Some Farmers Growing Rich on Government Crop Subsidies

From its gated headquarters in the suburbs here, the Britz family runs a farming behemoth with arms that stretch across the vast middle of California. It is a multimillion-dollar empire that includes a petrochemical company, packinghouses, a cotton gin and tens of thousands of acres of irrigated cropland.

But the Britzes--whose houses sit amid country clubs and not cotton fields--also get a big helping hand from Uncle Sam. Their 14 separate farming entities have collected $4.6 million in federal crop subsidies over the last six years alone, according to U.S. Department of Agriculture figures.

This was the year Washington was supposed to shut off the valve of crop supports to rural California and the rest of America’s farm belt, saving taxpayers billions of dollars while letting a free market balance supply and demand. But farmers have watched commodity prices fall to new lows in the face of increased foreign competition.

So Congress last month decided to perpetuate--and even enhance--a program of subsidies that was conceived in the Great Depression to help struggling family farmers but will continue to provide millions to big growers like the Britzes. Over the next decade, crop supports will cost American taxpayers an estimated $190 billion.

“The lion’s share of the money in California goes to a handful of big dogs,” said Ken Cook of the Environmental Working Group, a Washington-based nonprofit organization that is trying to reform the farm subsidy system. “The dirty little secret is that 10% of the recipients in California get 67% of the money. And these are the guys who least need it.”

As the noise of this spring’s farm debate has died down, it has left behind the question of which farmers in California--big or small, successful or struggling--benefit most from crop subsidies that have totaled $2.8 billion since 1996.

Proponents say the money goes to farms of every size and helps keep food affordable. It doesn’t line the pockets of farmers, they say, but is plowed right back into the soil. It is spent at local tractor dealers and hardware stores. It pays $7-an-hour jobs for laborers who come from Mexico.

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Most Crops Not Eligible

But only 9% of California’s 74,000 farms have actually received subsidy payments and nearly two-thirds of the money since 1996--$1.8 billion--has gone to fewer than 3,500 farms. Most of the crops that fuel the state’s $29-billion farm machine--grapes, peaches, plums, nectarines, strawberries, almonds, walnuts and vegetables of every hue--don’t get a penny of aid. They aren’t eligible.

Rather, the bulk of the money goes to support giant fields of cotton, rice, wheat and barley--crops that exist in surplus. Of the top 20 recipients in California, seven are big cotton growers and 11 are big rice growers. On average, they take in $596,000 in crop subsidies a year.

Some of these farmers can be found in coffee shops such as Pardini’s in Fresno, where they bemoan falling crop prices and grumble about Washington poking its finger in their business, dictating to them about endangered species on their land and polluted water in their irrigation ponds.

“Is it hypocrisy to receive government payments and then bad-mouth the same government when it tries to enforce laws like the Endangered Species Act?” asked Marvin Meyers, a cotton and almond farmer who has received nearly $2 million in crop subsidies since 1996. “You betcha it’s hypocritical.”

Other farmers say it isn’t hypocrisy but a matter of survival. Without government supports, they say, crops such as rice simply wouldn’t be grown here. It costs $700 to $800 to produce an acre of California rice that fetches just $650 in the world market. “Right now, I don’t see any way out of it,” said Dave Womble, a Colusa County supervisor and subsidized farmer.

The towns that the payments help prop up--Buttonwillow, Huron, Corcoran, Arbuckle--are among the poorest in the state. Jobless rates range from 12% to 18%. Lavishing more payments on a handful of farmers won’t ease the hard times, supporters of the new farm bill concede. Taking them away, though, could make things even worse.

“These aren’t farmer subsidies. They are consumer subsidies,” said David Unruh of the Farm Service Agency in Kings County, the arm of the USDA that hands out subsidy checks. “The farmer is the vehicle through which the government ensures an adequate supply of reasonably priced food and fiber. It extends to all Americans.”

The Environmental Working Group believes that such talk is just a rationalization for a policy that benefits the few. The group has posted on the Internet a county-by-county breakdown of six years of payments, showing hundreds of thousands of dollars going to people who look nothing like struggling farmers.

Here in the heart of California’s farm belt, the list includes wealthy doctors, lawyers, home builders and a man named Ed Donaghy, who built his fortune as a major distributor of Budweiser beer across the central San Joaquin Valley. It includes beef baron John Harris and members of the winemaking Gallo family--power brokers who donate large sums of money to state and national politicians.

It also extends to people like Jack Woolf, a man regarded by his peers as proudly independent and who helped turn this arid land into the most productive agricultural region in the world. The Woolf family, which farms about 15,000 acres in Fresno County and owns three vacation houses overlooking the Pacific in Santa Cruz, has received nearly $1 million in subsidies since 1996.

In the town of Firebaugh on the west side of Fresno County--where $58 million in crop supports has flowed to 203 growers since 1996--Marvin Meyers runs his farming operation from a small rundown office.

If he had his choice, Meyers said, he wouldn’t take a cent from the federal government to farm his 4,000 acres that stretch from flatland to hillside. But cotton that costs $1,200 an acre to produce now sells for $1,400.

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‘We’re Not Fat Cats’

Meyers said he simply can’t afford to thumb his nose at $333,000 a year in government subsidies.

“We’re not fat cats. We don’t drive fancy cars. We don’t own boats or summer homes on the coast,” said the 68-year-old Los Angeles transplant, dipping his thick fingers into a tin of Copenhagen chewing tobacco.

His six square miles of farmland may sound like a lot to city folk, he says, but it takes such scale to survive in a marketplace flooded by fiber from China and Egypt and grain from South America.

“My truck has 64,000 miles on it, and my son’s has more than twice that,” he said during a 90-minute tour of his land. “No one gave us anything. Everything you see here, we’ve worked hard for.”

Meyers and his son, Greg, 40, work the land side by side with 30 full-time employees. The company’s $1-million payroll is one of the few bright spots in the hard-luck town. Meyers has taken illegal migrants and turned them into U.S. citizens with $40,000-a-year salaries. He does all his trading within a 20-mile radius. “All that subsidy money stays here,” he said.

He’s doing all he can to wean his farm off federal aid, he said. He has chopped his cotton acres in half, converting from subsidized fiber to free-market almonds. It means more money and no guilt about accepting government help.

“Almonds, that’s where it’s at for us,” Meyers said. “You come back in a few years and we won’t be growing cotton. If we are, it’s going to be a variety that isn’t subsidized.”

In the middle of Kings County sits a huge dry lake bed where America’s biggest cotton farms roll out for miles. Seven families with roots three generations deep farm 250,000 acres of clay-bottom land.

The cotton and grain fields of the Hansens, Gilkeys, Newtons, Boyetts and Howes have yielded a collective $14 million in federal subsidy payments since 1996. But it is another operation--one that everyone counted as dead only a decade ago--that stands at the top of California’s subsidy list. Dublin Farms, run by the McCarthy family, has collected $7.2 million in subsidies over the last six years.

The checks kept coming even though the federal government tried for years to collect $1.3 million in subsidy overpayments to a McCarthy entity in the late 1980s, documents show. At the time, Richard McCarthy fended off government bill collectors by saying he was flat broke after suffering a heart attack and $7 million in farm losses. The McCarthys eventually paid back the debt.

But the once-highflying clan, with their helicopter and corporate jet, found an unusual ticket back to big farming and large subsidies: urban sewage. Each year, Los Angeles County alone pays the McCarthys $5.6 million to accept, spread and compost 200,000 wet tons of treated sewage on their land.

Now their growing size is prompting complaints from neighbors that the McCarthys are farming parcels that don’t belong to them, not only to spread more sludge but to harvest more crop subsidies.

Dozens of small adjacent landowners have asked the local Farm Services Agency to intervene. They say Dublin Farms has collected subsidy payments on 151 acres that belong to them. The McCarthys did not return calls seeking comment.

“The Farm Service Agency has refused to do anything,” said Norma Rulison, head of the landowner group. “We’ve asked the McCarthys to pay us for farming our land and taking our subsidies, but they refuse. These guys give new meaning to the word chutzpah.”

Unruh, the head of the local Farm Service Agency, said he couldn’t recall whether complaints by Rulison’s group triggered an inquiry into subsidy overpayments to the McCarthys.

“You’re talking about something two or three years ago,” he said. “That’s a long, long time ago around here.”

Given the green light from Congress, farmers with far more wealth than the McCarthys have used their extensive holdings to create manifold entities that qualify for even more subsidy payments.

Few have done it more aggressively than the Britz family, whose net worth would appear to dwarf that of many small farming towns.

Bob Glassman, a Britz son-in-law who runs much of the family’s operations, didn’t want to talk about the $4.6 million in farm subsidies. “I have no comment on any of our programs. What you got is what you got,” he said, hanging up the phone.

In Five Points, population 70, the lime-green color of Britz looms everywhere. Five Points is Britz, its sprawling chemical distribution center, its cotton gin and labor camp and rich brown fields.

The men in the family may dress like farmers, wearing blue jeans and cotton work shirts, but they and their wives drive Mercedes-Benzes and bright red Cadillacs. They live in big houses, far from the fields, that look out on private golf courses. They own vacation cottages that nudge up to the shores of Lake Tahoe, land records show.

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Britz a Farming Giant

When Albert Britz, a Berkeley-educated chemist who founded the family’s fertilizer company 54 years ago, and his wife, Helen, died in 1986, they left a $23-million estate to their three grown children, David, Linda and Martin. With the vision of Glassman, Linda’s husband, the Britz heirs have moved into the business of lending.

If a grower can’t pay his Britz pesticide bill, Britz Investment steps in as “a bank of last resort.” The farms gained through loan defaults have helped turn Britz from a pesticide seller to a diversified farming giant with 19,000 acres of cotton, wheat, alfalfa, grapes, oranges, tomatoes and sugar beets, county records show.

The chemical company generates $229 million in yearly sales, according to company records filed in a recent court case.

The 2000 financial statement for Britz Fertilizer shows a $5.3-million net profit and a combined $2.4 million in salaries for company Chief Executive David Britz, Secretary Martin Britz and Chief Financial Officer Glassman.

“The Britz family is worth tens of millions of dollars,” said Butch Wagner, a Fresno attorney who gleaned the financial records while winning a lawsuit on behalf of a fired company employee. “The notion that they are milking the federal government for millions more is shameful.”

In addition, millions of dollars worth of subsidized federal water flows to Britz farms in the Westlands Water District.

The family has divided its immense land holdings into smaller trusts and partnerships because federal reclamation law limits subsidized water to farms no larger than 960 acres.

Crop subsidies also go to farms that have a number of ties to Britz. For instance, $525,000 in checks have gone to “San Mateo Farms,” which in 1999 listed its mailing address as 16423 W. Kamm Ave. in Helm, the same as the Britz cotton gin.

San Mateo’s co-owner, Howard Jones, was a longtime Britz chemical salesman before he retired last year.

He said the crop loans for the 1,913-acre farm come from Britz Investment and the farming equipment belongs to Britz. Britz applies the pesticides and gins the cotton.

As for the subsidy payments to San Mateo since 1996, Jones said the money went to him and two partners, who also are top Britz employees. “I took the subsidy money,” he said. “Only I don’t remember it being that much.”