The $3.9-billion drought-relief program of 1988, hailed as the salvation of small farms devastated by a prolonged dry spell, became much more than that. It was an election-year windfall for thousands of farmers who collected millions of dollars in compensation for normal quirks of nature.
An Associated Press study conducted over seven months found that the drought-relief program paid cash to farmers for everything from hail-damaged kiwi fruit in California to heat-stressed radicchio in Massachusetts, from water-logged tomatoes in New Jersey to washed-out bird-seed crops in Colorado.
The payments went far beyond the legislation’s intent--to save Midwestern grain farms from bankruptcy. It was an effort--supported by almost everyone--that simply grew and grew and grew.
At each step in the legislative process, the program was broadened. Congress began with a bill to aid drought victims. The lawmakers added hail damage to the relief categories, then flood losses.
Next came “heat,” added by the Agriculture Department.
By the time the checks were being written at the county level, farmers elected to administer federal agriculture programs locally were approving claims for common problems such as insects, sand, wind, cold and fungus, even “ineffective herbicide.”
None of those conditions should have been eligible, administrators in Washington say. Nothing in federal procedures, however, requires paper work to be forwarded to higher officials for routine approval or checking.
By the end of October, about a quarter of all U.S. farmers had collected on damage to most of 506 eligible crops and just about any kind of weather in 49 states. The taxpayers’ tab ran to $3.9 billion.
“We lucked out last year on account of the boys up north,” said Travis Turnipseed, a Levelland, Tex., cotton farmer whose crops have been hit by hail in 23 of the last 28 years. He collected cash for hail damage the first time in 1988.
Loose regulations and lax enforcement of them were the major reasons for the government generosity, the AP found by examining federal records in 14 states through the Freedom of Information Act.
The politics of 1988 and the media attention the drought received--a steady bombardment of print and electronic images of shriveled cornstalks and dusty fields--were factors in the swift passage of the nation’s largest disaster relief measure to date.
“Being an election year, there were a lot of concessions to farmers,” said Dan Otto, a professor at Iowa State University. "(Politicians) were trying to get recognized as a friend of agriculture.”
In the end, drought relief meant a one-time bonus for thousands of farmers in parts of the country that in 1988 generally enjoyed good harvests that fetched high prices and wouldn’t have qualified as disaster areas. These included parts of California, Arizona, New Mexico, Texas, Oklahoma, Maryland and New Jersey.
Although some producers appeared to have been ineligible--some had more than the maximum annual income allowed, for example--their requests for aid were approved anyway. Most farmers simply took advantage of a generous program. As tough as farming is, they’d be fools not to take what was offered, they said.
“It was there, so I took it,” said Melvin Przilas, a wheat and corn farmer in the Texas Panhandle who collected $2,254 because hail and Russian wheat aphids damaged crops on his 1,265-acre irrigated farm, which grosses between $300,000 and $400,000 a year.
Government officials say they did the best they could with a rushed program. Loopholes were narrowed the a smaller, $1-billion drought-relief program that was passed this year.
“Some farmers just got grandfathered in, that’s true,” said Dan Shaw, deputy administrator of the Agricultural Stabilization and Conservation Service, which administers payment programs for the Agriculture Department. “What percentage, we don’t know, but that is part of the beast, I guess, that was created. Whenever you do this for the whole nation, there are some people that luck out.”
Some farmers did better than just luck out. They profited from “triple-dipping,” by collecting on crop insurance as well as drought aid for damaged crops, then re-planting for a successful harvest--all perfectly legal under the 1988 program.
Relief payments in several states also went to banks, corporations, investment firms, churches and local governments such as the city of Littlefield, Tex., despite regulations designed to reserve the benefits for small farmers.
In several cases, corporations ineligible for drought relief because of the $2-million limit on a farm’s gross annual income collected anyway because they owned a stake in a farm.
Santa Fe Pacific Co., the railroad with annual revenue of $3 billion, received a check through its energy division. The American Cancer Society got a check, as did a unit of Texas A&M; University and the Jesuits’ mid-Atlantic headquarters in Baltimore.
Pryslak Farms of Great Meadows, N. J., a $9-million-a-year truck-farming operation, collected $100,000 for losses on endive, escarole and leaf lettuce crops because the local Agriculture Department official said he thought the $2-million ceiling applied only to the vegetable operation.
Wrong, Washington officials said. The ceiling applies to revenue from all operations.
For all the apparent misapplications, the program did provide crucial assistance to farms racked by severe drought.
In North Dakota, the hardest-hit state, farmers lost an estimated $1.1 billion to the drought, but direct federal aid cut that by 36%, to $706 million. In Iowa the aid, calculated by the federal government at $335 million, went a long way, state agriculture secretary Dale Cochran said.
Without that money, “it would have meant substantially more losses to Main Street,” Cochran said. “Drought legislation saved businesses from having to close their doors.”
To examine the program, the AP interviewed agriculture experts in 21 states, then chose 14 states where rainfall data and drought payments were matched county by county in a computer database. From those results, the AP selected 120 counties for further study.
Farm Entitlement reports, the ASCS summaries of individual farms’ participation in the program, were requested for about 12,000 farms in those counties under the Freedom of Information Act.
Because much of the ASCS paper work never leaves the counties, reporters then traveled to 22 county offices in eight states to examine detailed drought program files for 346 specific farms, also available under the information act.
One such farmer was Don Gresham, who raises cotton on 4,000 acres near Levelland. Gresham readily admitted that he and his son operate their farms under five names precisely because of federal payment limits--in the case of drought aid, it was $100,000 per farmer.
Because of hail damage, Gresham and his companies collected $248,662 from the drought program, plus $159,478 from federal crop insurance. He gambled and replanted the cotton acres in milo--and made a good crop.
According to government program formulas, Gresham grossed nearly $100,000 more than if he had grown cotton successfully.
“I’ll be the first to tell you it worked out to a good year for me,” Gresham said. “You can’t farm without the government. You play their game.”
Among other findings of the study:
* More than $1 billion of the $3.9 billion was spent outside the Midwest drought area, which was the focal point of concern.
* In the 22 county offices visited, the AP found more than a dozen cases in which farmers and corporations got more than the maximum $100,000 payment by identifying farms in relatives’ names, corporate names, partnerships or trusts. One California family split its 2,734-acre farm in the fertile San Joaquin Valley eight ways and collected $367,434 for heat damage to irrigated cotton.
* Program rules did not consider the higher prices farmers received in 1988, the costs they incurred, the quality of what they grew or the value of stored surpluses. Vegetable farmers in particular found the system beneficial: Their payments for lost corn, zucchini and tomatoes included expenses they never had, such as the cost of harvest, sometimes 50% of their overhead.
“It was a very good payment to the vegetable producers,” said James Richardson, the Maryland ASCS director.
* While Congress and then-President Reagan touted drought relief as a necessity without which “hundreds of thousands of farmers and ranchers would have faced bankruptcy,” the aid payments averaged only $4,683 per farmer, according to ASCS figures. In many of the counties studied by the AP, a few farmers collected payments of more than $50,000. The rest received checks for less than $2,500; some got less than $10.
* Some farmers complained that they were shortchanged by the system of estimating crop yields, or how much would have been produced. Others were credited with far more produce than they would have raised in a good year.
“When I saw what I was going to get, I wanted to smile. . . . It was like I was in heaven,” said Peter Gibney, an Essex County, Mass., vegetable farmer who was paid the state average yield of 186 bushels an acre for sweet corn. He usually raises about 100 bushels on each acre.