Published on Friday, August 17, 2001 in the Washington Post
For Big Hog Farms, Big Subsidies
Taxpayers May Foot the Bill for Environmental Cleanup
by John Lancaster
FLAT BRANCH, N.C. -- Here amid the rolling green hills of North Carolina's
central plateau, on the edge of hog farm country, there's a strong
whiff of prosperity in the air.
Embraced by politicians and business leaders as an alternative to tobacco and all its uncertainties, large factory-style hog farms -- some housing 10,000 or more animals -- have brought jobs and wealth to depressed rural communities and generated fat profits for the handful of big companies that dominate the industry.
But prosperity has an unpleasant byproduct. Besides the stench that sometimes wafts into neighboring subdivisions, the untreated waste that hog farmers store in open lagoons and spray onto their fields has sparked broad concern about potential threats to streams and drinking water.
Now, with the Environmental Protection Agency contemplating new and potentially costly regulations governing livestock waste, lobbyists for the pork, cattle and poultry industries have proposed that taxpayers help foot the bill. And Congress, it seems, is poised to go along with the idea as it considers legislation that will chart a course for farm policy over 10 years.
Already, the notion of using taxpayer dollars to help livestock producers pay for environmental damage caused by their operations is being labeled corporate welfare for the rich, and it echoes a larger debate over farm subsidies.
Rooted in the New Deal, such crop payments are intended to protect farmers from market fluctuations and ensure an affordable and steady supply of food. But many lawmakers -- especially those from more urban states -- have grown skeptical of the programs, which increasingly benefit the wealthiest growers as the number of small family farms continues to decline.'Feeding the Country'
To L.D. Black, the support seems only fair. A burly, third-generation farmer who wears Reeboks and a look of perpetual amusement, Black, 40, switched from tobacco to hogs in 1993 and raises nearly 6,000 of them under contract with Prestage Farms Inc., one of the state's largest producers of pork and poultry. "In my view, we're feeding the country," he said. "If they want to eat cheap, someone's got to pay the costs."
The measure that Black and other North Carolina hog producers see as their salvation was approved last month by the House Agriculture Committee. It would lift the cap on the size of livestock operations eligible for a U.S. Department of Agriculture program that helps both crop and livestock producers pay for environmental projects. Administered by the department's conservation service, the Environmental Quality Incentives Program, or EQIP, until now has restricted its livestock assistance to smaller producers -- in the case of hog farms, those with 2,500 or fewer animals.
If approved by the Senate and signed into law, the legislation will mean that any livestock producer -- including the largest and most profitable ones -- will be eligible for up to $50,000 in assistance per year, or a total of $200,000 over 10 years.
Supporters of the change say it merely recognizes the obvious -- namely, that the scale of livestock operations has grown rapidly in recent years and that helping the industry improve its waste management practices is an undeniable public good. The measure -- initiated by Rep. Frank Lucas (R-Okla.), who chairs the agriculture panel's conservation subcommittee -- would increase the overall size of the EQIP program from $200 million to $1.2 billion per year.Corporate Welfare Charges
Environmental groups and advocates for small-farm owners call the measure a clear case of corporate welfare and one that highlights the enduring clout of agribusiness on Capitol Hill. They say that because the EQIP program gives priority to livestock operators facing the biggest environmental challenges, lifting the size cap will divert resources from small operations to large ones, hastening the demise of the family farm.
"The bigger guys . . . can afford to do it themselves," said Susanne Fleek, director of government affairs for the Environmental Working Group, a Washington-based research and advocacy organization. "I'm not saying that you won't still get a public benefit. The question is, will you get a public benefit you would have gotten anyway? . . . I don't think we're paying DuPont to meet the Clean Water Act."
Timothy D. Searchinger, an attorney with Environmental Defense in Washington, said the environmental measure in the bill underscores what critics say is the larger problem with the crop subsidy program. "The amount of money being shoveled out is incredible, and the fact is that it's having no effect on keeping average farmers in business," he said.
A study published in June by the General Accounting Office, the investigative arm of Congress, supports his point: In 1999, farms of 1,000 or more acres received 52 percent of farm payments even though they make up just 8 percent of the nation's farms.
Lawmakers have grappled with these matters before. In 1996, the last time the farm bill was up for consideration, Congress passed the Freedom to Farm Act, which was supposed to phase out many farm subsidies by 2002. Since then, however, subsidies have increased to record levels -- $20 billion last year -- as Congress has doled out "emergency" payments aimed at helping farmers through rough economic times.
This year, the House and Senate have already approved a $5.5 billion emergency aid package that administration officials say President Bush is prepared to sign.'We Eat Cheaper'
Lucas, the subcommittee chairman, said critics of crop payment programs often overlook the benefits they provide to consumers, to say nothing of faltering rural economies. "Farm bills have been very successful since 1933," he said. "We eat cheaper than anyone else in the world."
Searchinger and other environmental lobbyists contend that farm subsidies should be reapportioned in favor of conservation programs, such as paying farmers to protect wetlands. Such payments, they say, would not only benefit the environment -- more than half the land in the contiguous 48 states is devoted to agriculture of one sort or another -- but also would channel support to smaller farms, specialty crop growers and states that do not benefit from crop payments.
As passed by the House Agriculture Committee last month, the $168 billion farm bill would perpetuate traditional crop payments while reserving about $15 billion for conservation measures, an increase over current levels but far less than environmentalists are seeking. They are backing legislation, co-sponsored by Reps. Ron Kind (D-Wis.) and Wayne T. Gilchrist (R-Md.), that would increase conservation spending over 10 years to $35 billion.Waste Issues Grow
Livestock waste is a particular concern. This is due in large part to the trend toward large "confined animal feeding operations," or CAFOs, in which animals spend their lives in metal sheds. An abundance of such operations, the Agriculture Department's Economic Research Service reported in June, "can overwhelm the ability of a watershed to assimilate the nutrients contained in [livestock] waste and maintain water quality."
But if lawmakers generally agree on the problem, the solution -- making financial assistance available to large as well as small operations -- is not entirely settled. "I'm concerned about creating a program that would unfairly subsidize large livestock operations," Senate Agriculture Chairman Tom Harkin (D-Iowa) said at a hearing last month.
He added: "We've seen how farm programs have inadvertently [helped big farms] get bigger . . . On the other hand, we want the larger operations to be environmentally sound, so I'm on the horns of a dilemma, no pun intended."
Nowhere, perhaps, is that dilemma illustrated more starkly than in North Carolina, the nation's second-largest hog producer after Iowa.
The state is home to about 10 million hogs, each of which produces two to four times the waste of an average human. More than 96 percent are housed in confinement operations of 2,000 animals or more, according to the North Carolina Department of Agriculture. The waste is typically stored in open-air pits, called lagoons, then sprayed onto fields, where its nutrient load of nitrogen and phosphorus is supposed to be absorbed by plants.
State officials initially welcomed the hog industry, accepting its assurances that hog waste posed little hazard to the environment. Attitudes changed, however, after several large-scale fish kills linked to spilled waste and warnings from scientists about potential -- if still largely theoretical -- threats to underground water supplies. The state slapped a moratorium on new hog operations in 1997.
Since the mid-1990s, North Carolina regulators have begun to toughen their oversight, requiring, for example, that farmers with more than 250 hogs develop formal waste-management plans and apply for special permits.Bracing for New Rules
The EPA, meanwhile, has been developing new rules that essentially would relegate agricultural runoff to the same category as pollution from concentrated sources such as factories and sewage plants. Although Bush has delayed implementation of the rules, which were initiated by President Bill Clinton, livestock producers are bracing for new mandates that they say would cost them $1.2 billion yearly over 10 years.
Like many people in his business, Black, the hog farmer, thinks he already does plenty to protect the environment.
His immaculately kept 130-acre farm, about 60 miles south of Raleigh, is something of a showplace, having recently been cited by the EPA for exemplary waste-management practices. Black and his wife, Debra, flush out their hog buildings with recycled water, store the waste in clay-lined lagoons and spray it onto their fields at rates established by state regulators, who periodically stop by to check his records.
Black fears, however, that he may face a new and onerous set of restrictions, including a requirement that he greatly expand the area over which he sprays the waste from his barns. The aim would be to dilute the amount of phosphorus that enters the environment.
But because his acreage is limited, Black said, he would have no choice but to pump the waste into a "honey wagon" and truck it elsewhere at prohibitively high cost.
"They say it's going to take about four times the land," said Black, who under current rules would not be eligible for EQIP assistance because he keeps too many hogs. "I'd have to fold up and go home."
In many respects, Black is precisely the type of family farmer whom lawmakers are forever saying they want to help. He grew up on his farm, where his grandfather and father are buried beneath a stand of loblolly pines. Black hopes that his 19-year-old son, who installs security systems, will someday join him in the family business.
For now, Black is comfortable but not rich: Last year, he said, his hog operation earned him a profit of about $50,000 (he also raises chickens).
What makes the situation more complicated, however, is that Black does not own the pigs he keeps in his barns. They belong to Prestage Farms, a privately held North Carolina company with 1,000 employees that pays him a fee to tend the animals while covering the cost of feed and veterinary services.
In keeping with the trend toward consolidation in agriculture, that arrangement -- called contract farming -- is typical of the hog business in North Carolina. About 90 percent of North Carolina hog farmers are contract farmers, and of those, well over half raise pigs for just one company, Smithfield Foods of Smithfield, Va.
Smithfield is no family farm. Ranked No. 341 on the Fortune 500 list, the publicly traded company is the world's largest pork producer and last year earned a $75 million profit on sales of more than $5 billion, according to its annual report.
In light of the pork industry's profitability, environmentalists wonder why taxpayers should help bear the cost of managing its waste.
"We are working down here to try to get big companies like Smithfield, which has basically taken over the industry, to pay their fair share," said Dan Whittle, a senior attorney with North Carolina Environmental Defense. "The public can pay some role in the funding, but that money should be targeted to those farmers who can least afford the changes."
Spokesmen for Smithfield and Prestage declined to comment on the EQIP legislation. But Lucas, its principal sponsor in Congress, said the idea of government extending a helping hand to industry is not unique to agriculture. "There are no pure segments in the American -economy," he said. "Whether it's the things we do to subsidize airports or highways, we are subsidizing industries all across the board."
© 2001 The Washington Post Company