COTTON BAILOUT: PART 2
Who gets cotton aid? Ted Turner, nuns in Illinois ...
By DAN CHAPMAN and KEN FOSKETT
The Atlanta Journal-Constitution
Published on Oct. 2, 2006

Farm subsidies make for strange bedfellows.

Last year, federal taxpayers sent subsidy checks to media mogul Ted Turner, an order of Franciscan nuns in Illinois and the Louisiana prison system.

What do they have in common? They own farmland.

In the confusing logic of farm programs, government subsidies flow to anyone who produces an eligible commodity, regardless of whether farming is their livelihood or whether they truly need financial aid. Sometimes, the beneficiaries of farm subsidies don't even need to grow a crop.

Since 1995, The Atlanta Journal-Constitution found, the government has paid at least $402 million in subsidies to people living in the nation's 10 largest cities, often for farmland located hundreds of miles away.

Subsidies also help large institutions not normally associated with agriculture. The programs have paid $113 million to government agencies, $90.9 million to public schools and universities, and at least $6.8 million to insurance and other Fortune 500 companies since 1995.

In Georgia, subsidy recipients include former Coca-Cola Chairman M. Douglas Ivester and his wife, who are now among the largest private landowners in southwest Georgia. Gov. Sonny Perdue has collected $278,679 for growing wheat and cotton, among other crops, mainly on farmland in his native Houston County. Perdue sold the farmland in 2004.

Former President Jimmy Carter and his family have collected $235,695, mostly in peanut and conservation payments, through Carter Farms Inc., a family business. The University of Georgia collects subsidies on its research farms scattered across the state Ñ $1.45 million in the past 11 years.

Turner, one of the largest private landowners in the country, has collected subsidies on crop and ranchland in four states. More than half the subsidies paid to Turner since 1995 were for conservation.

Jim Kennedy, chairman of Cox Enterprises Inc., which owns the Journal-Constitution, has collected $123,131 in subsidies since 1995. Half of Kennedy's subsidies have come from conservation payments set up before he bought the land. The rest were crop subsidy payments initiated by farmers leasing his land, a spokesman for Kennedy said.

Recipients of conservation payments say they protect farmland from environmental degradation and preserve wildlife habitat and much-needed green space in fast-growing communities. Under the $1.9 billion-a-year program, landowners contract to keep their land out of agricultural production for up to 15 years.

"What we're really trying to do with these conservation payments is to maintain these resources for the long term, for future generations. Once they're gone, they're gone. You can only erode it or pollute it so many times," said James Lee Adams of Camilla, a retired farmer and official with the U.S. Department of Agriculture. "When everybody benefits, everybody ought to pay to some degree."

'Don't turn money down'

Some recipients say they are entitled to the aid just as much as traditional farmers because they grow an eligible crop.

"We don't turn money down," said Perry Stagg, chief financial officer for prison enterprises with the Louisiana prison system, which grows 3,200 acres of soybeans, cotton and other crops on its farms. "They send it to us and we put it in the bank."

But critics of farm programs, including some farmers, argue that taxpayer aid should be reserved for those whose livelihoods depend on farming, not for hobby farmers or those taking advantage of the subsidy simply because it's there.

"At a time when resources are so scarce, at best we should be steering the payments to working farms and to people who have their butts on tractor seats on a regular basis," said Ken Cook, president of the Environmental Working Group, a Washington-based nonprofit organization.

In 2001, the EWG began listing subsidy recipients online in a searchable database, calling attention to the number of businesses, government agencies, universities and other nonfarmers taking advantage of taxpayer aid.

In 2002, Congress adopted a new farm bill that disqualified applicants with adjusted gross incomes of more than $2.5 million. The income cap exempted governments, universities and farming operations that derive at least 75 percent of their income from farming.

The USDA cannot say how many have been disqualified by the cap, or whether it has saved taxpayers money. When the rule was implemented in 2003, it was projected to save $22 million over five years.

The USDA is now assessing compliance with the income cap, said James Baxa, a USDA official.

"Maybe in a year we'll have some sense," Baxa said.

Investors moving in

Historically, crop subsidies were tied to production, which steered payments to working farmers. But two of the largest subsidy programs are now "decoupled" from production and tied to cropland, making the owners eligible for payments even if their principal business isn't farming.

Decoupling subsidies from production came during the past decade as foreign growers pressed for U.S. farmers to make planting decisions based on the market, not the subsidy. Now, for example, landowners receive a direct subsidy that is based on the historical yield and productivity of the land, not what's actually grown. The subsidy is paid even if no crop is grown.

As a result, cropland has become attractive for investors who recognize that it can generate hefty rents from farmers.

"The subsidies have caused the land rent to skyrocket," said Jerry McKinnon, who farms 2,300 acres of cotton and peanuts in and around Coffee County. "Investors come in and knock out the American farmer."

Subsidy critics deride the conservation payments, arguing that the payments reward landowners for what is already in their best interest Ñ preserving the land.

"I don't think we need subsidies in order to bribe farmers to not destroy their own resources," said Brian Riedl, a senior budget analyst for the Heritage Foundation, a Washington think tank that opposes most farm subsidies.

Even subsidy proponents, such as Sen. Saxby Chambliss (R-Ga.), chairman of the Senate Agriculture Committee, believe that subsidy rules permit too many nontraditional farmers to collect.

"I hope in the next farm bill we can get away from that and have payments that only go to producers, not to the folks who own the land but don't grow the crops," Chambliss said in an interview. "There is no question that there are abuses out there, and we are going to address that in the next farm bill."

Meanwhile, farm subsidies help pay for public education in Montana and agricultural research in Indiana.

Montana leases 500,000 state-owned acres to farmers, qualifying for $35.4 million in subsidies since 1995. The state uses the subsidy money for public schools and its university system.

Purdue University in Indiana, like many colleges located in farming states, collects subsidies on its research farms, enabling it to help underwrite agricultural research by faculty.

The Sisters of the Third Order of St. Francis operates hospitals and health care facilities in Illinois and Michigan, generating $2.5 billion in revenue last year. For years, the Franciscan order has also earned anywhere from $2,000 to $57,000 a year from farming subsidies.

Daniel Baker, the hospital system's chief financial officer, said the sisters got into farming reluctantly after receiving a large bequest of farmland in the late 1970s or early 1980s. Since then, the order has gradually sold off the land and all but gotten out of agriculture.

"We never wanted to be in the farming business," said Baker. "It's always been an issue for us."

Who qualifies for a check?

Full-time working farmers are not the only beneficiaries of federal farm subsidies. Anyone who owns farmland can collect the payments, even if they live elsewhere or if it's not being cultivated. Subsidy supporters say that's fair to everyone, but critics say payments should be limited to those who truly need them. Here's a sampling of subsidy recipients since 1995:

Ted Turner, $797,772

University of Georgia, $1.45 million

Chevron, $485,956

M. Douglas Ivester, ex-Coke chair, wife, $1.3 million

Family wealth

Richard & Seward Mellon, banking heirs: $2.2 million

David Rockefeller, ex-chairman, Chase Manhattan: $553,782

Family of Sam Walton, Wal-Mart founder: $254,276

Big business

John Hancock, life insurance: $3.1 million

Prudential, life insurance: $1.1 million

Caterpillar Inc., construction equipment: $324,179

Colleges and universities

University of Illinois: $4.1 million

Purdue University: $2.1 million

Iowa State University: $2.1 million

Holy farmers

Community of Christ, Jackson County, Mo.: $940,724

United Pentecostal Church, Hugoton, Kansas: $417,451

Sisters of the Third Order of St. Francis, Knox County, Ill.: $224,719

Government handouts

Montana Department of Natural Resources: $35.4 million

Louisiana Department of Public Safety and Corrections: $1.03 million

Georgia Department of Natural Resources: $243,431

Note: Subsidy amounts are totals for 1995-2005 and include crop, conservation and disaster payments. Recipients may not have collected subsidies every year.

Source: Staff analysis of USDA data by MEGAN CLARKE / Computer-assisted reporting specialist

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