Big farms find easy ways around trade aid limitsJuly 3, 2019
MINNEAPOLIS — When President Donald Trump’s administration announced a $12 billion aid package for farmers struggling under the financial strain of his trade dispute with China, the payments were capped. But many large farming operations had no trouble finding legal ways around them, records provided to The Associated Press under the Freedom of Information Act show.
The government paid out nearly $2.8 million to a Missouri soybean-growing operation registered as three entities at the same address. More than $900,000 went to five other farm businesses, in Indiana, Illinois, Tennessee and two in Texas. Three other farming operations collected more than $800,000. Sixteen more collected over $700,000. And the data list more than 3,000 recipients who collected more than the $125,000 cap.
Recipients who spoke to AP defended the payouts, saying they didn’t cover their losses from the trade war, and they were legally entitled to them. U.S. Department of Agriculture rules let farms file claims for multiple family members or other partners who meet the department’s definition of being “actively engaged in farming.”
But critics including U.S. Sen. Charles Grassley, an Iowa Republican who has long fought for subsidy limits, say it’s the latest example of how loopholes in federal farm subsidy programs allow large farms to collect far more than the supposed caps on that aid.
Grassley said in a statement to AP that some of the nation’s largest farms are receiving huge subsidies “through underhanded legal tricks. They’re getting richer off the backs of taxpayers while young and beginning farmers are priced out of the profession. This needs to end. The Department of Agriculture needs to re-evaluate its rules for awarding federal funds and conduct more thorough oversight of where it’s funneling taxpayer dollars.”
USDA officials defended the program, saying they believe its rules are being followed and that the department has procedures in place to audit recipients.
About 83 percent of the aid under the Market Facilitation Program has gone to soybean farmers because they’ve suffered the most under China’s retaliatory tariffs. The program sets a $125,000 cap in each of three categories of commodities: one for soybeans and other row crops, one for pork and dairy, and one for cherries and almonds. But each qualified family member or business partner gets their own $125,000 cap for each category. Farmers who produce both soybeans and hogs, for example, would have separate caps for each and could thus collect $250,000. But there are legal ways around those caps, and the data show that farmers are using them.
Data provided to AP from the USDA show that the biggest beneficiary has been the DeLine Farms Partnership and two similarly named partnerships registered at the same address in Charleston, Missouri, that collected nearly $2.8 million combined. They’re led by Donald DeLine and his wife, Lisa DeLine. They referred calls to their attorney, Robert Serio of Clarendon, Arkansas, who said the three partnerships qualified legally and probably could have qualified for more if not for the caps. He said each partnership farms around 27,000 acres and is made up of eight or nine partners who all meet the “actively engaged” requirement.
USDA spokesman Dave Warner said in an email that the department couldn’t comment on the specifics of the DeLines’ operations but that such a large claim was likely audited to ensure eligibility, and that the agency had no reason to believe they didn’t meet the requirements.
At Peterson Farms in Loretto, Kentucky, eight members of the family partnership collected a total $863,560 for crops they grow on over 15,000 acres in seven counties, including wheat and corn used at the nearby Maker’s Mark bourbon distillery.
Co-owner Bernard Peterson said that it didn’t make up for all their losses at a time when it was already hard to be profitable. The $1.65 per bushel aid payments for soybeans fell well short of losses he estimated at $2 to $2.50 per bushel, factoring in the loss of the Chinese market that took years to develop.
“It’s a big number but there are a big number of people directly depending on the success of our operation in the community,” he said. Peterson said the operation supports about 30 families year-round, and more at harvest time. “It’s a lot more than just the owners of the company.”
The numerous ways around the $125,000 caps mean that millions of subsidy dollars flow to “city slickers who are stretching the limits of the law,” said Scott Faber, senior vice president of government affairs at the Environmental Working Group, which has long tracked federal farm subsidy programs, and criticizes them as biased toward big producers and promote environmentally damaging farming practices. Urban dwellers might play only a small role in an operation without ever setting foot on the farm because of the loose definitions for who qualifies, he said.
More trade aid is on the way. The Trump administration in May announced a new $16 billion package for Round Two for 2019. But most details of how the new edition will be structured have yet to be released.
The USDA says it has spent only about $8.6 billion so far out of the $12 billion authorized. But Congress recently eased a rule that said a producer’s average adjusted gross income could not exceed $900,000. That change will require the agency to reopen Round One to producers with higher incomes, as long as 75 percent or more of their income is derived from agriculture. And that will push spending closer to the $12 billion.
Matt Keller, a pork producer in Kenyon, Minnesota, who also grows crops to feed his livestock, said he “definitely appreciated” the $143,820 he collected from the program. It didn’t cover all his losses but it helped with his cash flow, he said. He reached the $125,000 cap on his hogs, and the remaining money was for his soybeans and corn.
Keller said his wife and other family members are all involved in his operation, which produces about 29,000 pigs per year. He doesn’t blame the trade wars for depressed hog prices, but he said the tariffs, piled on top of an already existing oversupply, make things even tougher for producers.
“It was kind of a relief, I guess, that we had a little support from the president and the country,” Keller said.