Farm subsidies: A gift for Utah's wealthy?

Farm subsidies: A gift for Utah's wealthy?
By Dawn House
The Salt Lake Tribune


Posted: 1:42 PM- A billionaire, a U.S. cabinet member, lobbyists, a polygamous clan and a sports team owner are among the few Utahns paid federal farm subsidies in a state where four out of five farmers get nothing. The majority of those few Utahns who do get subsidies receive small checks. The average payment for 80 percent of the state's recipients is $612 annually - compared with $18,300 for the top 10 percent. That top tier also collects 65 percent of all payments flowing into Utah.

The Bush Administration is asking Congress to cut off America's wealthiest individuals from getting government subsidies, 90 percent of which go to certain commodities: wheat, corn, rice, cotton and soybeans. Under the proposed 2007 Farm Bill, as envisioned by the White House, those making more than $200,000 in adjusted gross income would be ineligible for payments - down from the current cap of $2.5 million.

For his part, Jazz owner Larry H. Miller had no idea, until he was asked to comment, that he and his wife had received $239,000 over the course of a decade for a ranch they own in Idaho.

"Evidently we've got some land where you get government subsidies for not planting," Miller said recently. "I think that's very silly to get paid on something like that. I'm sure there's reasons for it. But I don't know why and, in general, I'm very opposed to government subsidies in a free-market economy."

Son Greg Miller, who helps run the Idaho operation, said the money "went back into the ranch," such as improvements to springs, fences, gates, cattle guards and access roads.

The law that governs payments by the U.S. Department of Agriculture expires in September. The White House wants to cut farm spending over the next five years by $10 billion.

The issue has created a deep division in the Democratic-controlled U.S. House, which on Friday passed a bill that among things rejected the Bush administration income limit of $200,000 and set the cap at those earning $1 million or less. In all, the bill includes $42 billion in assistance to farmers.

Some Democrats teamed with conservative GOP budget hawks on an unsuccessful amendment that would have banned subsidies to those making an average of $250,000 or more annually, and would have steered more money to conservation, nutrition, specialty-crop and rural-development programs.

President Bush is threatening a veto, and given that all but 19 Republicans opposed the bill, it leaves Democrats well short of the margin they would need to override it. Utah's two Republican House members voted against the bill, while Democrat Jim Matheson voted for it. The Senate is set to begin its consideration of the legislation in September. Utah Sen. Orrin Hatch said he supports the concept of a $200,000 cap, while Sen. Bob Bennett said he opposes farm subsidies in general.

Whatever the outcome, "it's a fact that the [current] system isn't equitable," said state Rep. James Gowans, a Tooele rancher who acknowledges some farming operations need help from time to time, such as the drought years of 2001 and 2002, when he collected $14,400 in disaster subsidies. "I know a lot of farmers who work at a day job and come home at night to farm, and they're not getting any help from the government."

Among the richest Utahns receiving subsidies is James L. Sorenson, whose net worth is listed by Forbes magazine at $4.3 billion. The source of his income comes from medical devices and real estate. It is the latter that from 1995 to 2005 qualified Sorensen for crop subsidies totaling $600,000.

Sorensen spokesman David Parkinson said the subsidies helped offset unspecified losses Sorenson incurred and "encouraged him to invest in augmenting the productive capacity of his farm." Parkinson said Sorenson no longer receives subsidies, but he would not say when the payments stopped.

Information on subsidies comes from the Environmental Working Group, a public-interest organization based in Washington, D.C., which has sorted through a complex web of corporations, partnerships and other business entities to show who is benefiting.

Another Utah millionaire receiving farm subsidies is Secretary of Health and Human Services Michael Leavitt, a former insurance executive. Leavitt owned a 13 percent interest in a subsidized farming operation in Wayne County, which received $200,887 in disaster, crop and dairy supports. The payments started in 1999, six years after Leavitt became Utah governor (he left office in 2003).

Leavitt sold off his holdings in 2005 from his family's insurance business and cattle operations, valued at a minimum of $5.1 million, to avoid conflicts of interest once he became chief of the federal agency. He retains a 13 percent interest in Leavitt Land and Investment, valued at $1 million to $5 million, which received conservation subsidies on land in Clark County, Nev., in 2000, 2001 and 2005 totaling $32,340.

"We're concerned that the government is giving away money to rich, absentee landlords, and it appears to be the case with Mr. Leavitt," said Sandra Schubert, director of government affairs with Environmental Working Group. "We would like to see these taxpayer dollars going to people who are struggling and who actually are working the land."

Leavitt, who made a minimum of $380,000 in interest payments alone for 2005 in addition to his annual federal salary of $189,000, apparently might still qualify for subsidy payments under the bill passed by the House but would not have under a $200,000 cap.

Leavitt declined to comment, but family spokesman and brother, Dane Leavitt said, "We have participated in programs that Congress has enacted to meet policy objectives of the government and believe we have done it consistent with the law and appropriate procedures."

For their part, large organizations that represent farmers and their interests are opposed to the $200,000 cap.

"There are many ownership patterns in agriculture and many different sizes of farms," said Utah Farm Bureau CEO Randy Parker. "Setting a means test would defeat what we're trying to do, which is to protect an entire industry."

U.S. Department of Agriculture spokesman Keith Williams said a $200,000 cap would effect few farmers. For all Americans, only 2.3 percent of individuals have an adjusted gross income above $200,000, he said, "and because farmers can take a variety of deductions and their incomes would be based on a three-year average to even out a particularly good year, very few producers would be on the hit list."

Neither Fred Openshaw nor son Fred C. Openshaw supports a cap, even though their Santaquin orchard does not produce one of the commodities eligible for payments. The two, however, differ on who should qualify for subsidies. The father said those owning agribusiness interests should get payments because they grow food and hire workers, but the son said subsidies should help only full-time farmers stay in business "because that's what the program originally was set up to do."

In Utah, diverse groups are reaping the benefits of subsidies, including taxpayer-supported state agencies.

The Utah Trust Lands Administration collected $298,000 from 1995 to 2005. Utah State University received $161,000, and the state prison dairy got $1,600.

The polygamous Kingston clan, which owns a variety of farm and commercial properties, also received subsidies. Crop supports and disaster payments have totaled $156,000 and went to two corporations in which clan leaders are officers or own an interest.

The Church of Jesus Christ of Latter-day Saints, a big landowner in Utah and other states including Nebraska and Florida, does not collect government subsidies. Church spokesman Scott Trotter would not elaborate.

Lobbyist Cap Ferry qualifies for subsidies. He and wife Sue hold a 48 percent and 5.5 percent interest, respectively, in a Corrine ranch that received subsidies totaling $683,000 during the past decade, placing it at No. 22 among the 12,200 Utah farming interests getting government checks.

The Ferrys are lobbyists to nation's largest nuclear services company, EnergySolutions, and to the state's largest hospital chain, Intermountain Healthcare. Some of their other clients are Philip Morris, Pfizer Inc., Kraft Foods and Zions Bancorporation. Their son, Ben Ferry, a member of the state House of Representatives who owns a 14 percent interest in the ranch, spoke for the family.

"Foreign aid is often in the form of food, and that sometimes creates an artificial market here," he said. "Payments that level out the impact of social programs on producers is a component to protecting agriculture that you're calling a subsidy."

Ferry is among eight state lawmakers with farming interests. All have collected government payments.

For his part, Utah Agriculture Commissioner Leonard Blackham supports the current price-support program, even though the turkeys he raises are not one of the commodities the government subsidizes. Subsidy-eligible row-crop and dairy farmers are more susceptible to the elements, he said, while poultry farmers can protect flocks by housing them away from the weather, "but we do joke that we're one disease away from going out of business ourselves."