City Slickers

How farm subsidy checks end up in big cities

Wednesday, March 1, 1995

City Slickers

How farm subsidy checks end up in big cities

American taxpayers are sending hundreds of millions of dollars in Federal farm subsidy checks every year to a handful of absentee owners, corporations and other "farmers" who live smack in the middle of the country's biggest cities. Over the past decade, taxpayers wrote 1.6 million agriculture subsidy checks worth more than $1.3 billion to "city slickers" whose permanent mailing address is in the heart of one of the 50 most populous urban areas in the United States. For a variety of reasons, even this substantial sum probably underestimates farm subsidy payments made to recipients in major U.S. cities.

An Environmental Working Group (EWG) analysis of 110 million U.S. Department of Agriculture (USDA) computer records of $106 billion-worth of farm subsidy payments made since 1985 found over 74,000 recipients whose current mailing address for agriculture department checks is in downtown New York City, Los Angeles, Chicago, Houston, Phoenix, Miami, St. Louis, Detroit, Dallas or another top U.S. city. When EWG analyzed major suburbs and satellite cities and towns in the greater metropolitan areas of just 28 of the 50 biggest cities, total payments increased by $528 million, bringing the total payments to $1.8 billion. From Beverly Hills to Key West, EWG research shows that it is the rare, well-heeled suburb, urban enclave or resort spot in the United States that does not have at least one Federal farm subsidy recipient in residence.

In every major U.S. city, farm subsidy checks pour in from farms located in dozens of states. Farms in 42 states pump government subsidies into New York City, 38 states send Federal farm dollars to Los Angeles, 37 states have farm program recipients in Chicago, and 41 states are sending agricultural assistance to "farmers" in Houston. In many big cities--New York City, Los Angeles, Chicago, and Tucson, for example--half or more of the subsidies come from farms located out of state.

In big cities as in the countryside, a small number of individuals, partnerships, trusts and corporations collects the lion's share of Federal farm subsidies. Just 862 big city subsidy recipients (1 percent) collected $388 million, nearly 30 percent of the total payments to the postal areas of the top 50 cities. A general partnership in Dallas, Texas, for instance, received 157 checks over 6 of the last 10 years totaling more than $1.8 million. From Beverly Hills to Key West, EWG research shows that it is the rare, well-heeled suburb, urban enclave or resort spot in the United States that does not have at least one Federal farm subsidy recipient in residence.

At the other end of the spectrum are thousands of urban farm subsidy recipients who received very small amounts of money over the past 10 years. Overall, about 57 percent of the subsidy recipients received less than $5,000, totaling just 5 percent of the payments. Many recipients received just a few, small subsidy checks, in which case the program benefits may have been less than USDA's processing costs for the payments. Payments that went to cities were made under literally dozens of Federal programs that subsidize farmers, including commodity supports, conservation and disaster programs.

More than 63 percent ($825 million) of the total farm subsidies paid to big-city recipients went to individuals, who on average received $13,000 over the 10-year period. General partnerships brought in 12 percent ($150 million), averaging $72,000. Corporations with stockholders collected 11 percent of total big city subsidy payments ($138 million), averaging $58,000, and joint ventures collected $74 million (5.7 percent of the payments), but averaged over $200,000 each over the 10-year period. Subsidy payments also went to churches; county, state and city governments; public schools and other recipients with big city mailing addresses, including the Federal government itself.

Policy Implications

For several reasons, this analysis captures only a portion of the total Federal farm subsidy payments sent to big city recipients over the past decade. First, many recipients did not have a mailing address zip code in the USDA computer files we used for this analysis, making it impossible to track the destination of their payments. Second, EWG analyzed the postal areas of only the 50 top cities, plus the surrounding urban areas and satellite towns for only 28 of those cities. Payments to smaller urban and suburban areas would add billions of dollars to the payment total, though some of those cities are situated in farming regions. Third, at the time this report was prepared, EWG was unable to track payments made to urban and suburban residents or other absentee interests if the subsidy payments went directly to a corporation, trust or other entity at an address outside the 50 top cities, and the entity then disbursed a share of those payments to others with an interest in the farm. Such arrangements are commonplace and if accounted for would have substantially boosted our tally for city slickers. It should also be noted that this analysis focuses on only one manifestation of the phenomenon of farm subsidies paid to absentee interests--payments to cities. Payments to absentee owners who live in small towns or rural areas are even more common.

Massive and widespread cash payments to absentee interests in cities are just one of many indications that America's Federal farm subsidy programs are out of date--and badly out of control.

This study underscores just one of the fundamental problems with America's Depression-era farm programs: they mostly reward the ownership of land, not the farming of it, and reward most those who own the most, not those most in need.

Absentee landowners, distant corporations and farflung investors are able to draw substantial government agriculture subsidies, though they may reside in a big city hundreds or even thousands of miles from the farm and never set foot on that farm for years on end. As a practical matter, almost anyone can qualify for Federal agriculture subsidies. You don't have to farm the land, you don't have to live anywhere near the land, you don't even have to visit from time to time. You don't have to be related to the farmer or to anyone else who has an interest in the farm. And wealthy, absentee farm owners who are most likely to run afoul of payment limits or other rules have ready access to legal advice that can help them maximize their government payments--advice provided by the government itself.

Policy Recommendations

The fact that Federal farm programs transfer massive government subsidy payments to recipients in big cities, as we document in City Slickers, is just one more compelling reason why the 1995 Farm Bill must not result in business as usual. Three broad objectives should guide Congress as it begins the 1995 Farm Bill debate.

  • Congress should directly and firmly address the issue of taxpayer support for large "paper" farms, corporate producers, and absentee owners who can and do earn much of their living elsewhere. If taxpayers are expected to maintain an income safety net for agriculture, assistance should be limited to reasonable levels that would help a small family business, not enrich big agribusiness.
  • Congress should fundamentally change priorities for taxpayer investments in agriculture and rural communities, so that spending reflects contemporary needs, not the needs of 1933. The 1995 Farm Bill presents an unprecedented opportunity for taxpayers to invest in programs that get pesticides out of their food and tapwater and protect rivers, lakes, land, and wildlife. Instead of voting to weaken environmental safeguards, Congress should provide farmers assistance to meet or exceed environmental standards, and protect their land at the same time.
  • If Congress adopts a broad risk-assessment bill with cost-benefit provisions that override public health or environmental laws, the same rigorous procedures should be strictly applied to all agricultural assistance programs. No farm, export, or crop insurance subsidies should be provided until the environmental and economic risks of those subsidies have been clearly identified, and least-cost alternatives, such as block granting farm program funds to the states, have been thoroughly considered. Similarly, if Congress enacts broad "takings" legislation that will result in compensation to farmland owners whose property values are in any way diminished by Federal environmental laws, Congress should protect taxpayers from paying twice. Federal law should eliminate Federal farm subsidy payments that inflate the price of farmland and thus boost the potential taxpayer exposure from "takings" compensation claims.
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