How farm subsidy checks end up in big cities
City Slickers: Chapter 4. Conclusions and Recommendations
Massive and widespread cash payments to absentee interests in cities are just one of many indications that America's Federal farm subsidy programs are out of date--and badly out of control.
Absentee landowners, distant corporations and farflung investors are able to draw substantial government agriculture subsidies, though they may reside in a big city hundreds or even thousands of miles from the farm and never set foot on that farm for years on end. As a practical matter, almost anyone can qualify for Federal agriculture subsidies. You don't have to farm the land, you don't have to live anywhere near the land, you don't even have to visit from time to time. You don't have to be related to the farmer or to anyone else who has an interest in the farm. And wealthy, absentee farm owners who are most likely to run afoul of payment limits or other rules have ready access to legal advice that can help them maximize their government payments--advice provided by the government itself.
Absentee ownership and interest take many forms.
Not all big-city residents receiving farm subsidy checks are necessarily absentee owners or interests--though they certainly could be, given USDA's permissive programmatic definition of who can be considered a "person" who is "actively engaged" in farming, and the department's very limited oversight of program participants. For example, some city residents no doubt commute with some frequency to nearby farms that they own or operate, especially during peak workload periods. Other recipients may be "actively engaged" in the operation of the farm from afar by making frequent and important management decisions. In those cases, USDA's rules and regulations are being honored in the spirit and letter. But even then the question still begs to be asked: Why are taxpayers involved in this arrangement?
This report does not examine the many manifestations of absentee ownership or interests that are much more common. A small-town doctor, lawyer, accountant, college professor, farm real estate agent or small businessman might inherit eligible farmland, buy it as an investment, or rent it to a farmer in the county. In this manner, non-farmers could receive most or all of the USDA payments while also reaping the longer-term boost those payments give to land values. A group of farmland investors may shop around for land under 10-year Conservation Reserve Program (CRP) contracts and collect the payments. A farmer's widow, brother, daughter or son might move to a small or mid-size town nearby or a few counties distant, and still receive a share of USDA farm, disaster or conservation payments from the farm they've left behind. Or a relative or landowner may actually live part-time or full-time on the farm that he or she owns only in part, but have no physical or managerial involvement with the farming of the land by the renting tenant. Any such individual could meet USDA's test of being "actively engaged" in farming with no difficulty.
Some of the above examples certainly seem more reasonable than others, but all underscore a fundamental problem with America's Depression-era farm programs: they mostly reward the ownership of land, not the farming of it, and reward most those who own the most, not those most in need.
A major overhaul of America's 60-year-old Federal farm subsidy programs is long overdue.
The fact that these programs transfer massive government subsidy payments to recipients in big cities, as we document in City Slickers, is just one more compelling reason why the 1995 Farm Bill must not result in business as usual.
A "bottom up" review of Federal farm programs, of the sort initiated by Senate Agriculture Committee Chairman Richard Lugar, is very much in order. We believe that three broad objectives should guide Congress as it begins the 1995 Farm Bill debate.
- First, Congress should directly and firmly address the issue of taxpayer support for large "paper" farms, corporate producers, and absentee owners who can and do earn much of their living elsewhere. If taxpayers are expected to maintain an income safety net for agriculture, assistance should be limited to reasonable levels that would help a small family business, not enrich big agribusiness.
- Second, Congress should fundamentally change priorities for taxpayer investments in agriculture and rural communities, so that spending reflects contemporary needs, not the needs of 1933. The 1995 Farm Bill presents an unprecedented opportunity for taxpayers to invest in programs that get pesticides out of their food and tapwater, that protect rivers, lakes, land, and wildlife. Instead of voting to weaken environmental safeguards, Congress should provide farmers assistance to meet or exceed environmental standards, and protect their land at the same time.
- Finally, if Congress adopts a broad risk-assessment bill with cost-benefit provisions that override public health or environmental laws, the same rigorous procedures should be strictly applied to all agricultural assistance programs. No farm, export, or crop insurance subsidies should be provided until the environmental and economic risks of those subsidies have been clearly identified, and least-cost alternatives, such as block granting farm program funds to the states, have been thoroughly considered. Similarly, if Congress enacts broad "takings" legislation that will result in compensation to farmland owners whose property values are in any way diminished by Federal environmental laws, Congress should protect taxpayers from paying twice. Federal law should eliminate Federal farm subsidy payments that inflate the price of farmland and thus boost the potential taxpayer exposure to "takings" compensation claims.