Amber Waves of Gain

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AMBERAmberW AWavesVES OF of Gain:GAIN:

How the

F a r m Bureau Is

Reaping Profits at the

Expense of America’s

Family Far m e r s ,

Taxpayers and the

E n v i r onment

April, 2000 DEDICATION

This report is dedicated to the memory of Joseph Y. Resnick, the two-term congressman from New York who ﬁrst exposed the Farm Bureau as not being the organization of farmers it claims to be. Resnick launched an investigation of the Farm Bureau in 1967 and resumed it after leaving politics in1969. He died later that year, but the probe he initiated and funded continued, culminating two years later in the publication of the book Dollar Harvest, a major exposé about the Farm Bureau by former Resnick aide Samuel R. Berger. This report builds on the foundation laid by Resnick and resurrects his call for the dealings of the Farm Bureau to be closely examined on Capitol Hill. AMBER WAVES OF GAIN

Table of Contents

Foreword...... iv

Executive Summary...... v

Introduction: The Farm Lobby Colossus...... 1

1. Emphasizing the Bottom Line...... 8

2. Plumping for Factory Hog Farms ...... 19

3. Changing Rural America...... 30

4. Cooperating with Conglomerates...... 34 iii

5. Taking Care of Business...... 46

6. Pushing an Anti-Wildlife Agenda...... 56

7. Spinning the Global Warming Issue...... 62

8. Putting Pest Control Before Human Health...... 66

9. Aligning With the Extreme Right...... 75

Conclusion: A Call to Common Ground...... 84

Appendix 1. Farm Bureau Connections...... 85

Appendix 2. Tax Treatment of Unrelated Business Income for Agricultural and Horticultural Organizations...... 90 ACKNOWLEDGMENTS

PRINCIPAL AUTHOR: Vicki Monks

CONTRIBUTING AUTHORS: Robert M. Ferris, Vice President for Species Conservation Program, Defenders of Wildlife Don Campbell

PROJECT MANAGER: Robert M. Ferris

RESEARCH COORDINATOR: Heather Pellet, Species Conservation Program Coordinator, Defenders of Wildlife

RESEARCH: Scotty Johnson, Rural Outreach Coordinator, Grassroots Environmental Effectiveness Network (GREEN) Roger Featherstone, Director, GREEN Carol/Trevelyan Strategy Group (Dan Carol, Catharine Gilliam) Rob Roy Smith, Species Conservation Program Intern, Defenders of Wildlife William J. Snape III, Vice President for Law and Litigation, Defenders of Wildlife Joe McCaleb

EDITING AND PRODUCTION: James G. Deane, Vice President for Publications, Defenders of Wildlife Kate Davies, Publications Manager, Defenders of Wildlife Maureen Hearn, Editorial Associate, Defenders of Wildlife

DESIGN: Cissy Russell

ABOUT DEFENDERS OF WILDLIFE Defenders of Wildlife is a leading nonproﬁt conservation organization recognized as one of the nation’s most progressive advocates for wildlife and its habitat. Defenders uses education, litigation, research and promotion of conservation policies to protect wild animals and plants in their natural communities. Known for its effective leadership on endangered species issues, Defenders also advocates new approaches to wildlife conservation that protect species before they become endangered. Founded in 1947, Defenders of Wildlife is a 501(c)(3) membership organization headquartered in Washington, D.C., and has nearly 400,000 members and supporters.

Visit our website at www.defenders.org and our children’s website at www.kidsplanet.org.

Cover Illustration: David Chen/The Stock Illustration Source

Printed on recycled paper. AMBER WAVES OF GAIN

Foreword Foreword

n December, 1997,Defenders of Wildlife heard deeply disturbing news. A federal district judge in Wyoming had ruled that Yellowstone and central Idaho wolf reintroductions carried out by the federal government in 1995 and 1996 were unlawful and that the thriving Inew wolf populations must be removed. Since their former territories in Canada were by then occupied by other wolves and there wasn’t room for them in the nation’s zoos, it appeared that the wolves would have to be killed. The ruling threatened to erase years of hard work by the government and conservation- ists and to destroy what has been called the most popular and successful wildlife restoration effort of the 20th century, an effort in which Defenders had been a leader for two decades. The most significant plaintiff in the lawsuit responsible for the court decision was the American Farm Bureau Federation (AFBF — or the Farm Bureau). AFBF and its state and county units regularly oppose not only measures to sustain and recover endangered species like the wolf but many important environmental protection efforts. The organization also is negative toward other widely accepted laws and public policies. Its 1998 policy manual, for example, advocated repeal of the Voting Rights Act of 1965, opposed registration and licensing of firearms and advocated abolishing the U.S. Department of Education. From its name, one might suppose that the Farm Bur eau exists to serve American family farmers. In reality the Farm Bur eau is a gigantic agribusiness and insurance conglomerate. Th e majority of its “me m b e r s ” are not farmers, but customers of Farm Bur eau insurance companies and other business ven t u r es. Yet the organization’s nonprofi t status allows it to use the U.S. tax code to help build a financial war chest with which it pursues an extreme political agenda, while doing little for — and sometimes working against — America’s family farmers. We decided that we should try to find out more about this politically powerful organization and make what we learned available to the public. The result is the accompanying report. We would have liked to examine more of the Farm Bureau’s operations but lacked the time and resources to do so.We believe the public deserves to learn the full facts about this huge financial conglomerate that purports to be the voice of America’s family farmers.

Rodger Schlickeisen President, Defenders of Wildlife AMBER WAVES OF GAIN

Foreword Executive Summary

he American Farm Bureau Federation (AFBF) — with its roughly 3,000 constituent state and county farm bureaus — ranks among the richest and most powerful non- governmental organizations in America. AFBF claims to have more than 4.9 million Tmembers. It has artfully portrayed itself as the voice and champion of our nation’s family farmers for nearly 80 years. The vast majority of the Farm Bure a u ’s members, howeve r , are either policyholders of one of numerous insurance companies affiliated with state farm bureaus or are customers of other farm bureau business ven t u r es. (At latest count there wer e some 54 farm bureau insurance companies.) Such members have no say in establishing or carrying out Farm Bur eau policies and, in most cases, have no particular interest in agriculture. AFBF spends a great deal of money and time opposing environmental laws such as the Endangered Species Act, the Clean Air and Safe Drinking Water Acts, wetlands laws and pesticide regulations. But the organization’s views may have more to do with its own finan- vi cial interests than with the views of its members or the needs of the family farmer. AFBF is allied with some of the nation’s biggest agribusinesses. It has large investments in the automobile, oil and pesticide industries, often supports factory farming rather than family farming and regularly opposes government regulation to reduce air and water pollution and pesticide use and to protect wildlife, habitat, rural amenities and food quality. It is critical of efforts to counter global warming. It has opposed the registration and licensing of firearms. It has advocated repeal of the 1965 Voting Rights Act, one of the nation’s key civil rights laws. It has advocated abolition of the federal Department of Education and of the U.S. Fish and Wildlife Service. It has launched lawsuits to halt reintroduction of endangered gray wolves. It is allied politically with, and provides funding for, right-wing interests and the so-called wise-use movement, which works for the supremacy of private property ownership and against the protection and conservation of public lands. The Farm Bureau’s policies are set by voting delegates at its annual meetings. Many high officers of the national and state farm bureaus also serve as officers or directors of the insurance companies and of Farm Bureau cooperatives and other businesses. Defenders of Wildlife first investigated the Farm Bureau because of the longstanding Farm Bureau lobbying campaigns against wildlife and environmental protections. We found, AMBER WAVES OF GAIN

Foreword however, that the Farm Bureau not only opposes our core mission but also works actively against the interests of rural communities and mainstream America. A significant problem facing rural communities in the last decade has been the rise in factory farms which produce hundreds of thousands of hogs every year. The Farm Bureau has sided with the corporations that own and operate these farms, often to the detriment of rural communities and local family farmers. Beyond significant pollution issues, these pig factories are putting family farms out of business. Over the last decade, as market concentration has become an overwhelming force in American agriculture, hundreds if not thousands of family-owned farms have been forced out of business. The Farm Bureau supports, through investments and political clout, this concentration of the agricultural industry and, indirectly, the destruction of rural America. When the cooperative farm bureau system was first set up in 1922, it empower ed farmers and other rural residents to get the goods and services they needed while enabling them to sell their products at a better price. Unf o rt u n a t e l y , what was once a beneficial arrangement for farmers and consumers has drastically changed. Many Farm Bure a u - a f fi liated co-ops are vii no w multibillion-dollar operations that compete directly with their farmer members. Furt h e r m o r e, many of these cooperatives are partnering with the ver y companies res p o n s i b l e for the agribusiness megamergers that are putting smaller farmers out of business. As can be expected, the Farm Bureau has taken positions that benefit its business interests or investments. Other lobbying priorities are more difficult to fathom. However, the theme that runs through all Farm Bureau policies seems to be less regulation and more power for business interests. To further this agenda, the Farm Bureau has developed close ties to the corporate-led property rights movement. Plenty of farmers and ranchers see common ground with environmentalists. Some are Farm Bureau members who cannot make their voices heard. Others have dropped membership and are working for change in other ways. Yet the Farm Bureau has pursued a deliberate strategy of fostering enmity between farmers and environmentalists, two groups that could benefit from working together. AMBER WAVES OF GAIN

I N T R O D U C T I O N The Farm Lobby Colossus

“...the Far m Bur eau is far more than simply er ful lobby,” says Sam Hitt of For est Gua r dians, a an organization of farmers, as it so often claims. Santa Fe, New Mexico, environmental grou p . Hit t The nation’s biggest farm organization has been has run up against the Farm Bur eau time and quietly but systematically amassing one of the again on environmental issues, such as prot e c t i o n largest business networks in America, while of streamside ecosystems. “Legislators seem to go tu r ning its back on the deepening crisis of the go o g l e - e y ed when they see them walk through the fa r mers whom it supposedly rep re s e n t s . . . . ” do o r , and that’s caused the loss of a lot of our — Samuel R. Berger, Dollar Harvest. wildlife heritage,” he says. One measure of the Farm Bur eau empire’s size he majority of Americans may be only is the $200 million or more that it takes in yea r l y 1 vaguely aware of the existence of the in membership dues. The national, state and TAmerican Farm Bur eau Federation (AFBF), county farm bureaus also control insurance com- although it is a huge and immensely powerf u l panies producing annual rev enue of some $6.5 organization that claims to speak for farmers on billion and cooperatives producing rev enue of many public policy issues and has a significa n t some $12 billion. And farm bureaus earn reve n u e in fl uence on decisions of government at all level s . fr om consulting, satellite TV and Internet servi c e s Sur veys by For tune magazine regularly rank and a bank headed by AFBF’s pres i d e n t . AFBF as one of the top 25 most potent special- AFBF spends considerable money and energy in t e r est groups in Washington, D.C. The organi- fighting such environmental initiatives as the zation is no less formidable a presence in state Endangered Species Act, the Clean Water, Clean capitals, county seats and rural communities. And Air and Safe Drinking Water Acts, wetlands laws, its influence extends into business and fina n c i a l pesticide regulations and efforts to curb global ci r cles, to which it has major and profi table ties. warming. But the Farm Bureau’s views may have With more than 4.9 million members and affil- more to do with the organization’s own financial iated organizations in ever y state, AFBF — famil- interests than with the needs of family farms. iarly called simply the Farm Bur eau — has colossal The Farm Bureau’s emotionally charged political clout in Congress, state legislatures and attacks on environmental regulations seem county commissions.“They are an incredibly pow- intended at least partly to divert the attention of AMBER WAVES OF GAIN

farmers from the real issues facing agriculture from farm bureaus, but close connections today. For years this strategy apparently worked. between the two entities remained. Ironically, But interviews with cattle ranchers, hog produc- this association with the federal government — ers and farmers across the nation suggest that and the consequent access to federal crop pro- many no longer believe these issues have any- grams and technical information — helped thing to do with the troubles plaguing agricul- establish AFBF’s dominance as a farmers’ organi- ture, and they no longer trust the Farm Bureau zation. These days, AFBF complains that the to act on their behalf. federal government is too intrusive, particularly The United States is in the midst of one of in regard to environmental regulations, which the worst agricultural crises in decades. Hog, cat- AFBF claims are overly burdensome to farmers. tle and grain prices for farmers have collapsed at But many of the causes that the Farm Bureau the same time that food costs for consumers champions, including less pesticide regulation, remain high. Food production at all levels is relate at least as much to the financial interest of becoming more and more concentrated in the the Farm Bureau as to the needs of farmers. hands of enormous agribusinesses, including Dean Kleckner, AFBF president from 1986 those of the AFBF network, while thousands of to January, 2000, reserved particular invective for family farms go under. AFBF and its affiliates the Food Quality Protection Act, which direc t s have not only advocated policies that have con- the Env i r onmental Protection Agency (EPA) to 2 tributed to the crisis but are actively benefiting set standards for pesticide residues in food at lev- from the demise of family farms. els low enough to protect the health of infants The Farm Bureau began its rise to power in and children. “Sane people do wonder what these 1911 when the Chamber of Commerce in kids will eat . . . when the government closes the Binghamton, New York, set up the first county pr oduce department at our groc e r y stores , ” farm bureau to sponsor an extension agent pro- Kleckner wrote in a newspaper column in which vided by the U.S. Department of Agriculture. he suggested that EPA’s “bureaucratic madness” From that time through the 1950s, a cozy rela- would result in bans on all agricultural chemicals. tionship persisted between the private farm The Farm Bur eau may genuinely fear that agri- bureaus and federal agricultural agents — a rela- cu l t u r e will suffer if farmers must reduce their use tionship so close that many farmers mistakenly of chemicals, but Farm Bure a u - a f fi liated compa- believed that the farm bureaus and the govern- nies also hold stock in corporations that manufac- ment were one and the same, according to a his- tu r e pesticides, and presumably those inves t m e n t s tory of the Farm Bureau in The Corporate might suffer as well. Reapers: The Book of Agribusiness by A.V. Krebs (Essential Books, 1992). In 1954, the WIDE-RANGING BUSINESS INTERESTS Department of Agriculture ordered its agents to Agricultural cooperatives under the direct stop accepting free office space and gratuities control of state farm bureaus earn significant rev- AMBER WAVES OF GAIN

enues from pesticides and market them aggres- the farm bureaus. The California Farm Bureau, sively. In addition, according to corporate docu- for example, reported total revenue of $37 mil- ments, some 54 Farm Bureau-affiliated insurance lion in 1996. This and the examples that follow companies earn a total of more than $6.5 billion indicate just why AFBF would be inclined to annually in net premiums. The farm bureaus also function more like a big-business interest than ha v e investments in banks, mutual-fund and the advocate of family farmers: fina n c i a l - s e r vices firms, grain-trading companies The Illinois Farm Bur eau (also known as the and other businesses. Many of those businesses in Illinois Agricultural Association or IAA) is the turn own stock in oil and gas, pulp and paper, majority stockholder in a group of inves t m e n t ti m b e r , railroad, automobile, plastics, chemical, funds run by IAA Trust Company, which man- steel, pesticide, communications, electronics and ages stock, bond and money-market funds worth ci g a r ette companies and even a nuclear power mo r e than $356 million. Illinois Farm Bure a u plant. The lists of stocks held by Farm Bure a u also owns 95 percent of IAA Trust Company. In companies read like a who’s who of corporate 1998, the IAA Trust Funds earned $10.6 million he a v y w eights: Philip Morris, Weye r h a e u s e r , in interest and dividends from stocks and other DuP ont, Union Carbide, AT& T , For d Mot o r , in v estments, and the value of IAA Trus t ’s portf o - Raytheon (a leading manufacturer of tactical mis- lio increased by more than $46 million for the siles), International Pap e r , CBS, Tyson Foo d s , year ending June 30, 1999. Acc o r ding to an 3 Ar cher Daniels Midland (ADM) and many more. Oct o b e r , 1999, rep o r t filed with the Sec u r i t i e s (For a list of farm bureau insurance companies and Exchange Commission (SEC), Illinois Far m and other farm bureau business affiliations see Bur eau president Ronald War field is also pres i - Appendix 1, “Farm Bureau Connections.” ) dent of IAA Trust and serves on AFBF’s board as In a 1998 interview, AFBF Washington lob- well as the boards of several of AFBF’s affili a t e d byist Dennis Stolte claimed ignorance of these companies. Acc o r ding to the SEC rep o r t, nearly financial interests and insisted that the insurance all of the top officers and directors of IAA Trus t and other businesses have little to do with AFBF. ar e also on the board of the Illinois Farm Bure a u . “That’s not the Farm Bureau,” he said. “Our Twenty-one board members serve both organiza- members are farmers for the most part. They’re tions. The IAA investment funds pay the IAA people who are interested in promoting agricul- Trust Company more than $2 million a year to ture.” Nevertheless, comparisons of the boards of provide advice on which stocks to buy and when. directors of Farm Bureau-affiliated businesses These same Farm Bur eau officers are in and Farm Bureau organizations themselves show charge of 52 companies directly owned by or substantial overlap. In many cases, the individu- closely affiliated with the Illinois Farm Bure a u . als and boards controlling the businesses also The list includes Country Companies Ins u r a n c e , control the state farm bureaus. Frequently, much real estate brokerage firms, credit and fina n c i a l of the profit earned by these businesses reverts to se r vices companies, an export company headquar- AMBER WAVES OF GAIN

te r ed in Barbados, West Indies, oil and gas com- announced plans to purchase the reinsurance panies and Growm a r k, an international agricul- division of Nationwide Insurance. The terms tural cooperative with close business ties to the were not disclosed. According to a news release, agribusiness giant Archer Daniels Mid l a n d Nationwide’s president Richard D. Crabtree said (A D M ) . the sale to AAIC is a good fit because the two Nationwide Insurance of Columbus, Ohio, companies “share a cooperative heritage . . . .” with $74 billion in assets and $12 billion in Other examples of overlapping farm bureau annual sales, grew out of the Ohio Farm Bureau. organizational and business interests include: Even though the insurance company split off • New York Farm Bureau president John from the Ohio bureau in 1948, connections Lincoln serves as vice chairman of the board of remain close. According to the Columbus Farm Family Insurance Companies. Farm Family Dispatch, Ohio Farm Bureau presidents and past also shares office space with the New York Farm presidents routinely are elected to the board of Bureau. Nationwide and the bureau nominates a majority • Kentucky Farm Bureau Federation execu- of the board. Irv Bell, president of the Ohio tive vice president David S. Beck also is corpo- Farm Bureau until early 1998, now sits on rate secretary of Kentucky Farm Bureau Mutual Nationwide’s board. Nationwide’s long-time Insurance Company. chairman and chief executive officer, George • Farm Bureau Town and Country Insurance 4 Dunlap, was also an Ohio Farm Bureau director and Farm Bureau Life Insurance of Missouri are for 15 years and director of a county farm owned by Missouri Farm Bureau Services, Inc., bureau for 25 years. which is controlled by the Missouri Farm Bure a u . AFBF owns 42.7 percent of American • All directors of Western Farm Bureau Agricultural Insurance Company (AAIC). Th i rt y - Mutual Insurance are also directors of the New th r ee other Farm Bur eau insurance companies Mexico Farm and Livestock Bureau. own the rest of AAIC. AAIC sells reinsurance, • Former Wyoming Farm Bureau Federation insuring other insurance companies against the president and AFBF executive committee mem- kinds of huge losses that might be caused by nat- ber Dave Flitner also served as president of ural disasters — a risky but profitable business. Mountain West Farm Bureau Mutual Insurance According to financial reports, in early 1999 and Farm Bureau Life Insurance. Flitner is better AAIC had assets of more than $575 million and known for his close ties with former Interior a surplus of $285 million. The president of Secretary James Watt and for his tenure as presi- AFBF is also AAIC’s president. AAIC employs dent of the Mountain States Legal Foundation, AFBF’s secretary and treasurer as secretary and one of the nation’s most active anti-environmen- treasurer of the reinsurance company. In fact, tal legal groups. Mountain States, a co-plaintiff AAIC’s entire board is chosen from among AFBF in the Farm Bureau Yellowstone/Idaho wolf law- board members. On March 31, 1999, AAIC suit, also provided legal representation for the AMBER WAVES OF GAIN

Farm Bureau in that lawsuit. Flitner once com- considering a ban on imports of hormone- pared reintroduction of wolves to “inviting in the enhanced meat, Hightower tried to recruit Texas AIDS virus.” He also proposed cutting agricul- cattle producers to raise hormone-free beef for ture programs to lower the federal deficit. export. He figured that ranchers could take So vast is this web of interlocking companies advantage of the new market for “organic” beef if with interlocking boards that it is nearly impossi- they acted quickly. The Texas Farm Bureau inter- ble to estimate the true extent of the Farm Bur - preted Hightower’s actions as disparagement of ea u ’s financial power . It’s equally difficult to gauge hormone-enhanced cattle and launched a suc- whether or how much individual farm burea u cessful campaign to drive him from office. After of fi cers who sit on multiple boards of direc t o r s the smoke cleared, the Dallas Times Herald pro fi t from these businesses, since individual hold- reported that Texas Farm Bureau-controlled ings in the companies are never disclosed. companies owned $1.3 million worth of stock in In addition to their other businesses, state farm Syntex, a cattle growth hormone manufacturer. bu r eaus are now providing digital television, satellite, advanced communication, long-distance and INFLATED MEMBERSHIP RANKS cellular telephone services and high-speed Int e r n e t access. Farm Bur eau leaders seem reluctant to dis- “If these people lose their prestige as the cuss these enterprises with outsiders. AFBF excl u d - spokesmen for agriculture, they’re just another 5 ed members of the press from a 1998 communica- insurance lobby, and insurance lobbies are a tions conference in Santa Fe, New Mex i c o . dime a dozen. That’s why they don’t like to talk This exclusion of the press is not surprising. about how many of those members are actually AFBF works hard to maintain its image as a farmers.” grassroots advocate for family farms. Too much — Missouri farmer Scott Dye. emphasis on AFBF’s outside business interests might spoil that illusion. “There’s an impression If proof is still needed that AFBF is not quite that this is a huge organization of farmers,” says the grassroots farming organization that it repre- former Texas agriculture commissioner Jim sents itself to be, it would be found in the Hightower, who now hosts a syndicated radio AFBF’s own membership rolls. The Department talk show. “But they are no more a family farmer of Agriculture estimates the number of full-time organization than is State Farm Insurance. Just American farmers at just over 1 million, so clear- because you have the word farm in your name ly most of AFBF’s 4.9 million members must doesn’t mean you really represent farmers.” come from outside agriculture. Numbers from As agriculture commissioner, Hightower had the Texas Farm Bureau tell the story. In 1997, firsthand experience with the Farm Bureau’s jeal- Harris County, which includes metropolitan ous protection of its financial interests. In the Houston, had 4,675 members even though the mid-1980s, when the European Community was Department of Agriculture listed only 551 full- AMBER WAVES OF GAIN

time farmers there. Dallas County, with just 229 Garner objected to the policy on “Wildlife Pest farmers, listed 2,332 Texas Farm Bureau mem- and Predator Control” she could vote with her bers. Even in the unlikely event that every full- checkbook and find other insurance. time farmer in both of those counties belonged Farm Bureau officials at the state, county and to the Farm Bureau, around 90 percent of the national levels alike generally seem reluctant to Dallas and Harris county Farm Bureau members give straight answers to questions about how would have been non-farmers. many actual farmers belong to the organization. In fact, most urban members are nothing “We feel like we represent eight out of ten more than customers of Farm Bureau-affiliated American farmers,” says Dick Newpher, execu- insurance companies. The Farm Bureau requires tive director of AFBF’s Washington, D.C., office. these customers to purchase memberships in But he admits he actually has no idea whether order to qualify for low-cost automobile, home, that statement is true because, he says, AFBF health or life insurance. These members do not does not keep a central membership list that necessarily support or even know about the Farm identifies who is a farmer and who is not. Bureau political activities that membership fees However, AFBF bylaws clearly spell out two cat- and insurance premiums are bankrolling. egories of membership: full members actively Chicago banker Sallyann Garner, for example, engaged in agriculture or retired from farming became a Farm Bureau member when she took and associate members, defined as anyone else 6 out an insurance policy in 1991. Garner says she with an “interest” in agriculture. Newpher says knew that a membership in the DuPage County, county and state farm bureaus keep those Illinois, Farm Bureau came with her policy. She records, but queries to several state farm bureaus cannot recall whether her insurance agent told did not produce answers, either.Texas Farm her that all county members automatically Bureau spokesman Gene Hall says Texas mem- become members of the national organization. bership records make no distinction between Garner learned in April, 1998, about AFBF’s farmers and other members. lawsuit to force removal of the Yellowstone The heavy dependence on insurance cus- wolves. “Wolf recovery happens to be one of my tomers as the bulwark of the organization sug- pet programs,” she says. “I was extremely upset. I gests that AFBF might become increasingly was appalled that I was forced to be a member of inclined to focus more on building its business the American Farm Bureau just because of my interests than on speaking for individual farmers. insurance. I ought to be able to choose insurance This is supported in AFBF publications. For based on the cost and the value and not unwit- example, in a recent on-line essay, New York tingly be part of a political action group that Farm Bureau executive Bill Stamp spelled out the advocates policies I personally object to.” A letter importance of adding as many insurance cus- to DuPage County Farm Bureau president tomers as possible to the Farm Bureau’s member- Michael Ashby brought a response saying that if ship rolls: “This year, New Jersey Farm Bureau AMBER WAVES OF GAIN

made a bold effort to increase membership with to the Farm Bureau’s rescue. Legislation reversing the support of their farm family agents. The the IRS decision won congressional approval in membership increase was made largely with asso- 1996 as part of the tax-relief package under ciate members. New Jersey Farm Bureau provid- House Speaker Newt Gingrich’s “Contract With ed a wonderful marketing brochure for the non- America.” Congressman Camp explained that he farm consumer of insurance. This practical ini- wanted to shield the organization from “unwar- tiative creates a larger membership base . . . . ranted and potentially devastating audits.” This boosts the financial foundation that Farm Senator Phil Gramm (R-Texas) argued during Bureau needs to achieve success of their policy floor debate that “the IRS is trying to force the efforts. This is a shining example of success!” Farm Bureau to pay taxes they do not owe” and Despite paying dues, Farm Bureau associate said the IRS action was “indefensible in the members aren’t allowed to vote at the organiza- opinion of the vast majority of the American tion’s conventions and thus have no say in policy people.” After all, Gramm insisted, “being part matters. of the Farm Bureau is being part of agriculture.” Unlike the average farmer, AFBF has escaped (For a detailed discussion of the 1996 tax relief paying taxes on its hefty income from member- package see Appendix 2, “Tax Treatment of ship dues because it is a nonprofit organization Unrelated Business Income for Agricultural and (although some state affiliates are set up as for- Horticultural Organizations.”) 7 profit groups). However, after an Internal During 1995 and 1996, Farm Bureau-affiliat- Revenue Service (IRS) survey of associate mem- ed political action committees (PACs) contribu- bers found that only five percent joined AFBF ted $109,824 to many of the 126 congressional because of an interest in agriculture, IRS in 1993 sponsors of the Tax Fairness for Agriculture Act, ruled that dues from these non-farming associate including $16,480 to Camp. In 1996 the Texas members — customers of Farm Bureau insur- Farm Bureau PAC gave Senator Gramm $5,000. ance companies and other businesses — should This report will examine the Farm Bureau’s be taxed as business income. The IRS ruling multibillion-dollar financial empire and show could have cost AFBF and state affiliates $62 how AFBF’s pursuit of policies beneficial to its million in annual taxes. By 1996, IRS was suing wide-ranging business interests has undercut the farm bureaus in 11 states for back taxes. well-being of America’s family farmers as well as A group of members of Congress led by the interests of consumers and efforts to protect Representative David Camp (R-Michigan) came the environment. AMBER WAVES OF GAIN

CHAPTER ONE Emphasizing the Bottom Line

“Farm Bureau businesses sustain and pre- i n vestigation and in 1971 produced the most serve the organization. In terms of money, poli- c o m p re h e n s i ve analysis of the AFBF empire cy and power, they dominate the organization.” written to date. His book Dollar Ha rvest ( He a t h — Samuel R. Berger, Dollar Harvest. Lexington Books) explains in detail how the n o n p rofit farm bureaus benefit from re l a t i o n- n 1967, U.S. Representative Joseph Resnick ships with their for-profit business part n e r s . 8 (D-New York) launched an inquiry into Be r g e r, now national security adviser to IAFBF’s already sizable commercial ventures. As President Clinton, described the Farm Bu re a u chairman of the House Subcommittee on Rural insurance network as “one giant company” Development, he wanted to investigate whether clearly controlled by AFBF. profits from AFBF-controlled businesses were According to Berger, the relationship works being transferred to the tax-exempt organization. like this: The insurance companies give AFBF But when he moved for hearings, his subcom- organizations “sponsorship fees,” which amount mittee balked. Most of those committee mem- to percentages of insurance company earnings. bers belonged to AFBF and had benefited from “Putting aside the fascinating tax consequences AFBF help in their campaigns. The subcommit- of these transactions, other ticklish problems tee refused to authorize the investigation. arise,” Berger wrote. Part of the insurance cus- Resnick conducted hearings anyway, gathering tomer’s premium goes directly into the pocket of enough information to fill in a rough outline of the Farm Bureau without the customer’s knowl- the Farm Bureau’s inscrutable business domain. edge, he pointed out. Before he could complete the process, however, Especially interesting are cases where Fa r m he died, at the age of 45. Bu reau and insurance company boards of dire c- Samuel R. Be r g e r, who had served as a tors are exactly the same people. Be r g e r Resnick aide, picked up the threads of the described a 1947 Ohio Insurance De p a rt m e n t AMBER WAVES OF GAIN

i n vestigation into the relationship between the INSURANCE AT A PREMIUM Ohio Farm Bu reau and Nationwide In s u r a n c e . The insurance examiners were n ’t too happy “The purpose of this program is to provide with the concept of overlapping board s . the best insurance products to Farm Bureau Quoting from the examiner’s re p o rt, Be r g e r members at the lowest possible cost and provide w rote that eve ry time the insurance company excellent policyholder service.” b o a rd offered the Farm Bu reau fees, “the same — AFBF insurance brochure. men rushed around to the other side of the table to say ‘Ok a y, we accept those fees.’ T h e “Farm Bureau member Nathan Baxley has examiners said they felt people should not cancer and his daughter has muscular dystro- negotiate with themselves.” phy; the Farm Bureau insurance plan hit him Frequently, the insurance companies rent with a premium increase of $1,950 a month their office space from state farm bureaus and or an option for drastically reduced coverage.” employ the farm bureaus’ in-house advertising, — Arkansas Democrat-Gazette, public relations and communications divisions. January 20, 1994. In many states, the nonprofit farm bureaus also own all or most of the stock of the insurance State farm bureaus have always promoted companies. And those stocks pay dividends to their insurance lines as an important service to 9 the state organizations. The farm bureaus also their members, and in many cases customers do benefit from using insurance customers to inflate have trouble finding any other insurance for a their membership numbers, since everyone who reasonable price. Farm bureau insurance rates buys a policy must join the bureau. The insur- generally compare favorably with other carriers ance companies also benefit from the alliances. and often are lower. Despite these advantages, Farm bureau lobbyists use their considerable Farm Bureau insurance falls far short of provid- political clout to lobby on bills affecting their ing the best service to its customers. For exam- partners in the insurance business. For instance, ple, state officials and consumer groups have state farm bureaus have lobbied hard for limits accused some farm bureau-affiliated companies on medical malpractice damage awards. And of insuring only those who pose the least risk AFBF is pushing for privatization of Social and therefore are least likely to file claims. As the Security, which could bring a profit windfall to following examples illustrate, the Farm Bureau insurance company and financial investment has a long history of using exorbitantly high rates firm ventures. Relating any of those issues to to dissuade or exclude altogether those who need agriculture is a far stretch, but they certainly insurance the most: affect the Farm Bureau’s bottom line. • In 1961, as the East Germans were build- AMBER WAVES OF GAIN

WHILE FAMILY FARMS FLOUNDER, THE FARM BUREAU FLOURISHES

Family farmers are going broke, but the Farm Bureau and many of its state af ﬁliates ar e amassing wealth and spending it as the following list and examples illustrate:

10 WEALTHIEST STATE FARM BUREAUS (Based on 1996 tax revenues)

1. California Farm Federation...... $37,596,117 2. Illinois Agricultural Association ...... 28,780,046 3. Ohio Farm Bureau Federation ...... 11,122,260 4. Michigan Farm Bureau ...... 10,134,866 5. Georgia Farm Bureau Federation ...... 8,356,010 6. Texas Farm Bureau ...... 8,244,374 7. Tennessee Farm Bureau Federation ...... 8,107,782

10 8. North Carolina Farm Bureau Federation, Inc...... 8,075,741 9. Iowa Farm Bureau Federation ...... 7,479,588 10. Kentucky Farm Bureau Federation ...... 7,020,080

•Forty-one farm bureau afﬁliates had enough surplus funds to open their own bank in 1999 with assets of approximately $135 million.

•Southern Farm Bureau Insurance sponsors the Southern Farm Bureau Classic, an annual stop on the Professional Golfers Association Tour.

•In 1985, the height of the farm crisis in America, the Farm Bureau held a million-dollar annual convention in Hawaii.

• FBL Financial Group, Inc., a publicly held company with special marketing arrangements to sell farm bureau insurance in 15 states, did so well in 1999 it had to readjust its operating income four times. AMBER WAVES OF GAIN

ing the Berlin wall at the height of the cold war, the rate increases to purge sick members from 24-year-old Iowa corn farmer Larry Moore the rolls. “These members have been paying 20 decided to answer President John F. Kennedy’s and 25 years and didn’t need you until two or call to service by joining the Army. Moore had three years ago,” Arkansas state representative been a farmer all his life and a loyal Farm Bureau Lloyd George said at a hearing. George suggested member. But as the young man prepared for his that the company had lowered rates for other tour of duty he got a notice from his Farm health insurance customers in order to attract Bureau insurance agent that the company would more new members. Baxley’s brother-in-law double his auto insurance premium. “That’s just added, “The Farm Bureau will attract you with not the kind of thing you’d do to show support the new low premiums, then cut you out the for America’s troops,” says Moore’s wife, Mary moment you get sick.” Ellen. Moore immediately quit the Farm Bureau • In Texas in 1994, regulators ordered and has refused to rejoin. Mary Ellen is still a Southern Farm Bureau Life Insurance Company member, although she does not want to be. She to pay a $250,000 fine for overcharging owns a separate farm across the border in Illinois Medicare patients for prescription drug insur- and says she has no choice but to deal with farm ance. The Texas insurance department said bureau cooperatives, which offer the only market Southern Farm had charged elderly patients for her grain. “They’ve got you in a noose, so deductibles as high as $3,000 on prescription 11 what are you going to do?” she asks. “I sure don’t drug claims after advertising that the policies agree with their policies.” would cover 100 percent of prescription drugs • In the 1960s, after a series of rate hearings, with no deductibles. South Carolina Chief Insurance Commissioner In addition, lawsuits have been filed and reg- Charles Gambrell accused Southern Farm Bureau ulators in several states have fined Farm Bureau- Casualty Insurance Company of attempting to affiliated insurance companies for engaging in persuade other insurance carriers “to lead the way redlining, the practice of refusing insurance to in raising farmers’ rates, so that Farm Bureau people because of age or race or because they live could follow suit and avoid the stigma of being in low-income or minority neighborhoods. Red- the first to do so.” lining can mean that insurers refuse to write • In 1994, Nathan Baxley was one of 1,400 policies in certain neighborhoods — they literal- ailing Farm Bureau members in Arkansas who ly draw red lines on maps to mark off excluded got rate-hike notices from Arkansas Farm Bureau areas. But more often, redlining takes subtler Insurance, which gave them less than 30 days to forms. In many cases, regulators have found that find other insurance or pay the company thou- insurance companies discourage minorities from sands of dollars extra in annual premiums. buying policies by quoting substantially higher According to Arkansas newspaper accounts, state rates than the companies offer to people who live legislators accused the company of manipulating in similar but largely white neighborhoods. AMBER WAVES OF GAIN

In 1994, the Missouri insurance department • One of Nationwide’s own agents accused brought formal administrative charges against the company in 1997 of refusing to let him sell Farm Bureau and Country Insurance Companies insurance in minority neighborhoods of for redlining the entire city of St. Louis. Pittsburgh, Pennsylvania. Now, more than 20 Examiners found a map in a Farm Bureau under- Nationwide agents in other states have come for- writing manual with the whole predominantly ward with allegations that the company pro- minority city outlined in yellow and labeled motes redlining. “ineligible property.” At the time, the Farm • In February, 1998, Nationwide settled a Bureau was the ninth largest homeowners’ insur- racial discrimination lawsuit brought by the er in the state. A spokesman for the company Cincinnati NAACP. The suit accused the insur- claimed that urban residents were excluded ance company of charging higher premiums in because the Farm Bureau is “traditionally a rural neighborhoods with high concentrations of non- insurer” and confines business to counties with white homeowners. Later that year, the Texas local farm bureaus. Department of Insurance found that Nationwide Insurance has been particularly Nationwide’s tightly controlled marketing strate- troubled by redlining lawsuits filed by fair-hous- gy, which is overseen from its home office in ing groups around the country. While the Ohio Columbus, Ohio, “systematically exclude[s] Farm Bureau no longer owns Nationwide, it still minority customers from the market in which 12 exerts considerable influence over the insurance [they] operate. Such a pattern of operations company through its role in hand-picking board shows that Nationwide has engaged in a practice members for Nationwide. The company and the of unfair discrimination.” Farm Bureau continue to share office space in • In October, 1998, a Richmond, Virginia, Columbus. The insurance company pays the court ordered Nationwide to pay $100 million in Ohio Farm Bureau a generous fee on each policy punitive damages and $500,000 in compensato- sold through the bureau. The farm bureaus in ry damages for redlining. The verdict followed a California, Maryland and Pennsylvania have sim- jury trial in which fair-housing advocates pre- ilar agreements with Nationwide. sented evidence that Nationwide had denied More examples: home insurance to black applicants and had • In 1997, Nationwide Insurance agreed to imposed higher rates in Richmond, a predomi- pay Toledo residents $3.5 million to settle a civil nantly black city, than in Richmond’s largely rights lawsuit over redlining, although the com- white suburbs. The $100 million judgment was pany did not admit doing anything wrong. In the largest ever imposed in a redlining case — that same year, Nationwide without admitting and a judge who reviewed the jury’s decision guilt settled a Justice Department redlining law- ruled in December, 1998, that the award was not suit by agreeing to spend more than “$26 mil- excessive. Nationwide denied wrongdoing. In lion in minority neighborhoods nationally.” December, 1999, the case was still on appeal. AMBER WAVES OF GAIN

CORPORATIONS OVER FAMILIES and dozens of farmers showed up at the hearing. “Cassidy had this big old Cheshire-cat grin on “The purpose of Farm Bureau is to make his face when he saw all of these farmers come the business of farming more profitable, and filing into the room,” recalls one farmer who the community a better place to live.... Farm attended. Cassidy testified first, arguing that the Bureau is the voice of farmers and ranchers in listing would lead to onerous and burdensome local meetings, at state legislatures and in the regulations that could put family farmers out of nation’s capital.” business. But then farmer after farmer got up to — This Is Farm Bureau, AFBF website. say that the Farm Bureau did not speak for the farmer. According to a head count taken by the “They had 70 or 80 years to speak out on Sierra Club, 69 of the 87 farmers and rural resi- behalf of the small farmer and if they had done dents at the meeting disagreed with Cassidy and their job, we wouldn’t be in the mess we’re in supported listing the shiner. now, where we’re losing farmers in astronomi- Martha Stevens, who has farmed for 45 years cal numbers.” and is nearing retirement, says she is proud that — Martha Stevens, Missouri farmer. Topeka shiners still survive in northern Missouri streams. “It means we’ve been doing something Two Missouri controversies illustrate how out right,” she says. “If the water kills the fish, it 13 of step the Farm Bureau can be with the family can’t be good for us. The Topeka shiner is a darn farmers it purports to represent. Both cases good indication of when your water is polluted, involve the efforts of small farmers and rural and I believe we ought to be able to coexist and communities to protect their environment and not pollute to the point that it destroys them quality of life, and in both cases the Farm Bureau and eventually destroys us.” Stevens says the has come down squarely on the side of polluters. degree of support for listing the Topeka shiner The first example involves efforts to protect the appeared to take the Farm Bureau men by sur- imperiled Topeka shiner, a tiny minnow that can prise, but if they had been paying attention to live only in cool, clear-running streams and can- the concerns of small farmers, she says, the not tolerate pollution. At a 1998 U.S. Fish and bureau would have realized that family farmers Wildlife Service hearing in Bethany, Missouri, see pollution from big agribusiness as a far Farm Bureau lobbyist Dan Cassidy testified greater threat than government regulation. against a proposal to add the shiner to the federal The second example underscores Stevens’s endangered species list. Listing the minnow point. For several years now, small farmers and could require farmers to take special care to keep other rural residents in a three-county area of sediments, pesticides, manure and other pollu- northern Missouri have been locked in what is so tants out of the water. far a losing battle over pollution from confined The Farm Bureau had alerted its members, animal-feeding operations (CAFOs). These AMBER WAVES OF GAIN

megahog farms house as many as 140,000 ani- group’s national priorities, suggests otherwise. mals at one time. Rolf Cristen’s 600-acre farm is The Farm Bureau wants the federal government sandwiched between two of these operations. “It to compensate farmers or others who lose money stinks at our house continuously,” he says. People or have to spend it in order to comply with envi- who have worked around livestock all their lives ronmental regulations. “When society makes say they sometimes wake up in the middle of the such demands, it is only fair that society share in night and vomit because the stench is so bad. the cost,” reads an AFBF release. At first blush, In 1982, Missouri’s legislature enacted a that policy may sound like something farmers “right-to-farm” law whose provisions made it dif- might see in their interest to support. But that is ficult for the Missouri Air Conservation not how the issue played out in northern Commission (MACC) to act against sources of Missouri, where an agribusiness giant with ties to agricultural odors. Subsequently the commission the Farm Bureau used a property rights lawsuit exempted farms from laws that require other to force a small rural community into accepting businesses to keep smells under control. The a corporate hog farm that has essentially intent was to protect farmers when city people destroyed the town’s quality of life. move out to the country and then object to nor- In January, 1994, when residents of Lincoln mal farm smells. The exemption never contem- Township got wind that Premium Standard plated, however, the intense, all-pervasive stench Farms (PSF) wanted to build an 80,000-hog 14 that comes from hundreds of thousands of hogs farm on the outskirts of their community, they all housed together. In 1998, Missouri Attorney organized a petition drive to let the company General Jay Nixon petitioned MACC to revoke know that the town did not want the megahog the odor exemption for the state’s 20 largest live- farm built there. That was before PSF had pur- stock producers. Although there was no inten- chased any land in the area. When the petitions tion of dropping the exemption for family farm- did not work, community leaders tried to keep ers, the Missouri Farm Bureau attacked the pro- the corporate farm away by adopting new zoning posal, arguing that the odor regulations were not rules. As a result, Premium Standard sued based on sound science and would trample pri- Lincoln Township for $7.9 million, alleging vio- vate property rights. In 1999, MACC approved lations of its corporate property rights. the change, however. With only 146 registered voters, Lincoln Farm Bureau spokesman Estil Fretwell says Township could hardly afford to defend itself the bureau worried that if regulations were against PSF’s claim. PSF is the fifth-largest hog imposed on the biggest farmers, they would soon producer in the nation, right behind Cargill and trickle down to family farms. “I think we’ve been Tyson Foods. This battle was truly a David-and- very clearly on the side of concerns of the aver- Goliath conflict, except that in this round, age farmer in the state,” he says. But AFBF’s Goliath won. After a three-year legal battle, the position on private property rights, one of the Missouri Supreme Court ruled in 1997 that AMBER WAVES OF GAIN

WHA TFARMERS THINK

Rating U.S. Farm Economy About the U.S. Farm Economy Asked to rate the overall farm economy in the United States today, most farmers (88 percent) rate it negatively (54 percent say it is “poor,” 34 percent say it is “not so good”). The overwhelmingly negative view of their own economic condition puts farmers in direct contrast to Americans as a whole. National polls show more than 60 percent of Americans are positive about the U.S. economy.

Positive Negative

What one organization or individual do you think About the Farm Bureau as an Advocate for Family Farmers most strongly advocates for the interests of the Fewer than one in three farmers (28 percent or 45 percent of Farm American family farm today? Bureau members) mention the Farm Bureau when asked to volunteer the organization or individual that most strongly advocates for the Farm interests of the American family farm today. Nearly half (48 percent) Bureau Don’t Know/ (28%) say they don’t know or give no response, while one in four (24 per- No Response cent) mention groups or individuals such as the Department of 15 (48%) Other* Agriculture or Secretary of Agriculture, Congress or a speciﬁc member, (24%) the Farmer’s Union or government.

* Mentions: Department/Secretary of Agriculture, Congress/speciﬁc member, Farmers Union, government, speciﬁc state organization About the Farm Bureau in General Farmers are three times as likely to have a positive O P I N I O N O N F A R M B U R E A U (49 percent) as a negative (16 percent) opinion of the Farm Bureau Member? Size of Farm (acres) Farm Bureau (19 percent have a “very” positive opin- Total Yes No <500 1,000 1,000+ ion). One in four (25 percent) have a neutral opinion. %%%%%% Farm Bureau members are particularly likely to have a positive opinion (71 percent), while nonmem- Positive 49 71 29 50 47 47 bers are evenly divided (29 percent positive, 30 per- Neutral 25 20 30 25 21 30 cent neutral, 23 percent negative). Negative 16 7 23 14 21 16 Those farmers negative toward the Farm Bureau Net Positive +33 +64 +6 +36 +26 +31 perceive it to be unresponsive to the needs of family farmers or simply more interested in Farm Bureau business ventures than in farm advocacy.

Source: Telephone poll of 500 randomly selected U.S. family farmers conducted by Frederick Schneiders Research for Defenders of Wildlife in December, 1998. AMBER WAVES OF GAIN

townships have no authority to impose any kind Mussel Fork Creek and Blackbird Creek were of zoning regulations on farm buildings. The killed, and the Department of Conservation court rejected Lincoln Township’s argument that indicated that the spills killed all aquatic life the planned PSF operation was a massive meat- along miles of Missouri’s waterways. production factory, not a farm. The ruling left “On December 26, 1995, at the Whitetail the town with no options, so the hogs moved in. Hog Farm, a crack in a pipe designed to carry The community had good reason to fear waste from a hog-raising building to a sewage what PSF’s hogs might do to its environment. In lagoon released more than 35,000 gallons of fact, PSF’s record of contamination problems has wastewater. The wastewater flowed into nearby been so abominable that the U.S. Environmental Blackbird Creek, killing fish and flowing into Protection Agency (EPA) singled out PSF as the neighboring farmland. bad example to illustrate the need for stricter reg- “I n addition to these waste containment ulations on CAFOs. In congressional hearings in pr oblems, in Jan u a r y, 1996, state inspectors April, 1998, EPA assistant administrator Robert rep o r ted a widespread pattern of improper animal Perciasepe described a nightmare of manure waste disposal at Premium Sta n d a r d Far m s . spills, sewage leaks, fish kills and continued Mis s o u r i ’s Dep a r tment of Natural Res o u r ces cited improper handling of waste. To begin with, he Premium Sta n d a r d for failing to comply with per- told the Senate Committee on Agriculture, mit req u i r ements for land application of waste- 16 Nutrition and Forestry, PSF’s hogs generate more water at all of its 15 farms. State inspectors deter- waste every day than many entire cities. mined that Premium Sta n d a r d’s wastewater flow Perciasepe’s testimony is worth quoting at some was about 10 million gallons more than the length: ap p r oved maximum flow of 84 million gallons. “PSF operates 15 hog farms in Mercer, In addition, the Dep a r tment of Nat u r a l Putnam and Sullivan counties in northern Res o u r ces found that one of the August, 1995, Missouri. The Whitetail Hog Farm alone raises fish kills had been caused by improper land appli- 1.6 million hogs each year, approximately two cation at Premium Sta n d a r d’s Green Hills Farm.” percent of the national total. The 15 operations After more spills wer e rep o r ted in 1997, the generate 31 times more wastewater each year Missouri attorney general’s office and a grou p than a city the size of Columbia, Missouri. called Citizen s ’ Legal Env i r onmental Act i o n “From August through December in 1995, Net w o r k (CLEAN) filed legal actions claiming seven separate incidents at Premium Standard that PSF violated clean air and water laws. Th e Farms in northern Missouri released hog urine attorney general also sued a PSF meatpacking and manure into northern Missouri waters. Six plant for discharging raw sewage. In May , 1999, a of the releases totaled more than 55,000 gallons. ju r y agreed with CLEAN that the hog farms are a The Department of Natural Resources reported nuisance and orde r ed PSF (now owned by Con- that more than 178,000 fish in Spring Creek, tinental Grain Co.) to pay $100,000 each to the AMBER WAVES OF GAIN

52 families living nearest the farms. Th r ee months The Missouri Farm Bureau has continued to la t e r , PSF agreed to spend $25 million on trea t i n g fight stricter odor regulations and any other new hog waste before spreading it on land. The trea t - rules that might force the big hog operations to ment will be overseen by a court-appointed panel, become better neighbors. and Scott Holste of the Missouri attorney general’s The Farm Bureau’s support of property-rights of fi ce says PSF is being pressed to use “next gener- claims especially rankles Missouri farmers. at i o n ” technology. “We’re ver y proud of what we “Property rights stop at your fence line,” Dye won in this case,” he says. says. “Just because you call yourself a farmer Scott Dye, CLEAN’s leader, says his small doesn’t give you any right to fog out your neigh- group has never gotten any help from the Farm bor with the stink of hog manure and doesn’t Bureau in its fight with the corporate farms. give you any right to pollute the water. Believe According to Dye, the Farm Bureau has consis- me, you get a snout full of 80,000 hogs and it tently sided with PSF on the contamination will clarify your thought processes real quick.” If the Farm Bur eau succeeds in persuading Co n g r ess and state legislatures to approve even Th e re ’ s never been a farmer put out of business by st r onger prop e r ty-rights laws, environ m e n t a l i s t s en v i r onmental laws. They’re put out of business by warn that few communities will be safe from the kind of damage PSF has inflicted on Lincoln 17 fa c t o r y farms that skew markets and deflate prices. Town s h i p . “The hog issue is a perfect example of ho w this ideology can cause obvious and direc t damage to rural residents, including Farm Bure a u problems. Not that he expected anything differ- members,” says Ken Cook of the Env i ro n m e n t a l ent. Dye’s own family has farmed in Missouri for Wor king Grou p , a res e a r ch and advocacy organi- 118 years, but Dye says he has never belonged to zation based in Washington, D.C. “Does the the Farm Bureau and will never join because he Farm Bur eau seriously mean that communities believes the organization does not truly represent should pay corporations when towns adopt reg u - family farms. “They’ve sold me up the river as far lations to protect themselves?” he asks. as I’m concerned,” he says. Former AFBF president Dean Kleckner own s In 1993, the Missouri Farm Bureau lobbied a hog farm himself. At the national level AFBF in favor of the legislation that allowed the corpo- has fought EPA’s initiative to tighten Clean Wat e r rate farms to move into the state in the first Act regulations on large animal-feeding opera- place. When the legislature revisited the issue in tions. Although AFBF says it is trying to prot e c t 1998, the Farm Bureau once again used its clout small farmers from burdensome regulations, Dye to help push through an extension of the 1993 says his experience suggests that farmers have law so the megahog farms could not only contin- nothing to fear. “Th e r e’s never been a farmer put ue to operate but could expand. out of business by environmental laws,” he AMBER WAVES OF GAIN

de c l a r es. “Th e y ’re put out of business by factory Arkansas, Kentucky, Mississippi and Texas set up farms that skew markets and deflate prices. We’ve this insurance company, which now offers insur- lost 5,000 independent swine producers in ance in 11 states. According to financial records, Missouri in the last five years — family farms — the PSF stock is just part of more than $5 billion and they’re gone foreve r . The Farm Bur eau has in assets that Southern Farm Bureau Insurance stood on the sidelines and let that happen.” owns. The Farm Bureau tie to PSF that Dye dis- Dye’s friend Rolf Cristen, active in the covered is not an isolated case. Through its Sullivan County Farm Bureau for more than a insurance companies and an extensive network of decade, says he firmly believes in the bureau’s agricultural co-ops, AFBF’s financial interests are mission and in working to influence its policies intertwined with the biggest of agribusinesses. from the inside. The Farm Bureau has so much In this case, the connections extend all the clout in Missouri, he says, that it is important to way to Cargill, a mammoth corporation with have it on your side. On the hog issue, however, annual revenue of more than $50 billion. In Cristen has been getting more help lately from January, 1998, Continental Grain, an interna- the Sierra Club. “If you would have told me six tional agribusiness and financial services compa- years ago that I would have a meeting with Sierra ny based in New York, took control of PSF. The Club, I would have told you you are totally off following November Cargill announced plans to your rocker,” he says. The Sierra Club’s Missouri buy Continental Grain. Cargill completed a 18 program director, Ken Midkiff, adds, “I would scaled-back purchase of Continental’s grain busi- suspect this is causing some concern for the ness in July, 1999, with approval from federal Farm Bureau. When family farmers start aligning regulators even though the Department of Justice with the Sierra Club, that should be sending up had charged that the merger would “substantially some kind of signal.” lessen competition for purchases of corn, soy- Scott Dye sent a very strong signal by going beans and wheat . . . enabling it unilaterally to to work for the Sierra Club. Instead of looking depress the prices paid to farmers.” How the deal to the Farm Bureau for help on contamination will affect Southern Farm Bureau Annuity problems, he used the Sierra Club as a base to Insurance’s 18,872 shares of PSF stock remains begin his own investigation of PSF. In the to be seen. As this report will explore, these rela- process, he learned that Southern Farm Bureau tionships create incentives for the “nonprofit” Annuity Insurance Co. owns 18,872 shares of farm bureaus to lobby for policies that benefit PSF. The farm bureau federations in Alabama, corporations at the expense of family farms. AMBER WAVES OF GAIN

CHAPTER TWO Plumping for Factory Hog Farms

“I don’t know these people who are saying water quality and odor violations. A state inspec- Farm Bureau is anti-small farmer or anti-fam- tor had found concentrated runoff from a waste ily farmer, or that Farm Bureau is only for the lagoon flowing directly into a creek where fish big guys. I don’t know what they’re talking kills had been reported. about.” Buss and her husband have lived in this — Dean Kleckner, AFBF president, Henderson County farming community for 19 1986-2000. more than 20 years. “We’d never had problems with any of our neighbors’ farming practices “The Farm Bureau basically represents a before,” she says, until the hog operation started very small minority of their membership and up in 1995. “The stench from this place is unbe- then claims to be a friend of the farmers. All lievable,” she says. “You’d think the Farm Bureau we want is on any given day to be able to step would be a little concerned about maintaining outside our door and take a deep breath the quality of rural life.” But the Illinois Farm regardless of which direction the wind is blow- Bureau gave exactly the opposite response. In ing.” March, 1998, its board voted to offer Durkee — Donna Buss, Illinois Farm Bureau Swine Farm legal assistance. And when Buss and member. other neighbors, including several Farm Bureau members, filed complaints and wrote letters to onna Buss lives just down the road from the local newspapers, she claims a delegation from Durkee Swine Farm, a confined animal-feed- the county farm bureau paid them a visit to pres- Ding operation with a record of pollution sure them to back off. “I don’t know if this was problems so serious that Illinois’s attorney gener- scare tactics or what,” Buss says. al at the request of the Illinois Environmental If Buss is angry about the Farm Bureau’s fail- Protection Agency last year sued the owner for ure to take a stand against agricultural polluters, AMBER WAVES OF GAIN

she is not alone. With the exponential growth of involve tens of thousands of hogs in one con- huge hog farms in recent years, rural residents in fined location. Hog waste from these huge facili- hu n d r eds of communities across the nation have ties is piped into enormous lagoons that too watched their quality of life deteriorate. Yet in often leak and nearly always stink. nearly ever y state that has tried to curb the size of According to EPA, livestock operations are these mostly corporate farms or to control the pol- now producing a staggering 1.4 billion tons of lution from them, the Farm Bur eau has activel y manure annually. Leaking lagoons can contami- wo r ked to defeat new laws or reg u l a t i o n s . nate water supplies with nitrogen, phosphorus, Farm Bureau leaders insist they do not side sediment, pathogens, heavy metals, hormones, with the interests of corporate agribusiness over antibiotics and ammonia. And as production family farmers. “We’re taking the side of growth becomes more concentrated, the pollution threat in the livestock industry,” says Illinois Farm escalates. Examples: Bureau communications director Dennis Vercler. • In 1994, manure that spilled from a hog “We have to have a good political climate, a operation in western Illinois killed 160,000 fish, favorable public climate, a positive regulatory cli- according to the U.S. EPA. mate to allow this industry to grow. We’ve said • In 1995, 22 million gallons of hog waste we need to concentrate on making sure we have burst through a lagoon dike at a North Carolina the ability to expand the size of the industry confined animal-feeding operation and spilled 20 regardless of the size of individual operations.” into the New River. The spill was twice the size That policy may not deliberately oppose the of the Exxon Valdez oil spill. interests of small farmers, but one result has been • In 1996, 40 manure spills — double the a precipitous decline in the number of family number reported in 1992 — killed 670,000 fish hog farms and an unprecedented concentration in Iowa, Minnesota and Missouri, according to a of hog production in facilities controlled by a report prepared for U.S. Senator Tom Harkin handful of huge corporations. Some of those (D-Iowa). megahog farms are run by agricultural coopera- • In 1997, Illinois EPA inspectors found hog tives with direct ties to state farm bureaus. waste in 68 percent of the streams they surveyed. • On the east coast, where the microorgan- PIG POLLUTION ism Pfiesteria piscicida was blamed for killing Traditionally, the techniques used by small more than a billion fish and for sickening fisher- hog farmers for manure disposal are simple and men, scientists suggested that Pfiesteria over- sustainable. These farmers usually grow crops in growth could be linked to runoff from livestock addition to raising livestock, and manure from operations. In 1998, medical researchers pub- several hundred hogs can be plowed into the soil lished studies showing that watermen exposed to for fertilizer as needed. That option does not Pfiesteria were suffering from long-term visual apply, however, when animal-feeding operations disorders and memory loss. According to the AMBER WAVES OF GAIN

Centers for Disease Control, Pfiesteria also can lations on agricultural land use and day-to-day cause muscle cramps, nausea, vomiting, diarrhea management will blanket the nation, targeting and abdominal cramps. farms that are alleged, without scientific basis, to Pfiesteria is not the only dangerous pathogen be water quality threats,” Kleckner said. His associated with livestock waste. According to the stance put the Farm Bureau directly at odds with National Institute for Environmental Health rural residents fighting for stricter pollution con- Sciences, people can be exposed to Salmonella, trols on factory farms. A sampling of recent news Shigella, E. Coli, Cryptosporidium, Giardia and coverage illustrates the nature of the problems: other disease-causing organisms just by fishing or • “Peosta, Iowa. One hundred thirty years swimming in contaminated waters. Three years ago, the Irish monks at New Melleray Monastery ago, the Centers for Disease Control confirmed began raising the graceful Gothic-style limestone that six miscarriages among women in LaGrange church . . . . Now, [the] monks find themselves County, Indiana, were caused by nitrate contam- reluctant soldiers in a holy war that they and fel- ination from a leaking hog-manure pit. low Catholics have begun waging against a rapid- People living downwind of hog operations ly growing trend in American agriculture — the become tense, angry and depressed. A 1995 “hog factory”. . . . Last December, the National study published in the Brain Research Bulletin by Catholic Rural Life Conference called for a Duke University Medical Center psychiatrists moratorium on new and expanded confined ani- 21 also found that these people are more tired and mal-feeding operations (CAFOs), calling them confused than normal. Such medical effects are an urgent environmental and social threat . . . .” not surprising, given that manure lagoons emit a — Chicago Tribune, September 20, 1998. variety of airborne toxic compounds, including • “Sioux Falls, South Dakota. Ralph ammonia and hydrogen sulfide, that can con- Duxbury can barely contain himself as he talks tribute to respiratory problems. about the changes in hog farming in South Contamination problems caused by confined Dakota, where his family has lived for 120 years. animal-feeding operations also have begun affect- The 71-year-old retired farmer. . . heaps scorn on ing farm animals. In California’s Central Valley, corporations coming into the state, building dairy cows have aborted calves after they drank huge “pig factories” in environmentally sensitive water from wells contaminated with nitrates. areas and signing on farmers as contract workers. Farmers now are forced to dig deeper wells to “They’re trying to take us over, and farmers are find safe water. becoming modern-day serfs,” he said. “It’s what In October, 1998, in a news release respond- our forefathers came here to escape. It’s against ing to EPA efforts to impose new water-quality everything we stand for.” — Chicago Tribune, regulations on hog producers, then AFBF presi- November 23, 1998. dent Dean Kleckner announced a “call to arms” • Milford, Utah. Milford will end up with to fight the proposed rules. “If unchecked, regu- something like 1.2 million pigs. Five years ago, AMBER WAVES OF GAIN

this high desert outpost, eager for some 400 hog farms. Until recently, a 1982 “right-to-farm” promised jobs, invited Circle Four Farms to set law in Iowa had protected farmers from public- up what will be the world’s largest hog operation. nuisance lawsuits. As long as the farmers abided Now Milford is chock full of pigs and awash by state regulations, neighbors could not sue with problems. A hog manure spill has raised them over odors, contaminated runoff or other fears of contaminated ground water. . . . And problems. In September, 1998, the Iowa Milford, once renowned for its pristine, sage- Supreme Court struck down that law as uncon- scented desert air, is in fact becoming famous for stitutional. The court found that a bad stench something else. . . .” — The Wall Street Journal, from hog manure can be the equivalent of a November 28, 1997. physical invasion and therefore a violation of • Guymon, Oklahoma. Imagine that you are property rights. In essence, the court said, the sitting on the front porch of your farmhouse on government had been allowing hog farms to take the prairie, surrounded by four Washington odor easements across their neighbors’ property Monuments, each filled to the top with pig without compensation or due process. manure. And then there are all the dead pigs The Iowa Farm Bureau joined the hog opera- lying about. . . . Sometimes dead hogs are piled tor in appealing the decision to the U.S. up beside barns, sometimes at the side of the Supreme Court. In January, 1999, the Supreme road. And sometimes they lie about so long that Court declined to hear the case. The Farm 22 the flesh rots away. . . . In all, the Seaboard Bureau saw this preservation of the small farmer’s [Corporation’s hog plant] death toll reached 48 right to protect the quality of his or her property hogs an hour in 1997 — 420,000 for the year. as a potential evil. “This has opened a Pandora’s And the carcasses are picked up only once a day box, and it does not bode well for Iowa’s farm- — assuming the dead-pig truck is on schedule. ers,” commented Iowa Farm Bureau president Ed Sometimes it isn’t. . . .” — Time magazine, Wiederstein. November 30, 1998. In Illinois, neighbors of hog farms in several counties have petitioned for and in some cases THE PROPERTY RIGHTS EXCEPTION won reduced property tax assessments. The peti- For years, the Farm Bureau has championed tioners claimed that their proximity to confined the cause of private property rights, even endors- animal-feeding operations substantially lowered ing the notion that government should pay prop- their property values. County farm bureaus have erty owners to comply with environmental regu- objected to this trend and in one case took extra- lations whenever those regulations interfere with ordinary measures to counter neighbors’ claims. how property can be used. However, the Farm Deanna Belz had won a 37 percent property Bureau does not always consider private property tax reduction because of a poorly run confined rights deserving of protection, at least not when animal-feeding operation near her home in the rights in question are those of neighbors to McLean County. She had told the assessor that AMBER WAVES OF GAIN

the stink was so bad her family frequently could sometimes successful efforts to curb the worst not even go outdoors. Belz says she was not abuses of factory farms. For example: thinking about the tax case when she caught a • In the fall of 1998, South Dakota voters stranger videotaping her two young daughters at approved a ballot initiative prohibiting corporate play in her front yard. “He was standing across agribusiness from setting up operations in the the street, behind his car, but it was obvious he state. Tyson Foods and other out-of-state corpo- was taping my girls,” Belz said in an interview. rations had planned high-volume hog factories Belz called the sheriff. When officers caught up there. Although the South Dakota Farmers with the man, they discovered he was a well- Union joined the South Dakota Wildlife known Illinois Farm Bureau lobbyist who had Federation in promoting the ballot initiative, the been active on hog regulation issues. Belz figured South Dakota Farm Bureau allied itself with a the man was trying to gather evidence that the consortium of banks and chambers of commerce hog farm stench wasn’t bad enough to keep her to fight the measure. The South Dakota Farm children indoors. “That’s ridiculous,” she says. Bureau also took a shot at eliminating local con- “The stink gets better or worse depending on trol over hog farms, suing Hyde County over an which way the wind is blowing.” ordinance establishing setback distances between In an interview during the January, 1999, new hog operations and existing homes. A state American Farm Bureau Federation annual con- court, ruling against the farm bureau, affirmed 23 vention in Albuquerque, New Mexico, Farm the right of counties to regulate the siting of Bureau president Kleckner maintained that South Dakota agricultural operations. AFBF supports reasonable regulations. “We’re all • In the fall of 1998, the Colorado Farm for clean water,” he said. “My own view is that Bureau teamed up with corporate hog farmers farmers that pollute, particularly if they pollute who spent nearly $500,000 trying to defeat a on purpose, should be made to stop, and prose- ballot initiative to regulate hog farms. The initia- cution is warranted in some cases.” AFBF policy tive included measures to minimize odor and calls for local control rather than “one size fits water pollution from manure. Ray Christensen, all” regulations mandated by Washington, he director of legislative and governmental services added. Yet in nearly every instance when states, for the Colorado Farm Bureau, argued that the counties or municipalities have attempted to initiative threatened agriculture and rural jobs tighten restrictions, the Farm Bureau has worked and “would impose costly mandates on hog against those efforts. In many cases it has helped farms such as animal fees, lagoon covers, finan- bankroll opposition campaigns. cial assurances, citizen lawsuits, monitoring and On the opposite side in these battles, other other requirements.” The Farm Bureau’s stance farming groups, including the National Farmers did not seem to sway the opinions of small farm- Union and the National Family Farm Coalition, ers who live near the giant operations. The have joined forces with environmentalists in Denver Post reported on October 18, 1998, that AMBER WAVES OF GAIN

“more than 100 ranchers and farmers testified apparently state farm bureaus feel county govern- before lawmakers that they were worried hog ments cannot be trusted to make wise decisions farms would pollute groundwater, upon which about hog farms. “A decision about either siting they depend for survival.” Rocky Mountain or not siting a new or expanded facility should Farmers Union president Dave Carter told the not be made by local government,” Illinois Farm Post, “There are some who are trying to cast this Bureau communications director Dennis Vercler whole movement as an effort to destroy econom- declared in an interview. “The state is the politi- ic development. This is an issue about being cal entity that has the expertise to deal with the good neighbors, and that’s what we’re all about final decision.” County involvement would be “a in eastern Colorado.” Nearly two thirds of the duplication of regulatory authority that already voters approved the initiative. exists at the state level,” he said. • More than 160 new Illinois factory farms • The Idaho Farm Bureau opposed a bill in have started up in only the last two years. The the state legislature that would give counties Illinois Farm Bureau brags of “maintaining a more control over CAFOs. According to a Farm positive environment for growth in the state’s livestock industry through the defeat of a moratorium on new facility construction or expan- The Illinois Farm Bureau also opposed legislation to sion.” The bureau also opposed legislation to 24 req u i r e annual state inspections of waste lagoons on req u i r e annual state inspections of waste lagoons on big farms, odor control and a quarter-mile set- big farms, odor control and a quarte r -mile setback back between dead animal compost and homes. The legislature approved the legislation anyway, between dead animal compost and homes. along with a measure allowing county boards to hold public hearings on new hog farms. Bureau alert, “Such things as setbacks, expan- Farm Week Journal reported in February, sion, odor control, nutrient management and 1998, that the Farm Bureau and others “empha- animal units are defined in the bill and will have sized the entire agriculture industry is threatened a profound effect in Idaho.” by proposed legislation that would give local • The Maryland Farm Bureau helped push governments authority on siting of livestock through the Water Quality Improvement Act of operations.” These efforts to interfere with local 1998. The act eliminated provisions for odor control run counter to longstanding AFBF poli- control, water-quality permits, local control and cy. AFBF usually insists that county governments public hearings and reduces penalties for viola- deserve final authority over local land-use deci- tions of manure-management plans. sions. For instance, the AFBF policy manual calls • EPA has found groundwater contamination for giving county governments the right to veto from animal factories in Oklahoma as well as 16 proposed wilderness areas on federal land. But other states. One Oklahoma lagoon covers 11 AMBER WAVES OF GAIN

acres and holds more than 42 million gallons of farmers in particular will find it difficult to meet hog manure. Nevertheless, in 1998 the ne w req u i r ements.” Oklahoma Farm Bureau went on record strongly The Nebraska Farm Bur eau suggested that if opposing more regulations on animal-feeding the government wants clean water, the gover n m e n t operations. In fact, the bureau opposes “any gov- should pay for it. “Imp r ovements for water quality ernment regulation of agriculture.” The bureau pr otection must be supported with federal and says it opposes all regulations “that limit a per- state financial assistance, as the financial burden of son’s right to use their property as they see fit.” unfunded mandates ultimately comes back to the pro d u c e r ,” said a Nebraska Farm Bur eau release. SCARE TACTICS AND DIRTY SECRETS The Farm Bureau’s strong opposition to the When EPA in March, 1998, announced a proposed regulations persisted even as EPA new Clean Water Act enforcement strategy for moved to compromise. At the behest of AFBF, the largest confined animal-feeding operations, it EPA worked out a deal with the National Pork pointed out that excessive nutrient levels from Producers Council allowing “independent” livestock waste have been responsible for lower inspectors to check hog farms for violations. Any oxygen levels in surface waters throughout the problems “that are promptly disclosed and cor- nation, including the “Dead Zone” in the Gulf rected under this program” will be eligible for of Mexico, an oxygen-starved area off the greatly reduced penalties. More than 10,000 of 25 Louisiana coast that develops each summer and the largest pork production facilities are expected at times has been as large as the state of New to participate. The Sierra Club, an outspoken Jersey. When oxygen levels drop, fish and other critic of factory hog farms, says the deal would aquatic species cannot survive. allow pork producers to pick their own inspec- AFBF immediately responded to EPA’s prop o s - tors, arrange the inspection date, and let the al with a strategy apparently intended to scare operator of the facility conduct the inspection al r eady hard- p r essed small farmers into believing tour.To top it off, inspection reports will not be that the new regulations would force them out of made public, a “dirty secrets” concept of regula- business. The new regulations, howeve r , apply only tion, the Sierra Club complains. to farms with more than 1,000 “animal units.” Even with EPA’s generous compromise, how- That means 1,000 cattle, 2,500 hogs or 100,000 ever, speakers at the 1999 AFBF convention chickens. Only farms with more than 10,000 ani- blasted the new regulations, claiming that the mal units must comply by 2003. Other large farms rules pose a serious threat to small farmers. can wait until 2005. Neve r theless, AFBF pres i d e n t AFBF president Kleckner called for an immedi- Kleckner declared in a news release, “Of all the ate moratorium on all regulations, not just those ways government regulations impact the lives of directed at CAFOs. Referring to the “added family farmers, arbitrary water quality reg u l a t i o n s urgency of a crumbling agricultural economy,” will likely turn out to be the most harmful. Sma l l e r he blamed American farm woes on “regulations AMBER WAVES OF GAIN

that are cutting deeply into the pocketbooks of not because of excessive regulations. Factory the nation’s farm and ranch families.” farms are turning out so many pigs that hog The 4,000 or more Farm Bureau members prices received by independent farmers have attending the convention applauded Kleckner’s plummeted to Depression-era lows. remarks, but a good many of the nation’s family farmers are no longer fooled by such rhetoric. THE HOG CRISIS Record numbers of independent hog producers In November, 1998, the Nebraska Farm have gone out of business in recent years, but Bureau radio service reported that hog prices had

VERTICAL INTEGRATION AND THE FARM BUREAU

ertical integration is a business term that 40 percent to $94.9 million.“Ordinarily, the Vrefers to the practice of companies merg- odds would be against another strong year,” ing with or purchasing other companies in the article continued. “The corn-hog cycle the same supply chain. For example, an is a classic example of how the interplay of auto manufacturer that buys a car radio or supply and demand for inputs and outputs tire company has vertically integrated. creates equilibrium in markets. Low hog While this practice may seem to increase prices sooner or later lead to production economic efficiency, the value of that effi- cuts that push prices up. But by vertically ciency to society diminishes greatly when integrating, Smithfield makes more money 26 companies become so highly integrated that on the growing side when hog prices are consumers and small producers are affected high, and wins on the packing side when through monopolistic pricing, elimination prices are low.” of competition, insulation of significant Keeping hog prices low through over- portions of the supply chain from market production is in the best interests of the big forces or alteration of the market structure conglomerates. Just the opposite is true of to force integration on small and midsize small producers and the environment. operators. Moreover, as these “dirt to shelf” systems In agriculture, when market prices are become more integrated, consumers’ inter- down, putting family farmers in dire straits, ests are jeopardized because the ability of a vertically integrated company can do well. markets to impact shelf prices by competi- Just how well was described in an August tion diminishes as more supply chain ele- 30, 1999, Washington Post article on ments become part of the vertically inte- Smithfield Foods, largest of the integrated grated company. In other words, without pork producers: “Surprisingly, packers make exposure to market forces, downswings are more money when prices are low — more likely to result in windfall profits for because raw material prices fall more than the integrator rather than price cuts at the supermarket prices — so with hog prices at supermarket. their lowest in five decades, Smithfield has Agricultural cooperatives are perhaps the had three record years in a row,” the article best example of the Farm Bureau’s active stated. In the latest fiscal year, revenue was participation in vertical integration. Owned down nine percent, but tonnage was up wholly or partly by the Farm Bureau, multi- more than ten percent. Profit grew almost billion-dollar agricultural co-ops such as AMBER WAVES OF GAIN

dropped to a 30-year low while grocery pork is making megabucks” and blamed the crisis on prices had stayed the same or increased. The ser- factory farms. “Right now there’s no way for a vice said that in May farmers were getting about family farmer or an average producer to compete 42 cents a pound for hogs but in November only with megahog operations,” he said in a radio 17 cents. Compare that with the price of a broadcast. “They’ve got deep enough pockets pound of bacon, selling for $1.69 in May, 1998, they can survive even with losses; smaller pro- and $2.69 in November. Nebraska Farm Bureau ducers can’t.” president Bryce Neidig suggested that “somebody Neidig’s comments strike an odd note con-

Countrymark and Growmark increasingly the Farm Bureau co-ops are involved more are integrating the process of farming. prominently, consists of Novartis, a Swiss Purportedly farmer-owned and operated, biotech conglomerate that has been gob- these super co-ops are marketing multina- bling up other biotech firms, and Archer tionally and have usurped a large portion of Daniels Midland (ADM), the self-pro- the nation’s agricultural supply chain. claimed “supermarket to the world.” Selling raw materials and equipment These key players lacked the constituent such as seeds, fertilizer, pesticides, fuel and parts to form a fully integrated food chain tractors as well as services such as consult- cluster but have solved that problem by ing, marketing, communication and insur- aggressively pursuing arrangements with 27 ance, the co-ops have eliminated much farmer co-ops. “First, ADM, with its vast choice and opportunity for farmers. The network of processing facilities, lacked co-ops benefit from overproduction and access to farmers, a problem the firm reme- low prices in much the same way as the died through a longstanding joint venture pork processors and producers. Established with Growmark and the more recent ones to protect individual producers from large with Countrymark, Riceland and United corporations, co-ops have evolved into a Grain Growers,” Heffernan asserts. “The system that does just the opposite. Growmark and Countrymark joint ven- Professor William Heffernan of the tures, for instance, give ADM access to 50 University of Missouri has documented percent of the corn and soybean market market concentration and integration for region and 75 percent of Canada’s corn and the National Farmers Union. He examined soybean market region.” large-scale/global integration and identified The Farm Bureau and its co-ops and three food chain clusters or loose alliances other affiliates are part of a system that among grain trading and processing, meat favors big agribusiness over small and mid- production and processing and biotechnol- size operations. As Samuel Berger so aptly ogy. In the first two — Cargill/Monsanto pointed out in his 1971 book Dollar and ConAgra — all necessary parts are con- Harvest, “With the vertically integrated tained within the global corporations and meat industries, co-ops and food clusters their innumerable subsidiaries, partner- flourishing and family farmers suffering, it ships, side agreements and contracts. is clear which master the Farm Bureau has The third food chain cluster, in which chosen to serve.” AMBER WAVES OF GAIN

sidering the extent to which the Farm Bureau has inefficient, says University of Missouri rural soci- gone to protect the special advantages of corpo- ologist William Heffernan. Independent produc- rate farms. He is one of the few Farm Bureau ers simply lack the resources to hang on when leaders to acknowledge the harm that mega-oper- prices for hogs drop below the cost of produc- ations have done to small farmers. tion. Heffernan and several colleagues recently Dennis Verc l e r , the Illinois Farm Bure a u completed a study of concentration in agribusi- spokesman pushing for continued expansion of ness for the National Farmers Union, a 300,000- the livestock industry, admits the current crisis member organization frequently at odds with the resulted from too much growth. “We’ve faced a Farm Bureau. The study concluded that farmers tr emendous economic squeeze because of over p r o- are no longer earning reasonable returns because duction in hogs,” he says. “Par t of that was over - competition has all but disappeared from much enthusiasm for markets in Asia. A lot of things of the food production industry. came together to punish the whole industry.” According to Heffernan’s analysis, four com- However, according to University of Missouri panies control more than half of the hog market. livestock economist Glenn Grimes, pork exports Three out of every five hogs slaughtered in the rose by 18 percent in 1998. “Our exports are nation go to those firms. Factory farms get spe- doing fine,” says Grimes. “We’re just being over- cial deals from slaughter and packing houses as whelmed with hogs.” During the last decade well as discounts on feed. This arrangement 28 investors pumped more than $1 billion into new occurs partly because many factory farms are ver- hog operations in North Carolina alone. By last tically integrated. The same company that raises fall, the number of hogs on farms soared to a pigs also sells feed-grain, slaughters the hogs, record 62.9 million, according to the Knight packages the meat and delivers the finished prod- Ridder/Tribune Business News Service. Mega- ucts to stores. These agribusinesses can afford to farms accounted for nearly all of this growth. take lower prices for live hogs, says Missouri U.S. Department of Agriculture statistics farmer and activist Scott Dye, because they make show that 86,520 hog producers went out of up the difference at the grocery store. “They’re business between 1993 and 1997. Most of these not selling hogs,” he says, “they’re selling pork were small, independent farmers who raised chops, so what do they care?” fewer than 500 hogs a year. Over the last decade As economist Grimes sees it, consolidation of North Carolina lost nearly three fourths of its slaughterhouses is one of the reasons prices independent hog producers. In the same period, dropped so dramatically when too many hogs hit North Carolina hog factories tripled production. the market. Concentrated slaughtering opera- Other states show similar trends, with bigger and tions lack the flexibility to handle excess produc- bigger factory farms producing more and more tion. In the past, slaughterhouses were smaller hogs while small farmers called it quits. and routinely ran one shift a day. “It used to be The problem is not that family farmers are they could add two hours or a Saturday shift and HEADLINE GOES HERE

AMBER WAVES OF GAIN

increase capacity by 50 percent to handle big 2000 if prices remain low, he predicted. bulges in numbers,” Grimes explains. When hog prices crashed in 1998, big pro- Today, bigger slaughterhouses that already ducers saw another opportunity for expansion. run double shifts cannot adapt so easily, so live The trade magazine Successful Farming reported hogs end up bottlenecked at the gates. And when that “the best producers are holding tight and the same company owns the slaughterhouse and eyeing acquisitions. The industry has too many the hog farms, that company’s hogs usually get pigs and no structure for quick liquidation. One priority over those from independent producers. thing’s for sure: only the strong will survive.” An In Washington hearings in Feb ru a r y, 1999, on analysis by the Federal Reserve Bank of Chicago the impacts of agricultural concentration, Leland found that if today’s rate of growth of large oper- Swenson, president of the National Far m e r s ations continues, only 50 producers will be need- Union, accused corporate agribusiness of pred a t o - ed to provide all the nation’s pork. ry practices. “Industries can afford to operate at a Such extreme consolidation of food prod u c t i o n loss in one area in order to eliminate the competi- could have profound consequences in higher con- tion,” he told the House Agriculture Committee. sumer prices, damage to rural communities and “O nce the competition is gone, the company is elimination of family farms. Yet as the next chapter able to earn higher returns.” Few independent hog will detail, the Farm Bur eau continues to prom o t e farmers will remain in business by the end of policies promoting agricultural monopoly. 29 AMBER WAVES OF GAIN

CHAPTER THREE Changing Rural America

“The very soul and spirit of this nation has worsened for some by natural disasters.” But he always resided in the countryside of America, acknowledges no connection between that trend the agriculture sector.You are the core, the glue, and the emerging dominance of factory farms the leadership, the passion that keeps this and takes a position that downplays the contrast nation together.” between corporate farms and family farmers. “I — U.S. Senator Chuck Hagel don’t know that we’re at a point in this country 30 (R-Nebraska) addressing where we’re saying just because you’re big you’re the 1999 AFBF convention. bad or just because you’re small you’re good or vice versa,” he said in an interview during the arm Bur eau leaders have always been quick AFBF convention. “I happen to think you can with platitudes about the nobility of farmers, be big and good, or you can be big and bad, or Fand speakers at the 1999 convention had plen- you can be small and bad.” ty to say on this theme. What they did not Corporate agribusiness does hurt rural com- ad d r ess, howeve r , wer e the ways in which concen- munities, says University of Missouri sociology trated agribusiness is changing the nature of rur a l professor William Heffernan, because corporate America. They also did not mention the Far m proﬁts do not stay in the local economies where Bure a u ’s ties to farm cooperatives that take farm- the goods are produced. Family farmers, on the er s ’ money and use it to start businesses, including other hand, traditionally spend most of the overseas enterprises, that compete with farmers. money they earn in the local community, Former AFBF president Dean Kleckner has Heffernan says, so money gets multiplied by a written that “in the past 50 years, farm numbers factor of three or four. That means every dollar have dropped from 7 million to less than 2 mil- the farmer earns can generate three or four dol- lion. The drain is still occurring, a result of low lars in income for other local businesses, which prices for virtually all of our commodities and in turn creates more jobs. A corporation, howev- AMBER WAVES OF GAIN

er, sends most of its profits to distant company ing about why that kind of hog farming doesn’t headquarters. make economic sense,” Thorson said in a recent Visit any town where factory farms have interview. “It tears apart the fabric of local com- moved in and the implications for rural America munities. People wanted to talk about that. We become obvious. Farmers now struggle to sup- were getting a lot of response. “ port their families on a typical factory farm The discussions went on until two Illinois salary of around $16,000. Many are working two Farm Bureau representatives paid a visit to or three jobs. On top of that, working conditions WCMY’s general manager. The station is a Farm at the hog factories are so poor and the pay is so Bureau radio-network affiliate; the Illinois Farm low that owners often recruit hundreds of immi- Bureau produces a daily statewide show broad- grants from Asia and Central America to fill the cast on local stations. The Farm Bureau program jobs. And the new arrivals fill country schools funnels advertising revenue to the local affiliates. with children who speak only Vietnamese, The Illinois Farm Bureau executives had taped a Laotian or Spanish. In Guymon, Oklahoma, for few hours of Thorson’s program and apparently example, where Seaboard Corporation opened a didn’t like what they heard. According to plant with the capacity to raise and slaughter 4 Thorson, when he arrived at the station to do his million hogs a year, the employee turnover rate is show at 5:30 the next morning, the general man- running close to 100 percent, according to a ager was there waiting to tell Thorson that he 31 Time magazine investigative report. Schools there was fired effective immediately. have become seriously overcrowded, and 21 per- Thorson says he was not particularly sur- cent of the students can’t speak English. People prised. The Illinois Farm Bureau has been push- who once themselves farmed can’t make a living ing the conversion of agriculture to factory farm- and can’t sell their land because no one wants to ing, Thorson says, and Farm Bureau leaders don’t live near the hog factory. want that story told. “Farm Bureau leadership sold us on the idea that bigger is better, and that A DISSENTER SILENCED philosophy has empowered companies to exploit The Farm Bureau is quick to defend factory independent farmers. You have to ask the ques- farms despite the negative impacts they are hav- tion, ‘Why?’ Is it to promote a higher standard ing on family farmers, as Rod Thorson, former of living for family farmers or to control the sup- host of a farm radio show on station WCMY in ply of pork?” Ottawa, Illinois, discovered. Most of the farmers calling in to Thorson’s show last year were not all THE COST TO CONSUMERS that concerned about the environmental costs of Mary Ellen Moore’s farm in Bonaparte, Iowa, factory farming. They saw the corporate takeover is one of the casualties of the hog crisis. She and of agriculture as a threat to their livelihoods and her husband Larry bailed out of the hog business way of life, and many were angry. “We were talk- four years ago. Her cousin’s hog farm went under AMBER WAVES OF GAIN

in 1998. “It doesn’t take long for losses like we’ve bined company became the third largest pork had to eat up everything you’ve got,” she says. producer in the nation, with 162,000 sows each But what will happen, she asks, when no inde- producing 20 pigs a year. That comes out to pendent producers are left? 3.24 million hogs a year in Missouri, North “People might not care much about what Carolina and Texas, “with more growth planned happens to farmers, but one of these days when at some point,” according to CEO John Meyer. it’s all in the hands of just a few producers, peo- Continental Grain is also America’s biggest beef ple are going to find out how high food prices in feedlot operator, annually moving 405,000 head this country can go,” she said. of cattle through six lots, and the company ranks As things stand now, consumers are seeing second in the grain-trading business. And with very little benefit from the record low prices that its 18,872 shares of stock in PSF, Southern Farm farmers have been getting for their hogs. That Bureau Annuity Insurance now has a stake in apparently is fine with former AFBF president one of the biggest agribusinesses in the world. Kleckner, who wrote in an October, 1998, col- Southern Farm is not the only Farm Bureau umn that U.S. food prices are a great bargain. “Americans now pay about ten percent of their income for food, a ludicrously low amount com- People might not care much about what happens to pared to prices paid in most other countries,” the 32 fa r mers, but one of these days when it’s all in the column says. During a later interview he repeated the point, declaring: “We may complain for hands of just a few producers, people are going to good reason about taxes, but we should not complain about the cost of food. It is really very, very find out how high food prices in this country can go. low.” To their credit, delegates at the 1999 AFBF insurance company investment in big pork. Farm convention raised concerns by inserting language Bureau Mutual Insurance Corp. of Idaho and in resolutions about monopolistic trends in Western Community Insurance Co., both affili- agribusiness. But they did not bring up the fact ated with the Idaho Farm Bureau, own more that AFBF is in big agribusiness itself and even than $500,000 in bonds from Archer Daniels competes with family farms in some arenas. Midland (ADM), according to annual reports. ADM, one of the country’s largest agribusinesses, INVESTMENTS IN BIG PORK is also an emerging powerhouse in the pork Why the Farm Bureau defends factory farms industry. ADM owns 13.5 percent of IBP, the and corporate agriculture becomes clear when nation’s largest pork packer, and according to the the bureau’s business interests are examined. For magazine Successful Farming, ADM is planning example, when Continental Grain and Premium an even larger presence in the pork business. In Standard Farms (PSF) merged in 1998, the com- addition, the Idaho Farm Bureau’s insurance AMBER WAVES OF GAIN

companies hold 3,000 shares of stock in Tyson Illinois, Iowa and Wisconsin farm bureaus, has Foods, the nation’s seventh largest pork producer ag r eed to joint ven t u r es with Land O’ Lakes to with 2,470,000 pigs a year. Arkansas-based ma r ket oil, gas, feed, seed, pesticides and ferti l i ze r . Tyson Foods also is the nation’s top chicken pro- • In Cass County, Illinois, where the Land ducer, turning out 155 million pounds (live O’ Lakes cooperative runs a 90,000-pig opera- weight) of chicken every week, according to tion, citizens filed a lawsuit after the co-op built Feedstuffs magazine. a hog manure lagoon that extended into the The Farm Bureau’s ties to the giants of the water table. Illinois’s attorney general asked Land pork industry do not stop with insurance compa- O’ Lakes to develop a groundwater monitoring ny investments. Farm Bureau affiliates are allied plan. in joint ventures or direct partnerships with • Growmark (Illinois, Iowa, Wisconsin farm major players in the pork business. For instance: bureaus) merged its grain terminal division with • Cooperatives associated with the farm ADM in 1985. Growmark traded its grain facili- bureaus of Illinois, Iowa, Wisconsin, New York, ties for stock in ADM. Glenn Webb, chairman Ohio, Indiana and Michigan jointly own two of the board and president of Growmark, sits on businesses with Farmland Industries. Farmland is the ADM board. the nation’s fifth largest pork packer and 16th If these connections seem hard to follow, they largest pork producer. ar e only a small sampling of the intricate web of 33 • In 1997, Nationwide Insurance, with close agribusiness corporations and cooperatives that ties to the Ohio Farm Bureau, merged with co n t r ol much of the nation’s food and fiber pro- Farmland Industries Cooperative Service Co., a duction, a web in which the Farm Bur eau is firm - Farmland-owned insurance company. According ly anchored. Understanding these relationships is to a news release, Farmland now has a represen- cr ucially important, says the Uni v ersity of tative on the board of Nationwide Insurance. Mis s o u r i ’s William Heffernan. Yet information • Land O’ Lakes, the 14th largest pork pro- often is difficult to obtain and even harder to ducer, with 1.2 million pigs a year, merged with piece together. Acc o r ding to Heffernan, people Countrymark Cooperative in the fall of 1998. who say we must adapt to change don’t rea l l y Countrymark is affiliated with the Ohio, Indiana understand “the magnitude of the changes and the and Michigan farm bureaus. implications of them for agriculture and for the • Growm a r k, a cooperative controlled by the long-term sustainability of the food system.” AMBER WAVES OF GAIN

CHAPTER FOUR Cooperating With Conglomerates

“It’s all become one big ball of snakes. It’s a bargaining power in the marketplace. The disgusting mess of cooperation among these big Capper-Volstead Act authorized farmers to form entities to exploit the market and to exploit cooperatives in order to negotiate more effective- farmers and consumers. I don’t know of a co-op ly with big grain traders and meatpackers. The in existence today that is really beneﬁting the law permitted farmers to make deals as a unit, farmer. Most of them are exploiting the joining forces to set prices for their goods with- 34 farmer.” out being subject to prosecution under antitrust — Mike Callicrate, Kansas rancher, laws. In a sense, the cooperatives functioned as Cattlemen’s Legal Foundation. labor unions for farmers, giving growers “the same right to bargain collectively that is already “You cannot be a little guy any more and enjoyed by corporations,” said Senator Capper compete in the world market. I’m glad that our during debate. afﬁliated companies are able to help us by The cooperative movement played a crucial being able to compete with the giants of the role in enabling farmers and rural communities world.” to thrive. But what began as a populist response — Dean Kleckner, to domination by big agribusiness has become former AFBF president. today an entirely different beast. Cooperatives themselves have become an integral part of big n 1922 when conglomerates controlled much agribusiness — worth billions and virtually of agribusiness in the United States, two cru- indistinguishable from agribusiness corporations. Isading members of Congress, Senator Arthur The local and statewide cooperatives set up Capper (R-Kansas) and Representative Andrew by farm bureaus during the 1920s have merged Volstead (R-Minnesota), won passage of legisla- and consolidated into regional, interregional and tion intended to give struggling farmers more even multinational businesses. Today these co- AMBER WAVES OF GAIN

ops not only market grain and other commodi- that mission. Co-ops run convenience stores and ties but also manufacture and sell pesticides, fer- sell products, including oil and gasoline, to the tilizer, tires, batteries, gasoline and other petrole- general public. In fact, Farm Bureau-affiliated um products and run refineries, banks and inter- Growmark bragged about this in its 1997 annual national financial-service networks. And the report. “The proportion of non-agricultural Farm Bureau cooperatives have formed partner- Growmark energy customers continues to grow,” ships and joint ventures with some of the world’s the report declared. “Growmark’s presence in the richest corporations, including agribusiness giant retail fuel market grows through promotion and Archer Daniels Midland (ADM) and the world’s the addition of new retail sites. There are cur- largest pesticide manufacturer, Novartis. rently 136 sites.” Because of the antitrust exemptions and special tax advantages that Congress has granted to THE P ATRONAGE REFUND DILEMMA cooperatives, the co-ops have even gained some The law allows co-ops to accept outside advantages over corporations. Co-ops are not investors. According to Department of subject to the same reporting requirements as Agriculture cooperative specialist John Wells, publicly traded companies, so financial transac- some states limit the amount of profit those tions are more difficult to track. The co-ops can investors can be paid to eight percent. But co- use tax-free capital for investment and expansion, ops also may merge with regular stock companies 35 and in some cases they have used this money to or even foreign corporations. All of these expand production into areas that compete with arrangements make for an exceedingly complicat- their own members. ed tax structure, yet co-ops enjoy one critical tax The cooperatives all brag that they are advantage. They pay no taxes on profits earned farmer-owned, and indeed, at the local level, in transactions with their farmer-members. For farmers do make up co-op membership. These instance, a co-op pays no tax on profit from sell- local co-ops comply with the legal requirement ing fertilizer to a member or from marketing that that each member get only one vote. But the farmer’s grain. voices of these local farmer-members become so Those profi ts are not tax-free, howeve r . diluted at each progressive step — from county, Individual farmers pay the taxes for the co-ops, to state, to regional, to interregional, to joint and all too often those farmers get little benefit in venture, to international — that the farmers have return. By law, co-op profi ts are supposed to be no impact at the levels where decisions are made. returned to farmer-members on the basis of how Although cooperatives originally were set up much business each farmer did with the co-op to market the goods produced by their members during the yea r . These are called patron a g e and to provide fertilizer, seed and the like at refunds. The farmers themselves are req u i r ed to lower prices than individuals might get on their pay taxes on the refunds even if they never actual- own, co-op businesses today extend well beyond ly see the money. In order to qualify for tax AMBER WAVES OF GAIN

ex emptions, the co-op is req u i r ed to give farmers Rivers and Sawyer co-ops decided to close up only 20 percent of their patronage refunds in shop and liquidate all the equity held by their cash. The co-op can and usually does keep the members. The trouble was, Farmland had con- remaining 80 percent itself to use for inves t - trol of the money and would not give it back. ments, expansion or any other purpose. Th e Farmland Industries advertises itself as the farmers must pay income taxes on the full 100 nation’s biggest farmer-owned cooperative. It is a pe r cent. In return for keeping part of the farmer’s Fortune 200 company that did $11.9 billion in pa t r onage refund, the co-op issues equity shares sales in 1998 and does business in a dozen coun- that build up over the years. In theory, farmers tries. Farmland is not a Farm Bureau co-op, but should be able to trade that equity for cash when- Farmland’s business interests are linked tightly to ev er they like, but legally a co-op does not have those of cooperatives that are Farm Bureau afﬁli- to redeem any equity until it is ready to do so. ates. For instance, Farmland, Growmark (Illinois, According to Department of Agriculture Iowa and Wisconsin farm bureaus), Country- economist Bob Rathbone, the midwestern grain mark (Ohio and Indiana farm bureaus) and co-ops usually hold onto the refunds for 16 or Agway (New York Farm Bureau) share ownership 17 years before paying back the farmers. In some of Universal Cooperatives, an even more enor- cases, Rathbone says, he has seen co-ops hold the mous cooperative conglomerate, with annual money for as long as 25 years. During that time, sales in excess of $30 billion. 36 the farmers’ shares of equity earn no interest. Farmers in Saw ye r , Kansas, had $480,000 of They cannot be sold or traded like stock, and equity in Far m l a n d ’s hands, says Saw ye r they have no cash value on the open market. If a Co o p e r a t i v e president Matt Novot n y . Not a lot of farmer needs money from the equity for his own money for Farmland, but all the money in the purposes, he is out of luck. The farmer has no world to the farmers who owned the equity. control over when the equity will be paid. “F armland used to call it ‘sa v i n g s ’ in their litera- Neither does the local co-op. Equity built up by tu r e,” says Novot n y . “You built an account there local members usually never ﬁlters down to the and it would be yours. A lot of people wer e think- county co-op. Most of it stays at the highest lev- ing this is a nest egg I’ve put away. This is what els in the cooperative cascade. The multibillion- they wer e counting on. Farmland basically said dollar multinational cooperatives end up keeping that there was no plan for any type of red e m p t i o n most of the cash. That cash gives these giant co- of our money. Th a t ’s why we had to sue.” ops a vast pool of working capital. In Great Rivers, Iowa, the same thing had Consider the case of the Great Rivers happened. Novotny’s friend Dan Webb had been Cooperative of Iowa and the Sawyer Cooperative such a died-in-the-wool co-op supporter that he of Kansas versus Farmland Industries. Ten years used to say, “If you’d cut me, I’d bleed co-op ago, after most of the farmers in these two small- blue.” Webb had counted on his co-op equity as town co-ops had gone out of business, the Great his savings account. “He thought that whenever AMBER WAVES OF GAIN

you quit doing business you got your money farmers with stories similar to those of Novotny back,” Novotny recalls. But when Webb became and Webb. Resnick sponsored a reform package too ill to work and asked for his equity, that would have given farmers the choice of Farmland said no. “We spent a lot of time on the whether to take their refunds in cash or in equity phone where he would alternate between anger shares. The House passed Resnick’s proposals on and tears,” Novotny relates. “Dan passed away August 7, 1969. But according to Dollar Harvest, with a bitter taste in his mouth.” the book by former Resnick aide Samuel R. In 1994, the Great Rivers and Sawyer co-ops Berger, the Farm Bureau worked successfully to filed a class-action lawsuit in federal district court kill the measure in the Senate. In a letter to the in Des Moines, Iowa, alleging fraud and federal Senate Finance Committee, AFBF said that the securities violations and asking the court to proposed changes “are unwarranted” and would require that Farmland pay co-op members the “represent further involvement of the federal gov- money they were owed in equity. A year after the ernment into the fiscal affairs of private enter- lawsuit was filed, Farmland began to redeem prise. . . .” Since then all suggestions of reform some of the equity. It now has a schedule for have failed. paying back the rest. These payments might The problems created by the patronage ref u n d never have been made if Farmland had not been dilemma go beyond the financial difficulties crea t - forced to do so by the lawsuit. Novotny believes ed for individual family farmers. The co-ops are 37 that without the courts, the farmers probably using capital gleaned from farmers’ equity to would have lost their money. in v est in businesses competing directly with their Such equity refund problems are widespread, own members. Millions of dollars in co-op equity longstanding, unresolved and unfair. University money are flowing into the megahog farms that of Missouri professor Heffernan says his own ar e taking over the market from small prod u c e r s . parents never got their equity back from FS Co-ops have even used the capital to finance cattle Cooperative, part of Growmark, an Illinois Farm and grain operations in South America. “For the Bureau-owned cooperative. “They’d been co-op life of me, I don’t think it’s right, and I can’t members all their lives,” he says. “They always understand why the co-ops are going into ven - thought they’d get something back, but the local tu r es outside the U.S,” says Novot n y . “Bas i c a l l y , co-op told us the money just wasn’t there.” Co- they are taking our dollars to do it, and it sure fol- op members might have expected the Farm lo ws that South American production competes Bureau to help them in these equity disputes. with American production.” Instead, AFBF has fought changing the law to “The co-ops brag about being farmer-owned, remedy the injustice. but they don’t behave that way,” says John Three decades ago when New York Crabtree of the Center for Rural Affairs, a non- Representative Joseph Resnick investigated Farm profit research and advocacy group based in Bureau cooperatives, he heard from dozens of Walthill, Nebraska. “Frequently you’ll find them AMBER WAVES OF GAIN

working against the interests of their members. the world,” ranks as one of the world’s largest When the co-op directly competes with its own grain traders and food processors, a manufacturer members, it doesn’t serve the members’ interests. of products ranging from corn syrup to amino So to that extent the original mission of the co- acids that are marketed on a global scale. Wh e n ops gets lost in the shuffle,” he said in an inter- ADM was convicted in 1996 of fixing prices for view. “The big co-ops feel they have to behave lysine and citric-acid products, the company paid like corporations in order to compete in the cor- a rec o r d $100 million fine. The punishment did porate world.” not hurt much considering that ADM does more The alliances between co-ops and for-profit than $14 billion a year in sales. Wall Str eet had corporations are also raising questions about expected a much higher penalty, so ADM stock whose interests are being served. Considering quickly rose. Farmers, on the other hand, lost con- that one of the original missions of the co-ops si d e r a b l y . Citric acid is used as a food supplement was to get better prices for farmers by taking on and pres e r vat i v e and in detergents and other agri- corporate commodities traders, it seems more cultural products. Lysine is an important feed sup- than a bit incongruous to see joint ventures such plement that spurs growth in chickens and pigs. as the one between ADM and the Farm Bureau Pur due Uni v ersity agricultural economist Joh n co-op Growmark. Here we have a co-op suppos- Connor figu r ed that farmers who had been cheat- edly representing the interests of 250,000 farmed on the price of lysine paid an extra $165 mil- 38 ers tying its financial future to one of the world’s lion to $180 million over three and a half yea r s . biggest grain dealers. Growmark, the cooperative owned by the Illinois, Iowa and Wisconsin farm bureaus, THE TIES THAT BIND entered into a joint venture with ADM in 1985 that continued through and beyond the years “In essence, greed, simple greed, replaced when ADM was overcharging farmers for lysine. any sense of corporate decency or integrity.” As mentioned earlier, when Growmark and — Joel Klein, assistant attorney general ADM merged their grain businesses, the cooper- for antitrust, commenting on a ative traded its river grain terminals for stock in price-fixing case against ADM. ADM and the partnership became ADM/Growmark. Growmark president Glenn One of the most shocking aspects of the Webb took a seat on the ADM board. Farm Bureau is how its financial ties and busi- Interlocking Farm Bureau board members from ness interests have led it into policies and proce- Iowa, Illinois and Wisconsin sit on Growmark’s dures that are harmful to the family farmer. board with Webb. In 1996, Countrymark, the Consider, for example, the Farm Bureau’s convo- cooperative affiliated with the Ohio, Michigan luted ties to ADM. and Indiana farm bureaus, also joined the ADM, which bills itself as the “su p e r m a r ket to alliance with ADM. AMBER WAVES OF GAIN

ADM is not the only agribusiness giant with made of the financial ties between Novartis and which the Farm Bureau collaborates. In 1998, Farm Bureau cooperatives. Growmark formed a new partnership with Novartis, a Swiss company that operates in 142 WELL-OILED CONNECTIONS countries on six continents, grossing $21.6 bil- As with the Farm Bureau’s anti-farmer poli- lion in annual sales. Under the partnership agree- cies, an examination of the organization’s busi- ment, Growmark will sell Novartis seeds, pesti- ness ties explains some of its anti-environmental cides and other products through the co-op’s FS positions. For example, at their 1999 convention outlets and will share in profits. The farm bureau AFBF delegates approved resolutions calling for affiliate Countrymark has a similar agreement opening the Arctic National Wildlife Refuge to with Novartis. oil drilling, reinstating special tax advantages for Novartis is the world’s second-largest phar- oil companies, including the infamous oil deple- maceutical manufacturer and largest pesticide tion allowance, and getting rid of “excessive envi- maker. It brags that its pesticides and herbicides ronmental regulations” on oil drilling. The ratio- “are used on well over 100 million acres of crop- nale offered spoke of energy self-sufficiency and land in the United States.” The company owns the importance of ensuring adequate fuel sup- Gerber baby food, Ciba Vision and Ex-Lax. It plies for farmers. Nothing was said of AFBF’’s also makes atrazine, a weed-killer that has conta- extensive investments in oil and gas.. 39 minated groundwater throughout the Midwest. Farm Bureau affiliate Countrymark produces According to the Environmental Working petroleum products that Farm Bureau affiliate Group, atrazine has contaminated the tapwater Growmark then sells to Land O’ Lakes cus- of 374 midwestern towns, with levels ten times tomers in a joint venture called Mark II Energy. above benchmark standards in the water supplies In 1996, Countrymark’s oil refinery in Mount for 60 towns, high enough to raise cancer risks. Vernon, Indiana, ranked in the top 20 percent of Novartis disputes this, claiming that the cancer Indiana polluters in terms of air and water releas- risks are negligible. Nevertheless, the groundwa- es of toxic chemicals known to be harmful to ter contamination problems have prompted EPA human developmental and reproductive health. to conduct a special review of atrazine to deter- EPA accused the Countrymark refinery of failure mine whether use should be restricted. The to monitor air emissions properly. Countrymark review is expected to be completed this year. agreed to pay a $32,000 fine without admitting During the 1999 AFBF convention, Novartis wrongdoing and to install pollution-control hosted lavish cocktail receptions for delegates equipment costing about $700,000. and the press. Afterward, delegates approved a Growmark set up a joint operation with resolution urging EPA to reach a favorable con- Sunoco of Canada in another petroleum venture. clusion on atrazine by reauthorizing its use Growmark is also part-owner of the National “without further restriction.” No mention was Cooperative Refinery Association (NCRA), a AMBER WAVES OF GAIN

business that conducts oil exploration, produc- in Yellowstone County, Montana, is the fourth tion and distribution throughout the nation. biggest polluter in the state, according to EPA’s According to Kansas City Business Journal, toxic-releases inventory. Minnesota-based Cenex NCRA was formed 50 years ago to give mid- is independent of the Farm Bureau but has sub- western co-ops a guaranteed source of petroleum stantial overlapping business interests. Cenex products. Now Growmark sells much of its fuel and Farm Bureau affiliates Agway, Growmark directly to the public. NCRA’s refinery in and Countrymark are co-owners of Universal McPherson, Kansas, produces more than a mil- Cooperatives. They all also own shares in CF lion gallons of gasoline and other fuel each year. Industries, an interregional co-op that manufac- That refinery also has had pollution problems. tures and sells fertilizer. Cenex operates several In 1996, it released 977,545 pounds of toxic divisions jointly with Land O’ Lakes, which last chemicals, making it one of the nation’s biggest year merged with Countrymark. polluters. According to the EPA, this refinery is In addition to refinery troubles, Cenex and in the top 20 percent in terms of cancer hazards other cooperatives have had their share of prob- and the release of toxicants into the air. lems with toxic waste. For instance, Cenex has Farmland, a corporation involved in joint agreed to clean up a toxic-waste pond across the businesses with Farm Bureau co-ops, runs even street from a Quincy,Washington, high school. dirtier refineries. One in Jefferson City, The pond was contaminated with heavy metals, 40 Missouri, became a Superfund site. Coffeyville, radioactive materials and telone, a potato bug Kansas, citizens filed a $7.5 million lawsuit killer suspected of being carcinogenic. A cleanup against another Farmland refinery, saying they begun in 1998 is still unfinished. And this is not were tired of breathing foul air. The lawsuit cited the only trouble Cenex has had in Quincy. Farmland’s own reports to the Kansas Depart- ment of Health and Environment listing more TOXIC FERTILIZER than 30,000 violations of the Clean Air Act in the last five years. EPA orde r ed Farmland to pay Farmers in Quincy were “wondering aloud civil penalties totaling $1.45 million and to install why their wheat yields were lousy, their corn po l l u t i o n - c o n t r ol equipment costing $4.2 million. crops thin, their cows sickly. . . . They discov- Farmland violations at the facility, EPA said, ered something they found shocking and that included repeated disposal of hazardous wastes on they think other American farmers and con- the ground and failure to rep o r t immediately sumers ought to know: Manufacturing indus- se v en accidental releases of hydr ogen sulfide gas. tries are disposing of hazardous wastes by turn- Farmland, which produces 100,000 barrels a day ing them into fertilizer to spread around at the Coffeyville refin e r y, also operates a lube oil farms. And they’re doing it legally.” plant in Texas and a grease plant in Mis s o u r i . — Duff Wilson, Seattle Times reporter. A refinery operated by the Cenex cooperative Patty Martin was mayor of Quincy, AMBER WAVES OF GAIN

Washington, in 1997 when she first went to the over crops grown to feed livestock. Seattle Times with a story about poisoned crop- • Other fertilizers contain waste from smelt- land and deliberate use of toxic industrial waste ing, mining, cement kilns, wood-product slurries in fertilizers. After several farmers in this small and a variety of other heavy industries and from community 150 miles east of Seattle began to the burning of medical and municipal wastes. suspect that their crop failures were related to These wastes may contain a potpourri of haz- bad fertilizer, they had a few tests run. In fertiliz- ardous chemicals, including cadmium, lead, er tank residue, chemists found arsenic, berylli- arsenic, radionuclides and dioxins. um, lead, titanium, chromium, copper and mer- • Limestone fertilizer laden with heavy met- cury. The tank belonged to Cenex. als killed more than 1,000 acres of peanuts in In a recent interview, Martin recalled her Tifton, Georgia. The fertilizer was called “Lime frustration at discovering that the practice of Plus.” Regulation is left entirely up to states, and recycling industrial waste as fertilizer was wide- most have no requirement that toxic wastes be spread and completely legal. Environmental offi- listed as ingredients. Most fertilizer labels lump cials seemed unconcerned. “The people doing toxics into the broad category of unspecified this are putting entirely unsuspecting communi- “inert” ingredients. ties at risk from pollutants that are known to be The Farm Bureau defends the practice of harmful to human health,” she said. “There’s not using such industrial “raw materials” in fertilizer. 41 enough information out there to say that the In 1998, the Maryland Farm Bureau lobbied practice is safe.” against a bill in the legislature to require labeling Safe or not, when reporter Duff Wilson of of fertilizers containing hazardous or toxic waste. the Seattle Times looked into the matter, he dis- According to the bureau, that bill “could have covered that industries nationwide have convert- limited the availability of necessary fertilizers due ed millions of pounds of hazardous waste into to the classification of materials used in making fertilizer. Among his findings: such fertilizers.” • Toxic byproducts from two Oregon steel In 1999, the Montana Farm Bureau fought mills are stored in silos at the Bay Zinc legislation to prohibit the sale of commercial fer- Company. When the material is taken out of the tilizer “if analysis by the Department of silos, it is used as a raw material for fertilizer. Agriculture reveals the presence of a heavy metal, “When it goes into our silo, it’s a hazardous arsenic, or organochlorine . . . at a level that pre- waste,” Bay Zinc president Dick Camp told sents a threat to the public health.” The bureau Wilson. “When it comes out of the silo, it’s no objected that “at this point in time there is no longer regulated. The exact same material. Don’t way to measure organochlorine and no standard ask me why. That’s the wisdom of the EPA.” set by the federal government to determine what • Lead-laced waste from a pulp mill is hauled amount presents a threat to the public health, to southwestern Washington farms and spread safety or welfare.” In reality, organochlorines can AMBER WAVES OF GAIN

be measured easily, and several government agen- heavy metals and that using them resulted in cies have established maximum exposure stan- poor crops and ill health. One suit was settled dards for most of the toxic chemicals added to out of court. In the other, a jury agreed with the fertilizer. farmer’s claims but did not award him monetary Former Quincy,Washington, mayor Patty damages. That case is on appeal. Meanwhile, Martin says the Washington Farm Bureau always Martin is now out of office. In the last election, defended the fertilizer companies during meet- she says, Cenex sent employees door to door to ings of the Governor’s Fertilizer Work Group, campaign against her. inactive since the legislature set standards for The Washington Farm Bur eau joined an contaminants in fertilizer in 1999. Farm Bureau in d u s t r y coalition that tried to intervene in the representative Greg Richardson has never chal- Pul i t z er Pri z e selection process so Duff Wil s o n , lenged the practice of using industrial waste, she the rep o r ter nominated for his story about toxi c asserts, declaring, “He didn’t see any problem with it. You’d think that any entity that represents agriculture would have some interest in “Y ou’d think that any entity that rep r esents agricul- protecting its members, not just their crops — tu r e would have some interest in protecting its protecting their soils and their health.” Richardson did not return phone calls seek- members, not just their crop s —p r otecting their 42 ing comment. Washington Farm Bureau lobbyist Linda Johnson says no one has shown that any- soils and their health.” thing in the Cenex fertilizers has harmed people or crops. “Farm Bureau has no problems with wastes in ferti l i ze r , would not win. Together with what was being used on the fields,” she says. “We a group called the Far West Fert i l i z er and believe that the fertilizer being used was fine.” Agrichemical Association, the bureau wrote the Cenex has not acknowledged that any indus- Pul i t z er selection committee charging that Wil s o n trial wastes have ever been added to its products. had misrep r esented the facts. “The Farm Bure a u Cenex spokeswoman Lani Jordan told the Seattle was part of a coalition that submitted informa- Times that the company has “always followed the tion to the Pul i t z er committee,” says lobbyi s t industry recommendations, as well as the govern- Johnson, and in her mind the campaign was suc- ment regulations, where these products were cessful. “The committee rev i e wed the informa- concerned.” Two Quincy farmers independently tion and pulled him off the list,” she says. sued Cenex in federal court. One charged that That is not exactly what happened, however. the company made money “by disposing of Disregarding the Farm Bureau letter, the Pulitzer highly toxic industrial waste by adding it to fer- committee chose Wilson as one of three finalists tilizer.” The suit also contended that Cenex for its public service prize. Wilson ultimately failed to disclose that its fertilizer contained didn’t win, but most journalists consider selec- AMBER WAVES OF GAIN

tion as a finalist to be a great honor in itself. John Deere Credit. In 1998, the finance compa- “This is a highly competitive prize,” Wilson ny loaned out $112 million. “This is the eighth pointed out in an interview. “I was proud that I consecutive year of record loan volumes,” says an made it to the finals.” The Farm Bureau has FS brochure. “Expanded loan programs such as never given Wilson a copy of its letter, he says. full line operating loans and three-year revolving “If they believe I got facts wrong, let’s see it. loans make FS Agri-Finance more convenient They still have not come forward with anything and flexible to customers.” It is also convenient in my articles that they can show is untrue.” to the financier. The co-op loans farmers money to buy co-op products — everything from trac- MERGER MANIA tors to seeds, feed, pesticides and antibiotics — and earns profits on both the sale of the mer- “These finance companies offer credit lines chandise and finance charges. to pay for the farm products their companies Growmark finances large capital ventures. In sell, which in Growmark’s case includes fertiliz- 1993, Co-Bank opened an office in Mexico City. er, feed, seed and petroleum fuels. A main In 1997, it set up shop in Singapore to “facilitate attraction to the customer is the convenience of export financing in Asian markets.” In 1998, 21 a one-stop shop for the product and financing.” state farm bureau organizations and 19 farm — American Banker magazine. bureau-affiliated insurance companies pooled 43 investment money to form a bank holding com- You might call it a new twist on the old company called Farm Bureau Bancorp. That corpora- pany store, or the ultimate in vertical integration. tion opened up shop in 1999, doing business as Co-ops have moved into nearly every aspect of the Farm Bureau Bank. The Farm Bureau Bank agricultural production, selling seeds, fertilizer, is offering a full line of financial services in 39 pesticides, crop advice, market news, livestock states, and bank officers figure that gives them a feed, antibiotics, additives, growth hormones, oil, potential 3 million customers. AFBF’s new presi- gas, tires and batteries; marketing produce, grain dent, Bob Stallman, who won election at the and livestock on behalf of farmers; buying grain Farm Bureau’s January, 2000, convention, was on behalf of traders, buying and raising livestock, the initial chairman of the bank holding compa- slaughtering hogs and cattle, packaging meat, ny. A Texas rice farmer and former president of transporting products and advertising all this. the Texas Farm Bureau, he stepped down in Everyone involved needs plenty of cash to ensure March, 2000, but continues as a bank advisory the smooth flow of these business transactions. board member. Nearly all the large cooperatives now operate The extent of the vertical integration of the their own financial-services divisions. Growmark, co-ops might tend to worry anyone concerned for instance, lends through FS Agri-Finance, about monopoly and concentration, especially which operates under an alliance agreement with considering the ever-changing mixtures of part- AMBER WAVES OF GAIN

nerships, alliances, mergers and joint ventures bill, introduced in 1999, would put an 18- involved. Add to that the fact that much of this month moratorium on mergers between big cooperative activity is protected from scrutiny by agribusinesses and set up a commission to review the antitrust exemptions of the Capper-Volstead the issues of concentration and market power in act of 1922, and it’s easy to see room for abuses. agriculture. That sounds like just exactly what At the 1999 AFBF convention, delegates Farm Bureau members voted to support at their approved new language calling for an “immedi- last convention — so AFBF did not at ﬁrst pub- ate investigation into the mergers that are occur- licly acknowledge its opposition. Instead, Farm ring in the agricultural industry” and for “action Bureau lobbyists quietly circulated a letter to that will protect producer interests.” The resolu- members of Congress asking them to oppose the tion declared that “the continued mergers of bill. In an apparent effort to obscure its lobbying agribusiness ﬁrms” threaten “the free enterprise efforts, AFBF posted an article on its website system that is based on competition.” headlined, “President Will Not Back Bill to Stop The Farm Bur eau, howeve r , does not want to Farm Mergers.” The article reported that see its own co-ops investigated, even though the President Clinton had not endorsed the legisla- co-ops clearly have been as deeply engaged as pri- tion. It did not mention AFBF’s opposition. vate corporations in mergers and concentration. Unfortunately for the Farm Bureau, Mike When an Iowa delegate offered an amendment Callicrate of the Cattlemen’s Legal Fund 44 calling on Congress to “examine antitrust laws to obtained a copy of the AFBF letter and posted it determine if changes are needed to more effec- on his website, “nobull.net.” ti v ely protect farmers,” Farm Bur eau leaders Forced to admit that it had opposed the quickly shot the idea down. “Mr. Chairman, I Wellstone bill, the Farm Bureau now offers the ha v e a terrible time with those additional lines argument that a moratorium would delay better th e r e — that whole ‘examine antitrus t . ’ Th i n k antitrust enforcement. In an article on AFBF’s about Capper-Volstead for a minute, where we’re website posted November 16, 1999, Cheryl at there,” said Wisconsin Farm Bur eau pres i d e n t Stubbendieck of the Nebraska Farm Bureau Howa r d Poulson. “I urge that we defeat this addi- called the Wellstone proposal dangerous, saying tional language.” The amendment was defeated that “a moratorium can result in nothing of con- on a voice vote with a chorus of loud “no ’s. ” sequence happening until the time out is nearly Perhaps it should come as no surprise that in over. American farmers can’t wait 18 months for spite of the formal Farm Bureau policy positions concrete action on an issue that so greatly affects calling for immediate investigations of mergers their livelihoods.” and strong enforcement of antitrust laws, AFBF Stubbendieck’s piece did not explain how has actively lobbied against legislation that could allowing mergers to go forward over the next put the brakes on what Senator Paul Wellstone year and a half could speed antitrust-law reform. (D-Minnesota) calls “merger mania.” Wellstone’s AFBF governmental relations specialist Tim AMBER WAVES OF GAIN

Cansler offered no clarification on that point in activity as “a gross breach of faith and detrimen- an interview on a Farm Bureau radio program. tal to the interests of producer members.” He simply asserted that the issue “strikes right to This challenge from the Farm Bure a u ’s grass- the heart of the constitution, and the capitalistic roots failed to shake AFBF’s stance on the reg u l a - system that we have in America,” without tion of big business. At the Jan u a r y, 2000, con- explaining precisely what he meant. vention in Houston, Texas, the voting delegates Even some state farm bureaus aren’t buying again approved resolutions calling for inves t i g a - those arguments. In December, 1999, the tions of mergers. The language used was nearly Mississippi Farm Bureau unanimously approved identical to that of the 1999 policies. But dele- a resolution condemning AFBF for opposing the gates also adopted a new policy opposing any merger moratorium. “The national Farm Bureau moratorium on mergers. policy book is full of statements expressing con- The Farm Bureau’s financial interests in cern about concentration of market power and cooperatives and other big businesses may help monopoly in agribusiness,” said Mississippi Farm explain why AFBF’s leadership has held so stub- Bureau member Fred Stokes, who introduced the bornly to policies that appear to run counter to resolution. “Yet AFBF President Dean Kleckner the interests of family farmers. Those policies and the national staff consistently sell out their embrace a variety of conservative causes that fre- members and jump in bed with agribusiness.” quently serve as cover for actions that would 45 Stokes went on to characterize AFBF’s lobbying benefit the bottom lines of big business. AMBER WAVES OF GAIN

CHAPTER FIVE Taking Care of Business

“What’s the influence in Farm Bureau? It’s apply almost excl u s i v ely to urban areas? Wh y zilch. They don’t talk to me. They don’t pressure would farmers care about easing restrictions on me. If they tried to I would say ‘buzz off.’ They mining or deregulating telecommunications? don’t drive us. They don’t help us pay the bills. Understanding the Farm Bure a u ’s business ties Our dues pay the bills. Farm Bureau member- offers some clues. Seemingly odd policy positions ship fees pay the bills, so there’s no connection.” ar e easier to fathom in the light of the business 46 — Former AFBF president Dean connections outlined in previous chapters of this Kleckner commenting on the influence of rep o r t, including Farm Bur eau links to insurance, Farm Bureau businesses on bureau policy. oil, chemical, automobile, timber, paper, communications and other industries. For example: or years, AFBF has fought laws designed to • The Farm Bureau has lobbied to privatize protect wetlands, wilderness areas, drinking Social Security and to put limits on legal damage Fwater and streams. It has lobbied aggressively awards for product liability and medical malprac- to weaken pesticide regulations and the tice — steps that could substantially benefit Endangered Species Act and has been instrumen- insurance and financial businesses. tal in blocking Senate ratification of international • AFBF is a member of the Coalition for treaties to safeguard biodiversity and counteract Vehicle Choice, which helped defeat legislation global warming. Although these issues may have to raise fuel-efficiency standards for automobiles. at least some bearing on agriculture, AFBF also FBL Financial Group, which controls Farm has used its clout to push policies that have no Bureau insurance affiliates in 12 states, also owns apparent connection with farming. stock in Ford Motor Co., Texaco and other oil Why would a supposed farmers’ organization and gas producers, according to FBL financial oppose higher fuel-efficiency standards for auto- reports. The Iowa Farm Bureau owns 63 percent mobiles or fight Clean Air Act provisions that of FBL. IAA Trust, headed by Illinois Farm AMBER WAVES OF GAIN

Bureau president Ronald Warfield, owns millions e f f o rts to delay tighter standards on gro u n d - of dollars worth of stock in Ford Motor Co. and l e vel ozone and particulate matter, an issue that half a dozen oil companies. In addition, Farm primarily relates to urban areas. Public health Bureau-affiliated co-ops hold substantial stakes in officials had found that in many cities these oil refineries and retail gas stations. pollutants we re contributing to serious re s p i r a- Farm Bu reau leaders insist that the organiza- t o ry illnesses such as asthma, especially among t i o n’s business ties have no influence over poli- young children. EPA blamed the pollution pri- cies whatsoeve r. Policies are developed at the marily on auto and diesel engine exhaust and local level and move up through state farm industrial emissions. From the outset, EPA b u reau conventions to the national meeting, made it clear that agriculture was not a target w h e re voting delegates choose which re s o l u t i o n s and the proposed regulations would not re q u i re to support. Ac c o rding to former AFBF pre s i- farmers to change the way they operate. dent Kleckner, all policies “must have some Neve r theless, the Farm Bu reau went out fro n t connection with agriculture, even indire c t l y, or in a public relations and lobbying campaign to we wouldn’t be invo l ved.” The Farm Bu re a u delay implementation of new standards for four takes no position on most of the thousands of years. bills that move through Congress, he says, For whatever reason, AFBF and its state affil- “because they are not directly enough related to iates have chosen to ally themselves with coali- 47 f a r m i n g . ” tions that include many of the most powerful With some AFBF polices, however, the con- trade associations in the country. AFBF has nections to agriculture are hard to figure. Even worked closely with the National Association of the Farm Bureau’s known financial interests do Manufacturers, American Petroleum Institute, not fully explain why the organization even cares National Mining Association, Association of about certain issues. For instance: International Automobile Manufacturers, Steel • AFBF policy calls for restoring provisions in Manufacturers Association, National Asphalt the 1872 Mining Act “that guarantee the rights Pavement Association, Associated General and freedom of prospectors and miners.” This Contractors and many others. law has allowed foreign corporations to extract In addition, AFBF and these industrial asso- billions of dollars in precious metals from public ciations have formed alliances with conservative lands without paying more than minimal royal- political groups, including the inappropriately ties to the government. It contains no require- named wise-use organizations. AFBF has con- ments for land reclamation and elevates mining tributed funds to many of these groups, includ- above all other interests on public land, including coalitions that are seeking to eviscerate the ing wildlife habitat, clean water and grazing Endangered Species Act, roll back wetlands pro- rights. tections, lower clean air and water standards and • The Farm Bu reau played a leading role in thwart steps to reduce global warming. AMBER WAVES OF GAIN

THE WISE-USERS in Washington, D.C., AFBF is a member of the most prominent wise-use group, the Alliance for “The Farm Bureau has become, in an odd America, which sponsors an annual “Fly In For way, a very attractive group to put in the fore- Freedom” rally in Washington. The Farm Bureau front of all kinds of environmental fights that has contributed funds to more than a dozen industry doesn’t fight very well on its own.” other wise-use organizations. Among them: — Ken Cook, • ECO, the Environmental Conservation Environmental Working Group. Organization, set up as the grassroots wing of the Land Improvement Contractors Association. Over the last decade, some of the greatest ECO concentrates on property-rights issues. threats to environmental protection have taken Members include representatives of the timber, shape among a conglomeration of so-called wise- pulp and paper, oil, mining, real estate, building, use groups. The common thread among these fur trapping and coal industries as well as AFBF diverse organizations seems to be the belief that and several state farm bureaus. private property rights must always take prece- • Foundation for Clean Air Progress, which dence over the public good. Farm Bureau leaders campaigns against stricter clean-air standards. have been active in the wise-use movement since Members include the National Asphalt Pavement its inception. In 1988, when wise-use leaders Association, American Road and Transportation 48 convened for the first time at a conference in Builders Association, Petroleum Marketers Reno, Nevada, Farm Bureau representatives from Association of America, American Petroleum Oregon and California participated. That meet- Institute, Asphalt Institute and AFBF. ing set an agenda for the movement focused on • Air Quality Standards Coalition, which the goal of protecting private property while lobbied to delay implementation of tighter exploiting public resources. Among the specific restrictions on ozone and particulate pollution. goals, conference participants pledged to cam- This coalition includes the National Association paign for opening all public lands, “including of Manufacturers, Geneva Steel, National wilderness and national parks,” to mining and Mining Association, American Electric Power energy development; increasing logging of old- Co., Mobil and Ford Motor Co. growth forests and allowing oil development in • Global Climate Information Project, an the Arctic National Wildlife Refuge. industry alliance that includes auto makers, oil Since then, the American Farm Bureau companies, manufacturers and AFBF. In 1997, Federation (AFBF) and state farm bureaus have this group spent more than $3 million on an participated actively in and helped to fund wise- advertising campaign alleging that a proposed use coalitions. According to records compiled by international treaty to curb global warming the Clearinghouse on Environmental Advocacy would hamstring the U.S. economy. and Research (CLEAR), a watchdog group based • National Wetlands Coalition, set up by real AMBER WAVES OF GAIN

estate developers, utilities and mining and oil the Public Interest (NLCPI). According to companies to lobby for less restriction on com- CLEAR, NLCPI is an umbrella for other legal mercial development of wetlands. The coalition foundations, including Pacific and Mountain also has lobbied for laws requiring taxpayers to States. NLCPI gets money from AT&T, Exxon, compensate property owners whenever wetland Ford Motor Co., Gulf Oil, Kimberly-Clark, the regulations prevent development. Sara Scaife Foundation and Union Carbide. • National Endangered Species Act Reform Ultra-conservative former Judge Robert Bork Coalition was set up primarily by southwestern and Kenneth Starr, special prosecutor for the electric utilities. The coalition wants Congress to Clinton-Whitewater case, are listed as legal advis- require that economic factors be considered in ers to NLCPI. any plans to protect endangered species. It also has lobbied for new policies to make it more dif- FRIENDS HELPING FRIENDS ficult to add species to the endangered list. AFBF’s own nonprofit, the American Farm In addition to helping to finance these orga- Bureau Federation Foundation for Agriculture, nizations, AFBF has contributed money to con- has benefited from the Farm Bureau’s close conservative think tanks and legal foundations, nections with the nation’s business elite. In 1997, including the Cato Institute, Reason Foundation the foundation received more than $10,000 and Pacific Legal Foundation. Pacific Legal apiece from Philip Morris, ADM, Nationwide 49 Foundation has used the funds to challenge clean Insurance, American Agricultural Insurance water regulations, hazardous-waste cleanup Corp., Asgrow Seeds and Kraft. Pharmaceutical, requirements and wilderness designations. seed and pesticide giant Novartis contributed The Farm Bureau also has ties to other anti- more than $5,000. In 1993 and 1994, RJR environmental legal groups. From 1985 to 1989, Nabisco, maker of Winston, Camel and Salem former Wyoming Farm Bureau president Dave cigarettes, contributed at least $80,000 to agri- Flitner was also president of the Mountain States culture sciences programs sponsored by the Legal Foundation (MSLF), set up by arch-con- North Carolina and Kentucky farm bureaus. servative beer magnate Joseph Coors primarily to Because of these links to the tobacco indus- challenge environmental restrictions on public try, it comes as no surprise that farm bureaus lands. Former Reagan administration Interior often are allied with big tobacco. For example, in Secretary James Watt served as the first MSLF 1998 the Maryland Farm Bureau lobbied against president. Amoco, Chevron, Exxon, Ford Motor legislation for a tobacco tax to support a chil- Co., Phillips Petroleum and other corporations dren’s health and learning program. The bill provide funding. MSLF represented the Farm included a tobacco crop conversion program and Bureau in its Yellowstone-Idaho wolf lawsuit. a health protection fund. It died in committee. Former AFBF president Kleckner served as AFBF would like to see taxpayers foot the vice chairman of the National Legal Center for bill anytime its business associates are faced with AMBER WAVES OF GAIN

expenses for compliance with environmental reg- ers have had close ties with conservative politi- ulations. AFBF policy states that “businesses, cians. In 1991, Kleckner was on the short list of industries and farmers who have to expend sums candidates for Secretary of Agriculture under of money to implement or prove they are meet- President George Bush. ing environmental regulations should be reim- In compiling its annual list of organizations bursed for their expenditure.” Such a policy with the most clout in Washington, Fort u n e ma g a - could save businesses — and cost taxpayers — zine surveys members of Congress, senior congres - billions. If the tab ran too high, the Farm sional staff and prominent lobbyists. The survey , Bureau’s reasoning implies, the government called “The Power 25: The Infl uence Merc h a n t s , ” could simply dispense with environmental pro- pr ofesses to tell “what Washington insiders alrea d y tection. This is clearly an option most Americans kn o w: who are the true masters and who the mere would not support, but the Farm Bureau’s views pr etenders.” In 1998, the survey ranked AFBF are generally given great weight by lawmakers 14th; in 1999, 21st. No conservation or environ - even when those views are at odds with those of mental group has ever made the list . the majority of American citizens. In an article accompanying the 1998 survey results, Jeffrey H. Birnbaum wrote about that POLITICAL POWER year: “Bills that should have been sure-fire failed, including ones designed to reduce teen smoking 50 “I remind Congress that our proposal is not and improve the service of HMOs. . . . How a ‘wish list.’ It is a ‘must do’ directive.” could this be? The answers lie far from public — AFBF then-president Dean Kleckner view in a region inhabited only by lobbyists, commenting in October, 1998, on Farm interest groups and the lawmakers whose votes Bureau-backed proposals, including fast- they seek. It’s where some of the nation’s most track international trade authority and elimi- powerful people play an extraordinarily high- nation of capital gains and estate taxes. stakes game of persuasion, where backs are scratched, arms twisted, favors granted and Of the more than 10,000 organizations that redeemed. This is where the business of politics lobby Congress, few would presume to issue so really gets done.” brazen an ultimatum as the Farm Bureau’s “must Part of the Farm Bureau’s power stems from do” directive. But AFBF president Kleckner’s the presumption that the organization does demand was not mere chutzpah. The Farm indeed speak for the nation’s farmers. But as this Bureau wields enormous power with Congress report illustrates, that impression may be mostly and state legislatures. “It’s extremely difficult to illusion. Those who have watched the Farm get anything through without them on board,” Bureau’s maneuvering at close quarters speak of says a Capitol Hill insider who asked not to be an organization in lockstep with business allies, identified. Through the years, Farm Bureau lead- pushing for causes that could never be classified AMBER WAVES OF GAIN

as part of a family-farm agenda. The Farm islative regulation aimed at putting you out of Bureau also has won friends on Capitol Hill business . . . and they are only two of the many through the traditional means of entertaining groups looking to put farmers and ranchers in politicians and helping them finance their cam- the unemployment line.” paigns. In 1998, AFBF spent $4.56 million on AFBF has lobbied for legislation to bar labor lobbying in Washington. State farm bureaus unions from using membership dues for political spent another $250,000 on lobbying, according purposes without express consent from individ- to documents compiled by the Center for ual members. AFBF also has supported restric- Responsive Politics, a Washington-based public tions on lobbying by other nonprofit groups. interest group. From 1989 to 1997, 18 state- Agricultural organizations, including the Farm affiliated farm bureau political action committees Bureau, were specifically exempted from these (PACs) contributed a total of $1.2 million to proposals. It would be interesting to see what federal candidates. While the Farm Bureau does might happen if the Farm Bureau had to abide not support a national PAC, from 1989 to 1997 by the rules it wants to impose on labor unions. AFBF contributed $38,000 in “soft money” Labor union members at least get to vote within (donations not regulated by campaign finance their organizations. Much of the money the limits) to the national political parties — mostly Farm Bureau uses for its political activities comes to the Republican National Committee. In addi- from membership dues paid by insurance cus- 51 tion, employees of the Farm Bureau and related tomers who are not allowed to vote in Farm businesses contributed to individual campaigns. Bureau elections and have no say in Farm Bureau With a few exceptions, the beneficiaries of policies. Those insurance customers constitute Farm Bureau largesse have some of the worst the majority of Farm Bureau members. By some records in Congress on conservation and envi- estimates they make up as much as 80 percent or ronmental issues, according to scorecards of the more of the organization’s “members.” As this League of Conservation Voters (LCV). LCV report points out, many of those insurance-cus- evaluates legislators on the basis of their votes on tomer members are not even aware of how the such issues as wetlands preservation and pollu- Farm Bureau is spending their money. tion control. For the most part, the Farm Bureau Tony Dean is one Farm Bureau insurance has been spending its money on politicians who customer who has made it his business to find generally side against environmental protection. out. “They are opposed to wetland acquisition, In making a pitch for contributions to its regulations — anything that means a good envi- PAC, the Arizona Farm Bureau advertised its ronment,” says Dean, an outdoor writer and activities as “Lobbying that carries power with popular South Dakota television and radio show punch.” It told members their assistance was crit- host. “If the average person saw what their poli- ical to counter labor unions and environmental cies were, the Farm Bureau wouldn’t exist. But groups that are trying “to create self-serving leg- they don’t operate at that level. They are very AMBER WAVES OF GAIN

PAC CONTRIBUTIONS AND ENVIRONMENTAL VOTING RECORDS

1989-1999 League of Conservation Voters AFBF PAC Recipients National Environmental Scorecard Ratings contributions* ($) 1993 1994 1995 1996 1997 1998 Steve Buyer (R-IN) 25,000 20% 12% 0% 31% 6% 7% Jim Lightfoot (R-IA) 23,746 10% 4% 0% 0% –– Charles Stenholm (D-TX) 22,250 25% 12% 15% 15% 6% 10% David McIntosh (R-IN) 20,000 –– 0% 15% – 14% Greg Laughlin (D-TX) 19,099 30% 19% 0% 0% –– Tim Roemer (D-IN) 18,700 70% 73% 46% 62% 50% 55% Frank Riggs (R-CA) 18,250 –– 0% 23% 13% 7% Ike Skelton (D-MO) 17,650 50% 31% 23% 31% 19% 21% David Camp (R-MI) 16,480 20% 8% 8% 38% 13% 17% Mike DeWine (ROH) 15,500 –– 31% 31% 29% 13% Lee Hamilton (D-IN) 15,400 70% 65% 54% 62% 63% 62% Dianne Feinstein (D-CA) 14,930 63% 77% 85% 85% 100% 100% Gary Condit (D-CA) 14,760 25% 19% 31% 31% 50% 34%

52 John Doolittle (R-CA) 14,420 15% 4% 0% 0% 13% 7% Richard Lugar (R-IN) 14,250 6% 31% 15% 15% 0% 7% Bill Emerson (R-MO) 13,500 10% 0% 0% 0% –– Chet Edwards (D-TX) 13,000 50% 35% 31% 38% 25% 31% Wally Herger (R-CA) 12,242 15% 4% 0% 0% 13% 7% Kika de la Garza (D-TX) 12,073 60% 54% 31% 23% –– Henry Bonilla (R-TX) 12,000 15% 4% 0% 8% 13% 7% Richard Chrysler (R-MI) 11,750 –– 8% 46% –– Christopher Bond (R-MO) 11,629 6% 15% 0% 0% 14% 7% Kay Bailey Hutchison (R-TX) 10,807 0% 0% 15% 15% 0% 0% Jim Nussle (R-IA) 10,693 20% 19% 8% 8% 13% 21% Earl Hillard (D-AL) 10,631 60% 62% 69% 62% 31% 48% James Talent (R-MO) 10,440 25% 23% 8% 23% 19% 17% Phil Gramm (R-TX) 10,250 6% 0% 8% 8% 0% 0% Charlie Rose (D-NC) 10,250 60% 54% 38% 54% –– Vic Fazio (D-CA) 10,100 55% 62% 77% 62% 50% 66% Jill Long (D-IN) 10,000 60% 65% –––– Ed Pease (R-IN) 10,000 38% 31% Lamar Smith (R-TX) 10,000 15% 0% 0% 8% 6% 7%

*Source: Center for Responsive Politics AMBER WAVES OF GAIN

close to the upper echelon of decision-making in Perhaps the Farm Bureau did not intend that the state and federal government.” such anti-democratic language sneak into its pol- The South Dakota Farm Bur eau was not icy manual, but the provision on federal land- happy when Dean, a reg i s t e r ed Republican, circu - acquisition clearly harkens back to a time before lated a list of Farm Bur eau-endorsed policies in a the principle of one-man-one-vote, when only campaign broc h u r e for the Democratic candidate the landed gentry were allowed a voice in affairs in the race for South Dakota public lands com- of state. But if property owners alone will not be mi s s i o n e r . The Republican candidate for land allowed to decide the fate of public land, the commissioner was a board member of the Sou t h Farm Bureau has a fallback position. “County Dakota Farm Bur eau. Dean says he thought the governments should have the right to ratify or public ought to know exactly what the Far m reject any proposed wilderness area,” the AFBF Bur eau supports. “I lifted the policies straight out policy manual declares. This would give county of the Farm Bure a u ’s manual,” he says. Two days governments veto power over decisions involving after the broc h u r e hit the mail, Dean says he got lands that belong to all Americans. “st e a m i n g ” letters from Farm Bur eau officers and The Farm Bureau opposes all expansion of bo a r d members, along with phone calls accusing wilderness areas and is urging reevaluation of all him of being a Communist and left-wing radical. existing wilderness designations. In addition, The Farm Bureau candidate lost. Perhaps AFBF wants the National Park Service to “cease 53 South Dakota voters sensed that someone repre- efforts to condemn and acquire privately owned senting an organization that consistently opposes farmland and ranch land within the boundaries protection of public resources might not be the of national parks.” At the same time, the Farm best person to put in charge of state-owned Bureau would like the government to improve lands. A close look at Farm Bureau policies roads through national parks to allow more reveals a radical agenda with little concern for motorized access. protection of treasured national resources. Furthermore, the Farm Bureau would like to prohibit the government from acquiring addi- NO NET LOSS OF PRIV ATE PROPERTY tional land for any purpose, whether to protect sensitive watersheds from development or to pro- “We strongly urge that no more private tect endangered species habitat. AFBF has adopt- property be acquired by state or federal govern- ed a policy of “no net loss of private property,” ments for wilderness, national preserve or any meaning that government agencies could not other nonproductive, non-economical use with- purchase land without first selling off property to out first conducting a binding referendum of private buyers. “What happens when the federal property owners in the county or counties government gobbles up land?” asks a Farm directly affected.” Bureau website essay. “First, more and more land — AFBF 1999 policy manual. becomes inaccessible to the public.” AMBER WAVES OF GAIN

That’s an odd concept, since generally it is tion for land, water or wildlife. For example: private landowners who forbid trespass and pub- • The New Mexico Farm and Livestock lic land that most people are allowed to use. But Bureau adopted a resolution requesting the state AFBF takes the bold position that Congress attorney general to “investigate the activities of should sell off all federal public domain and The Nature Conservancy in New Mexico to national forest lands to private individuals. The determine whether conspiracy exists between it sales should include all subsurface oil and mining and government entities.” The Nature rights, AFBF’s policy manual says. If Congress is Conservancy has been active in negotiating with not willing to go that far, the Farm Bureau wants New Mexico landowners for conservation ease- ownership of such federal lands transferred to the ments to prevent development of open land. states. • The Idaho Farm Bureau pushed a joint For a number of years it appeared that the memorial in the 1998 legislature opposing desig- Farm Bureau’s public lands agenda might prevail nation of “any river, watershed or river segment in Congress. Now, however, popular demand for within the state of Idaho” as an American protection of our shared national resources has Heritage River. The memorial passed the house become so great that even long-time Farm but not the senate. Bureau allies in Congress appear to be listening. • The Oklahoma Farm Bureau has tried to “Sensing widespread support for programs to block protection of the Red River, which delin- 54 preserve open spaces, lawmakers from both par- eates the border between Texas and Oklahoma. ties have offered competing proposals that exceed According to its policy manual, the bureau even the Clinton administration’s record $1.1 opposes all proposals “for potential wildlife habi- billion request to protect open land from devel- tats, parks, ‘wetlands’ preserves, hiking/biking opment,” the New York Times reported on March recreational areas, wilderness designations, game 11, 1999. “But the differences serve mainly to preserves and Wild and Scenic River designation underscore the political popularity of spending on the Red River. All land should remain in pri- more on conservation, demonstrated by the suc- vate ownership.” cess across the country of ballot measures to buy AFBF opposes expanding the national wild open space and preserve it for the public good.” and scenic rivers system and wants land already Part of the money for these projects would acquired under the national program to be come from the Land and Water Conservation “returned to the original owners.” (Presumably Fund, a program that taxes offshore oil produc- this excludes the Native American tribes who tion to pay for conservation. AFBF policy calls owned the land before the arrival of white set- for repeal of the Land and Water Conservation tlers.) AFBF opposes a national policy of “no net Act, which established the fund. This policy loss of wetlands” and believes isolated wetlands comes as no surprise. The Farm Bureau has such as vernal pools and prairie potholes should repeatedly opposed measures that offer protec- not be protected under the Clean Water Act. AMBER WAVES OF GAIN

AFBF opposes any legislation to regulate the sale ed a claim of New Mexico rancher Kit Laney and use of nitrogen fertilizers even where they that the Forest Service acted illegally when it have been found to pollute lakes, streams or revoked his grazing permits in the Gila National estuaries. And AFBF insists that fertilizer runoff Forest. is not contributing to the “dead zone” at the Federal scientists had concluded that the mouth of the Mississippi River, scientific evi- statutory wilderness areas where Laney held leas- dence to the contrary notwithstanding. es had been seriously damaged by overgrazing. Laney claimed that his grazing leases constituted COMPENSATION FOR COMPLIANCE vested property rights. The court ruled that ranchers do “not now hold and have never held a “We oppose any action that infringes on an vested private property right to graze cattle on individual’s right to own and manage private federal public lands. At the time plaintiffs’ prede- property, including stream beds, stream banks, cessors began ranching, grazing on the public water rights, wetlands, mineral rights and domain was a privilege tacitly permitted by the adjacent private lands. . . . We support legisla- government by an implied license.” tion protecting the rights and property of pri- Nonetheless, AFBF continues to argue that vate property owners against animal rights federal agencies should be prohibited from tak- activists and environmental activists.” ing any action to protect public land in areas 55 — Oklahoma Farm Bureau policy where ranchers hold grazing permits. For exam- manual. ple, the Farm Bureau argues that the government has no right to fence off streamside riparian The Farm Bureau supports a broad interpre- zones within grazing allotments even though tation of private property rights that would biologists have concluded that cattle grazing has require taxpayers to compensate property owners been a major factor in the destruction of these for the costs of compliance with environmental fragile ecosystems throughout the West. Riparian regulations. AFBF takes the definition of proper- zones provide critical habitat for hundreds of ty rights even further by classifying private use of species, including many that are endangered. public land as a property right. AFBF’s policy The Farm Bureau’s opposition to protection manual insists that taxpayers should compensate of critical streamside habitat fits a pattern that ranchers whenever grazing permits on public the organization has followed throughout its his- land are revoked or ranchers are required to tory. As detailed in Chapter Six, whenever policy reduce cattle numbers on public land. questions involve protection of species with no Federal courts disagree. The Tenth Circuit immediate commercial value, the Farm Bureau U.S. Court of Appeals in Denver recently reject- nearly always assumes an adversarial position. AMBER WAVES OF GAIN

CHAPTER SIX Pushing an Anti-Wildlife Agenda

“The ruling is a major victory for Farm The Farm Bureau has made battling wolf Bureau. This ruling culminates more than recovery a cause célèbre. Virtually everywhere three years of litigation on this issue. The rul- wolf reintroduction has been proposed, AFBF’s ing vindicates the Farm Bureau position that leaders or those of its state afﬁliates have voiced the wolf reintroduction program failed to opposition. address the concerns of farmers and ranchers, Farm Bur eau leaders claim that the wolves 56 and represented overzealous regulation by the represent a land grab by federal bureaucrats using government.” wolf recovery as a pretext for booting cattlemen — Dean Kleckner, AFBF president, off public lands where they have grazed their December, 1997. livestock for generations. In an essay posted on the Farm Bureau’s website, Montana Farm n Dec e m b e r , 1997, a federal district judge in Bureau executive vice president Jake Cummins Wyoming dismayed wildlife conservat i o n i s t s argued that environmental leaders “don’t care Iac r oss the nation with an unexpected rul i n g . whether the wolves live or die” and claimed that The judge ruled that the rei n t r oduction of wolves “the whole wolf program was a fraud. The real by the federal government in 1995 and 1996 in goal was to use the Endangered Species Act to Yel l o wstone National Par k and on federal lands in expand federal land use control. Neither the fed- central Idaho had been unlawful and that the new eral government nor the leaders of the major and thriving wolf populations must be rem o ved . environmental groups have ever really cared a The ruling, which was later overturned by a hoot about the welfare of the wolves.” Environ- higher court, was chieﬂy the result of a lawsuit mentalists simply want to “redistribute wealth by brought by the American Farm Bureau consolidating power in the federal bureaucracy,” Federation (AFBF) and three state farm bureau he said, suggesting that such people still admire federations. “the Communist ideal.” AMBER WAVES OF GAIN

WHY SAVE WILDLIFE? servation groups at risk if they propose animals or plants for listing under the act. The Farm “We believe that modern society cannot Bureau suggests that anyone proposing a listing continue to operate on the basis that all species should “be required to post a bond for damages must be preserved at any cost. All state and incurred if the species are subsequently not federal actions designed to protect alleged found to be endangered or threatened.” In the threatened and/or assumed endangered and event that this altered version of the ESA might threatened species pursuant to the ESA must still protect any plants or animals, the Farm demonstrate that the benefits to humans exceed Bureau wants taxpayers to compensate landown- the cost to humans.” ers for any resulting “reductions in property val- — AFBF 1999 policy manual. ues or for the loss of use of property.” At AFBF’s 1999 convention, delegates adopt- “Many predators such as the grizzly bear ed a wildlife pest and predator control policy and some wolf species are contributing very lit- calling for legislation “which would require the tle tangible benefit to the American people, and control of wildlife including endangered species” the extinction of the dinosaur, brontosaurus, that damages crops or kills livestock. The policy pterodactyl, sabertooth tiger and countless other recommends that property owners “have the species is not hindering the occupation of earth right to control predators in any way possible” if 57 by the human race. Therefore be it resolved the animals cause damage on private land — NMFLB strongly urge that the endangered meaning that ranchers legally could kill wolves, species act be reworded....” grizzlies or other protected species. Delegates also — New Mexico Farm and Livestock voted to petition for dropping wolves and grizzly Bureau 1999 policy manual. bears from the endangered species list and to oppose further introductions of bison on federal AFBF’s effort to stop wolf reintroduction is land. Another resolution called for abolishing the only one aspect of a much broader anti-wildlife U.S. Fish and Wildlife Service. Other policies on agenda. AFBF has been urging Congress to wildlife approved at the convention ran the spec- rewrite the Endangered Species Act (ESA) so that trum from the improbable to the downright species could be protected only if doing so satis- bizarre: fies a strict cost-benefit economic analysis. Under • A resolution on wildlife management the AFBF proposal, modification of endangered- objected to the “federal policy” of allowing species habitat would no longer be prohibited. wildlife to graze rent-free on federal lands. This Furthermore, the Farm Bureau says no U.S. policy “is discriminatory to other grazing users species should be listed if it can be found in who pay for forage on an animal-unit-month another country. basis,” the resolution said. The same resolution The Farm Bureau would also like to put con- called for renaming prairie dogs “prairie rats” so AMBER WAVES OF GAIN

that people will no longer think of them as trample all over the State of Idaho, this bill sends “comparable to poodles.” the message that we don’t necessarily like it.” • Another resolution supported everyone’s • The Wyoming Farm Bureau staked out a right to own a reindeer regardless of race, creed position against reintroduction of endangered or national origin. Currently only native black-footed ferrets. Alaskans are allowed to keep reindeer. • The Illinois Farm Bur eau listed “delay in the •To help salmon recover, the Farm Bureau in t r oduction of wild elk into rural areas of Ill i n o i s ” favors eliminating or controlling such salmon as one of its major accomplishments for 1998. predators as sea lions and seals. AFBF would also • The Missouri Farm Bureau worked against like to “privatize salmon fisheries for stronger a ballot initiative to outlaw bear wrestling. fish.” The bureau did not explain exactly how Animal fighting had been illegal in Missouri for private hatcheries might produce stronger stocks 112 years until the state supreme court over- of salmon — and little scientific evidence exists turned the law in 1985 as too vague. A 1998 ini- to back up that conclusion. The National Marine tiative reinstated penalties for baiting or fighting Fisheries Service, the Idaho Fish and Game animals. The bureau argued that the initiative Commission and organizations representing uni- “could unintentionally call into question the use versity biologists have all agreed that breaching of live fishing bait, prohibit common rodeo prac- some dams on western rivers would give endan- tices by subjugating to a national rodeo associa- 58 gered salmon the best chance of survival. But tion the authority to determine what local rodeo AFBF strongly opposes that option. events are legal, and interfere with traditional Over the years, AFBF has regularly opposed quail and raccoon hunting practices.” But voters plans to aid wildlife regardless of the impact on approved the bear wrestling ban by a 62.6 per- agriculture. And state farm bureaus seem to be cent majority. doing all they can to interfere with species protection and recovery. For example: PRAIRIE DOGS/PRAIRIE RATS • The Idaho Farm Bur eau opposed designa- The South Dakota Farm Bureau is urging the tion of the Snake River Bir ds of Prey Nat i o n a l federal Bureau of Land Management and U.S. Co n s e r vation Area which protects the habitat of Forest Service to control prairie dogs by any Nor th America’s densest concentration of raptors. means necessary. Prairie dogs are keystone • The Idaho Farm Bureau also pushed a bill species, that is, their presence in the ecosystem is in the state legislature to require the federal gov- critical to many other species. In 1989, Def e n d e r s ernment to obtain the legislature’s permission of Wildlife sued the Env i r onmental Prot e c t i o n before any species could be reintroduced. “We Agency (EPA) to stop the use of above-ground love this bill,” said a Farm Bureau legislative strychnine baits against prairie dogs, ground alert, “and even though preservationists will squirrels, meadow mice and other animals. argue that the ESA gives the Feds the right to Defenders argued that these pesticides also killed AMBER WAVES OF GAIN

some 60 nontarget, federally protected species, fully to stop the state’s reintroduction of the lynx including 15 threatened or endangered species. in the Rio Grande/San Juan National Forest. The Farm Bur eau unsuccessfully intervened in the Bureau president Roger Bill Mitchell voiced fear lawsuit, arguing for continued use of the poisons. that introduction of an additional predator The Colorado Farm Bureau is ﬁghting might “place other species in jeopardy of becom- attempts to list black-tailed prairie dogs as ing endangered.” threatened. The bureau contends that if the prairie dog is listed, all hunting and poisoning PANTHER FLIP-FLOP programs would have to be discontinued and The Florida Farm Bureau in 1998 went on landowners might be required to develop habitat record opposing reintroduction of endangered conservation plans. Prairie dog numbers have Florida panthers in the northern part of the declined radically in recent years as the animal’s state, citing alleged threats to domestic livestock habitat has been converted to other uses. This and private-property-rights restrictions. Panthers dwindling species is the sole food source for have nearly disappeared from southern Florida, endangered black-footed ferrets, arguably the in part because of inbreeding and highway rarest mammal in North America. deaths. Scientists have also discovered that toxic chemicals from agricultural runoff and other LYNX CONSPIRACY sources may interfere with the panthers’ ability 59 Efforts to reintroduce the lynx in Colorado to reproduce. It was hoped that bringing pan- could mean the end of agriculture in the state, thers into northern Florida would improve their according to the Colorado Farm Bureau. In a let- chances for survival. ter to the U.S. Fish and Wildlife Service, the The Florida Farm Bureau’s opposition was a bureau insisted that listing the lynx as threatened slap in the face, says Florida Panther Society in Colorado could stop agricultural use of public president Stephen Williams, because the Farm lands. “This is just a misguided attempt to halt Bureau, ironically enough, had won and spent a economic development in struggling rural areas,” $180,000 state grant it had received for a pan- wrote Buford Rice, executive vice president. “If ther education program. The money came from the lynx is listed, it could effectively terminate the Environmental Education Trust Fund, a vol- every agricultural activity, existing or proposed, untary program that collects extra fees on auto in Colorado.” license plates to support research and education The Colorado Farm Bureau also says it is programs beneﬁting panthers and endangered concerned that reintroduction of a predator manatees. The Farm Bureau used the grant to would put more pressure on livestock, although print brochures and mount panther-protection the lynx is not known to prey on sheep or cattle. exhibits around the state. The lynx is already on Colorado’s endangered Bureau president Carl Loop, who is also a species list. In 1998, the bureau tried unsuccess- vice president of AFBF, says the Farm Bureau SOUTHERN LESSONS

believes agriculture can share land with panthers. agency responsible for killing predators on behalf “We were in favor of saving the panther, and of ranchers will continue operating with a fat they were looking at taking a lot of land for pan- budget. AFBF lobbyist Jon Doggett acknowl- ther habitat,” he said in an interview. “We edges that the Farm Bureau was instrumental in weren’t sure what our position should be, and we reversing a funding cut for the Department of thought an education program would be the best Agriculture’s Wildlife Services (formerly called way to do it.” Loop justifies the later decision to Animal Damage Control), whose agents trap and oppose reintroduction by the fact that northern poison predators on public and private land. The Florida is more populated than the south. “I House of Representatives voted in June, 1998, to don’t see it as a contradiction,” he said. “We were cut $10 million from the Wildlife Services trying to preserve them in their habitat in south appropriation. After intense lobbying by Farm Florida.” Bureau representatives in several states, the Despite the change of heart, Loop says the House reversed its decision the next day. education program “was a good experience for In the West over the last five years, Wildlife us. We got a lot of support out of Audubon and Services has killed or trapped mountain lions, other groups and it helped to build a relation- black bears, coyotes, foxes and golden eagles — a ship.... We find we have a lot in common. Where total of 90,814 predators in 1997 — even in des- 60 there’s problems, there’s got to be a best way to ignated federal wilderness areas, including the solve them, to work together.” Even so, the Santa Teresa Wilderness in Arizona and the Panther Society feels betrayed. In November, Apache Kid Wilderness in New Mexico. 1998, the Florida Game and Fresh Water Fish Ranchers had complained that these predators Commission said it would abandon efforts to attacked their calves. “You’d think if there was reintroduce panthers in north Florida because of one place that should be predator-friendly, it strong local landowner opposition. would be the wilderness,” says John Horning of the conservation group Forest Guardians. “It ANIMAL DAMAGE CONTROL boggles the mind that on the cusp of the 21st “As wildlife numbers grow by leaps and century we are paying federal employees to kill bounds, conflicts with humans are increasing,” predators on federal land for the benefit of a wrote AFBF broadcast services director Stewart handful of people.” Truelsen in a 1998 web posting. AFBF apparently is satisfied that “wildlife numbers are much GRA Y WOLVES AND SPOTTED OWLS higher than in the past” and believes that the When the New Mexico Farm and Livestock greatest wildlife challenge today is controlling Bureau and other ranching groups asked a feder- pest species. al court in December, 1998, to bar further Because of the Farm Bureau, the federal releases of endangered Mexican gray wolves, AMBER WAVES OF GAIN

bureau attorneys argued that the wolves would ‘cowboy biology,’ but it should be no laughing take food away from spotted owls from which matter to the court.” Apparently the court didn’t ranchers “derive substantial aesthetic enjoyment.” buy the farm bureau arguments. It dismissed the The Albuquerque Journal chastised the ranching lawsuit. groups in an editorial saying the court should Attacks such as these on wildlife protections consider sanctions for ﬁling frivolous pleadings. are just one part of a comprehensive anti-envi- “Crocodile tears over the fate of the spotted owl ronment, anti-labor agenda that the Farm are so contrary to the track record of ranching Bureau continues to pursue. And as the next groups as to be bereft of credibility,” the editorial chapters will illustrate, when it comes to arguing said. “Ranchers and their lawyers probably its point of view, the Farm Bureau doesn’t neces- enjoyed a good guffaw or two over that bit of sarily rely on truth or scientiﬁc validity.

61 AMBER WAVES OF GAIN

CHAPTER SEVEN Spinning the Global Warming Issue

“Our own president and vice president are Flawed Treaty Impacts America.” The title refers embarrassed and ashamed by our warlike her- to the Kyoto Protocol, a treaty negotiated in itage and our unabashed economic success. December, 1997, that commits nations to reduc- Hence they seek every opportunity to give up ing emissions that contribute to global warming. our national sovereignty to world bureaucratic The United States has not signed the Kyoto bodies like the United Nations . . . [giving Protocol, and AFBF has bragged about its influ- 62 them authority] to scold and punish us for our ence in preventing ratification by the Senate. faults and then redistribute our wealth to the In the video, Senator Chuck Hagel (R- sick, lame and lazy nations who have suffered Nebraska) warns that “devastating economic con- so from our overachievement.” sequences to agriculture families would ensue” if — Jake Cummins, Montana Farm the United States signs the treaty. Even more Bureau executive vice president, writing frightening, Hagel says, the Kyoto Protocol about treaties on climate change. would give “United Nations bureaucrats the ability to go into Nebraska and close down a farm or he anti-environmental campaigns pursued by a ranch” because “that farmer’s soil might not the Farm Bureau may be all about business, comply with the Kyoto treaty. He might have Tbut often the rhetoric used takes on an emo- too much nitrogen in the soil. This is real,” tional tone. Farm Bureau speeches and literature Hagel says on the tape. “This is in the protocol.” on these issues seem designed to inflame. The In reality, this is not in the protocol. The information provided is sometimes misleading or protocol gives the United Nations no such downright false. Consider the issue of global cli- power. Nothing in the treaty suggests that any- mate change. one could shut down an individual farm against At its 1999 convention, AFBF gave members an owner’s will. Senator Hagel’s interpretation “is a videotape titled, “Kyoto in Perspective: A absolutely incorrect,” says Robert Watson, who AMBER WAVES OF GAIN

chairs the Intergovernmental Panel on Climate Instead of contributing to potential solutions, Change. To begin with, Watson says, the treaty the Farm Bureau seems intent on scaring farmers makes it clear that all decisions regarding green- into believing that efforts to reduce global warm- house gas reductions are entirely up to individual ing will mean that energy prices will rise so high nations. If the United States ratified the protocol, that they will be unable to run their machinery. “no one could tell the U.S. how to meet its A 1997 analysis by AFBF economists predicted reduction targets,” Watson said in an interview. that the climate treaty would cause at least a 24 If the United States does ratify the treaty, the percent loss in net farm income. According to nation must reduce emissions of carbon dioxide that analysis, “net profits for corn growers could and other greenhouse gases by seven percent by be slashed by 23 to 51 percent. . . . Net profits the year 2012. Most greenhouse gases come from for hog producers could be reduced 40-85 per- burning fossil fuels, and analyses published by cent. . . . Smaller farmers and younger farmers Consumers Union and others show that simply . . . would find their farms unprofitable and improving gas mileage in automobiles could go a abandon agriculture.” Farm Bureau leaders were long way toward meeting the target. Other still quoting this study in 1999 — without paus- conservation and efficiency improvements also ing to note that the predicted profit losses have would help, and several economists have argued already taken place, not because of higher energy that taking these steps actually would make the prices, but because of monopolistic trends in 63 United States more competitive in the world agribusiness. market by reducing the amount of energy need- The Farm Bur eau insists that evidence of ed to produce goods and services. global warming is lacking and that no scientific The Farm Bureau videotape fails to address consensus exists about the process. “If you look at any of these arguments, which is not surprising some of the scientific data, there’s nothing that considering that the tape was produced by the really proves that dramatic climate changes have Global Climate Information Project, an industry taken place,” Louisiana Farm Bur eau pres i d e n t alliance consisting of auto makers, oil companies and AFBF board member Ronnie Anderson said and others. The tape, of course, does not reveal during the 1999 convention. On the videotape who is behind this Information Project. distributed there, Rep re s e n t a t i v e Jo Ann Eme r s o n As mentioned earlier, the Farm Bureau and (R - M issouri) implies that rep o r ts of scientific these same industries have worked hard to roll consensus are bogus. “People heard we‘ ve got back requirements for better gas mileage in cars. 2,600 quote-unquote scientists who say global Improved mileage would save consumers, includ- warming is a problem,” Emerson tells viewer s . ing farmers, a lot of money and might also help “B ut if you look at who’s who, you find just a few reduce global warming. But fuel efficiency in geologists, a physician, an OB-GYN! Psyc h o l o g i s t s . American cars has been dropping since this Two climatologists. They don’t know any more industry coalition went to work. about global warming than I do.” AMBER WAVES OF GAIN

“That’s absurd,” says Robert Watson, chair- and the National Oceanic and Atmospheric man of the Intergovernmental Panel on Climate Administration (NOAA) were releasing reports Change and a former NASA atmospheric showing that the 1990s were the hottest decade chemist. “Our working groups are made up of ever, 1998 was the hottest year and the pace of the best scientists in the world in their fields.” warming has accelerated. Higher temperatures Indeed, the lists of climate scientists who have pose a variety of threats to agriculture, including contributed to or reviewed the panel’s studies increases in insect and plant pests and harmful comprise many pages of names from the world’s shifts in rainfall. most prominent institutions. Agriculture special- • On January 28, 1999, the American ists, economists and scientists from other disci- Geophysical Union issued a policy statement say- plines are also on the panel, Watson says, because ing that there is a “compelling basis for legiti- the panel is looking at the potential conse- mate public concern” about human-induced cli- quences of global warming as well as atmospheric matic change and that scientific uncertainty processes. “But I can assure you that none of “does not justify inaction” in coping with it. The them are psychologists or OB-GYNs,” he says. union is this nation’s most broadly based profes- At a 1998 House subcommittee hearing, a sional organization representing earth and space group of scientists told Representative Emerson scientists. she was mistaken and was mixing up two differ- • On March 2, 1999, the New York Times 64 ent groups. In one case, a public-interest group reported that “separate studies using different had recruited 2,600 people from all walks of life methods in the last three years have found that to sign a petition expressing their concerns about as the Earth’s atmosphere warms, spring warmth global warming. The climate change panel, on is arriving earlier and autumn coolness is coming the other hand, consists of 2,500 scientists. In later in the Northern Hemisphere.” 1995 this panel stated unequivocally that because • On March 5, the New York Times reported of continued greenhouse gas emissions, the Earth that highly sophisticated NASA aerial surveys had entered a period of climatic instability likely had found that “the southern half of the to cause “widespread economic, social and envi- Greenland ice sheet, the second largest expanse ronmental dislocation over the next century.” of land-bound ice on earth after Antarctica, has Even so, the Farm Bureau has continued to dis- shrunk substantially in the last five years.” tribute the misleading video. And all the while, • On March 15, the journal Geophysical evidence of climate change continues to build: Research Letters published results of a University • On January 11, 1999, while Senator Hagel of Massachusetts and University of Arizona study was telling the AFBF convention that the Kyoto finding that the Northern Hemisphere was Protocol “threatens the liberties of individual warmer in the 20th century than in any other Americans and U.S. industry,” the National century of the last thousand years. The study Aeronautics and Space Administration (NASA) concluded that man-made greenhouse gases were AMBER WAVES OF GAIN

primarily responsible. If estimates that the Earth dependent businesses in small rural towns lost will warm by 3.5 degrees Celsius during the 21st another $8 billion. If global warming adds to Century are correct, the Earth will become these drought problems, it does not bode well for warmer than it has been for millions of years. Texas agriculture. Scientists in Colorado also have found that THE FORECAST FOR FARMERS warmer nighttime temperatures are already killing off grasses that ranchers depend on to “Even if it is proved that global warming feed their cattle during dry summer months. As will occur, who’s to say such a phenomenon Farm Bureau delegates were gathering for the would be detrimental? There are those who 1999 convention, the highly respected journal argue that global warming could benefit — Science published a study by Colorado State not harm — the environment.” University ecologist Richard Alward showing — C. David Kelly, assistant director of that exotic plants and noxious weeds are taking news services, AFBF. over where blue grama grass used to flourish. Blue grama thrives during hot summers and is In its 1995 report, the Intergovernmental tolerant of drought but needs cool night temper- Panel on Climate Change detailed what is likely atures to survive. It can get cattle through times to happen as the planet warms. Intensified when no other nutritious grasses survive. 65 storms, widespread flooding and crop-destroying The Farm Bureau obviously has chosen to droughts were listed. Texas farmers have some ignore these studies and other credible scientific experience with all of those, and whether recent evidence of the threat that climate changes pose conditions are related to global warming or not, for farmers. Instead, Farm Bureau rhetoric on the bad weather seems to be getting worse. In global warming appears to be driven by the orga- February, 1999, Texas A&M economists reported nization’s own financial interests. As the next that Texas farmers and ranchers lost $2.4 billion chapter will show, the same pattern is repeated in income because of a 1998 drought. Farm- on issues related to human health. AMBER WAVES OF GAIN

CHAPTER EIGHT Putting Pest Control Before Human Health

“Tell your members of Congress that they sands, of the most widely used, most successful must regulate the regulators. Bureaucratic pesticides we have and in the process ban food handiwork takes $20 billion a year straight off safety and abundance. Americans young and old of our net farm income.... This law gives the may not get the nutrition we need to stay healthy. EPA virtual free rein to pursue their anti- The EPA will be banning the affordability and chemical agenda.” av ailability of wholesome food!” 66 — Dean Kleckner, In reality, EPA is considering whether about former AFBF president. 40 organophosphates should be restricted or taken off the market. Organophosphates are neu- he Food Quality Protection Act of 1996 rotoxins developed originally during World War req u i r es EPA to ree v aluate all pesticides and II as nerve gas agents for chemical warfare. They Therbicides used on food to establish a “rea s o n - work by paralyzing muscles, and they can kill able certainty of no harm.” EPA must pay special humans and other species in exactly the same attention to the effects of these toxic chemicals on way they kill bugs. Organophosphates are widely ch i l d r en and consider all sources of exposure, used as roach and termite killers, and since they including drinking water and household bug are also used on such crops as cotton, soybeans, sprays. Although AFBF supported the legislation, potatoes, corn, carrots, rice, bananas and other subsequent implementation has inspired Far m fruit, human exposure is a concern. Bur eau leaders to make wild predictions about EPA has accelerated its review of new, less the end of agriculture as we know it. “As a farmer toxic alternatives to organophosphates, and sev- and a father, I’m outraged! And, you should be, eral are already on the market. But development too!” writes Arkansas Farm Bur eau pres i d e n t of these new pesticides has not stopped the Farm An d r ew Whisenhunt on the bureau web s i t e . Bureau’s vitriolic rhetoric. “EPA is moving quick- “The EPA intends to ban hundreds, maybe thou- ly and not so secretly to eliminate many of our AMBER WAVES OF GAIN

most important crop protection tools,” Kleckner new chemicals at a fairly brisk pace. What else wrote in a 1998 column. “Organophosphates are would they have us do?” in the agency’s sights now. If the agency contin- If anything, says World Res o u r ces Ins t i t u t e ues on the course it has set, farmers will see their epidemiologist Devra Davis, EPA is giving chemi- control costs skyrocket, product quality deterio- cal companies too much of a break at the expense rate and crop volumes decline.” of protecting children ’s health. Davis objects to On the Arkansas Farm Bur eau web s i t e , EP A’s practice of keeping pesticide industry stud- Whisenhunt goes furth e r , putting the scare into ies secret. Outside scientists are allowed to see farmers by telling them that the Food Qua l i t y only summaries. And Davis raises an even more Protection Act “is being wielded carelessly by the disturbing concern: EPA has been accepting EP A in a way that will not just put American in d u s t r y studies of pesticides tested directly and farmers out of business, it will endanger the safety deliberately on human beings. of fruits and vegetables.... Th e r e are serious questions about the ‘sc i e n c e ’ the EPA has used to deter- HUMAN GUINEA PIGS mine that these pesticides are unsafe. It’s not allow- When Dow Agrosciences wanted to ﬁnd out ing input from outside scientists (‘pe e r - re v i e w’) how much of the organophosphate chlorpyrifos that ensures its ‘da t a ’ is [sic] valid. Over zealous and humans could tolerate before suffering serious ca r eless banning of the most widely used, safe pes- nerve damage, the company asked for employee 67 ticides will cause a major disruption of agricultural volunteers to consume measured doses of this pr oduction and weaken our nation.” highly toxic chemical. EPA considered the results Again, as with global warming, the Farm of the experiment in setting “safe” limits for Bureau pitch distorts the facts. To begin with, chlorpyrifos exposure. says EPA’s senior pesticide science adviser Penny Although questions have been raised about the Fenner-Crisp, most of the studies EPA relies on ethics of using human test subjects, a coalition of were provided by pesticide companies. The eval- farm, food, pest management and manufacturing uation process is subject to extensive outside peer gr oups has encouraged chemical companies to test review. University, government and chemical their wares on humans more often. The coalition, industry scientists sit on an independent science called the Implementation Wor king Grou p , says it advisory panel that checks EPA’s work. Another “joined together to address and respond to the 52-member panel representing everyone from req u i r ements of the Food Quality Protection Act . ” environmentalists to the Farm Bureau advises AFBF is a member of the grou p . EPA on every step. Former AFBF president In 1998 this group took the position that Kleckner even sat on that panel. “We have been pesticide makers “will ﬁnd it increasingly unde- bending over backwards to involve all of the sirable” to rely on animal testing “since this cus- interested parties as we go through this process,” tomarily requires the application of a tenfold says Fenner-Crisp. “We’ve been cranking out uncertainty factor to account for interspecies AMBER WAVES OF GAIN

variations.... For this reason, there probably will of the pesticide reviews. AFBF is also asking leg- be an increased reliance by registrants on data islators to impose a moratorium on EPA regula- from human studies on acute or short-term toxi- tions and cut the agency’s budget. city of organophosphates that could avoid the Although it may be a coincidence, at least one need for that tenfold uncertainty factor.” Farm Bur eau-linked company manufactures sev- In other words, EPA might allow higher pesti- eral organophosphates. Novar tis (the multination- cide levels in food and water if testing is done on al corporation now in partnership with a Far m humans rather than mice. Of course, feeding pesti- Bure a u - a f fi liated cooperative) makes organophos- cides to healthy adult males says nothing about the phates such as profenofos, a chemical on EPA’s effects these chemicals might have on children or initial hit list. EPA put profenofos on the list pr egnant women. Nor does it shed light on the because the compound is considered one of the effects of long-term, low-dose exposures. Neve rt h e - most hazardous insecticides on the market. “We less, says Ken Cook of the Env i r onmental Work i n g decided to ree v aluate the worst pesticides, the Grou p , “pesticide companies have a huge fina n c i a l most dangerous ones first,” says Fen n e r - Cr i s p . in c e n t i v e to test people instead of other animals. “Th a t ’s why we’re looking at organophosphates.” They know that U.S. regulations on pesticides are The Farm Bureau maintains that dangers finally being tightened. Human tests enable chemi- from pesticide residues have never been proved, cal companies to eliminate safety factors that have even for the chemicals EPA considers the greatest 68 long been applied when nonhuman animals are threat to children’s health. “Farm Bureau is used for testing.” absolutely in favor of protecting children from EP A is only now beginning to grapple with the higher risks of pesticides if and when they do the issue. An announcement of a task force meet- exist — that’s a no-brainer,” says Dennis Stolte, ing late in 1998 said “the Agency is parti c u l a r l y AFBF deputy director of government relations. in t e r ested in exploring the issues raised when pri- “We think EPA right now is overreaching in vate companies choose to test pesticides in applying the full tenfold margin of safety for humans, and submit the results of such res e a rc h children before we have data to show there are to EPA. Because EPA neither encourages nor actual health risks there.... Most food experts req u i r es res e a r ch on pesticide effects in humans it would agree that the health risks from food pesti- has not set standards for such studies. A central cide residues, if not nonexistent, are certainly issue is how the Agency should assess the scientif- very, very small.” ic and ethical acceptability of these studies when Pediatrician Philip J. Landrigan of Mount they are submitted for its consideration.” Sinai Medical Center in New York takes issue Whatever EPA decides with regard to human with that conclusion. Landrigan chaired a panel testing, former AFBF president Kleckner said of the National Academy of Sciences that con- Farm Bureau lawyers stand ready to file lawsuits cluded in 1993 that EPA regulations systemati- if Farm Bureau leaders do not like the outcome cally underestimated children’s risk from pesti- AMBER WAVES OF GAIN

cides. The academy’s study and similar research higher-priced organic food. Yet the Farm Bureau led to passage of the Food Quality Protection has done little to foster such development. And Act, which requires EPA to err on the side of in Iowa, some organic farmers are accusing the caution to protect infants and children. Farm Bureau of making it difficult to keep Acc o r ding to Consumers Union, the res e a rc h organic farms chemical-free. and advocacy group that publishes Co n s u m e r Rep o r ts magazine, two out of ever y five toddlers DRIFTING POISON who eat an American-grown peach are getting too much of the organophosphate methyl parathion. “I cannot imagine why the Iowa Farm A Consumers Union analysis of government data Bureau wants to protect farmers and applica- found that apples, grapes, green beans, peaches, tors who violate the law. The Farm Bureau pears, spinach and winter squash all have unac- talks about how they want to be good neigh- ceptably high levels of pesticide res i d u e s . bors. If that’s true, I can’t understand why they Consumers Union stresses that these residue lev- are so upset about raising penalties for farmers els are not acutely toxic. They are not poisonous who allow pesticides to drift onto their neigh- in the sense that a child could be sickened from bors’ property.” one meal. But over time, if young children eat — Dennis Fett, Iowa organic farmer. food with residues at these levels, it could raise 69 the risk of cancer and other health prob l e m s . Nearly two decades have passed since The Farm Bureau argues that restrictions on Dennis Fett began raising organic ve g e t a b l e s pesticides will lead to a scarcity of wholesome, and peacocks on his Minden, Iowa, farm. In affordable food. But according to Consumers that time, he has never used herbicides or insec- Union policy analyst Jeannine Kenney, “Many ticides, but Iowa Pesticide Bu reau inve s t i g a t o r s safer pest-control alternatives exist.” Parents in 1998 found significant levels of chemicals on should be able to feed their children nutritious his land, including atrazine and the highly tox i c fruit and vegetables without exposing them to herbicides acetochlor and 2,4-D, a major com- potentially unsafe levels of harmful pesticides. ponent of Agent Orange. “Phasing out a small fraction of high-risk insecti- Fett has filed complaints with the state year cide uses would substantially reduce children’s after year alleging that pesticide applicators risk while maintaining a productive, sustainable spraying neighboring farms allow the chemicals agriculture,” says Kenney. to drift onto his property. A nationally recog- Because of consumer demand for safer pro- nized peafowl breeder, Fett blames the death of duce, organic farming has emerged as an impor- one of his prize peacocks on the chemicals. tant segment of American agriculture. Small Other Iowa farmers have blamed pesticide drift farmers, especially, have discovered that they can for killing animals and contaminating organic increase per-acre profits dramatically by growing crops. In 1998, the Iowa Pesticide Bureau AMBER WAVES OF GAIN

received 146 such complaints. Fett believes The Farm Bureau, along with a coalition of well- penalties for this offense are too low to motivate heeled industrial associations, has helped con- applicators to be more careful. vince journalists and the public that the Alar For the last six years, Fett has campaigned for scare was a hoax — that the chemical never a tougher law that would raise fines from the posed any health risks and that apple farmers lost current $500 maximum to $1,500. Other mid- a great deal of money as the result of public hys- western states impose fines of as much as $7,500 teria over a nonexistent threat. per offense, but a bill to raise penalties died in a The Farm Bureau is wrong on all counts. subcommittee after the Iowa Farm Bureau raised Alar was taken off the market in 1989 because objections. Says Fett, “We’ll push for the bill credible peer-reviewed scientific studies found again next year, but I honestly don’t think it will that the chemical posed an unacceptable cancer go through. The Farm Bureau holds way too risk, especially to young children. The American much power here.” Academy of Pediatrics had urged EPA to ban Farm Bureau leaders contend that organically Alar in 1986. Since then, EPA’s independent sci- grown foods are no more healthful than the ence advisory board has reviewed the evidence chemically assisted kind. They are ready to chal- on Alar three times and each time has reached lenge anyone who says pesticide residues in food the same conclusion: Alar residues pose a signifi- cause harm. In more than a dozen states, farm cant health risk and the chemical should not be 70 bureaus have helped to win passage of anti-dis- used. The World Health Organization’s paragement laws making it illegal to report that International Agency for Research on Cancer chemical residues or other contaminants in food and the National Toxicology Program of the U.S. are harmful unless those claims can be proved Public Health Service both confirmed Alar’s car- scientifically. cinogenicity. Further evidence about Alar’s dangers can be found in numerous studies published VEGGIE LIBEL in respected peer-reviewed scientific journals with exacting standards. To call this work “junk” “You might remember the Alar debacle. debases the very notion of sound science that the The same kind of junk science that sent moth- Farm Bureau claims to cherish. ers scurrying to dump apple juice and snatch The Farm Bureau also exaggerates the impact apples out of lunch bags is again staring us in that the Alar controversy had on growers. Alar the face.” was never critically important for producing — Dean Kleckner, healthy apples. It was used to make orchards former AFBF president. ripen on schedule. After a 1989 CBS “60 Minutes” broadcast raised questions about EPA’s Equating Alar with junk science is one of the delay in taking action on Alar,Washington apple most enduring myths of environmental debate. growers claimed to have lost $100 million in AMBER WAVES OF GAIN

sales and sued CBS for damages. The Farm related risks. It has urged the Department of Bureau says “the real loss was close to $450 mil- Agriculture to investigate “unsubstantiated” lion.” But according to the Department of media reports and to help producers challenge Agriculture, apple sales only stumbled momen- them. This position seems ironic for an organiza- tarily and were back to normal within four tion that is usually so vocal in criticizing the months. A federal court dismissed the growers’ intrusiveness of the federal government. Even the lawsuit, finding that the “60 Minutes” broadcast trade magazine Feedstuffs considers it a bad idea. had been substantially correct. In 1996 the U.S. In an editorial titled, “Absolving Farmers Worst Supreme Court upheld that ruling. Step in Food Safety,” Feedstuffs says, “Although Why the Farm Bureau has chosen to ignore the AFBF means well, such an arrangement these facts remains unclear, but the organization would compromise the USDA’s role as interme- has taken advantage of the misunderstandings diary between producers and consumers.” about Alar to help silence critics who raise con- The New Mexico Farm and Livestock Bureau cerns about pesticides or food-borne illness. In would simply cut off all information about every state where farm bureaus have lobbied for which pesticides are used on which crops, or so-called “veggie libel” laws, the organization which microorganisms are found in whose pro- consistently raises the specter of Alar and “junk cessing plants, or how much manure has run science.” The tactic has been successful. Farm into which streams, by exempting all agricultural 71 bureaus have persuaded legislatures in 13 states activities from right-to-know laws. The New to approve such laws. Mexico Farm and Livestock Bureau approved a Most of these laws remain untested. In one resolution calling for such an exemption at its well-publicized case, cattle growers sued televi- 1998 state convention. sion personality Oprah Winfrey under the Texas At that same convention, New Mexico dele- veggie libel law, but the court ruled that the law gates adopted a resolution opposing field reentry did not apply to Winfrey’s reports on mad-cow regulations that the Farm Bureau considers disease. A jury found in Winfrey’s favor on other “unreasonable.” Those rules prohibit growers counts. Regardless of that outcome, current post- from sending workers back into fields immedi- ings on the Montana Farm Bureau’s website refer ately after they are sprayed. They are based on to the Winfrey case as proof of “why anti-dispar- manufacturer estimates of how long insecticides agement laws are necessary to protect agricultural and herbicides remain acutely toxic. The resolu- products.” tion is just one example of Farm Bureau resis- AFBF has even tried to get the federal gov- tance to even minimal protections for farm ernment involved in squelching reports of food- workers. AMBER WAVES OF GAIN

FARM WORKERS AT RISK spraying pesticides on workers. “That’s a totally indefensible practice,” he says. “Farm Bureau “The new regs weren’t anything major that supports the strongest possible penalties for pro- would be a substantial disruption or expense to ducers who openly violate the law.” But he says employers, but you should have heard the he is not convinced that pesticide exposure has screaming and howling. You would have seriously harmed farm workers. “From the work- thought somebody had burned their barns and er safety data that I’ve seen, it’s very unclear run off their stock.” whether we can document any deaths from pesti- — David Hall, cide use,” he said in an interview. Texas Rural Legal Aid attorney. The case of Zacarias Ruiz is well documented in the medical literature, however. Ruiz was a In the early 1980s, when the Texas Texas field hand in the early 1980s when he died Agriculture Department adopted regulations to a few hours after exposure to the extremely toxic prevent growers from spraying pesticides while herbicide Dinoseb. Although it had been well farm workers were in the fields, the Texas Farm established that Dinoseb can be absorbed Bureau nearly succeeded in getting the state leg- through the skin, Ruiz was given no gloves or islature to revoke those rules. “The Farm Bureau protective clothing when he was told to treat a acted as though an asteroid had struck Texas,” field using a backpack and hand-held sprayer. 72 says Jim Hightower, then state agriculture com- His death helped prompt the Texas Agriculture missioner. “To hear them talk, you’d think that Department’s new pesticide regulations. In this was the end of civilization as we knew it,” he another case, Ciba Corp. took one of its reflected during a recent interview. organophosphates off the market “after several Hightower’s agriculture initiatives, including farmers using the products were reported to have his efforts to protect workers, so angered the died or been hospitalized due to accidental poi- Texas Farm Bureau that it tried to persuade the soning,” according to a 1995 report in European legislature to convert Hightower’s job from an Chemical News. (One year later Ciba merged elective to an appointive position. Bureau with Sandoz to create Novartis. As mentioned spokesman Gene Hall acknowledges that the earlier, Novartis and the Farm Bureau’s bureau wanted to get rid of Hightower, no mat- Growmark and Countrymark cooperatives have ter how. “I wouldn’t agree that it was an unde- since formed partnerships to sell pesticides, seeds mocratic move,” Hall said in an interview. “It and other products to co-ops.) was part of a strategy to change the leadership of Pesticide safety rules are not the only farm the Texas Department of Agriculture.” The bill worker protections the Farm Bureau has failed by one vote. opposed. A posting on the Farm Bureau web site AFBF lobbyist Dennis Stolte maintains that boasts that last year “Farm Bureau worked to the Farm Bureau certainly does not approve of decrease the regulatory burden on thousands of AMBER WAVES OF GAIN

farm employers, due to the Migrant and Seasonal and has tried to block minimum wage laws and Worker Protection Act, the Fair Labor Standards workers’ compensation insurance coverage. For Act, the Worker Protection Standard, the example: Occupational Safety and Health Act, as well as • For years the Farm Bureau successfully numerous state and local laws.” blocked Idaho legislation to require workers’ In his 1992 book The Corporate Reapers, compensation insurance for farm labor. agribusiness historian A.V. Krebs details the According to the Idaho Statesman, Idaho Farm Farm Bureau’s extensive record of anti-farm-labor Bureau president Tom Geary argued that the activity. According to Krebs, the Farm Bureau insurance was “a socialistic and Communistic played “a major role in excluding agriculture and system.” After turning down farm worker cover- farm labor from the provisions of the 1937 age eight times, the Idaho legislature finally National Labor Relations Act.” The significance adopted the requirement in 1996. That was after of that action is critical to understanding the farm worker Javier Tellez Juarez lost both arms Farm Bureau’s attitude toward family farmers, and a leg when his clothing caught in a power the people AFBF leaders routinely laud as the post-hole digger. The burden of his medical costs backbone of America. In 1937 many of the went to taxpayers. Now, Idaho Farm Bureau nation’s farm workers had quite recently been Mutual Insurance sells workers’ compensation family farmers themselves. insurance itself through its subsidiary, Western 73 The year 1937 marked the height of the Community Insurance Company. Dust Bowl, a 14-year drought that culminated in • In Ohio, the Farm Bu reau worked to dust storms that destroyed crops and pastureland retain an exemption from the National Labor throughout the Great Plains. By then, many Relations Act for large corporate farms. As a thousands of family farmers in Oklahoma, Texas, result of this exemption, workers on egg farms Kansas, Colorado and New Mexico had lost their with millions of laying hens have no pro t e c t i o n farms. Because their skills were primarily in f rom firing or harassment by their bosses if they farming, many became farm workers. The Farm t ry to organize labor unions. The exemption has Bureau opposed nearly all measures that would w o rked to the benefit of companies such as have given these new farm workers legal protec- Bu c k e ye Egg, one of the nation’s largest pro d u c- tions, higher wages and better working condi- ers, with annual sales of $100 million. In 1998, tions. By doing so, the Farm Bureau helped to Bu c k e ye agreed to a $425,000 settlement with ensure that these former farming families would the U.S. Occupational Safety and He a l t h remain in poverty. Administration over substandard working condi- Today, the Farm Bureau continues to fight tions and migrant housing. Neighbors are n’t against farm worker benefits. The organization happy with Bu c k e ye, either. T h e y’ve complained has worked against including farm workers under about enormous swarms of flies and about Social Security and unemployment insurance m a n u re pro b l e m s . AMBER WAVES OF GAIN

• The Texas Farm Bu reau opposed legislation tions the Farm Bureau wants to change apply to in the 1980s to ban the short-handled hoe. hired help. Under the Farm Bureau proposal, 12- Growers prefer that workers use this tool year-olds could be employed full time on farms because it enables them to be more precise in as long as parents approve. chopping weeds. Un f o rt u n a t e l y, the stooped In the Rio Grande Valley of south Texas, position re q u i red to use this hoe can lead to where big fruit and vegetable growers dominate serious back trouble. In 1999, the New Me x i c o agriculture, the U.S. Department of Labor is Farm and Livestock Bu reau successfully opposed called in every now and then to investigate l e g i s l a t i ve efforts to ban the short-handled hoe. employment of children. “And sure enough, they The tool was already off limits under state re g u- ﬁnd six-, seven- and eight-year-olds working lations, but bill sponsors wanted to add the with mommy and daddy,” Texas Rural Legal Aid f o rce of law by speciﬁcally making the practice attorney David Hall says. i l l e g a l . Hall and other legal-aid attorneys who have called attention to the number of children work- CHILD LABOR ing on farms instead of attending school have landed on the Farm Bure a u ’s enemies list. Both “The child labor provisions of the Fair AFBF and the Texas Farm Bur eau advocate cut- Labor Standards Act are outmoded and should ting back or eliminating the Legal Ser vices Corp- 74 be modernized. Young people 10 to 12 years of oration, a federal organization that provides legal- age should be able, with parental consent, to do aid attorneys like Hall to assist low-income clients. certain kinds of safe work on farms during “Legal aid lawyers typically have greater res o u rc e s non-school hours and those aged 12 to 13 to pursue a technical or frivolous claim under laws should be allowed more latitude in working on go verning the employment of migrant farm work- farms with parental consent.” ers,” says the AFBF policy manual. — AFBF 1999 policy manual. On labor and a multitude of other issues, the Farm Bureau has aligned itself with groups on Family farms are already exempt from the the far right of the political spectrum. Farm child-labor provisions of the Fair Labor bureau leaders insist that the organization runs Standards Act; work restrictions do not apply to on principles of fair-mindedness. But the next the children of farmers. The child labor restric- chapter will show that the record says otherwise. AMBER WAVES OF GAIN

CHAPTER NINE Aligning With the Extreme Right

“We are probably the least selfish occupa- t the 1999 AFBF convention, faces of color tional group that there is in America. I don’t were scarce. A few African-American staff see us taking strong legislative positions where Amembers were present, but black or we set out to be of harm to other parts of our Hispanic voting delegates were notably absent on society. I don’t think we take extreme positions the convention floor, even though the conven- 75 that hurt other people. We try not to.” tion was in New Mexico, a state with a signifi- — Dick Newpher, executive director, cant Hispanic population. AFBF,Washington, D.C., office. By voice vote without debate, delegates approved a resolution calling for repeal of the “The district attorney should be required to Voting Rights Act of 1965, the cornerstone of institute a dependent and neglected action the nation’s civil rights protection. In an inter- against any unwed mother filing a second view during the convention, AFBF’S then presi- application for benefits under Aid to Families dent Kleckner claimed to know nothing of that with Dependent Children (AFDC). No AFDC policy plank even though Voting Rights Act payments should be made beyond the first repeal has been part of AFBF policies for years. child.” “I’ve heard of the Voting Rights Act, but I don’t — Oklahoma Farm Bureau know that we have a position on it, either for or 1999 policy manual. against it,” he said. At a news conference later, he said he could not explain why AFBF was “We favor repeal of the Voting Rights Act of opposed to the act or how repeal might benefit 1965, as amended.” agriculture. “I’m guessing it didn’t get any discus- — AFBF 1999 policy manual. sion at all,” he said. “It usually doesn’t, and I can’t answer the question of why we have it in AMBER WAVES OF GAIN

there, but it probably came from a state farm the New York Times reported that ‘In several bureau some years ago, and it has been in there states . . . there is an increasing identity of inter- ever since.” est and an apparent overlap in membership Herman Cain, president of the National between the Farm Bureau and the Birch Restaurant Association and the only African- Society.’” American to address the full convention, said he In 1995 the Farm Bureau joined forces with had been unaware of AFBF advocacy of repeal of Rogelio Maduro, a crony of ultra right-wing the Voting Rights Act and would look into the conservative Lyndon LaRouche, to try to block matter. Senate ratification of the global biodiversity In agreeing to a $300 million settlement with treaty. Negotiated in Rio de Janeiro in 1992, the black farmers in 1998, the U. S. Department of treaty had widespread support until the Farm Agriculture acknowledged that discrimination Bureau stepped in to oppose ratification. As a against minority farmers is longstanding and result, the United States remains the only major widespread. The department agreed to pay dam- nation in the world that has failed to ratify. ages to settle a lawsuit brought by thousands of For whatever reason, the national and state black farmers who claimed the department had farm bureaus have supported an extensive list of systematically denied them loans and other ser- conservative policies, many with no apparent vices available to white farmers. connection to agriculture or even to Farm 76 In a chapter of his book Dollar Harvest titled Bureau business affiliates. For example: “The Right Wing in Overalls,” Samuel Berger • In 1983, the North Carolina Farm Bureau writes about a link in the late 1940s between the opposed increasing penalties against individuals Arkansas Farm Bureau and Pappy O’Daniel’s who hold workers in involuntary servitude — in Christian American Association, an extreme other words, for people who keep slaves. Ten right-wing organization known for racist views. people had been convicted on slavery charges in O’Daniel’s group was permitted to send litera- North Carolina during the previous three years. ture to members of the Arkansas Farm Bureau, • The Texas Farm Bureau sought repeal of which worked with O’Daniel’s association to the federal minimum wage and wanted the gov- support anti-labor laws. In his book The ernment to cut food stamps for poor families Corporate Reapers, A.V. Krebs reports: “When whose children also get free lunches at school. questioned about its support of such work, • The Oklahoma Farm Bureau has pressured (Arkansas Farm) Bureau President Ed O’Neal the state to prevent teachers from discussing “so- told a congressional committee that it wasn’t called animal rights.” The group also called for such a bad idea if farmers joined the Ku Klux abolition of the state’s Advisory Commission on Klan since every farmer should join something.” the Status of Women. Oklahoma and other state Farm Bureau association with right-wing farm bureaus and AFBF also oppose the Equal groups continued. Again from Berger: “In 1967, Rights Amendment. AMBER WAVES OF GAIN

• The Montana Farm Bureau lobbied to officials to enforce federal laws without first get- require that schools teach creationism on an ting permission from the county sheriff. More equal basis with evolution. The bureau also than 45 western counties have followed suit. In wanted the state to ship convicted criminals to some areas where county-supremacy and wise- Mexico and promoted a resolution urging the use movements are active, Forest Service employ- United States to withdraw from the United ees have been attacked and federal property has Nations. been damaged. • The Maryland Farm Bureau supported a The county-supremacy movement is heir to bill designating English as the state’s official lan- at least parts of the philosophy of the militant guage. Posse Comitatus, which means “power of the In New Mexico, the Department of Public county.” That movement, launched in the late Safety withdrew a police training manual after 1960s, proclaimed county government as the the Farm Bureau objected to a passage that highest authority in the land. According to the included wise-use groups among organizations police training manual, Posse Comitatus took that advocate violence. The manual, titled “The advantage of the farm crisis of the 1970s and Extremist Right,” was designed to educate offi- 1980s to win recruits among bankrupt farmers. cers about potential terrorist threats following The organization advocated violent resistance to the bombing of the Murrah federal building in the government. In 1983, according to the man- 77 Oklahoma City. It pointed out, “Like other west- ual, Posse leaders were involved in shootouts in ern states, New Mexico has major land use which several federal marshals were killed or issues. Wise-use groups, anti-environmentalists injured and a local sheriff was killed. and land grant activists may prove to be the most Wise-use groups are supporters of today’s volatile and pose the greatest threat to law county-supremacy movement, and some have enforcement.” The wise-use movement was been associated with militant militia movements. defined as “a coalition of ranchers, loggers, min- Yet the New Mexico Farm and Livestock Bureau ers and others who want federal environmental said it was outraged by the police training manu- regulations repealed and who want more control al’s reference to that movement and used its of public lands given to local authorities.” influence with the governor and state lawmakers The Department of Public Safety’s concern to put pressure on the state police. The New was not unfounded. New Mexico is home to one Mexico farm bureau did not let up until the of the original county-supremacy movements. Department of Public Safety agreed to withdraw Catron County’s government was the first to the manual and recall all copies. By defending its adopt ordinances aimed at seizing control of fed- wise-use friends, the farm bureau may have eral land. The ordinances require federal officials deprived law-enforcement agencies of important to get local approval for any action affecting information about potential terrorist activities. grazing and make it a crime for Forest Service According to police, two recent attacks on AMBER WAVES OF GAIN

the offices of environmentalists in Santa Fe, New Bureau sows the seeds of violence with its hateful Mexico, may have been linked to one of the mil- rhetoric and antagonistic stance on wildlife itant organizations described in the training issues,” says Forest Guardians president Sam manual. On March 19, 1999, a potentially dead- Hitt. “The Farm Bureau has created a bigoted ly pipe bomb was discovered in the mailbox of and intolerant atmosphere in which acts of vio- Forest Guardians, a group advocating protection lence thrive.” And nowhere is that attitude more of wildlife and public lands. The bomb failed to apparent than on the issue of predator reintro- go off and later was detonated by a Santa Fe duction. police bomb squad. Police say the ball-bearing- filled pipe bomb was powerful enough to kill or RANCHERS AND WOLVES seriously injure anyone nearby. The next day, a drawing was mailed to Forest “We just don’t want ‘em. We don’t think we Guardians showing the name of the organization need ‘em. We think our technology today, with centered beneath the cross-hairs of a rifle scope. our jet planes and our transportation routes The drawing was signed with the initials M.M., and all of the things that we’ve developed over which police believe to stand for the Minute 200 years, certainly prohibits the reintroduc- Men. This shadowy group has claimed credit for tion of a specie [sic] that lived in the wildlands other attacks, including a 1998 nighttime shot- long ago.... It’s my feeling and pretty much the 78 gun blast that shattered windows at the Santa Fe Farm Bureau’s that there is a place for these offices of Animal Protection of New Mexico. wolves whether it be in a zoo or a wild animal Before that attack, Animal Protection received a park, but certainly not out on the public range. letter also signed M.M. warning, “You are And I don’t think we should sacrifice our food approaching a point where we will hurt you. We supply of America being beef cattle.” are going to make a concerted effort to kill any — Norm Plank, New Mexico Farm and wolf reintroduced into the wild and poison bison Livestock Bureau executive vice president. as long as you interfere with wildlife issues.” Both targeted environmental groups have Despite the many pressing issues in agriculture supported wolf reintroduction. Forest Guardians and the current economic crisis for family farmers, also has filed a number of successful lawsuits the Farm Bur eau continues to rank opposition to leading to curbs on grazing, logging and water wolf rei n t r oduction as one of its top ten priorities. use on public lands and better protection of Defenders of Wildlife and other groups hoped to endangered species. There is no evidence that the persuade the Farm Bur eau to change its policy on Farm Bureau has been involved with any of the wo l v es at the 1999 AFBF convention, but dele- militant anti-environmental groups. But some gates there adopted a new resolution calling for observers believe that the bureau’s extreme return of the Yel l o wstone wolves to Canada. Th a t rhetoric may encourage attacks. “The Farm plan was never a viable option, howeve r . Int e r i o r AMBER WAVES OF GAIN

Sec re t a r y Bruce Babbitt told Congress in 1998 represents,” Schlickeisen told reporters. that Canada would not take the wolves back. AFBF’S former president Kleckner insisted Norm Pla n k ’s suggestion that all the wolves be that wolves and other predators cause ranchers placed in captivity would not work, either. grave economic harm. Losing even a few calves Acc o r ding to Sydney But l e r , exec u t i v e director of can make a huge difference in a rancher’s ability the American Zoo and Aquarium Association, to survive, Kleckner said. To hear Farm Bureau zoos and wildlife parks could accommodate only a officials tell it, these predators could destroy the fe w of the wolves at most. ranching economy. “Our membership really Defenders of Wildlife ran newspaper adver- wonders why the federal government is spending tisements asserting that removing the more than millions of dollars putting predators into rural 200 Yellowstone wolves would be “tantamount areas where farm and ranch families are having a to a death sentence” because there is no place for real difficult time hanging on to the family the wolves to go. The Farm Bureau disputed this ranch,” said AFBF lobbyist Jon Doggett. contention. “Farm Bureau has never advocated Although Defenders of Wildlife in the last killing any wolves,” said former AFBF president decade has paid more than $100,000 to compen- Dean Kleckner. But Montana Farm Bureau exec- sate ranchers for livestock losses to wolves , utive vice president Jake Cummins acknowl- Doggett says ranchers do not believe they can edged that the wolves probably would be killed if always prove, or even know for sure, that a calf 79 the Farm Bureau prevailed in its legal challenge. has been killed by a wolf. But Def e n d e r s ’ north - The government “should round [the wolves] up ern Rockies rep re s e n t a t i v e, Hank Fis c h e r , says right now and ship them back to Canada where determining whether livestock has been killed by they came from,” Cummins wrote in an essay. wo l v es is not difficult. “Wolf kills are way down “But they won’t. They’ll avoid obeying the law as on the list of things that harm livestock, way long as they can by stringing out the appeal. The be l o w being struck by lightning or hit by auto- wolves will keep killing livestock. In the end fed- mobiles,” he adds. In fact, wolves killed only eral agents will have to shoot the wolves they se v en head of cattle in 1996, according to gover n - brought in and all their offspring.” ment rep o r ts. Domestic dogs killed nearly twice At a news conference during AFBF’s 1999 as many cattle as mountain lions, bobcats, bears convention in Albuquerque, New Mexico, and wolves combined. “We are talking about a Defenders of Wildlife president Rodger small level of predation,” Fischer says, “and if Schlickeisen accused the Farm Bureau of exagger- th a t ’s enough to tip the livestock industry over ating the threat wolves pose to ranchers. “They the edge, it has a pretty uncertain future anyway.” picked the wolf as a particular target for their Department of Agriculture statistics show rhetoric, and they have tried to inflame the farm- that in 1996, the last year for which figures are ing and ranching community well beyond any available, all predators combined killed about reasonable measure of the problems that the wolf 117,000 head of cattle — a small number com- AMBER WAVES OF GAIN

pared to the 417,000 lost to bad weather and approach to predators and to land conservation more than 2 million felled by respiratory and has made his ranch more profitable than others digestive problems. The magnitude of health- around him. Mountain lions and hundreds of related cattle deaths surprised Farm Bureau lead- coyotes inhabit the territory. Winder quit killing ers. “I’ve never heard that before,” AFBF’s then predators 15 years ago, and since then, he says, president Kleckner said in a radio interview dur- he has lost only two calves to coyotes. To figure ing the 1999 convention, “and frankly, I don’t out the best ways to deter attacks, Winder stud- believe it.” ied bison herding patterns. He uses herd dogs to keep cattle in larger groups so calves are better BRIDGING THE CHASM protected. Calving season is timed for spring, when cougars and coyotes have plenty of natural “It’s kind of like the old saying that you prey. And before the calves are born, cattle are take stumbling blocks and make them stepping moved away from coyote denning areas. stones. We’re the only ranch in New Mexico Winder’s Heritage Ranch is the first to win that came out in favor of reintroduction of the authentication from Defenders of Wildlife for Mexican wolf because frankly we see it as more predator-friendly practices. He has signed a of an opportunity than a threat. I feel that the memorandum of understanding pledging that no interest the wolf would bring to this area predators will be killed. In exchange, meat from 80 would far outweigh the dangers of it, and any- the ranch carries an Authentic Wolf Country way, we’re used to getting along with coyotes Beef label and sells for a premium. But more is and mountain lions, so I don’t see that wolves at stake here than a few extra cents per pound would be that much of a threat to us.” for ground beef.Winder looks at what he is — Jim Winder, New Mexico rancher. doing as a chance to help bridge a chasm. “We’re a very traditional lot, ranchers,” he says. “Years Fourth-generation rancher Jim Winder runs ago I kind of looked at where we were on our cattle on 100,000 acres of public and private ranch and saw that every year we were doing land in southwestern New Mexico, a region worse financially. I saw the environmentalists as a where reintroduced Mexican wolves are likely to threat.” But instead of fighting, Winder decided expand. And that’s just fine with Winder. “You he would rather try to communicate. Through know, they were here first, and they’re part of the that experience, he came to understand that pro- land, part of the ecology,” Winder explained dur- tecting the ecosystem might help save the ranch. ing a tour of his ranch. “I think we can adapt. Restoring wetlands and riparian areas, for That’s the whole idea with the wolf.You learn to instance, means more water available for live- live with them.” stock, a greater abundance of vegetation and less That isn’t talk you would expect from a spent on cattle feed. rancher, but Winder is convinced that his Winder now believes this ecological approach AMBER WAVES OF GAIN

to ranching is the only way to survive. “A lot of “radicalism” of these populists and pledged to ranchers are seeing that now is the time to make work against any policies that might help them. some changes,” he says. “They realize that envi- Some of that old enmity still lingers. Rocky ronmentalists are not our enemies.” Mountain Farmers Union legislative coordinator During AFBF’s 1999 New Mexico conven- Melissa Elliott says she has been disappointed tion, several hundred Farm Bureau members that the Farm Bureau has not helped more with attended a country dance and barbecue spon- issues that make a real difference in the West. sored by Defenders and featuring Winder’s Wolf “The market is definitely a bigger problem Country Beef. Many were skeptical about because every independent producer is affected, prospects for coexistence with wolves. But most and it’s literally driving people out of business,” agreed with what North Dakota rancher Bill she says. “The wolf isn’t doing that. Unfortun- Gackle said: “The predators are just a minor ately we’re always on opposite side of the coin problem compared to the prices that we’re cur- [from the Farm Bureau], and I wish that weren’t rently receiving. The predators are in no way so. We’re all in the same boat. We need to be running the farmers off the land, whereas the rowing in the same direction.” prices, the economy, are.” People are eating less beef these days. A lot of FREE-TRADE FACADE ranch land has been damaged by overgrazing and 81 other abuse and cannot sustain as many cattle as “The FB is essentially lying to their produc- in the past. On top of that, the beef market is ers about what the real issues are, so they are controlled by near-monopolies. Ranchers are in fueling the problem rather than helping to trouble, says Rocky Mountain Farmers Union address the problem. . . . The issues of private president Dave Carter, but not because of property rights, the environment, the wolves in wolves. “We do have some concerns about the Yellowstone Park, do not matter if we lose our wolf reintroduction,” he says, “but on the whole farmers and ranchers because of price fixing we’re more concerned about the wolves in the and predatory practices by major global corpo- marketplace than the wolves up in Yellowstone.” rations.” The National Farmers Union competes — Mike Callicrate, Cattlemen’s Legal directly with the Farm Bureau but is smaller and Foundation. takes a much different approach to agricultural and environmental issues. The Farmers Union is When Mike Callicrate came to speak in Ft. heir to an agrarian populist tradition that began Pie r r e, South Dakota, in 1998, more than 2,000 around the turn of the century as a fight against ranchers showed up at the town hall. Callicrate’s usurious banking practices, unscrupulous grain topic was corporate monopolies and international dealers and market speculators. Back then, in the trade agreements that he says are undercu t t i n g 1920s, Farm Bureau leaders railed against the U.S. cattlemen and forcing many out of business. AMBER WAVES OF GAIN

Callicrate runs the Cattlemen’s Legal Fund, a ADM, which owns 14 percent of IBP, the rancher group that has taken monopolistic nation’s largest beef packer. ConAgra, the second agribusinesses to court. The Kansas rancher says largest packer, runs a joint export facility with he took on the activist role reluctantly but didn’t ADM. Farmland National Beef, the fourth see much choice. As huge corporations took over largest, is part of Farmland Cooperative, which mo r e and more of the beef market, independent has extensive ties to several Farm Bureau-linked ranchers wer e feeling the squeeze, and Callicrate co-ops. Together, these four largest packers con- says the Farm Bur eau failed to offer ranchers any trol 79 percent of the nation’s beef supply. he l p . “I think it is sinful what the Farm Bure a u Bill Christisen, president of the National has done,” he said in an intervi e w. “To me, it’s Family Farm Coalition, echoes Callicrate’s frus- almost a fraud to even call it a farm organization.” tration in dealing with the Farm Bureau. The Callicrate’s group has petitioned the U.S. coalition, which represents 100,000 farming International Trade Commission for an investiga- families in 35 states, often finds itself on the tion into unfair trading practices by both Canada opposite side of issues from AFBF. “We’re con- and Mexico. It also has sought an investigation cerned that the Farm Bureau continues to antag- of alleged price manipulation by big meat pack- onize environmental groups rather than focusing ers. Callicrate says the Farm Bureau refused assis- on the causes of low farm prices,” Christisen told tance in both cases. reporters at a news conference during the 1999 82 New Mexico Farm and Livestock Bureau ABFB convention. The coalition has made a executive vice president Norm Plank agrees that number of proposals to break up corporate agri- the time has come for the Farm Bureau to take a cultural monopolies, Christisen says, but all have hard look at ways to break up agricultural failed. “AFBF leaders lobbied to kill those mea- monopolies. But in an interview he complained, sures,” he says. “The truth is, whenever we try to “We’re limited on how much court time we can implement better agricultural policies, our worst spend. It’s very, very costly. . . . We are limited opponent is almost always the AFBF.” on our funding, so we have to pick and choose.” The Farm Bure a u ’s primary response to the “You’ve got to be very careful when you start economic difficulties faced by ranchers and farm- monkeying with the free-enterprise system,” adds ers can be summarized in the words “fr ee trade.” the New Mexico Farm and Livestock Bureau’s Ag g re s s i v e export strategies are seen as the key. Erik Ness. “There are some things wrong with it, Acc o r ding to AFBF leaders, increased demand “is and this may be one of them. And we are work- the future of the U.S. cattle and beef industry.” ing to get the cattle industry more spread out.” The Farm Bur eau has become such a stron g Just as in the hog business, Farm Bureau agri- be l i e v er in free trade that in Jan u a r y, 1999, AFBF cultural cooperatives are closely tied to the took the unprecedented step of calling for normal- nation’s biggest beef packing corporations. Farm iz ed trade relations with Cuba. The Texas Far m Bureau affiliate Growmark is in business with Bur eau followed up in Sep t e m b e r , 1999, by send- AMBER WAVES OF GAIN

ing a trade mission to Cuba. “If full trade could “fast-track” negotiations aimed at speeding up be developed quickly, or allowed with Cuba, it the process of concluding free-trade agreements could be a billion dollars in sales ver y quickly with with other governments. But whether these another billion in sales down the road in a few aggressive free-trade strategies will help indepen- mo r e years,” said AFBF president Kleckner at a dent producers as much as they help multina- co n v ention news conference. On top of that, tional agribusinesses remains unclear. Several AFBF delegates agreed to a proposal for expanded family-farm groups oppose fast-track negotia- trade with China and Vietnam. Cur i o u s l y , they tions, contending that free-trade agreements have also rea f ﬁ rmed support for a longstanding Far m hurt farmers. Senator Byron Dorgan (D-North Bur eau condemnation of Communism. Dakota) contends that this country’s free-trade Besides opening trade with Communist agreements with Canada turned a $1.1 billion nations, the Farm Bureau also pins great hope on agricultural surplus into a $400 million deﬁcit.

83 AMBER WAVES OF GAIN

C O N C L U S I O N A Call to Common Ground

“The Farm Bureau has tried to drive a has pursued a deliberate strategy of fostering wedge between the environmental community enmity between farmers and environmentalists, and the family-farming community, which two groups that could benefit each other consid- really should be natural allies. Family farmers erably by working together. Ranchers like Jim help protect the land, and we want to promote Winder and Mike Callicrate and farmers like their continuation. I wish the Farm Bureau Scott Dye and Bill Christisen have seen past the 84 would focus attention on bridging the gap, Farm Bureau’s facade. They believe it is time to because we’d be the first ones to get up on that put antagonism aside and concentrate on the bridge and meet them halfway.” common goals of protecting the environment — Rodger Schlickeisen, Defenders of and preserving the tradition of family farms. Wildlife president. Attacking the wolf, environmental-protection laws and the federal government diverts attention udging from dozens of interviews conducted from the more important and complicated ques- for this report, plenty of farmers and ranchers tions about who controls agriculture in this Jsee common ground with environmentalists. country and how that control is sustained.The Some are Farm Bureau members who cannot Farm Bureau has successfully dodged these ques- penetrate the entrenched structure of the organi- tions since Representative Joseph Resnick first zation to make their voices heard. Others are for- raised them 33 years ago. By joining forces, per- mer members working for change through other haps family farmers and environmentalists can means. As this report illustrates, the Farm Bureau finally get some answers. AMBER WAVES OF GAIN

APPENDIX ONE Farm Bureau Connections

INSURANCE COMPANIES Farm Bureau Town and Country Insurance of The following insurance companies are afﬁliated Missouri with state farm bureaus: Farm Bureau Insurance Co. of Nebraska American Agricultural Insurance Co. Farm Bureau County Mutual Insurance Co. of American Agricultural Insurance Agency Texas American Farm Bureau Insurance Services Farm Bureau of Idaho Group Colorado Farm Bureau Mutual Insurance Co. - Farm Bureau Mutual Insurance Co. of Idaho 85 Country Companies (IL, NV, OR) - Farm Bureau Finance Co. - Country Life Insurance Co. -Western Community Insurance Co. - Country Mutual Insurance Co. FBL Financial Group/Farm Bureau Group of - Country Medical Plans, Inc. Iowa (UT, IA, ID, AZ, SD, ND, ) - Country Casualty Insurance Co. - Farm Bureau Life Insurance Co. Farm Bureau Annuity Co. ( MI) -Western Farm Bureau Life Insurance Co. Farm Bureau General Insurance Co. of Michigan - Farm Bureau Mutual Insurance Co. Farm Bureau Mutual Insurance Co. of Michigan -South Dakota Farm Bureau Mutual Farm Bureau Life Insurance Co. of Michigan Insurance Co. Farm Bureau Life Insurance Co. of Missouri - Utah Farm Bureau Insurance Co. Farm Family Holding Co. (VT, NY, CT, NH, -Western Agricultural Insurance Co. WV, ME, MA, NJ, RI) -Western Farm Bureau Mutual Insurance Co. - United Farm Family Insurance Co. - EquiTrust Life Insurance Co. - Farm Family Casualty Insurance - Universal Assurors Life Insurance Co. - Farm Family Insurance Co. Florida Farm Bureau Casualty - Farm Family Life Insurance Co. Insurance Co. Farm Bureau Insurance of North Carolina Florida Farm Bureau General Farm Bureau Mutual Insurance Co. of Arkansas Insurance Co. AMBER WAVES OF GAIN

Georgia Farm Bureau Mutual Colorado Farm Bureau Consumers Corp. Insurance Co. (100% - CO) Indiana Farm Bureau Insurance Co. Colorado Farm Bureau Marketing Assoc. (100% Kansas Farm Bureau Life Insurance Co. - CO) Kentucky Farm Bureau Mutual Community Service Acceptance Co. Insurance Co. (100% - MI) Louisiana Farm Bureau Mutual Insurance Connecticut Farm Bureau Service Co. Missouri Farm Bureau Insurance (100% - CT) Brokerage Connecticut Agricultural Cooperative Assoc. Nodak Mutual Insurance (ND) (91.7% - CT) North Carolina Farm Bureau Mutual Insurance Corporate Services, Inc. (60% - MI) Co. Farm Bureau Equity Sales Corp. of Michigan Rural Mutual Insurance Co. (WI) (100% - MI) Southern Farm Bureau Group (AL, AR, FL, GA, Farm Bureau Investment Corp. (100% - SC) KY, LA, MS, NC, SC, TX, VA) Farm Bureau Management Corp. -Southern Farm Bureau Property (100% - IA) Insurance Co. Farm Bureau Service Co. (100% - ID) -Southern Farm Bureau Annuity Farm Bureau Service Co. (100% - IN) 86 Insurance Co. Farm Employers Labor Service (100% - CA) - Southern Farm Bureau Casualty Group Farmers Petroleum Cooperative (67% - MI) -Southern Farm Bureau Casualty Florida Farm Bureau Agency (100% - FL) Insurance Co. Florida Farm Bureau Enterprises - Southern Farm Bureau Life Insurance Co. (100% - FL) -Southern Farm Bureau Universal Life Florida Farm Bureau Holding Co. Insurance Co. (100% - FL) Tennessee Farmer’s Life Insurance Co. Georgia Farm Bureau, Inc. (100% - GA) Tennessee Far m e r ’s Mutual Insurance Co. Georgia Farm Bureau Marketing Assoc. (100% - United Farm Bureau Family Life Insurance Co. GA) United Farm Bur eau Mutual Insurance Cos. (IN) Georgia Farm Bureau Holding Co. (100% - GA) OTHER BUSINESS AFFILIATIONS Georgia Farm Bureau Real Estate Co. The following companies are majority owned by the (100% - GA) AFBF or its state afﬁliates as noted in parentheses: Georgia Farm Bureau Service Co. American Agricultural Marketing Assoc. (53.5% (100% - GA) - AFBF) *I llinois Agricultural Holding Co. American Farm Bureau, Inc. (100% - AFBF) (100% - IL)

* Illinois Agricultural Holding Co. has a major interest in 53 companies. See note and list on next page. AMBER WAVES OF GAIN

Indiana Agricultural Marketing Assoc. North Carolina Farm Bureau Service Co., Inc. (100% - IN) and Subsidiaries (100% - NC) Kansas Farm Bureau Services (100% - KS) North Dakota Farm Bureau Trade Development Kansas Agricultural Marketing Assoc. and Service Corp. (98% - KS) (100% - ND) Kentucky Farm Bureau Investment Corp. Ohio Agricultural Marketing Assoc. (100% - KY) (53% - OH) Kentucky Farm Bureau Development Corp. Ohio Farm Bureau Synfuels (100% - OH) (100% - KY) Ohio Farm Bureau Development Corp. Louisiana Farm Bureau Investment (100% - OH) (100% - LA) Oklahoma Farm Bureau Building Corp. (OK) Louisiana Farm Bureau Service (99.6% - LA) Salina Marketing Services (54% - UT) Maine Farm Bureau Service (92.25% - ME) South Carolina Farm Bureau Marketing Corp. Maine Farm Bureau Building (100% - ME) (100% - SC) Maine Farmer’s Service (88.83% - ME) South Dakota Farm Bureau Service Co. (100% - Maine Agricultural Marketing Assoc. SD) (51.74% - ME) Synfuels Capital Corp. (100% - OH) Maryland Farm Bureau Service Co. Tennessee Farm Bureau Federation Corporation 87 (100% - MD) (100% - TN) Media West, Inc. (100% - UT) Texas Farm Bureau Building Corp. Michigan Farm Bureau Financial Corp. (100% - TX) (100% - MI) Texas Farm Bureau Investment Corp. Michigan Agricultural Cooperative Marketing (100% - TX) Assoc. (57% - MI) Texas Farm Bureau Management Corp. Michigan Farm Bureau Group Purchasing, Inc. (100% - TX) (100% - MI) Utah Farm Bureau Service Co. (100% - UT) Missouri Farm Bureau Services, Inc. West Virginia Farm Bureau Service Corp. (100% (100% - MO) - WV) Nebraska Farm Administration Corp. West Virginia Agricultural Marketing Assoc. (100% - NE) (100% - WV) New York Farm Bureau Member Services, Inc. Wisconsin Farm Bureau Service Corp. (100% - NY) (100% - WI) North Carolina Farm Bureau Investment Corp., Wyoming Farm Bureau Management, Inc. Inc. (% - not available) (100% - WY) AMBER WAVES OF GAIN

Note: Illinois Agricultural Holding Co., 100% Illinois Livestock Marketing Co. owned and controlled by the Illinois Farm Bureau, lllinois Milk Producers Assoc. has a major interest in the companies listed here: Interstate Producers Livestock Assoc. 1105433 Ontario Inc. Lakeland FS, Inc. ABC Dairy, Inc. Mid-America Brokerage, Inc. (Oklahoma) Alliance Agency, L.L.C. Mid-America Services of Alaska, Inc. American Quality Pork, L.L.C. Mid-America Services of Nevada, Inc. CC Services, Inc. Mid-America Services of Oregon, Inc. Country Capital Management Co. Mid-America Services of Washington, Inc. Country Casualty Insurance Co. Mid-CO Commodities, Inc. Country Preferred Insurance Co. Middlesex Mutual Assurance Co. Country Life Insurance Co. Midﬁeld Corp. Country Investors Life Assurance Co. Mo-Kan Express, Inc. Country Medical Plans Inc. Muller-Pinehurst Dairy, Inc. Country Mutual Insurance Co. P.F.D. Supply Corp. East Side Jersey Dairy, Inc. Prairie Farms Dairy, Inc. FS Energy, Inc. Project Explorer Corp. FS Financial Services Corp. Project Explorer Mark II Corp. 88 FS Structures of Iowa, L.L.C. Southwest FS, Inc. FS Credit Corp. UCO Petroleum, Inc. FS Export Services, Inc. TRI-FS, Inc. FS Services Ontario Ltd. GMS Transport Co. WISE-USE MOVEMENT CONNECTIONS Growmark, Inc. According to the Environmental Working Group’s Henry Foods, L.L.C. Clearinghouse on Environmental Advocacy and Hoosier Dairy, Inc. Research (CLEAR), the following farm bureau IAA Federal Credit Union organizations are wise-use groups: IAA Trust Growth Fund, Inc. Alabama Farm Bureau IAA Trust Tax Exempt Bond Fund, Inc. Albany County (NY) Farm Bureau IAA Trust Asset Allocation Fund, Inc. American Farm Bureau Federation IAA Trust Co. California Farm Bureau IAA Trust Taxable Fixed Income Series Fund, Carroll County (TX) Farm Bureau Inc. Colorado Farm Bureau Ice Cream Specialties, Inc. Delaware Farm Bureau Federation Illinois Agricultural Auditing Assoc. Elko County (NV) Farm Bureau Illinois Agricultural Service Co. Farm Bureau News (Olympia, WA) AMBER WAVES OF GAIN

Florida Farm Bureau Washington State Farm Bureau Idaho County (ID) Farm Bureau Wyoming Farm Bureau Idaho Farm Bureau Indiana Farm Bureau According to CLEAR, the following wise-use groups Kansas Farm Bureau are supported by farm bureau organizations: King County (WA) Farm Bureau Alliance Defense Fund Maine Farm Bureau Cato Institute Massachusetts Farm Bureau Federation, Inc. Coalition for Vehicle Choice Minnesota Farm Bureau Council for Agricultural Science and Mississippi Farm Bureau Federation Technology Modoc County (CA) Farm Bureau National Endangered Species Act Reform Montana Farm Bureau Federation Coalition Nevada Farm Bureau National Wetlands Coalition New Hanover County (NC) Farm Bureau Paciﬁc Legal Foundation New York Farm Bureau Reason Foundation Ogle County (IL) Farm Bureau Environmental Conservation Organization Oklahoma Farm Bureau (ECO) Oregon Farm Bureau Oregon Lands Coalition 89 Pike County (IL) Farm Bureau Wilderness Impact Research Foundation Polk County (AR) Farm Bureau Western States Coalition Ravalli County (MT)Farm Bureau Environmental Issues Council Rhode Island Farm Bureau Foundation for Clean Air Progress Riverside County (CA) Farm Bureau Air Quality Standards Institute San Bernardino County (CA) Farm Bureau Heartland Institute San Diego County (CA) Farm Bureau Global Climate Information Project Santa Clara County (CA) Farm Bureau Center for the New West Siskiyou County (CA) Farm Bureau People for the U.S.A. Texas Farm Bureau (Formerly People for the West!) The Farm Bureau of Snohomish County (WA) Pennsylvania Landowners Association Utah Farm Bureau Federation American Land Rights Association Vermont Farm Bureau Federation National Inholders Association Virginia Farm Bureau Multiple Use Alliance AMBER WAVES OF GAIN

APPENDIX TWO

Tax Treatment of Unrelated Business Income For Agricultural and Horticultural Orga n i z a t i o n s

ongress quietly slipped the farm bureau sys- organizations perform functions for which gov- tem a lucrative gift in the 1996 Tax Act.1 It ernment would otherwise have to pay, (2) pro- Cwas tucked in as Section 1115, which gives vide a subsidy for solving societal problems in tax exemption for farm bureau income from vir- ways unavailable to government, and (3) com- tually any kind of “membership dues.” pensate nonprofit organizations for restraints on This seemingly arcane provision props open a their ability to raise capital. 90 huge back door through which the farm bureau Section 501(c) of the U.S. Tax Code specifies system draws in tens of millions of tax-free dol- 25 categories of organizations eligible for tax lars from unrelated business activities — and exemption. from individuals who have little connection with The American Farm Bureau Federation farm bureau objectives. When enacting that pro- (AFBF) and its affiliates are exempt under vision, Congress brushed aside growing Internal Section 501(c)(5), which applies to labor and Revenue Service (IRS) concerns that farm agricultural organizations2.To qualify, an organi- bureaus, along with other tax-exempt organiza- zation must have one or more of the following tions, were creating artificial membership cate- exempt purposes: (1) bettering the conditions of gories primarily to circumvent the tax laws. persons engaged in the pursuits of labor or agri- Enactment of Section 1115 is a case study of culture, (2) improving the grade of their prod- how the farm bureau system parlays its “small ucts, or (3) developing a higher degree of effi- farmer” image into big-time political power and ciency in their occupations.3 In its annual returns financial gain. to IRS, AFBF states that its purpose is “to promote and advocate the economic, social, and TAX EXEMPTION educational interest of its members, and to pro- The federal income tax has always exempted mote agriculture in general.”4 certain nonprofit organizations to (1) help these Farm bureaus are given unusual latitude AMBER WAVES OF GAIN

under the tax code. Section 501(c)(5) does not by a small number of large organizations that can limit farm bureau membership to persons actual- wield substantial financial clout when entering ly engaged in agricultural pursuits.5 And, unlike into competition with tax-paying businesses.8 most other tax exempt organizations, a 501(c)(5) Because of its decentralized struc t u r e, the farm organization may engage in (1) lobbying that is bu r eau system is able to camouflage its large size. 9 germane to its exempt purposes and (2) some The AFBF’s Form 990 rep o r ted 1997 rev enues of political activity, so long as that is not the orga- only $18.6 million — $17.1 million of which was nization’s primary activity. fr om membership dues. AFBF does not provide The farm bureau system has turned tax laws aggregate financial reports for its affiliated state into a unique license to make money and wield and county farm bureaus. Farm bureau opera- political influence. tions receive very little congressional scrutiny. In early 1995, the General Accounting Office POTENTIAL FOR ABUSE (GAO) noted that press reports and congre- Since tax-exemption creates strong tempta- ssional hearings had focused on charitable orga- tions for abuse, Congress and IRS have been nizations but had not given the same level of especially concerned with (1) preventing legiti- scrutiny to other categories of tax-exempt organi- mately tax-exempt organizations from unfairly zations. Nevertheless, when GAO itself studied competing against tax-paying businesses, and (2) these other categories — reviewing 285 exempt 91 preventing essentially commercial enterprises organizations, of which 46 were Section from obtaining Section 501(c) exemption to 501(c)(5) organizations — it included only one evade taxation. agricultural organization, a farm bureau in one The tax-exempt sector issue has far-reaching state.10 consequences for the private economy and the federal budget. This sector is large and, for UNRELATED BUSINESS INCOME TAX decades, has grown almost three times faster than The Tax Code does not prohibit tax-exempt the rest of the economy.6 Between 1975 and organizations from generating profits from activi- 1995, the financial resources of 501(c) organiza- ties in which they are engaged. In fact, tax- tions reporting to IRS more than tripled to $1.9 exempt organizations have long derived most of trillion in assets and $899 billion in annual rev- their revenues from profit-making activities. A enues. IRS estimates that in 1995 the total rev- 1998 IRS report states that Section 501(c) orga- enues of exempt organizations equaled about nizations received about 69 percent of their 1995 12.4 percent of gross domestic product (GDP) revenues from income-producing activities.11 — more than double the percentage 20 years Prior to 1950, all revenues of tax-exempt earlier.7 organizations went untaxed. But after taxpaying Moreover, more than two thirds of the businesses protested that tax-exempts were exempt sector’s financial resources are controlled increasingly moving in as their direct competi- AMBER WAVES OF GAIN

tors, Congress enacted the Unrelated Business producing activities. AFBF’s IRS returns for the Income Tax (UBIT) as part of the Revenue Act tax years 1995 through 1997 claim that member of 1950.12 dues accounted for about 95 percent of its total Under current law, an activity of an exempt reported revenue.17 AFBF reported that only 0.2 organization is subject to UBIT if the activity is: percent of its revenues come from program ser- • A trade or business, that is carried on for vice income. the production of income from providing the An IRS summary report, which relies on that services; information, suggests that labor and agricultural • Regularly carried on; and organizations benefit much less from income- • Not substantially related to the organiza- producing activities than do other classes of tion’s exempt purpose.13 exempt organizations. 18 IRS regulations provide that a trade or busi- That public image is quite at odds with the ness is “related” to the organization’s exempt pur- true extent of the farm bureau system’s for-profit pose only if the activities have a direct causal corporate reach. relationship to the achievement of exempt purposes. It is not sufficient that these activities pro- ASSOCIATE MEMBER DUES duce income needed to carry out those exempt The peculiar way the tax laws treat their purposes.14 member dues makes it easy for the farm bureaus 92 The variety of profitable activities and the to understate their unrelated business income. creativity of tax-exempt organizations have kept Dues are a handy device for tax avoidance. IRS and the courts busy trying to maintain a Since a 501(c) membership organization’s dues clear line between what is and what is not sub- income is generally not subject to taxation, the ject to UBIT. organization has a clear incentive to characterize The farm bureau system has been an aggres- income as nontaxable membership dues – even sive leader in unrelated business activities, as when the income is derived from the sale of defined by IRS. A nationwide network of farm unrelated business products or services marketed bureau insurance companies sells life insurance, beyond the organization’s regular members. retirement annuities, car insurance, home insur- An easy way to accomplish that task is to ance, business insurance, health and disability establish artificial classes of “membership” for insurance and more.15 In 1998, the farm bureau purchasers of those unrelated business products. system began expanding into direct banking.16 Farm bureaus, for example, have created a While these for-profit subsidiaries have class of “associate members” who cannot vote or turned the farm bureau membership base into a hold office in the organization but pay “dues” lucrative commercial asset, farm bureaus present primarily to gain access to unrelated business ser- themselves as local or regional membership orga- vices, such as insurance.19 nizations that derive little revenue from income To see how this can be a very lucrative sub- AMBER WAVES OF GAIN

terfuge, consider two cases with identical cash activities or policy agenda. As noted, most “asso- flows to a farm bureau. In the first case, an insur- ciate members” pay dues to gain access to farm ance company pays a farm bureau, say, $80 bureau insurance. Farm bureau materials empha- whenever it issues an insurance policy to a non- size that the cost of membership can be more member. That payment is income to the farm than recouped through such other benefits as bureau from unrelated business and thus subject free-death benefits and discounts on automotive to UBIT. parts, medication, lube jobs and other products. In the second case, the farm bureau (1) has An IRS technical advisory memorandum its insurance subsidiary issue policies only to stated the following: “A random survey conduct- farm bureau members and (2) requires each non- ed in August 1990 indicates that accessibility to member insurance applicant to pay the farm insurance programs offered by [the farm bureau $80 in dues to join as an “associate mem- bureau’s] affiliates is the major reason that associ- ber.”20 Now the farm bureau does not pay UBIT ate members join [the farm bureau]. The report on this “dues” income. reveals that 96 percent of those associate mem- This second method enables the farm bureau bers surveyed were aware of [the farm bureau’s] system to tap large amounts of tax-free income insurance programs; 95 percent of those who from customers of its unrelated businesses, while were aware actually purchased insurance; and 91 restricting farm bureau voting membership to percent of associate members have one or more 93 individuals who are most likely to support the insurance policies. leadership’s established political objectives and “Although all of [the farm bureau’s] benefit operating methods. programs are available to associate members, Although the farm bureau system does not those associate members surveyed cite insurance release information on the amount of income it programs (45 percent), lower rates (33 percent) derives from associate member dues, the amount and their insurance agent (12 percent) as their is very large. One typical state farm bureau primary reasons for being members of [the farm reported that “associate members” accounted for bureau]. According to the study, this correlates 51 percent of its total membership and 63 per- with the high percentage of associate members cent of its new members in 1998.21 who own one or more insurance policies. In con- Other available evidence suggests that most trast to regular members, only five percent of farm bureau revenue growth is coming from associate members surveyed indicate they had “associate memberships.” Creation of the Farm purchased a membership because of an interest Bureau Bank greatly expands the number of in agricultural activities.”22 potential associate members. In 1983, under the Reagan administration, “Associate membership” in a farm bureau is the IRS held that, while an exempt organization’s sold with little regard to an individual’s interest income from insurance activities was taxable, in or support for the organization’s tax-exempt associate member dues were not taxable if associ- AMBER WAVES OF GAIN

ate members received member benefits other across the country and pressed lawsuits for pay- than eligibility for the insurance. ment of back taxes against farm bureaus in 11 Farm bureaus were not, of course, the only states — Alabama, Florida, Georgia, Illinois, exempt organizations to exploit this opportunity. Kentucky, Michigan, Missouri, North Carolina, By the late 1980s the “associate membership” Tennessee, Texas and Washington. The farm problem attracted much closer IRS scrutiny.23 bureaus promptly took their case to Congress. The issue gained momentum in 1991 when two circuit courts held that postal unions would CAMP-P AYNE BILL have to pay UBIT on associate member dues if On February 1, 1995, Congressmen David the dues were paid primarily to obtain lower cost Camp (R-Michigan) and L.F. Payne (D-Virginia) group insurance.24 introduced “The Tax Fairness for Agriculture In 1994, when auditing a state farm bureau, Act” (H.R. 783), which was designed explicitly IRS issued a revised position on associate mem- to overturn the revised IRS position and reinstate ber dues.25 IRS now focused, not on the variety the 1983 policy for finding of the previous year. of member benefits, as in 1983, but on the asso- In summary, the bill provided special aid to agri- ciate member’s reasons for paying the dues. The cultural organizations by: revised position held that associate member dues • Exempting from UBIT any portion of are subject to UBIT because: annual membership dues that did not exceed 94 “[P]roviding access to insurance coverage $100 in calendar 1996, adjusted for inflation available from a subsidiary is not consistent with annually thereafter; and the purposes of tax-exempt agricultural organiza- • Prohibiting IRS from collecting UBIT on tions. [The state farm bureau] promotes and prior year membership dues if the organization administers its program as would any private, had a “reasonable basis” for not treating the dues commercial entity. … [I]ndividuals who are not as income from an unrelated trade or business. bona fide members of an exempt organization Of the 38 original cosponsors, 28 were are required to make a payment to the organiza- Republicans and ten were Democrats. The bill tion in order to obtain insurance.”26 eventually attracted 126 House cosponsors. IRS found that associate members could not vote, represent their counties as voting delegates IRS REVENUE PROCEDURES 95-21 at annual meetings or serve on the board of Less than two months after H.R. 783 was directors. They could serve as officers, but the in t r oduced, IRS revised its standard for determin- only ones who did so were also full-time employ- ing the tax exemption of associate member dues.28 ees of the farm bureau. The revised IRS position In Revenue Procedure 95-21, IRS announced was consistent with the findings in several other it would no longer consider why individuals court cases that turned on the nature of these chose to become associate members of an agri- associate memberships.27 IRS applied this policy cultural organization. For future years, “other AMBER WAVES OF GAIN

than where the statute or regulation specifically However, farm bureau lobbyists and congression- provides a method for allocating a portion of al supporters kept the effort low-profile — out of dues payments to unrelated business taxable media attention. income, the Service will treat dues payments During 1995 and 1996, farm bureau affiliat- from associate members as not [subject to UBIT] ed political action committees (PACs) gave if the associate member category has been $109,824 to many of the cosponsors of this bill, formed or availed of for the principal purpose of including $16,480 for Camp. The Texas Farm furthering the organization’s exempt purposes” Bureau PAC gave $5,000 in 1996 to Senator — rather than producing unrelated business Phil Gramm (R-Texas), a key supporter of the income.29 provision in the Senate. IRS seemed to be retreating to a more easily IRS continued to press strongly behind the defended position. It dropped its concern with scenes to limit the impact of congressional inter- an associate member’s reasons for paying dues. vention. During negotiations with senators, And it agreed not to assume automatically that including Chairman William V. Roth (R- associate member dues are subject to UBIT. Delaware) and ranking member Daniel P. However, it was trying to retain its right (1) to Moynihan (D-New York) of the Senate Finance pursue collection of UBIT payments for prior Committee, IRS stated that it had decided, in years, (2) to determine on a case-by-case basis accordance with Rev. Proc. 95-21, not to treat 95 whether an organization was using associate associate member dues as subject to UBIT in the memberships primarily to produce unrelated future. However, IRS would not agree to drop business income, and (3) to establish specific pending litigation to recover back taxes.30 methods for subjecting a portion of the associate Non-farm organizations found themselves in member dues to UBIT. The IRS motives cannot an uncomfortable position. They had little hope be known with certainty, but experienced of stopping or significantly changing this special- observers believe the tactical objective was to interest legislation — but its enactment would ward off legislative intervention that would set weaken the farm bureaus’ incentive to ease IRS costly and disruptive precedents. enforcement. The American Society of Association SMALL BUSINESS JOB PROTECTION ACT Executives (ASAE) tried to strike a balance in its Nevertheless, Congress took up the farm testimony before the House Ways and Means bureau’s associate member cause when it acted Committee. ASAE’s official position was that it on the 1996 tax bill, “The Small Business Job opposed “any abridgment of tax exemption for Protection Act” (H.R. 3448). Several aspects of associations including, but not limited to, taxa- the legislative action are particularly revealing. tion of dues income.” ASAE stated, however, Tax exemption for associate member dues was a that the pending legislation was not broad major farm bureau priority in the 1996 tax bill. enough because it only benefited agricultural AMBER WAVES OF GAIN

organizations. ASAE favored making all mem- members of Congress an easy opportunity to side bership dues tax-free unless income generation with taxpayers against the IRS32 House floor was the organization’s principal purpose for hav- action. Section 1115 was not mentioned on May ing the class of members.31 22, 1996, during House floor debate on the tax Surprisingly, the Joint Tax Committee, which bill. provides technical analysis of pending tax legisla- The committee report states blandly: “The tion, advised Congress that the farm bureau dues Committee believes that it is appropriate to clari- provision would have negligible revenue impact. fy the treatment of certain limited dues pay- If that were the case, it is unlikely IRS would be ments from associate members of organizations taking farm bureaus to court. described in section 501(c)(5) to curtail expen- Subsequently, the committee staff has given sive and time-consuming controversies regarding two reasons for its estimate, both of which are the treatment of such payments for purposes of questionable. the UBIT and to facilitate administration of the One reason given is that Revised Procedure Code.”33 95-21 would exempt agricultural membership The House-passed bill provided UBIT dues from UBIT in the future. The IRS regula- exemption for all agricultural organization mem- tion did not, however, provide the blanket ber dues up to $100 starting in tax years after exemption provided in the bill. 1995, with adjustments for inflation thereafter. 96 Another reason given is that farm burea u s Only one dues payment per member would be could avoid UBIT law by simply conver ting their so exempted. associate members to voting members. But, as Senator Gramm was the only senator to men- noted above, the farm bureau leadership could tion Section 1115 during floor debate. He stated ne v er do that since it would overt h r ow the power that the provision would stop IRS from “tr ying to relationships within the established system. fo r ce the Farm Bur eau to pay taxes they do not The Joint Tax Committee staff may simply owe. ” 34 In his floor rem a r ks, Senator Gra m m have overlooked this issue. But experienced said: “[B]eing part of the Farm Bur eau is being observers believe it is more likely that farm pa r t of agriculture.... The position of the IRS is bureau advocates in Congress actively pressed for indefensible in the opinion of the vast majority of a revenue estimate that would make Section Members of Congress and is indefensible in the 1115 more easily accepted. opinion of the vast majority of the American peo- Most members of Congress accepted the ple. We not only want the IRS to stop doing this farm bureau’s self-projected image as the “voice in the future, we want them to go back to these of farming.” Staff recall that Section 1115 had old lawsuits and end this harassment once and for broad, bipartisan support and was generally con- all.” The Senate unanimously accepted a package sidered a noncontroversial, pro-farming vote. of amendments including one that applied the Important also was that Section 1115 gave farm bureaus’ UBIT exemption all the way back AMBER WAVES OF GAIN

to 1986, thus pulling the rug out from under more influential organizations in Washington.35 pending litigation. In June of 1995, AARP practices were exposed to IRS regulations currently reflect this “safe two days of aggressive hearings by the Senate harbor” exemption for all membership dues paid Finance Committee’s Subcommittee on Social to agricultural organizations. Security and Family Policy, chaired by Senator Alan Simpson (R-Wyoming). A SHARP CONTRAST: AARP Senator Simpson in his opening statement The kid-glove treatment the farm bureaus said, “People know something is wrong when an received from Congress in this instance is rarely organization that gets more than half of its extended to other nonprofit organizations — income from commercial business activities even politically powerful ones. simultaneously spends millions annually to A starkly different reception was given the lobby, with a claim that they represent the inter- American Association of Retired Persons ests of seniors and the elderly.”36 That logic evi- (AARP), which is generally considered one of the dently does not apply to the Farm Bureau.

N O T E S 97

1 The Small Business Job Protection Act of 1996 1975-95, Alicia Meckstroth and Paul Arnsberger, (H.R. 4338; P.L. 104-188). Statistics of Income Bulletin, IRS, Fall of 1998. pp. 149 ff. 2 In this paper, the term “agricultural organization” refers to an agricultural organization or a horticul- 8 Competition between Tax-Exempt Organizations tural organization, as deﬁned in the Tax Code. and Taxable Businesses, GAO/GGD-87-40BR, Feb. 27, 1987. Followup analysis by GAO found 3 IRS Handbook 7.8 - Exempt Organization that the ﬁnancial concentration continued in Handbook, Chapter 5.5. 1989 (Gandhi, op. cit, p. 78).

4 American Farm Bureau Federation Form 990 for 9 The interlocking structure of the farm bureau sys- tax years 1995, 1996 and 1997 provided for public tem is described in other analyses prepared by inspection in accordance with IRC 6104(b). Defenders of Wildlife.

5 IRS Handbook 7.8 op. cit. 10 Competition, op. cit. p. 61.

6 Testimony of Natwar M. Gandhi on behalf of the 11 Meckstroth and Arnsberger, op. cit. p. 164. U.S. General Accounting Ofﬁce, Hearings before the Senate Finance Committee, Subcommittee on 12 P.L. 81-814, September 23, 1950; IRC 511(a) Social Security and Family Policy, June 13, 1995, Washington, D.C. 13 IRC 512(a)(1), 513(a).

7 A 20-year Review of the Non-proﬁt Sector, 14 IRS Reg. 1.513-1(d)(2). AMBER WAVES OF GAIN

15 The complex corporate and financial relationship 25 TAM 94-16-002. between the farm bureau system and its insurance affiliates is described elsewhere in analyses by 26 ibid “Rationale.” Defenders of Wildlife. 27 National Association of Life Underwriters, Inc. v. 16 On April 21, 1999, FB BanCorp received formal Commissioner, 64 CCH Tax Ct. Mem. 3779 approval from the federal Office of Thrift (1992); Hunt v.Washington Apple Advertising Supervision to establish a de novo federal savings Commission, 432 U.S. 333 (1977); Health bank. FB BanCorp is a Nevada corporation Research Group v. Kennedy, 82 F.R.D. 21 whose stock is owned by 21 state farm bureau (1979); FEC v. National Right to Work federations and 19 of their affiliated insurance Committee, 459 U.S. 197 (1982). companies. The Farm Bureau Bank is headquartered in Sparks, Nevada, and has its operations 28 Rev. Proc. 95-21, 1995-1 C.B. 686, 1995-15 center in San Antonio, Texas. The bank currently I.R.B. 22. Published March 23, 1995. offers consumer banking services to 3 million Farm Bureau members in 39 states. It has assets 29 ibid. of more than $150 million. 30 Letter to Senator Phil Gramm from Donald C. 17 American Farm Bureau Federation Form 990 for Lubick, Acting Assistant Secretary (Tax Policy) tax years 1995, 1996 and 1997, made available by June 24, 1996, 104 C.R. p. S7426f. AFBF for public inspection in accordance with IRC 6104(b). 31 House Ways and Means Committee Hearings on H.R. 3448. 18 Meckstroth and Arnsberger, op. cit. p. 164. 32 ibid. 98 19 Farm bureau associate members usually pay the same dues as voting members. 33 H.Rept. 104-568.

20 In actual practice, farm bureau insurance compa- 34 op. cit 104 CR. nies collect these “associate membership” dues in conjunction with initial premiums and forward 35 After being audited by IRS, AARP in 1994 agreed payment to a farm bureau. State, local and to pay $135 million in lieu of taxes to resolve dis- national afﬁliates share the revenue. putes for the years 1985 through 1993. At issue were AARP revenues from the sale of insurance 21 Wisconsin Farm Bureau, 1998 Annual Report. and other services, not associate membership dues. The dispute was ﬁnally settled in June, 22 ibid. “Facts.” 1999. cf. Wall Street Journal, June 29, 1999.

23 TAM 83-02-009 and TAM 83-02-010. 36 Business and Financial Practices of the AARP, Hearings before the Subcommittee on Social 24 American Postal Workers Union, AFL-CIO v. Security and Family Policy of the Committee on United States, 925 F.2d 480 (D.C. Cir. 1991) Finance, U.S. Senate, 104th Congress, First and National Association of Postal Supervisors v. Session, June 13 and June 20, 1995. S. Hrg. 104- United States, 944 F.2d 859 (Fed. Cir. 1991). 109, p. 4.