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Farming for Federal Dollars

There are no corn, soybean, or wheat fields within biking distance of Royalton Heating and Cooling. The shop's headquarters, located in the decidedly un-rustic suburb of Brooklyn Center, isn't even within a stone's throw of a garden.

Yet the USDA sent checks totaling $6,522—made out to Stewart Brothers Partnership—to this address in 2008 for corn, soybean, and wheat, with an additional $2,600 coming in last year.

That's about all we know, because when we got Brady Stewart, Royalton's registered owner, on the phone, he had no interest in discussing the taxpayer subsidies he receives.

Asked whether he was involved in farming, Stewart sounded almost incredulous.

"We're not interested in anything like that," he said. "This is just a heating company."

Click.

No other facet of Midwestern policy elicits more controversy than farm subsidies. Implemented during the Dust Bowl as a safety net for struggling farmers—who then comprised 25 percent of the nation's population—the federal handouts have long since mutated into something else entirely. The vast majority of the public largesse is doled out not to family farms, but Big Agribusiness. About 10 percent of recipients account for 75 percent of the $10 to $30 billion the U.S. Department of Agriculture shells out each year.

Efforts to rein in farm subsidies have been stymied for years. Chalk it up to Big Ag's lobbying efforts, the disproportionate political clout enjoyed by rural states, and the romanticized notion of life on the farm, but few meaningful reforms have gotten out of the starting gate.

At $1 billion, Minnesota is the fourth biggest recipient of federal farm subsidies. In order to shed some light on who is receiving this money, City Pages filed a Freedom of Information Act request with the USDA. The resulting database contains tens of thousands of the farm subsidy recipients in each of the last three years—hundreds of whom reside in the metro and rarely, if ever, set foot on a farm.

"When absentee owners reap commodity program benefits, we consider that to be an abuse of farm programs," says Adam Warthesen, policy organizer with the Land Stewardship Project, a Minnesota-based non-profit. "There have been ample opportunities in Congress to cinch up some of these loopholes. They have utterly failed. And that gives all the other programs a bad name."

Noel Rahn

Venture capitalist/CEO, Rahn Group

SUBSIDIES RECEIVED IN 2009: $25,848 (MINNESOTA ONLY)

One would be hard pressed to invent a starker antithesis of the small family farmer than Noel Rahn.

Prior to forming California venture capital firm the Rahn Group in 1998, Rahn presided over Investment Advisers, Inc., a money-management firm headquartered in Minneapolis. During his 25 years at Investment Advisers, he helped grow the company from $50 million to $16 billion.

Along the way, the University of Southern California alum got heavily involved with agriculture, buying up thousands of acres of cropland and renting it out to farmers.

The land also provides a nice windfall from the federal government. Between 1995 and 2006, Rahn reaped $1,171,595 in corn and soybean subsidies, according to data collected by the Environmental Working Group, a watchdog organization that keeps a database on national farm subsidies. Last year, he collected $25,848 from his Minnesota land alone.

Rahn didn't return messages seeking comment. Perhaps he was out plowing?

David Alme

CEO, ABC Wire Sales

Subsidies received in 2009: $15,732

By his own admission, David Alme isn't your typical farmer. He's first and foremost a businessman—and a financially successful one at that.

Alme, 65, is co-founder of ABC Wire Sales, a company that manufacturers the steel string that recycling centers use to wrap bundles of salvaged waste. The affable resident of tony East Isles projects that ABC's profits this year will approach $6 million. He puts his yearly salary between $700,000 and $800,000, depending on annual sales.

Hardly the kind of person who requires government handouts to make ends meet. No matter. Alme collects more than $15,000 a year in farm subsidies.

"The checks used to total $40,000," he says matter-of-factly. "They've shrunk in recent years, but I think it's nice that they're shrinking. I don't need subsidies."

The bulk of Alme's subsidies—$14,910 of last year's total $15,732—come from direct payments, a particularly controversial sub-category of farm subsidies, since they're tied not to production but base acreage.

"Direct payments are the most egregious form of subsidy," says Don Carr, press secretary for the Environmental Working Group. "These are checks that are mailed out no matter what. You might not even grow anything a particular year and still get a check."

Alme says he grows corn and soybeans every year, planting and harvesting the crops himself. He homesteads on his 900-acre farm in Goondue County—about an hour and a half west of the metro—a move that grants him an additional tax break.

"I shouldn't get paid for putting in trees that I would have put in anyway," he says. "It's unnecessary. I feel sorry for anyone who has to represent us in Washington."

Pat Mulroy

 

Body shop owner

Subsidies received in 2009: $14,175

If Mulroy's Body Shop on Nicollet Avenue in downtown Minneapolis seems like an unlikely destination for tens of thousands of farm subsidy dollars, that's because it is.

But its jovial owner, Pat Mulroy, did what thousands of landowners in Minnesota do: enrolled in a Conservation Reserve Program (CRP).

On one hand, Mulroy is no more a farmer than he is a trapeze artist. On the other, he is doing exactly what the program requires, which is to say: not farming.

Implemented in 1985, CRP compensates farmers who take certain cropland out of production for 10 or 15 years, depending on the contract.

The USDA had two motives for doing so: It limits supply and increases the profit for farmers who continue to produce the crop, which effectively amounts to state-sponsored price manipulation.

The other, more publicly palatable intent was to preserve "environmentally sensitive" terrain and wildlife.

"Every morning I look out, I have pheasants walking around the yard, deer on the driveway," Mulroy says. "CRP was designed to protect open space, and boy I tell you, open space is hard to come by these days."

If you're willing to forego farming or grazing said open space, you can make a pretty penny. With two properties under his name—the other in the western part of the state—Mulroy's 120 acres of non-farmland raked in $36,779 in federal subsidies in the past three years.

"When you get down to it, you're renting your property to the USDA," he says. "The best part about CRP is that it protects wildlife. It really protects wildlife."

For that reason, the USDA prohibits the use of snowmobiles, four-wheelers, or any motorized vehicle on CRP grounds.

Recreational hunting, however, is allowed.

Robert Engstrom

Real estate developer

Subsidies received in 2009: $1,989

Asked about the CRP checks sent to his Minneapolis offices, Robert Engstrom frames the two grand as virtually insignificant.

"If you think this is a big windfall, you're barking up the wrong tree."

He's right, in a sense. The amount of subsidies the Minneapolis-based real estate developer rakes in—just shy of $6,000 over the past three years—is peanuts compared to the money he makes from developments and rental properties.

Engstrom presides over Robert Engstrom Companies, which specializes in environmentally friendly domiciles. His 113-home, 241-acre Field of St. Croix neighborhood near Lake Elmo was the first conservation development in the state and has garnered awards from homebuilders' trade groups and open space organizations alike.

But it's a 120-acre plot of land near Detroit Lakes that the USDA has chosen to reward with federal taxpayer money.

Nestled amid rolling hills, Engstrom's late parents' sprawling estate is home to literally thousands of evergreens and deciduous trees, which Engstrom says he planted himself. He gets paid $2,000 not to raze the estate and turn it into a farm, which he likely had no plans to do anyway.

"It's about enough to pay taxes," he says of the $1,989.

Neal Anderson

Real-estate salesman

Subsidies received in 2009: $10,658

Minneapolis resident Neal Anderson is a self-described "absentee landowner," but he doesn't consider the term pejorative.

"It's like sharecropping," he explains. "When you own land and rent it out. We've had farmland in our family since the 1930s, and that's the way it's always been."

Although he's never farmed himself, the real-estate salesman owns or co-owns five farms across the state. This has earned him at least $10,000 in subsidies in each of the past three years.

The bulk of the payouts come from a 320-acre farm in Lac qui Parle County, which sits against the South Dakota border. The farmland is enrolled in CREP, a more lucrative offshoot of CRP that pays landowners to convert grass or riparian forest.

It's a solid three-hour commute from the cities, but fortunately for Anderson, it requires minimal upkeep. Every three to five years, he'll do a controlled burn to rejuvenate the soil.

"It's a place to put your money where you'll get a set return in a set amount of time," he says. "It's a safe investment that does great things for the environment. From a wildlife standpoint, the CRP has been by far the best thing to happen to this country."

Ten grand a year would be decent money for most, but Anderson insists he barely breaks even.

"We pay our land payments right when the checks comes in," he says. "It goes right to the bank. It offsets the mortgage for the most part."

Brian Geis

Attorney

Subsidies received in 2009: $52,568

Prior Lake attorney Brian Geis makes more money per year in farm subsidies than the average Twin Cities resident makes in wages.

 

Geis and his mother, Dorothy, don't exactly fit the bill of the struggling small farmer. Their stately two-story home on Summit Avenue in St. Paul is more Great Gatsby than American Gothic.

Nevertheless, Brian collected $52,568 in CRP payments last year, with Dorothy accepting another $22,253. They had an even better 2008, wracking up a combined $95,382.

Brian didn't return messages seeking an interview, but his brother David—a corn and soybean farmer who owns land in Redwood and Pipestone Counties—says the bulk of Brian's payments stems from a 476-acre plot near Milroy. Brian bought the farm from David in the late '90s and immediately enrolled it in CRP.

Asked whether he thinks the amount could be construed as excessive, David was quick to defend the subsidies.

"Sure, there's people who take advantage of the programs that shouldn't," he says. "But for the majority of the instances that's not the case, and that's not the case here."

Of course David hasn't done too bad for himself either, having collected $89,840 in CRP and direct payments last year alone.

"Collin Peterson, our congressman, has done a fantastic job in steering the Ag budget and programs," David added. "I'm real happy with the work he's done."

Rep. Collin Peterson

U.S. Representative

Subsidies received in 2009: $129

Rep. Collin Peterson (D-MN) is one of two Minnesota members of U.S. Congress who accepts farm subsidies.

The former accountant accepts $129 a year in direct payments.

Not the most brazen example of a politician wantonly sucking off the public teat, but the real money is in campaign contributions. The top four industries that chipped in for his 2010 re-election campaign are all farm- related: the agricultural services, crop, dairy, and food-processing industries have already dumped a combined $209,550 into his campaign coffers with eight months remaining until midterm elections.

Now about that other Minnesotan in Congress receiving farm subsidies ...

Rep. Michele Bachmann

U.S. Representative

Subsidies received in 2009: Between $2,501 and $5,000

Michele Bachmann has carved out a niche by denouncing big government in all its forms. On Thanksgiving, she even published a blog post entitled, "What We Learned from the Pilgrims" that lauded their free enterprise as a reason to avoid contributing to food kitchens.

"We've had our own modern day fling with great society welfare state policies," she concluded. "And after trillions and trillions spent we've purchased neither more personal industry or frugality. Rather, if people can obtain for free what other men endeavor to labor for, the former learns to keep the latter busy."

Just weeks later, it emerged that this champion of "personal industry" was, as she might put it, "obtaining for free what other men endeavor to labor for."

Bachmann's late father-in-law, Paul Bachmann, owns a 949-acre farm in western Wisconsin. The Bachmann Farm Family Limited Partnership took in $251,973 in federal handouts between 1995 and 2006, mostly in the form of dairy and crop subsidies.

Though not registered under her name, Michele—whose yearly salary as a member of Congress is $169,300—profits modestly from the operation. Her personal stake is between $100,001 and $250,000, according to her 2007 personal financial disclosure statement, which would net her between $2,501 and $5,000 in federal subsidies for not farming.

"You can't have it both ways," says Donald McFarland, a Minnesota-based Democratic strategist. "You can't travel around the country railing against government handouts while your family farm is accepting hundreds of thousands of dollars of public money. The hypocrisy is just astounding. How she justifies it to herself, I have no idea."

Cargill, Inc.

Multinational corporation

Subsidies received in 2009: Immeasurable

One of the biggest Minnesota beneficiaries of federal handouts wasn't listed on the FOIA-requested database provided by the USDA. But when it comes to publicly subsidized windfalls, Cargill, Inc. is the $120-billion gorilla in the living room.

"You won't find them on the database, but they buy the raw product produced by corn and soy farmers, who are themselves highly subsidized," says Carr. "This enables them to buy corn and other commodities at artificially low prices."

The influx of taxpayer money drives down costs on the front end, which inflates the profit margin on the back end. In other words, Cargill's overhead is, in effect, partially subsidized by the public, while the resulting profits remain 100 percent privatized. (Cargill did not return several phone calls requesting comment.)

The company's profits are consequently stratospheric. During the last full fiscal year, the agribusiness behemoth reaped $3.64 billion. The largest privately held corporation in America, Cargill would be among the top 10 companies in the Fortune 500 were it publicly traded.

With so much cash, no wonder Cargill pays almost $1.5 million each year to federal lobbyists. Now that's money well spent.


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