsidy programs in San Luis Obispo County received 77 percent of those subsidies, according to the data. More than half of the $17 million in commodity subsidies in the past 15 years went to 20 farms in the county.

Livestock subsidies

The smallest subsidy program is livestock, which accounts for more than $4 million from 1995 to 2010.

The largest recipient since 1995 in the county has been the Twisselman Grain and Cattle company in Shandon, which received more than $300,000. No further information on this subsidy recipient was available to the public. The owners of the company did not reply to numerous requests for comment.

Double dipping?

The top recipients in the county take advantage of all of these programs, according to the data. For instance, the second highest recipient of subsidies since 1995 was listed as the Shandon-based Twisselman/Clark farm, which has overlapping ownership with Twisselman Grain and Cattle. (The Tribune made repeated requests for comment.) Since 1995, the farm was paid out more than $1.8 million in subsidies, including nearly $1.2 million for commodity subsidies. The rest came in the form of conservation and disaster relief. No further information is available about the details of these subsidies.

In the end, whether the system is “fair” or not, said Val Dolcini, California’s executive director of the FSA, is not for his agency to say.

These federal programs are run in the manner they were designed to by Congress, he said. The FSA just implements those policies, he added, which do indeed help all farmers manage the natural and economic risks inherent in farming.

Top 10 overall San Luis Obispo County subsidy recipients, 1995-2010

• White Ranch Co. $3.6 million

• Kuhnle & Sons $1.9 million

• Lacey Livestock $1.9 million

• KW Ranch $1.7 million

• Johansing Farms $1.3 million

• LY7 Co. $1.3 million

• Robert K. Morrison $1.07 million

• Dianne Morrison $1.02 million

• Kenneth S. Eng Jr. $1.01 million

• Michael Strous $1 million

Note on sourcing: Data is from a 15-year database compiled from federal sources by the Environmental Working Group, a nonprofit environmental and consumer research organization. For more details on the database and individual farms, go to http://farm.ewg.org/region.php?fips=06079.

By the numbers: Federal subsidies given to California farmers from 1995-2010

$9.65 billion Total subsidies given to California farmers

91% Percent of farmers who collected no subsidy payments

1,196 Number of farmers who received conservation subsidies

8,882 Number of farmers who received subsidy payments for barley

16,039 Number of farmers who received subsidy payments for wheat

27,001 Number of farmers who received disaster relief