Ag producers reap federal farm subsidy payments

GROVER – Out on this nearly treeless landscape in far north Weld County near the Wyoming line, the Loyd family grows corn, alfalfa, wheat, dry beans, oats and barley on more than 20,000 acres.

Dan Loyd and his parents, brothers and sister all share in the work on a farm that his grandfather established decades ago. That modest farm outside the tiny town of Grover – population 153 – has grown into a giant operation that now supports six households, according to Loyd.

But they didn’t do it without a lot of help from the federal government and the U.S. taxpayer.

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According to U.S. Department of Agriculture records gathered by the Environmental Working Group, a Washington D.C.-based watchdog organization, Loyd Farms collected $393,806 in federal subsidies in 2005, the latest year for which data is available. Over the last decade – from 1995 through 2005 – Loyd Farms has banked subsidy checks amounting to more than $2.7 million.

Loyd grows a little defensive when asked about subsidies paid to such a large operation. “What’s wrong with that? Why should we be penalized because we have a large number of acres?”

Loyd defends federal subsidies as essential to the survivability of agriculture in an America that wants cheap food at the supermarket.

“Farm (commodity) prices have been generally under the cost of production for the last 20 years,” he said. “Without the programs, all the farms in America would have gone to heck, and it keeps the cost of food from going up.”

Loyd maintains that the sale of his crops alone would not cover his expenses, even in good years. “We’ve been getting subsidy payments for more than 50 years, just like other farmers. It’s part of the cheap food policy that America wants.”

Even though the family also owns two Taco Del Mar restaurants in Fort Collins, Loyd insists it’s the government subsidies that enable them to make ends meet. “It’s the only way it works for us because we’re a large family,” he said. “Those subsidies are not profits for us, merely a way to survive.”

Subsidies created in the Depression

Loyd Farms certainly isn’t alone in its reliance on federal subsidy payments. Last year, 3.2 million recipients nationwide received more than $21 billion in subsidies for commodity supports, disaster aid and land conservation programs.

The payments go back to the Depression days of the 1930s, when farmers and ranchers literally were fighting to survive every year. Congress created a series of subsidy programs over the years to make sure farms could stay afloat in years of bad weather and poor food prices.

The programs also helped ensure that American consumers would have access to affordable food by keeping the price of commodities such as corn, wheat and rice low while making sure growers had enough income each year to stay in business.

But the programs have grown bloated and wasteful, some critics say, resulting in the wealthiest operators receiving the most subsidies and little paid out to small and medium-sized farms and ranches.

A survey conducted in 2004 by the USDA’s Economic Research Service found about 82 percent of the largest farms in America – those with 2,000 acres or more – received government payments that year compared to less than 20 percent of the smallest farms -those with 100 acres or less.

In addition, the survey found about 62 percent of the farms with sales of $1 million or more received subsidies while less than 24 percent of the smallest farms with sales of less than $10,000 received payments.

A series of articles written by the Washington Post in 2006 showed more than $1.3 billion in subsidies was paid out between 2000 and 2005 to individuals who do no farming at all. The Post series also discovered the programs were actually destroying the small family farm instead of protecting it because wealthy producers use the checks to buy land and drive up its price to the point where young farmers can’t afford to get started.

Not hard to get

Wayne Rieger is director of the Larimer and Weld county offices of Farm Service Agency, an arm of USDA charged with administering subsidy and farm loan programs.

Rieger said taking part in the subsidy programs is pretty easy.

“If you are an ag producer with an acreage or operation, you are entitled to payments,” he said. “Anybody who shares in the production of that crop, based on a historical planting of a crop, can come in and participate in (the commodities) program.”

Rieger acknowledges that farmers who grow certain crops or who have historically grown such crops automatically qualify for payments whether they plant that year or not. “There are payment limitations on the amount you can get, but it’s generally limited to $50,000 per year per person or corporation,” he said.

Rieger also notes that operations that make more than $2.5 million annually cannot qualify for payments. He defends the subsidies as “very crucial” to the survival of agriculture and the domestic food supply.

“Obviously, there’s a very large impact not only for the farms but for the community as well,” he said. “People say, ‘Why should they get these payments?’ But they need to realize it’s not just a farm subsidy. It’s for the stability of the food supply, and there are benefits from that.”

Ken Cook, president of EWG, said his watchdog group has been tracking and reporting on subsidy recipients in an effort to rein in the payment system. “We believe in the free market system and capitalism and all that, but at some point isn’t there some test that should apply and some point that you’re on your own?”

Cook said he finds it interesting “how out of touch some farmers are with the fact that in most occupations in life you don’t get a direct payment” if you have financial difficulty.

Cook said EWG believes subsidy reform “is long overdue” and that payments should be more focused on land conservation and rural development to provide jobs to rural residents “instead of making wealthy farmers even wealthier.”

He hopes the upcoming farm bill has more success than previous subsidy reform attempts partly because of Secretary of Agriculture Mike Johanns, a former governor of the farm state of Nebraska, who he as “very open-minded” toward reform. Cook also points toward the fact that other potential recipients of ag money – such as fruit and organic vegetable growers – are lining up for a limited amount of funds as another factor that might start weaning traditional receivers off the program.