Farm Program Pays $1.3 Billion to People Who Don’T Farm by Dan Morgan, Gilbert M

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HARVESTING CASH Reaping Money for Nothing Farm Program Pays $1.3 Billion to People Who Don’t Farm By Dan Morgan, Gilbert M. Gaul lars without planting a seed. Mary Anna Hudson, 87, and Sarah Cohen from the River Oaks neighborhood in Houston, has re- Washington Post Staff Writers ceived $191,000 over the past decade. For Houston sur- Trade geon Jimmy Frank Howell, the total was $490,709. EL CAMPO, Tex. — Even though Donald R. Mat- “I don’t agree with the government’s policy,” said Conference thews put his sprawling new residence in the heart of Matthews, who wanted to give the money back but was Collapses rice country, he is no farmer. He is a 67-year-old asphalt told it would just go to other landowners. “They give all contractor who wanted to build a dream house for his of this money to landowners who don’t even farm, while Talks in Geneva wife of 40 years. real farmers can’t afford to get started. It’s wrong.” were intended to Yet under a federal agriculture program approved by The checks to Matthews and other landowners were lead to a new global Congress, his 18-acre suburban lot receives about intended 10 years ago as a first step toward eventually agreement on issues $1,300 in annual “direct payments,” because years ago eliminating costly, decades-old farm subsidies. Instead, including farm the land was used to grow rice. the payments have grown into an even larger subsidy subsidies, but they Matthews is not alone. Nationwide, the federal gov- that benefits millionaire landowners, foreign spec- broke down so badly ernment has paid at least $1.3 billion in subsidies for ulators and absentee landlords, as well as farmers. the negotiators quit BY JAMES M. THRESHER — THE WASHINGTON POST rice and other crops since 2000 to individuals who do no Most of the money goes to real farmers who grow early. A18 These homes in El Campo, Tex., stand on land once used to grow rice. farming at all, according to an analysis of government crops on their land, but they are under no obligation to Because of that, their back yards qualify for direct payments under federal records by The Washington Post. agricultural programs as long as the owner does not develop the acreage. Some of them collect hundreds of thousands of dol- See FARMING, A12, Col. 1

Maryland Baghdad Senate Race Big Crowds for History’s Big Picture May Hinge Market On Ethnicity Bombing Mfume Leads Cardin Kills 66 In Sharply Divided Primary, Poll Shows Attack Is Largest Under New Regime By Matthew Mosk and Claudia Deane By Ellen Knickmeyer Washington Post Staff Writers Washington Post Foreign Service

Former NAACP president Kwei- BAGHDAD, July 1 — A truck si Mfume leads U.S. Rep. Benjamin bomb killed at least 66 people and L. Cardin in what is shaping up to injured more than 100 on a market be a racially polarized Democratic street in the Shiite Muslim heart of Senate primary in Maryland, even Baghdad on Saturday, the deadliest as roughly a third of the electorate such attack since Iraq’s national- has not settled on a candidate, ac- unity government took office in cording to a new Washington Post May. poll. Prime Minister Nouri al-Maliki’s For the first time in Maryland government, which is attempting history, both major parties have to end sectarian bloodshed through the potential to nominate an Afri- force and conciliation, had escaped can American, and the poll sug- the high-fatality bombings that gests that the hopes of all of the were a fixture under the previous major candidates will depend on government. But Saturday’s mas- their ability to cross racial bound- sive bomb, powerful enough to hurl aries for support. bodies of shoppers onto the roofs of As they stand, the racial divi- high-rise buildings surrounding the sions are stark: In the primary, market in Baghdad’s Sadr City dis- Mfume, who is black, gets 72 per- trict, drew angry denunciations cent of his support from black vot- BY LUCIAN PERKINS — WASHINGTON POST from survivors, suggesting Iraqis ers, the poll shows. Cardin, who is Vistors swarm the Old Patent Office yesterday at its reopening after a six-year, $298 million makeover. The building houses the Smithsonian’s could quickly sour on Maliki’s ini- white, gets 82 percent of his back- National Portrait Gallery, where William Sommerfield performed as George Washington, as well as the American Art Museum. Style, D1 tiatives if insurgent attacks once ing from white voters. again begin claiming dozens of Then there is Maryland Lt. Gov. lives at a time. Michael S. Steele, who has Folklife Festival for a New Era The U.S. military, meanwhile, COMING TUESDAY brought national attention to the The 40th annual Folklife Festival on the Mall has disclosed new details about allega- Senate campaign because he is one some unusual modern touches, including a video tions that soldiers raped a woman of a handful of African American 4th on the Mall screen that links young people here with students in and killed her, along with her moth- Republicans whom the national Alberta, Canada. C3 er, father and a sibling, in March in party is counting on to establish Tuesday’s Metro a village south of Baghdad. A U.S. credibility among black voters. section will feature an military official revealed Saturday Both Democrats hold leads over illustrated guide to Holiday Weekend Events that the target of the alleged attack Steele in potential general election Mall festivities, Information on celebrations and television coverage was a 20-year-old Iraqi woman who including a list of the of Independence Day in Washington can be found in See MARYLAND, A16, Col. 1 best spots to watch Sunday Source, TV Week and online in the City See IRAQ, A23, Col. 1 fireworks. Guide at www.washingtonpost.com. K For Mfume, race can cut K Bin Laden tape advises both ways. | Marc Fisher, C1 against negotiations. | A23 City Has a New Bounce in Its Step INSIDE THE WORLD Mexico’s Political Theater D.C. Tests Tree-Friendly Sidewalks Made of Recycled Tires Colorful presidential campaign season comes to an end. A18 By Elizabeth Williamson to break your mother’s back. In one of ones — and are favored by city bu- Washington Post Staff Writer the biggest tests in the nation, the reaucrats who last year took 2,600 OUTLOOK District recently installed several complaints about broken concrete, A small boy in big white Nikes hus- blocks’ worth of rubber sidewalks in got slapped with three lawsuits from The D.C. Power Read tled down Rhode Island Avenue head- Northeast. The cost was $60,000, people who fell on sidewalks and re- Talk-show host Chris Matthews on the ing for the bus stop when, boing. He roughly three times more than if it placed hundreds of trees. Next year, if methods Washingtonians use to stopped, looked down at the pave- had been concrete. all weathers well, there may be a search out morsels of information in a ment, and took a few hops. Around tree roots, the walkways springy surprise in store for even sea of new current affairs books. B1 Rubber sidewalks — good for the are said to last about 14 years — near- trees, easier on the knees, no cracks ly three times longer than concrete See RUBBER, A10, Col. 1 METRO Frolicking for Survival? Summer is here and scientists say go ahead and play — it serves a purpose MS-13 Blamed in 3 Pr. George’s Slayings for both humans and animals. C1 SPORTS By Eric Rich Witnesses said the gunmen yelled police said, and all remained at large and Ernesto Londoño out the name of the gang Mara Salva- late yesterday. REUTERS Agassi, Williams Exit Wimbledon Washington Post Staff Writers trucha, also known as MS-13, as they Several police sources said there European Space Agency astronaut Thomas Reiter It was Andre’s final farewell, but Venus opened fire in the Adelphi area about was no immediate indication that the of Germany has his flight suit checked before the will be back. E1 Assailants thought to belong to a midnight Friday, according to two po- victims — the men killed were 19, 20 decision was made to delay the shuttle launch. Latino street gang fatally shot three lice sources. Two other sources, also and 29, and the survivor is 21 — were men and wounded a fourth in the en- speaking on condition of anonymity affiliated with gangs. Two of the men THE NATION tryway of a Prince George’s County because the investigation is in its ear- died at the scene, and two were taken Space Shuttle Launch Scrubbed Contents apartment complex, police said yes- ly stages, confirmed that police be- to a hospital, where one died.  2006 NASA is hoping the weather will improve The 7 terday, shattering the relative calm lieve that MS-13 was behind the at- Police did not release the names of Washington that followed gang-fueled bloodshed tack. today to allow Discovery to lift off. A6 Post

in the region last summer. There were five or six assailants, See SHOOT, A14, Col. 1

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A12 Sunday, July 2, 2006 M1 x The Washington Post

HARVESTING CASH Reaping Money for Nothing Payments Keep Coming, Even Without Crops

El Campo, Tex.

RRiceice ffieldieldield BY JAMES M. THRESHER — THE WASHINGTON POST FARMING, From A1 cline over seven years. Many lawmakers as- Money for Nothing sumed they would eventually end. But two grow the crop being subsidized. They can In 2002, this land in El Campo, TODAY years later, farm prices fell sharply, and the switch to a different crop or raise cattle or Tex., was a rice field. Today, owners This land is the site of a new subdivision. Republican-led Congress gave in to the even grow a stand of timber — and still get of new homes on the land collect farm lobby. the government payments. The cash BEFORE Sen. Thad Cochran (R-Miss.) used his comes with so few restrictions that sub- farm subsidies on their back yards. RRiceice ffieldieldield power as chairman of the Appropriations This satellite photo shows the former division developers who buy farmland ad- One real estate broker refers to the subcommittee on agriculture to push rice fields. vertise that homeowners can collect farm properties as “cowboy starter kits.” Sites of homes above through $3 billion in “emergency” assis- subsidies on their new back yards. tance to grain, cotton and dairy farmers. The payments now account for nearly That was only the beginning of a retreat by half of the nation’s expanding agricultural Vanishing Acres Republicans fearing retribution at the polls subsidy system, a complex web that has lit- In 1981, 600,000 acres were in key “red” states with broad farm constitu- tle basis in fairness or efficiency. What be- planted in rice in Texas. encies. gan in the 1930s as a limited safety net for Owners or tenants were paid “The original intent was to make a step in working farmers has swollen into a far- rice subsidies on that land last the direction of eliminating farm pro- flung infrastructure of entitlements that year, even though only grams,” said then-House Majority Leader has cost $172 billion over the past decade. 202,000 acres were in rice. Richard K. Armey (R-Tex.), who led an un- In 2005 alone, when pretax farm profits The vanishing acres have been successful fight in the 1990s to trim the sub- were at a near-record $72 billion, the feder- retired, used for grazing or sidies. “By 1998, there was no zeal left.” al government handed out more than $25 planted in another crop. Instead of cutting, Congress ended up ex- billion in aid, almost 50 percent more than panding the program, now known as direct the amount it pays to families receiving Texas rice production and countercyclical payments. A program welfare. In thousands of acres planted intended to cost $36 billion over seven The Post’s nine-month investigation 600 years instead topped $54 billion. found farm subsidy programs that have be- “The farm policy we’re pursuing now has come so all-encompassing and generous 500 no rhyme or reason, and we’re just sending that they have taken much of the risk out of big checks to big farmers,” said Gary Mitch- farming for the increasingly wealthy indi- Not Planted ell, now a family farmer in Kansas who was 400 viduals who dominate it. TEXATTEXASE X A S once a top aide to then-Rep. Pat Roberts (R- The farm payments have also altered the Fields Grow Cash 2005: Kan.), the 1996 bill’s House sponsor. landscape and culture of the Farm Belt, Since 2000, at PAYMENTS 300 202,000 “They’re living off their welfare checks.” pushing up land prices and favoring large, (by county) Efforts to overhaul the farm subsidy net- least $1.3 billion in El Campo wealthy operators. direct and More than $5 million 200 work have been repeatedly thwarted by The system pays farmers a subsidy to countercyclical $1 million to $5 million powerful farm-state lawmakers in Congress Planted protect against low prices even when they payments have 500 allied with agricultural interests. $500,000 to $1 million 0 100 sell their crops at higher prices. It makes been sent to MILES “The strength of the farm lobby in this “emergency disaster payments” for crops landowners who do Less than $500,000 town is really unbelievable,” Armey said. “I 0 that fail even as it provides subsidized in- not actively farm. No payment ’96 ’98 ’00 ’02 ’04 don’t think there’s a smaller group of con- surance to protect against those failures. stituents that has a bigger influence.” And it pays people such as Matthews for SOURCE: Washington Post compilation of U.S. Department of Agriculture data BY SARAH COHEN, LAURA STANTON AND NATHANIEL VAUGHN KELSO — THE WASHINGTON POST merely owning land that was once farmed. ‘Cowboy Starter Kits’ “We’re simply administering it the way Congress established,” said John A. John- Farmers and landowners benefited from son, a top official at the U.S. Agriculture when the Roosevelt administration farmers annual fixed cash payments as a farmers got them whether or not they grew the 1996 law whether their land once grew Department. stepped forward to support millions of De- way of weaning them off subsidies. any crops, or whether prices were high or wheat, corn, cotton or any of the other sub- Today, even key farm-state figures be- pression-era farmers suffering from low That sweetener was needed to win over low. sidized crops. But nowhere is the impact lieve the direct-payment program needs a prices. By the early 1990s, U.S. agriculture wheat-state Democrats — led by Senate Owners could do almost anything they more evident than in the sunbaked Texas major overhaul. was a productive marvel, yet was still Minority Leader Tom Daschle (S.D.) — wanted with their land, as long as they did rice country that spreads southwest from “This was an unintended consequence mired in government controls and awash and GOP House members from rice and not develop it. They could leave it fallow or Houston to the Colorado River and east to of the farm bill,” said former representative in complex subsidies. cotton districts. Wheat growers alone rent it for pasture. They could set up a the Gulf of Mexico. Charles W. Stenholm, the west Texas Dem- When the Republicans took control of stood to receive $1.4 billion in the first hunting retreat. Or, as happened in some In 1981, the Texas rice belt extended ocrat who was once the ranking member Congress in 1995, they brought a new free- year. The payments for rice growers were Louisiana parishes, landowners could col- over about 600,000 acres. By last year, on the House Agriculture Committee. “In- market philosophy toward farm policy. In a increased by $52 million at the last minute lect payments while planting stands of USDA records show, the amount of planted stead of maintaining a rice industry in break with 60 years of farm protections, in an effort to win support from Sen. David commercial timber. rice had shrunk to 202,000 acres, partly be- Texas, we basically contributed to its de- they promoted the idea that farmers Pryor (D-Ark.). Supporters said these annual payments cause landowners were able to get farm pay- mise.” should be allowed to grow crops without The new payments were calculated on a gave farmers the flexibility to switch from ments even if no rice was grown on their restrictions, standing or falling on their farm’s “base acres,” or production dating one crop to another as market conditions land. Freedom to Farm own. The result was the 1996 bill, which to 1981. For example, if a farmer had plant- changed, or even to sit it out in a year of In fact, so many landowners and farmers the Republicans called Freedom to Farm. ed 400 acres of rice, he was entitled to a low prices. In addition, the payments fit are collecting money on their former rice- The program that pays Matthews was The idea was to finally remove govern- check of about $100 an acre, or $40,000, with international trade rules that frown lands — $37 million last year alone — that the central feature of a landmark 1996 farm ment limits on planting and phase out sub- every year. The amount per acre varied de- on traditional price supports. the acres no longer used for rice outnumber law that was meant to be a break with the sidies. But GOP leaders had to make a pending on past production. The annual payments were dubbed the planted ones. farm handouts of the past. Subsidies began trade-off to get the votes: They offered The payments were unrestricted — “transitional” and were supposed to de- “So many wealthy people are getting so

A Changing THREE FARMERS, THREE CHOICES Idle Switching Crops Staying the Course Farm Program $ Idle Jerry Warren is one Iowa corn farmer The 950 acres that of dozens of former Ronnie Hunt’s H&D John R. Adams farms Federal farm programs began peanut farmers in Farms partnership outside Atlanta, Ill., during the Great Depression, when $ Idle Comanche and rented a 5,200-acre were traditionally one-quarter of the U.S. population lived Planted Eastland counties near rice farm in southwest planted in corn and on farms. The programs guaranteed prices Fort Worth who quit Arkansas. He grows soybeans. They still by effectively allowing farmers to sell some farming. But he later corn, soybeans and are. Adams has bought former peanut wheat on the property received $185,125 crops to the federal government when markets farms and has — but has collected for the historical were poor. Farmers who participated in the 1973 1996 received about $30,000 $2.4 million in subsidies use of the land. programs were required to limit their production. for the historical use based on the farm’s Here is how the farm programs evolved: Farmers had to limit production to Farmers can plant as much as they want of the land, where historical rice qualify for an extra cash payment — or nothing at all — and receive a new cattle now graze. plantings. $ = Subsidy paid when prices were low. kind of annual allowance, now called direct and countercyclical payments

SOURCE: Washington Post analysis based on historical plantings. BY SARAH COHEN, DAN MORGAN AND LAURA STANTON — THE WASHINGTON POST

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HARVESTING CASH Reaping Money for Nothing Farm Subsidies Over Time 1973: $120 In recent years, farm subsidies have $121 billion remained high even in years of 1972 1985 1996 2005 near-record profits. A crop failure in the In the midst of of the worst farm A new Republican majority in Congress The World Trade Organization tells the 100 Soviet Union triggers crisis since the 1930s, the first bristles at the government’s United States it must stop paying a run on U.S. corn and Farm Aid concert raises interference in agricultural markets certain subsidies that could affect PRETAX FARM PROFIT wheat. Prices and $7 million for struggling farmers. and enacts Freedom to Farm. world prices or production. 80 In billions, adjusted for inflation farm incomes soar. 2005: $60 $72.6 60 billion At their lowest in 1974, 40 At their peak in 2000, 2005: 40 subsidies made up 2% subsidies made up 47% $23 of total farm income. ALL OTHER NET INCOME of total farm income. billion 20 20 1974: 2000: FARM SUBSIDIES $9.2 billion $25.7 billion 0 0 1960 1970 1980 1990 2000 NOTE: Excludes crop insurance premium subsidies, which would bring the 2005 total to more than $25 billion. BY SARAH COHEN, DAN MORGAN AND LAURA STANTON — THE WASHINGTON POST

Finding Free Money The 1996 Freedom to Farm Act contained a provision that allowed landowners or tenant farmers to receive an annual payment even if they planted no crops. Six years later, the federal government tried to measure how much of that money, now known as direct and countercyclical payments, went to those who did not farm.

The conclusion: Its data were insufficient to allow for an estimate.

The Washington Post sought on its own to document the amount. The newspaper interviewed individual landowners and analyzed county production records, government surveys of farmers, the Census of Agriculture and a database of 217 million payment records dating to 1990.

Virtually all working farmers who receive the annual payment also receive other subsidies that are related to their farm’s production, including disaster payments and price supports.

To find individuals who collect the annual payment even though they do not farm, The BY MICHAEL WILLIAMSON — THE WASHINGTON POST Post looked for those who had Donald R. Matthews said he did not want to take the payments on his former riceland but was told they would have gone to other landowners. So he uses the money for scholarships. received that money but claimed none of the other subsidies over six years. Those matic. For example, she said, a parcel by his grandparents have generated $1.8 who fell into this category might be assessed at $55 an acre for agri- million in rice subsidies since 1996. collected $1.3 billion over the cultural use but $3,000 for regular use. “It’s Stovall stopped growing rice and began six-year period, about 3 percent big,” Gamble said. renting the land for grazing cattle. The of the total. Gamble is trying to enforce local rules family continues to grow some crops, such that require landowners to actually farm to as sorghum and soybeans. That figure excludes payments qualify for the lower tax rate. But she is Stovall said that is exactly the kind of to landowners who agree not to hampered by the federal government’s def- transition Congress intended with Free- farm as part of the govern- inition of farming, “which does not require dom to Farm. He estimates that 50 to 60 ment’s “soil bank,” now called you to actually farm. There is a conflict percent of his government payments go to the Conservation Reserve there between the federal definition and soil, water and other improvements, such Program. our definition,” she said. as filling in irrigation ditches and putting — Sarah Cohen Gary Underwood, director of agricultur- up fences. al appraisals for sprawling Harris County, “There are bullfrogs where there were which includes Houston, said owners are none, and we’re starting to see quail,” he building $500,000 houses on old rice fields said. “There are less chemicals flowing into with Bailey, 55, from sharecropping to a and qualifying for tax breaks. our bays, and it reminds me of the environ- fixed annual rent, pegged to capture the He singled out one tract where the own- ment when I was a kid.” $90 an acre that the government was pay- er built a 4,000-square-foot single-story ing him on 214 acres. house on five acres in Katy, a booming sub- ‘Hell of a Deal’ “A lot of landlords increased their rental urb. The house sits on one acre. The other rates to equal or exceed the direct pay- BY DAN MORGAN — THE WASHINGTON POST four acres get a tax break and a farm pay- Among the most fervent critics of the an- ments,” Bailey said. “They know what the Rex Bailey III raised rice as a sharecropper near Angleton, Tex., until his landlord switched ment. “I can’t touch him,” Underwood nual payments are hundreds of Texas farm- payment is, so that’s what the rent is. Even to a fixed annual rent set at about the amount of the federal rice payments. said. ers who rent land on which they grow rice. though the payment is in my name, I turn Under the rules, tenants receive the money around and give it to” the owner. The Big Landowners if they operate the farms. But landlords can In 2004, the property was sold to Shin much money off this, it’s going to be hard and garage sit on part of the land and are simply increase rents to capture those pay- Shan Chu, an elderly investor who lives in to cut,” said Michael Wollam, a rice farmer appraised at $338,140, records show. His The large landowners who control vast ments. Vancouver, Canada. Once a year, Bailey, from Brazoria County. payments have been about $4,500, accord- sections of the once-sprawling rice fields Other landlords have evicted the tenants who still grows rice on part of the 4,000 At a housing development rising from ing to USDA records. “The money is free,” outside Houston have been some of the from land they had farmed for years. Then acres, cuts a $25,000 check and sends it to old rice fields on the outskirts of El Campo, Hamman, 48, said, adding that he thought biggest beneficiaries of the 1996 law, the landowners can collect the checks Chu, whom he has never met. 70 miles southwest of Houston, local real the money should go to real farmers. “You USDA records show. themselves, even if they do not farm. Reached by telephone, Chu said he estate broker John K. Petty purchased a 75- don’t have to do anything but keep the Diana Morton Hudson is a corporate se- Congress “made slaves out of every hoped to eventually “develop some resi- acre tract from investors in July 2002. He ground.” curities lawyer whose 87-year-old mother, farmer who was a tenant,” said Stephen J. dential buildings there. It’s very nice land, held on to it for a few months, then carved When Donald Matthews bought his 18- Mary Anna Hudson, owns an interest in Zapalac, a former Matagorda County rice very flat, very close to the city.” it up and resold it for housing. acre tract from Petty in 2002, he never ex- two tracts of land in nearby Matagorda farmer who now runs a farm credit office in Chu, who also owns and leases 17,000 “At one time, the area was all farmed in pected to receive farm subsidies on his County. USDA records show that Mary Bay City. acres of farmland in west Texas, grew up in rice,” Petty said. Now, the dusty tract is property, appraised at $381,000. Anna Hudson has received $191,000 since In 1998, Zapalac was leasing 2,500 mainland China and Taiwan, worked in perfect for what he calls “cowboy starter “I was informed by Mr. Petty that there 1997 on land she doesn’t farm. “We just pay acres, most of it for rice farming. One land- electronics and moved to Vancouver 36 kits,” residential tracts owned by non- was a ‘rice base’ and I was entitled. I said, someone to mow it, and it just sits there,” lord canceled a lease for 1,400 acres in years ago. He described himself as nearly farmers but still large enough to keep a ‘What do you mean I’m entitled? I’m not Diana Hudson said. 1998, he said, and a second cancellation fol- 80. horse in the back yard. going to farm rice.’ ” Later, she added: “I’m a corporate secu- lowed for the rest in 2004. “It’s just an investment,” he said of his Petty informed potential buyers that be- But nine of Matthews’s acres are classi- rities lawyer. I couldn’t even locate these “As soon as they figured they could take farm holdings. “I’m waiting for the money.” cause their land had once been an active fied as agricultural land, for which he has two parcels in Matagorda.” the payments, they said, ‘I don’t need you rice field, they could collect an annual pay- received more than $5,000, records show. Houston heart surgeon Jimmy Frank anymore,’ ” he said. “They were renting Researchers Alice Crites and Don ment from the USDA on the portion that Matthews said he originally was not go- Howell has received $490,709 since 1996 me land for $40 an acre, but they could get Pohlman contributed to this report. was not developed. They did not have to ing to take the money. But he said Petty in payments tied to old rice tracts on a vast $125 an acre from the government.” grow rice or anything else. told him that it would just go to other land- ranch near Raywood in Liberty County Some of the rice land he lost has been “If you have 10 acres and build a house owners. “I thought, heck, why should I do where he now raises cattle, USDA records turned into pasture for cattle, while the on one, you can continue to get farm pay- that? I wasn’t going to give it to somebody show. The last rice produced on the landlord continues to receive the rice mon- washingtonpost.com ments on those other nine acres without else to put in their pocket.” Instead, he uses 10,000-acre property was “probably over ey. A collection of photographs of farms farming,” the USDA’s Johnson said. the money to fund scholarships at the coun- 10 years ago,” according to Susan Cotton, “You can sell the calves and still stick the from this report and a clickable map Petty used it as a selling point. ty fair and two local high schools, he said. Howell’s business manager. “We’re not rice rice payment in your pocket,” Zapalac said. that shows top direct and “Does it increase the marketability?” “Still, I get money I don’t think I’m enti- producers anymore.” “It’s a hell of a deal.” countercyclical payments for counties Petty asked. “Sure it does.” tled to,” he said. For Guy F. Stovall III, an El Campo bank- For years, Rex Bailey III, a rugged 6- across the country can be found at Duane Korenek bought 17 acres at the In some Texas counties, the federal pay- er who helps oversee thousands of acres of foot-5 rice farmer, sharecropped near An- www.washingtonpost.com/nation site and is building a house. Korenek said it ments open the door to another benefit: family lands in Wharton, Matagorda and gleton, Tex., an arrangement in which he was “common knowledge around here” property tax reductions. Jackson counties, the 1996 farm law was a and his landlord divided the costs and that the new owners could collect farm pay- “When a property owner receives a fed- chance to get out of rice farming and con- shared in profits and government payments. He has received about $2,550, eral payment, the land is considered agri- vert properties inherited from his grand- ments. Washington Post Radio USDA records show. cultural use and is assessed at that lower parents to other uses. “It was all based on what was produced,” 8:15 a.m. Monday: The Post’s Sarah A few hundred yards up a gravel and dirt rate,” explained Tylene Gamble, the chief But 10 years later, taxpayers are still pay- he said. “We shared the risk.” Cohen and Dan Morgan. road, oilman Rene Hamman purchased 20 appraiser for Wharton County, where El ing for the transition. Records show the That changed in 2002, when the owners acres in May 2003. His two-story house Campo is located. The discount can be dra- land owned by Stovall and two trusts set up of one tract changed their arrangement Tune to 107.7 FM or 1500 AM.

About the Series 2005 farm subsidies, in billions As Congress prepares to debate a farm bill next year, Direct and countercyclical payments $9.4 billion TODAY: Direct and countercyclical The Washington Post is examining federal agriculture payments carry few restrictions: The Price supports $6.2 subsidies that grew to more than $25 billion last year, land must stay undeveloped. despite near-record farm revenue. Today’s report looks at Disaster payments $2.9 Landowners or tenants can plant as direct income-support payments made to landowners, Conservation programs $2.5 much as they want, or nothing at all. even if they do not farm. Tomorrow’s report will explore Crop insurance premiums* $2.3 how price supports pay billions to farmers, even when they *Insurance figure is for crop year, not calendar year.

Other farm subsidies $2.0 have good years. SOURCES: Economic Research Service, Risk Management Agency, USDA payment records

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Weather

Today: Partly sunny, storm. High 91. Low 72. Tuesday: Thunderstorms. High 92. Low 72. ABCDE B6 Details, 35¢ Prices may vary in areas outside metropolitan 129th Year No. 210 S DCMDVA Monday, July 3, 2006 M1 M2 M3 M4 V1 V2 V3 V4 Washington. (See box on A2)

Iraqis Bury Victims of Market Bombing Petitions to FDA Sometimes Delay Generic Drugs Critics Say Companies Misusing Process

By Marc Kaufman Miss.) that would rein in industry- Washington Post Staff Writer filed citizen petitions, show that 20 of the 21 brand-name petitions set- A procedure designed to alert tled by the FDA since 2003 were the Food and Drug Administration ultimately rejected. to scientific and safety issues is “The brand-name drug industry getting a hard look from members has found a major new loophole,” of Congress, who say they are con- Stabenow said in an interview. cerned that it may be getting sub- “The way things stand now, even if verted by the brand-name drug in- the FDA finds that a petition was dustry. frivolous and rejects it, [the drug Some at the FDA, as well as lead- companies] can get hundreds of ers in the generic drug industry, millions of dollars of profits from complain that “citizen petitions” the delay.” — requests for agency action that She and others point to the any individual, group or company example of Wellbutrin XL, a hot- can file — are being misused by selling antidepressant that was fac- brand-name drugmakers to stave ing the prospect of competition off generic competition. from cheaper generics late last The simple act of filing a peti- year. tion, they say, triggers another By the time Biovail Corp., the round of time-consuming and often drug’s maker, filed a citizen peti- redundant reviews of the generics tion with the FDA, raising con- by the FDA, which can take cerns about the safety of its poten- months or years. In the process, tial rivals, Impax Laboratories Inc. consumers continue to pay mil- and several other companies had lions of dollars more for the brand- already gone through much of the

BY ALAA AL-MARJANI — ASSOCIATED PRESS name drugs. FDA application and review proc- Statistics collected by the staff ess for their generic versions of the After a funeral procession in Najaf, rows of graves are dug for victims of Saturday’s massive truck bombing in Baghdad. At least 66 died and more than of Sen. Debbie Stabenow (D- drug. Impax was looking forward 100 were injured. Meanwhile, Sunni Arab legislators decided to boycott the Iraqi parliament to protest the kidnapping of a colleague. Story, A15. Mich.), who has introduced legislation with Sen. Trent Lott (R- See DRUGS, A10, Col. 1

Episcopal HARVESTING CASH Working a Farm Subsidy Protest of Growers Reap Benefits Even in Good Years Top Bishop By Dan Morgan, Sarah Cohen as if he needed help and paid him $75,000. Richardson who sold at higher prices, ac- just cash paid to farmers when market and Gilbert M. Gaul The money came from a little-known, 20- cording to a Washington Post analysis of prices dip below the government-set mini- Washington Post Staff Writers year-old U.S. Agriculture Department pro- USDA payment data. mum, or floor, if only for a single day. Increases gram that was intended to boost farmers’ The subsidy is called the loan deficiency The LDP has become so ingrained in EDEN, Md. — Roger L. Richardson, a incomes when prices are low. payment. Although it has cost taxpayers farmland finances that farmers sometimes vigorous 72-year-old who grows corn on The farmers do not have to sell at dis- $29 billion since 1998, it is virtually un- wish for market prices to drop so they can More Dioceses Reject 1,500 acres of prime Eastern Shore farm- tressed prices to collect the money. They known outside farm country. But in rural capture a larger subsidy. land, had a good year in 2005. Thanks to can bank the government payments and sell America, the LDP is a topic at backyard bar- “In the fall of the year, we find the farmer New Female Leader smart planning, shrewd investing and a when prices are higher. becues and local diners along with the high wanting the price to go down,” John Fletch- little luck, he grossed a healthy $500,000 for Since September, the program has cost school football team and the weather. De- er, a Missouri grain dealer, told Congress By Alan Cooperman his crop. taxpayers $4.8 billion. Most of that money spite its name, it is neither a loan nor, in Washington Post Staff Writer But the federal government treated him — $3.8 billion — went to farmers such as many cases, payment for a deficiency. It is See FARMING, A8, Col. 1

To visit Episcopal parishes across her huge but sparsely populated Neva- da diocese, Bishop Katharine Jefferts Schori pilots a small airplane. She often bumps down on tiny airstrips, but Mexican Presidential Vote wherever her single-engine Cessna 172 lands, she is welcome. That’s about to change. A Tossup Between 2 Rivals On June 18, the Episcopal Church’s General Convention elected Jefferts By Manuel Roig-Franzia ers had urged the electoral commission to Schori to a nine-year term as the de- Washington Post Foreign Service be cautious about releasing preliminary re- nomination’s presiding bishop, making sults, worried that a premature announce- her the first woman to head any branch MEXICO CITY, July 2 — Mexico’s presi- ment could lead to unrest. of the Anglican Communion, the world- dential election appeared to be excruciat- “Be careful . . . you could put the stability wide family of churches descended ingly close as polls closed Sunday with An- of the nation in danger,” said Mariano Pala- from the Church of England. drés Manuel López Obrador, a populist cios Alcocer, head of the Institutional Revo- Although she will not take up her favorite of the poor who pledged dramatic lutionary Party, or PRI. The PRI’s candi- new role until November, six U.S. dio- change, in a fierce contest against Felipe date, Roberto Madrazo, consistently ran ceses already have rejected her au- Calderón, a free-trade booster who prom- third in pre-election polls. thority, and that number is rising. ised continuity. Frontrunners López Obrador and Calde- Many church leaders expect that by the Luis Carlos Ugalde, the head of Mexico’s rón battled for the presidency in starkly dif- time she takes office, about five more, electoral institute, said late Sunday that the ferent style. López Obrador charmed voters for a total of 10 percent of the nation’s difference “was too narrow” for him to an- with a mix of charisma and New Deal-style 111 Episcopal dioceses, will have nounce results and that he might not be able public works proposals that he promised joined the rejectionist camp. to definitively reveal the winner until would create jobs for millions of poor Mex- Moreover, conservative Anglicans Wednesday. icans and stem illegal migration to the Unit- overseas have made no secret of their BY JAHI CHIKWENDIU — THE WASHINGTON POST The announcement came after exit polls hope that the archbishop of Canter- Outside Williamsburg Middle School in North Arlington, Elizabeth Meikle, right, guides showed the race too close to call. Party lead- See MEXICO, A16, Col. 2 bury, the spiritual leader of the Angli- Bilguun “Billy” Boldbaatar, 13, and other students onto a bus. More than half of the can Communion, will not invite Jefferts students in the high-intensity language training program at the school are Mongolian. Schori to the next gathering of the heads of the 38 constituent churches in 2008. INSIDE Gender is only part of the reason Mongolians Meld Old, New that some conservatives in the church THE NATION

See BISHOP, A5, Col. 1 In Making Arlington Home Shuttle Launch Scrubbed Again NASA says it will try Drawn Partly by Schools, Enclave Rapidly Arises again tomorrow, weather permitting. A4 By Tara Bahrampour of a young man playing a morin huur, a Washington Post Staff Writer stringed instrument with a carved horse’s SCIENCE head at the top. Backstage at the Rosslyn Spectrum, The Mongolian Children’s Festival, in Avian Flu Primer three girls in identical black tops and its third year, highlights a little-known A guide explains how white miniskirts checked their makeup fact about life in Arlington County — that the virus infects. A7 and tried to calm their jitters as they de- the Mongolian community has become a BY LOIS RAIMONDO — THE WASHINGTON POST bated whether their shimmying dance to force. After English and Spanish, the THE WORLD STYLE the Black Eyed Peas’ “Shut Up” could pos- school system’s most common language Israel Takes Action sibly win the traditional Mongolian dance is Mongolian. Immigrant Gateway Leaves Adams Morgan competition. Mongolians in Arlington are a new Army ordered to “do Latino bookstore follows customers to Manassas. C1 “We’re really nervous . . . ” said Enkh- phenomenon, most arriving in the past everything’’ to free captured soldier. A15 jin Tuvshinzaya, 11. five years, and they seem to have an in- METRO “ . . . because people usually dance the nate talent for fitting in. Within months, SPORTS traditional dances, so they might win . . .” most Mongolian children prattle comfort- Storms Knock Out Power said Enkhuush Nyamsaikhan, 12. ably in English and embrace U.S. fash- Nats Top Devil Rays High winds cause damage “ . . . but I think we’re better than ions, music and dance moves. Ortiz’s pitching and across the region. B1 them,” said Orgil Bayarsaikhan, 13. Traditionally a nomadic culture of Zimmerman’s two-run The girls’ routine was unusual for the horsemen, Mongolians lived for years as a « Plus: Guess who’s BY JAY LAPRETE — ASSOCIATED PRESS homer help get a Classical and Traditional Mongolian Soviet satellite with no access to the west. much-needed win. E1 turning a year old? B2 Katharine Jefferts Schori was elected Dance or Songs competition, which fol- BY ANN BATDORF — NATIONAL ZOO presiding bishop last month. lowed the more customary performance See MONGOLIANS, A12, Col. 1

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HARVESTING CASH Working a Farm Subsidy Even in Good Years, Farmers Get Benefits FARMING, From A1 last year. “It’s almost unnatural.” Corn farmers collected the LDP on 90 percent of their crop last year, but most did not suffer the losses that traditional subsidies are meant to offset. Some collected hundreds of thousands of dollars. “Most smart farmers are cashing in on it,” said Bruce A. Babcock, director of the Center for Agricultural and Rural Development at Iowa State University. “It shows me that farmers are being overcompensat- ed.” The LDP bears little resemblance to the original price-support system, created in 1938 to help millions of desperate farmers during the De- pression. The government then propped up prices by buying grain and cotton whenever the market dipped below a government-set floor. But by the 1980s, the government had accumulated huge stockpiles of commodities that it could not sell abroad. With the backing of South- ern rice- and cotton-state lawmakers, Congress in 1985 came up with a way to protect farmers from low prices: the LDP. The government encouraged farmers to sell their crops on the market and paid them cash when prices fell below the floor. This reduced the stockpiles and made U.S. farm products a better buy abroad. But few foresaw where the program would end up, according to Arkansas Secretary of Agricul- ture Richard E. Bell, who lobbied for the change as president of the state’s largest rice cooperative. When corn prices fell in the late 1990s, the cash payments to farmers soared. BY DAN MORGAN — THE WASHINGTON POST Corn piles up at a grain elevator in central Illinois in October after Hurricane Katrina disrupted shipping on the Mississippi. Falling grain prices resulted in higher subsidy payments. ‘Location, Location . . .’ difference in LDP subsidies across Roger Richardson’s experience states and between counties — and, with his corn farm in Maryland’s in effect, across the country. Making the Most of a Subsidy Worcester County illustrates one “We were trying to make certain The federal government has guaranteed minimum prices, or floors, to farmers for generations. Loan deficiency way farmers take advantage of the that you wouldn’t have a farmer re- payments, created in 1985, have become the largest component of that guarantee. The subsidies — available for The Result LDP. ceiving 5, 10, 15 cents less than an- After harvesting his corn last sum- other farmer across the river or the major commodity crops including corn, wheat, cotton and soybeans — can vary each day for each crop in each A farmer would get mer, Richardson stored 190,000 county line,” said former representa- county where it is produced. Here is how the LDP works, based on market conditions and estimates for corn to keep the subsidy bushels in silos that he owns with tive Charles W. Stenholm (D-Tex.). published by the U.S. Agriculture Department last year for the Eastern Shore of Maryland. of 42 cents, even other farmers. He then waited for Lawmakers are frequently del- though the sales price was 13% prices to rise. He had reason to be uged by complaints from farm con- Sale price for one bushel of Eastern Shore corn in 2005 hopeful because the corn-dependent stituents who are outraged by a percent above the $2.50 government- Delmarva poultry industry pays a higher LDP across state or county 4 premium to lock up local supplies for borders. The lawmakers, in turn, Actual market price guaranteed chicken feed. lean on the USDA. minimum. Meanwhile, in the Midwest, pric- In June 2002, for example, South 1 es briefly dropped to their lowest lev- Dakota’s senators demanded that an Government- Subsidy el in five years after Hurricane Katri- injustice be corrected: Corn farmers 2.00 2 guaranteed price 3 Loan deficiency payment (subsidy) per na. The storm stalled grain barges in Iowa were getting 9 cents a bushel Posted $0.42 $0.42 bushel $2.13 county up and down the Mississippi. Huge while those just across the border in $2.40 yellow piles lay in fields outside South Dakota were getting 7 cents. price per bushel stuffed grain elevators, and a sign “These inequities are more than $1.71 outside one elevator said, “Blame it just numbers because for farmers 1.50 per bushel + on Katrina.” they could make the difference be- January sale per The drop in prices brought the tween profit and loss,” wrote Sens. 1 2 3 4 bushel government’s safety net — the LDP Tim Johnson (D) and Thomas A. $2.40 — into play. Daschle (D) in a two-page, single- The government Each day, the USDA estimates local prices Farmers can choose to After taking the LDP, farmers In DeKalb County, Ill., the sub- spaced letter to then-Agriculture 1.00 guarantees a price for and publishes its “posted county price” take their LDP any time can sell that corn whenever sidy had reached 46 cents a bushel Secretary Ann M. Veneman ob- each crop in each county for an area. This will be used to calculate after harvest and before they want for whatever one day in September. (The LDP for tained under the Freedom of In- based on historical the next day's subsidy offer. No subsidy is the corn is sold. If an price they can get. If a each county is calculated by sub- formation Act. patterns. Nationwide, a offered if the posted price is above the Eastern Shore farmer took farmer in Maryland waited tracting the USDA’s daily estimate Efforts to equalize the subsidies bushel of corn averaged guarantee. If it is lower, farmers can claim the corn subsidy on Sept. until January, the corn of the local market price from the fall to a staff of 10 officials housed in 0.50 $1.95 last year. the difference in a subsidy called the loan 14, the LDP would have would have been worth government’s floor, which is set the USDA’s Commodity Office in Worcester County’s floor deficiency payment, or LDP. been 42 cents for every about $2.40 per bushel. each year and was $1.98 a bushel in suburban Kansas City. Every work- was $2.13. bushel. DeKalb.) day, they check with online services, Yet in one of the oddities of the call grain elevators across the Mid- = per system, across the country on the west and poll 19 major grain mar- 0 $2.82 bushel Eastern Shore, where corn market kets, where large merchants and JUNE JULY AUG. SEPT. OCT. NOV. DEC. JAN. prices were much higher, the sub- food processors go to buy. sidy was about the same: 48 cents. It Then, in a 4 p.m. ritual, the USDA SOURCE: Washington Post compilation of USDA data BY SARAH COHEN AND LAURA STANTON — THE WASHINGTON POST hovered around that level for the officials gather around a conference next two months. table with an open phone line to when prices are low and sell when grain elevator for about $2 a bushel. To book the subsidy being paid on headquarters in Washington. Poring prices are higher. The practice, called “forward con- a particular date, Richardson simply over maps and prices, the group sets For last year’s crop, farmers sold tracting,” is increasingly common had to walk into the local USDA of- the next day’s LDP for corn, wheat their corn for an average of $1.90 per and helps insulate farmers from the fice in Snow Hill, Md., with the abili- and 15 other commodities in more bushel, only 5 cents below the na- market’s routine ups and downs. ty to prove that he owned a harvest- than 3,000 counties. tional floor price. But they received On top of their contracted price, ed corn crop. He applied for the Officials add a few cents in one an LDP averaging 44 cents, govern- the Sullivans got the subsidy: subsidy for different portions of his county and take away in another, ment payment records show. The $292,054 for that same corn, accord- crop on several days throughout the when the research shows that sub- difference amounted to $3.8 billion. ing to payment records. fall. sidies in different areas would be too The same thing happened in Sullivan considers the LDP a god- By December, feed mills on the far apart. 2004, when the LDP was 27 cents send, given the uncertainties of Eastern Shore had begun running “Congress gave us conflicting re- even though the price farmers re- farming. “Without it, Main Street short, and prices were rising. Rich- quirements,” said Bert Farrish, di- ceived when they sold their crops Minnesota would have no money to ardson began selling for an average rector of the USDA’s Commodity was above the floor. The windfall for keep the economy rolling,” he said. $2.60 a bushel. That was about 50 Office in Washington. “We have to farmers was $2.7 billion. Richardson also makes no apolo- cents more than the price quoted in minimize the difference in benefits One reason for the discrepancy is gies for taking the government mon- Chicago, the national benchmark. across state and county lines, but ad- that farmers have adopted modern ey. He contends that the LDP helps Richardson cashed in because of his minister it in a way that reflects local methods to limit their financial risk. keep him and other farmers afloat by ability to store grain until it was markets as closely as we can.” “A farmer who plays it right can offsetting rising energy costs. Mary- needed and his proximity to the Stenholm acknowledges the prob- make a bundle at times,” said Daniel land farmers, he adds, deserve high- BY DAN MORGAN — THE WASHINGTON POST mills. lems but believes it all evens out. A. Sumner, an agricultural econo- er subsidies because they have high- While receiving federal payments designed to offset low prices, Roger L. “It’s like real estate,” he said. “It’s “There’s no way you’re going to mist at the University of California er costs and lower yields than Richardson was able to hold on to his corn crop last year until the price rose. location, location, location.” get a national program that works at Davis. Midwestern farmers. The LDP subsidy that he had al- perfectly,” he said. “Some get an ad- One who played it right last year “Without the LDP last year, farm- counties in six states, has received necessary to cushion other farmers ready booked would bring his total vantage, some get a disadvantage. was Michael T. Sullivan, who pro- ers would have been in deep water,” $3.4 million in LDP checks over the who do not have access to sophis- take to more than $3 a bushel — he And you hope over 10 years it bal- duces a million bushels of corn annu- he said recently. As a large farmer, past decade, including $491,726 on ticated financial hedges, and to but- made $75,000 from the LDP alone. ances out.” ally with his three sons in Franklin, he said, “You handle a lot of dollars, the 2005 corn crop, government rec- tress the farm economy in bad years. The paradox of paying roughly Minn. He thrived even during the but that’s no panacea.” ords show. “It’s a protection in years of de- equal subsidies regardless of local Financial Hedging depressed post-Katrina market. The bigger the farm, the bigger Stephanie Walker Spiros, who pressed prices,” she said. conditions was a deliberate policy Well before the storm, Sullivan the payouts. helps run the sprawling family farm But the payments for corn alone devised by Congress. In 2002, it di- Increasingly, farmers have said, the family had arranged to sell Walker Place, an operation based empire, acknowledged that the sys- have grown, from $1 billion for the rected the USDA to “minimize” the learned to lock in their subsidies three-quarters of its crop to a local in Danville, Ill., that farms in 23 tem has flaws. But she defends it as 1998 crop to $4.3 billion for last From Loans to Loan Deficiency Payments What Why How What Happened A loan program that To guarantee a minimum price. The Farmers could borrow the value of their crops based By the early 1980s, government warehouses were stuffed with guaranteed a minimum loans were made when farmers were on the government’s guaranteed floor price. If prices surplus commodities, and the U.S. government had become the OLD price for crops by trying to pay their bills and might have rose enough, they could reclaim their crop and pay world’s largest grain trader. The loans still exist but are not as SYSTEM effectively allowing farmers to sell at low harvest prices. It back the loan. If not, they could leave the widely used. to sell to the government encouraged farmers to spread their commodities in government warehouses and were when prices were low. sales throughout the year. not required to repay the debt.

Cash paid to farmers when To boost farm incomes in times of low When market prices are lower than the government- The government now rarely buys and sells excess grain, and prices NEW market prices are low, called prices, eliminate government set minimum, farmers are paid the difference in are allowed to rise and fall with market conditions. But over the SYSTEM a loan deficiency payment. purchases of crops and encourage cash. The government is not a buyer. Farmers can past two years, taxpayers have paid farmers more than they would The program began in 1985 year-round sales. sell at any price whenever they want. have under the old system. and has been expanded.

THE WASHINGTON POST

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HARVESTING CASH Working a Farm Subsidy

back, of the LDP. The main objection to the LDP is Cash for Corn that it hurts world commodity prices After Hurricane Katrina caused a brief dip in Midwest corn markets, farmers across the country were by encouraging overproduction. able to claim loan deficiency payments, whether or not they sold their corn at the distressed prices. Farmers abroad lose because “the LDP causes us to grow more corn than we otherwise would,” said Sumner, the University of California economist. He advised Brazil when it successfully argued to the World Trade Organization last year that the LDP and other U.S. subsidies de- press world cotton prices. Negotiations over a new world trade deal broke up in disarray Sat- urday after the United States and other countries deadlocked on the issue of reducing farm subsidies. Lawmakers from Midwestern farm states — most of which backed Bush in the past two presidential r e iv elections — have vowed to defend R i p the LDP.

p i

CORN PAYMENTS s

s Supporters say it has helped the (by county, 2005) i s 0 500 s i U.S. trade balance and has encour- MILES More than $10 million M aged the efficient marketing of grain. $5 million to $10 million Landfall: Moreover, they say, European and Aug. 29, 2005 $2 million to $5 million Asian nations subsidize their agri- Hurricane Katrina disrupted Mississippi culture at even higher levels. Less than $2 million River traffic, which normally carries Senate Finance Committee Chair- No payment 60 percent of the nation’s grain exports. man Charles E. Grassley (R-Iowa) has warned U.S. trade negotiators BY SARAH COHEN AND NATHANIEL VAUGHN KELSO — THE WASHINGTON POST not to bow to foreign pressure unless they win major concessions for year’s, even though the average 1,000 acres of corn and soybeans, corn than sell it,” Kuhfuss said. U.S. agriculture. price farmers received for a bushel splitting the revenue and the govern- He talked his father into his first BY SARAH L. VOISIN — THE WASHINGTON POST “We’re not going to buy a pig in a has remained near or above the gov- ment payments with several land- contract on the corn futures market Grain barges backed up at the Port of St. Louis after Hurricane Katrina poke,” he said. ernment floor for the past five years. owners. — and he came out a winner. disrupted the flow of traffic on the river, triggering a drop in corn prices. U.S. farmers can also make up for Still, he uses a financial adviser Now the son uses the lingo of the Researcher Alice Crites declining prices with higher yields. and a commodity broker to help trader as much as that of the farmer, LPDed all my corn at over 40 cents a er’s hat: contributed to this report. They now harvest 20 percent more hedge his farming risks with options throwing around terms such as bushel,” he said. “It’s going to take a lot of dollars corn from each acre than just a dec- and futures contracts at the Chicago “strike price,” “puts” and “calls.” He He said he and his partners netted to pay that LDP.” washingtonpost.com ade ago, and yields in the past three Board of Trade and Chicago Mer- looks for opportunities to sell his nearly $40,000 in LDP on their 500 years were the highest ever, accord- cantile Exchange. Farmers call that crop more than a year before it is acres of corn. They were not alone. Global Impact A collection of photographs of ing to USDA statistics. “paper corn.” harvested. On the days he received his checks, farms from this article and a It is a different world from that of “I’m perfectly willing to plan a other Illinois corn farmers netted Today, farm price supports, espe- clickable map that shows top ‘Paper Corn’ the 1970s, when his father, the late year out,” he said. “Sometimes there $36.5 million. cially the LDP, are under serious at- federal land payments for William J. Kuhfuss, was president of are opportunities there.” In Lincoln, Ill., not far from Kuh- tack. counties across the country can Riding his combine through the the American Farm Bureau, the na- In spring 2005 he had seized such fuss’s place, the farmer-owned Kru- Last year at the economic summit be found at www. heart of Illinois corn and soybean tion’s largest farm group. an opportunity and sold 30,000 ger grain elevator was at full-harvest of the Group of Eight leading indus- washingtonpost.com/nation country early last October, Macki- “When he started farming, he bushels of corn to a local elevator for tilt. trial nations in Gleneagles, Scotland, naw farmer John Kuhfuss person- hitched a couple of horses to a wag- $2.25 a bushel. By October, with General manager Hugh Whelan President Bush shocked U.S. farm Washington Post Radio ified the business-savvy farmer who on, hauled his corn to the nearest buyers offering only $1.70 a bushel, was keeping a close eye on the LDP. organizations by proposing that cer- profits from the LDP. railroad siding and sold it for what- that decision looked smart. “The best thing for farmers now is tain farm subsidies by rich industrial 8:15 a.m. today: The Post’s Sarah Kuhfuss is a modest-size farmer ever the cash offer was — and in the With his price assured, Kuhfuss for the market to go lower,” he said. nations be eliminated. That would Cohen and Dan Morgan. by Illinois standards. He sharecrops Depression it was cheaper to burn made another smart decision: “I But then Whelan put on his taxpay- mean the end, or drastic scaling Tune to 107.7 FM or 1500 AM.

About the Series 2005 farm subsidies, in billions As Congress prepares to debate a new farm bill for Direct and countercyclical payments $9.4 billion TODAY: Price supports are used to maintain next year, The Washington Post is examining federal Price supports $6.2 farmers’ incomes when market prices dip below agriculture subsidies which grew to more than $25 a government-set floor. The largest is called the Disaster payments $2.9 billion last year, despite near-record farm revenue. loan deficiency payment, which made up about Yesterday’s report looked at direct income-support Conservation programs $2.5 80 percent of the price supports last year. payments made to farmers, even if they do not farm. Crop insurance premiums* $2.3 Today’s report explores how price supports pay billions *Insurance figure is for crop year, not calendar year. to farmers, even when they have good years. Other farm subsidies $2 SOURCES: Economic Research Service, Risk Management Agency, USDA payment records

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HARVESTING CASH Bonus on the Range Toll Climbs No Drought In Mideast Required As Fighting For Federal Rages On As Leaders Weigh Plans, Drought Aid Westerners Flee Beirut By Jonathan Finer and Anthony Shadid Livestock Program Grew Washington Post Foreign Service To Cover Any ‘Disaster’ JERUSALEM, July 17 — Israel traded heavy fire with Hezbollah fighters in Leba- By Gilbert M. Gaul, Dan Morgan non on Monday, its air and artillery attacks and Sarah Cohen killing at least 38 Lebanese, many of them Washington Post Staff Writers civilians, and Hezbollah rockets made their deepest strikes yet into the Jewish state. CHANDLER, Tex. — On a clear, cold morn- Blaring air raid sirens sent Israelis dash- ing in February 2003, Nico de Boer heard what ing for concrete bomb shelters throughout sounded like a clap of thunder and stepped out- the day, and thousands of people across side his hillside home for a look. High above the Lebanon abandoned their homes to flee the tree line, the 40-year-old dairy farmer saw a trail violence. Several Western nations, includ- of smoke curling across the sky — all that re- ing the United States, launched plans to mained of the space shuttle Columbia. BY KEVORK DJANSEZIAN — ASSOCIATED PRESS evacuate their citizens from the battered Weeks later, de Boer was startled to learn that Toddler Bruno Habre is carried over a fence by his uncle, Pascal Habre, as they wait to be evacuated from Lebanon with hundreds of country. he was one of hundreds of East Texas ranchers French citizens near the French Embassy in Beirut. Thousands of foreigners have left or are preparing to leave, mostly to neighboring With the violence came a flurry of diplo- entitled to up to $40,000 in disaster compensa- Syria or to Cyprus. The U.S. military has begun evacuating Americans, a mission that could involve thousands of citizens. Details, A12. matic efforts to bring about a cease-fire and tion from the federal government, even though quell the crisis. British Prime Minister the nearest debris landed 10 to 20 miles from his Tony Blair and U.N. Secretary General Kofi cattle. Annan called for deployment of multi- The money came from the U.S. Department Waiting Anxiously for Word From Family national peacekeeping forces to southern of Agriculture as part of the Livestock Compen- Lebanon. U.S. officials called such a move sation Program, originally intended as a limited premature, but did not reject it; Israeli offi- helping hand for dairy farmers and ranchers As Displaced Lebanese Take Shelter, Some Sectarian Divides Are Bridged cials did. hurt by drought. Hurriedly drafted by the Bush Hours after that proposal, Israeli Prime administration in 2002 and expanded by Con- Anthony Shadid Minister Ehud Olmert vowed that Israel gress the following year, the relief plan rapidly By yard that, in a capricious war, had be- The exodus has overwhelmed Leba- would not halt its offensive on Lebanon un- became an expensive part of the government’s Washington Post Foreign Service come sanctuary. non’s already feeble infrastructure, til four conditions were met: the release of sprawling system of entitlements for farmers, “There’s no way for any of us to know swamping schools, clubs, mosques and two soldiers abducted last week, the de- which topped $25 billion last year. BEIRUT, July 17 — The families anything here,” said Hassan Abdullah, churches in the capital and its mountain ployment of the Lebanese army along a In all, the Livestock Compensation Program started arriving at Shakib Arslan High whose mother and two brothers were hinterland. In a war many Lebanese sus- buffer zone at the border, the withdrawal of cost taxpayers $1.2 billion during its two years of School days ago, by car, van and bus trapped in the south. The wiry 24-year- pect will last weeks, months or perhaps Hezbollah fighters from that zone and the existence, 2002 and 2003. Of that, $635 million from battered neighborhoods of Beirut old shook his head. “I just don’t know longer, the unknown sometimes inspires implementation of U.N. Resolution 1559, went to ranchers and dairy farmers in areas and southern Lebanon. There were a anything about them.” the greatest fear. which calls for the disarmament of militias where there was moderate drought or none at all, few at first, some with only the clothes In six days of Israeli strikes that fol- “We’re praying for them to be safe,” according to an analysis of government records they were wearing. By Monday, the pil- lowed Hezbollah’s capture of two Israeli Abdullah, who was at the school with See LEBANON, A15, Col. 1 by The Washington Post. None of the ranchers grimage had brought more than 1,000. soldiers in a cross-border raid, more another brother, said of his family. were required to prove they suffered an actual They threw frayed blankets, foam mat- than 60,000 Lebanese have been driven “God save them,” added his friend, loss. The government simply sent each of them a tresses and cheap mats over dusty tile from their homes, an estimate that offi- floors, staking claims to a sunlit court- cials acknowledged was conservative. check based on the number of cattle they owned. See BEIRUT, A15, Col. 5 For continuous updates, audio clips and a video gallery about violence in the See DROUGHT, A10, Col. 1 K Arabs voice some anger at Hezbollah. | A12 K In Nazareth, Arab Israelis feel vulnerable. | A12 Middle East, go to washingtonpost.com. As Heat Bakes the Region, Officials Take Precautions Code Red Alert on Air Quality Issued for Today

By Sue Anne Pressley Montes adults and individuals with heart or and Lena H. Sun breathing ailments to limit outdoor activ- Washington Post Staff Writers ities. In an effort to reduce air pollution, residents are also asked not to worsen The fiercest summer heat to hit the conditions by driving unnecessarily or Washington region in four years led offi- using gasoline-powered mowers. cials yesterday to throw open cooling Fares will be waived today on Metro- shelters and caution moderation and sent bus routes in Maryland and Northern Vir- BY ALAA AL-MARJANI — ASSOCIATED PRESS tourists in the nation’s capital scurrying ginia. A relative mourns one of those who died in an to their hotel swimming pools for relief. The mid-Atlantic was not the only attack by masked gunmen in Mahmudiyah. It hit 98 degrees in the shade — with a region sagging under a heat wave. Exces- high approaching 100 expected today. sive heat warnings were issued from Las For the first time since summer 2004, a Vegas to New Jersey as temperatures Code Red day for the region — when air from coast to coast soared into the upper Military-Style quality is expected to be unhealthy — was 90s and beyond. In Illinois, where a 1995 declared for today by the Metropolitan heat wave killed about 700 people, offi- BY MARVIN JOSEPH — THE WASHINGTON POST Washington Council of Governments. Children frolic in the water at Park Morton apartments in the District. Today’s high could Assault Kills The health advisory urges children, older See HEAT, A5, Col. 1 approach 100, but a cool front could drop temperatures into the lower 90s tomorrow. Dozens in Iraqi Marketplace INSIDE THE NATION House Backs $1.5 Billion By Ellen Knickmeyer Washington Post Foreign Service Discovery Makes Triumphant Return » For Metro — With a Hitch BAGHDAD, July 17 — Masked attackers with Its 13-day mission is called heavy machine guns mounted on pickup trucks a success, helping put the D.C., Md. and Va. Must Match Amount slaughtered at least 40 people in a crowded mar- troubled shuttle program ket area south of Baghdad on Monday, hurling back on track to finish By Lena H. Sun hour subway riders, and more than grenades to blow up merchants at their counters building the international Washington Post Staff Writer 50 federal agencies are located ad- and shooting down mothers as they fled with space station. A2 jacent to subway stations.” their children, witnesses and authorities said. The House of Representatives The funds would come from fed- The military-style assault on unarmed civilians THE WORLD passed legislation yesterday that eral revenue from offshore drilling in the mostly Shiite city of Mahmudiyah lasted 30 would commit $1.5 billion over 10 operations. minutes and was vicious even for a country be- Tsunami Hits Indonesia years to improve the Metro transit But the federal money, which no sieged daily by bombs and coldblooded attacks. Earthquake-triggered system as long as the District, Mary- other transit system in the country At one point, the assailants entered a cafe and waves kill at least 226. A13 land and Virginia guarantee to would receive and which Metro says shot dead seven men — most of them elderly — BY JOE SKIPPER — REUTERS match that money. The vote was 242 it deserves because of its unique role while they were having tea, said Maythan Abdul to 120, just exceeding the needed in carrying federal workers and visi- Zahad, a police officer. He said the gunmen two-thirds majority. tors in the nation’s capital, is con- stepped on their victims’ heads to keep them still. STYLE OBITUARY The measure, part of a plan to tingent on a $1.5 billion match from “Only those who escaped and ran were able to keep trains, tracks, stations and bus- the District, Maryland and Virginia. survive,” Zahad said in Najaf, where he later trav- Kinky in the Heart of Texas Tough-Guy Writer es in good repair and increase feder- The regional jurisdictions have to eled to bury a cousin killed in the attack. “They Big black boots. A big black hat. Jesse Ventura’s Mickey Spillane Dies al oversight, now goes to the Senate, create a major, dedicated source of did not spare anyone. Not the children. Not the campaign chairman and $3.4 million in the bank. Known for prose rife where Rep. Thomas M. Davis III (R- money for Metro — such as a por- elderly. The Iraqi army did not interfere.” Author and humorist Kinky Friedman has it all, with sex and violence, Va.), sponsor of the House bill, said tion of a sales tax earmarked for The massacre left the central shopping street and he wants to govern the Lone Star State. C1 the creator of he hopes passage will be “less of a transit — to cover their share of cap- in Mahmudiyah a charred war zone of gutted ve- detective Mike problem.” ital and operational expenses. hicles and blackened and smoldering tin-roofed HEALTH Hammer was scorned “Metro is central to all of the fed- The District has approved a meas- shops. Some hospital authorities put the death Wear This, You Stinker by critics but loved by eral activities,” Davis said. “In many ure to dedicate 0.5 percent of city toll at more than 70; most of the victims were Shi- millions of readers. ways, Metro is the lifeblood of the sales tax revenue to Metro, but ef- New fitness garb aims to K.O. bad B.O. F1 He was 88. B6 federal government. Federal work- See MAHMUDIYAH, A16, Col. 5 ers make up more than half of rush- See METRO, A9, Col. 1

Contents INSIDE SECTIONS» METRO • STYLE • BUSINESS • SPORTS • HEALTH On Radio: 107.7 FM • 1500 AM Online:  2006 The 1 Washington

World News ...... A12 Letters ...... A18 Lotteries...... B4 Weather ...... B8 Movies...... C4 KidsPost...... C12 TV Sports ...... E2 Post

Corrections...... A2 Editorials ...... A18 Obituaries ...... B6-7 Television ...... C6-7 Comics...... C9-11 Stocks...... D6-10 Classifieds ...... E7-12

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A10 Tuesday, July 18, 2006 R x The Washington Post

HARVESTING CASH Bonus on the Range Proximity to Shuttle Debris, Quake Brought Aid DROUGHT, From A1

At first, livestock owners were re- Cash for Cows quired to be in a county officially suffering In 2002 and 2003, the federal government paid ranchers and dairy farmers $1.2 billion to compensate for higher feed costs in counties designated as a drought to collect the money. But ranchers who weren’t eligible complained to federal disasters. About half of that money, however, went to producers in counties that experienced moderate or no drought, according to an analysis their representatives in Washington, and by The Washington Post of federal payment records and historical drought maps. in 2003 Congress dropped that requirement. Ranchers could then get payments LIVESTOCK PAYMENTS DROUGHT CONDITIONS for any type of federally declared “dis- (by county, 2002-2003) (by county, 2001-2002) aster.” In some cases, USDA administra- WASH. tors prodded employees in the agency’s = $250,000 None to moderate county offices to find qualifying disasters, Severe to extreme even if they were two years old or had nothing to do with ranching or farming. Extraordinary In one county in northern Texas, ranchers collected nearly $1 million for an ice storm that took place a year and a half before the livestock program was even created. In Washington state, ranchers in S.D. WIS. one county received $1.6 million for an earthquake that caused them no damage. In Wisconsin, a winter snowstorm triggered millions of dollars more. For hundreds of ranchers from East Texas to the Louisiana border, the shuttle explosion opened the door to about $5 million, records show. W.VA. John A. Johnson, deputy administrator for farm programs for the USDA, said that initially the program provided mean- ingful assistance to ranchers in areas suf- CALIF. fering from drought. But after Congress loosened the rules, he acknowledged,

“what was meant as disaster assistance NOTE: The Washington Post ended up being given to people who ARK. categorized each county by determining the worst drought didn’t have a need or a loss.” designation made for that The money doled out for the livestock county by the U.S. Drought MISS. Monitor anywhere within its program was part of more than $20 bil- border during six key periods — March, July and September lion that taxpayers have given to ranchers LA. of 2001 and 2002. The and farmers since 1990 to compensate for Drought Monitor, a consensus TEXAS FLA. of federal and academic droughts, hurricanes, floods and other scientists, is considered the most comprehensive measure forms of damaging weather. Many of of long-term drought conditions. The Agriculture those events caused serious damage. But 0 250 Department does not use the in some cases, routine storms triggered MILES Drought Monitor when making its drought disaster millions in payments, The Post’s investi- declarations. gation found.

“The livestock program was a joke. We SOURCES: U.S. Drought Monitor had no losses,” de Boer said. “I don’t and USDA payment records

know what Congress is thinking some- BY SARAH COHEN AND NATHANIEL VAUGHN KELSO — THE WASHINGTON POST times.” Still, while de Boer said he was embar- rassed by the $40,000 check, he added: “If They did only limited spot checks. Then lawmakers from Arkansas to Wis- called Hunt Shipman, a former top USDA eligible if their county was included in a there is money available, you might as A spokesman for the USDA, Ed Loyd, consin wrote more than 100 letters to official who now works as a lobbyist in presidential disaster declaration. Under well take it. You would be a fool not to.” said last week that the system was meant Veneman’s office, complaining that the Washington. the new rules, the time period covered to distribute funds quickly. “Given the se- USDA’s sign-up deadline of Sept. 19, Still, even with the growing list, hun- also was extended, to Feb. 20, 2003. One $18 a Head verity of the drought, we were confident 2002, was “arbitrary” and “bureaucratic.” dreds of counties remained ineligible be- rule remained the same: Livestock own- enough of the losses” to forgo the time- Deserving counties, they said, were being cause they had not been declared ers still did not have to prove a loss. Shortly before the 2002 congressional consuming process of checking every excluded. Virginia’s delegation alone sent drought-stricken areas. That, Shipman The expansion was pushed by a biparti- elections, the Bush administration faced farm and ranch, Loyd said. 20 letters, including six from Republican said, is when “Congress came back in. san group of senators from Western growing pressure from ranchers and poli- Agriculture officials estimated the pro- Rep. Virgil H. Goode Jr. The congress- They decided to drop the drought re- states and House members from the ticians in a handful of Western states that gram would require $752 million. But so man’s office said he was responding to requirement in the second year.” Southeast. House-Senate negotiators were hit hard by drought. Of special polit- many ranchers and dairy farmers applied quests from his constituents. Under Congress’s new version of the then added the legislation to a huge annu- ical concern to the White House, sources that the cost quickly ballooned to The Agriculture Department soon add- program in 2003, livestock owners could al spending bill that was not subject to said, was South Dakota, where Repub- $900 million. At the time, a second year ed dozens of counties to its drought list. qualify as a result of any type of weather- amendments on the floor. lican Rep. John Thune was close to un- of the program wasn’t being contemplat- “There was pressure that year to grow related disaster declaration by the secre- Sen. Thad Cochran (R-Miss.), the top- seating Democratic Sen. Tim Johnson. ed. emergency declarations for drought,” re- tary of agriculture. Or they could become ranking Senate GOP negotiator on the The USDA responded with a plan to agricultural provisions, did not return give ranchers cash payments based on telephone calls seeking comment. Former how much livestock they owned. A beef Rep. Max Burns (R-Ga.), who introduced cow would count for $18; a dairy cow, legislation to extend the livestock pro- $31.50. Lesser payments would be award- gram in January 2003, also did not return ed for buffalo and sheep. The maximum calls requesting comment. an individual rancher could get was As a result of the changes, 765 counties $40,000. that had no droughts in 2001 or 2002 Ann M. Veneman, then secretary of ag- qualified for cash in 2003. In some cases, riculture, proclaimed at a September entire states — including Arkansas, Flori- 2002 news conference that the plan “will da, Mississippi, West Virginia and Wis- provide immediate assistance to pro- consin — were now included. ducers who need it the most.” To qualify, a rancher had to be in a Hunting for Disasters county that was suffering from a drought and declared a disaster by the agriculture With the rules relaxed by Congress, secretary in 2001 or 2002. More than federal agriculture officials pushed their 2,000 counties had such declarations at local offices to find disasters that would the time, including many with only mod- make more livestock owners eligible, rec- est dry spells. ords and interviews show. It didn’t matter All that livestock owners had to do was if it was a cold snap or a storm that was show up at their county agriculture office two years old. and fill out a short form certifying the The Agriculture Department inspector number of animals they owned as of BY GILBERT GAUL — THE WASHINGTON POST BY SCOTT LIEBERMAN — TYLER MORNING TELEGRAPH VIA ASSOCIATED PRESS general’s office eventually audited the June 1, 2002. Short-staffed county offices Nico de Boer, who raises dairy cattle in After pieces of the space shuttle Columbia flared over East Texas on Feb. 1, 2003, area program, saying the payments should were hard pressed to verify the numbers. East Texas, received $40,000 in aid. livestock owners such as de Boer, miles from any debris field, were given payments. have gone only to those with legitimate

‘INNOVATIVE RELIEF’ When Feed Was Cheap, Catfish Farmers Got Help Buying It By Gilbert M. Gaul Washington Post Staff Writer Fish Food One of the more unusual offshoots of As part of a government drought-relief program, catfish farmers Congress’s drought-relief efforts was a in Mississippi, Arkansas and other states in 2003 were granted $34 million assistance program for cat- $34 million in credits for fish feed. One argument for the program fish farmers. was that the 2002 drought had driven up feed prices, when in fact Under the 2003 Catfish Feed Assis- prices during the drought were among the lowest in a decade. tance Program, announced in August of that year, commercial catfish farmers in Price of catfish feed per ton 2002 Total U.S. catfish sales 2002 Mississippi, Arkansas and a handful of (U.S. catfish industry) drought In millions drought other states got government credits for $300 $600 BY STEPHEN LANCE DENNEE — ASSOCIATED PRESS feed equal to $34 per ton. $270 $480 All they had to do was apply at their The industry that farms catfish was contracting in 2002 and 2003, after a decade 250 500 million local feed mill. The amount they re- of growth, and facing foreign competition. But feed prices remained low. ceived was based on how much feed 200 400 they had purchased at the mill in 2002 peared to have more to do with econom- est share of federal dollars — nearly $19 — not any actual losses. ics than with bad weather. After expand- million, records show. It has more cat- 150 300 The USDA advertised the program as ing for a decade, the industry was fish farms than any other state. It also 100 August 2003: 200 “an innovative relief to catfish pro- contracting in 2002 and 2003 and faced has a powerful U.S. senator, Republican Catfish Feed Assistance ducers who have experienced losses due competition from foreign imports that Thad Cochran, then chairman of the ag- 50 Program announced 100 to adverse weather and natural dis- drove prices to record lows. Even riculture committee and second-rank- asters,” according to a news release. though farmers were selling more cat- ing majority member of the Appropria- 0 0 The agency said a 2002 drought had fish, their revenue was slipping. Some tions Committee, looking out for the ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04

driven up the price of feed. received separate foreign trade adjust- industry’s interests. SOURCE: Mississippi State University Extension Service THE WASHINGTON POST To be sure, some of the states had suf- ment payments from the government. It was Cochran who inserted lan- fered drought, but not all. Moreover, “Prices went down in 2002 and 2003. guage into a wartime appropriations bill then-Agriculture Secretary Ann M. Ve- wrote. Cochran did not respond to re- feed prices for catfish in 2002 were A lot of people had to give up [catfish] in 2003 to ensure that catfish farmers re- neman in March 2003. “Higher feed quests for an interview. among the lowest in a decade, according farming,” said Terry Hanson, an agricul- ceived relief. Cochran also lobbied costs . . . have added tremendously to a Most Mississippi catfish farmers did to federal data and agricultural econo- tural economist at Mississippi State USDA officials to adopt feed credits of catfish producer’s cost of production.” not receive their feed credits until 2004, mists. They didn’t spike again until University. “But feed prices were very $35 to $40 per ton. Fish-eating birds and fish-killing para- according to the Mississippi Depart-

mid-2003. low in 2002-2003, about $200 a ton.” “The catfish industry is in a very pre- sites had also “decimated the catfish ment of Agriculture and Commerce. By

The struggles of catfish farmers ap- Mississippi reeled in by far the larg- carious situation,” Cochran wrote to farmers’ hope of making a profit,” he then, catfish prices were rising.

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The Washington Post x S Tuesday, July 18, 2006 A11

HARVESTING CASH Bonus on the Range

for the Livestock Compensation Program Vancouver because they had not received drought B.C. CANADA declarations from the secretary of agricul- Victoria U.S. IDAHO ture. 5 mbia R. Five months later, in April 2003, Bran- lu o Spokane cel put out another news release: As a re- Seattle C Olympia WASHINGTON 90 sult of Congress broadening the eligibili- ty criteria, 53 Wisconsin counties now ake R. Sn qualified for that cash. Detail 82 In still another news release, Brancel

Pacific Ocean implored livestock owners to apply for 84 Portland 0 100 the money. “If you own eligible livestock OREGON MILES in eligible counties you are eligible,” he wrote. “In these tough economic times, CANADA you don’t want to miss the opportunity to U.S. WHATCOM CO. receive money to help pay some of the bills.” North Wisconsin livestock owners took Bran- Victoria Cascades 5 Nat’l. Park cel up on his offer, collecting more than $39 million. Still, some dairy farmers and P county officials were confused about why Port u WASHINGTON g they were getting the money. Townsend e Olympic t “In this county, we got a lot of ques- S 0 25 Nat’l. 101 o tions from producers: ‘Why are we eligi- u MILES Park n Seattle ble?’ ” recalled Tom Schneider, the head

d 90 of the USDA office in Manitowoc County, where livestock owners got $1.5 million. Nisqually epicenter “Our answer was ‘Because we were told Olympia you were eligible.’ ” Mount Rainier Several Wisconsin counties qualified 5 Nat’l. Park on the basis of a two-year-old disaster dec- BY NATHANIEL VAUGHN KELSO — THE WASHINGTON POST laration for a January 2001 snowstorm. “It was a nasty winter storm,” recalled Te- Ranchers in Whatcom County, Wash., resa Zimmer, the USDA official in Green received aid after a 2001 earthquake, even County. Asked how the storm affected though it did not cause them damage. ranchers, she said, “There were several days where livestock owners couldn’t get Distant Earthquake to the market . . . to sell their animals.” Ranchers in Green County collected On Feb. 28, 2001, the 6.8-magnitude nearly $1.5 million. One of those who got Nisqually earthquake hit near Olympia, a payment was Cornell Kasbergen, who Wash., collapsing brick facades of busi- helps run family dairy farms in Green nesses and leaving cracks in several state County and Tulare County, Calif. Family office buildings. About 170 miles away members received a total of $72,000 in from the epicenter, in Whatcom County, livestock funds, records show. near the Canadian border, residents felt “It was a program that was available some of the aftershocks but experienced that we took advantage of,” Kasbergen little damage. said. “Did we have any losses? I couldn’t “We registered about a 3 [magnitude] tell you. In my mind, I think a lot of these or something,” said Don Boyd, a local programs are a waste of money.” emergency management official. “We had some minor shaking, some cracks in the Researcher Alice Crites contributed to chimneys, that sort of thing.” this report. USDA officials didn’t check for damage because none of the local dairy farmers complained. Harvesting Cash Yet in 2003 more than 200 livestock owners in Whatcom County collected Today: Bonus on the Range $1.6 million under the Livestock Com- Ranchers and dairy farmers collected pensation Program — one of the largest hundreds of millions of dollars in payouts for a county nationwide — for disaster relief without suffering a BY NATI HARNIK — ASSOCIATED PRESS the same earthquake. disaster. Cattle gathered near a well in a parched pasture in Nebraska in 2002. The Livestock Compensation Program was originally meant to aid A 2001 presidential disaster declara- Tomorrow: Milking the System ranchers in such drought-stricken areas, but it expanded after local officials in other places complained that they were being excluded. tion for the Nisqually earthquake had How agriculture officials touched off a named 22 counties, including Whatcom. secondary market in powdered milk losses. But that was long after the looser from his state bosses to go back and look who heads the local farm committee. “It Dairy farmers and ranchers in Washing- that spanned the globe and enriched rules led the USDA to hand out an addi- again for a disaster — any disaster — un- might have been more political than any- ton state collected nearly $4 million in private brokers. tional $234 million in 2003. der which local ranchers could qualify. thing.” livestock funds, according to records ana- No state did better than Texas. In the “I don’t deny it,” English said. “We got In Henderson County, about 100 miles lyzed by The Post. About This Series end, all 254 of its counties qualified. the message, a message to take another southeast of Dallas, Nico de Boer felt the “Don’t blame us,” said Gary M. West, This is one in a series of articles The Ranchers in counties without droughts look. It came from our state office, prob- same way. When he arrived from the chief administrator for the USDA’s Farm Washington Post is publishing this year collected $45 million in 2003, on top of ably through the district director.” Eng- Netherlands 17 years ago, de Boer had 90 Service Agency in Washington state. “We on waste and abuse in the nation’s the $67 million that had flowed to the lish said it was “pretty clear that we want- acres, a house, one barn and fewer than don’t get to choose which programs we farm subsidy programs. state in 2002. ed the entire state of Texas to be eligible.” 200 cows. Today, he has 1,000 acres, mul- implement. We have to work with what The first installment in the Harvesting In northern Texas, Cooke County John Fuston, the Texas USDA director, tiple cow barns and sheds, 650 cows that Congress gives us.” Cash series showed that since 2000, ranchers qualified for $906,000 in 2003 confirmed that the county offices were produce 3 million pounds of milk month- Larry Reeves, who heads the Whatcom the federal government has paid at on the basis of an ice storm that hit the urged to look for weather events and dis- ly, a BMW in the driveway, a swimming County USDA office, echoed that view. least $1.3 billion in crop subsidies to area more than two years earlier. Tim Gil- asters that could qualify ranchers for the pool, and two more farms in neighboring “We do what we are told,” he said. “Our individuals who grow no crops at all. bert, former head of the USDA county program. He said the agency was follow- counties. thoughts and feelings generally don’t Another article detailed a little-known office, recalled that “there was no damage ing the rules set by Congress. The rolling hills surrounding his have a bearing.” subsidy that has cost taxpayers $29 in Cooke County to the crops or livestock. Without any real disasters in Denton sprawling farm receive a generous aver- Terri Noteboom and her husband re- billion since 1998 and goes to farmers Maybe a few pine trees got knocked County, though, English was left to age of 40 inches of rain annually. When ceived nearly $13,000 in livestock funds even in some good years. down.” scramble. “We didn’t have a drought,” he the shuttle exploded, pastures were full for their dairy farm in Lynden. Noteboom Nonetheless, the county had been in- said. “In fact, we were wet. The crops and there hadn’t been a drought or any also chairs the farmers committee that washingtonpost.com cluded in a presidential disaster declara- were above normal at the time.” other type of weather disaster in years, advises Reeves. She said some Whatcom tion because of the storm. “The state of- English said he did his best, preparing records show. But after the presidential County dairy farmers came into the office The complete series, including an fice called and said, ‘Yeah, you are a report on a rainstorm that had blown disaster declaration, John Reeves of the to report that they had accidentally re- interactive map showing the total eligible,’ ” Gilbert said. “I said, ‘How can I through more than a year earlier. “We local USDA office informed livestock ceived government checks. payments made under the Livestock be eligible for a storm in December two knew it wasn’t a disaster,” he said. “We owners in Henderson County they were “I told them, ‘No, you didn’t. It wasn’t Compensation Program in 2002 and years ago?’ ” knew it wouldn’t be approved.” And, ac- eligible. They eventually collected an accident. It’s yours,’ ” she said. 2003, is online at www. Over in Denton County, northwest of cording to English, it wasn’t. $751,083 despite no shuttle damage. “The way I see it, many times they do washingtonpost.com/harvestingcash. Dallas, ranchers weren’t hurting from a Then, on Feb. 1, 2003, the shuttle ex- Reeves said he had no choice but to these programs and instead of applying it drought in 2002. Nor were they pressur- ploded. To ensure recovery of the debris write the checks. “Congress passed legis- to one area, they find a way to apply it to Reporters Gilbert M. Gaul, Dan Morgan ing county USDA official Blake English and pay for emergency costs, President lation and approved us for that Livestock the entire country. I don’t know if you call and Sarah Cohen will be online at 11 for the livestock money. “There has not Bush issued a federal disaster declara- Compensation Program, and that’s what that a loophole or not.” a.m. to discuss the series. been anything like an uproar, because tion. As an unintended result, most of it was,” he said. most everyone agrees that there was not a East Texas was then eligible for livestock “The closest debris I heard about was Snow in Wisconsin Washington Post Radio disaster in Denton County,” English funds. Denton County’s livestock owners 10 to 20 miles away. There wasn’t any- wrote in the minutes of a December 2002 collected $433,000, records show. thing here,” de Boer said. “Believe me, we In November 2002, Ben Brancel, the 10:30 a.m. today: Reporters Gilbert M. meeting of a local farm advisory commit- “Speaking personally, I didn’t think it would be better off if the government got top USDA official in Wisconsin, sent out a Gaul, Dan Morgan and Sarah Cohen tee. was necessary at that point in time,” said out of the business and limited the pay- news release notifying livestock owners will discuss their report. Still, in 2003, English said, he got word Calvin Peterson, an 81-year-old rancher ments to those who really need them.” that none of the state’s counties qualified Tune to 107.7 FM or 1500 AM.

BIRTH OF A SUBSIDY Benefit for Ranchers Was Created to Help GOP Candidate By Dan Morgan Ken Mehlman, recognized the impor- The ceremony, which was not at- Washington Post Staff Writer tance of the drought-relief issue to the tended by any Democrats, had the aura Thune race. That spurred an effort in of a campaign event. If not for a tight Senate race in South the administration to come up with a Veneman credited Thune with the Dakota in 2002, there might have been way to help the embattled Republican “very creative suggestion” of using no Livestock Compensation Program. candidate, according to a former sen- Section 32. After saying the USDA had In August 2002, 12 weeks before the ior official at the Department of Agri- “worked closely with the congress- election, aides to the Republican candi- culture. man,” Veneman explained the program date, then-Rep. John Thune, were wor- In his speech in South Dakota, the and introduced Thune for remarks. ried about the political fallout from a president said he opposed drought re- During a campaign swing through speech made by President Bush during lief that would add to the federal budg- South Dakota four days later, Thune a visit to Mount Rushmore, with et deficit. So White House and USDA thanked the White House for finding a Thune in attendance. The president officials came up with the idea of tap- way to help ranchers “that didn’t take had pointedly refused to promise ping a special fund derived from annu- an act of Congress.” ranchers new large-scale federal al customs receipts, the former official South Dakota ranchers received $50 drought relief, suggesting instead that said. The fund, dating to 1935, is million of the first $750 million the Congress consider shifting some funds known as Section 32. The secretary of USDA set aside for the program. from a recently enacted farm bill. agriculture can use it to help farmers It did not save Thune. He lost to The president’s tough line undercut without consulting Congress. Johnson by 524 votes and had to wait Thune’s message that a GOP senator On Sept. 12, Thune weighed in with two more years to enter the Senate. In could get more done for the state dur- a letter to the USDA suggesting the 2004, after a campaign that focused ing a Republican administration than use of the fund. more on abortion than drought, Thune could the Democratic incumbent, Tim BY EVAN VUCCI — ASSOCIATED PRESS One week later, then-Agriculture defeated Daschle. Johnson. Announcing the livestock program in 2002, then-Agriculture Secretary Ann M. Secretary Ann M. Veneman sum- Asked about the livestock program, Afterward, hundreds of disgruntled Veneman gave credit to John Thune, who was in a tight Senate race. moned reporters to the USDA’s broad- Thune’s office said last week, “Then- ranchers who had attended the presi- cast center and, with Thune and sever- Congressman Thune supported this dent’s speech headed for a Democratic lambasted the administration for let- cations director. “The president ba- al other Republican lawmakers at her program because it was a responsible rally in nearby Rapid City, where John- ting South Dakota ranchers down. sically said, ‘Bootstrap it, boys.’ ” side, announced the creation of the approach to helping South Dakota’s

son and Sen. Thomas A. Daschle (D- “It was a stunning political blunder,” In Washington, the White House po- Livestock Compensation Program, us- farmers and ranchers, who were suf-

S.D.), then Senate minority leader, said Bob Martin, Johnson’s communi- litical affairs office, then directed by ing $750 million from the special fund. fering from a devastating drought.”

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Weather

Today: Warm, thunderstorm. High 88. Low 73. DISTRICT Thursday: Thunderstorm. HOME EDITION High 88. Low 74. ABCDE B10 Details, 35¢ Prices may vary in areas outside metropolitan 129th Year No. 226 SDC Wednesday, July 19, 2006 M1 M2 M3 M4 V1 V2 V3 V4 Washington. (See box on A2)

Heat, Humidity and Foul Air Smother Area First Code Red Day in 2 Years Is Declared as Pollution Levels Rise By Sue Anne Pressley Montes driving so as not to add to the pollution. ty on Sunday, a woman found her 73-year- and Jennifer Lenhart Code Red days are declared by the Met- old husband dead in his car at a shopping Washington Post Staff Writers ropolitan Washington Council of Govern- center. In Carroll County, Md., a 60-year- ments when the air quality is so poor that it old man also died Sunday, but further de- On what seemed to be the steamiest, rot- can adversely affect people with heart and tails were not available. Several area hospi- tenest day of the summer so far, when the breathing ailments. tals yesterday also reported one or two temperature reached a withering 97 de- At least three people in Maryland have cases of heat-related problems. grees and air pollution rose to unhealthy died of heat-related causes, according to Since the weekend, an oppressive heat levels, Washington area residents gamely the Maryland Department of Health. In wave has gripped much of the nation with tried to cope with fewer activities. Calvert County, a 54-year-old man was temperatures in the 90s, and heat indexes The region’s first Code Red day since found dead Friday in his home, of heart dis- often made it feel like it exceeded 100 de- 2004 sent some people to area bus stops as ease complicated by hyperthermia, a they heeded the official request to avoid spokesman said. In Prince George’s Coun- See HEAT, A6, Col. 2

BY LOIS RAIMONDO — THE WASHINGTON POST K Hot weather can take K LaGuardia blackout K Some like it hot — a body by surprise. grounds flights. if it’s yoga. Madison Umberger, 10 months, held by Lillie Umberger, revels in a water mister at the zoo. 97 AND COPING | A6 | A6 | Style, C1 Senate Passes Stem Cell Bill; Evacuations Underway in Beirut Israel Continues Bush Vows Veto Deadly Airstrikes; By Charles Babington Hezbollah Fires Washington Post Staff Writer

The Senate voted to lift restrictions on federal- Scores of Rockets ly funded human embryonic stem cell research By Anthony Shadid yesterday, setting the table for President Bush’s Washington Post Foreign Service first veto and producing an emotional campaign issue that Democrats believe will help them this BEIRUT, July 18 — By helicopter fall. and ship, hundreds of Americans and Senators voted 63 to 37 to approve a House- Europeans fled on Tuesday from Bei- passed bill that would pour millions of dollars rut, ending its first week of siege, as into a field of medical research that is promising casualties mounted in deadly Israeli — but also controversial because it requires de- raids that struck a Lebanese military stroying human embryos to extract the cells. base, a truck carrying food from Syr- Bush announced in his first nationally televised ia and a village near the border. The address, on Aug. 9, 2001, that he would ban gov- militant group Hezbollah fired at ernment funding for research using embryonic least 100 rockets into Israel, killing stem cell colonies created after that date, and he one civilian. has vowed to cast his first presidential veto to On a sweltering day, Norwegian, block the legislation rescinding his executive or- Swedish, Greek and British ships der. pulled into Beirut’s harbor, most of White House press secretary Tony Snow said them trying to load their passengers Bush’s veto “will be pretty swift” once he receives before nightfall. From a helipad at the bill, possibly as soon as today. the U.S. Embassy overlooking Bei- The House, which passed the measure last rut, the dull thud of rotors an- year, appears well short of the two-thirds majority nounced the arrival of helicopters, needed to override a veto. If the House override which ferried passengers to the is- attempt, which is expected within hours of land of Cyprus, taking 30 people on Bush’s veto, is unsuccessful, it would kill the is- each trip. Other U.S. citizens waited, sue for the 109th Congress but would probably growing more frustrated over having propel it toward the front ranks of the November to endure another day of a conflict congressional election, lawmakers and political that has begun to impose a wartime BY SEBASTIAN SCHEINER — ASSOCIATED PRESS logic in the city. See STEM CELLS, A4, Col. 3 Israeli forces near Kiryat Shmona, in northern Israel, fire at a target in southern Lebanon. Israeli forces are trying to curtail Hezbollah’s “I had to come and cry at the door ability to fire rockets into Israel, the army’s deputy chief of staff said, adding that a ground invasion has not been ruled out. of the U.S. Embassy, kissing hand and foot, telling them they must let me leave,” said Raba Letteri, a child- HARVESTING CASH Military Strategy care provider from Reston, Va., who High Civilian Price was on vacation in Lebanon with her husband and two children. Milking the System For Both Sides They were living near Beirut’s in- Towns in northern Israel ternational airport, a swath of the Missile War Is a New Challenge are shuttered; warplanes capital barraged in Israeli airstrikes. hit a key road for civilians Her 2-year-old son, Aaron, had a Aid to Ranchers fleeing Lebanon. A10 stomach infection. As they waited to To Israel’s Long Rule of the Sky board, he burst into tears. “This is Bush Endorses the worst thing in my life,” she said. Was Diverted By Scott Wilson and the short-range rockets reach targets in Through the day, Beirut itself was Washington Post Foreign Service seconds, making interception nearly impos- Israel’s Efforts relatively quiet. Life returned to sible. Israel dominated air power in earlier President Bush backs some streets so far unscathed by the For Big Profits JERUSALEM, July 18 — Israel and the years but now faces a fresh challenge from Israel’s military campaign attacks. Even traffic in the battered radical Islamic groups Hamas and Hezbollah the crude rockets that Hezbollah and Hamas against Hezbollah. A10 Shiite Muslim suburbs, Hezbollah’s are waging war for the first time largely in are using to strike Israeli cities. The war of stronghold, trickled past the rubble Tons of Powdered Milk the skies, exchanging rocket fire, artillery the missiles could also render less relevant Bipartisan Support of destroyed bridges and the shat- rounds and airstrikes in battles that military the large-scale ground operations that the On Capitol Hill tered glass from apartment buildings Ended Up on the Market officials and analysts here say could redefine Israeli military relied on in the past. that littered the streets. To some, the the regional conflict for years to come. Israel’s withdrawal from Gaza last year In the Senate and House, day was a brief respite as evacuations By Gilbert M. Gaul, Sarah Cohen Both militias are now drawing on longer- and south Lebanon in 2000 has deprived Ha- both parties are rushing to got underway. What might follow the and Dan Morgan range arsenals to send missiles deeper into offer support for Israel. A5 Washington Post Staff Writers Israel. The launch sites are hard to detect, See MILITARY, A16, Col. 1 See CONFLICT, A14, Col. 1

When a drought left pastures in a handful of Plains states parched in 2003, ranchers turned to the federal government for help. Officials at the U.S. Depart- ment of Agriculture quickly responded with what they considered an innovative plan. Conservative Anger Grows Over Bush’s Foreign Policy They decided to dip into massive stockpiles of By Michael Abramowitz as a willingness to aggressively confront terprise Institute, a think tank that has had powdered milk that the agency had stored in ware- Washington Post Staff Writer threats and advance U.S. interests said in strong influence in staffing the administration houses nationwide as part of its milk price-support interviews that they perceive timidity and con- and shaping its ideas. “I don’t have a friend in program. Livestock owners could get the protein- At a moment when his conservative coali- fusion about long-standing problems includ- the administration, on Capitol Hill or any part rich commodity free and feed it to their cattle and tion is already under strain over domestic pol- ing Iran and North Korea, as well as urgent of the conservative foreign policy establish- calves. The milk would help ranchers weather the icy, President Bush is facing a new and swiftly new ones such as the latest crisis between Is- ment who is not beside themselves with fury drought while the government reduced its growing building backlash on the right over his han- rael and Hezbollah. at the administration.” stockpile. dling of foreign affairs. “It is Topic A of every single conversation,” Conservatives complain that the United But within months, the program spawned a lucra- Conservative intellectuals and commenta- said Danielle Pletka, vice president for foreign Criticism comes from the tive secondary market in which ranchers, feed deal- tors who once lauded Bush for what they saw and defense policy studies at the American En- See BUSH, A5, Col. 1 right for President Bush. ers and brokers began trading the powdered milk in a daisy chain of transactions, generating millions of dollars in profits. Tens of millions of pounds of pow- INSIDE dered milk intended solely for livestock owners in drought-stricken states went to states with no THE WORLD THE NATION METRO drought or were sold to middlemen in Mexico and other countries, a Washington Post investigation « Tsunami’s Aftermath Bush Intervened in Probe 10 p.m. Curfew for Teens? found. An Indonesian woman touches The Justice Department A majority of D.C. Council Taxpayers paid at least $400 million for the emer- her shrouded son, one of more investigation of wiretapping was members indicate support of an gency milk program, one of an array of costly relief than 460 villagers killed in effectively blocked, the attorney emergency crime plan that also plans crafted by Congress and the USDA to insulate Monday’s disaster. A12 general testifies. A4 includes neighborhood farmers and ranchers from risk. In some cases, own- surveillance cameras. B1 ership of the powdered milk changed hands half a Katrina Deaths Bring Charges dozen times or more in a matter of days, with the Violence in Iraq Intensifies FOOD price increasing each time. A commodity that started A suicide bomber kills 53 day Doctor, two nurses arrested in out being sold for almost nothing was soon trading laborers in Kufa on the same day alleged mercy killings. A3 What’s Safe to Eat? for hundreds of dollars a ton. the United Nations announces With all the conflicting that more than 3,000 Iraqi Abramoff Fallout? Ralph Reed headlines, choosing healthful

See MILK, A8, Col. 1 BY ED WRAY — THE ASSOCIATED PRESS civilians died in June. A13 loses in Georgia primary. A3 food has become hard work. F1

Contents INSIDE SECTIONS» METRO • STYLE • BUSINESS • SPORTS • FOOD On Radio: 107.7 FM • 1500 AM Online:  2006 The 1 Washington

World News ...... A10 Letters ...... A18 Lotteries...... B4 Weather ...... B10 Movies...... C9 KidsPost...... C14 TV Sports ...... E2 Post

Corrections...... A2 Editorials ...... A18 Obituaries ...... B6-8 Television ...... C6 Comics ...... C10-12 Stocks ...... D6 Classifieds ...... G1

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A8 Wednesday, July 19, 2006 R x The Washington Post

HARVESTING CASH Milking the System A Government-Surplus Dairy Detour FEED & SEED How powdered milk got shipped around the world. $$$ $$$

$$$ $$$

CREDIT Trade for $$$ POWDERED POWDERED MILK other MILK OR feed 1 2 3 4 5 The USDA purchases 1.4 billion pounds In 2003, the USDA decides to give 390 Ranchers can pick up their free allotment Feed dealers acquire tens of millions of By late 2003, a secondary market for of powdered milk from milk producers million pounds of powdered milk as of government milk or trade it to the pounds of government milk in trades. powdered milk is in place, with millions over several years as part of its program supplemental feed to ranchers in areas feed dealer for a credit for different feed. Some mix it with other feed and sell it of pounds intended for ranchers in to boost milk prices. The milk is stored suffering from extreme drought. The For each ton of government milk traded, back to ranchers at a higher price. But drought-stricken states being sold in in warehouses and caves around the $400 million cost is borne by federal ranchers get a credit equal to $80. some mark up the price and sell it to other states with no droughts or to brokers in country. Each year, the USDA gives out taxpayers. In most cases, the milk is Hundreds of ranchers decide to trade dealers, mills and brokers, which mark it Mexico and other countries. Some millions of pounds of the milk to charities. shipped by truck to local feed dealers. the milk for a better form of feed. still higher and sell it to other middlemen. brokers pay as much as $400 per ton.

SOURCES: U.S. Department of Agriculture; USDA office of inspector general; Utah and Wyoming agriculture departments; interviews with brokers

BY GILBERT GAUL AND LAURA STANTON — THE WASHINGTON POST How Aid to Ranchers Created a Lucrative Market MILK, From A1

One government inspector stumbled upon huge cargo containers being loaded with the milk at the Port of Houston. The destination: Europe. A New Zealand official complained to USDA officials that American brokers were flooding her country with the powdered milk, un- dercutting local dairy suppliers. Still other records show the milk going to the Netherlands and the Philippines. “The milk was being bought and sold, bought and sold. Some of it was probably ending up in dog food and pet food,” said Matthew J. Hoobler, a Wyoming official who oversaw the distribution of more than 60 million pounds of powdered milk in that state. That trading was possible, he said, because “there was no enforcement.” Tons of the surplus milk entered the commercial market in one of two ways. Some states ended up ordering more powdered milk than ranchers could use and then auctioned the rest to brokers. And ranchers sold powdered milk they didn’t want or need back to feed dealers, who marked it up and sold it to other dealers or brokers. In its contracts with eligible states, the Agriculture De- partment required that the milk be used to feed cattle within the state’s borders. The trading itself was not illegal, but shipping the milk outside of the states violated the rules. Even when agriculture officials learned that the product was being diverted, however, there was little they could do. The USDA had allocated the milk directly to the states, and state officials did not have the resources to track the middlemen. In any case, penalties were non- existent. “The problem came in when we got lots of different brokers looking to turn a buck,” said Bert Farrish, the USDA’s deputy administrator for commodity operations. “They didn’t seem too concerned about the restrictions on the use of the product.” One Utah broker, Randy Schreiber, sold 11.1 million pounds of powdered milk to Mexican middlemen and others, records and interviews show. Schreiber, who is the subject of an investigation by the Agriculture Depart- BY BILL O’LEARY — THE WASHINGTON POST ment’s inspector general, said he does not think he broke any rules. Flory Eutzy walks past bags upon bags of powdered milk, part of the federal government’s stockpile, stacked in her company’s warehouse in Chambersburg, Pa. “I tried to be creative . . . entrepreneurial,” he said. “This is a chapter in my life I would really like to forget.” shared them with the department’s office of inspector Federal officials still don’t know how much of the gov- general. ernment’s milk was diverted to foreign countries and to Shipping records from the USDA In January 2004, Schreiber met with USDA inspectors states that didn’t have a drought. Warehouse exam- show that some government at a Comfort Suites hotel in Salt Lake City. Separately, inations identified some abuses. But “when we turned powdered milk intended for U.S. Robinson and Kunz also met with inspectors. over title [for the milk] to the states, we were finished,” ranchers hurt by a drought was Schreiber said he was “completely open” about where Farrish said. instead exported to Mexico. the powdered milk was going. He said one of the in- State officials said the assistance program was fraught spectors even applauded him for his creativity. But later, with loopholes that fostered the speculative trading. And Schreiber said, the tone of the inspectors changed and he when they did report cases of suspected abuse, they said, started to worry that he was in trouble. the USDA was slow to respond. “As far as I know, it’s still an ongoing case,” he said. “I “We didn’t have the capability to do enforcement our- don’t know what is going to happen, but I know at one selves,” said Wyoming’s Hoobler. “It was me and a part- point it will get ugly.” time intern running the program. When we did phone in In July 2004, then-Agriculture Secretary Ann M. Vene- a concern, we didn’t get a lot of feedback.” man announced that the USDA would once again dip into its stockpile of powdered milk to help ranchers. But An Overflowing Cave this time, the agency included specific restrictions on SOURCE: Utah Department of Agriculture feed dealers and a more explicit prohibition on exports. For years, the government has periodically purchased A spokesman for the USDA inspector general declined powdered milk — as well as butter and cheese, the other Kunz said he had an agreement with Schreiber that to comment on the status of any investigations into di- byproducts of raw milk — as part of a congressionally the broker would use the powdered milk “within the pre- version of the government’s powdered milk. Last fall the mandated price-support program for milk producers. By broker for up to $400 a load. With the profits, “I could scribed guidelines of the program.” But he added that agency issued an audit report on government drought- 2003, the Agriculture Department had accumulated a buy soybean meal cheaper,” Bateman said. Walton officials didn’t track the milk once it left their pos- relief programs that noted abuses in powdered-milk trad- record 1.4 billion pounds of powdered milk in warehous- session and “didn’t know how Randy used the product.” ing, including that some of the product went abroad. But es and in a huge limestone cave in the Kansas City area. A Warning in a Fax Schreiber arranged to have the powdered milk re- the report named no names. The bulging stores coincided with a drought that left mixed and repackaged at two mills in the Salt Lake City Schreiber said he stopped buying and selling pow- livestock pastures burned in about a dozen states. Some One of the first hints of the burgeoning market in gov- area. Sherman Robinson, the owner of Lehi Roller Mills dered milk in 2004. Since then, his firm has gone from livestock owners were faced with selling their herds, Far- ernment milk came in a fax to the Utah Department of near Provo, said Schreiber paid him 9 or 10 cents to re- five employees to one, he said: “As soon as this is over, it rish said. Giving them the powdered milk as an emergen- Agriculture and Food on Oct. 23, 2003. pack each 55-pound bag. will cease to exist.” cy source of feed seemed like a good way to help out. “We The fax said a USDA warehouse was about to ship “They ran a lot of product through here . . . probably 5 Today, Schreiber, 42, said he is trying to sell commer- did stop the wholesale liquidation” of breeding herds, nearly 250,000 pounds of powdered milk from its stock- or 6 million pounds,” Robinson said. cial real estate while waiting for the other shoe to drop. Farrish said. pile to a private warehouse in Salt Lake City. That puz- Shipping records show that of the 11 million pounds of The government “is trying to turn things inside out,” he In 2003, the government released zled state officials, because the shipment was clearly out- powdered milk handled by Schreiber, half went to Mex- said. “Here I was trying to do something positive. They 390 million pounds of powdered side their allotment under the federal program. ico. wanted to reduce their stockpile. Ranchers got feed. milk for the ranchers, giving it to That same week, a series of anonymous phone calls “I would guess if it was going overseas it would be Now they want to say I did something wrong.” the states for $1 a truckload. Re- were made to the Utah officials describing alleged abuses lumped into a [cargo] container. We loaded some con- sponsibility for running the pro- in the program. One caller “indicated that he suspected tainers here, too,” Robinson said. “The only reason I had gram was given to the states. In ad- the product . . . was being shipped to foreign markets,” to suspect that it was going to Mexico was the Spanish dition, ranchers were permitted — according to an Oct. 31 e-mail written by Utah Deputy on the labels.” Harvesting Cash within limits — to trade their gov- Commissioner of Agriculture Kyle R. Stephens. Schreiber declined to identify his Mexican customers. Monday: Bonus on the Range ernment allotments to feed dealers The e-mail was among thousands of pages of in- Records show that one was Monte Roble S.A. de C.V., a Ranchers and dairy farmers collected hundreds of for other feed mixes and in some vestigative files and government records that The Post small food company near Mexico City. A Nov. 19, 2003, millions of dollars in disaster relief without cases cash. Bert Farrish of the obtained from state and federal agencies under the Free- export certificate shows that Impression Foods shipped suffering a disaster. The trading made the secondary USDA said the aid dom of Information Act. Those records, as well as in- 765 bags to Monte Roble. The description was “animal Today: Milking the System market possible. Once the pow- preserved some terviews with more than 50 government officials, trad- products.” How agriculture officials touched off a secondary dered milk reached a feed dealer, it ranchers’ herds. ers, brokers, mill operators and feed companies, show A spokesman for Monte Roble, Jesus Cazare, said the market in powdered milk that spanned the globe had a much higher potential price. It that the Utah shipment was part of a chain of trans- small firm was in the business of brokering “food prod- and enriched private brokers. could be mixed with other feeds and resold to ranchers actions that stretched from Wyoming to Idaho to Utah to ucts and nourishment for human consumption.” He add- or sold to brokers who in turn traded it at the going rate Mexico. ed that he had no “recollection” of the purchases of pow- in the commodities market. Protein-rich powdered milk The chain began in June 2003 when Randy Schreiber, dered milk and had been at the firm only a short time. About This Series is one of the most widely traded commodities, because it the Utah broker, decided to get into the powdered-milk “There have been big changes in the company,” he said. This is one in a series of articles The Washington is versatile enough to be used in both animal feed and hu- market. Schreiber’s tiny company, Impression Foods, “I am not aware Monte Roble was buying from this com- Post is publishing this year on waste and abuse in man food, such as pudding, hot-chocolate mix, ice cream specialized in buying and selling food internationally. He pany.” the nation’s farm subsidy programs. and infant formula. said he had never sold animal feed before. Schreiber also said he sold millions of pounds of milk The first installment in the Harvesting Cash series “Our job is not to hold on to any product,” explained According to Schreiber, he didn’t have to look very to brokers whom he declined to name. Records show showed that since 2000, the federal government Pam Neary, owner of High Country Mercantile Inc., a hard to find the government’s powdered milk. “Traders that all of that product went abroad. has paid at least $1.3 billion in crop subsidies to commodity-trading firm in Cody, Wyo., that acquired the found me,” he said. “I never contacted anyone. People “Can I account for what those people did to the prod- individuals who grow no crops at all. Another article rights to millions of pounds of powdered milk that it then just called.” uct once it left my control? No,” Schreiber said in one of a detailed a little-known subsidy that has cost sold to third parties. “We don’t hold it. We don’t store it. One call came from Walton Feed, based in Montpelier, series of interviews. “Do I know some of our customers taxpayers $29 billion since 1998 and goes to It’s in one hand and out the other hand.” Idaho. The firm had access to tons of powdered milk, sold elsewhere? Yes. Do I know it left the country? . . . farmers even in some good years. Jake Malloy, a trader in Casa Grande, Ariz., said, “I which it had traded or purchased from ranchers and bro- Yes. Do I know where they took it? No.” think the product had a lot of value. But ranchers didn’t kers. washingtonpost.com get that much. It was the feed dealers and mills who real- Greg Kunz, one of the owners of Walton Feed, said his ‘It Will Get Ugly’ The complete series, including an interactive map ly made out on this.” company handled 200 to 300 truckloads. Each truck held showing the total payments made under the Rancher Brad Bateman of Elberta, Utah, who runs about 22 tons. Kunz said he was paid up to $160 a ton by When Utah’s Stephens learned that brokers in his Livestock Compensation Program in 2002 and

10,000 head of cattle, said he got “truckloads” of pow- some brokers. “I made $40 on top,” he said. “But remem- state were diverting the government’s powdered milk, he 2003, is online at www.washingtonpost.com/ dered milk. He used some as feed and traded the rest to a ber, I had to store and reload it.” turned the findings over to USDA officials, who in turn harvestingcash.

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Tigers Sweep A’s in ALCS; Terps Come Back to Beat Cavs SPORTS, E1

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Today: Mostly sunny. High 62. Low 41. DISTRICT Monday: Partly sunny. EDITION High 65. Low 51. ABCDE C12 Details, $1.50 Prices may vary in areas outside metropolitan 129th Year No. 314 M1 DC Sunday, October 15, 2006 M1 M2 M3 M4 V1 V2 V3 V4 Washington. (See box on A3)

HARVESTING CASH Allen and Webb in Virtual Tie, Post Poll Says Double-Dipping Northern Virginia Voters’ Views Differ From Rest of Commonwealth POLL When Disaster Strikes If the election were today, for whom By Robert Barnes age point margin of error for the poll con- pared with the number in a national poll. Q: would you vote? Michael D. Shear ducted over three days last week. With few And in a sign that the greater Democratic and NORTHERN VIRGINIA REST OF STATE Washington Post Staff Writers respondents saying they are undecided and enthusiasm seen nationally is also evident Aid Is a most seemingly locked in for their candi- in Virginia, the poll finds that fewer of Virginia Sen. George Allen (R) and Dem- date, the poll indicates that the candidates’ those who say they are certain to vote Allen (R) Webb (D) Allen (R) Webb (D) ocratic challenger James Webb are virtually strategies for turning out supporters will Nov. 7 identify themselves as Republicans 42% 56% 52% 43% Bumper tied in a race that could shift the balance of be vital and that changes in the national po- than a year ago. power in Washington and which reinforces litical climate could tilt the outcome. The three issues that poll respondents Parker Parker the differences between Northern Virginia President Bush’s approval rating among cite most frequently as extremely impor- (I) 2% (I) 2% and the rest of the commonwealth, accord- Virginians who say they are likely to vote is tant — the situation in Iraq, the war on ter- 1% No opinion 2% No opinion Note: Does not equal 100 percent due to rounding. Crop for ing to a new Washington Post poll. about the same as it is nationally. But fewer rorism and ethics in government — are all SOURCE: Washington Post poll based on 1,004 telephone Allen gets 49 percent, compared with people in the state say their feelings about interviews, conducted Oct. 10-12. Farmers 47 percent for Webb, within the 3 percent- Bush will influence their Senate vote, com- See POLL, A6, Col. 1 THE WASHINGTON POST By Gilbert M. Gaul, Dan Morgan and Sarah Cohen A Day of Dedication, War Memories Washington Post Staff Writers U.N. Votes In the spring of 2000, Congress decided to do something about its costly and politically driven practice To Impose of giving farmers a disaster payment each time a storm damaged their crops. Sanctions The lawmakers voted to use $8 billion in new taxpayer subsidies to help farmers buy crop insurance to protect them against losses. The in- On N. Korea surance would replace the disaster payments and reduce government costs. Council Demands End But shortly after passing the Agri- cultural Risk Protection Act, Con- To Nuclear Program gress lost its fiscal will. One week before the presidential election, it By Colum Lynch passed a new $1.8 billion disaster bill and Glenn Kessler to assist farmers hurt by bad weath- Washington Post Staff Writers er. Two others followed in subse- quent years, totaling more than $6 UNITED NATIONS, Oct. 14 — The billion. Today, after a searing U.N. Security Council voted unanimously drought in the Plains, farm-state leg- Saturday to condemn North Korea and im- islators are pushing for billions more pose stiff sanctions on the communist gov- in aid. ernment in response to its suspected nucle- The result is that farmers often get ar test. paid twice by the government for the North Korea’s ambassador immediately same disaster, once in subsidized in- rejected the council’s demand to dismantle surance and then again in disaster as- its nuclear weapons program and threat- sistance, a legal but controversial ened to respond to the escalating pressure form of double-dipping, a Washing- on the reclusive government with unspeci- ton Post investigation found. Togeth- fied “physical countermeasures.” er, the programs have cost taxpayers The 15-nation council’s action highlight- ed the outrage that followed North Korea’s See FARMERS, A12, Col. 1 claim of having tested a nuclear bomb Oct. 9. It also marked a rare willingness by North’s Korea council allies, China and Costly ‘Reform’ Russia, to impose sanctions on Pyongyang. But to secure their support, the United Congress increased crop insurance States was compelled to water down key subsidies, hoping to cut costs by measures designed to ensure that the sanc- replacing disaster payments. tions could be enforced. And China — Instead, spending is up slightly. which shares an 880-mile border with ª Disaster aid ª Insurance subsidies North Korea — said after the vote that it In billions would ignore a critical provision, which calls on governments to inspect goods en- 2000 $2.9 1.1 Total: $4.0 tering or leaving North Korea. 2005 $3.0 2.3 $5.3 BY LUCIAN PERKINS — THE WASHINGTON POST See N. KOREA, A17, Col. 1 Note: Adjusted for inflation based on 2005 dollars SOURCES: Risk Management Agency; USDA; budget The Thunderbirds fly by during the Air Force memorial dedication ceremony in Arlington. Nearly 60 years after the military branch was documents created, veterans and their family members gathered yesterday and shared their stories. Story, C1. Gallaudet For India’s Traditional Fishermen, Reopens With Cellphones Deliver a Sea Change Protesters Still By Kevin Sullivan Minutes later Rajan’s phone rang again Washington Post Foreign Service — another agent at a different port. “When I have a big catch, the phone rings At Front Gates PALLIPURAM, India 60 or 70 times before I get to port,” he said. abu Rajan pointed off the starboard The cellphone is bringing new economic bow and shouted: “There! There!” clout, profit and productivity to Rajan and Jordan Is Criticized In choppy, gray seas four miles millions of other poor laborers in India, the from shore near India’s tropical world’s fastest-growing cellphone market. For Approving Arrests Bsouthern tip, Rajan spotted the tinselly At the beginning of 2000, India had 1.6 sparkle of a school of sardines. He ordered million cellphone subscribers; today there By Susan Kinzie and Mary Otto his three dozen crewmen to quickly drop are 125 million — three times the number Washington Post Staff Writers their five-ton net overboard. of land lines in the country. With 6 million Within five minutes, the cellphone hang- new cellphone subscribers each month, in- Gallaudet University reopened yester- ing around his neck rang. dustry analysts predict that in four years day, the morning after 133 protesters were “Hallo!” he shouted, struggling to hear nearly half of India’s 1.1 billion people will arrested to break up a three-day shutdown over the big diesel engines of his 74-foot be connected by cellphone. of the nationally renowned school for the boat, Andavan. “Medium sized! Medium That explosive growth has meant greater deaf over the choice of Jane K. Fernandes sized!” he said, estimating the haul for a access to markets, more information about to be president. wholesale agent calling from port, who had prices and new customers for tens of mil- BY KEVIN SULLIVAN — THE WASHINGTON POST Although the arrests resolved the imme- heard by cellphone from other skippers that With his cellphone, Babu Rajan discusses the day’s catch with another skipper while a diate crisis, the university remains as deep- Rajan had just set his nets. See INDIA, A20, Col. 1 crewman holds an umbrella protecting them from the Arabian Sea’s brutal midday sun. ly fractured as it ever has been, and no one sees the reopening as an end to the bitter confrontation with the school’s leadership. Last night, about 1,000 protesters stood shoulder to shoulder from the front gates INSIDE of the school in Northeast Washington up a hill to Chapel Hall. Fernandes remains the THE NATION METRO BUSINESS target of their wrath. But the current presi- THE MAGAZINE dent, I. King Jordan, who has been hailed White House Remains Upbeat Ehrlich, O’Malley Face Off Climbing Out of Debt as a heroic symbol of deaf accomplishment, State of the Plate But optimism about GOP chances in In debates, Maryland’s candidates for Financial is now viewed by many as a traitor for or- Post food critic Tom Sietsema the midterm elections isn’t shared by governor trade scathing assessments planners and dering the arrests by campus police. offers his annual dining guide. many Republicans. A4 of each other’s records. C1 credit counselors “We can’t believe King had us arrested,” say money said sophomore Calvin Doudt, standing in THE WORLD OUTLOOK mistakes come in the autumn sunshine yesterday amid a all shapes, and group of protesters. “We are his students.” Nationalist or Pragmatist? She Loves It, She Hates It the consequences The protesters are encouraging Gallau- As Ecuador votes, questions surround A first- can linger for a det students not to return to classes tomor- leftist front-runner Rafael Correa. A15 generation long time. F1 row, when they are scheduled to resume. hip-hop mom OBITUARIES retraces her ARTS See GALLAUDET, A9, Col. 1 complicated Ex-Congressman Gerry Studds Dies relationship Clint Eastwood and Neil Simon The Democrat was the first openly gay with the A new film for one, the Mark Twain Contents person elected to Congress. C7 genre. B1 prize for the other. N1  2006

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HARVESTING CASH Double-Dipping When Disaster Strikes

$6 billion 2005 Almost every crop year since 1988 has seen some sort of emergency total: spending for weather disasters even as spending on insurance has grown. $5.3 billion 5 Paying for Disasters Over the years, Congress has repeatedly 1988 total: bolstered taxpayer subsidies for crop $5.2 insurance as a way to cut back on billion 4 emergency disaster aid to farmers. 2005 disaster Yet billions of dollars in disaster aid: payments continue to flow. $3 billion 3 1988 KEY Disaster aid disaster aid: + $5.04 Crop insurance subsidies billion 2 = Total government spending 2005 crop Disaster aid insurance subsidy: 1 1988 crop $2.3 billion insurance subsidy: $161 million Crop Insurance Subsidies

0 ’81 ’82 ’83 ’84 ’85 ’86 ’87 ’88 ’89 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 Program History Ad hoc disaster programs grow after Congress doubles insurance Congress approves more than Another crop insurance Congress approves aid to a major drought in 1988 and subsidies and requires $2 billion for crop losses reform again raises the farmers hurt by hurricanes political pressure from farm groups. farmers to buy policies. The dating back to 1995 as part government’s contribution Katrina and Rita but rejects

NOTE: Adjusted for inflation based on 2005 dollars. Years requirement is dropped the of a larger agricultural to premiums. Four months requests for an additional refer to crop or program year. Disater payments after 1990 following year. emergency spending bill. later, Congress passes $4 billion for droughts and denote actual spending, not amounts projected in legislation. SOURCES: Risk Management Agency; USDA subsidy spending records; budget documents new crop disaster funding. losses elsewhere.

THE WASHINGTON POST Farmers Relying on Both Aid and Insurance

FARMERS, From A1 how much they have received in crop insur- Armed with the records, the Lauxes filed for ance for losses. Farmers must show that they aid. nearly $24 billion since 2000. have lost at least 35 percent of their crop to “We’re not farming for the government, The government pays billions to help qualify for a disaster payment. The maxi- we’re farming for ourselves,” Gary Laux farmers buy cheap federal insurance, billions mum is $80,000. The total of their insurance said. “We truly would like to make money more to private insurance companies to help payments, disaster aid and sales revenue growing crops. But there are a lot of influenc- run the program and billions more to cover from remaining crops is capped at 95 per- es out there we have no control over. It’s nice the riskiest claims. And on top of all that, it cent of what they would have earned if they to have a safety net.” spends billions on disaster payments. had harvested and sold a full crop. Minutes of monthly Farm Service Agency “It should be one or the other,” said Mark meetings, obtained under the Freedom of In- Orebaugh, a flinty 52-year-old who has suf- Bountiful Harvests and Aid, Too formation Act, show that some Tulare grow- fered several years of bad crops in southwest- ers have pushed the disaster program to the ern Kansas. “There should be a permanent Tulare County in California is an example limit. In March 2004, for example, a grower disaster program or crop insurance that is of a farming region where the use of crop in- sought a payment on 27.6 acres of nectarines enough to cover my losses.” surance is extensive but farmers still draw he said he had grown three years earlier. Af- Instead, there are essentially both. millions in disaster relief. The county is part ter a field inspection and aerial photographs, “Everybody says the money is free, but of the lush San Joaquin Valley, one of the the committee concluded that “there was no we’re all paying,” said Charles Fisher, a cen- largest and most productive agricultural re- evidence of nectarines. The slides distinctly tral California farmer who helped oversee gions in the world. The largely irrigated show pulled trees in bunches on the 27.6 government disaster payments in his area fields produce a bountiful harvest of oranges, acres.” for a dozen years. “Washington unbundles lemons, olives, cotton and 150 other crops. A catfish farmer who put in a claim for fish the money, opens the window and turns on For 12 years, Charles Fisher, 73, helped to lost because of heat “was unable to substanti- the fan.” police the distribution of disaster payments ate the viability of the operation.” A field in- The money is blown all over the country, to Tulare’s farmers. spection found “a lack of evidence of fish or from New York to Nebraska to California, It wasn’t the easiest task for Fisher, who fish bones in the dried up ponds.” usually at election time, fanned by farm-state chaired the local farmers’ committee that ap- Both applications were rejected. legislators. proves disaster payments on behalf of the Tu- A major share of the money goes to lare County branch of the federal Farm Ser- ‘Everything but the Kitchen Sink’ parched and flood-prone areas where farm- vice Agency. In one case, a nectarine grower ing is tenuous at best and “disasters” seem to sought help for weather damage after he had Congressional sponsors of disaster legisla- happen every year, a review of thousands of pulled down his own trees. Other farmers tion offer a variety of reasons for their bills. records and interviews with dozens of farm- claimed to have suffered disasters when the They say federally subsidized insurance ers, economists, insurers and government weather was normal. doesn’t cover all of a farmer’s losses, and dis- regulators have found. Fisher said he doesn’t begrudge growers aster aid fills the gaps. It helps to stabilize ru- Farmers in Gaines County, a parched who have collected disaster aid, despite the ral economies, which don’t have many other stretch of West Texas, collected nearly $66 cost to taxpayers. His own farm has gotten options. And it offsets rising fuel and produc- million in the past five disaster bills. Cavalier some. “Whether it’s right or wrong, if they tion costs while securing cheap food for County farmers in North Dakota, soaked by are offering it, you’re foolish to turn it Americans. rain and floods, got $67 million. The money down,” he said. “Any suggestion that things are good in ag was in addition to $116 million that farmers Tulare farmers have received a total of country does not meet the reality test,” Rep. in those two counties got in crop insurance nearly $77 million in disaster payments since Jerry Moran (R-Kan.), chairman of a key payments. 1998. They have also netted $51.1 million in House Agriculture subcommittee, observed Just four states forming a narrow swath in crop insurance. Yet the county harvest has in a floor speech last year. His office recently the middle of the country — Texas, Kansas, been bountiful in most years, with agricultur- helped to coordinate a day of lobbying by South Dakota and North Dakota — collected al sales reaching an all-time high of $4 billion farmers and agriculture groups pressing for nearly four of every 10 dollars of the disaster in 2005. billions in aid for the 2005 and 2006 crop aid handed out in the past decade, $3.8 bil- The county hasn’t suffered a true weather years. lion in all, records show. Farmers in those disaster since Christmas 1998, when it was To get those costly disaster packages states also collected $5.6 billion from crop in- hit with a freeze and torrential rains, accord- passed, their sponsors spread the money surance. ing to local weather consultants and some around. Recent disaster bills include millions Those farmers have come to depend on farmers. for cottonseed producers and pecan and sug- both crop insurance and disaster payments, “Katrina is a disaster,” said Tom Gruber, a ar beet growers; set-asides for farmers in Vir- which together allow for covering up to 95 local orange grower. “A hurricane in Florida ginia and North Carolina; and $7.2 million percent of the value of their crops. “Taxpay- is a disaster.” for a transportation project benefiting a sug- ers are funding something good, the rural But very few Tulare farmers are rejected ar grower’s co-op in Hawaii. Since 1990, leg- life,” said Terry Aronson, a farmer in the when they apply for disaster aid, records islators have muscled through eight major flood-prone Devil’s Lake area of North Dako- show. Of the 732 applications by orange disaster packages and several smaller provi- ta, who has received nearly $300,000 in dis- growers for assistance in the past two dis- sions covering every year except the past aster aid the past decade. aster bills, only 33 were ruled ineligible — two, including money for clams, oysters, “No one wants to appear they are being less than 5 percent. shellfish, hay, sod, shrimp and lobster. chintzy with farmers,” said Bruce L. Gard- Don Laux, 78, of Porterville, is one of doz- Many of the recent disaster packages have ner, an agricultural economist at the Uni- ens of citrus growers who have gotten help. been shoehorned into large appropriations versity of Maryland and a former top USDA Some of the orange trees on his 500-plus bills, including a military construction bill in official. “In spite of all of these increases in acres were planted in 1911 and have sur- 2004. That means legislators do not even get subsidies, crop insurance really hasn’t made vived Tulare County weather for nearly a an opportunity to vote directly on the sub- a dent in the disaster payments.” century. As do most citrus growers, Laux sidies. and his son Gary use wind machines, auto- “The problem with ad hoc disaster pro- A Continuous Cycle BY STEVEN HAUSLER FOR THE WASHINGTON POST matic irrigation systems, computerized grams is that in order to get them passed, Mark Orebaugh suffered losses to his wheat, corn and sorghum crops and is expecting to weather stations and a private weather con- they throw in everything but the kitchen In the past 25 years, Congress has passed receive federal crop insurance payments. Like most Kansas farmers, he is heavily insured. sultant to minimize their risks. They also sink,” said Tom Buis, president of the Na- three major “reforms” of the federal crop in- take out crop insurance, which has paid tional Farmers Union. The industry group fa- surance program in an effort to sign up more The government would now pick up an “It can hurt them politically if they don’t.” them for losses. Still, Laux Land Co. has re- vors overhauling the present system to make farmers and reduce their dependence on dis- average of 60 percent of the cost of farmers’ Combest, now a lobbyist representing ag- ceived $215,000 in disaster payments since it more rigorous while still targeting farmers aster aid. Instead, the result has been a con- premiums. Farmers jumped at the cheaper ricultural interests, including crop insurance 1998, according to USDA records. in need. “There’s a lot of ways we can do this tinuous cycle in which Congress expands insurance. Today, about 80 percent of all eli- agents, declined to be interviewed. “I think “I think anyone could get along without it, better. We need to start looking at the un- crop insurance only to turn around and hand gible cropland — 240 million acres — is in- I’ll take a pass,” he said. Roberts did not re- but it would be a lot harder,” Don Laux said. derlying cause of the problem, not just the out more disaster payments. sured at some level. spond to requests for comment. “Any little bit helps.” symptoms.” In 2000, then-House Agriculture Commit- Yet only four months after the bill was Disaster payments to farmers are a public Last year, the Lauxes received $73,000 in Buis added that farmers don’t expect to tee Chairman Larry Combest, a Republican passed, Congress authorized $1.8 billion in record but, by law, the USDA keeps the disaster payments for losses on a portion of have all of their losses covered by disaster representing West Texas, was instrumental disaster aid. That was followed by $3.1 bil- names of recipients of crop insurance confi- their 2004 crop of navels and Valencias. payments. “They’re not being made whole in getting the most recent reform bill passed, lion for 2001 and 2002 crop losses, and $3.5 dential. Thus there is no way to count how They based their claim on a warm spell that now,” he said. “What we have is a horrible which included the $8 billion in new premi- billion covering 2003 and 2004. Still another many farmers have collected both and in “hit the blooms” and caused some oranges to public policy that needs to be fixed so we um subsidies. He cited the “countless bil- $250 million was set aside after the 2005 hur- what amount. However, interviews with fall prematurely. help farmers who truly have a need.” lions” in disaster payments that were un- ricanes. farmers and government officials indicate Most of their orchards came through Among the ideas being considered by dermining crop insurance. In the Senate, Pat “In farm states, legislators have to appear that farmers who get insurance payments okay, but when Don Laux checked with the Buis and others is guaranteeing a portion of Roberts (R-Kan. ) argued that expanded in- they are doing something,” said Art Barnaby, also get most of the disaster money. packaging house that handled their oranges, a farmer’s income. surance would result in “less need” for dis- an agricultural economist at Kansas State The USDA calculates how much to pay he learned that yields per acre had fallen by aster aid. University and an expert on crop insurance. farmers in disaster money by first looking at up to 40 percent in some of their orchards. See FARMERS, A13, Col. 1

About the Series 2005 farm subsidies, in billions As Congress prepares to debate a new farm bill next year, Direct and counter cyclical payments $9.4 billion $1.3 billion over five years was paid to farmers who had not planted any crops. The Washington Post is examining federal agriculture Price supports $6.2 $3.8 billion was paid to farmers who did not sell their crops at prices below the government-guaranteed minimum. subsidies that grew to more than $25 billion last year, Disaster payments $2.9 despite near-record farm revenues. Today’s story looks at About $635 million was paid to ranchers and dairy farmers to compensate for severe drought that they never how farmers can collect both federally subsidized crop TODAY: Conservation programs $2.5 suffered, including payments for the crash of the Columbia shuttle over Texas. insurance and emergency disaster payments from Crop insurance premiums $2.3 Repeated reform of the nation's crop insurance has raised costs but failed to stem ad-hoc disaster legislation. Farmers now Congress for the same disaster. Tomorrow’s story will collect for disasters twice — once in federally funded insurance payments and again when Congress passes a disaster bill. explore how private insurance companies profit from a Other farm subsidies $2.0

costly federal crop insurance program. SOURCE: Economic Research Service, Risk Management Agency, USDA payment records NOTE: Insurance figure is for crop year, not calendar year.

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HARVESTING CASH Double-Dipping When Disaster Strikes ‘Farming Your Insurance’ WHITEVILLE, N.C. — Crop insurance helps to protect farmers against the vagaries of weather. But it can also alter the landscape of farming in a region, resulting in higher losses for taxpayers. Consider the lowly sweet potato. For years, it was excluded from federal crop insurance. But in the late 1990s, growers and legislators in North Carolina successfully lobbied federal officials for coverage. Soon, the number of acres planted with sweet potatoes was doubling and tripling, as were the claims filed by farmers. In Columbus County, a low-lying area tucked away in the southern corner of the state, the number of sweet potato acres quadrupled after federal crop insurance was introduced in 1998. Almost immediately, losses also began mounting: $1.4 million in 1999, $2 million in 2000, $3.3 million in 2001. BY LOIS RAIMONDO — THE WASHINGTON POST Between 1999 and 2005, sweet potato North Dakota Gov. John Hoeven addresses a rally outside the Capitol last month, where lawmakers and agricultural groups met to lobby for a debate and a vote on disaster assistance. farmers paid $954,264 in premiums but collected nearly $15 million in federal insurance payments — a return of almost $16 on every $1 in premiums. On one level, it was a case of bad luck, growers said. Starting in 1999 with Droughts Bring Floods of Aid Money Hurricane Floyd, the county was hit with a series of storms that roared in off the coast and dumped buckets of rain on FARMERS, From A12 PAYMENTS their fields during the fall harvest. A Where the Money Goes (by county, 1996-2006) root crop, sweet potatoes are vulnerable In recent months, lawmakers from the to standing water and rot easily. Plains states have pressed for billions more Over the past decade disaster money has been spread to every county with farms. The $5 million to $216 million funds are concentrated in the same areas that received the most in insurance payments “We just seem to have had one storm in disaster aid to cover the past two crop $1 million to $4.9 million after another,” said Phil Gore, a crop years, contending that farmers have been for losses because of bad weather. The center of the country, which is especially hard hit Less than $1 million insurance agent who also grew sweet devastated by drought and rising costs. The by droughts and floods, gets the bulk of the money. No payment potatoes until a few years ago. Bush administration opposes the additional But other growers and government aid, noting that crops were at “record or Total Net Insurance Payments* Total Disaster Payments officials said the large losses couldn’t be near record” levels in 2005 and that millions explained by bad weather alone. They would go to farmers who do not really need said some of the farmers who started the money. growing sweet potatoes had never In a letter to Agriculture Secretary Mike grown them before. Others planted in Johanns, Sen. Kent Conrad (D-N.D.) wrote areas known to be wet. Still others that not all farmers have “had the good for- didn’t take care of their crops, saving tune to produce above average crops,” add- money on fertilizers and other ing that the $4 billion wouldn’t “come close production costs, only to turn around to making farmers whole.” and file insurance claims when their yields were poor — a practice known as A Perennial Safety Net “farming your insurance.” “I heard some farmers plant in dark, Conrad’s home state highlights how dis- wet soil,” said Michael Shaw, a county aster aid has become a kind of perennial extension agent. “Others were planting safety net for risk-prone farmers. North Da- 0 500 * Insurance payments less MILES their bushes far apart, so when the kota ranks second, behind only Texas, in to- premiums paid by farmers. adjuster came it looked like they had a tal disaster aid, with almost $1 billion in the bad yield.” SOURCE: U.S.D.A., Risk Management Agency and Farm Service Agency past decade. Its farmers have suffered floods BY SARAH COHEN AND NATHANIEL VAUGHN KELSO — THE WASHINGTON POST “There was definitely a problem with and droughts, with many getting payments the insurance,” said R. Coke Gray II, a over and over. local USDA official. “Someone could go Federal agricultural disasters have been out and put nitrogen on their plants. declared five out of the past six years in Cav- eryone’s involved this time.” heavily insured. With the help of govern- ever landed in this godforsaken valley I That makes them nice and bushy . . . but alier County, where farmers grow wheat Conrad said that “it’s a key and legitimate ment subsidies, he has covered up to 75 per- don’t know.” produces no potatoes.” and barley on flat, wind-blown fields in the question” to ask how much aid farmers cent of the yields on the 6,000 acres he owns A drought has plagued much of western Crop insurance officials became so northeastern corner of the state. None of should get. But he added, “We’re in some- or leases. Kansas, including Ford County, where Ore- alarmed about the sweet potato losses the farmers’ applications for aid for their thing extraordinary. Go to the Gulf Coast, Orebaugh said the insurance alone is not baugh farms, since 2000. Orebaugh has had that they hired a consultant. In October 2003-2004 crops was turned down, records they have 100 years’ experience with hurri- enough. To begin with, it does not cover all two good crop years out of the last six. “This 2003, the consultant reported that the show. “There was no reason to turn any canes. We don’t say, ‘Enough’ to Florida, or of a farmer’s losses. In addition, if a farmer year is going to be a wipeout,” he said. high losses could not be explained by down,” said Michele Schommer, who heads to California and earthquakes, wildfires and suffers poor harvests in back-to-back years, The good years help to average out the weather alone and that the losses for the local office of the Farm Service Agency. mudslides. As a matter of national policy, we his insurance policy, which is based on his bad. “I use the money to pay back my loans,” sweet potatoes “were remarkably higher “The whole county was bad.” help out areas that have natural disasters.” average yield over four years, covers less. Orebaugh said. But he quickly adds that he than those of other crops.” Although accounting for 2 percent of all This is a major sore point in areas such as rarely gets ahead. “That’s why we need dis- Several members of the Federal Crop farms in North Dakota, Cavalier County has How Much Risk to Bear? Kansas, which has been hard hit by aster assistance. It’s the only way we can pay Insurance Corporation, which sets received more than 7 percent of the state’s droughts. back our loans.” policy for the insurance program, disaster payments in the past decade. The How much risk should taxpayers expect “I’m not sure what more we can do,” said This year, Orebaugh took on an addition- wanted to eliminate sweet potato average total of $113,000 per farm was American farmers to bear on their own? Rebecca Davies, a regional director for the al 1,000 acres in his operation and has high- insurance in Columbus County. After more than double the state average and Mark Orebaugh struggles with that ques- crop insurance program in Topeka, Kan. er costs and a bigger bank loan, about lobbying by the North Carolina nearly 20 times the national average. tion while sitting at the kitchen table in his “We have coverage [plans] of up to 85 per- $230,000. “Talk about a case of bad timing,” congressional delegation, a revised At 6,300 acres, Dettler Farms is among modest home northwest of Dodge City, cent. What more could you ask for? They he said. Now, he is “praying” for another dis- insurance plan was introduced with the biggest in Cavalier County. It has col- Kan. He has received hundreds of thou- still pass disaster programs.” aster bill. higher premiums and stiff restrictions lected disaster payments each time they sands of dollars in federal crop insurance in Kansas farmers have received $421 mil- “We don’t like it any more than the tax- on the number of acres that farmers were available in the past decade — the last four years. An additional $116,000 lion in disaster payments since 2001, among payers do. With disaster assistance, we’re at were allowed to plant. Growers also had $450,000 all together. The farm has also re- has arrived in disaster payments. the highest payouts nationally. That is in ad- the whims of the politicians,” he said. “But to hire a “scout” to inspect their crops ceived insurance payments nearly every Finally, after a long pause, he answers dition to $1.3 billion in insurance payments we need something. I don’t care what you before harvest. year, said Steve Dettler. that he could tolerate up to a “20 percent” to farmers and $680 million in federal sub- name it. Most of the changes went into effect Last year “was the worst year ever,” Det- crop loss. “I don’t think 20 percent is a dis- sides to help farmers pay their premiums. “It’s feast or famine here. Economically, in 2005, with dramatic results. The tler said. Rains came during the planting aster,” he said. “I could probably handle that For Orebaugh and most Kansas farmers, does it make sense? Probably not. Philo- number of insured acres of sweet season in June. “You couldn’t get into the if you average out the good and bad years.” the federal insurance is “a good deal.” In the sophically, I don’t know. Americans want potatoes in Columbus County fields.” But Orebaugh is uncertain and looks to past four years, he has paid $81,730 in pre- cheap food, and they want it when they plummeted to 1,548, from a high of Dettler and other farmers are counting his banker, Leon Flax, for help. Flax, tall and miums but collected $295,796 in claims— want it.” about 6,000. The lower figure was on more help. In late August, Conrad staged dressed in blue jeans, has worked with Ore- or $3.62 for every $1 he put in. That’s high- nearly identical to the number of acres a rally of 400 farmers in Bismarck support- baugh and other farmers for years. “I don’t er than the state average, but Orebaugh Research editor Alice Crites contributed planted in 1997, the year before ing a multibillion-dollar aid package to help know,” he says, shaking his head. “Not this farms on the western side of Kansas where to this report. insurance became available. Losses also farmers and ranchers in the western part of year. I don’t think you could handle anything water is scarce and much of the farmland took a nosedive, to $109,265. the state, which has been beset by drought. this year.” isn’t irrigated. “After they revised the program, it He was joined by Gov. John Hoeven (R). A late freeze hit some of Orebaugh’s “There’s just no water,” he said. “We wasn’t as easy to collect,” said George The drought has actually helped Cavalier crops. Then the temperature soared to 100 probably should never have developed those Wooten III, whose family has grown County by drying out fields that had been degrees in June and remained there for [fields] when we did 30 years ago because sweet potatoes here for decades. “It’s flooded; farmers there are harvesting one of weeks, baking his wheat, corn and grain sor- the water table was declining.” The complete series, including two almost like the guys who were in it their best crops in a decade. But Dettler said ghum. The claims adjuster has already been Orebaugh’s grandfather immigrated Web-exclusive stories and an before insurance stayed in it, and ones he hopes there is a disaster program to cov- by once, and Orebaugh expects him back from Germany in 1901. “He crossed two of interactive map showing crop insurance who weren’t left.” er his 2005 losses. soon. He hopes to collect about $200,000 in the most fertile valleys in the country, the and disaster payments per county, is — Gilbert M. Gaul “We depend on it being there every other crop insurance. Missouri and the Mississippi, and settled in online at www.washingtonpost.com/ year,” he said. “It’s an election year, and ev- Like most Kansas farmers, Orebaugh is western Kansas,” Orebaugh said. “Why he harvestingcash. When Bad Weather Hits There are five federal programs that offer farmers help with weather-related losses. It is possible for farmers to receive money from several programs in the same disaster.

1 2 3 4 5 Emergency Disaster Loans: Federal Disaster Assistance: Federal Crop Insurance: Noninsured Crop Disaster Section 32 Emergency Funds: When the secretary of agricul- Congress frequently passes aid The government provides Assistance: The secretary of agriculture has ture issues a disaster declaration packages following droughts, subsidized insurance for more This USDA program provides the discretion to spend during for a county, farmers who are storms and other bad weather. than 1 million farmers. In all, payments when crop insurance is emergencies without congres- denied loans by their banks can Farmers are required to demon- about 80 percent of eligible not available and farmers suffer a sional approval. In recent years, apply to the USDA for a low- strate a 35 percent or greater acres — or about 240 million 50 percent crop loss. Some the USDA has given farmers interest government loan of up loss. acres — have some subsidized eligible crops include mushrooms, more than $1 billion after to $500,000. coverage. Christmas trees and sod. droughts and hurricanes.

$286.3 million $6.4 billion $14.9 billion** $636.5 million $1.6 billion***

How Taxpayer Money Gets Divided *Complete spending figures for 2005 were not available. **Includes net payments to farmers, insurers’ administrative expenses and underwriting gains.

From 2001 to 2005*, taxpayers spent $23.8 billion $23.8 billion ***2002-2005 on disaster aid and crop insurance for farmers: SOURCES: USDA, Risk Management Agency, Farm Service Agency THE WASHINGTON POST

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Redskins Lose to Previously Winless Titans Tennessee Rushes for 194 Yards IN SPORTS: Full coverage, including Thomas Boswell

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Season Is Dozens Slipping Away Of Iraqis For Redskins Killed in Fourth Loss in Six Games Is a ‘Bitter Disappointment’ Reprisals By Les Carpenter Washington Post Staff Writer River Towns Trade As the last desperate pass of another lost afternoon wobbled into the hands of Tennessee Sectarian Strikes Titans safety Lamont Thompson for an interception, some 88,000 people rushed for the As Militias Move In FedEx Field exits at once. Loyalty would not last a second half of Washington Redskins in- By Ellen Knickmeyer eptitude, and as a sellout crowd made its way to Muhanned Saif Aldin the parking lots, the home team in last place in and the NFC East, the sound of protest came in the Washington Post Foreign Service form of loud and prolonged boos. BAGHDAD, Oct. 15 — Militias allied How had things gone so wrong? After march- with Iraq’s Shiite-led government roamed ing to within two games of the Super Bowl last roads north of Baghdad, seeking out and at- January, this was supposed to be the season tacking Sunni Arab targets Sunday, police Washington’s NFL team finished the charge. and hospital officials said. The violence With a new offensive coordinator, two new wide raised to at least 80 the number of people receivers and two defensive stars, the Redskins killed in retaliatory strikes between a Shiite were supposed to walk through games like yes- city and a Sunni town separated only by the terday’s with the Tennessee Titans. Tigris River. Instead they are 2-4 after being overrun by The wave of killings around the Shiite city one of the worst teams in the league, 25-22 los- of Balad was the bloodiest in a surge of vio- ers to a club that until yesterday hadn’t won a lence that has claimed at least 110 lives in game this year. Iraq since Saturday. The victims included 12 “Obviously this was a huge, bitter disappoint- people who were killed in coordinated sui- ment for me,” a grim Redskins coach Joe Gibbs cide bombings in the strategic northern oil said after the game. “It’s all of us together and city of Kirkuk. certainly that starts with me.” “This has pushed us to the point that we This was a theme he would revisit several must stop this sectarian government,” Ali times in a 10-minute postgame news confer- Hussein al-Jubouri, a Sunni farmer in Dului- ence. In fact, he said some variation of “all of us yah, said as he searched for the body of a together” three times in his opening statement nephew reportedly killed in the violence alone. around Balad. But in trying to assess how a season of so BY JOHN MCDONNELL — THE WASHINGTON POST The slaughter came as Prime Minister Clinton Portis and the Washington Redskins are thrown for a loss by the Tennessee Titans, who entered the game 0-5. Portis Nouri al-Maliki on Sunday renewed pledges scored two touchdowns, including one in the fourth quarter that tied the score, but was held to only 58 yards rushing. See REDSKINS, A6, Col. 1 by the Iraqi government to break up the militias, and as al-Qaeda in Iraq and other Sunni Arab insurgent groups declared a new Islam- ic republic in the western and central parts of the country. NYC School Takeover Inspires Fenty, but Critics Abound The violence around Balad, a Shiite enclave in a largely Sunni region, began Friday By David Nakamura Now, three years into a dramatic re- possible when a city’s chief executive of the speed and breadth of New York with the kidnapping and beheading of 17 Washington Post Staff Writer structuring, it has been divided to house takes a hands-on approach to school re- City school reform. Fenty, who plans to Shiite farmworkers from Duluiyah, a pre- six small schools. On different floors, form. In 2002, Bloomberg abolished the meet here today with Bloomberg and dominantly Sunni town. Taysser Musawi, a NEW YORK — For years, Evander students are learning in more intimate Board of Education, took direct control Chancellor Joel Klein, suggests he will Shiite cleric in Balad, said Shiite leaders in Childs High School in the Bronx epito- environments — with such themes as of the 1.1 million-student system and move quickly to take control of the Dis- the town appealed to a Baghdad office of mized the problems with this city’s fail- aerospace, communications and health. named a former Justice Department law- trict’s struggling system next year. Fenty Moqtada al-Sadr, an influential Shiite cleric, ing public education system. With more Discipline has improved, and more stu- yer as schools chancellor. is all but guaranteed to win the Nov. 7 to send militiamen to defend local Shiites than 3,500 students, the four-story build- dents are graduating, teachers say. Bloomberg’s plan is a prototype for election; three-quarters of registered and to take revenge. Sadr’s political party is ing was crowded, the classes were unruly Mayor Michael R. Bloomberg hails Ev- D.C. Democratic mayoral nominee Adri- and the graduation rate was 31 percent. ander Childs as an example of what is an M. Fenty, who has spoken admiringly See TAKEOVER, A4, Col. 1 See IRAQ, A17, Col. 1

HARVESTING CASH Corporate Gold in Crop Insurance Crop Insurers Piling Up Record Profits By Gilbert M. Gaul, Dan Morgan percent on their premiums. you don’t like to compete?” asked Steve and Sarah Cohen An eruption ensued. The other com- Baccus, chairman of the company that Washington Post Staff Writers panies quickly turned to Congress to now owns Crop 1. “This is about keeping quash the idea. In congressional testimo- the status quo.” In 2002, a small upstart insurance ny and letters to lawmakers and reg- The episode illuminates the power of a company approached the federal govern- ulators, they complained that competing collection of niche insurance companies ment with an idea. The company, Crop 1, on price threatened the “unique public- that have made billions in profits from was one of 16 firms that sold federally private partnership” that the companies the federal crop insurance program, even subsidized crop insurance policies to had with the government. as the government has lost billions cover- farmers under rates set by the govern- With the help of several powerful ing the riskiest claims, a Washington ment. members of Congress, the program was Post investigation has found. Crop 1’s plan was modest. It wanted to eventually derailed. Last year, the companies made $927 introduce a slight amount of competition “Why would you want to kill a pro- by offering farmers discounts of up to 10 gram that saves farmers money unless See INSURANCE, A12, Col. 1

BY LOIS RAIMONDO — THE WASHINGTON POST Best friends Ashley Bradshaw, 16, left, and Davia Carter, 17, move to the sounds of the Critical Hastert’s Team Mentality to Be INSIDE Condition Band at a go-go for teenagers who took lessons on keeping things peaceful. Tested as Foley Scandal Unfolds THE NATION Strong Earthquake Rocks Hawaii Pulse of Go-Go, Promise of Peace By Michael Grunwald as a powerless figurehead inside Wash- The quake off the Big Island of and Jim VandeHei ington, the accidental speaker has Hawaii causes no fatalities but Washington Post Staff Writers helped unify his fractious caucus, pro- statewide power outages. A3 Mingle at D.C. Dance Event for Youth mote President Bush’s agenda and ex- Robert E. Pierre On a table near the desk of the speak- pand the House’s GOP majority. Health-Care Firm’s Chief to Depart By assigned to the event didn’t budge, pretty cer- er of the House, nine bears sit in a wood- “That rowboat is how he sees his job,” Clarence Williams tain there’d be no trouble. UnitedHealth Group’s chairman and and en rowboat, eight with oars said lobbyist David Thomp- Washington Post Staff Writers These teens and preteens trained — took and one in charge. But the boat son, a former Hastert aide. chief executive will step down after lessons — to come to this club. can’t move unless the oars all “He wakes up every morning questions about the timing behind The teenagers started lining up early on They sat through two documentaries. row in the same direction. thinking about how he can his stock option grants. A22 the lilac stairs, arriving by Metro, bus and car They endured tough-love lectures. That’s why House Speaker J. help the Republican team.” METRO and on foot. Word had spread: The Market They made a pledge: We will not come to Dennis Hastert (R-Ill.) bought But now the Republican Lounge in Northeast was playing go-go. The Pandas Have a New Home go-gos to settle scores. We will not fight. We it. rowboat is leaking, and the At the door, they waved their ID cards, and will abide by the rules and be respectful. Ever since an odd combina- longest-serving GOP speaker We take you on a tour of the soon they were in the middle of a throbbing Finally, they were issued special ID cards tion of scandal and turmoil in history is at the center of the National Zoo’s $53 million Asia dance floor, 100 teenagers dancing elbow to that would get them into a series of “peace- catapulted Hastert into the storm. Trail, which opens tomorrow. B1 elbow, holding up T-shirts honoring their gos.” Saturday’s was the first. speaker’s job in 1999, the beefy As investigators probe dead homies and flashing neighborhood signs The city has been up in arms lately about former wrestling coach — House Speaker whether Hastert ignored STYLE with their fingers: Lench Mob (Woodland youth violence, issuing curfews, ordering po- who’s a bit bearlike himself — J. Dennis Hastert warnings about former repre- A Night to Honor Neil Simon Terrace), Choppa City (Anacostia), Simple lice to work overtime. This is an effort to end has pushed House Republicans sentative Mark Foley (R-Fla.), The stars pay tribute to Simon as City (Benning Terrace). youth violence, too — a novel experiment by to work as a team. And he’s had remark- Democrats across the country are por- he’s presented the Mark Twain That’s about the time at many go-gos that Market Lounge and a community coalition. able success. Largely unknown outside Prize for American Humor. C1 fights break out and someone winds up shot Washington, routinely underestimated See HASTERT, A5, Col. 1 or dead. But here, the two police officers See GO-GO, A14, Col. 1

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A12 Monday, October 16, 2006 S x The Washington Post HARVESTING CASH Corporate Gold in Crop Insurance For Insurers, Subsidies Spell Record Profits

INSURANCE, From A1 the same rate set by the government. Farm- Company Gains, Taxpayer Losses ers cannot go online and get rate quotes million in profit, a record. They received an from different insurers. additional $829 million from the govern- The 16 companies that sell federal crop insurance policies share the risk with the federal govern- When Crop 1 broke ranks and approached ment in administrative fees to help run the ment. But as part of the arrangement, the companies are allowed to shift most of their high-risk the government with its premium-savings program. On top of that, taxpayers kicked in plan, it was attempting to bring competition $2.3 billion to subsidize premium payments customers to the government. In good years, that translates to large profits for the companies. to a program that had never had any. Under for farmers. a little-known government program called All of that to pay farmers $752 million for Profits or losses* in crop insurance program the Premium Reduction Plan, Crop 1 could losses from bad weather. 1998 1999 2000 2001 2002 2003 2004 2005 pass along savings to farmers in the form of “We would probably be better off just giv- lower premiums if the company could trim $927 ing the farmers the money directly,” said $1.0 million its government-paid administrative costs. Bruce A. Babcock, an agricultural economist billion 16 crop insurance companies The crop insurance The government approved Crop 1’s plan, companies had profits in $690 $723 at Iowa State University who recently pub- million and the company, then a subsidiary of Occi- lished his own study of the program. “That Federal government seven of the last eight years . . . million dental Fire and Casualty Co. of North Caroli- way we would save on all of the fees going to na, started offering lower premiums in se- the private insurers.” 0.5 $346 $378 lected states. The insurance companies say they cannot $279 $272 $282 million million The other crop insurance companies ar- million million million $204 afford to offer farmers coverage without the million gued that the plan was unfair. It would, they government subsidies because of the risky said, place companies in financial jeopardy nature of farming. As for their profits, they and might result in Crop 1 agents “cherry- say they are taking on more risk than ever 0 picking” larger, more profitable accounts and need the money to protect against a po- –$47 while sidestepping smaller, riskier farmers. –$128 million tentially catastrophic loss. million –$202 Agents complained that most of the savings “You’ve got to have a good year to make million would come out of their pockets because

LOSS PROFIT –$352 –$329 –$335 up for the bad,” said Sam Scheef, president million million sales commissions account for about half of of ARMtech Insurance Services, which sells -0.5 million insurers’ administrative costs. federal crop insurance policies in 40 states. . . . while the federal govern- Billy Rose, chief executive of Crop 1, dis- He added that other companies aren’t “ex- ment registered losses in six of missed the charge that his company cherry- actly rushing to get into the business.” the last eight years. picked policies. “That was a line they used in- Federal crop insurance, one of the largest -1.0 side the Beltway,” he said. “We’re a growing pieces of the nation’s costly and sprawling company. Why would we turn away any- farm subsidy system, does not resemble any –$1.1 one?” other insurance. Unlike firms that sell auto billion ARMtech’s Scheef testified that the crop or homeowners insurance, the companies do Total insurance program is based on “service com- not compete on the basis of price but on ser- combined $151 –$80 –$47 $11 –$1.15 $176 $894 $1.65 petition,” not price competition. In a recent million million million million billion million million billion vice. profits/losses interview, he said the Crop 1 plan was And unlike other insurers, which try to flawed because there was no way for in- weed out bad customers and limit risk, the * The underwriting gains/losses are current as of August 2006. These numbers are subject to some change as outstanding claims are reported to FCIC. surers to “trim” administrative expenses federal program agrees to take on any and all “without reducing services” to farmers. comers. In fact, to attract customers, the The federal government covers costs in the 1998-2005 total: Robert W. Parkerson, president of Nation- government charges farmers only about one- crop insurance program in three ways: more than $20 billion al Crop Insurance Services, another industry third of what it actually costs to cover the Losses (detailed above): $1.5 billion group, said that “nobody is against the dis- claims. Since 1981, subsidies to farmers for It pays losses on the riskiest policies. count per se.” He added that the insurers fa- their premiums have totaled nearly $19 bil- vored another type of savings in which farm- Premium subsidies: $14.1 billion lion. Administrative costs: $5.2 billion ers with good track records and fewer claims The government pays about 60 percent Finally, under an agreement with federal It pays the insurance companies fees to would receive small discounts similar to of farmers’ premiums. officials, crop insurance companies are al- cover their administrative and those good drivers get from auto insurance lowed to shift their riskiest policies to the operating expenses. companies. government. In the past eight years, the Baccus, president of the Kansas Farm Bu- companies have made a total of $3.1 billion SOURCE: Federal Crop Insurance Corp. reau and chairman of the Farm Bureau Mu- in profit as the government has lost $1.5 bil- THE WASHINGTON POST tual Insurance Co., the Iowa firm that now lion, an analysis of records shows. owns Crop 1, said its plan saved farmers “Crop insurance reform has become a “over $4 million and has a 94 percent re- good idea gone awry,” said Jerry R. Skees, an tention rate.” agricultural economist at the University of In February 2005, federal regulators re- Kentucky. “It’s expensive, complex and in- ceived about 800 letters in response to a re- efficient.” quest for comments on the Crop 1 plan. The majority were from crop agents and insur- Flocking to Cheap Insurance ance officials denouncing it. In some in- stances, the letters were identical except for In 1980, Congress turned to private insur- the name. Four arrived from farmers in Kan- ance companies and their extensive net- sas, one of whom was Landon Koehn of Ma- works of agents in an effort to expand crop rienthal. insurance and save money on the billions When a reporter contacted Koehn, he said that were being paid to farmers in emergen- he didn’t remember the letter. But after a re- cy disaster legislation. Companies get into porter read him its contents, he responded, the program by applying to the government. “I can tell you this honestly: I didn’t write That year, lawmakers also introduced a this letter,” adding, “I would know if I did.” subsidy to help farmers buy insurance, pick- Later in 2005, Rep. Jack Kingston, a Geor- ing up about 30 percent of the premium. gia Republican and former insurance agent, Farmers flocked to the cheap insurance. successfully introduced language in a House Insured acres went from 45 million in 1981 appropriations bill to derail Crop 1’s dis- to 101 million in 1990 to 240 million today. count plan by essentially prohibiting govern- The number of crops covered has also in- ment funds from being used in the Premium creased. Reduction Plan. Since Congress boosted subsidies for pre- In May, the Independent Insurance miums again in 2000 — the average is now Agents and Brokers of America, known in 60 percent — the crop insurance industry the industry as “Big I,” awarded Kingston its has collected record underwriting gains, or Gerald Solomon Legislator of the Year the profits left from premiums after claims Award. “Congressman Kingston has been a have been paid. The $927 million insurance true friend to independent insurance companies made last year surpassed the pre- agents,” Big I chief executive Robert A. Rus- vious record of $690 million, set the year be- buldt said at the time. fore. Overall, they have had record profits in In an interview, Kingston said he offered four out of the past five years. the provision because “small farmers weren’t Keith Collins, the U.S. Department of Ag- being served” by the discount plan. riculture’s chief economist and chairman of During final House-Senate negotiations the federal board that oversees the crop in- last fall, Sen. Conrad Burns (R-Mont.) of- surance program, said the companies’ per- BY HOLLY MCQUEEN — DES MOINES REGISTER VIA ASSOCIATED PRESS fered language similar to Kingston’s that formance has been “atypically good” in re- Last year, insurers made millions in profits in Iowa, where corn harvests have been plentiful. Crop insurance agents flock to do business there. was approved by the conferees and passed cent years. by Congress, Burns spokesman James Pen- Company spokesmen added that it is im- ernment’s Risk Management Agency are not government often lose money on states the companies, it cost the government $3.34 dleton said. portant to look at the history of the program, exactly household names. The market is plagued by droughts and floods, such as for each $1 it paid out in claims to farmers “Senator Burns was supportive of the con- not just the recent results. “I think you have dominated by three firms — Rain and Hail Texas and North Dakota. whose crops were damaged by storms and cept,” Pendleton said. “But his rationale was to look at 2002 and this year and 1993,” said LLC; Great American Insurance Co.; and One result is that insurance companies bad weather, federal data shows. that the premium reduction program wasn’t Scheef, referring to years in which the in- Rural Community Insurance Co. — which and agents are concentrated in profitable “I’ve never really looked at it from that working. It was a bait and switch. There was surers lost money. Recently, he added, “I just together account for the bulk of the business, states. For example, there are 2,900 agents perspective,” said Scheef, who also serves as no guarantee that farmers would get a reduc- think we had some good weather.” according to industry and government offi- registered to sell federal crop insurance in vice chairman of the American Association tion in their premium in the end.” Since the insurance companies began ad- cials. Iowa, compared with 750 in Texas. of Crop Insurers, an industry group. He add- In February, the American Association of ministering the program in 1981, records The companies make their money in two The companies are required to sell pol- ed that the program has become more com- Crop Insurers hosted Burns as its main show, they have suffered $139 million in loss- ways: on administrative fees that the govern- icies to any farmer who wants one, regard- plex, driving up administrative costs. speaker and sponsored a fundraiser for him es in a few bad years while collecting more ment pays them to sell and service policies less of the risk, Collins said, and would be un- Crop insurance administrator Ross Da- at the Grande Resort Hotel in Naples, Fla. than $4 billion in profit during the good and on profits when gains from premiums willing go into high-risk states unless they vidson Jr. sought to reduce company fees by The event raised $15,000, according to ones. exceed losses from claims. could shift those losses to the government. $75 million last year. But in a highly unusual McLeod, the association’s director and a for- In many years, they have made large prof- Federal officials negotiate how the gov- He added that the companies have agreed to congressional hearing, Davidson was pub- mer chief counsel of the Senate Agriculture its even when the government loses huge ernment and insurers split their gains and take on greater risk in recent years. licly upbraided by Sens. Pat Roberts (R- Committee. sums on crop insurance, a Post analysis losses through a document known as the “Greater risk-sharing does allow the com- Kan.), Charles E. Grassley (R-Iowa) and The association’s political action commit- found. For example, in 2001, the companies Standard Reinsurance Agreement, the most panies to do better when times are good,” he Kent Conrad (D-N.D.) for not being more tee has contributed $9,315 to Burns during made $346 million, while the government recent version of which dates to 2005. The told The Post in an e-mail. Nevertheless, “producer friendly” and for losing the trust the current campaign cycle, the largest dona- lost $335 million. highly detailed document allows insurers to “they face much greater exposure to losses of the insurers. They called for his resigna- tion to Burns from any agriculture group, ac- Even in bad years, when everybody loses decide which level of risk they assign to each should weather go bad.” tion. cording to the campaign watchdog group Po- money, the government bears the brunt. In policy, from low to high. The government also negotiates the fees Later, Davidson was transferred to the liticalMoneyLine. the drought year of 2002, the companies lost The agreement allows the companies to that it pays the companies to run the pro- U.S. Department of Agriculture main office $47.4 million, while the government lost assign the bulk of their high-risk policies to gram, known as administrative and operat- to work on energy issues. He has since left Research editor Alice Crites contributed to $1.1 billion. the government, leaving taxpayers liable for ing expenses. The companies currently re- the agency to work in South America for the this report. Government officials maintain that the those losses. Meanwhile, the companies ceive about 21 cents for every premium Mormon Church. Attempts to reach him crop insurance program pays for itself. But keep most of the low-risk policies likely to dollar, down from as high as 36 cents in the through the church were unsuccessful. they count the billions of taxpayer dollars for generate a profit. 1980s. Insurers complain that they lose mon- The crop insurance industry was “defi- ON WASHINGTONPOST.COM premium subsidies as revenue to the pro- The USDA’s Collins said the agreement is ey servicing each policy because of the cut. nitely” glad to see Davidson go, said Michael The complete series, including two gram. Take away the subsidies, and the pro- “highly asymmetric. Companies get a larger But while the fees have declined as a per- R. McLeod, executive director of the Amer- Web-exclusive stories and gram would have lost $12 billion in the past share of the gain than of the loss.” centage of premiums, the higher subsidies ican Association of Crop Insurers. “Rela- an interactive map showing decade. Policies in states such as Iowa, Illinois and have encouraged farmers to buy more insur- tions had nowhere to go but up.” crop insurance and disaster Minnesota, with stable climates and good ance, boosting the fees to $891 million in payments per county, is Less Risk, More Gain for Firms soil, generate large profits for the companies 2004 from $550 million in 2000. One Rate Fits All online at www.washingtonpost. — $268 million in 2005 alone, an analysis of Last year, including net payments to farm- com/harvestingcash. The 16 companies that work with the gov- underwriting data found. But firms and the ers and profits and administrative fees for Each of the 16 companies sells policies at

About the Series 2005 farm subsidies, in billions As Congress prepares to debate a new farm bill next year, Direct and counter-cyclical payments $9.4 billion $1.3 billion over five years was paid to farmers who had not planted any crops. The Washington Post is examining federal agriculture Price supports $6.2 $3.8 billion was paid to farmers who did not sell their crops at prices below the government-guaranteed minimum. subsidies, which grew to more than $25 billion last year despite near-record farm revenues. Today’s story explores Disaster payments $2.9 About $635 million was paid to ranchers and dairy farmers to compensate for severe drought that they never how private insurance companies profit from a costly Conservation programs $2.5 suffered, including payments for the crash of the space shuttle Columbia over Texas. federal crop insurance program. Yesterday’s story looked TODAY: Crop insurance premiums $2.3 Last year, it cost the federal government $3.34 for each dollar that was paid to farmers. at how farmers can collect both federally subsidized crop insurance and emergency disaster payments from Other farm subsidies $2.0

Congress for the same disaster. SOURCES: Economic Research Service, Risk Management Agency, USDA payment records NOTE: Insurance figure is for crop year, not calendar year.

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Red and Green, and Just a Little Off-Color GOP Laments Mixed Results As Control of Congress Ends By Jonathan Weisman Washington Post Staff Writer

Demoralized Republicans adjourned the 109th Congress at 5 a.m. yesterday with a near-empty Capi- tol, closing the door on a dozen years of nearly un- broken GOP control by spending more time in the final days lamenting their failures — to rein in government, tame the deficit and temper their own lust for power — than reliving their successes. Still reeling from their electoral defeat Nov. 7, Re- publicans capped an era of conservative ascendance with the passage of business tax break extensions, a package of trade measures, and legislation to stave off physician-payment cuts they once trumpeted in their budget-cutting drive. While GOP leaders touted their handiwork, it was a far cry from 12 years ago when the Republicans swept to power with the zeal of self-described revolu- tionaries and a mission to shrink the size of government, limit its reach, strengthen the nation’s security and end an era of a privileged, imperial Congress. “Together, we reformed welfare. We cut taxes, and small businesses grew all over the nation,” House Speaker J. Dennis Hastert (R-Ill.) said in a late-night farewell address. “We promised to protect this nation

BY SARAH L. VOISIN — THE WASHINGTON POST from further attack, and by grace of God and with the leadership of President Bush, we have been suc- Tylerton, Md., residents Mary Ada Marshall, Tina and Joan Corbin and Missy Evans, from left, get holly-jolly at Ewell United Methodist Church during the annual cessful.” holiday pageant held by the church’s ladies’ aid group. The slightly naughty Smith Island event is for women’s eyes only. Style, D1. But beyond Hastert’s speech, a conclusion punctu-

See REPUBLICANS, A6, Col. 1 Witnessing Execution a Matter of Duty, Choice End-of-Session Measures Pre-dawn final action of the 109th Congress: By Candace Rondeaux was 9 p.m. — time for the execution to begin. A Richmond school bus driver, a South Hill book- K Broad tax-and-trade bill including a five- Washington Post Staff Writer Later, they would remember how the air in the keeper, a Prince William County police officer, an year extension of 20 tax breaks at a cost of room seemed to compress at that moment. How the Ashburn computer specialist, a Lynchburg brass $38 billion. They couldn’t take their eyes off the electric electric chair seemed to dwarf everything else. How works fabricator. All have visited the Greensville K Legislation allowing civilian-nuclear-tech- chair. They took it in piece by piece as they filed the condemned man, one of the rare few to choose Correctional Center in Jarratt. nology transfers to India. into the witness room: The leather restraints on the electrocution, looked right through them before he Candy Couch, the candle shop owner, had seen giant oak armrests. A long electrical cord coiling died. But at that moment, all they could think was other men put to death, but they had been flat on K Authority to open 8.3 million acres in the from the bottom across the slate gray death cham- that they were about to watch a man die. their backs, feet facing her, arms splayed on a gur- Gulf of Mexico to oil and gas drilling. ber floor. It’s been 70 years since executions in the United ney, waiting for the needle. She rarely saw their K Funding to combat AIDS and other pan- The candle shop owner grabbed one of the white States were open to the public. But in Virginia, eyes before the life drained out of them. But this demic diseases and premature births. plastic lawn chairs in front of the plate glass win- there is always someone watching, turning what is man, her fourth, stared her down as he walked to Story, A5 dow that would soon separate the living from the for most people a distinctly private moment into a the electric chair. dead. Next to her, the social worker nervously very public end. One of more than a dozen death “He’s staring at me,” Couch said. “Oh my God, smoothed her hair as she took a seat with a direct penalty states that require ordinary citizens to wit- he’s looking right at me.” view of the chair. The investigator climbed the ness executions, Virginia has enlisted hundreds of For nearly 100 years, broad public support for wood risers and took a seat behind them. volunteers for the task. The clock’s second hand swept over the 12. It They come from every corner and every quarter: See WITNESS, A16, Col. 1 Candidates Woo Bush Donors for HARVESTING CASH The Milk Lobby Strikes Back Lebanon’s Shiites Grapple ‘Invisible Primary’ By Chris Cillizza With New Feeling of Power washingtonpost.com Staff Writer and Michael A. Fletcher Despite Gains, Sense of Vulnerability Persists Washington Post Staff Writer Last month, a group of Republican royalty gathered By Anthony Shadid they are defining. to be wined and dined by Gov. Mitt Romney in Boston. Washington Post Foreign Service “How is this democracy?” Ayyash asked, On Friday night, they ate at Copia, a pricey Mediterra- pointing to the colonnaded government nean steakhouse. On Saturday, they had breakfast at BEIRUT, Dec. 9 — As morning clouds headquarters known as the Serail, standing the Four Seasons and then lunched at Fenway Park. hovered overhead Saturday, Fadil Ayyash like a citadel atop a hill. “The majority is Key Romney advisers made presentations about the wiped eyes that were bleary from just two here,” he said, waving his hand across rows path to the presidential nomination they see for the hours of sleep over two days in the city- of protesters’ tents. Massachusetts governor. Others walked attendees within-a-city that Hezbollah’s protests in His friends nodded, sprawled in brown through how a race would be financed. downtown Beirut have become. plastic chairs. Among the 160 or so wealthy Republicans the Rom- The mood in his tent, set alongside a site “These days,” he said, “we have to seize ney campaign had invited for the weekend was a par- for luxury apartments, was playful. The first our opportunity.” ticularly important group of potential supporters — order of business was stoking a water pipe. Once the country’s most downtrodden, the 40 or so men and women who were “Rangers” or BY DAVID WALLACE — ARIZONA REPUBLIC Under two yellow Hezbollah flags, with a entrenched in feudal misery, Lebanon’s Shi- “Pioneers” in the 2000 and 2004 campaigns of Presi- Working without the government safety net, Hein Hettinga sold milk hint of mischief, he and his friends unveiled ites stand today on the verge of their great- dent Bush. for less than the big dairy companies did. So they called Congress. their makeshift fireplace, charred cinder- est political power in the history of a diverse These Rangers, who raised $200,000 or more for blocks stacked on a sidewalk still warm country defined by its fractious religious Bush in 2004, and Pioneers, who each collected more from a campfire the night before. But they communities: Sunni and Shiite Muslims, than $100,000 as part of campaigns that redefined spoke bluntly — of frustration and protest, Druze and Christians. But their ascent is a modern political fundraising, are being intensely Dairy Industry Crushed of politics and power — the vocabulary of a Innovator Who Bested moment the young Shiite Muslim men feel See LEBANON, A30, Col. 1 See FUNDRAISERS, A14, Col. 2 Price-Control System INSIDE THE NATION By Dan Morgan, Sarah Cohen and Gilbert M. Gaul Washington Post Staff Writers Rep. Jefferson Reelected in Louisiana The congressman wins a runoff election despite a In the summer of 2003, shoppers in Southern California began federal investigation into bribery allegations. A10 getting a break on the price of milk. A maverick dairyman named Hein Hettinga started bottling his Fallout From Iraq Study Group Report own milk and selling it for as much as 20 cents a gallon less than the As conservatives criticize it, family members of competition, exercising his right to work outside the rigid system those who died in Iraq offer strong reactions. A3 that has controlled U.S. milk production for almost 70 years. Soon the effects were rippling through the state, helping to hold down THE WORLD retail prices at supermarkets and warehouse stores. That was when a coalition of giant milk companies and dairies, Shiites Storm Baghdad Neighborhood along with their congressional allies, decided to crush Hettinga’s Mahdi Army militiamen kill at least two people initiative. For three years, the milk lobby spent millions of dollars on and drive Sunni families from their homes. A24 lobbying and campaign contributions and made deals with lawmakers, including incoming Senate Majority Leader Harry M. Radiation Trail Extends to Germany Reid (D-Nev.). Traces are found in two residences visited by a Last March, Congress passed a law reshaping the Western milk man who met last month with former Russian market and essentially ending Hettinga’s experiment — all without intelligence officer Alexander Litvinenko. A28 a single congressional hearing. “They wanted to make sure there would be no more Heins,” said STYLE Mary Keough Ledman, a dairy economist who observed the battle. Hettinga, who ran a big business and was no political innocent, BY NIGEL COOK — ASSOCIATED PRESS Jimmy Carter Raises a Ruckus fought back with his own lobbyists and alliances with lawmakers. THE NATION The former president’s new book is his most But he found he was no match for the dairy lobby. provocative, and he says that’s by design. D1 “I had an awakening,” the 64-year-old Dutch-born dairyman said. Discovery’s Spectacular Show “It’s not totally free enterprise in the United States.” Contents The shuttle lit up the night sky as it lifted off for a mission to the international space  2006

station. It was NASA’s first night launch since the 2003 Columbia disaster. A20 The 7

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A12 Sunday, December 10, 2006 S x The Washington Post

HARVESTING CASH The Milk Lobby Strikes Back

The Maverick: The Establishment: Dairy Groups Taking On Hein Hettinga and Sarah Farms Big Milk Dairyman and bottler based in Yuma, Ariz. For three years, starting in 2003, a coalition of milk companies and In the end: Lobbying: dairies lobbied to crush an initiative $2,475,000 Dean Foods by a maverick Arizona dairyman. Total Bill backed by Largest U.S. milk lobbying processor Hein Hettinga chose to work outside expenses dairy groups the rigid system that has controlled for Hettinga: passes U.S. milk production for almost 70 $120,000 Legislation passes Total years. The milk lobby said he Congress, sponsored lobbying expenses Contributions: presented unfair competition because by Sens. Harry Reid for dairy groups: $624,600 he chose to operate without federal $52,900 (D-Nev.), Jon Kyl (R-Ariz.) and $5,586,657 price control. Hettinga fought Dianne Feinstein (D-Calif.) Total and Rep. David Nunes back but was outgunned on the Hill. contributions (R-Calif.). It forces Hettinga $1,160,000 In March, Congress passed a bill by Hettinga and to join the regional milk relatives v Dairy Farmers that effectively ended his experiment. system while also ending of America federal milk pricing in all of Largest U.S. dairy Nevada. In effect, Nevada cooperative bottlers get some of the $841,300 same rights being taken away from Hettinga. Law Ended Venture National Milk Producers $1,031,548 Federation Umbrella group of dairy cooperatives That Lowered Prices $93,000 International DAIRY, From A1 Dean Foods, which in turn sells to retailers. $765,109 Dairy Foods As Hettinga’s milk began reaching Costco Association Most U.S. dairy farmers work within a stores, there was a snowball effect as other Total Represents dairy- political action committee government system set up in the 1930s to milk suppliers were forced to lower their $273,402 products industry and employee contributions give thousands of small dairies a guaranteed prices, Costco’s Benoliel said. by dairy groups: market for their milk and to even out prices Dean Foods recently said that Hettinga $75,000 Western United for consumers. Farmers who participate in was unfairly exploiting a “regulatory $1,990,752 Dairymen regional pools operated by the federal loophole” and that his actions led to lower $69,000 California dairy group government or the states deliver raw milk milk prices for California dairies. to cooperatives or food processors. They Hettinga’s operation was “damaging to get a guaranteed price, whether the milk the marketplace,” said Elvin Hollon, Dairy Institute ends up in a gallon jug, cheese, butter or ice director of economic analysis for Dairy $40,000 of California Represents milk cream. In Arizona and other federally Farmers of America. “Nobody ever (No PAC) processors and regulated regions, the Agriculture envisioned there would be such large spending of more than $5 million in 2005 retailers Department uses a formula to set the price handlers” outside the pool. and the first half of 2006. Dean Foods processors pay for raw milk, issuing “milk “So,” Hollon said, “the regulations had to reported spending almost $2.5 million, marketing orders.” change.” including $500,000 for outside lobbyists. Developed for a bygone era of small One was Charles M. “Chip” English Jr. of $20,000 United Dairymen of dairies and decentralized milk plants, the Political Education Thelen Reid & Priest. English also $31,000 system lives on when 3,000-cow dairies are represented Shamrock Foods, United Arizona not uncommon and huge cooperatives and The first challenge to Hettinga came in Dairymen of Arizona and the Dairy State dairy food companies dominate the business. late 2001, when Sen. Jon Kyl (R-Ariz.) Institute of California. cooperative Business groups, fiscal conservatives and proposed a measure that would have forced During 2005, English fine-tuned the some dairy organizations have called for Hettinga to pay in to the pool that language in the milk bill. “My hand can be $20,000 Shamrock Foods Congress to overhaul the complex system of Shamrock was governed by. seen throughout the bill,” he said in an $58,450 Arizona’s largest milk protections and subsidies, which they say is Shamrock’s chairman, Norman P. interview. Pick a paragraph in the processor and dairy costly to taxpayers and consumers. A recent McClelland, had contributed thousands of legislation, he said, and “either I wrote it or NOTES: Not all money spent by dairy groups was in connection USDA study acknowledged that “dairy dollars to Kyl, beginning with Kyl’s first I commented on it.” with the bill. Lobbying figures are for 2005 through first half programs raise the retail price” of milk. The House campaign, in 1986. Among others in the lobbying effort were of 2006. PAC and employee contributions are for 2005-2006. watchdog group Citizens Against Hettinga fought back by printing labels the International Dairy Foods Association, SOURCES: PoliticalMoneyLine, federal lobby disclosure reports Government Waste estimates that the saying that Kyl wanted to “limit competition the National Milk Producers Federation and and federal campaign finance records programs cost U.S. consumers at least $1.5 and raise the cost of milk to the Arizona the Western United Dairymen. Dairy BY DAN MORGAN AND LAURA STANTON — THE WASHINGTON POST billion a year. consumer” and putting them on 50,000 Farmers of America, with members in 47 The 1937 law allowed “producer- gallons of milk shipped around Arizona. states, mobilized a grass-roots campaign for here,” said lobbyist Charles Garrison. handlers” — dairy farmers who bottle milk In the House, Devin Nunes, a new the legislation. Nunes was a protege of House Ways and from only their own cows — to operate Republican member from California’s BY JIM GARDNER FOR THE WASHINGTON POST At every turn, Lewis’s office was Means Committee Chairman Bill Thomas outside the pools. But it was risky for a farm Central Valley, introduced a bill to close Hein Hettinga fought the dairy industry’s “barraged by calls and faxes from dairy (R-Calif.). And he had recently backed John to do this because it might end up with what he called the “regulatory loophole” campaign against him by saying his owners,” recalled Specht, Lewis’s aide. “It A. Boehner (R-Ohio) in his successful more milk than it could sell. Most of these that let Hettinga ship unregulated milk into company lowered milk prices. seemed clear that all the skids had been campaign for majority leader. outsiders were small. California. Nunes’s district is No. 1 in milk greased for this legislation.” In late March, Boehner placed the bill on Hettinga started out as a hired hand in production in the nation. Nunes and Sons dairyman would save by operating outside a special docket usually reserved for the Dutch American dairies of Southern dairy, located a few miles north of Tulare, the federal system would have to be paid in An Angry Meeting uncontroversial measures such as naming California, where his family emigrated after was started by Nunes’s grandfather and was to the pool. post offices. Under that docket, bills require World War II. He soon figured out he could still in the family. On the evening of Nov. 2, 2005, a two-thirds majority for passage. But the buy cows with injured hooves, then fix and In Nunes’s first run Getting Around Lewis lawmakers and several dozen lobbyists parliamentary procedure also meant that no sell them at a profit that exceeded his for Congress, in 2002, squeezed into the conference room of Sen. one could offer an amendment to slow the weekly paycheck. he pulled in $130,000 In 2003, Hettinga still looked the part of a Dianne Feinstein (D-Calif.) to seek common bill down. By the early 1990s, Hettinga was from dairy interests, hard-working dairy farmer. He wore jeans, ground in the milk dispute. Lewis brought McGrath, Hettinga’s lobbyist, watched working with partners and relatives and had second only to lunched on fried chicken and salad at the Hettinga and McGrath. Reid came with the vote from the Capitol Hill Club. After half a dozen dairies in Arizona and President Bush among Hometown Buffet in Yuma, and seldom Anderson’s Coon. Shamrock Foods’ Lewis came up 13 votes short and the bill California. Then he decided to build his federal candidates, took a vacation. But he was no longer a little McClelland was with Kyl. passed, McGrath recalled, a large own bottling plant in Yuma, Ariz. election records show. guy. He owned a private plane and kept a “Jerry, if it wasn’t for you, we’d have contingent of dairy lobbyists arrived, some His first customers were in Mexico. Later Nunes’s bill and pilot on standby. His 16 dairies stretched taken care of this a long time ago,” Reid trading high-fives. Lewis was to have had he made a deal with a chain of Arizona Kyl’s amendment from Texas to California, and his company, said, according to several participants. dinner at the club with his wife, but when stores catering to the fast-growing Hispanic Sen. Jon Kyl initially went nowhere. Sarah Farms, supplied nearly a fifth of Lewis bridled. It seemed as if Reid was he showed up and saw the lobbyists population. In 2002, he and his son began worked to protect So Kyl, a conservative Arizona’s liquid milk. calling him a “liar,” he said. If that was so, celebrating, he turned and left. building a second Yuma plant to supply his donors from Republican, found an As Kyl and Reid were putting together he might as well leave, he added. In an interview later, Nunes called the Costco stores in Southern California. competition in unlikely ally in Reid, their deal, a milk-industry friend put Hettinga told the group how he had built milk legislation a victory for “every dairy For Costco shoppers, it was a good deal, Arizona. then the Senate’s Hettinga in touch with a Washington his plants, arguing that the other dairy farmer in America except those who were according to an e-mail sent last year to fiercely partisan lobbyist, former representative Raymond J. farmers “didn’t pay me when I started the gaming the system.” He added, “People out Reid’s office by Joel Benoliel, Costco Democratic whip. McGrath (R-N.Y.). McGrath, who was business, why should I start paying them there were making millions of dollars a year Wholesale Corp.’s senior vice president. Reid was no newcomer to dairy issues. president of the National Republican Club when the business is off the backs of America’s dairy farmers . . . The arrangement lowered the average price Nevada’s population was growing faster of Capitol Hill, had retained good successful?” that was a wrong that was finally righted.” of milk “by 20 cents a gallon overnight and than its dairies could supply milk, so prices connections in GOP circles. At the end, The next morning, lawmakers in dairy it stayed that way for three years,” Benoliel tended to be high. Milk plants that had to During a swing through Capitol Hill with participants said, Reid districts who voted against the dairy groups wrote in the e-mail, made available to The import milk from far away thought they McGrath, Hettinga pitched his cause to was plainly got an e-mail from a lobbyist expressing Washington Post. “Milk suppliers in could get it cheaper if they did not have to House Appropriations Committee exasperated. “I’m not “disappointment on behalf of the members southern California were gouging the public pay regulated prices. In 1999, Reid helped Chairman Jerry Lewis (R-Calif.). listening to any more of the International Dairy Foods on price (20 cents a gallon higher than N. them out. He slipped an amendment into a Lewis’s district was home to some large of this,” he said. “I’m Association for your vote.” It added: “We California) for years and were unresponsive spending bill exempting milk plants in the dairies, including a Hettinga dairy in San out of here.” will be letting our member companies and to our call for lower prices. It was a brazen Las Vegas area from federal pricing rules. Jacinto. The two men had never before met Reid made his move their employees know of the outcome.” case of price gouging and profiteering by David Coon, vice president of Anderson or talked, according to Lewis’s spokesman. on Dec. 16, with the Hettinga vowed to keep supplying his the strongest, largest market suppliers Dairy Inc., then the area’s largest milk But Lewis was sympathetic. “This is not Sen. Harry Reid’s Senate chamber nearly customers in Arizona and California even simply because they could.” plant, hailed Reid’s amendment as a “good right, taking a rifle shot at one individual,” bill took rights empty. He brought up though the new law required him to pay the In Arizona, Hettinga was competing for example of the good we feel he has done Hettinga recalls Lewis saying. from Hettinga and the milk bill, which Arizona pool what he said was a “crippling” retail sales against Arizona’s biggest milk fighting for our state.” Reid later listed A few months later, Lewis used his power gave them to passed a few minutes sum of up to $400,000 a month. company, Shamrock Foods Co. of Phoenix. Anderson as one of 51 “soft money” donors to kill the Kyl-Reid measure. “Congressman Nevada firms. later by “unanimous “The irony is that Hein is paying his He “wasn’t by any stretch a more to his Searchlight Leadership Fund, which Lewis did it strictly on behalf of a consent,” a procedure competitors,” said Alfred W. Ricciardi, cost-effective operator than we are. He just funds Democratic candidates in Nevada. constituent and because he thought Hein’s that requires no debate or roll call vote if Hettinga’s Phoenix lawyer. didn’t have the same rules apply,” said The 1999 provision still left the Las deal was good for consumers,” said Lewis’s both political parties agree. Reid and Kyl Hettinga and his relatives gave nearly Shamrock’s general manager, Michael A. Vegas area subject to some federal milk deputy chief of staff, Jim Specht. said in recent statements that their goal was $20,000 to Kyl’s Democratic challenger this Krueger. regulations. By 2003, fixing that had Hettinga said that at Lewis’s request he to level the playing field for milk producers. year. Kyl won handily and got his own dairy United Dairymen of Arizona, a become a pressing concern as Dean Foods chipped in $2,000 to the Bush-Cheney That set the stage for a bitter battle in the industry support: A few weeks before cooperative that handles 85 percent of the began construction on a $40 million, campaign later that year. He also gave House, pitting Nunes, the new California- Senate action on the milk bill, 11 officials of state’s milk, complained that by keeping his state-of-the-art milk plant outside town. $4,000 to Lewis’s campaign war chest dairy-district congressman, against Lewis, Shamrock contributed $14,800. milk outside the Arizona pool, Hettinga was That year, Reid and Kyl saw they could between 2003 and 2006, records show. then a 14-term veteran with friends on both Hettinga also turned to the courts. In affecting the USDA price-setting formula, make a deal. Kyl agreed to back removing But the big milk producers and dairy sides of the aisle. October, he filed a lawsuit charging that the lowering returns for other dairies. all of Nevada from federal milk regulation, trade groups were already at work in Lewis used the muscle of his 66-member milk bill was unconstitutional because it In California, the Hettingas were taking and Reid agreed to support legislation Washington. Through its employees and Appropriations Committee, the dispenser of was aimed at penalizing a single individual. on the two biggest players in the U.S. milk cracking down on Hettinga and protecting political action committee, Dean Foods, billions of dollars a year in spending. But he “I still think this is a great country,” industry: Dean Foods Co., the largest Arizona dairies from competition from with nearly 100 plants around the country, faced the nearly unified front of the dairy Hettinga said. “In Mexico, they would have processor of dairy products, with $10 billion low-priced Nevada milk. In 2003, the spent more than $600,000 on political lobby and its friends. Virginia dairy farmers just shot me.” in annual sales and five California plants, senators co-sponsored an amendment with contributions in 2005 and 2006, including had helped win the key support of Robert and Dairy Farmers of America, a co-op that both provisions. In effect, Nevada bottlers $5,000 to Kyl and $3,000 to Nunes. Reid got W. Goodlatte (R-Va.), chairman of the Research editor Alice Crites, research controls nearly a third of the nation’s liquid would get some of the same rights that were $5,000 in 2004. Agriculture Committee, convincing him database editor Derek Willis and staff milk. being taken away from Hettinga. Under this Eight groups with an interest in the that if Hettinga were brought into line, the researcher Magda Jean-Louis contributed In Southern California, the co-op sells to arrangement, the money the Yuma legislation reported overall lobbying threat “would be less likely to show up back to this report.

About the Series 2005 farm subsidies, in billions As Congress prepares to debate a new farm bill next year, Direct and countercyclical payments $9.4 billion $1.3 billion over five years was paid to farmers who had not planted any crops. The Washington Post is examining federal agriculture Price supports $6.2 For the 2005 crop, $3.8 billion was paid to farmers who sold their crops for more than the guaranteed minimum. subsidies, which grew to more than $25 billion last year, despite near-record farm revenues. Today’s story looks at Disaster payments $2.9 In 2002 and 2003, about $635 million was paid to ranchers and dairy farmers, including for severe drought how the powerful milk lobby worked to keep one dairy Conservation programs $2.5 they never suffered and for the crash of the Columbia shuttle in Texas. farmer from working outside the system of federal price Crop insurance premiums $2.3 For the 2005 crop, each dollar paid to farmers cost the federal government $3.34. controls. The complete “Harvesting Cash” series, along with Web-exclusive stories and interactive maps, can be Other farm subsidies $2.0 found at www.washingtonpost.com/harvestingcash. SOURCE: Economic Research Service, Risk Management Agency, USDA payment records 1 BLACK A12

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HARVESTING CASH The Myth of the Small Farmer President Federal Subsidies Turn Confronts Farms Into Big Business Dissent on By Gilbert M. Gaul, still find that today in agriculture. . . . It Sarah Cohen and Dan Morgan is a celebration of what too many in our Washington Post Staff Writers country have forgotten, an endangered way of life that we must work each and Troop Levels The cornerstone of the multibillion- every day to preserve.” dollar system of federal farm subsidies This imagery secures billions annu- is an iconic image of the struggling fam- ally in what one grower called “empathy ily farmer: small, powerless against payments” for farmers. But it is mis- Bush Indicates Military Mother Nature, tied to the land by leading. blood. Today, most of the nation’s food is Won’t Dictate Numbers; Without generous government help, produced by modern family farms that farm-state politicians say, thousands of are large operations using state-of-the- BY JOSEPH C. GARZA FOR THE WASHINGTON POST these hardworking families would fail, art computers, marketing consultants John Phipps of Illinois did well last year; his farm grossed nearly $500,000. Yet the Top General to Retire threatening the nation’s abundant food and technologies that cut labor, time government sent him $120,000. “It’s embarrassing,” he said. Peter Baker supply. and costs. The owners are frequently By “In today’s fast-paced, interconnect- college graduates who are as comfort- as a way to save small family farms are money to acquire more land, pushing Washington Post Staff Writer ed world, there are few industries able with a spreadsheet as with a trac- instead helping to accelerate their de- aside small and medium-size farms as The debate over sending more U.S. troops to where sons and daughters can work tor. They cover more acres and produce mise, economists, analysts and farmers well as young farmers starting out. Iraq intensified yesterday as President Bush sig- side-by-side with moms and dads, more crops with fewer workers than say. That’s because owners of large “Historically, when you think of fami- naled that he will listen but not necessarily defer to grandmas and grandpas,” Rep. Jerry ever before. farms receive the largest share of gov- balky military officers, while Gen. John P. Abizaid, Moran (R-Kan.) said last year. “But we The very policies touted by Congress ernment subsidies. They often use the See SUBSIDIES, A8, Col. 1 his top Middle East commander and a leading skep- tic of a so-called surge, announced his retirement. At an end-of-the-year news conference, Bush said he agrees with generals “that there’s got to be a specific mission that can be accomplished” before he decides to dispatch an additional 15,000 to 30,000 Felons’ DNA troops to the war zone. But he declined to repeat his usual formulation that he will heed his com- manders on the ground when it comes to troop levels. Missing From Bush sought to use the 52-minute session, held in the ornate Indian Treaty Room in a building ad- jacent to the White House, to sum up what he called “a difficult year for our troops and the Iraqi people” Va. Database and reassure the American public that “we enter this new year clear-eyed about the challenges in Uncollected Samples Iraq.” Asked about his comment to The Washington Post this week that the United States is neither win- May Number in Thousands ning nor losing the war, Bush pivoted forward. “Vic- tory in Iraq is achievable,” he said. By Candace Rondeaux The tension between the White House and the Washington Post Staff Writer 1964 1980 Joint Chiefs of Staff over the proposed troop increase has come to dominate the administration’s Virginia authorities have launched a massive review of the state’s DNA database after discovering See BUSH, A15, Col. 1 that thousands of felons may have skirted a legal requirement to submit genetic samples, partly because local and state agencies may have failed to Bush Backs Wage Increase make them do so. President Bush supports the Democrats’ call Public safety and crime lab officials estimate that for a $2.10 minimum-wage increase. A14 at least 20 percent of felons’ DNA profiles could be missing from the database, a flaw that could hamper criminal investigations across the state and nation. Investigators routinely take crime scene evidence and run it through Virginia’s database and others looking for DNA matches. Shiite Clerics’ “The good news is it appears that we have well over 80 percent of convicted felons in the database, but obviously we need to have 100 percent of them Rivalry Deepens in the database,” said Clyde Cristman, deputy secretary of the Virginia Department of Public Safety. Virginia law requires all convicted felons and In Fragile Iraq those arrested in connection with violent crimes such as rape or homicide to submit cheek swabs for By Sudarsan Raghavan DNA analysis and entry into the statewide data- Washington Post Foreign Service base. Currently, there are more than 253,000 samples in the database, according to the Department BAGHDAD — In the quest to create a new Iraq, of Forensic Science Web site. two powerful clerics compete for domination, one The Public Safety Department is working with from within the government, the other from its shadows. See DATABASE, A9, Col. 1 1983 Both wear the black turban signifying their de- scent from the prophet Muhammad. They have PHOTOS BY ALDON D. NIELSEN fought each other since the days their fathers vied Aldon D. Nielsen has captured the National Christmas Tree in all its looks since arriving in Washington in 1963. to lead Iraq’s majority Shiites. They hold no official positions, but their parties each control 30 seats in the parliament. And they both lead militias that are Mass. Governor’s widely alleged to run death squads. Mastering a Branch of History But in the view of the Bush administration, Ab- dul Aziz al-Hakim is a moderate and Moqtada al- Rightward Shift Sadr is an extremist. As the U.S. president faces Amateur Photographer Has Focused mounting pressure to reshape his Iraq policy, administration officials say they are pursuing a Ha- Raises Questions On Decades of the National Christmas Tree kim-led moderate coalition of Shiites, Sunnis and Kurdish parties in order to isolate extremists, in By Dan Balz and Shailagh Murray By Timothy Dwyer Over the years, he has become the nation’s lead- particular Sadr. Washington Post Staff Writers Washington Post Staff Writer ing expert on the history of the tree. When the tree is lighted each year, it marks a moment in the coun- See RIVALS, A22, Col. 1 As he prepares for a 2008 presidential campaign, Each year since 1963, Aldon D. Nielsen, 84, has try’s history, the ceremony a reflection of what is Massachusetts Gov. Mitt Romney (R) has champi- taken pictures of the National Christmas Tree. going on in America and the world. Jimmy Carter, oned the conservative principles that guided Presi- He’s trudged out there in the snow and sleet and the sweater president, had energy-efficient lights. dent Ronald Reagan, become an outspoken oppo- rain, on frigid nights and perfectly clear star-kissed Richard Nixon pulled the switch to light the tree nent of same-sex marriage and supported nights. He has photographed fat trees, skinny while being hooted by Vietnam War protesters. INSIDE overturning the Supreme Court trees and one tree that had to be surgically re- Ronald Reagan, after an assassination attempt, decision that legalized abortion. paired because the train carrying it to Washington THE NATION It was not always so. Twelve derailed. See TREE, A16, Col. 1 Obesity Breakthrough? years ago, Romney boasted that Researchers say microbes in the digestive he would be more effective in system might be a cause of — and a key to fighting discrimination against preventing and treating — the condition. A12 gay men and lesbians than Sen. Edward M. Kennedy (D-Mass.), STYLE distanced himself from some A D.C. Icon Signs Off conservative policies of the Rea- Arch Campbell ends his 32-year reign as gan administration, and proud- film/theater critic for Channel 4 tonight. C1 Romney, known ly recalled his family’s record in as a moderate, is support of abortion rights. BUSINESS considering a run The apparent gulf between Ruling May Boost Cable TV Competition for president. the candidate who ran for the Senate in 1994 and the one get- The FCC approves rules that could make it ting ready to run for president has raised questions easier for telephone firms to compete. D1 as to who is the real Mitt Romney. Is he the self- described moderate who unsuccessfully challenged HOME Kennedy in the year of the Republican landslide, the A Merry Time for Nondrinkers self-described conservative now ready to bid for the For those who don’t drink alcohol, holiday Republican presidential nomination in 2008, or parties can be a minefield, but a little 1986 2000 sensitivity can add to their holiday cheer. H1 See ROMNEY, A10, Col. 1

Contents INSIDE SECTIONS» METRO • STYLE • BUSINESS • SPORTS • HOME • LOCAL NEWS EXTRA On Radio: 107.7 FM • 1500 AM Online:  2006 The 1 Washington

World News ...... A20 Letters ...... A28 Lotteries...... B4 Weather ...... B10 Movies...... C9 KidsPost...... C14 TV Sports ...... E3 Post

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C M Y K A1 8BLACK A8 DAILY 12-21-06 MD SU A8 BLACK

A8 Thursday, December 21, 2006 S NATIONAL NEWS The Washington Post HARVESTING CASH The Myth of the Small Farmer Subsidies Drive the Shift Toward Larger Farms SUBSIDIES, From A1 ‘I Want to Earn It’ ly farms, you think of Mom and Dad and In mid-November, when the harvest is fin- three generations working a small or mid- ished, Thomas Oswald, 40, retreats to his sized farm. It gives you a warm and fuzzy neatly restored house bordering the fields in feeling,” said Alex White, a professor of agri- northwest Iowa that his family has farmed cultural economics at Virginia Tech. “In the since 1870. There, he dabbles on the com- real world, it might be a mid-sized farm. But puter, checking yields and prices, does odd it also might be a huge farm. It might be a jobs, and plans for the next planting season. corporation.” Oswald also serves as chairman of the local Large family farms, defined as those with Soil and Water Conservation District. revenue of more than $250,000, account for “I want to be known as someone who nearly 60 percent of all agricultural produc- farms well as opposed to farming big,” he tion but just 7 percent of all farms. They re- says. ceive more than 54 percent of government The 580 acres where Oswald grows corn subsidies. And their share of federal pay- and soybeans straddle a gravel road on the ments is growing — more than doubling outskirts of Cleghorn, a rural farming com- over the past decade for the biggest farms. munity. Oswald rents most of the land from Two farms help to tell the tale. his father, Stanley, who at 78 still helps with John Phipps of Chrisman, Ill., harvested the harvest. Oswald and his father share the nearly 170,000 bushels of corn and soybeans income from the farm, which grosses last year on two square miles of fertile soil. $150,000 to $250,000. “We’re a small to me- He grossed nearly $500,000, putting his dium-size farm,” Oswald said. He also does farm in the nation’s top 3 percent. Still, he re- farming for neighbors, and his wife, Su- ceived $120,000 in subsidies. zanne, works as a travel agent in Cherokee. “It’s embarrassing,” Phipps said. “My gov- As with many farming areas in the Corn ernment is basically saying I am incompetent Belt, land values are increasing and farms are and need help.” getting bigger in Cherokee County. Between Several hundred miles northwest, Thom- 1990 and 2005, the average price for an acre as Oswald farms the same Iowa fields that of farmland more than doubled, to $3,186, his relatives worked more than a century according to a USDA database of land val- ago. The land he rents is about one-third the ues. Between 1997 and 2002, the number of size of Phipps’s, and Oswald’s subsidies are BY GILBERT M. GAUL — THE WASHINGTON POST farms with 1,000 or more acres climbed by much smaller. Oswald contends that federal Thomas Oswald stays out of the land-grab game. “I want to be known as someone who farms well as opposed to farming big,” he said. nearly one-quarter, while the number of payments are helping to fuel a spike in land small and medium-size farms, such as Os- prices that favors the wealthy. wald’s, declined by 12 percent. “If the purpose of farm policy was to save The Changing Family Farm “Land prices are going nuts,” Oswald said. the family farm and help stabilize rural com- “Some farms are going for $4,000 to $5,000 munities, then it hasn’t worked,” Oswald Many American family farms have been transformed from small, self-contained businesses to complex enterprises. an acre.” In summer, it is not unusual to see said. “What the government is really doing is That change has been helped along by government agricultural payments that guarantee crop prices or prop up owners of larger farms “out trolling for land.” subsidizing land and assets, not people.” The chances of smaller farmers successfully farmers’ incomes — payments that increasingly go to the largest farms. bidding for those acres are slim. “You might A New Era in Farming as well buy a lottery ticket,” Oswald said. Large/very large farms make up less For smaller farmers, he said, it is a The transformation of the family farm than 10 percent of all U.S. Farms . . . Catch-22. “In order to afford land, you al- from a small, self-contained business to a ready have to own land or have a lot of mon- complex, technology-driven enterprise is Total small/medium and Total large/ Total ey,” he said. “The more subsidies you get, the seen today in a rapidly changing rural land- hobby/lifestyle/retired farms: very large farms: corporate farms: more money you have to reinvest and ex- scape dominated by larger and wealthier pand. That free money distorts the economic farms. That landscape shows a vastly differ- 1.9 million 148,000 36,000 pluses and minuses.” ent picture of family farms than the one often The subsidy-fueled competition for land evoked by legislators and industry groups: 91% 7% 1.7% has changed the culture and demographics bigger, more industrial than agrarian, with of all U.S. farms of all U.S. farms of all U.S. farms of farming areas such as Cherokee County. owners wealthier than most Main Street In the past, Oswald said, there was more Americans. sharing among neighbors. “It was less about In a late-October speech in Indianapolis, acquiring land,” he said. Now, neighbors Agriculture Secretary Mike Johanns said sometimes are eyed warily as competitors. that, in the face of higher energy prices and Larger, more efficient farms also require natural disasters, “our farmers’ resiliency is Small/medium farms: Large farms: 84,000 (4% of U.S. total) Corporate: 36,000 farms fewer workers, offering less opportunity for evident”: Agricultural exports are at a record 504,000 (24% of U.S. total) includes working family farms with (1.7% of U.S. total) younger people. Cherokee County has lost $68 billion; farm equity has swelled to $1.6 includes working family farms sales of $250,000-$500,000. includes farms not owned by one-third of its population since 1960, rec- trillion, another record; and farmers’ debt-to- with sales of up to $250,000. families. It includes farms that ords show. Across Iowa, there are now twice assets ratio is at a 45-year low. Very large farms: 64,000 (3.1% of total) are commonly thought of as as many farmers over the age of 65 as under “Today, producers grow more crops and Hobby/lifestyle/retired farms: includes working family farms with agribusinesses. the age of 35, according to Iowa State re- handle more livestock more efficiently than 1.4 million (68% of U.S. total) sales of $500,000 or more. searchers. “You see the thinning of the pop- at any time in the history of mankind,” Jo- includes small farms whose ulation, and at some point you have to ask hanns said. owners do not farm commercially yourself, ‘When does that line become too Nevertheless, just last year the govern- or have limited sales. It includes thin?’ ” Oswald said. ment paid out about $15 billion in income retirees and investors who receive Contrary to some expectations, the bil- support or price guarantees, which increas- most of their income from lions in subsidies have failed to slow the exo- ingly are going to the largest farms — those off-the-farm jobs or other sources. sympathy for farmers. “I think they do us dus. A March 2005 study by the Federal Re- with annual sales of $500,000 or more. Be- more harm than good,” he said as he scram- serve Bank of Kansas City found that tween 1989 and 2003, the share of federal SMALL/ bled to finish his harvest. “I don’t think farm- hundreds of counties most dependent on payments for those farms jumped from 13 MEDIUM ers are any more special than anyone else; subsidies had suffered the biggest popula- percent to 32 percent while the share going 24% lots of people work hard and don’t get help. tion losses and posted the weakest job to small and medium-size farms — those Why should farmers get special treatment?” growth. “Farm payments appear to create with $250,000 or less in sales — dropped HOBBY In addition to farming, Phipps hosts a dependency on even more payments, not from 63 percent to 43 percent. 68% weekly farm television show, writes a blog new engines of economic growth,” conclud- In 2003, the owners of the biggest family and contributes articles to Farm Journal. ed the study’s author, Mark Drabenstott. farms reported an average household in- That income helps significantly, he said, al- Oswald has received nearly $98,000 in come of $214,200, more than three times sands of acres, some tens of thousands. lowing him “a little more flexibility” than subsidies in the past five years. Each check is that of U.S. households on average. “Farm “It seems as though conventional agricul- . . . Yet, large/very large farms accounted other farmers have. In the past five years, the a “cash infusion” that helps to pay the bills. households are not, in general, poor,” gov- tural policy is to get big or get out,” said Tra- for over half the U.S. production and Phippses have also received about $357,000 “It’s hard to be proud of the little brown en- ernment researchers concluded. ci Bruckner, a policy analyst at the Center for subsidy payments in 2003, a share in federal subsidies. velope if you don’t do anything to earn it,” he To be sure, there are still many small and Rural Affairs in Lyons, Neb., which works to that has grown since 1989. “I’m not proud of it,” he said. “I would like said. “I want to earn it.” medium-size family farms. In fact, they ac- preserve small farms and rural communities. to have the moral courage and financial clout Oswald chose to remain smaller, he said, count for nine of every 10 farms nationwide “To me, that seems backwards.” Percent of U.S. Production not to take them. But if I don’t, I won’t be explaining that he does not “want to muscle — 1.9 million farms in all, according to the able to compete when it comes time to bid out neighbors” for land and is conservative 1989 2003 Agriculture Department’s definition. But ‘Farming Is a Science’ for land.” about taking on too much risk. And although about a million of those farms are “hobby” or Phipps knows that this fuels the rising he may be small, Oswald stressed, he is not “residential” farms that produce little or no From the perch of his $180,000 six-row MED./ MED./ cost of farmland; an acre of land there now backward. “That’s an image they use in LARGE SMALL LARGE SMALL income from crops or livestock. The govern- combine, churning through cornfields that sells for about $4,800. “When I belly up and Washington to sell these programs,” he said. ment’s definition of a farm includes any oper- stretch as far as the eye can see, John Phipps 51.5% 42.3% 59.1% 27.1% write a check, I am perpetuating the prob- “It’s an emotion argument — political.” ation that has or could have $1,000 annually has a rare view of American farm policy. lem,” he said. “For the most part, all of the in sales. Outfitted against a gray October day in 13.7% smaller farmers have all been flushed out in Research editor Alice Crites contributed to By including “these very, very small hobby jeans, wool shirt, vest and faded baseball cap, 6.2 the last five years.” this report. farms” in its overall count, the USDA is Phipps, 58, resembled hundreds of other CORP. CORP. Still, Phipps’s sympathy extends only so “masking the tremendous consolidation” farmers as he struggled to change a filter on Recipients of Government Subsidies far. Large farms are a “rational and ethical” that has occurred, said Iowa State University his combine. But he is hardly typical. response to market demands, he said. His About the Series economist Michael D. Duffy. Trained as a chemical engineer, Phipps spent 1989 2003 family has farmed there for six generations, The shift in subsidies to wealthier farmers five years serving on a nuclear-powered sub- Phipps himself for the past three decades. He As Congress prepares to debate a is helping to fuel this consolidation of farm- marine before returning to east-central Illi- MED./ MED./ owns 800 acres outright or with his siblings new farm bill next year, The LARGESMALL LARGE SMALL land. The largest farms’ share of agricultural nois in the 1970s. and rents 1,000 acres. His wife is his main Washington Post is examining production has climbed from 32 percent to Today, he calls himself an “industrial farm- 35.7% 63.3% 54.4% 43% helper and drives one of the trucks that haul federal agricultural subsidies that 45 percent while the number for small and er” who uses computers, technology and sci- up to 700 bushels of corn per load to grain grew to more than $25 billion last medium-size farms has tumbled from 42 per- ence to get the most out of the 1,800 acres of bins. “Imagine that: Two middle-aged people year, despite near-record farm cent to 27 percent. corn and soybeans he plants in an area of Illi- CORP. able to farm 1,800 acres,” Phipps marveled. revenues. Today’s article As in many states, farmland in Iowa is be- nois where the weather and soil are ideal for 1.1% CORP. 2.7% “That’s all because of the immense technolo- discusses how the very policies touted by Congress as a way to ing gathered up into ever-larger farms. In farming. The strategy has paid off with big- NOTE: Figures rounded gy we have at our hands. We are horrendous- many cases, the owners are families buying ger and better yields. SOURCES: USDA Economic Research Service; Post research ly efficient.” save small family farms are up neighboring tracts. But increasingly, out- Yet to Congress and federal agricultural THE WASHINGTON POST As his combine churns down the rows of instead helping to accelerate their side investors are also buying Iowa farmland, officials, Phipps and his wife, Jan, are strug- corn, Phipps knows exactly how many bush- demise. Tomorrow’s with “one in five acres of farmland in Iowa gling family farmers. Last year, the govern- help,” he said. “Name one other business like els he is harvesting, acre by acre, row by row. installment previews the political now owned by someone who doesn’t live ment sent the Phippses a check for that — there are none.” The information is downloaded to his com- fight in Congress over farm here,” Duffy said. Many of the outside land- $120,000. Thousands of similar checks ar- Over the past decade, farmers in the Mid- puter so he can put it in a spreadsheet. policies. The complete “Harvesting lords rent their land to the highest bidders. rived throughout the Corn Belt, even as west have produced one record crop after an- “Farming is a science now,” he said. “The Cash” series can be found at Nationally, the average size of a farm has many farmers had bumper crops. other. Now, surging demand for corn-based image of a farmer in bib overalls bumbling www.washingtonpost.com/ more than doubled in the past two decades, “Being labeled as a family farmer immedi- ethanol has corn prices at a 10-year high. along is just wrong. I’m an engineer, for harvestingcash. to 441 acres. Many farms now cover thou- ately qualifies me as someone who needs Phipps resents the images used to evoke God’s sake.” A Big Farm, but Not So Big It Could Get By Without Subsidies While some farmers and agricultural ex- who actually made their livelihood on the outside, I look big. Between my machinery Last year was a good year, even with low But there is no guarantee that those pric- perts see a downside to farm subsidies, oth- farm,” he said. and the land, I manage a couple million dol- prices. The yields on Loschen’s crops were es will last. The ethanol boom could go ers say the payments are a fair way to help Loschen draws a distinction between lars’ worth of assets. But only a half-million good, and he was able to sell a few bushels bust. And the number of family-owned out farmers in need. “Some years, that’s landlords who capture government pay- are mine. I’m really a mid-sized farmer.” in advance at above-average prices. He also farms in Franklin County and Nebraska is probably what I live on,” Steve Loschen ments without farming and full-time farm- Most of the land Loschen farms belongs received about $60,000 in federal pay- declining, as the remaining farms get big- said. “Honest to goodness. It helps me stay ers such as himself who assume all the risks to his father. He also rents about 500 acres ments. “Last year was a great year. My net ger. At 930 acres, the average size of a Ne- current on equipment payments and helps of growing a crop. “This is not welfare for from a neighbor who retired to Arizona. worth grew a little. If I could do that year in braska farm is more than twice the national pay for my health care. It pretty much cov- me,” he said. “I’m not trying to get rich. I’m Loschen’s father and two teenage sons help and year out, that would be good.” average. Federal agricultural subsidies are ers my family living expenses.” trying to make a living. My definition of a out, but for the most part he works alone. In recent months, prices for corn have also growing, up 6 percent since 1997, gov- Loschen, 40, grows corn, wheat and soy- family farmer is they’re the guys who are During planting and harvest seasons, Los- shot up dramatically, in part due to the ernment data show. beans on more than 1,500 acres in Franklin actually doing the work.” chen estimated, he may spend up to 100 growing demand for corn-based ethanol. “There’s no way you can just go ‘click’ County, Neb., about 30 miles from the Kan- By government standards, Loschen is hours a week in the fields. “Don’t get me Prices have been running about $3.50 a and there will be no more farm payments. sas state line. In the past five years, he has operating a large farm. But even at 1,500 wrong — I don’t want to be viewed as a bushel, more than $1.50 a bushel above last Everybody like me would be broke,” Los- received nearly $300,000 in government acres, he feels caught in the middle: too big complainer,” he said. “We live in a nice year’s prices, Loschen said. He estimated chen said. “Ideology got us to this point. payments and disaster aid. “Really, if you to be a hobby farmer and too small to com- house we built new in 1996. I make the that farmers need $2.75 a bushel to cover We need a new ideology to take us back to look at the average of what I have received, pete against corporations and the biggest monthly payments. We have plenty of food. their costs. “We can make a living at these where we need to be.”

I am at the middle to bottom of individuals farms. “If you look at my business from the I pay my taxes.” prices,” he said. — Gilbert M. Gaul 8BLACK A8

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A1 DAILY 12-22-06 MD SU A1 CMYK

Weather

Today: Rain. High 49. Low 47. HOME Saturday: Early rain. EDITION High 61. Low 40. ABCDE B10 Details, 35¢ Prices may vary in areas outside metropolitan 130th Year No. 17 S DCMDVA Friday, December 22, 2006 M1 M2 M3 M4 V1 V2 V3 V4 Washington. (See box on A4) 4 Marines Charged In Haditha Killings Deaths of Iraqi Civilians Also Lead to Dereliction Counts Against 4 Officers By Josh White and Sonya Geis Washington Post Staff Writers The Haditha

T Haditha i g Four U.S. Marines were charged r i with multiple counts of murder yes- Case s 0 100 Baghdad terday for their alleged roles in the MILES deaths of two dozen civilians in the What IRAQ Iraqi town of Haditha last year. The E happened: uph rates Basra accusations set up what could be the On Nov. 19, highest-profile atrocity prosecution 2005, in Haditha, 24 to arise from the Iraq war. unarmed men, women In an unusual move, the Marine and children were shot and killed. Corps also charged four officers with crimes related to their alleged failure The probe: Iraqi witnesses say U.S. to investigate and report the Nov. Marines shot the civilians in their homes 19, 2005, slayings, which occurred to retaliate for the death of a Marine killed when the Marines conducted a by a bomb that exploded under a convoy house-to-house sweep and attacked a rolling through the town. vehicle after a member of their unit The charges: was killed in an ambush. ª Four Marines charged with murder; The separate investigation into charges do not carry the death penalty. how the incident was reported led to ª Four ofﬁ cers charged with dereliction. dereliction charges against a lieutenant colonel, two captains and a first What’s next: Article 32 hearing, in BY MATT MCCLAIN — ROCKY MOUNTAIN NEWS lieutenant. They are accused of fail- which a military judge decides whether A Delta Air Lines plane covered with ice and snow sits at Denver International Airport. A storm dumped more than two feet of snow in Colorado. ing to thoroughly investigate and ac- to convene courts-martial. curately report the slayings to supe- SOURCES: Staff, wire reports riors. The lieutenant also faces charges of making a false official statement and obstructing justice, Gates, Maliki Meet A Slow Start for Holiday Travelers according to the Marine Corps. None of the murder charges car- The Iraqi premier tells Defense Secretary Robert M. Gates he’ll Many Flights Canceled as Snow Closes Denver Airport, Bad Weather Spans Nation See HADITHA, A22, Col. 1 defer to U.S. on “surge.” A23 By Del Quentin Wilber and Ivan Carter Washington Post Staff Writers Area Population Losses Air travelers were stranded across the country yesterday as severe weather disrupted thousands of flights on one of the airlines’ busiest days of the holiday season — complicating plans Offset by Immigrants of countless passengers trying to make it home N.C. Aizenman for Christmas. By further confirmation of the Wash- Travel was snarled by a major storm that Washington Post Staff Writer ington area’s steady transforma- dumped more than two feet of snow in Colorado tion from a relatively inexpensive and forced authorities to close the Denver air- Maryland and the District are Southern area into a Northeastern port for nearly two days. losing residents to other juris- metropolis whose rising housing Poor weather also struck overseas. London dictions but making up for the loss costs are pricing Americans out of was hit with its worst fog in 15 years, causing a by gaining immigrants, according its downtown and close-in suburbs wave of flight cancellations. to new census estimates released even as the region remains an im- United Airlines, which has a major hub in today. Virginia has followed a simi- migrant gateway. Denver, canceled 2,000 flights across its system lar pattern, attracting vastly more “I used to think of Washington, since Wednesday. Other weather problems in newcomers from overseas than D.C., as a bridge between the the United States created additional delays that BY KARL GEHRING — DENVER POST from within the United States and Northeast and the South. But these rippled through the country. Two stranded travelers at Denver International Airport decide to get some rest in a luggage cart. growing only marginally since numbers suggest it’s becoming Low clouds, wind and rain hampered opera- 2000. more like the Northeast,” said Wil- tions in Chicago and in the New York area. holidays. — I bought some things at the airport gift The influx of immigrants has liam H. Frey, a demographer at the Flights into Chicago’s O’Hare International Air- “I’d trade my laptop right now for a clean pair shops, but that’s it.” saved the three jurisdictions from Brookings Institution. “For most of port yesterday were delayed as much as four of pants,” said Jared Keith, a business traveler The National Weather Service said that the what might otherwise be a precipi- D.C.’s history, it’s been a white- hours. Many flights into Newark or New York who was stuck at Denver’s downtown Marriott snowstorm was expected to taper off by last tous population decline. black area. If these changes contin- were backed up by more than one hour, Federal hotel. “The whole thing is aggravating,” said night. But rain is expected to batter the East Although the data released to- ue, it will become more of a global Aviation Administration officials said. Keith, who was on his way home to California to Coast early today and into tomorrow. Heavy day are limited to the state level, city. Over time, it will probably end The air traffic tie-ups frustrated many pas- be with his wife and two young daughters. “I several demographers said they sengers who were trying to get home for the haven’t been able to do any Christmas shopping See TRAVEL, A4, Col. 3 also think the information provides See CENSUS, A12, Col. 1

HARVESTING CASH The Fight Over the Farm Bill Pelosi Aims Powerful Interests Ally to Restructure Agriculture Subsidies To Recast By Dan Morgan, Sarah Cohen ers,” said Iowa Gov. Tom Vilsack (D), “be- practices on farms. Florida want their share of the pie. Even the and Gilbert M. Gaul cause deep down most of them know the sys- Bread for the World, an anti-hunger orga- National Corn Growers Association, with Washington Post Staff Writers tem needs to be changed.” nization, has brought religious leaders to 33,000 members, advocates an overhaul. Self, Party Politicians such as Vilsack have joined a Washington to lobby for cuts in subsidies, But these groups will be going up against There may be no better sign of the chang- host of interest groups from across the politi- which they argue can lead to a glut on world one of Washington’s most effective lobbies as New House Speaker ing debate over the nation’s farm subsidies: cal spectrum that are pressing for changes in markets that hurts poor farmers abroad. The Congress takes up a new farm bill next year. A Midwestern governor running for presi- government assistance to agriculture. They Republican-leaning Club for Growth says The farm bloc is an efficient, tightknit club Plans a 4-Day Fete dent calls for cuts in a system that has want the money moved from large farmers to subsidies stand in the way of a global trade of farmers, rural banks, insurance compa- By Lyndsey Layton steered hundreds of millions of dollars a year conservation, nutrition, rural development deal that would help U.S. business. A politi- nies, real estate operators and tractor deal- Washington Post Staff Writer to his state. and energy research. Vilsack, for example, fa- cally potent coalition of unsubsidized fruit “I didn’t get much of a reaction from farm- vors programs that improve environmental and vegetable growers from California and See FARM BILL, A6, Col. 1 On a scale associated with presidential inaugurations, Nancy Pelosi is planning four days of celebration surrounding her Jan. 4 swearing-in as the first female speaker of the INSIDE WEEKEND PLANNER In China, Aging in the Care of Strangers House. She will return to the blue- collar Baltimore neighborhood THE NATION A ‘GOOD’ DAY FOR A where she grew up, attend Mass at Prescription Drug Abuse MOVIE? In both Style and One-Child Policy the women’s college where she stud- Officials express concern Weekend, reviews of “The ied political science, and dine at the over teenagers’ illicit use of Good Shepherd,” “The Changes Tradition Italian Embassy as Tony Bennett sings “I Left My Heart in San Fran- medicines. A3 Good German” and other new releases, including By Maureen Fan cisco.” THE WORLD Ben Stiller in “Night at the Washington Post Foreign Service But the hoopla is more than just a The New Castro Museum.” party. DALIAN, China — Tian Deren Pelosi is grabbing the moment to Raúl Castro calls for more COLORFUL present herself as the new face of the political debate in Cuba, is only 58, but poor eyesight means OPPORTUNITIES: A guide to he must be helped across the Democratic Party and to restore the signaling openness to the area’s best light shows, party’s image as one hospitable to change when he takes over street. He also has diabetes and is in Weekend. hard of hearing, so earlier this year ethnic minorities, families, religion, for his brother, Fidel. A21 DON’T STAY HOME FOR a son-in-law brought him to a pri- the working class and women. THE HOLIDAYS: Start with a vately run home for the elderly. “This is important strategic repo- KIDSPOST sitioning,” said Kathleen Hall Jamie- Harry Potter Mystery Toys for Tots concert, add Because he is still mobile, Tian a free “Messiah,” throw in isn’t relegated to the fourth floor, son, who teaches political communi- Those hoping the title of the where the most infirm residents cation and rhetoric at the University next book would offer clues a bad elf and assorted fruits and nuts: It’s a live and where some have been of Pennsylvania. “Essentially, she’s to the plot are left with more BY MAUREEN FAN — THE WASHINGTON POST holiday edition of Style on known to throw cups of tea at the trying to embody the Democratic questions than answers. C11 the Go (and some ideas for staff. His room is clean, the food Wang Xiulian, left, tends to Tian Deren, 58, at a home for seniors in China. Party that she would like to offer the the non-tinsel set). C10 plentiful. Life is good, he said. nation in 2008.” BUSINESS But like many of China’s graying Only children often bear the bur- life emphasized the Confucian ideal In her meticulous selection of Raise for Federal Workers QUIET TIME WITH THE citizens, Tian understands that the den of taking care of their parents of respecting one’s elders. Today, events and venues during a week The president orders an KIDS: A gift for parents elderly are now treated differently alone, while the cradle-to-grave making good money is the slogan when she expects to attract media average 2.2 percent increase who don’t celebrate than they once were, that the coun- welfare associated with state- of choice. attention from as far away as Aus- for 2007 after Congress Christmas. See Weekend, try’s modernization and one-child- owned factories is becoming a “I understand why children send tralia, Pelosi is clearly trying to bury failed to pass a raise. D1 Page 42. only policy have shifted assump- thing of the past. Two or three dec- tions about old age. ades ago, a more traditional way of See CHINA, A24, Col. 1 See PELOSI, A10, Col. 1

Contents INSIDE SECTIONS» METRO • STYLE • BUSINESS • SPORTS • WEEKEND On Radio: 107.7 FM • 1500 AM Online:  2006 The 1 Washington

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C M Y K A1 6BLACK A6 DAILY 12-22-06 MD RE A6 BLACK

A6 Friday, December 22, 2006 R NATIONAL NEWS The Washington Post HARVESTING CASH The Fight Over the Farm Bill Farm Bloc Digs In Against Effort to Shift Subsidies

FARM BILL, From A1 AGRICULTURE COMMITTEES to be his last big farm battle. He resigned The Coming Battle from the House for personal reasons in 2003. ers. Many of its Washington lobbyists are SENATE HOUSE Shortly before he left, the National Cotton former lawmakers or congressional aides. When Congress takes up the 2007 Council paid for him and his wife to travel to Harnessed to dozens of grass-roots groups, farm bill, the farm bloc, one of its annual meeting in Tampa. There Com- such as the American Farm Bureau Feder- best was awarded the Harry S. Baker Dis- ation, the National Cotton Council and the Washington’s most effective lobbies, tinguished Service Award for Cotton for his USA Rice Federation, farm-state lawmakers will try to block new efforts to revamp “invaluable assistance to the U.S. cotton in- — the “aggies,” as they call themselves — the government system for subsidizing dustry.” fight with the fervor of the embattled. agriculture. Here are some of the key TOM HARKIN SAXBY CHAMBLISS COLLIN PETERSON BOB GOODLATTE About 1.2 million farmers and farmland issues that will be up for a fight: The New Battle owners got $15 billion in income support or D-Iowa R-Ga. D-Minn. R-Va. price guarantees in 2005, according to a Chairman Ranking Republican Chairman Ranking Republican Combest, now a lobbyist for the USA Rice Washington Post analysis of Agriculture De- Federation, has called on Congress to extend partment payment records. The benefits are the bill he helped write — which expires heavily tilted to large commercial farmers PRICE GUARANTEES: SUPPORTERS OPPONENTS Sept. 30, 2007 — rather than draft new legis- growing a few row crops in a handful of Southern rice and cotton growers want to extend expensive American Farm Alliance for Sensible lation. That is also the position of the Amer- states. But the money also is widely distrib- programs that offset their losses when crop prices fall. But Bureau Federation, Agriculture Policies ican Farm Bureau Federation, which has 5.2 uted to a middle group of more than 130,000 anti-poverty groups, environmental organizations and National Cotton (includes environ- million members. “You have programs that farms, each receiving $25,000 to $100,000. growers of unsubsidized crops want funds diverted for other Council, USA Rice mental and have been in place for 60 years,” said the The federal dollars ripple through local econ- purposes. Corn and soybean groups, now enjoying strong Federation. anti-poverty groups, group’s president, Bob Stallman, a Texas omies, adding to purchasing power at stores prices, see less benefit from price subsidies and are eyeing Club for Growth, and rice grower. “You have to be careful or you and businesses — and creating a political new approaches. Wheat farmers say they fall between the cracks. Cato Institute). can have very destructive effects in farm constituency for the programs. country.” The farm bloc, says former congressman The farm groups are counting on the new Cal M. Dooley (D-Calif.), now an executive PAYMENT LIMITS: Democratic chairmen of the Senate and with a food industry trade group, is “commit- Midwest and Northern grain farmers, coastal citrus and National Farmers American Farm House agriculture committees, Sen. Tom ted and focused.” vegetable growers, and environmentalists want to end Union, Environ- Bureau Federation, Harkin (Iowa) and Rep. Collin C. Peterson loopholes that enable large commercial farmers — especially mental Working National Cotton (Minn.), who have long supported the sub- Opening Loopholes Southern cotton and rice planters — to avoid the ceiling on Group. Council, USA Rice sidy system. annual subsidy payments. They would divert the savings to Federation. But a number of political and economic Ever since subsidies began in the New conservation and other programs. forces have changed since the last farm bill, Deal, Farm Belt politicians from the Dakotas and those seeking reform think the tide is to the Gulf of Mexico have worked to expand flowing in their direction. the payments. They have repeatedly thwart- FRUIT AND VEGETABLES: Corn farmers are making record profits Growers, who get no direct subsidies, are asking for $500 Speciality Crop Farm No public ed efforts to scale subsidies back by trading because of their sales to ethanol plants million in federal block grants to states to promote research Bill Alliance (includes opposition but political favors, manipulating the USDA or and develop new markets for their crops. United Fresh Produce some congressio- across the Midwest. That calls into question strong-arming opponents. Association, Western nal leaders whether it is politically sustainable for them In 1987, for example, Congress tried to Growers, Florida question the block to continue receiving billions of dollars a close loopholes that allowed larger farms to Citrus Mutual). grant approach. year in automatic federal allowances. exceed the limit on how much each could re- International pressure also has been build- ceive in annual federal payments. Some set ing against U.S. subsidies. The World Trade up complex legal structures, such as dividing DISASTERS AND CROP INSURANCE: Organization, the Geneva-based supreme a single farm into many paper corporations, Wheat, cotton, canola growers in drought-prone Western National Farmers Fiscal conserva- court of the global economy, ruled last year each eligible for the maximum payment. Farm Belt want permanent legislation that would compen- Union, Speciality tives who favor that key U.S. cotton subsidies are illegal. The Congress decided that to get the money, a sate farmers for weather-related losses if they can prove Crop Farm Bill smaller farm United States must remove the subsidies, or farmer or partner would have to be “actively damage. Would replace ad hoc earmarks by Congress. Alliance. program. Brazil, which filed the complaint, can retali- engaged” in farming. ate. Other foreign challenges to other sub- Lawmakers left it to the USDA to define sidies are possible. active engagement. It proposed a standard of Another difference is that money for a 1,000 hours a year spent managing the farm. WATER QUALITY: new farm bill will be tighter than in 2001 be- But the language was drastically watered Farmers, ranchers, dairies, and hog and poultry producers, National Cattlemen’s No public opponents, cause the government is facing big budget down after an objection from Rep. Thomas J. allied with environmentalists, are seeking more money to Beef Association, but some environmen- deficits. “Expect a smaller pie,” the House “Jerry” Huckaby (D-La.), then head of the help the agricultural sector meet water-quality and other National Pork Producers tal groups and smaller Agriculture Committee’s chief economist re- subcommittee overseeing the rice program. environmental rules. They would boost funds for the Council, Environmental farmers favor cently told members in a briefing paper. “We got direction from the author of the Environmental Quality Incentives Program and the Conser- Defense, Environmental excluding very large Vilsack, the Iowa governor, said emerging bill that what we were putting in the reg- vation Security Program for working farms. Working Group. operators. markets for crops, such as corn-based etha- ulations was not what they intended,” said nol, make it more likely there will be sus- former USDA official William Penn, retained demand and good prices “without the THE WASHINGTON POST ferring to Huckaby. At the USDA, Penn necessity of subsidizing crops to the extent drafted rules for complying with the legisla- we have.” tion. could collect each year. ical “no” votes. The next day the House over- Vilsack, who once represented farmers in Huckaby, now president of a McLean real- But Combest had a strong hand. “He hi- whelmingly approved Combest’s farm bill. his law practice, said many farmers are un- estate company, explained his 1988 action in jacked the process,” said a former USDA offi- The farm bill passed the Senate, too. But easy about the subsidy system and how it can a recent e-mail: “The thinking was probably cial who spoke on the condition of anonym- not before an amendment sponsored by distort the market for crops and land. that you could make all the management de- ity because he still deals with Congress. Sens. Charles E. Grassley (R-Iowa) and By- “They’ll take the checks,” he said, “but most cisions of a farming operation in significantly At a meeting in Rove’s office soon after ron L. Dorgan (D-N.D.) was approved 2 to 1. would prefer a system where the market sets less time” than 1,000 hours. the Sept. 11, 2001, attacks, Combest deliv- It aimed to close loopholes, including the prices.” The softer language meant that the struc- ered a warning, according to several people 1999 provision that enabled Southern cotton Kind and Grassley plan to renew their ef- tured corporate farms could continue almost with knowledge of the session. Unless the planters to escape price-support limits. The forts to cut some subsidies and redistribute unabated. In 2004, the most recent year administration backed off, Combest warned, same legislation set a hard ceiling of others. Kind’s new bill would offer incentives available, at least 1,900 of these organiza- he and his farm-bloc allies would sink a top $275,000 annually for a farmer and spouse. to farmers to expand conservation efforts tions collected $312 million more than they priority of President Bush’s: legislation giv- “$275,000 is enough,” Grassley, a corn and bring U.S. policy in line with WTO rules. would have if their farms were held to strict ing the president a free hand to negotiate a and soybean farmer who never collected “It ain’t an easy fight,” said Rick Swartz, a limits, the Washington Post analysis shows. global trade treaty strongly favored by big more than $35,000 a year, told the Senate. Washington lawyer who works with the Alli- Republicans critical of big government corporations. “You have to ease up,” one par- As House and Senate negotiators met to ance for Sensible Agriculture Policies, an in- frequently tried to pare back the subsidies, ticipant remembers Combest saying. reconcile the two versions of the farm bill, formal grouping of diverse organizations with little success until the GOP gained con- Over the next several months, the admin- Combest chaired the meetings. When the fi- lobbying for change. “There’s a lot of inertia, trol of the House and Senate. In 1996, Con- istration laid off its public criticism of Com- nal bill emerged, the Grassley-Dorgan and you’ve got ag committee members gress passed a landmark bill, nicknamed best’s farm bill. Combest withdrew his oppo- changes had all but vanished. whose states get the bulk of the money.” “Freedom to Farm.” It was intended to wean sition to trade-promotion authority, and it The bill did add a requirement that the Swartz has said the alliance participants, growers off some traditional subsidies. But a squeaked through the House by a single USDA begin tracking payments more care- which include the well-heeled Club for couple of years later, when crop prices vote. He declined to comment for this arti- fully so that in the future lawmakers could Growth, plan to spend about $10 million dropped, farm-bloc lawmakers earmarked BY ADRIANO MACHADO — ASSOCIATED PRESS cle. see the effects of changes in payment limits. over the next 18 months lobbying for chang- billions of dollars for supplemental payments Drafting the current farm bill, Rep. Larry A review of that data, released this week for es in the farm bill. to farmers. Combest (R-Tex.) fought off attempts to ‘$275,000 Is Enough’ the first time, suggests that Grassley’s pro- The involvement of groups such as Oxfam Then in 1999, Congress and the USDA, create a firm per-farm payment cap. posed limit would have saved taxpayers America and Bread for the World “enables lobbied by Southern cotton interests, In the House, Reps. Ron Kind (D-Wis.) about $390 million for the 2004 crop. lawmakers who oppose subsidies to use the opened another loophole enabling farmers to ership interest in cotton farms that got more and Sherwood L. Boehlert (R-N.Y.) had 145 “The simple fact of the matter is our Sen- moral argument” against farm-state mem- keep unlimited proceeds under the govern- than $300,000 in subsidies between 2001 signatures for an amendment that would ate leaders let themselves be outmaneu- bers who trot out images of struggling Amer- ment’s main price-support program. An and 2005, USDA records show. tear up Combest’s handiwork and force him vered,” said Grassley, who voted against the ican family farmers, said a senior congres- analysis of payment records shows that cost With help from a generous mandate from to start over. It proposed shifting billions of final compromise version of the farm bill. sional aide. taxpayers more than $500 million for the the House Budget Committee — chaired by federal dollars from large farms to conserva- “They were run over by Southern forces in Oxfam America President Raymond C. 2004 crop, the most recent full crop year for Jim Nussle (R-Iowa) — Combest produced a tion programs that could help livestock oper- the House, and they ended up with what the Offenheiser said the group will step up its which data are available. new farm bill in 2001 authorizing an eye- ations and small farmers. House wanted.” lobbying. “We think there is a vision for popping $50 billion, 10-year increase in price Among Kind’s allies were “green Repub- Grassley was not quite finished. He called American agriculture that doesn’t just deliv- Combest’s Bill supports and income supports for farmers. licans” such as Rep. Wayne T. Gilchrist (R- the White House to lobby for a veto. “My rea- er benefits to a small group of people,” he He boasted that the measure was “a major Md.) and hunting and fishing groups cham- son was that the Senate had been sold out on said. One of the most remarkable examples of step away from Freedom to Farm.” pioned by Rep. John D. Dingell (D-Mich.). everything,” he said. Offenheiser said Oxfam already has the farm lobby’s power came in 2001 and For one thing, the bill restored a key pillar But Combest’s forces also had big guns be- But White House aides, aware of the im- brought farmers from Africa to meet U.S. 2002, when the existing farm bill was writ- of the pre-1996 program: cash payments that hind them: more than 100 groups, such as portance of the farm-bill money to red states farmers in the Midwest. ten, expanding payments again over the op- compensate for low crop prices. Thousands the U.S. Canola Association and the Amer- with midterm elections nearing, did not rec- “We wanted to show,” he said, “how position of the White House and key law- of farms were eligible even if they never grew ican Bankers Association. ommend a veto. Before signing the legisla- they’re both victims of the last farm bill.” makers. Reformers see it as a cautionary crops. Budget officials estimated that change The Agriculture Committee’s control over tion, Bush praised Combest for a “job well tale. alone would cost $37 billion over a decade. food-stamp funding — a top priority for the done.” Research editor Alice Crites contributed to The architect of the legislation was Rep. The Bush White House disliked Com- black and Hispanic caucuses — provided ad- Combest’s legislative victory turned out this report. Larry Combest, an aggie through and best’s bill. Chief political adviser Karl Rove ditional leverage. Combest’s supporters through, a West Texas Republican who came saw it as the antithesis of fiscal responsibili- “made it known that nutrition would be the from three generations of cotton farmers and ty. “We’re Republicans,” aides remember victim” if the bill was rewritten, said Rep. who took control of the House Agriculture Rove grumbling. The White House budget Eva Clayton (D-N.C.), a member of the Con- About the Series Committee in 1999. office issued a stinging critique, saying the gressional Black Caucus and the Agriculture As Congress prepares to debate a new farm bill next year, The Washington Others on Combest’s committee included bill was too costly and failed to help farmers Committee. “I encouraged members of the Post is examining federal agricultural subsidies that grew to more than a cattle rancher and tobacco farmer from most in need. black caucus to vote against” the amend- $25 billion last year, despite near-record farm revenues. Today’s article Tennessee, a Missouri corn and hog farmer, Combest also faced strong opposition ment, she said, “because of the nutrition im- previews the political fight in Congress over farm policies. The complete and a government-subsidized rice farmer from a disgruntled group of Eastern and pact.” “Harvesting Cash” series can be found at www.washingtonpost.com/ from Arkansas. The ranking Democrat, Midwestern lawmakers, and from senators Kind’s amendment was defeated 226 to harvestingcash. Charles W. Stenholm of Texas, had an own- who wanted tighter limits on what a farm 200, with the black caucus providing 10 crit-

DROUGHT DIRECT AND PRICE EMERGENCY SUBSIDY How to Spend PROGRAM COUNTERCYCLICAL PAYMENTS SUBSIDIES DISASTER PAYMENTS LIMITS An Extra A 2002 program to help The largest annual subsidy For the 2005 corn crop, the Over five years, the federal Federal rules limit the ranchers overcome a is given to farmers federal government spent government spent more than total amount that farms serious drought gave regardless of what crops about $4.8 billion $20 billion to expand crop can receive from the $15 Billion they grow — or whether to compensate farmers insurance coverage that was three primary farm $635 million they grow anything at all. because corn prices were supposed to eliminate the programs to $180,000 The U.S. has spent more to ranchers and dairy The Post found that, since low. About need for annual disaster annually. But for the than $95 billion on farm farmers in areas where 2001, at least payments. Over the same five 2004 crop year — the there was moderate drought subsidies in the past five $3.8 billion years, taxpayers spent about most recent data or none at all. The rules $1.3 billion of that was paid to farmers available — about years. In a yearlong investi- were so loose than any was paid to landowners who sold their corn months $9 billion gation, The Washington rancher in a declared who had planted nothing later, once prices had risen. in emergency disaster $817 million Post has found that billions disaster area could qualify, since 2000. They included payments — often to the of the total for those went for wasteful, unneces- including those living in homeowners in new same farmers. Each dollar programs was sent to counties where debris fell developments whose paid to farmers in insurance farms that used loopholes sary or redundant expendi- from the space shuttle backyards used to be rice claims in 2005 cost the to exceed the limits. tures: Columbia. fields. government $3.31. The extra

money went mostly to 16

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