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Texas Agriculture Archive

February 7, 2003

Tenant/USDA issue
devastates rice farmers

By Mike Barnett
Editor

Worth Lucas of Matagorda County has tenant-farmed the same land, for the same landlord, for 29 years. For three decades Lucas has worked the tight, black clay soil, making a huge investment in equipment and time growing rice, bound to his landlord at a fair rental rate by only a verbal agreement.

Things are changing this year, however, for this 52-year-old cattle and rice producer. The landlord recently died, survived by four heirs. The new landlords have learned to work the farm bill to their benefit, and have chosen a route taken by many across the Texas Gulf Coast that endangers the livelihoods of farmers growing a crop with a rich, 100-year history in the Lone Star State.

A majority of the new landlords originally wanted to take all the government payments for the rice base and take the land out of production. One, however, in an effort to keep Lucas farming, offered a proposal where the landlords would get a majority of the government payment for the land through Lucas by raising the land rent.

"They're under the impression, and I am too, that what they are doing is all legal," Lucas says, noting that many landowners, facing payment limitations of their own, resort to raising rents sky high to tap further into government programs through the tenant's eligibility. "My biggest problem is, I have a moral issue with this...me, taking all of the government checks and giving it back to them..."

With a short 35 to 40 days until planting time, Lucas is undecided about his immediate future. He runs cattle in rotation with his rice, and that's the only reason he's trying to hang in. But this producer realizes that two bumper rice crops the last two years is the only thing that's kept him in business. Three great years in a row, he admits, might be wishful thinking.

"Needing the pasture land, it's kind of got me between a rock and a hard place," Lucas admits. "Either I do what they want...and I'm not saying that they would...but there's a possibility they'd just find someone else who would farm the land."

Tenant/USDA issue

Lucas' story is being written over and over again across Texas as many landowners, rice producers feel, with help from USDA, have found out how to farm the farm bill. Some call the problem a landlord/tenant issue. Rice producer and Matagorda County Farm Bureau President Paul Sliva prefers a term that places blame where he feels blame is due. What's happened, he says, is an unintentional consequence of the writers of the farm bill.

"I want to get one thing clear," this 35-year-old producer says. "It's been called a landlord/tenant issue. I try not to use that. I don't blame the landlord for doing what they can do. It's a tenant/USDA issue. And it just boils down to fair treatment by USDA of the tenant or sharecropper."

The problem in Texas, Sliva says, started in the 1996 farm bill when Congress decoupled farm program payments to meet World Trade Organization commitments. Since decoupling, USDA has interpreted farm program rules as follows: If the payment isn't tied to production, growing a crop doesn't have to take place to receive a payment.

"Well USDA said that means nothing has to be done with that land, you don't have to have any involvement in that land, you don't have to have any risk in that land," Sliva charges, noting that USDA hasn't followed the rules and regulations they've come up with to implement the farm bill. "Nowhere is it written that the landowner just by owning land is actively engaged. The problem we're having is trying to get something changed that has been happening since 1996."

With no determination of risk or eligibility, Sliva says there's no protection for the tenant and sharecropper because the landowner can take all the government payment he wants–either by taking 100 percent of the payment if he decides to idle the land, or keeping the land in production and receiving the payment through land rent.

"Our land rents have gone sky-high since 1996," Sliva exclaims. "There's a guy who payed $17,000 in land rent last year that's now being asked to pay $57,000. Since there's no determination of eligibility, no determination of actively engaged, made, landowners are allowed to circumvent the rules."

The result of this is a tremendous drop in rice production. According to Sliva, there was 320,000 acres of Texas rice in 1995. There were 200,000 last year.

In Chambers County alone, there were 28,000 acres of rice in 1995.

"Last year we had 8,500 acres of rice," says Chambers County producer David Murrell. "I know it's going to be less this year. I know of three more farmers who have lost their land."

Murrell says the signing of the new farm bill last year has Texas rice producers in a crisis mode. Landowners who previously thought they needed to keep land in production to preserve their base found there was no such requirement in the new farm bill.

"A bunch of them said, 'Here's a green light. Let's go,'" said Bob Reed, Bay City rice farmer and Texas Farm Bureau District 11 state director.

"You give all that payment in land rent, you can't afford to farm," Murrell says of the current situation. "There are no other alternatives. Rice and cattle is what God made this country for."

Wider impact

The impact of lost production stretches beyond the farm gate. Rice is a high input crop, and many rural Gulf Coast communities depend on the commodity for economic vitality. Matagorda County Farm Bureau President Sliva estimates a $65 million loss in rice production since 1995 in the 10 major rice producing counties in Texas. This affects fertilizer and equipment dealers, automobile and truck dealers, and reaches deep in the heart of the community as well.

"Agriculture money turns over three to seven times in the local economy," Sliva says. "If you just turned it over three times that would be a $200 million loss. That money's not coming to our rural economies and invested like I think Congress intended it to be. We're slowly dying."

Case in point: Alan Heskamp owns the Bay City John Deere dealership and other dealerships across the Texas rice belt. Of the 46 rice combines he's sold in the last six years, only five have sold in the last three.

"I think the bulk of that is attributed to the 1995 farm bill and the landlord/tenant issue," Heskamp asserts. "That's what's led to the decline in rice acreage. I have landlord friends that live in the River Oaks section in Houston that are drawing some pretty nice payments. And they're sure not spending them with me."

Fighting back

Texas producers aren't sitting on their hands, waiting to go out of business. They're fighting back. The logical conclusion would be to bring the determination of eligibility back to the county level, something that Bob Reed tried to inject into American Farm Bureau Federation policy at their annual convention in January in Tampa, Fla. (Reed was successful in getting a resolution passed that would give more power to the state FSA committee).

Steven Goetsch, who farms 500 acres of rice, is president of the Rice Marketing Association, and serves on his county FSA Committee, says the county committee is supposed to be enforcing cash rent deals.

"The state won't support it," he says. "We set equipment rental rates, we set basis for farmers, we set yields for them. And we're not setting cash rent, which in the rules say we're supposed to be setting. We're not getting any backing from Washington on this."

Reed was in Washington, D.C. in mid-January talking up the issue, and found little support from the House Ag Committee.

He also met with Ag Secretary Veneman's chief of staff, and other USDA personnel.

"They told us they understood it was a problem and should be addressed. And they were just trying to figure out some way to accomplish that," Reed said.

Sliva says Texas growers are trying to enlist support from other rice farming states to bring pressure on the issue. The problem hasn't been as severe in other states because unlike Texas, most of the land is being farmed by the owners. Still, other states are stepping up.

"The Delta Rice Council in Mississippi voted recently to support what we're doing," Sliva said. "And we're working with other rice advisory committees in the other five rice states."

Sliva is also awaiting the results of a study commissioned by Texas Rep. Charles Stenholm in the last farm bill that requires USDA to study the effects of decoupled payments on the Texas rice industry.

"That's one thing that could be helpful," he says.

Sliva also issued a warning for other commodity growers...they could be next: "I think if commodity prices stay as low as they are, this is going to happen more and more."

Matagorda County producer Mark Dodd agrees: "One thing we all need to keep in mind, it's not just a rice issue. It's a bigger concentrated problem along the Gulf Coast of Texas with rice because of the payments."

Dodd adds the whole issue boils down to these philosophical questions: "Is this a land subsidy program or is this a farm subsidy program? Was the program put into effect to keep farmers in business so we have a safe, affordable supply of food?

"Or was the program put into effect to put producers out of business? It's very simple. And I don't think the intent of Congress was to put us out of business."