Farmer on the Dole
On April 7, 1995, Coors Field opened for business. Designed to blend into Denver's lower-downtown warehouse district, the retro-looking, brick-encased home of the new expansion Colorado Rockies baseball club was an instant hit. Of course, at a cost of $215 million, the architecture did not come cheap.
But thanks to some hard campaigning from the team's chief executive officer, Jerry McMorris, the Rockies did not have to bear the entire burden. As has been the case with most new sports stadiums built today, the bulk of the Coors Field price tag was picked up by taxpayers. Denver-area residents subsidized McMorris's ballfield to the tune of $162 million, or about three-quarters of the bill.
Not everyone was in favor of the public money giveaway. Critics pointed out that McMorris was already a wealthy man (although one of his family businesses, NationsWay Transport, went bankrupt several years ago); surely, they argued, he could afford to pay his own way. To many, the idea of giving public money to a rich man was a waste.
Yet what most people don't know is that McMorris has been on the government dole for years -- as a farmer.
A man of many business interests and broad economic reach, McMorris is also the longtime owner of Timnath Farms, the vast family spread in Larimer and Weld counties, north and west of Denver. According to local farm officials, Timnath Farms sprawls across tens of thousands of acres of ranchland. Another 1,000 or so acres are irrigated cropland on which McMorris grows mostly corn, but also some wheat and barley.
Despite his personal fortune, in the eyes of the government, McMorris the farmer is no different than a small agriculturist with a hundred acres of wheat in Kit Carson County: Both are permitted access to the massive program of farm subsidies administered by the U.S. Department of Agriculture. The subsidies, one of the larger single items in the federal budget, are distributed to make sure that farmers can continue to produce crops while still earning enough money to make a living.
The subsidies are based on production quantity, so larger amounts of taxpayer assistance naturally go to larger farms. Thus, big landowners such as McMorris generally are entitled to more money than owners of smaller farms.
In fact, between the years 1996 and 2000, no other farmer in Larimer County received more federal farm-subsidy money than Jerry McMorris. All told during that five-year period, the owner of the Colorado Rockies baseball team -- which Forbes magazine recently valued as the ninth-most-valuable Major League Franchise, worth $334 million with an annual income of $6.4 million -- received just over $262,000 of taxpayer help.
That makes McMorris, who did not return Westword telephone calls, a rich man receiving government money not because he needs it, but simply because he is entitled to it. As such, he represents a pivot point in the current debate over a new $160 billion farm bill now being forged in Congress. Many lawmakers have proposed changing the program. Even at this late date, it is still unclear what form the new law will take. But at their heart, most discussions regarding reform have struggled to define the purpose of farm subsidies: Are they to protect crops or farmers? The difference means everything to already wealthy landmen like McMorris.
"What we have to ask is, 'Are we doing this for the consumer, or are we doing it for the farmer?'" asks Dana Hoag, a professor and farm-policy specialist at Colorado State University. "If the subsidies are for the consumer, I don't care that Jerry McMorris gets the money, as long as there's enough wheat out there. But if it's for the farmer, I'm not sure I want taxpayer money going to the rich."
Most recipients of farm subsidies in Colorado are genuine farmers. Yet many are not what most people think of when they think of the family farmer. In addition to a baseball-team owner who hobnobs with the likes of Ted Turner (who, incidentally, also receives farm subsidies), it is a group that includes real-estate speculators, opera buffs, Vail chalet owners, sports executives, corporate titans, realtors, lawyers and doctors. It even includes a big airport on the edge of Denver.
When it comes to farm subsidies, Colorado is in the middle: Some states' farmers receive more in subsidies, other receive less. (Many figures for this story come from an Internet database compiled by the Environmental Working Group, a nonprofit, politically unaffiliated group that nevertheless receives money from organizations commonly described as "liberal" and "environmental." EWG's founder, Ken Cook, has written extensively on soil conservation. With minor exceptions -- overpayments to farmers that later had to be refunded to the government, for example -- none of the group's data has been challenged. And where possible, Westword has confirmed its numbers with local farm authorities.)
But even in the middle, the numbers are staggering. Between 1996, when the latest farm bill was passed, and 2000, Colorado farmers received about $1.3 billion. If the checks had gone to everyone, each man, woman and child in the state would have received about $430 for the five-year period.
The distribution of the money also generally mirrors that in the rest of the country, which is to say that a very few large farms get a disproportionate share of the money. Although some 35,000 Coloradans calling themselves farmers received federal assistance for their crops, the largest 20 percent of them received 80 percent of the money. The bottom 80 percent received payments of just over $2,000 a year.
The reason is consolidation. The economics of farming, in which huge quantities of production are necessary to see a decent profit, have meant that you must be huge to thrive. Today there are fewer -- but bigger -- farms than ever before. In 1935, a few years before the first subsidies began, there were 6.8 million farms in America. In 1997, there were less than 2 million. Of these, 350,000 accounted for about 90 percent of production.
The subsidies received by the largest Colorado farms can't begin to compare with those received by the huge operations of the Midwest. The nation's largest recipient, Riceland Foods of Arkansas, "earned" about $49 million in taxpayer help between 1996 and 2000. But the top money-getters here aren't juggling mere pocket cash, either.
The biggest federal checks were written to Cure Brothers, a huge operation in Burlington, Colorado. Support payments to the Kit Carson County farm family totaled about $4 million over five years. The state's top five recipients were all huge farms on the eastern plains; together they took in about $13.5 million in taxpayer help.
But they were all, without question, farmers -- living on and working off their land.
Like many big government programs, farm subsidies are simple in theory, but ridiculously complex in the details. While the basic sentiment behind them is the same -- give enough money to farmers to make it worth their while to farm -- today there are dozens of ways bureaucrats accomplish that goal.
Still, when most people think of farm subsidies, they are thinking of price supports. These go to only a handful of basic crops -- primarily wheat, corn, sorghum, barley, oats, cotton, rice and soybeans, although the government has tacked on others, depending on political pressure at any given time.
That means that many crops don't qualify for government handouts. CSU's Dana Hoag points out, for instance, that California, which accounts for about a tenth of all crop sales nationally, gets less than 2 percent of farm subsidies, because many of the state's crops are fruit and vegetables.
Most subsidy payments are based on what a farm traditionally has produced. Think of those legal disclaimers on radio advertisements that provide cover-your-ass protection for stock investors: "Past performance is not a guarantee of future results." Then think of the opposite: In farming, future subsidies are based entirely on past results.
"We know about the product capability of each farm," explains Marty Reeves, who, as the Farm Service Agency's county executive, oversees the subsidy program in Adams County. Each year, he adds, Congress sets the amount of money it thinks a bushel of wheat should sell for. Then it multiples that by the number of bushels per acre that the farm traditionally has produced -- generally calculated from twenty-year-old figures -- times the number of acres. Then, for reasons that are not entirely clear, the final number is multiplied by 85 percent. Presto! A subsidy is created.
Of course, that's only one kind of assistance. There are many others, all designed to protect farmers from the ups and downs of a market economy. Most serious farmers include the payments prominently in their budgets; the government money can even influence what a farmer will plant and harvest in a given year, a financial dance Jim Miller, policy director of the Colorado Farm Bureau, calls "the farming game." For example, the federal Marketing Assistance Loan program is sort of a stock-option plan for farmers.
Under this program, when a farmer harvests his wheat, he looks at the market price and decides if he would like to sell his crop. If the going rate is too low for his liking, under the deficiency program, he can drop it off at government-run bins (like a giant agricultural pawnshop), and the government will pay him a set amount for the wheat -- say, $2.50 a bushel.
Then the farmer waits, although not exactly with bated breath. If the price goes up, he reclaims his wheat, pays back the money with an extremely low rate of interest to the government, then sells his wheat for the better price. If the price goes low -- to $2.30 -- the farmer merely pays the government the current, lower price. Then the interest payments are forgotten about. In other words, a risk-free proposition.
Not surprisingly, such a peculiar bump on the free-market highway has caused a few accidents. For example, farming methods and technology have improved enormously since the government figured out how much an acre could produce. One result has been that, when combined with the fact that there is no free-market pressure to curb production -- the government cuts checks to a farmer the more he produces, regardless of demand -- there is a surplus of crops.
Which, in turn, has meant low prices -- and even lower profits for farmers. And even though subsidies may have kept some farmers in business, in a roundabout way, they have actually kept farmers' incomes low. Many farmers complain that their only options are to sell out to an operation huge enough to survive, or to bail out altogether.
"You can't make it out here on less than 6,000 acres," says Jennifer Reed, who owns a small farm in Kit Carson County. "So we are losing small farms. We have very few kids coming back here to take over the family farm."
None of this was supposed to happen. In 1996, President Bill Clinton signed what was known as the "Freedom to Farm" bill. Over the course of the next seven years, it was supposed to wean farmers from taxpayer handouts. But thanks to a number of factors -- bumper crops, stumbling international markets, among a host of others -- the opposite has happened. Today, nearing the end of that seven years, taxpayers are paying more money than ever to farmers.
According to the 1996 law, by 2001, farmers were supposed to be getting a total of about $5 billion in subsidies. Instead, every year, Congress has written a ledger's worth of emergency checks. The result: Last year American farmers received more than $20 billion in subsidies. In all, since 1996, the government has spent three times the amount of money on farm subsidies than it planned on spending. Today farmers get about half of their net income from government support assistance.
Crucial to understanding the state of farming in this country is also understanding what, exactly, makes a farmer. Finding the right definition speaks directly to Hoag's question of who farm subsidies really are for: crops or farmers? The definition is especially important, because it seems as though farm assistance programs have less than ever to do with actual food.
At one time, government subsidies might have made sense as necessary to protect the country's food supply. Yet it's hard to make that case now. The fact is, most agricultural products don't get direct subsidies. And as economics columnist Robert Samuelson pointed out in a recent Newsweek essay, "Has anyone noticed shortages of chicken, lettuce, carrots or bacon?"
So that leaves the farmers as the main reason for the existence of subsidies. But what, exactly, is an American farmer in 2002?
Hoag, the CSU agricultural economist, has tried to figure it out -- and he concludes that it's probably not what you think. Consider these statistics: Three percent of farmers produce about half of all agricultural sales. Taking it from the opposite direction, 85 percent of all farmers produce only about 20 percent of sales.
But at what point does a farmer stop actually being a farmer? According to Hoag's research, of that 85 percent of the country's smallest farms, three-quarters lose money, an average of $3,400 per farm per year.
Yet, he continues, this same group's off-farm income runs about $43,000 a year -- more than that of your average non-farming American. These people's net worth, he adds, is about $245,000, higher than that of non-farmers. "About 90 percent have off-farm jobs" from which they make their primary income, Hoag explains.
Hoag's conclusion: "They really are not farmers," he says. "They are people who farm for a second income." And, he notes, that is probably not who most taxpayers envision when they think about supporting farmers with subsidies.
"Like a Denver engineer who goes out and buys 35 acres in Kiowa County and joins the 4-H," notes Hoag. "Personally, I don't want to support these people."
Farmers living along the Front Range urban corridor -- Denver, Colorado Springs, Boulder and Fort Collins -- took in about $66 million in farm subsidies between 1996 and 2000. In a way, it's not surprising: Traditionally, fortunes in the West have often sprung from the land. Think oil, ranching, mining. Even today, big land often goes hand in hand with big money: Tycoons like their space, and many wealthy city-dwelling Coloradans like to have a spread to call their own. Billionaire Phil Anschutz made his pile in railroads, entertainment and communications, but he maintains a huge preserve in Weld County because, well, he can.
And many Denver-based farmers are the genuine article: large agricultural concerns that have installed their headquarters in the big city. Still, the combination of urban and rural can make for a wide assortment of hybrid farmers. For example, old land barons who've since moved on to other interests -- though not left their subsidies behind entirely.
Monfort Inc., for instance, has received about $50,000 over the past five years for land it owns in Larimer County. And the Cannon Land Co., controlled by local manufacturing titans the Gates family, has picked up $105,000 in taxpayer support.
The owners of the Boulder County-based Caribou Ranch made a name as big-time music producers of bands like Blood, Sweat and Tears and Chicago; many other famous groups recorded music at the ranch as well. Yet Caribou has also received about $200,000 in farm subsidies since 1996, mostly for land in Yuma County. Members of the Aspen-dwelling Walton family, developers of the Crested Butte ski area, collected a little more than $30,000 for property owned in Missouri. In the scheme of things, it's not much money. But it's worth asking if the companies need it at all.
Other urban Westerners grew up in the boonies and then made their marks in the city. (Roy Romer and Hank Brown are a couple of fine examples.) The farm was left behind years ago -- but not necessarily the subsidy payments.
Sam Mersfelder grew up on a farm in Kit Carson County. But after graduating from veterinary school in Fort Collins in 1972, he decided to stay along the Front Range. In a stroke of economic good fortune, he situated his clinic near the Denver Tech Center before real-estate prices soared out of reach.
Though he moved to the city, Mersfelder and his mother kept their land on the eastern plains. His mother still lives there much of the year, and he visits often. Later, Mersfelder bought up more nearby acreage as an investment. Most of the land was already in the Conservation Reserve Program, a federal assistance program that pays landowners not to farm ground that ideally never should have been farmed in the first place. These days, out of 13,000 acres, only about 1,000 are actually farmed.
Mersfelder says he still thinks of himself as a farmer, and records compiled by the Environmental Working Group agree: He and his wife received subsidy checks totaling $705,000, or about $141,000 annually, between 1996 and 2000. But property records show that they also live in a new house in an exclusive Castle Rock neighborhood and own a $1 million home in Edwards, near Vail.
Harry Schack moved to Denver from his small Nebraska hometown in 1960. Two years later he received his real-estate license; in 1988 he was named Colorado Realtor of the Year. Despite his living, buying and selling Denver real estate, he has also collected $335,000 worth of subsidies over the past five years from family land back in Nebraska. (Most, he says, is from the Conservation Reserve Program.)
Finally, bona fide city dwellers Nathaniel and Louise Merrill -- Nathaniel headed Opera Colorado for many years -- have, through a family trust, continued to earn about $13,200 a year in subsidies for family plots in Kansas.
Some urban subsidy farmers came to their avocation from the opposite direction: They started in the city and then branched out rural-ward. They have personal reasons for holding their ground. William Danks, for example, fits Hoag's description of a farmer who earns a living despite his crops, not because of them.
A Denver native, Danks had a farm in his family nearly a century ago. His grandfather moved from Illinois to Colorado in 1905. "You have to go back three generations in my family to find the farm," he says.
Danks worked happily as a city attorney until his children reached their teens. When one began running into trouble in school, Danks looked for a place to get him out of trouble. Danks and his wife turned north, eventually settling on a 320-acre spread outside of Greeley.
The couple knew barely anything about farming. What little they did know they'd learned together as Peace Corps volunteers in Bolivia a quarter-century earlier. Still, they were determined. They bought a 1970s green tractor and other secondhand equipment and began plowing.
Today the Danks sell most of their corn and winter wheat to ConAgra's feedlots. But, Danks adds, any profit he sees would disappear without farm subsidies. Between 1996 and 2000, he received just over $227,000 in taxpayer-financed price supports --about $45,400 a year.
"If this were my real life, I couldn't do it," he admits.
William Erickson never lived on a farm. A Denver native, he left once to attend the University of Virginia Law School. He returned to Denver and began practicing law. For the last 25 years of his legal career, he served as a justice on the state's highest court.
But he also tries to hold on to his family's rural connection by overseeing a 7,000-acre spread in west Texas. "My grandfather acquired it in 1917 for about a dollar an acre," the now-retired Supreme Court justice says. The land has always been leased out to locals; many of the sharecroppers growing cotton, maize and wheat there now are the same people who have been there for decades. "These people are like family to me," Erickson says.
Erickson himself receives $57,000 a year in farm subsidies. "We're proud of the fact that we're producing some commodities that are important to the economy," he days. "But right now the price supports are necessary to keep farmers aboveground. It's impossible to contemplate what would happen if they were to be pulled. Without the supports, I'd have to sell the land."
He's not the only Denver lawyer/farmer. Robert Dyer III is a well-known litigation attorney, with downtown offices and a practice specializing in class-action lawsuits, particularly securities and investment fraud. A Montana native (he owns a working cattle ranch there), Dyer says he found himself wanting to add some farm ground to his holdings a while back.
So about twenty years ago he purchased some 5,000 acres of cropland in Washington County from its Canadian owners. Dyer has since sold off some of the property. Only about 1,000 acres remain in production, mostly dry-land wheat. "It frankly has not been a real good investment over the years," he admits.
Still, between 1996 and 2000, Dyer received about $287,000 in taxpayer money for his land that sits a couple hundred miles away from his home in Denver. Some is for price supports; other government payments have been made to Dyer to keep his land out of production. Without taxpayers' help, he says, "the property wouldn't be worthwhile."
He adds that the fact that a Denver lawyer earns farm subsidies is not what is important. "The purpose of farm assistance programs is to promote farming, whether it's done by family farmers on the farm or lawyers or investors," he says. Besides, Dyer adds, "There's no such thing as the family farm anymore. It's a corporation situation; the family farm is a figment of people's imagination."
Robert Sanderman admits he is probably not what people have in mind when they think "family farmer." "I've always had a love of the land," he says. "But I'm really just an investor."
Most recently, Sanderman earned his real paycheck as a right-hand man to Phil Anschutz, running several of the Denver billionaire's more high-profile businesses, including professional soccer teams in Los Angeles, Chicago and New York. Now in semi-retirement, he watches over personal investments from his Cherry Hills Village home.
One of those is about 2,000 acres of irrigated and dry land in Kit Carson County that he purchased about fifteen years ago. "It's not been a very good investment," he says. "I've had a modest return, but nothing like the stock market." In fact, he adds, "Without federal assistance, there would have been no return. We are totally dependent on supports to keep it going."
Taxpayers have paid a fair amount of money to keep this particular investment of Sanderman's profitable. Over the past five years, he has collected just over $300,000 -- about $60,000 a year in federal subsidies.
In certain areas of the state, farms are less about what they can produce than what they can be sold for. Particularly along the Front Range, a farmer who doesn't sell to a developer is crazy. And forget about new farmers buying land for actual crop production.
"There is virtually no land in Larimer County that is sold at agricultural prices," says Wayne Rieger, executive director of the Larimer County Farm Service Agency. He adds that with real-estate prices hovering around $20,000 to $30,000 an acre, "there's not a farmer that buys just to farm."
Another result: Not many farmers own their own land. Rieger estimates that about three-quarters of the people who receive federal subsidies from Larimer County land do not live on their farms. Even in traditional farming hubs such as Yuma County, along the Nebraska border, non-local owners have left a big footprint.
"We have quite a bit of absentee ownership -- families who owned the ground and then passed away and then left the land to their kids," says Ronald Ohlson, Yuma County's FSA boss. "I got a lady who lives in Boston who owns land here." Another large Yuma County landowner/investor lives in Florida. "I don't know what he does," says Ohlson, who has held his job for two decades. "I've never seen the man." Naturally, high land prices attract people who have no intention of farming past the point at which it becomes more profitable to develop the property. In Adams County, for example, where property values have exploded since Denver International Airport was built, "a lot of our landowners are speculators who are waiting for the price to go up," admits the Farm Services Agency's Reeves.
Federal farm programs are based on who owns the land, not necessarily who works it. So while many recipients of federal agricultural subsidies are bona fide farmers with deep roots in the community -- longtime Bennett planters Kalcevic Sons cashes about $233,000 worth of government checks every year -- not everyone appears to be in it for the long haul.
Real-estate giant L.C. Fulenwider, for instance, has earned more than $166,000 since 1996 in farm price supports. And Van Schaack Holdings of Greeley, another land baron, has taken home about $176,000 worth of subsidies in recent years from farming land it owns around the new airport.
You could even make the case that the City and County of Denver is a speculator of sorts. After purchasing land for DIA, the city began leasing parcels back to area farmers; the agreements call for the city to collect a portion of the crop grown on the ground, which it then sells on the open market.
Still, Reeves notes that most of the subsidy checks go directly to City Hall -- about $317,000 in all since 1996. In one sense, that makes Wellington Webb the fourth-largest recipient of federal farm subsidies in the city.
The current farm bill will expire next year. Reformers seeking to adjust the unwieldy collection of federal giveaways in the next version have proposed several changes to the current system. Until several months ago, for example, when the measures were mostly negotiated out, it appeared as though greater conservation measures, such as paying farmers to take unsuitable land out of production, would play a larger role in a new farm bill.
Another subject lawmakers are toying with is subsidy caps -- that is, limiting the amount of taxpayer money a single farmer, or a single farm, can collect in a year. These would be aimed at producers who game the system for more money than they are entitled to. In recent weeks, the House and Senate have proposed different ceilings.
One tactic that hasn't been proposed for reform of farm-subsidy payments, however, is an income test. It's an idea that has occurred to many. "There's got to be some way to get this money to the people it's supposed to help," says Yuma County's Ohlson. And, in fact, it is a criterion used in some other federal agricultural-assistance programs.
For baseball owner/farmer Jerry McMorris, the question of whether a person as wealthy as he should get taxpayer handouts was already addressed once by such a program. In 1995, according to Laramie County's Rieger, McMorris applied for a federal disaster relief grant for his cattle operation after drought depleted the grazing land on his spread.
He didn't get it. The reason: Unlike crop supports -- but like social welfare programs -- the disaster relief payment for the ranching operation had an income cutoff, a way to ensure that the money went to those who needed it most. According to the rules, a rancher seeking government assistance for his hurting business had to make less than $2.5 million a year to qualify for the government subsidy. McMorris didn't meet the requirement.
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