Amber Waves of Gain

A m b e r W a v e s o f G a i n :

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

AMBER WAVES OF GAIN:

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.

A M B E R W A V E S O F G A I N

iii

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

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

Table of Contents

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 progres-

sive 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 endan-

gered 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.

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 car-

ried out by the federal government in 1995 and 1996 were unlawful and that the thriving

new 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 Bu r eau exists to serve American family

farmers. In reality the Farm Bu reau is a gigantic agribusiness and insurance conglomerate. T h e

majority of its “m e m b e r s” are not farmers, but customers of Farm Bu r eau insurance companies

and other business ve n t u res. Yet the organization’s nonpro ﬁt 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 organiza-

tion 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.

A M B E R W A V E S O F G A I N

Foreword

Rodger Schlickeisen

President, Defenders of Wildlife

A M B E R W A V E S O F G A I N

Foreword

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

members. It has artfully portrayed itself as the voice and champion of our nation’s fam-

ily farmers for nearly 80 years.

The vast majority of the Farm Bu re a u’s members, howe ve r, are either policyholders of one

of numerous insurance companies afﬁliated with state farm bureaus or are customers of other

farm bureau business ve n t u res. (At latest count there we re some 54 farm bureau insurance

companies.) Such members have no say in establishing or carrying out Farm Bu reau 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-

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 pollu-

tion 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 owner-

ship 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 insur-

ance 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,

Executive Summary

A M B E R W A V E S O F G A I N

vii

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 empowe red farmers

and other rural residents to get the goods and services they needed while enabling them to

sell their products at a better price. Un f o rt u n a t e l y, what was once a beneﬁcial arrangement

for farmers and consumers has drastically changed. Many Farm Bu re a u - a f ﬁliated co-ops are

n o w multibillion-dollar operations that compete directly with their farmer members.

Fu rt h e r m o re, many of these cooperatives are partnering with the ve ry companies re s 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 inter-

ests 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 mem-

bership 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.

A M B E R W A V E S O F G A I N

“...the Fa rm Bu r eau is far more than simply

an organization of farmers, as it so often claims.

The nation’s biggest farm organization has been

quietly but systematically amassing one of the

largest business networks in America, while

t u rning its back on the deepening crisis of the

f a rmers whom it supposedly re p re s e n t s . . . .”

— Samuel R. Berger, Dollar Harvest.

he majority of Americans may be only

vaguely aware of the existence of the

American Farm Bu reau Federation (AFBF),

although it is a huge and immensely powe rf u l

organization that claims to speak for farmers on

many public policy issues and has a signiﬁc a n t

i n ﬂuence on decisions of government at all leve l s .

Su rveys by Fo rtune magazine regularly rank

AFBF as one of the top 25 most potent special-

i n t e r est groups in Washington, D.C. The organi-

zation is no less formidable a presence in state

capitals, county seats and rural communities. And

its inﬂuence extends into business and ﬁn a n c i a l

c i rcles, to which it has major and pro ﬁtable ties.

With more than 4.9 million members and afﬁl-

iated organizations in eve ry state, AFBF — famil-

iarly called simply the Farm Bu reau — has colossal

political clout in Congress, state legislatures and

county commissions.“They are an incredibly pow-

e rful lobby,” says Sam Hitt of Fo rest Gu a r dians, a

Santa Fe, New Mexico, environmental gro u p. Hi t t

has run up against the Farm Bu reau time and

again on environmental issues, such as pro t e c t i o n

of streamside ecosystems. “Legislators seem to go

g o o g l e - e yed when they see them walk through the

d o o r, and that’s caused the loss of a lot of our

wildlife heritage,” he says.

One measure of the Farm Bu reau empire’s size

is the $200 million or more that it takes in ye a r l y

in membership dues. The national, state and

county farm bureaus also control insurance com-

panies producing annual re v enue of some $6.5

billion and cooperatives producing re venue of

some $12 billion. And farm bureaus earn re ve n u e

f rom consulting, satellite TV and Internet serv i c e s

and a bank headed by AFBF’s pre s i d e n t .

AFBF spends considerable money and energy

ﬁghting such environmental initiatives as the

Endangered Species Act, the Clean Water, Clean

Air and Safe Drinking Water Acts, wetlands laws,

pesticide regulations and efforts to curb global

warming. But the Farm Bureau’s views may have

more to do with the organization’s own ﬁnancial

interests than with the needs of family farms.

The Farm Bureau’s emotionally charged

attacks on environmental regulations seem

intended at least partly to divert the attention of

I N T R O D U C T I O N

The Farm Lobby Colossus

A M B E R W A V E S O F G A I N

farmers from the real issues facing agriculture

today. For years this strategy apparently worked.

But interviews with cattle ranchers, hog produc-

ers and farmers across the nation suggest that

many no longer believe these issues have any-

thing to do with the troubles plaguing agricul-

ture, and they no longer trust the Farm Bureau

to act on their behalf.

The United States is in the midst of one of

the worst agricultural crises in decades. Hog, cat-

tle and grain prices for farmers have collapsed at

the same time that food costs for consumers

remain high. Food production at all levels is

becoming more and more concentrated in the

hands of enormous agribusinesses, including

those of the AFBF network, while thousands of

family farms go under. AFBF and its afﬁliates

have not only advocated policies that have con-

tributed to the crisis but are actively beneﬁting

from the demise of family farms.

The Farm Bureau began its rise to power in

1911 when the Chamber of Commerce in

Binghamton, New York, set up the ﬁrst county

farm bureau to sponsor an extension agent pro-

vided by the U.S. Department of Agriculture.

From that time through the 1950s, a cozy rela-

tionship persisted between the private farm

bureaus and federal agricultural agents — a rela-

tionship so close that many farmers mistakenly

believed that the farm bureaus and the govern-

ment were one and the same, according to a his-

tory of the Farm Bureau in The Corporate

Reapers: The Book of Agribusiness by A.V. Krebs

(Essential Books, 1992). In 1954, the

Department of Agriculture ordered its agents to

stop accepting free ofﬁce space and gratuities

from farm bureaus, but close connections

between the two entities remained. Ironically,

this association with the federal government —

and the consequent access to federal crop pro-

grams and technical information — helped

establish AFBF’s dominance as a farmers’ organi-

zation. These days, AFBF complains that the

federal government is too intrusive, particularly

in regard to environmental regulations, which

AFBF claims are overly burdensome to farmers.

But many of the causes that the Farm Bureau

champions, including less pesticide regulation,

relate at least as much to the ﬁnancial interest of

the Farm Bureau as to the needs of farmers.

Dean Kleckner, AFBF president from 1986

to January, 2000, reserved particular invective for

the Food Quality Protection Act, which dire c t s

the En v i ronmental Protection Agency (EPA) to

set standards for pesticide residues in food at lev-

els low enough to protect the health of infants

and children. “Sane people do wonder what these

kids will eat . . . when the government closes the

p roduce department at our gro c e ry store s , ”

Kleckner wrote in a newspaper column in which

he suggested that EPA’s “bureaucratic madness”

would result in bans on all agricultural chemicals.

The Farm Bu reau may genuinely fear that agri-

c u l t u re will suffer if farmers must reduce their use

of chemicals, but Farm Bu re a u - a f ﬁliated compa-

nies also hold stock in corporations that manufac-

t u r e pesticides, and presumably those inve s t m e n t s

might suffer as well.

WIDE-RANGING BUSINESS INTERESTS

Agricultural cooperatives under the direct

control of state farm bureaus earn signiﬁcant rev-

A M B E R W A V E S O F G A I N

enues from pesticides and market them aggres-

sively. In addition, according to corporate docu-

ments, some 54 Farm Bureau-afﬁliated insurance

companies earn a total of more than $6.5 billion

annually in net premiums. The farm bureaus also

h a ve investments in banks, mutual-fund and

ﬁn a n c i a l - s e rvices ﬁrms, grain-trading companies

and other businesses. Many of those businesses in

turn own stock in oil and gas, pulp and paper,

t i m b e r, railroad, automobile, plastics, chemical,

steel, pesticide, communications, electronics and

c i g a r ette companies and even a nuclear powe r

plant. The lists of stocks held by Farm Bu re a u

companies read like a who’s who of corporate

h e a v y w eights: Philip Morris, We ye r h a e u s e r,

Du P ont, Union Carbide, AT & T, Fo r d Mo t o r,

Raytheon (a leading manufacturer of tactical mis-

siles), International Pa p e r, CBS, Tyson Fo o d s ,

A r cher Daniels Midland (ADM) and many more .

(For a list of farm bureau insurance companies

and other farm bureau business afﬁliations see

Appendix 1, “Farm Bureau Connections.” )

In a 1998 interview, AFBF Washington lob-

byist Dennis Stolte claimed ignorance of these

ﬁnancial interests and insisted that the insurance

and other businesses have little to do with AFBF.

“That’s not the Farm Bureau,” he said. “Our

members are farmers for the most part. They’re

people who are interested in promoting agricul-

ture.” Nevertheless, comparisons of the boards of

directors of Farm Bureau-afﬁliated businesses

and Farm Bureau organizations themselves show

substantial overlap. In many cases, the individu-

als and boards controlling the businesses also

control the state farm bureaus. Frequently, much

of the proﬁt earned by these businesses reverts to

the farm bureaus. The California Farm Bureau,

for example, reported total revenue of $37 mil-

lion in 1996. This and the examples that follow

indicate just why AFBF would be inclined to

function more like a big-business interest than

the advocate of family farmers:

The Illinois Farm Bu reau (also known as the

Illinois Agricultural Association or IAA) is the

majority stockholder in a group of inve s t m e n t

funds run by IAA Trust Company, which man-

ages stock, bond and money-market funds wort h

m o re than $356 million. Illinois Farm Bu re a u

also owns 95 percent of IAA Trust Company. In

1998, the IAA Trust Funds earned $10.6 million

in interest and dividends from stocks and other

i n vestments, and the value of IAA Tru s t’s port f o-

lio increased by more than $46 million for the

year ending June 30, 1999. Ac c o rding to an

Oc t o b e r, 1999, re p o rt ﬁled with the Se c u r i t i e s

and Exchange Commission (SEC), Illinois Fa r m

Bu r eau president Ronald Wa rﬁeld is also pre s i-

dent of IAA Trust and serves on AFBF’s board as

well as the boards of several of AFBF’s afﬁl i a t e d

companies. Ac c o rding to the SEC re p o rt, nearly

all of the top ofﬁcers and directors of IAA Tru s t

a r e also on the board of the Illinois Farm Bu re a u .

Twenty-one board members serve both organiza-

tions. The IAA investment funds pay the IAA

Trust Company more than $2 million a year to

provide advice on which stocks to buy and when.

These same Farm Bu reau ofﬁcers are in

charge of 52 companies directly owned by or

closely afﬁliated with the Illinois Farm Bu re a u .

The list includes Country Companies In s u r a n c e ,

real estate brokerage ﬁrms, credit and ﬁn a n c i a l

s e rvices companies, an export company headquar-

A M B E R W A V E S O F G A I N

t e r ed in Barbados, West Indies, oil and gas com-

panies and Grow m a rk, an international agricul-

tural cooperative with close business ties to the

agribusiness giant Archer Daniels Mi d l a n d

( A D M ) .

Nationwide Insurance of Columbus, Ohio,

with $74 billion in assets and $12 billion in

annual sales, grew out of the Ohio Farm Bureau.

Even though the insurance company split off

from the Ohio bureau in 1948, connections

remain close. According to the Columbus

Dispatch, Ohio Farm Bureau presidents and past

presidents routinely are elected to the board of

Nationwide and the bureau nominates a majority

of the board. Irv Bell, president of the Ohio

Farm Bureau until early 1998, now sits on

Nationwide’s board. Nationwide’s long-time

chairman and chief executive ofﬁcer, George

Dunlap, was also an Ohio Farm Bureau director

for 15 years and director of a county farm

bureau for 25 years.

AFBF owns 42.7 percent of American

Agricultural Insurance Company (AAIC). T h i rt y -

t h ree other Farm Bu r eau insurance companies

own the rest of AAIC. AAIC sells reinsurance,

insuring other insurance companies against the

kinds of huge losses that might be caused by nat-

ural disasters — a risky but proﬁtable business.

According to ﬁnancial reports, in early 1999

AAIC had assets of more than $575 million and

a surplus of $285 million. The president of

AFBF is also AAIC’s president. AAIC employs

AFBF’s secretary and treasurer as secretary and

treasurer of the reinsurance company. In fact,

AAIC’s entire board is chosen from among AFBF

board members. On March 31, 1999, AAIC

announced plans to purchase the reinsurance

division of Nationwide Insurance. The terms

were not disclosed. According to a news release,

Nationwide’s president Richard D. Crabtree said

the sale to AAIC is a good ﬁt because the two

companies “share a cooperative heritage . . . .”

Other examples of overlapping farm bureau

organizational and business interests include:

• New York Farm Bureau president John

Lincoln serves as vice chairman of the board of

Farm Family Insurance Companies. Farm Family

also shares ofﬁce space with the New York Farm

Bureau.

• Kentucky Farm Bureau Federation execu-

tive vice president David S. Beck also is corpo-

rate secretary of Kentucky Farm Bureau Mutual

Insurance Company.

• Farm Bureau Town and Country Insurance

and Farm Bureau Life Insurance of Missouri are

owned by Missouri Farm Bureau Services, Inc.,

which is controlled by the Missouri Farm Bu re a u .

• All directors of Western Farm Bureau

Mutual Insurance are also directors of the New

Mexico Farm and Livestock Bureau.

• Former Wyoming Farm Bureau Federation

president and AFBF executive committee mem-

ber Dave Flitner also served as president of

Mountain West Farm Bureau Mutual Insurance

and Farm Bureau Life Insurance. Flitner is better

known for his close ties with former Interior

Secretary James Watt and for his tenure as presi-

dent of the Mountain States Legal Foundation,

one of the nation’s most active anti-environmen-

tal legal groups. Mountain States, a co-plaintiff

in the Farm Bureau Yellowstone/Idaho wolf law-

suit, also provided legal representation for the

Farm Bureau in that lawsuit. Flitner once com-

pared reintroduction of wolves to “inviting in the

AIDS virus.” He also proposed cutting agricul-

ture programs to lower the federal deﬁcit.

So vast is this web of interlocking companies

with interlocking boards that it is nearly impossi-

ble to estimate the true extent of the Farm Bu r-

e a u’s ﬁnancial powe r. It’s equally difﬁcult to gauge

whether or how much individual farm bure a u

o f ﬁcers who sit on multiple boards of dire c t o r s

p ro ﬁt from these businesses, since individual hold-

ings in the companies are never disclosed.

In addition to their other businesses, state farm

b u reaus are now providing digital television, satel-

lite, advanced communication, long-distance and

cellular telephone services and high-speed In t e r n e t

access. Farm Bu reau leaders seem reluctant to dis-

cuss these enterprises with outsiders. AFBF exc l u d-

ed members of the press from a 1998 communica-

tions conference in Santa Fe, New Me x i c o .

This exclusion of the press is not surprising.

AFBF works hard to maintain its image as a

grassroots advocate for family farms. Too much

emphasis on AFBF’s outside business interests

might spoil that illusion. “There’s an impression

that this is a huge organization of farmers,” says

former Texas agriculture commissioner Jim

Hightower, who now hosts a syndicated radio

talk show. “But they are no more a family farmer

organization than is State Farm Insurance. Just

because you have the word farm in your name

doesn’t mean you really represent farmers.”

As agriculture commissioner, Hightower had

ﬁrsthand experience with the Farm Bureau’s jeal-

ous protection of its ﬁnancial interests. In the

mid-1980s, when the European Community was

considering a ban on imports of hormone-

enhanced meat, Hightower tried to recruit Texas

cattle producers to raise hormone-free beef for

export. He ﬁgured that ranchers could take

advantage of the new market for “organic” beef if

they acted quickly. The Texas Farm Bureau inter-

preted Hightower’s actions as disparagement of

hormone-enhanced cattle and launched a suc-

cessful campaign to drive him from ofﬁce. After

the smoke cleared, the Dallas Times Herald

reported that Texas Farm Bureau-controlled

companies owned $1.3 million worth of stock in

Syntex, a cattle growth hormone manufacturer.

INFLATED MEMBERSHIP RANKS

“If these people lose their prestige as the

spokesmen for agriculture, they’re just another

insurance lobby, and insurance lobbies are a

dime a dozen. That’s why they don’t like to talk

about how many of those members are actually

farmers.”

— Missouri farmer Scott Dye.

If proof is still needed that AFBF is not quite

the grassroots farming organization that it repre-

sents itself to be, it would be found in the

AFBF’s own membership rolls. The Department

of Agriculture estimates the number of full-time

American farmers at just over 1 million, so clear-

ly most of AFBF’s 4.9 million members must

come from outside agriculture. Numbers from

the Texas Farm Bureau tell the story. In 1997,

Harris County, which includes metropolitan

Houston, had 4,675 members even though the

Department of Agriculture listed only 551 full-

A M B E R W A V E S O F G A I N

time farmers there. Dallas County, with just 229

farmers, listed 2,332 Texas Farm Bureau mem-

bers. Even in the unlikely event that every full-

time farmer in both of those counties belonged

to the Farm Bureau, around 90 percent of the

Dallas and Harris county Farm Bureau members

would have been non-farmers.

In fact, most urban members are nothing

more than customers of Farm Bureau-afﬁliated

insurance companies. The Farm Bureau requires

these customers to purchase memberships in

order to qualify for low-cost automobile, home,

health or life insurance. These members do not

necessarily support or even know about the Farm

Bureau political activities that membership fees

and insurance premiums are bankrolling.

Chicago banker Sallyann Garner, for example,

became a Farm Bureau member when she took

out an insurance policy in 1991. Garner says she

knew that a membership in the DuPage County,

Illinois, Farm Bureau came with her policy. She

cannot recall whether her insurance agent told

her that all county members automatically

become members of the national organization.

Garner learned in April, 1998, about AFBF’s

lawsuit to force removal of the Yellowstone

wolves. “Wolf recovery happens to be one of my

pet programs,” she says. “I was extremely upset. I

was appalled that I was forced to be a member of

the American Farm Bureau just because of my

insurance. I ought to be able to choose insurance

based on the cost and the value and not unwit-

tingly be part of a political action group that

advocates policies I personally object to.” A letter

to DuPage County Farm Bureau president

Michael Ashby brought a response saying that if

Garner objected to the policy on “Wildlife Pest

and Predator Control” she could vote with her

checkbook and ﬁnd other insurance.

Farm Bureau ofﬁcials at the state, county and

national levels alike generally seem reluctant to

give straight answers to questions about how

many actual farmers belong to the organization.

“We feel like we represent eight out of ten

American farmers,” says Dick Newpher, execu-

tive director of AFBF’s Washington, D.C., ofﬁce.

But he admits he actually has no idea whether

that statement is true because, he says, AFBF

does not keep a central membership list that

identiﬁes who is a farmer and who is not.

However, AFBF bylaws clearly spell out two cat-

egories of membership: full members actively

engaged in agriculture or retired from farming

and associate members, deﬁned as anyone else

with an “interest” in agriculture. Newpher says

county and state farm bureaus keep those

records, but queries to several state farm bureaus

did not produce answers, either. Texas Farm

Bureau spokesman Gene Hall says Texas mem-

bership records make no distinction between

farmers and other members.

The heavy dependence on insurance cus-

tomers as the bulwark of the organization sug-

gests that AFBF might become increasingly

inclined to focus more on building its business

interests than on speaking for individual farmers.

This is supported in AFBF publications. For

example, in a recent on-line essay, New York

Farm Bureau executive Bill Stamp spelled out the

importance of adding as many insurance cus-

tomers as possible to the Farm Bureau’s member-

ship rolls: “This year, New Jersey Farm Bureau

A M B E R W A V E S O F G A I N

made a bold effort to increase membership with

the support of their farm family agents. The

membership increase was made largely with asso-

ciate members. New Jersey Farm Bureau provid-

ed a wonderful marketing brochure for the non-

farm consumer of insurance. This practical ini-

tiative creates a larger membership base . . . .

This boosts the ﬁnancial foundation that Farm

Bureau needs to achieve success of their policy

efforts. This is a shining example of success!”

Despite paying dues, Farm Bureau associate

members aren’t allowed to vote at the organiza-

tion’s conventions and thus have no say in policy

matters.

Unlike the average farmer, AFBF has escaped

paying taxes on its hefty income from member-

ship dues because it is a nonproﬁt organization

(although some state afﬁliates are set up as for-

proﬁt groups). However, after an Internal

Revenue Service (IRS) survey of associate mem-

bers found that only ﬁve percent joined AFBF

because of an interest in agriculture, IRS in 1993

ruled that dues from these non-farming associate

members — customers of Farm Bureau insur-

ance companies and other businesses — should

be taxed as business income. The IRS ruling

could have cost AFBF and state afﬁliates $62

million in annual taxes. By 1996, IRS was suing

farm bureaus in 11 states for back taxes.

A group of members of Congress led by

Representative David Camp (R-Michigan) came

to the Farm Bureau’s rescue. Legislation reversing

the IRS decision won congressional approval in

1996 as part of the tax-relief package under

House Speaker Newt Gingrich’s “Contract With

America.” Congressman Camp explained that he

wanted to shield the organization from “unwar-

ranted and potentially devastating audits.”

Senator Phil Gramm (R-Texas) argued during

ﬂoor debate that “the IRS is trying to force the

Farm Bureau to pay taxes they do not owe” and

said the IRS action was “indefensible in the

opinion of the vast majority of the American

people.” After all, Gramm insisted, “being part

of the Farm Bureau is being part of agriculture.”

(For a detailed discussion of the 1996 tax relief

package see Appendix 2, “Tax Treatment of

Unrelated Business Income for Agricultural and

Horticultural Organizations.”)

During 1995 and 1996, Farm Bureau-afﬁliat-

ed political action committees (PACs) contribu-

ted $109,824 to many of the 126 congressional

sponsors of the Tax Fairness for Agriculture Act,

including $16,480 to Camp. In 1996 the Texas

Farm Bureau PAC gave Senator Gramm $5,000.

This report will examine the Farm Bureau’s

multibillion-dollar ﬁnancial empire and show

how AFBF’s pursuit of policies beneﬁcial to its

wide-ranging business interests has undercut the

well-being of America’s family farmers as well as

the interests of consumers and efforts to protect

the environment.

A M B E R W A V E S O F G A I N

“Farm Bureau businesses sustain and pre-

serve the organization. In terms of money, poli-

cy and power, they dominate the organization.”

— Samuel R. Berger, Dollar Harvest.

n 1967, U.S. Representative Joseph Resnick

(D-New York) launched an inquiry into

AFBF’s already sizable commercial ventures. As

chairman of the House Subcommittee on Rural

Development, he wanted to investigate whether

proﬁts from AFBF-controlled businesses were

being transferred to the tax-exempt organization.

But when he moved for hearings, his subcom-

mittee balked. Most of those committee mem-

bers belonged to AFBF and had beneﬁted from

AFBF help in their campaigns. The subcommit-

tee refused to authorize the investigation.

Resnick conducted hearings anyway, gathering

enough information to ﬁll in a rough outline of

the Farm Bureau’s inscrutable business domain.

Before he could complete the process, however,

he died, at the age of 45.

Samuel R. Be r g e r, who had served as a

Resnick aide, picked up the threads of the

i n vestigation and in 1971 produced the most

c o m p re h e n s i ve analysis of the AFBF empire

written to date. His book Dollar Ha rvest ( He a t h

Lexington Books) explains in detail how the

n o n p rofit farm bureaus benefit from re l a t i o n-

ships with their for-profit business part n e r s .

Be r g e r, now national security adviser to

President Clinton, described the Farm Bu re a u

insurance network as “one giant company”

clearly controlled by AFBF.

According to Berger, the relationship works

like this: The insurance companies give AFBF

organizations “sponsorship fees,” which amount

to percentages of insurance company earnings.

“Putting aside the fascinating tax consequences

of these transactions, other ticklish problems

arise,” Berger wrote. Part of the insurance cus-

tomer’s premium goes directly into the pocket of

the Farm Bureau without the customer’s knowl-

edge, he pointed out.

Especially interesting are cases where Fa r m

Bu reau and insurance company boards of dire c-

tors are exactly the same people. Be r g e r

described a 1947 Ohio Insurance De p a rt m e n t

C H A P T E R O N E

Emphasizing the Bottom Line

A M B E R W A V E S O F G A I N

i n vestigation into the relationship between the

Ohio Farm Bu reau and Nationwide In s u r a n c e .

The insurance examiners we re n’t too happy

with the concept of overlapping board s .

Quoting from the examiner’s re p o rt, Be r g e r

w rote that eve ry time the insurance company

b o a rd offered the Farm Bu reau fees, “the same

men rushed around to the other side of the

table to say ‘Ok a y, we accept those fees.’ T h e

examiners said they felt people should not

negotiate with themselves.”

Frequently, the insurance companies rent

their ofﬁce space from state farm bureaus and

employ the farm bureaus’ in-house advertising,

public relations and communications divisions.

In many states, the nonproﬁt farm bureaus also

own all or most of the stock of the insurance

companies. And those stocks pay dividends to

the state organizations. The farm bureaus also

beneﬁt from using insurance customers to inﬂate

their membership numbers, since everyone who

buys a policy must join the bureau. The insur-

ance companies also beneﬁt from the alliances.

Farm bureau lobbyists use their considerable

political clout to lobby on bills affecting their

partners in the insurance business. For instance,

state farm bureaus have lobbied hard for limits

on medical malpractice damage awards. And

AFBF is pushing for privatization of Social

Security, which could bring a proﬁt windfall to

insurance company and ﬁnancial investment

ﬁrm ventures. Relating any of those issues to

agriculture is a far stretch, but they certainly

affect the Farm Bureau’s bottom line.

INSURANCE AT A PREMIUM

“The purpose of this program is to provide

the best insurance products to Farm Bureau

members at the lowest possible cost and provide

excellent policyholder service.”

— AFBF insurance brochure.

“Farm Bureau member Nathan Baxley has

cancer and his daughter has muscular dystro-

phy; the Farm Bureau insurance plan hit him

with a premium increase of $1,950 a month

or an option for drastically reduced coverage.”

— Arkansas Democrat-Gazette,

January 20, 1994.

State farm bureaus have always promoted

their insurance lines as an important service to

their members, and in many cases customers do

have trouble ﬁnding any other insurance for a

reasonable price. Farm bureau insurance rates

generally compare favorably with other carriers

and often are lower. Despite these advantages,

Farm Bureau insurance falls far short of provid-

ing the best service to its customers. For exam-

ple, state ofﬁcials and consumer groups have

accused some farm bureau-afﬁliated companies

of insuring only those who pose the least risk

and therefore are least likely to ﬁle claims. As the

following examples illustrate, the Farm Bureau

has a long history of using exorbitantly high rates

to dissuade or exclude altogether those who need

insurance the most:

• In 1961, as the East Germans were build-

A M B E R W A V E S O F G A I N

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

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.

A M B E R W A V E S O F G A I N

ing the Berlin wall at the height of the cold war,

24-year-old Iowa corn farmer Larry Moore

decided to answer President John F. Kennedy’s

call to service by joining the Army. Moore had

been a farmer all his life and a loyal Farm Bureau

member. But as the young man prepared for his

tour of duty he got a notice from his Farm

Bureau insurance agent that the company would

double his auto insurance premium. “That’s just

not the kind of thing you’d do to show support

for America’s troops,” says Moore’s wife, Mary

Ellen. Moore immediately quit the Farm Bureau

and has refused to rejoin. Mary Ellen is still a

member, although she does not want to be. She

owns a separate farm across the border in Illinois

and says she has no choice but to deal with farm

bureau cooperatives, which offer the only market

for her grain. “They’ve got you in a noose, so

what are you going to do?” she asks. “I sure don’t

agree with their policies.”

• In the 1960s, after a series of rate hearings,

South Carolina Chief Insurance Commissioner

Charles Gambrell accused Southern Farm Bureau

Casualty Insurance Company of attempting to

persuade other insurance carriers “to lead the way

in raising farmers’ rates, so that Farm Bureau

could follow suit and avoid the stigma of being

the ﬁrst to do so.”

• In 1994, Nathan Baxley was one of 1,400

ailing Farm Bureau members in Arkansas who

got rate-hike notices from Arkansas Farm Bureau

Insurance, which gave them less than 30 days to

ﬁnd other insurance or pay the company thou-

sands of dollars extra in annual premiums.

According to Arkansas newspaper accounts, state

legislators accused the company of manipulating

the rate increases to purge sick members from

the rolls. “These members have been paying 20

and 25 years and didn’t need you until two or

three years ago,” Arkansas state representative

Lloyd George said at a hearing. George suggested

that the company had lowered rates for other

health insurance customers in order to attract

more new members. Baxley’s brother-in-law

added, “The Farm Bureau will attract you with

the new low premiums, then cut you out the

moment you get sick.”

• In Texas in 1994, regulators ordered

Southern Farm Bureau Life Insurance Company

to pay a $250,000 ﬁne for overcharging

Medicare patients for prescription drug insur-

ance. The Texas insurance department said

Southern Farm had charged elderly patients

deductibles as high as $3,000 on prescription

drug claims after advertising that the policies

would cover 100 percent of prescription drugs

with no deductibles.

In addition, lawsuits have been ﬁled and reg-

ulators in several states have ﬁned Farm Bureau-

afﬁliated insurance companies for engaging in

redlining, the practice of refusing insurance to

people because of age or race or because they live

in low-income or minority neighborhoods. Red-

lining can mean that insurers refuse to write

policies in certain neighborhoods — they literal-

ly draw red lines on maps to mark off excluded

areas. But more often, redlining takes subtler

forms. In many cases, regulators have found that

insurance companies discourage minorities from

buying policies by quoting substantially higher

rates than the companies offer to people who live

in similar but largely white neighborhoods.

A M B E R W A V E S O F G A I N

In 1994, the Missouri insurance department

brought formal administrative charges against

Farm Bureau and Country Insurance Companies

for redlining the entire city of St. Louis.

Examiners found a map in a Farm Bureau under-

writing manual with the whole predominantly

minority city outlined in yellow and labeled

“ineligible property.” At the time, the Farm

Bureau was the ninth largest homeowners’ insur-

er in the state. A spokesman for the company

claimed that urban residents were excluded

because the Farm Bureau is “traditionally a rural

insurer” and conﬁnes business to counties with

local farm bureaus.

Nationwide Insurance has been particularly

troubled by redlining lawsuits ﬁled by fair-hous-

ing groups around the country. While the Ohio

Farm Bureau no longer owns Nationwide, it still

exerts considerable inﬂuence over the insurance

company through its role in hand-picking board

members for Nationwide. The company and the

Farm Bureau continue to share ofﬁce space in

Columbus. The insurance company pays the

Ohio Farm Bureau a generous fee on each policy

sold through the bureau. The farm bureaus in

California, Maryland and Pennsylvania have sim-

ilar agreements with Nationwide.

More examples:

• In 1997, Nationwide Insurance agreed to

pay Toledo residents $3.5 million to settle a civil

rights lawsuit over redlining, although the com-

pany did not admit doing anything wrong. In

that same year, Nationwide without admitting

guilt settled a Justice Department redlining law-

suit by agreeing to spend more than “$26 mil-

lion in minority neighborhoods nationally.”

• One of Nationwide’s own agents accused

the company in 1997 of refusing to let him sell

insurance in minority neighborhoods of

Pittsburgh, Pennsylvania. Now, more than 20

Nationwide agents in other states have come for-

ward with allegations that the company pro-

motes redlining.

• In February, 1998, Nationwide settled a

racial discrimination lawsuit brought by the

Cincinnati NAACP. The suit accused the insur-

ance company of charging higher premiums in

neighborhoods with high concentrations of non-

white homeowners. Later that year, the Texas

Department of Insurance found that

Nationwide’s tightly controlled marketing strate-

gy, which is overseen from its home ofﬁce in

Columbus, Ohio, “systematically exclude[s]

minority customers from the market in which

[they] operate. Such a pattern of operations

shows that Nationwide has engaged in a practice

of unfair discrimination.”

• In October, 1998, a Richmond, Virginia,

court ordered Nationwide to pay $100 million in

punitive damages and $500,000 in compensato-

ry damages for redlining. The verdict followed a

jury trial in which fair-housing advocates pre-

sented evidence that Nationwide had denied

home insurance to black applicants and had

imposed higher rates in Richmond, a predomi-

nantly black city, than in Richmond’s largely

white suburbs. The $100 million judgment was

the largest ever imposed in a redlining case —

and a judge who reviewed the jury’s decision

ruled in December, 1998, that the award was not

excessive. Nationwide denied wrongdoing. In

December, 1999, the case was still on appeal.

A M B E R W A V E S O F G A I N

CORPORATIONS OVER FAMILIES

“The purpose of Farm Bureau is to make

the business of farming more proﬁtable, and

the community a better place to live.... Farm

Bureau is the voice of farmers and ranchers in

local meetings, at state legislatures and in the

nation’s capital.”

— This Is Farm Bureau, AFBF website.

“They had 70 or 80 years to speak out on

behalf of the small farmer and if they had done

their job, we wouldn’t be in the mess we’re in

now, where we’re losing farmers in astronomi-

cal numbers.”

— Martha Stevens, Missouri farmer.

Two Missouri controversies illustrate how out

of step the Farm Bureau can be with the family

farmers it purports to represent. Both cases

involve the efforts of small farmers and rural

communities to protect their environment and

quality of life, and in both cases the Farm Bureau

has come down squarely on the side of polluters.

The ﬁrst example involves efforts to protect the

imperiled Topeka shiner, a tiny minnow that can

live only in cool, clear-running streams and can-

not tolerate pollution. At a 1998 U.S. Fish and

Wildlife Service hearing in Bethany, Missouri,

Farm Bureau lobbyist Dan Cassidy testiﬁed

against a proposal to add the shiner to the federal

endangered species list. Listing the minnow

could require farmers to take special care to keep

sediments, pesticides, manure and other pollu-

tants out of the water.

The Farm Bureau had alerted its members,

and dozens of farmers showed up at the hearing.

“Cassidy had this big old Cheshire-cat grin on

his face when he saw all of these farmers come

ﬁling into the room,” recalls one farmer who

attended. Cassidy testiﬁed ﬁrst, arguing that the

listing would lead to onerous and burdensome

regulations that could put family farmers out of

business. But then farmer after farmer got up to

say that the Farm Bureau did not speak for the

farmer. According to a head count taken by the

Sierra Club, 69 of the 87 farmers and rural resi-

dents at the meeting disagreed with Cassidy and

supported listing the shiner.

Martha Stevens, who has farmed for 45 years

and is nearing retirement, says she is proud that

Topeka shiners still survive in northern Missouri

streams. “It means we’ve been doing something

right,” she says. “If the water kills the ﬁsh, it

can’t be good for us. The Topeka shiner is a darn

good indication of when your water is polluted,

and I believe we ought to be able to coexist and

not pollute to the point that it destroys them

and eventually destroys us.” Stevens says the

degree of support for listing the Topeka shiner

appeared to take the Farm Bureau men by sur-

prise, but if they had been paying attention to

the concerns of small farmers, she says, the

bureau would have realized that family farmers

see pollution from big agribusiness as a far

greater threat than government regulation.

The second example underscores Stevens’s

point. For several years now, small farmers and

other rural residents in a three-county area of

northern Missouri have been locked in what is so

far a losing battle over pollution from conﬁned

animal-feeding operations (CAFOs). These

A M B E R W A V E S O F G A I N

megahog farms house as many as 140,000 ani-

mals at one time. Rolf Cristen’s 600-acre farm is

sandwiched between two of these operations. “It

stinks at our house continuously,” he says. People

who have worked around livestock all their lives

say they sometimes wake up in the middle of the

night and vomit because the stench is so bad.

In 1982, Missouri’s legislature enacted a

“right-to-farm” law whose provisions made it dif-

ﬁcult for the Missouri Air Conservation

Commission (MACC) to act against sources of

agricultural odors. Subsequently the commission

exempted farms from laws that require other

businesses to keep smells under control. The

intent was to protect farmers when city people

move out to the country and then object to nor-

mal farm smells. The exemption never contem-

plated, however, the intense, all-pervasive stench

that comes from hundreds of thousands of hogs

all housed together. In 1998, Missouri Attorney

General Jay Nixon petitioned MACC to revoke

the odor exemption for the state’s 20 largest live-

stock producers. Although there was no inten-

tion of dropping the exemption for family farm-

ers, the Missouri Farm Bureau attacked the pro-

posal, arguing that the odor regulations were not

based on sound science and would trample pri-

vate property rights. In 1999, MACC approved

the change, however.

Farm Bureau spokesman Estil Fretwell says

the bureau worried that if regulations were

imposed on the biggest farmers, they would soon

trickle down to family farms. “I think we’ve been

very clearly on the side of concerns of the aver-

age farmer in the state,” he says. But AFBF’s

position on private property rights, one of the

group’s national priorities, suggests otherwise.

The Farm Bureau wants the federal government

to compensate farmers or others who lose money

or have to spend it in order to comply with envi-

ronmental regulations. “When society makes

such demands, it is only fair that society share in

the cost,” reads an AFBF release. At ﬁrst blush,

that policy may sound like something farmers

might see in their interest to support. But that is

not how the issue played out in northern

Missouri, where an agribusiness giant with ties to

the Farm Bureau used a property rights lawsuit

to force a small rural community into accepting

a corporate hog farm that has essentially

destroyed the town’s quality of life.

In January, 1994, when residents of Lincoln

Township got wind that Premium Standard

Farms (PSF) wanted to build an 80,000-hog

farm on the outskirts of their community, they

organized a petition drive to let the company

know that the town did not want the megahog

farm built there. That was before PSF had pur-

chased any land in the area. When the petitions

did not work, community leaders tried to keep

the corporate farm away by adopting new zoning

rules. As a result, Premium Standard sued

Lincoln Township for $7.9 million, alleging vio-

lations of its corporate property rights.

With only 146 registered voters, Lincoln

Township could hardly afford to defend itself

against PSF’s claim. PSF is the ﬁfth-largest hog

producer in the nation, right behind Cargill and

Tyson Foods. This battle was truly a David-and-

Goliath conﬂict, except that in this round,

Goliath won. After a three-year legal battle, the

Missouri Supreme Court ruled in 1997 that

A M B E R W A V E S O F G A I N

WHA T FARMERS THINK

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 nega-

tive view of their own economic condition puts farmers in direct con-

trast to Americans as a whole. National polls show more than 60 per-

cent of Americans are positive about the U.S. economy.

About the Farm Bureau as an Advocate for Family Farmers

Fewer than one in three farmers (28 percent or 45 percent of Farm

Bureau members) mention the Farm Bureau when asked to volunteer

the organization or individual that most strongly advocates for the

interests of the American family farm today. Nearly half (48 percent)

say they don’t know or give no response, while one in four (24 per-

cent) mention groups or individuals such as the Department of

Agriculture or Secretary of Agriculture, Congress or a speciﬁc member,

the Farmer’s Union or government.

About the Farm Bureau in General

Farmers are three times as likely to have a positive

(49 percent) as a negative (16 percent) opinion of the

Farm Bureau (19 percent have a “very” positive opin-

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-

bers are evenly divided (29 percent positive, 30 per-

cent neutral, 23 percent negative).

Those farmers negative toward the Farm Bureau

perceive it to be unresponsive to the needs of family

farmers or simply more interested in Farm Bureau

business ventures than in farm advocacy.

Farm Bureau Member? Size of Farm (acres)

O P I N I O N O N F A R M B U R E A U

Total Yes No

500 1,000 1,000+

% % % % % %

Positive 49 71 29 50 47 47

Neutral 25 20 30 25 21 30

Negative 16 7 23 14 21 16

Net Positive +33 +64 +6 +36 +26 +31

Don’t Know/

No Response

(48%)

Farm

Bureau

(28%)

Other*

(24%)

* Mentions: Department/Secretary of Agriculture, Congress/speciﬁc member,

Farmers Union, government, speciﬁc state organization

What one organization or individual do you think

most strongly advocates for the interests of the

American family farm today?

Source: Telephone poll of 500 randomly selected U.S. family farmers conducted by Frederick Schneiders Research

for Defenders of Wildlife in December, 1998.

Rating U.S. Farm Economy

Positive

Negative

A M B E R W A V E S O F G A I N

townships have no authority to impose any kind

of zoning regulations on farm buildings. The

court rejected Lincoln Township’s argument that

the planned PSF operation was a massive meat-

production factory, not a farm. The ruling left

the town with no options, so the hogs moved in.

The community had good reason to fear

what PSF’s hogs might do to its environment. In

fact, PSF’s record of contamination problems has

been so abominable that the U.S. Environmental

Protection Agency (EPA) singled out PSF as the

bad example to illustrate the need for stricter reg-

ulations on CAFOs. In congressional hearings in

April, 1998, EPA assistant administrator Robert

Perciasepe described a nightmare of manure

spills, sewage leaks, ﬁsh kills and continued

improper handling of waste. To begin with, he

told the Senate Committee on Agriculture,

Nutrition and Forestry, PSF’s hogs generate more

waste every day than many entire cities.

Perciasepe’s testimony is worth quoting at some

length:

“PSF operates 15 hog farms in Mercer,

Putnam and Sullivan counties in northern

Missouri. The Whitetail Hog Farm alone raises

1.6 million hogs each year, approximately two

percent of the national total. The 15 operations

generate 31 times more wastewater each year

than a city the size of Columbia, Missouri.

“From August through December in 1995,

seven separate incidents at Premium Standard

Farms in northern Missouri released hog urine

and manure into northern Missouri waters. Six

of the releases totaled more than 55,000 gallons.

The Department of Natural Resources reported

that more than 178,000 ﬁsh in Spring Creek,

Mussel Fork Creek and Blackbird Creek were

killed, and the Department of Conservation

indicated that the spills killed all aquatic life

along miles of Missouri’s waterways.

“On December 26, 1995, at the Whitetail

Hog Farm, a crack in a pipe designed to carry

waste from a hog-raising building to a sewage

lagoon released more than 35,000 gallons of

wastewater. The wastewater ﬂowed into nearby

Blackbird Creek, killing ﬁsh and ﬂowing into

neighboring farmland.

“ I n addition to these waste containment

p r oblems, in Ja n u a ry, 1996, state inspectors

re p o rted a widespread pattern of improper animal

waste disposal at Premium St a n d a rd Fa r m s .

Mi s s o u r i’s De p a rtment of Natural Re s o u r ces cited

Premium St a n d a rd for failing to comply with per-

mit re q u i r ements for land application of waste-

water at all of its 15 farms. State inspectors deter-

mined that Premium St a n d a rd’s wastewater ﬂow

was about 10 million gallons more than the

a p p roved maximum ﬂow of 84 million gallons.

In addition, the De p a rtment of Na t u r a l

Re s o u rces found that one of the August, 1995,

ﬁsh kills had been caused by improper land appli-

cation at Premium St a n d a rd’s Green Hills Farm.”

After more spills we re re p o rted in 1997, the

Missouri attorney general’s ofﬁce and a gro u p

called Citize n s’ Legal En v i r onmental Ac t i o n

Ne t w o rk (CLEAN) ﬁled legal actions claiming

that PSF violated clean air and water laws. T h e

attorney general also sued a PSF meatpacking

plant for discharging raw sewage. In Ma y, 1999, a

j u ry agreed with CLEAN that the hog farms are a

nuisance and ord e red PSF (now owned by Con-

tinental Grain Co.) to pay $100,000 each to the

A M B E R W A V E S O F G A I N

52 families living nearest the farms. T h ree months

l a t e r, PSF agreed to spend $25 million on tre a t i n g

hog waste before spreading it on land. The tre a t-

ment will be overseen by a court-appointed panel,

and Scott Holste of the Missouri attorney general’s

o f ﬁce says PSF is being pressed to use “next gener-

a t i o n” technology. “We’re ve ry proud of what we

won in this case,” he says.

Scott Dye, CLEAN’s leader, says his small

group has never gotten any help from the Farm

Bureau in its ﬁght with the corporate farms.

According to Dye, the Farm Bureau has consis-

tently sided with PSF on the contamination

problems. Not that he expected anything differ-

ent. Dye’s own family has farmed in Missouri for

118 years, but Dye says he has never belonged to

the Farm Bureau and will never join because he

believes the organization does not truly represent

family farms. “They’ve sold me up the river as far

as I’m concerned,” he says.

In 1993, the Missouri Farm Bureau lobbied

in favor of the legislation that allowed the corpo-

rate farms to move into the state in the ﬁrst

place. When the legislature revisited the issue in

1998, the Farm Bureau once again used its clout

to help push through an extension of the 1993

law so the megahog farms could not only contin-

ue to operate but could expand.

The Missouri Farm Bureau has continued to

ﬁght stricter odor regulations and any other new

rules that might force the big hog operations to

become better neighbors.

The Farm Bureau’s support of property-rights

claims especially rankles Missouri farmers.

“Property rights stop at your fence line,” Dye

says. “Just because you call yourself a farmer

doesn’t give you any right to fog out your neigh-

bor with the stink of hog manure and doesn’t

give you any right to pollute the water. Believe

me, you get a snout full of 80,000 hogs and it

will clarify your thought processes real quick.”

If the Farm Bu reau succeeds in persuading

C o n g ress and state legislatures to approve eve n

s t ronger pro p e rty-rights laws, enviro n m e n t a l i s t s

warn that few communities will be safe from the

kind of damage PSF has inﬂicted on Lincoln

Tow n s h i p . “The hog issue is a perfect example of

h o w this ideology can cause obvious and dire c t

damage to rural residents, including Farm Bu re a u

members,” says Ken Cook of the En v i ro n m e n t a l

Wo rking Gro u p, a re s e a rch and advocacy organi-

zation based in Washington, D.C. “Does the

Farm Bu reau seriously mean that communities

should pay corporations when towns adopt re g u -

lations to protect themselves?” he asks.

Former AFBF president Dean Kleckner ow n s

a hog farm himself. At the national level AFBF

has fought EPA’s initiative to tighten Clean Wa t e r

Act regulations on large animal-feeding opera-

tions. Although AFBF says it is trying to pro t e c t

small farmers from burdensome regulations, Dye

says his experience suggests that farmers have

nothing to fear. “T h e re’s never been a farmer put

out of business by environmental laws,” he

T h e re ’s never been a farmer put out of business by

e n v i ronmental laws. They’re put out of business by

f a c t o ry farms that skew markets and deﬂate prices.

A M B E R W A V E S O F G A I N

d e c l a r es. “T h e y’re put out of business by factory

farms that skew markets and deﬂate prices. We’ve

lost 5,000 independent swine producers in

Missouri in the last ﬁve years — family farms —

and they’re gone fore ve r. The Farm Bu reau has

stood on the sidelines and let that happen.”

Dye’s friend Rolf Cristen, active in the

Sullivan County Farm Bureau for more than a

decade, says he ﬁrmly believes in the bureau’s

mission and in working to inﬂuence its policies

from the inside. The Farm Bureau has so much

clout in Missouri, he says, that it is important to

have it on your side. On the hog issue, however,

Cristen has been getting more help lately from

the Sierra Club. “If you would have told me six

years ago that I would have a meeting with Sierra

Club, I would have told you you are totally off

your rocker,” he says. The Sierra Club’s Missouri

program director, Ken Midkiff, adds, “I would

suspect this is causing some concern for the

Farm Bureau. When family farmers start aligning

with the Sierra Club, that should be sending up

some kind of signal.”

Scott Dye sent a very strong signal by going

to work for the Sierra Club. Instead of looking

to the Farm Bureau for help on contamination

problems, he used the Sierra Club as a base to

begin his own investigation of PSF. In the

process, he learned that Southern Farm Bureau

Annuity Insurance Co. owns 18,872 shares of

PSF. The farm bureau federations in Alabama,

Arkansas, Kentucky, Mississippi and Texas set up

this insurance company, which now offers insur-

ance in 11 states. According to ﬁnancial records,

the PSF stock is just part of more than $5 billion

in assets that Southern Farm Bureau Insurance

owns. The Farm Bureau tie to PSF that Dye dis-

covered is not an isolated case. Through its

insurance companies and an extensive network of

agricultural co-ops, AFBF’s ﬁnancial interests are

intertwined with the biggest of agribusinesses.

In this case, the connections extend all the

way to Cargill, a mammoth corporation with

annual revenue of more than $50 billion. In

January, 1998, Continental Grain, an interna-

tional agribusiness and ﬁnancial services compa-

ny based in New York, took control of PSF. The

following November Cargill announced plans to

buy Continental Grain. Cargill completed a

scaled-back purchase of Continental’s grain busi-

ness in July, 1999, with approval from federal

regulators even though the Department of Justice

had charged that the merger would “substantially

lessen competition for purchases of corn, soy-

beans and wheat . . . enabling it unilaterally to

depress the prices paid to farmers.” How the deal

will affect Southern Farm Bureau Annuity

Insurance’s 18,872 shares of PSF stock remains

to be seen. As this report will explore, these rela-

tionships create incentives for the “nonproﬁt”

farm bureaus to lobby for policies that beneﬁt

corporations at the expense of family farms.

A M B E R W A V E S O F G A I N

“I don’t know these people who are saying

Farm Bureau is anti-small farmer or anti-fam-

ily farmer, or that Farm Bureau is only for the

big guys. I don’t know what they’re talking

about.”

— Dean Kleckner, AFBF president,

1986-2000.

“The Farm Bureau basically represents a

very small minority of their membership and

then claims to be a friend of the farmers. All

we want is on any given day to be able to step

outside our door and take a deep breath

regardless of which direction the wind is blow-

ing.”

— Donna Buss, Illinois Farm Bureau

member.

onna Buss lives just down the road from the

Durkee Swine Farm, a conﬁned animal-feed-

ing operation with a record of pollution

problems so serious that Illinois’s attorney gener-

al at the request of the Illinois Environmental

Protection Agency last year sued the owner for

water quality and odor violations. A state inspec-

tor had found concentrated runoff from a waste

lagoon ﬂowing directly into a creek where ﬁsh

kills had been reported.

Buss and her husband have lived in this

Henderson County farming community for

more than 20 years. “We’d never had problems

with any of our neighbors’ farming practices

before,” she says, until the hog operation started

up in 1995. “The stench from this place is unbe-

lievable,” she says. “You’d think the Farm Bureau

would be a little concerned about maintaining

the quality of rural life.” But the Illinois Farm

Bureau gave exactly the opposite response. In

March, 1998, its board voted to offer Durkee

Swine Farm legal assistance. And when Buss and

other neighbors, including several Farm Bureau

members, ﬁled complaints and wrote letters to

local newspapers, she claims a delegation from

the county farm bureau paid them a visit to pres-

sure them to back off. “I don’t know if this was

scare tactics or what,” Buss says.

If Buss is angry about the Farm Bureau’s fail-

ure to take a stand against agricultural polluters,

C H A P T E R T W O

Plumping for Factory Hog Farms

A M B E R W A V E S O F G A I N

she is not alone. With the exponential growth of

huge hog farms in recent years, rural residents in

h u n d r eds of communities across the nation have

watched their quality of life deteriorate. Yet in

nearly eve ry state that has tried to curb the size of

these mostly corporate farms or to control the pol-

lution from them, the Farm Bu reau has active l y

w o rked to defeat new laws or re g u l a t i o n s .

Farm Bureau leaders insist they do not side

with the interests of corporate agribusiness over

family farmers. “We’re taking the side of growth

in the livestock industry,” says Illinois Farm

Bureau communications director Dennis Vercler.

“We have to have a good political climate, a

favorable public climate, a positive regulatory cli-

mate to allow this industry to grow. We’ve said

we need to concentrate on making sure we have

the ability to expand the size of the industry

regardless of the size of individual operations.”

That policy may not deliberately oppose the

interests of small farmers, but one result has been

a precipitous decline in the number of family

hog farms and an unprecedented concentration

of hog production in facilities controlled by a

handful of huge corporations. Some of those

megahog farms are run by agricultural coopera-

tives with direct ties to state farm bureaus.

PIG POLLUTION

Traditionally, the techniques used by small

hog farmers for manure disposal are simple and

sustainable. These farmers usually grow crops in

addition to raising livestock, and manure from

several hundred hogs can be plowed into the soil

for fertilizer as needed. That option does not

apply, however, when animal-feeding operations

involve tens of thousands of hogs in one con-

ﬁned location. Hog waste from these huge facili-

ties is piped into enormous lagoons that too

often leak and nearly always stink.

According to EPA, livestock operations are

now producing a staggering 1.4 billion tons of

manure annually. Leaking lagoons can contami-

nate water supplies with nitrogen, phosphorus,

sediment, pathogens, heavy metals, hormones,

antibiotics and ammonia. And as production

becomes more concentrated, the pollution threat

escalates. Examples:

• In 1994, manure that spilled from a hog

operation in western Illinois killed 160,000 ﬁsh,

according to the U.S. EPA.

• In 1995, 22 million gallons of hog waste

burst through a lagoon dike at a North Carolina

conﬁned animal-feeding operation and spilled

into the New River. The spill was twice the size

of the Exxon Valdez oil spill.

• In 1996, 40 manure spills — double the

number reported in 1992 — killed 670,000 ﬁsh

in Iowa, Minnesota and Missouri, according to a

report prepared for U.S. Senator Tom Harkin

(D-Iowa).

• In 1997, Illinois EPA inspectors found hog

waste in 68 percent of the streams they surveyed.

• On the east coast, where the microorgan-

ism Pﬁesteria piscicida was blamed for killing

more than a billion ﬁsh and for sickening ﬁsher-

men, scientists suggested that Pﬁesteria over-

growth could be linked to runoff from livestock

operations. In 1998, medical researchers pub-

lished studies showing that watermen exposed to

Pﬁesteria were suffering from long-term visual

disorders and memory loss. According to the

A M B E R W A V E S O F G A I N

Centers for Disease Control, Pﬁesteria also can

cause muscle cramps, nausea, vomiting, diarrhea

and abdominal cramps.

Pﬁesteria is not the only dangerous pathogen

associated with livestock waste. According to the

National Institute for Environmental Health

Sciences, people can be exposed to Salmonella,

Shigella, E. Coli, Cryptosporidium, Giardia and

other disease-causing organisms just by ﬁshing or

swimming in contaminated waters. Three years

ago, the Centers for Disease Control conﬁrmed

that six miscarriages among women in LaGrange

County, Indiana, were caused by nitrate contam-

ination from a leaking hog-manure pit.

People living downwind of hog operations

become tense, angry and depressed. A 1995

study published in the Brain Research Bulletin by

Duke University Medical Center psychiatrists

also found that these people are more tired and

confused than normal. Such medical effects are

not surprising, given that manure lagoons emit a

variety of airborne toxic compounds, including

ammonia and hydrogen sulﬁde, that can con-

tribute to respiratory problems.

Contamination problems caused by conﬁned

animal-feeding operations also have begun affect-

ing farm animals. In California’s Central Valley,

dairy cows have aborted calves after they drank

water from wells contaminated with nitrates.

Farmers now are forced to dig deeper wells to

ﬁnd safe water.

In October, 1998, in a news release respond-

ing to EPA efforts to impose new water-quality

regulations on hog producers, then AFBF presi-

dent Dean Kleckner announced a “call to arms”

to ﬁght the proposed rules. “If unchecked, regu-

lations on agricultural land use and day-to-day

management will blanket the nation, targeting

farms that are alleged, without scientiﬁc basis, to

be water quality threats,” Kleckner said. His

stance put the Farm Bureau directly at odds with

rural residents ﬁghting for stricter pollution con-

trols on factory farms. A sampling of recent news

coverage illustrates the nature of the problems:

• “Peosta, Iowa. One hundred thirty years

ago, the Irish monks at New Melleray Monastery

began raising the graceful Gothic-style limestone

church . . . . Now, [the] monks ﬁnd themselves

reluctant soldiers in a holy war that they and fel-

low Catholics have begun waging against a rapid-

ly growing trend in American agriculture — the

“hog factory”. . . . Last December, the National

Catholic Rural Life Conference called for a

moratorium on new and expanded conﬁned ani-

mal-feeding operations (CAFOs), calling them

an urgent environmental and social threat . . . .”

— Chicago Tribune, September 20, 1998.

• “Sioux Falls, South Dakota. Ralph

Duxbury can barely contain himself as he talks

about the changes in hog farming in South

Dakota, where his family has lived for 120 years.

The 71-year-old retired farmer. . . heaps scorn on

corporations coming into the state, building

huge “pig factories” in environmentally sensitive

areas and signing on farmers as contract workers.

“They’re trying to take us over, and farmers are

becoming modern-day serfs,” he said. “It’s what

our forefathers came here to escape. It’s against

everything we stand for.” — Chicago Tribune,

November 23, 1998.

• Milford, Utah. Milford will end up with

something like 1.2 million pigs. Five years ago,

A M B E R W A V E S O F G A I N

this high desert outpost, eager for some 400

promised jobs, invited Circle Four Farms to set

up what will be the world’s largest hog operation.

Now Milford is chock full of pigs and awash

with problems. A hog manure spill has raised

fears of contaminated ground water. . . . And

Milford, once renowned for its pristine, sage-

scented desert air, is in fact becoming famous for

something else. . . .” — The Wall Street Journal,

November 28, 1997.

• Guymon, Oklahoma. Imagine that you are

sitting on the front porch of your farmhouse on

the prairie, surrounded by four Washington

Monuments, each ﬁlled to the top with pig

manure. And then there are all the dead pigs

lying about. . . . Sometimes dead hogs are piled

up beside barns, sometimes at the side of the

road. And sometimes they lie about so long that

the ﬂesh rots away. . . . In all, the Seaboard

[Corporation’s hog plant] death toll reached 48

hogs an hour in 1997 — 420,000 for the year.

And the carcasses are picked up only once a day

— assuming the dead-pig truck is on schedule.

Sometimes it isn’t. . . .” — Time magazine,

November 30, 1998.

THE PROPERTY RIGHTS EXCEPTION

For years, the Farm Bureau has championed

the cause of private property rights, even endors-

ing the notion that government should pay prop-

erty owners to comply with environmental regu-

lations whenever those regulations interfere with

how property can be used. However, the Farm

Bureau does not always consider private property

rights deserving of protection, at least not when

the rights in question are those of neighbors to

hog farms. Until recently, a 1982 “right-to-farm”

law in Iowa had protected farmers from public-

nuisance lawsuits. As long as the farmers abided

by state regulations, neighbors could not sue

them over odors, contaminated runoff or other

problems. In September, 1998, the Iowa

Supreme Court struck down that law as uncon-

stitutional. The court found that a bad stench

from hog manure can be the equivalent of a

physical invasion and therefore a violation of

property rights. In essence, the court said, the

government had been allowing hog farms to take

odor easements across their neighbors’ property

without compensation or due process.

The Iowa Farm Bureau joined the hog opera-

tor in appealing the decision to the U.S.

Supreme Court. In January, 1999, the Supreme

Court declined to hear the case. The Farm

Bureau saw this preservation of the small farmer’s

right to protect the quality of his or her property

as a potential evil. “This has opened a Pandora’s

box, and it does not bode well for Iowa’s farm-

ers,” commented Iowa Farm Bureau president Ed

Wiederstein.

In Illinois, neighbors of hog farms in several

counties have petitioned for and in some cases

won reduced property tax assessments. The peti-

tioners claimed that their proximity to conﬁned

animal-feeding operations substantially lowered

their property values. County farm bureaus have

objected to this trend and in one case took extra-

ordinary measures to counter neighbors’ claims.

Deanna Belz had won a 37 percent property

tax reduction because of a poorly run conﬁned

animal-feeding operation near her home in

McLean County. She had told the assessor that

A M B E R W A V E S O F G A I N

the stink was so bad her family frequently could

not even go outdoors. Belz says she was not

thinking about the tax case when she caught a

stranger videotaping her two young daughters at

play in her front yard. “He was standing across

the street, behind his car, but it was obvious he

was taping my girls,” Belz said in an interview.

Belz called the sheriff. When ofﬁcers caught up

with the man, they discovered he was a well-

known Illinois Farm Bureau lobbyist who had

been active on hog regulation issues. Belz ﬁgured

the man was trying to gather evidence that the

hog farm stench wasn’t bad enough to keep her

children indoors. “That’s ridiculous,” she says.

“The stink gets better or worse depending on

which way the wind is blowing.”

In an interview during the January, 1999,

American Farm Bureau Federation annual con-

vention in Albuquerque, New Mexico, Farm

Bureau president Kleckner maintained that

AFBF supports reasonable regulations. “We’re all

for clean water,” he said. “My own view is that

farmers that pollute, particularly if they pollute

on purpose, should be made to stop, and prose-

cution is warranted in some cases.” AFBF policy

calls for local control rather than “one size ﬁts

all” regulations mandated by Washington, he

added. Yet in nearly every instance when states,

counties or municipalities have attempted to

tighten restrictions, the Farm Bureau has worked

against those efforts. In many cases it has helped

bankroll opposition campaigns.

On the opposite side in these battles, other

farming groups, including the National Farmers

Union and the National Family Farm Coalition,

have joined forces with environmentalists in

sometimes successful efforts to curb the worst

abuses of factory farms. For example:

• In the fall of 1998, South Dakota voters

approved a ballot initiative prohibiting corporate

agribusiness from setting up operations in the

state. Tyson Foods and other out-of-state corpo-

rations had planned high-volume hog factories

there. Although the South Dakota Farmers

Union joined the South Dakota Wildlife

Federation in promoting the ballot initiative, the

South Dakota Farm Bureau allied itself with a

consortium of banks and chambers of commerce

to ﬁght the measure. The South Dakota Farm

Bureau also took a shot at eliminating local con-

trol over hog farms, suing Hyde County over an

ordinance establishing setback distances between

new hog operations and existing homes. A state

court, ruling against the farm bureau, afﬁrmed

the right of counties to regulate the siting of

South Dakota agricultural operations.

• In the fall of 1998, the Colorado Farm

Bureau teamed up with corporate hog farmers

who spent nearly $500,000 trying to defeat a

ballot initiative to regulate hog farms. The initia-

tive included measures to minimize odor and

water pollution from manure. Ray Christensen,

director of legislative and governmental services

for the Colorado Farm Bureau, argued that the

initiative threatened agriculture and rural jobs

and “would impose costly mandates on hog

farms such as animal fees, lagoon covers, ﬁnan-

cial assurances, citizen lawsuits, monitoring and

other requirements.” The Farm Bureau’s stance

did not seem to sway the opinions of small farm-

ers who live near the giant operations. The

Denver Post reported on October 18, 1998, that

A M B E R W A V E S O F G A I N

“more than 100 ranchers and farmers testiﬁed

before lawmakers that they were worried hog

farms would pollute groundwater, upon which

they depend for survival.” Rocky Mountain

Farmers Union president Dave Carter told the

Post, “There are some who are trying to cast this

whole movement as an effort to destroy econom-

ic development. This is an issue about being

good neighbors, and that’s what we’re all about

in eastern Colorado.” Nearly two thirds of the

voters approved the initiative.

• More than 160 new Illinois factory farms

have started up in only the last two years. The

Illinois Farm Bureau brags of “maintaining a

positive environment for growth in the state’s

livestock industry through the defeat of a mora-

torium on new facility construction or expan-

sion.” The bureau also opposed legislation to

re q u i re annual state inspections of waste lagoons

on big farms, odor control and a quarter-mile set-

back between dead animal compost and homes.

The legislature approved the legislation anyway,

along with a measure allowing county boards to

hold public hearings on new hog farms.

Farm Week Journal reported in February,

1998, that the Farm Bureau and others “empha-

sized the entire agriculture industry is threatened

by proposed legislation that would give local

governments authority on siting of livestock

operations.” These efforts to interfere with local

control run counter to longstanding AFBF poli-

cy. AFBF usually insists that county governments

deserve ﬁnal authority over local land-use deci-

sions. For instance, the AFBF policy manual calls

for giving county governments the right to veto

proposed wilderness areas on federal land. But

apparently state farm bureaus feel county govern-

ments cannot be trusted to make wise decisions

about hog farms. “A decision about either siting

or not siting a new or expanded facility should

not be made by local government,” Illinois Farm

Bureau communications director Dennis Vercler

declared in an interview. “The state is the politi-

cal entity that has the expertise to deal with the

ﬁnal decision.” County involvement would be “a

duplication of regulatory authority that already

exists at the state level,” he said.

• The Idaho Farm Bureau opposed a bill in

the state legislature that would give counties

more control over CAFOs. According to a Farm

Bureau alert, “Such things as setbacks, expan-

sion, odor control, nutrient management and

animal units are deﬁned in the bill and will have

a profound effect in Idaho.”

• The Maryland Farm Bureau helped push

through the Water Quality Improvement Act of

1998. The act eliminated provisions for odor

control, water-quality permits, local control and

public hearings and reduces penalties for viola-

tions of manure-management plans.

• EPA has found groundwater contamination

from animal factories in Oklahoma as well as 16

other states. One Oklahoma lagoon covers 11

The Illinois Farm Bureau also opposed legislation to

re q u i re annual state inspections of waste lagoons on

big farms, odor control and a quart e r-mile setback

between dead animal compost and homes.

A M B E R W A V E S O F G A I N

acres and holds more than 42 million gallons of

hog manure. Nevertheless, in 1998 the

Oklahoma Farm Bureau went on record strongly

opposing more regulations on animal-feeding

operations. In fact, the bureau opposes “any gov-

ernment regulation of agriculture.” The bureau

says it opposes all regulations “that limit a per-

son’s right to use their property as they see ﬁt.”

SCARE TACTICS AND DIRTY SECRETS

When EPA in March, 1998, announced a

new Clean Water Act enforcement strategy for

the largest conﬁned animal-feeding operations, it

pointed out that excessive nutrient levels from

livestock waste have been responsible for lower

oxygen levels in surface waters throughout the

nation, including the “Dead Zone” in the Gulf

of Mexico, an oxygen-starved area off the

Louisiana coast that develops each summer and

at times has been as large as the state of New

Jersey. When oxygen levels drop, ﬁsh and other

aquatic species cannot survive.

AFBF immediately responded to EPA’s pro p o s-

al with a strategy apparently intended to scare

a l r eady hard - p ressed small farmers into believing

that the new regulations would force them out of

business. The new regulations, howe ve r, apply only

to farms with more than 1,000 “animal units.”

That means 1,000 cattle, 2,500 hogs or 100,000

chickens. Only farms with more than 10,000 ani-

mal units must comply by 2003. Other large farms

can wait until 2005. Ne ve rtheless, AFBF pre s i d e n t

Kleckner declared in a news release, “Of all the

ways government regulations impact the lives of

family farmers, arbitrary water quality re g u l a t i o n s

will likely turn out to be the most harmful. Sm a l l e r

farmers in particular will ﬁnd it difﬁcult to meet

n ew re q u i rements.”

The Nebraska Farm Bu reau suggested that if

the government wants clean water, the gove r n m e n t

should pay for it. “Im p rovements for water quality

p r otection must be supported with federal and

state ﬁnancial assistance, as the ﬁnancial burden of

unfunded mandates ultimately comes back to the

p ro d u c e r,” said a Nebraska Farm Bu reau release.

The Farm Bureau’s strong opposition to the

proposed regulations persisted even as EPA

moved to compromise. At the behest of AFBF,

EPA worked out a deal with the National Pork

Producers Council allowing “independent”

inspectors to check hog farms for violations. Any

problems “that are promptly disclosed and cor-

rected under this program” will be eligible for

greatly reduced penalties. More than 10,000 of

the largest pork production facilities are expected

to participate. The Sierra Club, an outspoken

critic of factory hog farms, says the deal would

allow pork producers to pick their own inspec-

tors, arrange the inspection date, and let the

operator of the facility conduct the inspection

tour. To top it off, inspection reports will not be

made public, a “dirty secrets” concept of regula-

tion, the Sierra Club complains.

Even with EPA’s generous compromise, how-

ever, speakers at the 1999 AFBF convention

blasted the new regulations, claiming that the

rules pose a serious threat to small farmers.

AFBF president Kleckner called for an immedi-

ate moratorium on all regulations, not just those

directed at CAFOs. Referring to the “added

urgency of a crumbling agricultural economy,”

he blamed American farm woes on “regulations

A M B E R W A V E S O F G A I N

that are cutting deeply into the pocketbooks of

the nation’s farm and ranch families.”

The 4,000 or more Farm Bureau members

attending the convention applauded Kleckner’s

remarks, but a good many of the nation’s family

farmers are no longer fooled by such rhetoric.

Record numbers of independent hog producers

have gone out of business in recent years, but

not because of excessive regulations. Factory

farms are turning out so many pigs that hog

prices received by independent farmers have

plummeted to Depression-era lows.

THE HOG CRISIS

In November, 1998, the Nebraska Farm

Bureau radio service reported that hog prices had

VERTICAL INTEGRATION AND THE FARM BUREAU

ertical integration is a business term that

refers to the practice of companies merg-

ing with or purchasing other companies in

the same supply chain. For example, an

auto manufacturer that buys a car radio or

tire company has vertically integrated.

While this practice may seem to increase

economic efﬁciency, the value of that efﬁ-

ciency to society diminishes greatly when

companies become so highly integrated that

consumers and small producers are affected

through monopolistic pricing, elimination

of competition, insulation of signiﬁcant

portions of the supply chain from market

forces or alteration of the market structure

to force integration on small and midsize

operators.

In agriculture, when market prices are

down, putting family farmers in dire straits,

a vertically integrated company can do well.

Just how well was described in an August

30, 1999, Washington Post article on

Smithﬁeld Foods, largest of the integrated

pork producers: “Surprisingly, packers make

more money when prices are low —

because raw material prices fall more than

supermarket prices — so with hog prices at

their lowest in ﬁve decades, Smithﬁeld has

had three record years in a row,” the article

stated. In the latest ﬁscal year, revenue was

down nine percent, but tonnage was up

more than ten percent. Proﬁt grew almost

40 percent to $94.9 million.“Ordinarily, the

odds would be against another strong year,”

the article continued. “The corn-hog cycle

is a classic example of how the interplay of

supply and demand for inputs and outputs

creates equilibrium in markets. Low hog

prices sooner or later lead to production

cuts that push prices up. But by vertically

integrating, Smithﬁeld makes more money

on the growing side when hog prices are

high, and wins on the packing side when

prices are low.”

Keeping hog prices low through over-

production is in the best interests of the big

conglomerates. Just the opposite is true of

small producers and the environment.

Moreover, as these “dirt to shelf” systems

become more integrated, consumers’ inter-

ests are jeopardized because the ability of

markets to impact shelf prices by competi-

tion diminishes as more supply chain ele-

ments become part of the vertically inte-

grated company. In other words, without

exposure to market forces, downswings are

more likely to result in windfall proﬁts for

the integrator rather than price cuts at the

supermarket.

Agricultural cooperatives are perhaps the

best example of the Farm Bureau’s active

participation in vertical integration. Owned

wholly or partly by the Farm Bureau, multi-

billion-dollar agricultural co-ops such as

A M B E R W A V E S O F G A I N

dropped to a 30-year low while grocery pork

prices had stayed the same or increased. The ser-

vice said that in May farmers were getting about

42 cents a pound for hogs but in November only

17 cents. Compare that with the price of a

pound of bacon, selling for $1.69 in May, 1998,

and $2.69 in November. Nebraska Farm Bureau

president Bryce Neidig suggested that “somebody

is making megabucks” and blamed the crisis on

factory farms. “Right now there’s no way for a

family farmer or an average producer to compete

with megahog operations,” he said in a radio

broadcast. “They’ve got deep enough pockets

they can survive even with losses; smaller pro-

ducers can’t.”

Neidig’s comments strike an odd note con-

Countrymark and Growmark increasingly

are integrating the process of farming.

Purportedly farmer-owned and operated,

these super co-ops are marketing multina-

tionally and have usurped a large portion of

the nation’s agricultural supply chain.

Selling raw materials and equipment

such as seeds, fertilizer, pesticides, fuel and

tractors as well as services such as consult-

ing, marketing, communication and insur-

ance, the co-ops have eliminated much

choice and opportunity for farmers. The

co-ops beneﬁt from overproduction and

low prices in much the same way as the

pork processors and producers. Established

to protect individual producers from large

corporations, co-ops have evolved into a

system that does just the opposite.

Professor William Heffernan of the

University of Missouri has documented

market concentration and integration for

the National Farmers Union. He examined

large-scale/global integration and identiﬁed

three food chain clusters or loose alliances

among grain trading and processing, meat

production and processing and biotechnol-

ogy. In the ﬁrst two — Cargill/Monsanto

and ConAgra — all necessary parts are con-

tained within the global corporations and

their innumerable subsidiaries, partner-

ships, side agreements and contracts.

The third food chain cluster, in which

the Farm Bureau co-ops are involved more

prominently, consists of Novartis, a Swiss

biotech conglomerate that has been gob-

bling up other biotech ﬁrms, and Archer

Daniels Midland (ADM), the self-pro-

claimed “supermarket to the world.”

These key players lacked the constituent

parts to form a fully integrated food chain

cluster but have solved that problem by

aggressively pursuing arrangements with

farmer co-ops. “First, ADM, with its vast

network of processing facilities, lacked

access to farmers, a problem the ﬁrm reme-

died through a longstanding joint venture

with Growmark and the more recent ones

with Countrymark, Riceland and United

Grain Growers,” Heffernan asserts. “The

Growmark and Countrymark joint ven-

tures, for instance, give ADM access to 50

percent of the corn and soybean market

region and 75 percent of Canada’s corn and

soybean market region.”

The Farm Bureau and its co-ops and

other afﬁliates are part of a system that

favors big agribusiness over small and mid-

size operations. As Samuel Berger so aptly

pointed out in his 1971 book Dollar

Harvest, “With the vertically integrated

meat industries, co-ops and food clusters

ﬂourishing and family farmers suffering, it

is clear which master the Farm Bureau has

chosen to serve.”

A M B E R W A V E S O F G A I N

sidering the extent to which the Farm Bureau has

gone to protect the special advantages of corpo-

rate farms. He is one of the few Farm Bureau

leaders to acknowledge the harm that mega-oper-

ations have done to small farmers.

Dennis Ve rc l e r, the Illinois Farm Bu re a u

spokesman pushing for continued expansion of

the livestock industry, admits the current crisis

resulted from too much growth. “We’ve faced a

t r emendous economic squeeze because of ove r p ro-

duction in hogs,” he says. “Pa rt of that was ove r-

enthusiasm for markets in Asia. A lot of things

came together to punish the whole industry.”

However, according to University of Missouri

livestock economist Glenn Grimes, pork exports

rose by 18 percent in 1998. “Our exports are

doing ﬁne,” says Grimes. “We’re just being over-

whelmed with hogs.” During the last decade

investors pumped more than $1 billion into new

hog operations in North Carolina alone. By last

fall, the number of hogs on farms soared to a

record 62.9 million, according to the Knight

Ridder/Tribune Business News Service. Mega-

farms accounted for nearly all of this growth.

U.S. Department of Agriculture statistics

show that 86,520 hog producers went out of

business between 1993 and 1997. Most of these

were small, independent farmers who raised

fewer than 500 hogs a year. Over the last decade

North Carolina lost nearly three fourths of its

independent hog producers. In the same period,

North Carolina hog factories tripled production.

Other states show similar trends, with bigger and

bigger factory farms producing more and more

hogs while small farmers called it quits.

The problem is not that family farmers are

inefﬁcient, says University of Missouri rural soci-

ologist William Heffernan. Independent produc-

ers simply lack the resources to hang on when

prices for hogs drop below the cost of produc-

tion. Heffernan and several colleagues recently

completed a study of concentration in agribusi-

ness for the National Farmers Union, a 300,000-

member organization frequently at odds with the

Farm Bureau. The study concluded that farmers

are no longer earning reasonable returns because

competition has all but disappeared from much

of the food production industry.

According to Heffernan’s analysis, four com-

panies control more than half of the hog market.

Three out of every ﬁve hogs slaughtered in the

nation go to those ﬁrms. Factory farms get spe-

cial deals from slaughter and packing houses as

well as discounts on feed. This arrangement

occurs partly because many factory farms are ver-

tically integrated. The same company that raises

pigs also sells feed-grain, slaughters the hogs,

packages the meat and delivers the ﬁnished prod-

ucts to stores. These agribusinesses can afford to

take lower prices for live hogs, says Missouri

farmer and activist Scott Dye, because they make

up the difference at the grocery store. “They’re

not selling hogs,” he says, “they’re selling pork

chops, so what do they care?”

As economist Grimes sees it, consolidation of

slaughterhouses is one of the reasons prices

dropped so dramatically when too many hogs hit

the market. Concentrated slaughtering opera-

tions lack the ﬂexibility to handle excess produc-

tion. In the past, slaughterhouses were smaller

and routinely ran one shift a day. “It used to be

they could add two hours or a Saturday shift and

A M B E R W A V E S O F G A I N

HEADLINE GOES HERE

increase capacity by 50 percent to handle big

bulges in numbers,” Grimes explains.

Today, bigger slaughterhouses that already

run double shifts cannot adapt so easily, so live

hogs end up bottlenecked at the gates. And when

the same company owns the slaughterhouse and

the hog farms, that company’s hogs usually get

priority over those from independent producers.

In Washington hearings in Fe b ru a ry, 1999, on

the impacts of agricultural concentration, Leland

Swenson, president of the National Fa r m e r s

Union, accused corporate agribusiness of pre d a t o-

ry practices. “Industries can afford to operate at a

loss in one area in order to eliminate the competi-

tion,” he told the House Agriculture Committee.

“ O nce the competition is gone, the company is

able to earn higher returns.” Few independent hog

farmers will remain in business by the end of

2000 if prices remain low, he predicted.

When hog prices crashed in 1998, big pro-

ducers saw another opportunity for expansion.

The trade magazine Successful Farming reported

that “the best producers are holding tight and

eyeing acquisitions. The industry has too many

pigs and no structure for quick liquidation. One

thing’s for sure: only the strong will survive.” An

analysis by the Federal Reserve Bank of Chicago

found that if today’s rate of growth of large oper-

ations continues, only 50 producers will be need-

ed to provide all the nation’s pork.

Such extreme consolidation of food pro d u c t i o n

could have profound consequences in higher con-

sumer prices, damage to rural communities and

elimination of family farms. Yet as the next chapter

will detail, the Farm Bu reau continues to pro m o t e

policies promoting agricultural monopoly.

A M B E R W A V E S O F G A I N

“The very soul and spirit of this nation has

always resided in the countryside of America,

the agriculture sector. You are the core, the glue,

the leadership, the passion that keeps this

nation together.”

— U.S. Senator Chuck Hagel

(R-Nebraska) addressing

the 1999 AFBF convention.

arm Bu reau leaders have always been quick

with platitudes about the nobility of farmers,

and speakers at the 1999 convention had plen-

ty to say on this theme. What they did not

a d d r ess, howe ve r , we re the ways in which concen-

trated agribusiness is changing the nature of ru r a l

America. They also did not mention the Fa r m

Bu re a u’s ties to farm cooperatives that take farm-

e r s’ money and use it to start businesses, including

overseas enterprises, that compete with farmers.

Former AFBF president Dean Kleckner has

written that “in the past 50 years, farm numbers

have dropped from 7 million to less than 2 mil-

lion. The drain is still occurring, a result of low

prices for virtually all of our commodities and

worsened for some by natural disasters.” But he

acknowledges no connection between that trend

and the emerging dominance of factory farms

and takes a position that downplays the contrast

between corporate farms and family farmers. “I

don’t know that we’re at a point in this country

where we’re saying just because you’re big you’re

bad or just because you’re small you’re good or

vice versa,” he said in an interview during the

AFBF convention. “I happen to think you can

be big and good, or you can be big and bad, or

you can be small and bad.”

Corporate agribusiness does hurt rural com-

munities, says University of Missouri sociology

professor William Heffernan, because corporate

proﬁts do not stay in the local economies where

the goods are produced. Family farmers, on the

other hand, traditionally spend most of the

money they earn in the local community,

Heffernan says, so money gets multiplied by a

factor of three or four. That means every dollar

the farmer earns can generate three or four dol-

lars in income for other local businesses, which

in turn creates more jobs. A corporation, howev-

C H A P T E R T H R E E

Changing Rural America

A M B E R W A V E S O F G A I N

er, sends most of its proﬁts to distant company

headquarters.

Visit any town where factory farms have

moved in and the implications for rural America

become obvious. Farmers now struggle to sup-

port their families on a typical factory farm

salary of around $16,000. Many are working two

or three jobs. On top of that, working conditions

at the hog factories are so poor and the pay is so

low that owners often recruit hundreds of immi-

grants from Asia and Central America to ﬁll the

jobs. And the new arrivals ﬁll country schools

with children who speak only Vietnamese,

Laotian or Spanish. In Guymon, Oklahoma, for

example, where Seaboard Corporation opened a

plant with the capacity to raise and slaughter 4

million hogs a year, the employee turnover rate is

running close to 100 percent, according to a

Time magazine investigative report. Schools there

have become seriously overcrowded, and 21 per-

cent of the students can’t speak English. People

who once themselves farmed can’t make a living

and can’t sell their land because no one wants to

live near the hog factory.

A DISSENTER SILENCED

The Farm Bureau is quick to defend factory

farms despite the negative impacts they are hav-

ing on family farmers, as Rod Thorson, former

host of a farm radio show on station WCMY in

Ottawa, Illinois, discovered. Most of the farmers

calling in to Thorson’s show last year were not all

that concerned about the environmental costs of

factory farming. They saw the corporate takeover

of agriculture as a threat to their livelihoods and

way of life, and many were angry. “We were talk-

ing about why that kind of hog farming doesn’t

make economic sense,” Thorson said in a recent

interview. “It tears apart the fabric of local com-

munities. People wanted to talk about that. We

were getting a lot of response. “

The discussions went on until two Illinois

Farm Bureau representatives paid a visit to

WCMY’s general manager. The station is a Farm

Bureau radio-network afﬁliate; the Illinois Farm

Bureau produces a daily statewide show broad-

cast on local stations. The Farm Bureau program

funnels advertising revenue to the local afﬁliates.

The Illinois Farm Bureau executives had taped a

few hours of Thorson’s program and apparently

didn’t like what they heard. According to

Thorson, when he arrived at the station to do his

show at 5:30 the next morning, the general man-

ager was there waiting to tell Thorson that he

was ﬁred effective immediately.

Thorson says he was not particularly sur-

prised. The Illinois Farm Bureau has been push-

ing the conversion of agriculture to factory farm-

ing, Thorson says, and Farm Bureau leaders don’t

want that story told. “Farm Bureau leadership

sold us on the idea that bigger is better, and that

philosophy has empowered companies to exploit

independent farmers. You have to ask the ques-

tion, ‘Why?’ Is it to promote a higher standard

of living for family farmers or to control the sup-

ply of pork?”

THE COST TO CONSUMERS

Mary Ellen Moore’s farm in Bonaparte, Iowa,

is one of the casualties of the hog crisis. She and

her husband Larry bailed out of the hog business

four years ago. Her cousin’s hog farm went under

A M B E R W A V E S O F G A I N

in 1998. “It doesn’t take long for losses like we’ve

had to eat up everything you’ve got,” she says.

But what will happen, she asks, when no inde-

pendent producers are left?

“People might not care much about what

happens to farmers, but one of these days when

it’s all in the hands of just a few producers, peo-

ple are going to ﬁnd out how high food prices in

this country can go,” she said.

As things stand now, consumers are seeing

very little beneﬁt from the record low prices that

farmers have been getting for their hogs. That

apparently is ﬁne with former AFBF president

Kleckner, who wrote in an October, 1998, col-

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-

pared to prices paid in most other countries,” the

column says. During a later interview he repeat-

ed the point, declaring: “We may complain for

good reason about taxes, but we should not com-

plain about the cost of food. It is really very, very

low.”

To their credit, delegates at the 1999 AFBF

convention raised concerns by inserting language

in resolutions about monopolistic trends in

agribusiness. But they did not bring up the fact

that AFBF is in big agribusiness itself and even

competes with family farms in some arenas.

INVESTMENTS IN BIG PORK

Why the Farm Bureau defends factory farms

and corporate agriculture becomes clear when

the bureau’s business interests are examined. For

example, when Continental Grain and Premium

Standard Farms (PSF) merged in 1998, the com-

bined company became the third largest pork

producer in the nation, with 162,000 sows each

producing 20 pigs a year. That comes out to

3.24 million hogs a year in Missouri, North

Carolina and Texas, “with more growth planned

at some point,” according to CEO John Meyer.

Continental Grain is also America’s biggest beef

feedlot operator, annually moving 405,000 head

of cattle through six lots, and the company ranks

second in the grain-trading business. And with

its 18,872 shares of stock in PSF, Southern Farm

Bureau Annuity Insurance now has a stake in

one of the biggest agribusinesses in the world.

Southern Farm is not the only Farm Bureau

insurance company investment in big pork. Farm

Bureau Mutual Insurance Corp. of Idaho and

Western Community Insurance Co., both afﬁli-

ated with the Idaho Farm Bureau, own more

than $500,000 in bonds from Archer Daniels

Midland (ADM), according to annual reports.

ADM, one of the country’s largest agribusinesses,

is also an emerging powerhouse in the pork

industry. ADM owns 13.5 percent of IBP, the

nation’s largest pork packer, and according to the

magazine Successful Farming, ADM is planning

an even larger presence in the pork business. In

addition, the Idaho Farm Bureau’s insurance

People might not care much about what happens to

f a rmers, but one of these days when it’s all in the

hands of just a few producers, people are going to

ﬁnd out how high food prices in this country can go.

A M B E R W A V E S O F G A I N

companies hold 3,000 shares of stock in Tyson

Foods, the nation’s seventh largest pork producer

with 2,470,000 pigs a year. Arkansas-based

Tyson Foods also is the nation’s top chicken pro-

ducer, turning out 155 million pounds (live

weight) of chicken every week, according to

Feedstuffs magazine.

The Farm Bureau’s ties to the giants of the

pork industry do not stop with insurance compa-

ny investments. Farm Bureau afﬁliates are allied

in joint ventures or direct partnerships with

major players in the pork business. For instance:

• Cooperatives associated with the farm

bureaus of Illinois, Iowa, Wisconsin, New York,

Ohio, Indiana and Michigan jointly own two

businesses with Farmland Industries. Farmland is

the nation’s ﬁfth largest pork packer and 16th

largest pork producer.

• In 1997, Nationwide Insurance, with close

ties to the Ohio Farm Bureau, merged with

Farmland Industries Cooperative Service Co., a

Farmland-owned insurance company. According

to a news release, Farmland now has a represen-

tative on the board of Nationwide Insurance.

• Land O’ Lakes, the 14th largest pork pro-

ducer, with 1.2 million pigs a year, merged with

Countrymark Cooperative in the fall of 1998.

Countrymark is afﬁliated with the Ohio, Indiana

and Michigan farm bureaus.

• Grow m a r k, a cooperative controlled by the

Illinois, Iowa and Wisconsin farm bureaus, has

a g reed to joint ve n t u r es with Land O’ Lakes to

m a r ket oil, gas, feed, seed, pesticides and fert i l i ze r.

• In Cass County, Illinois, where the Land

O’ Lakes cooperative runs a 90,000-pig opera-

tion, citizens ﬁled a lawsuit after the co-op built

a hog manure lagoon that extended into the

water table. Illinois’s attorney general asked Land

O’ Lakes to develop a groundwater monitoring

plan.

• Growmark (Illinois, Iowa, Wisconsin farm

bureaus) merged its grain terminal division with

ADM in 1985. Growmark traded its grain facili-

ties for stock in ADM. Glenn Webb, chairman

of the board and president of Growmark, sits on

the ADM board.

If these connections seem hard to follow, they

a r e only a small sampling of the intricate web of

agribusiness corporations and cooperatives that

c o n t r ol much of the nation’s food and ﬁber pro-

duction, a web in which the Farm Bu reau is ﬁr m-

ly anchored. Understanding these relationships is

c rucially important, says the Un i versity of

Mi s s o u r i’s William Heffernan. Yet information

often is difﬁcult to obtain and even harder to

piece together. Ac c o rding to Heffernan, people

who say we must adapt to change don’t re a l l y

understand “the magnitude of the changes and the

implications of them for agriculture and for the

long-term sustainability of the food system.”

A M B E R W A V E S O F G A I N

“It’s all become one big ball of snakes. It’s a

disgusting mess of cooperation among these big

entities to exploit the market and to exploit

farmers and consumers. I don’t know of a co-op

in existence today that is really beneﬁting the

farmer. Most of them are exploiting the

farmer.”

— Mike Callicrate, Kansas rancher,

Cattlemen’s Legal Foundation.

“You cannot be a little guy any more and

compete in the world market. I’m glad that our

afﬁliated companies are able to help us by

being able to compete with the giants of the

world.”

— Dean Kleckner,

former AFBF president.

n 1922 when conglomerates controlled much

of agribusiness in the United States, two cru-

sading members of Congress, Senator Arthur

Capper (R-Kansas) and Representative Andrew

Volstead (R-Minnesota), won passage of legisla-

tion intended to give struggling farmers more

bargaining power in the marketplace. The

Capper-Volstead Act authorized farmers to form

cooperatives in order to negotiate more effective-

ly with big grain traders and meatpackers. The

law permitted farmers to make deals as a unit,

joining forces to set prices for their goods with-

out being subject to prosecution under antitrust

laws. In a sense, the cooperatives functioned as

labor unions for farmers, giving growers “the

same right to bargain collectively that is already

enjoyed by corporations,” said Senator Capper

during debate.

The cooperative movement played a crucial

role in enabling farmers and rural communities

to thrive. But what began as a populist response

to domination by big agribusiness has become

today an entirely different beast. Cooperatives

themselves have become an integral part of big

agribusiness — worth billions and virtually

indistinguishable from agribusiness corporations.

The local and statewide cooperatives set up

by farm bureaus during the 1920s have merged

and consolidated into regional, interregional and

even multinational businesses. Today these co-

C H A P T E R F O U R

Cooperating With Conglomerates

A M B E R W A V E S O F G A I N

ops not only market grain and other commodi-

ties but also manufacture and sell pesticides, fer-

tilizer, tires, batteries, gasoline and other petrole-

um products and run reﬁneries, banks and inter-

national ﬁnancial-service networks. And the

Farm Bureau cooperatives have formed partner-

ships and joint ventures with some of the world’s

richest corporations, including agribusiness giant

Archer Daniels Midland (ADM) and the world’s

largest pesticide manufacturer, Novartis.

Because of the antitrust exemptions and spe-

cial tax advantages that Congress has granted to

cooperatives, the co-ops have even gained some

advantages over corporations. Co-ops are not

subject to the same reporting requirements as

publicly traded companies, so ﬁnancial transac-

tions are more difﬁcult to track. The co-ops can

use tax-free capital for investment and expansion,

and in some cases they have used this money to

expand production into areas that compete with

their own members.

The cooperatives all brag that they are

farmer-owned, and indeed, at the local level,

farmers do make up co-op membership. These

local co-ops comply with the legal requirement

that each member get only one vote. But the

voices of these local farmer-members become so

diluted at each progressive step — from county,

to state, to regional, to interregional, to joint

venture, to international — that the farmers have

no impact at the levels where decisions are made.

Although cooperatives originally were set up

to market the goods produced by their members

and to provide fertilizer, seed and the like at

lower prices than individuals might get on their

own, co-op businesses today extend well beyond

that mission. Co-ops run convenience stores and

sell products, including oil and gasoline, to the

general public. In fact, Farm Bureau-afﬁliated

Growmark bragged about this in its 1997 annual

report. “The proportion of non-agricultural

Growmark energy customers continues to grow,”

the report declared. “Growmark’s presence in the

retail fuel market grows through promotion and

the addition of new retail sites. There are cur-

rently 136 sites.”

THE P ATRONAGE REFUND DILEMMA

The law allows co-ops to accept outside

investors. According to Department of

Agriculture cooperative specialist John Wells,

some states limit the amount of proﬁt those

investors can be paid to eight percent. But co-

ops also may merge with regular stock companies

or even foreign corporations. All of these

arrangements make for an exceedingly complicat-

ed tax structure, yet co-ops enjoy one critical tax

advantage. They pay no taxes on proﬁts earned

in transactions with their farmer-members. For

instance, a co-op pays no tax on proﬁt from sell-

ing fertilizer to a member or from marketing that

farmer’s grain.

Those pro ﬁts are not tax-free, howe ve r.

Individual farmers pay the taxes for the co-ops,

and all too often those farmers get little beneﬁt in

return. By law, co-op pro ﬁts are supposed to be

returned to farmer-members on the basis of how

much business each farmer did with the co-op

during the ye a r. These are called patro n a g e

refunds. The farmers themselves are re q u i r ed to

pay taxes on the refunds even if they never actual-

ly see the money. In order to qualify for tax

A M B E R W A V E S O F G A I N

e x emptions, the co-op is re q u i red to give farmers

only 20 percent of their patronage refunds in

cash. The co-op can and usually does keep the

remaining 80 percent itself to use for inve s t-

ments, expansion or any other purpose. T h e

farmers must pay income taxes on the full 100

p e rcent. In return for keeping part of the farmer’s

p a t r onage refund, the co-op issues equity share s

that build up over the years. In theory, farmers

should be able to trade that equity for cash when-

e ver they like, but legally a co-op does not have

to redeem any equity until it is ready to do so.

According to Department of Agriculture

economist Bob Rathbone, the midwestern grain

co-ops usually hold onto the refunds for 16 or

17 years before paying back the farmers. In some

cases, Rathbone says, he has seen co-ops hold the

money for as long as 25 years. During that time,

the farmers’ shares of equity earn no interest.

They cannot be sold or traded like stock, and

they have no cash value on the open market. If a

farmer needs money from the equity for his own

purposes, he is out of luck. The farmer has no

control over when the equity will be paid.

Neither does the local co-op. Equity built up by

local members usually never ﬁlters down to the

county co-op. Most of it stays at the highest lev-

els in the cooperative cascade. The multibillion-

dollar multinational cooperatives end up keeping

most of the cash. That cash gives these giant co-

ops a vast pool of working capital.

Consider the case of the Great Rivers

Cooperative of Iowa and the Sawyer Cooperative

of Kansas versus Farmland Industries. Ten years

ago, after most of the farmers in these two small-

town co-ops had gone out of business, the Great

Rivers and Sawyer co-ops decided to close up

shop and liquidate all the equity held by their

members. The trouble was, Farmland had con-

trol of the money and would not give it back.

Farmland Industries advertises itself as the

nation’s biggest farmer-owned cooperative. It is a

Fortune 200 company that did $11.9 billion in

sales in 1998 and does business in a dozen coun-

tries. Farmland is not a Farm Bureau co-op, but

Farmland’s business interests are linked tightly to

those of cooperatives that are Farm Bureau afﬁli-

ates. For instance, Farmland, Growmark (Illinois,

Iowa and Wisconsin farm bureaus), Country-

mark (Ohio and Indiana farm bureaus) and

Agway (New York Farm Bureau) share ownership

of Universal Cooperatives, an even more enor-

mous cooperative conglomerate, with annual

sales in excess of $30 billion.

Farmers in Sa w ye r, Kansas, had $480,000 of

equity in Fa r m l a n d’s hands, says Sa w ye r

C o o p e r a t i ve president Matt Novo t n y. Not a lot of

money for Farmland, but all the money in the

world to the farmers who owned the equity.

“ Farmland used to call it ‘s a v i n g s’ in their litera-

t u re,” says Novo t n y. “You built an account there

and it would be yours. A lot of people we re think-

ing this is a nest egg I’ve put away. This is what

they we re counting on. Farmland basically said

that there was no plan for any type of re d e m p t i o n

of our money. T h a t ’s why we had to sue.”

In Great Rivers, Iowa, the same thing had

happened. Novotny’s friend Dan Webb had been

such a died-in-the-wool co-op supporter that he

used to say, “If you’d cut me, I’d bleed co-op

blue.” Webb had counted on his co-op equity as

his savings account. “He thought that whenever

A M B E R W A V E S O F G A I N

you quit doing business you got your money

back,” Novotny recalls. But when Webb became

too ill to work and asked for his equity,

Farmland said no. “We spent a lot of time on the

phone where he would alternate between anger

and tears,” Novotny relates. “Dan passed away

with a bitter taste in his mouth.”

In 1994, the Great Rivers and Sawyer co-ops

ﬁled a class-action lawsuit in federal district court

in Des Moines, Iowa, alleging fraud and federal

securities violations and asking the court to

require that Farmland pay co-op members the

money they were owed in equity. A year after the

lawsuit was ﬁled, Farmland began to redeem

some of the equity. It now has a schedule for

paying back the rest. These payments might

never have been made if Farmland had not been

forced to do so by the lawsuit. Novotny believes

that without the courts, the farmers probably

would have lost their money.

Such equity refund problems are widespread,

longstanding, unresolved and unfair. University

of Missouri professor Heffernan says his own

parents never got their equity back from FS

Cooperative, part of Growmark, an Illinois Farm

Bureau-owned cooperative. “They’d been co-op

members all their lives,” he says. “They always

thought they’d get something back, but the local

co-op told us the money just wasn’t there.” Co-

op members might have expected the Farm

Bureau to help them in these equity disputes.

Instead, AFBF has fought changing the law to

remedy the injustice.

Three decades ago when New York

Representative Joseph Resnick investigated Farm

Bureau cooperatives, he heard from dozens of

farmers with stories similar to those of Novotny

and Webb. Resnick sponsored a reform package

that would have given farmers the choice of

whether to take their refunds in cash or in equity

shares. The House passed Resnick’s proposals on

August 7, 1969. But according to Dollar Harvest,

the book by former Resnick aide Samuel R.

Berger, the Farm Bureau worked successfully to

kill the measure in the Senate. In a letter to the

Senate Finance Committee, AFBF said that the

proposed changes “are unwarranted” and would

“represent further involvement of the federal gov-

ernment into the ﬁscal affairs of private enter-

prise. . . .” Since then all suggestions of reform

have failed.

The problems created by the patronage re f u n d

dilemma go beyond the ﬁnancial difﬁculties cre a t-

ed for individual family farmers. The co-ops are

using capital gleaned from farmers’ equity to

i n v est in businesses competing directly with their

own members. Millions of dollars in co-op equity

money are ﬂowing into the megahog farms that

a r e taking over the market from small pro d u c e r s .

Co-ops have even used the capital to ﬁnance cattle

and grain operations in South America. “For the

life of me, I don’t think it’s right, and I can’t

understand why the co-ops are going into ve n-

t u r es outside the U.S,” says Novo t n y. “Ba s i c a l l y,

they are taking our dollars to do it, and it sure fol-

l o ws that South American production competes

with American production.”

“The co-ops brag about being farmer-owned,

but they don’t behave that way,” says John

Crabtree of the Center for Rural Affairs, a non-

proﬁt research and advocacy group based in

Walthill, Nebraska. “Frequently you’ll ﬁnd them

A M B E R W A V E S O F G A I N

working against the interests of their members.

When the co-op directly competes with its own

members, it doesn’t serve the members’ interests.

So to that extent the original mission of the co-

ops gets lost in the shufﬂe,” he said in an inter-

view. “The big co-ops feel they have to behave

like corporations in order to compete in the cor-

porate world.”

The alliances between co-ops and for-proﬁt

corporations are also raising questions about

whose interests are being served. Considering

that one of the original missions of the co-ops

was to get better prices for farmers by taking on

corporate commodities traders, it seems more

than a bit incongruous to see joint ventures such

as the one between ADM and the Farm Bureau

co-op Growmark. Here we have a co-op suppos-

edly representing the interests of 250,000 farm-

ers tying its ﬁnancial future to one of the world’s

biggest grain dealers.

THE TIES THAT BIND

“In essence, greed, simple greed, replaced

any sense of corporate decency or integrity.”

— Joel Klein, assistant attorney general

for antitrust, commenting on a

price-ﬁxing case against ADM.

One of the most shocking aspects of the

Farm Bureau is how its ﬁnancial ties and busi-

ness interests have led it into policies and proce-

dures that are harmful to the family farmer.

Consider, for example, the Farm Bureau’s convo-

luted ties to ADM.

ADM, which bills itself as the “s u p e r m a r ket to

the world,” ranks as one of the world’s largest

grain traders and food processors, a manufacture r

of products ranging from corn syrup to amino

acids that are marketed on a global scale. W h e n

ADM was convicted in 1996 of ﬁxing prices for

lysine and citric-acid products, the company paid

a re c o r d $100 million ﬁne. The punishment did

not hurt much considering that ADM does more

than $14 billion a year in sales. Wall St reet had

expected a much higher penalty, so ADM stock

quickly rose. Farmers, on the other hand, lost con-

s i d e r a b l y. Citric acid is used as a food supplement

and pre s e rva t i ve and in detergents and other agri-

cultural products. Lysine is an important feed sup-

plement that spurs growth in chickens and pigs.

Pu rdue Un i versity agricultural economist Jo h n

Connor ﬁg u r ed that farmers who had been cheat-

ed on the price of lysine paid an extra $165 mil-

lion to $180 million over three and a half ye a r s .

Growmark, the cooperative owned by the

Illinois, Iowa and Wisconsin farm bureaus,

entered into a joint venture with ADM in 1985

that continued through and beyond the years

when ADM was overcharging farmers for lysine.

As mentioned earlier, when Growmark and

ADM merged their grain businesses, the cooper-

ative traded its river grain terminals for stock in

ADM and the partnership became

ADM/Growmark. Growmark president Glenn

Webb took a seat on the ADM board.

Interlocking Farm Bureau board members from

Iowa, Illinois and Wisconsin sit on Growmark’s

board with Webb. In 1996, Countrymark, the

cooperative afﬁliated with the Ohio, Michigan

and Indiana farm bureaus, also joined the

alliance with ADM.

A M B E R W A V E S O F G A I N

ADM is not the only agribusiness giant with

which the Farm Bureau collaborates. In 1998,

Growmark formed a new partnership with

Novartis, a Swiss company that operates in 142

countries on six continents, grossing $21.6 bil-

lion in annual sales. Under the partnership agree-

ment, Growmark will sell Novartis seeds, pesti-

cides and other products through the co-op’s FS

outlets and will share in proﬁts. The farm bureau

afﬁliate Countrymark has a similar agreement

with Novartis.

Novartis is the world’s second-largest phar-

maceutical manufacturer and largest pesticide

maker. It brags that its pesticides and herbicides

“are used on well over 100 million acres of crop-

land in the United States.” The company owns

Gerber baby food, Ciba Vision and Ex-Lax. It

also makes atrazine, a weed-killer that has conta-

minated groundwater throughout the Midwest.

According to the Environmental Working

Group, atrazine has contaminated the tapwater

of 374 midwestern towns, with levels ten times

above benchmark standards in the water supplies

for 60 towns, high enough to raise cancer risks.

Novartis disputes this, claiming that the cancer

risks are negligible. Nevertheless, the groundwa-

ter contamination problems have prompted EPA

to conduct a special review of atrazine to deter-

mine whether use should be restricted. The

review is expected to be completed this year.

During the 1999 AFBF convention, Novartis

hosted lavish cocktail receptions for delegates

and the press. Afterward, delegates approved a

resolution urging EPA to reach a favorable con-

clusion on atrazine by reauthorizing its use

“without further restriction.” No mention was

made of the ﬁnancial ties between Novartis and

Farm Bureau cooperatives.

WELL-OILED CONNECTIONS

As with the Farm Bureau’s anti-farmer poli-

cies, an examination of the organization’s busi-

ness ties explains some of its anti-environmental

positions. For example, at their 1999 convention

AFBF delegates approved resolutions calling for

opening the Arctic National Wildlife Refuge to

oil drilling, reinstating special tax advantages for

oil companies, including the infamous oil deple-

tion allowance, and getting rid of “excessive envi-

ronmental regulations” on oil drilling. The ratio-

nale offered spoke of energy self-sufﬁciency and

the importance of ensuring adequate fuel sup-

plies for farmers. Nothing was said of AFBF’’s

extensive investments in oil and gas..

Farm Bureau afﬁliate Countrymark produces

petroleum products that Farm Bureau afﬁliate

Growmark then sells to Land O’ Lakes cus-

tomers in a joint venture called Mark II Energy.

In 1996, Countrymark’s oil reﬁnery in Mount

Vernon, Indiana, ranked in the top 20 percent of

Indiana polluters in terms of air and water releas-

es of toxic chemicals known to be harmful to

human developmental and reproductive health.

EPA accused the Countrymark reﬁnery of failure

to monitor air emissions properly. Countrymark

agreed to pay a $32,000 ﬁne without admitting

wrongdoing and to install pollution-control

equipment costing about $700,000.

Growmark set up a joint operation with

Sunoco of Canada in another petroleum venture.

Growmark is also part-owner of the National

Cooperative Reﬁnery Association (NCRA), a

business that conducts oil exploration, produc-

tion and distribution throughout the nation.

According to Kansas City Business Journal,

NCRA was formed 50 years ago to give mid-

western co-ops a guaranteed source of petroleum

products. Now Growmark sells much of its fuel

directly to the public. NCRA’s reﬁnery in

McPherson, Kansas, produces more than a mil-

lion gallons of gasoline and other fuel each year.

That reﬁnery also has had pollution problems.

In 1996, it released 977,545 pounds of toxic

chemicals, making it one of the nation’s biggest

polluters. According to the EPA, this reﬁnery is

in the top 20 percent in terms of cancer hazards

and the release of toxicants into the air.

Farmland, a corporation involved in joint

businesses with Farm Bureau co-ops, runs even

dirtier reﬁneries. One in Jefferson City,

Missouri, became a Superfund site. Coffeyville,

Kansas, citizens ﬁled a $7.5 million lawsuit

against another Farmland reﬁnery, saying they

were tired of breathing foul air. The lawsuit cited

Farmland’s own reports to the Kansas Depart-

ment of Health and Environment listing more

than 30,000 violations of the Clean Air Act in

the last ﬁve years. EPA ord e red Farmland to pay

civil penalties totaling $1.45 million and to install

p o l l u t i o n - c o n t r ol equipment costing $4.2 million.

Farmland violations at the facility, EPA said,

included repeated disposal of hazardous wastes on

the ground and failure to re p o rt immediately

s e v en accidental releases of hyd rogen sulﬁde gas.

Farmland, which produces 100,000 barrels a day

at the Coffeyville re ﬁn e ry, also operates a lube oil

plant in Texas and a grease plant in Mi s s o u r i .

A reﬁnery operated by the Cenex cooperative

in Yellowstone County, Montana, is the fourth

biggest polluter in the state, according to EPA’s

toxic-releases inventory. Minnesota-based Cenex

is independent of the Farm Bureau but has sub-

stantial overlapping business interests. Cenex

and Farm Bureau afﬁliates Agway, Growmark

and Countrymark are co-owners of Universal

Cooperatives. They all also own shares in CF

Industries, an interregional co-op that manufac-

tures and sells fertilizer. Cenex operates several

divisions jointly with Land O’ Lakes, which last

year merged with Countrymark.

In addition to reﬁnery troubles, Cenex and

other cooperatives have had their share of prob-

lems with toxic waste. For instance, Cenex has

agreed to clean up a toxic-waste pond across the

street from a Quincy, Washington, high school.

The pond was contaminated with heavy metals,

radioactive materials and telone, a potato bug

killer suspected of being carcinogenic. A cleanup

begun in 1998 is still unﬁnished. And this is not

the only trouble Cenex has had in Quincy.

TOXIC FERTILIZER

Farmers in Quincy were “wondering aloud

why their wheat yields were lousy, their corn

crops thin, their cows sickly. . . . They discov-

ered something they found shocking and that

they think other American farmers and con-

sumers ought to know: Manufacturing indus-

tries are disposing of hazardous wastes by turn-

ing them into fertilizer to spread around

farms. And they’re doing it legally.”

— Duff Wilson, Seattle Times reporter.

Patty Martin was mayor of Quincy,

A M B E R W A V E S O F G A I N

Washington, in 1997 when she ﬁrst went to the

Seattle Times with a story about poisoned crop-

land and deliberate use of toxic industrial waste

in fertilizers. After several farmers in this small

community 150 miles east of Seattle began to

suspect that their crop failures were related to

bad fertilizer, they had a few tests run. In fertiliz-

er tank residue, chemists found arsenic, berylli-

um, lead, titanium, chromium, copper and mer-

cury. The tank belonged to Cenex.

In a recent interview, Martin recalled her

frustration at discovering that the practice of

recycling industrial waste as fertilizer was wide-

spread and completely legal. Environmental ofﬁ-

cials seemed unconcerned. “The people doing

this are putting entirely unsuspecting communi-

ties at risk from pollutants that are known to be

harmful to human health,” she said. “There’s not

enough information out there to say that the

practice is safe.”

Safe or not, when reporter Duff Wilson of

the Seattle Times looked into the matter, he dis-

covered that industries nationwide have convert-

ed millions of pounds of hazardous waste into

fertilizer. Among his ﬁndings:

• Toxic byproducts from two Oregon steel

mills are stored in silos at the Bay Zinc

Company. When the material is taken out of the

silos, it is used as a raw material for fertilizer.

“When it goes into our silo, it’s a hazardous

waste,” Bay Zinc president Dick Camp told

Wilson. “When it comes out of the silo, it’s no

longer regulated. The exact same material. Don’t

ask me why. That’s the wisdom of the EPA.”

• Lead-laced waste from a pulp mill is hauled

to southwestern Washington farms and spread

over crops grown to feed livestock.

• Other fertilizers contain waste from smelt-

ing, mining, cement kilns, wood-product slurries

and a variety of other heavy industries and from

the burning of medical and municipal wastes.

These wastes may contain a potpourri of haz-

ardous chemicals, including cadmium, lead,

arsenic, radionuclides and dioxins.

• Limestone fertilizer laden with heavy met-

als killed more than 1,000 acres of peanuts in

Tifton, Georgia. The fertilizer was called “Lime

Plus.” Regulation is left entirely up to states, and

most have no requirement that toxic wastes be

listed as ingredients. Most fertilizer labels lump

toxics into the broad category of unspeciﬁed

“inert” ingredients.

The Farm Bureau defends the practice of

using such industrial “raw materials” in fertilizer.

In 1998, the Maryland Farm Bureau lobbied

against a bill in the legislature to require labeling

of fertilizers containing hazardous or toxic waste.

According to the bureau, that bill “could have

limited the availability of necessary fertilizers due

to the classiﬁcation of materials used in making

such fertilizers.”

In 1999, the Montana Farm Bureau fought

legislation to prohibit the sale of commercial fer-

tilizer “if analysis by the Department of

Agriculture reveals the presence of a heavy metal,

arsenic, or organochlorine . . . at a level that pre-

sents a threat to the public health.” The bureau

objected that “at this point in time there is no

way to measure organochlorine and no standard

set by the federal government to determine what

amount presents a threat to the public health,

safety or welfare.” In reality, organochlorines can

A M B E R W A V E S O F G A I N

be measured easily, and several government agen-

cies have established maximum exposure stan-

dards for most of the toxic chemicals added to

fertilizer.

Former Quincy, Washington, mayor Patty

Martin says the Washington Farm Bureau always

defended the fertilizer companies during meet-

ings of the Governor’s Fertilizer Work Group,

inactive since the legislature set standards for

contaminants in fertilizer in 1999. Farm Bureau

representative Greg Richardson has never chal-

lenged the practice of using industrial waste, she

asserts, declaring, “He didn’t see any problem

with it. You’d think that any entity that repre-

sents agriculture would have some interest in

protecting its members, not just their crops —

protecting their soils and their health.”

Richardson did not return phone calls seek-

ing comment. Washington Farm Bureau lobbyist

Linda Johnson says no one has shown that any-

thing in the Cenex fertilizers has harmed people

or crops. “Farm Bureau has no problems with

what was being used on the ﬁelds,” she says. “We

believe that the fertilizer being used was ﬁne.”

Cenex has not acknowledged that any indus-

trial wastes have ever been added to its products.

Cenex spokeswoman Lani Jordan told the Seattle

Times that the company has “always followed the

industry recommendations, as well as the govern-

ment regulations, where these products were

concerned.” Two Quincy farmers independently

sued Cenex in federal court. One charged that

the company made money “by disposing of

highly toxic industrial waste by adding it to fer-

tilizer.” The suit also contended that Cenex

failed to disclose that its fertilizer contained

heavy metals and that using them resulted in

poor crops and ill health. One suit was settled

out of court. In the other, a jury agreed with the

farmer’s claims but did not award him monetary

damages. That case is on appeal. Meanwhile,

Martin is now out of ofﬁce. In the last election,

she says, Cenex sent employees door to door to

campaign against her.

The Washington Farm Bu r eau joined an

i n d u s t ry coalition that tried to intervene in the

Pu l i t zer Pr i z e selection process so Duff Wi l s o n ,

the re p o r ter nominated for his story about tox i c

wastes in fert i l i ze r, would not win. Together with

a group called the Far West Fe rt i l i zer and

Agrichemical Association, the bureau wrote the

Pu l i t zer selection committee charging that Wi l s o n

had misre p resented the facts. “The Farm Bu re a u

was part of a coalition that submitted informa-

tion to the Pu l i t z er committee,” says lobby i s t

Johnson, and in her mind the campaign was suc-

cessful. “The committee re v i ewed the informa-

tion and pulled him off the list,” she says.

That is not exactly what happened, however.

Disregarding the Farm Bureau letter, the Pulitzer

committee chose Wilson as one of three ﬁnalists

for its public service prize. Wilson ultimately

didn’t win, but most journalists consider selec-

“ You’d think that any entity that re p resents agricul-

t u re would have some interest in protecting its

members, not just their cro p s — p rotecting their

soils and their health.”

tion as a ﬁnalist to be a great honor in itself.

“This is a highly competitive prize,” Wilson

pointed out in an interview. “I was proud that I

made it to the ﬁnals.” The Farm Bureau has

never given Wilson a copy of its letter, he says.

“If they believe I got facts wrong, let’s see it.

They still have not come forward with anything

in my articles that they can show is untrue.”

MERGER MANIA

“These ﬁnance companies offer credit lines

to pay for the farm products their companies

sell, which in Growmark’s case includes fertiliz-

er, feed, seed and petroleum fuels. A main

attraction to the customer is the convenience of

a one-stop shop for the product and ﬁnancing.”

— American Banker magazine.

You might call it a new twist on the old com-

pany store, or the ultimate in vertical integration.

Co-ops have moved into nearly every aspect of

agricultural production, selling seeds, fertilizer,

pesticides, crop advice, market news, livestock

feed, antibiotics, additives, growth hormones, oil,

gas, tires and batteries; marketing produce, grain

and livestock on behalf of farmers; buying grain

on behalf of traders, buying and raising livestock,

slaughtering hogs and cattle, packaging meat,

transporting products and advertising all this.

Everyone involved needs plenty of cash to ensure

the smooth ﬂow of these business transactions.

Nearly all the large cooperatives now operate

their own ﬁnancial-services divisions. Growmark,

for instance, lends through FS Agri-Finance,

which operates under an alliance agreement with

John Deere Credit. In 1998, the ﬁnance compa-

ny loaned out $112 million. “This is the eighth

consecutive year of record loan volumes,” says an

FS brochure. “Expanded loan programs such as

full line operating loans and three-year revolving

loans make FS Agri-Finance more convenient

and ﬂexible to customers.” It is also convenient

to the ﬁnancier. The co-op loans farmers money

to buy co-op products — everything from trac-

tors to seeds, feed, pesticides and antibiotics —

and earns proﬁts on both the sale of the mer-

chandise and ﬁnance charges.

Growmark ﬁnances large capital ventures. In

1993, Co-Bank opened an ofﬁce in Mexico City.

In 1997, it set up shop in Singapore to “facilitate

export ﬁnancing in Asian markets.” In 1998, 21

state farm bureau organizations and 19 farm

bureau-afﬁliated insurance companies pooled

investment money to form a bank holding com-

pany called Farm Bureau Bancorp. That corpora-

tion opened up shop in 1999, doing business as

the Farm Bureau Bank. The Farm Bureau Bank

is offering a full line of ﬁnancial services in 39

states, and bank ofﬁcers ﬁgure that gives them a

potential 3 million customers. AFBF’s new presi-

dent, Bob Stallman, who won election at the

Farm Bureau’s January, 2000, convention, was

the initial chairman of the bank holding compa-

ny. A Texas rice farmer and former president of

the Texas Farm Bureau, he stepped down in

March, 2000, but continues as a bank advisory

board member.

The extent of the vertical integration of the

co-ops might tend to worry anyone concerned

about monopoly and concentration, especially

considering the ever-changing mixtures of part-

A M B E R W A V E S O F G A I N

nerships, alliances, mergers and joint ventures

involved. Add to that the fact that much of this

cooperative activity is protected from scrutiny by

the antitrust exemptions of the Capper-Volstead

act of 1922, and it’s easy to see room for abuses.

At the 1999 AFBF convention, delegates

approved new language calling for an “immedi-

ate investigation into the mergers that are occur-

ring in the agricultural industry” and for “action

that will protect producer interests.” The resolu-

tion declared that “the continued mergers of

agribusiness ﬁrms” threaten “the free enterprise

system that is based on competition.”

The Farm Bu reau, howe ve r, does not want to

see its own co-ops investigated, even though the

co-ops clearly have been as deeply engaged as pri-

vate corporations in mergers and concentration.

When an Iowa delegate offered an amendment

calling on Congress to “examine antitrust laws to

determine if changes are needed to more effec-

t i vely protect farmers,” Farm Bu r eau leaders

quickly shot the idea down. “Mr. Chairman, I

h a v e a terrible time with those additional lines

t h e re — that whole ‘examine antitru s t .’ T h i n k

about Capper-Volstead for a minute, where we’re

at there,” said Wisconsin Farm Bu reau pre s i d e n t

How a rd Poulson. “I urge that we defeat this addi-

tional language.” The amendment was defeated

on a voice vote with a chorus of loud “n o’s . ”

Perhaps it should come as no surprise that in

spite of the formal Farm Bureau policy positions

calling for immediate investigations of mergers

and strong enforcement of antitrust laws, AFBF

has actively lobbied against legislation that could

put the brakes on what Senator Paul Wellstone

(D-Minnesota) calls “merger mania.” Wellstone’s

bill, introduced in 1999, would put an 18-

month moratorium on mergers between big

agribusinesses and set up a commission to review

the issues of concentration and market power in

agriculture. That sounds like just exactly what

Farm Bureau members voted to support at their

last convention — so AFBF did not at ﬁrst pub-

licly acknowledge its opposition. Instead, Farm

Bureau lobbyists quietly circulated a letter to

members of Congress asking them to oppose the

bill. In an apparent effort to obscure its lobbying

efforts, AFBF posted an article on its website

headlined, “President Will Not Back Bill to Stop

Farm Mergers.” The article reported that

President Clinton had not endorsed the legisla-

tion. It did not mention AFBF’s opposition.

Unfortunately for the Farm Bureau, Mike

Callicrate of the Cattlemen’s Legal Fund

obtained a copy of the AFBF letter and posted it

on his website, “nobull.net.”

Forced to admit that it had opposed the

Wellstone bill, the Farm Bureau now offers the

argument that a moratorium would delay better

antitrust enforcement. In an article on AFBF’s

website posted November 16, 1999, Cheryl

Stubbendieck of the Nebraska Farm Bureau

called the Wellstone proposal dangerous, saying

that “a moratorium can result in nothing of con-

sequence happening until the time out is nearly

over. American farmers can’t wait 18 months for

concrete action on an issue that so greatly affects

their livelihoods.”

Stubbendieck’s piece did not explain how

allowing mergers to go forward over the next

year and a half could speed antitrust-law reform.

AFBF governmental relations specialist Tim

A M B E R W A V E S O F G A I N

Cansler offered no clariﬁcation on that point in

an interview on a Farm Bureau radio program.

He simply asserted that the issue “strikes right to

the heart of the constitution, and the capitalistic

system that we have in America,” without

explaining precisely what he meant.

Even some state farm bureaus aren’t buying

those arguments. In December, 1999, the

Mississippi Farm Bureau unanimously approved

a resolution condemning AFBF for opposing the

merger moratorium. “The national Farm Bureau

policy book is full of statements expressing con-

cern about concentration of market power and

monopoly in agribusiness,” said Mississippi Farm

Bureau member Fred Stokes, who introduced the

resolution. “Yet AFBF President Dean Kleckner

and the national staff consistently sell out their

members and jump in bed with agribusiness.”

Stokes went on to characterize AFBF’s lobbying

activity as “a gross breach of faith and detrimen-

tal to the interests of producer members.”

This challenge from the Farm Bu re a u’s grass-

roots failed to shake AFBF’s stance on the re g u l a-

tion of big business. At the Ja n u a ry, 2000, con-

vention in Houston, Texas, the voting delegates

again approved resolutions calling for inve s t i g a-

tions of mergers. The language used was nearly

identical to that of the 1999 policies. But dele-

gates also adopted a new policy opposing any

moratorium on mergers.

The Farm Bureau’s ﬁnancial interests in

cooperatives and other big businesses may help

explain why AFBF’s leadership has held so stub-

bornly to policies that appear to run counter to

the interests of family farmers. Those policies

embrace a variety of conservative causes that fre-

quently serve as cover for actions that would

beneﬁt the bottom lines of big business.

A M B E R W A V E S O F G A I N

“What’s the inﬂuence in Farm Bureau? It’s

zilch. They don’t talk to me. They don’t pressure

me. If they tried to I would say ‘buzz off.’ They

don’t drive us. They don’t help us pay the bills.

Our dues pay the bills. Farm Bureau member-

ship fees pay the bills, so there’s no connection.”

— Former AFBF president Dean

Kleckner commenting on the inﬂuence of

Farm Bureau businesses on bureau policy.

or years, AFBF has fought laws designed to

protect wetlands, wilderness areas, drinking

water and streams. It has lobbied aggressively

to weaken pesticide regulations and the

Endangered Species Act and has been instrumen-

tal in blocking Senate ratiﬁcation of international

treaties to safeguard biodiversity and counteract

global warming. Although these issues may have

at least some bearing on agriculture, AFBF also

has used its clout to push policies that have no

apparent connection with farming.

Why would a supposed farmers’ organization

oppose higher fuel-efﬁciency standards for auto-

mobiles or ﬁght Clean Air Act provisions that

apply almost exc l u s i v ely to urban areas? W h y

would farmers care about easing restrictions on

mining or deregulating telecommunications?

Understanding the Farm Bu re a u ’s business ties

offers some clues. Seemingly odd policy positions

a re easier to fathom in the light of the business

connections outlined in previous chapters of this

re p o rt, including Farm Bu reau links to insurance,

oil, chemical, automobile, timber, paper, commu-

nications and other industries. For example:

• The Farm Bureau has lobbied to privatize

Social Security and to put limits on legal damage

awards for product liability and medical malprac-

tice — steps that could substantially beneﬁt

insurance and ﬁnancial businesses.

• AFBF is a member of the Coalition for

Vehicle Choice, which helped defeat legislation

to raise fuel-efﬁciency standards for automobiles.

FBL Financial Group, which controls Farm

Bureau insurance afﬁliates in 12 states, also owns

stock in Ford Motor Co., Texaco and other oil

and gas producers, according to FBL ﬁnancial

reports. The Iowa Farm Bureau owns 63 percent

of FBL. IAA Trust, headed by Illinois Farm

C H A P T E R F I V E

Taking Care of Business

A M B E R W A V E S O F G A I N

Bureau president Ronald Warﬁeld, owns millions

of dollars worth of stock in Ford Motor Co. and

half a dozen oil companies. In addition, Farm

Bureau-afﬁliated co-ops hold substantial stakes in

oil reﬁneries and retail gas stations.

Farm Bu reau leaders insist that the organiza-

t i o n’s business ties have no influence over poli-

cies whatsoeve r. Policies are developed at the

local level and move up through state farm

b u reau conventions to the national meeting,

w h e re voting delegates choose which re s o l u t i o n s

to support. Ac c o rding to former AFBF pre s i -

dent Kleckner, all policies “must have some

connection with agriculture, even indire c t l y, or

we wouldn’t be invo l ved.” The Farm Bu re a u

takes no position on most of the thousands of

bills that move through Congress, he says,

“because they are not directly enough related to

f a r m i n g . ”

With some AFBF polices, however, the con-

nections to agriculture are hard to ﬁgure. Even

the Farm Bureau’s known ﬁnancial interests do

not fully explain why the organization even cares

about certain issues. For instance:

• AFBF policy calls for restoring provisions in

the 1872 Mining Act “that guarantee the rights

and freedom of prospectors and miners.” This

law has allowed foreign corporations to extract

billions of dollars in precious metals from public

lands without paying more than minimal royal-

ties to the government. It contains no require-

ments for land reclamation and elevates mining

above all other interests on public land, includ-

ing wildlife habitat, clean water and grazing

rights.

• The Farm Bu reau played a leading role in

e f f o rts to delay tighter standards on gro u n d -

l e vel ozone and particulate matter, an issue that

primarily relates to urban areas. Public health

officials had found that in many cities these

pollutants we re contributing to serious re s p i r a -

t o ry illnesses such as asthma, especially among

young children. EPA blamed the pollution pri-

marily on auto and diesel engine exhaust and

industrial emissions. From the outset, EPA

made it clear that agriculture was not a target

and the proposed regulations would not re q u i re

farmers to change the way they operate.

Ne ve rtheless, the Farm Bu reau went out fro n t

in a public relations and lobbying campaign to

delay implementation of new standards for four

years.

For whatever reason, AFBF and its state afﬁl-

iates have chosen to ally themselves with coali-

tions that include many of the most powerful

trade associations in the country. AFBF has

worked closely with the National Association of

Manufacturers, American Petroleum Institute,

National Mining Association, Association of

International Automobile Manufacturers, Steel

Manufacturers Association, National Asphalt

Pavement Association, Associated General

Contractors and many others.

In addition, AFBF and these industrial asso-

ciations have formed alliances with conservative

political groups, including the inappropriately

named wise-use organizations. AFBF has con-

tributed funds to many of these groups, includ-

ing coalitions that are seeking to eviscerate the

Endangered Species Act, roll back wetlands pro-

tections, lower clean air and water standards and

thwart steps to reduce global warming.

A M B E R W A V E S O F G A I N

THE WISE-USERS

“The Farm Bureau has become, in an odd

way, a very attractive group to put in the fore-

front of all kinds of environmental ﬁghts that

industry doesn’t ﬁght very well on its own.”

— Ken Cook,

Environmental Working Group.

Over the last decade, some of the greatest

threats to environmental protection have taken

shape among a conglomeration of so-called wise-

use groups. The common thread among these

diverse organizations seems to be the belief that

private property rights must always take prece-

dence over the public good. Farm Bureau leaders

have been active in the wise-use movement since

its inception. In 1988, when wise-use leaders

convened for the ﬁrst time at a conference in

Reno, Nevada, Farm Bureau representatives from

Oregon and California participated. That meet-

ing set an agenda for the movement focused on

the goal of protecting private property while

exploiting public resources. Among the speciﬁc

goals, conference participants pledged to cam-

paign for opening all public lands, “including

wilderness and national parks,” to mining and

energy development; increasing logging of old-

growth forests and allowing oil development in

the Arctic National Wildlife Refuge.

Since then, the American Farm Bureau

Federation (AFBF) and state farm bureaus have

participated actively in and helped to fund wise-

use coalitions. According to records compiled by

the Clearinghouse on Environmental Advocacy

and Research (CLEAR), a watchdog group based

in Washington, D.C., AFBF is a member of the

most prominent wise-use group, the Alliance for

America, which sponsors an annual “Fly In For

Freedom” rally in Washington. The Farm Bureau

has contributed funds to more than a dozen

other wise-use organizations. Among them:

• ECO, the Environmental Conservation

Organization, set up as the grassroots wing of the

Land Improvement Contractors Association.

ECO concentrates on property-rights issues.

Members include representatives of the timber,

pulp and paper, oil, mining, real estate, building,

fur trapping and coal industries as well as AFBF

and several state farm bureaus.

• Foundation for Clean Air Progress, which

campaigns against stricter clean-air standards.

Members include the National Asphalt Pavement

Association, American Road and Transportation

Builders Association, Petroleum Marketers

Association of America, American Petroleum

Institute, Asphalt Institute and AFBF.

• Air Quality Standards Coalition, which

lobbied to delay implementation of tighter

restrictions on ozone and particulate pollution.

This coalition includes the National Association

of Manufacturers, Geneva Steel, National

Mining Association, American Electric Power

Co., Mobil and Ford Motor Co.

• Global Climate Information Project, an

industry alliance that includes auto makers, oil

companies, manufacturers and AFBF. In 1997,

this group spent more than $3 million on an

advertising campaign alleging that a proposed

international treaty to curb global warming

would hamstring the U.S. economy.

• National Wetlands Coalition, set up by real

A M B E R W A V E S O F G A I N

estate developers, utilities and mining and oil

companies to lobby for less restriction on com-

mercial development of wetlands. The coalition

also has lobbied for laws requiring taxpayers to

compensate property owners whenever wetland

regulations prevent development.

• National Endangered Species Act Reform

Coalition was set up primarily by southwestern

electric utilities. The coalition wants Congress to

require that economic factors be considered in

any plans to protect endangered species. It also

has lobbied for new policies to make it more dif-

ﬁcult to add species to the endangered list.

In addition to helping to ﬁnance these orga-

nizations, AFBF has contributed money to con-

servative think tanks and legal foundations,

including the Cato Institute, Reason Foundation

and Paciﬁc Legal Foundation. Paciﬁc Legal

Foundation has used the funds to challenge clean

water regulations, hazardous-waste cleanup

requirements and wilderness designations.

The Farm Bureau also has ties to other anti-

environmental legal groups. From 1985 to 1989,

former Wyoming Farm Bureau president Dave

Flitner was also president of the Mountain States

Legal Foundation (MSLF), set up by arch-con-

servative beer magnate Joseph Coors primarily to

challenge environmental restrictions on public

lands. Former Reagan administration Interior

Secretary James Watt served as the ﬁrst MSLF

president. Amoco, Chevron, Exxon, Ford Motor

Co., Phillips Petroleum and other corporations

provide funding. MSLF represented the Farm

Bureau in its Yellowstone-Idaho wolf lawsuit.

Former AFBF president Kleckner served as

vice chairman of the National Legal Center for

the Public Interest (NLCPI). According to

CLEAR, NLCPI is an umbrella for other legal

foundations, including Paciﬁc and Mountain

States. NLCPI gets money from AT&T, Exxon,

Ford Motor Co., Gulf Oil, Kimberly-Clark, the

Sara Scaife Foundation and Union Carbide.

Ultra-conservative former Judge Robert Bork

and Kenneth Starr, special prosecutor for the

Clinton-Whitewater case, are listed as legal advis-

ers to NLCPI.

FRIENDS HELPING FRIENDS

AFBF’s own nonproﬁt, the American Farm

Bureau Federation Foundation for Agriculture,

has beneﬁted from the Farm Bureau’s close con-

nections with the nation’s business elite. In 1997,

the foundation received more than $10,000

apiece from Philip Morris, ADM, Nationwide

Insurance, American Agricultural Insurance

Corp., Asgrow Seeds and Kraft. Pharmaceutical,

seed and pesticide giant Novartis contributed

more than $5,000. In 1993 and 1994, RJR

Nabisco, maker of Winston, Camel and Salem

cigarettes, contributed at least $80,000 to agri-

culture sciences programs sponsored by the

North Carolina and Kentucky farm bureaus.

Because of these links to the tobacco indus-

try, it comes as no surprise that farm bureaus

often are allied with big tobacco. For example, in

1998 the Maryland Farm Bureau lobbied against

legislation for a tobacco tax to support a chil-

dren’s health and learning program. The bill

included a tobacco crop conversion program and

a health protection fund. It died in committee.

AFBF would like to see taxpayers foot the

bill anytime its business associates are faced with

A M B E R W A V E S O F G A I N

expenses for compliance with environmental reg-

ulations. AFBF policy states that “businesses,

industries and farmers who have to expend sums

of money to implement or prove they are meet-

ing environmental regulations should be reim-

bursed for their expenditure.” Such a policy

could save businesses — and cost taxpayers —

billions. If the tab ran too high, the Farm

Bureau’s reasoning implies, the government

could simply dispense with environmental pro-

tection. This is clearly an option most Americans

would not support, but the Farm Bureau’s views

are generally given great weight by lawmakers

even when those views are at odds with those of

the majority of American citizens.

POLITICAL POWER

“I remind Congress that our proposal is not

a ‘wish list.’ It is a ‘must do’ directive.”

— AFBF then-president Dean Kleckner

commenting in October, 1998, on Farm

Bureau-backed proposals, including fast-

track international trade authority and elimi-

nation of capital gains and estate taxes.

Of the more than 10,000 organizations that

lobby Congress, few would presume to issue so

brazen an ultimatum as the Farm Bureau’s “must

do” directive. But AFBF president Kleckner’s

demand was not mere chutzpah. The Farm

Bureau wields enormous power with Congress

and state legislatures. “It’s extremely difﬁcult to

get anything through without them on board,”

says a Capitol Hill insider who asked not to be

identiﬁed. Through the years, Farm Bureau lead-

ers have had close ties with conservative politi-

cians. In 1991, Kleckner was on the short list of

candidates for Secretary of Agriculture under

President George Bush.

In compiling its annual list of organizations

with the most clout in Washington, Fo rt u n e m a g a-

zine surveys members of Congress, senior congre s-

sional staff and prominent lobbyists. The surve y,

called “The Power 25: The In ﬂuence Me rc h a n t s , ”

p rofesses to tell “what Washington insiders alre a d y

k n o w: who are the true masters and who the mere

p r etenders.” In 1998, the survey ranked AFBF

14th; in 1999, 21st. No conservation or enviro n-

mental group has ever made the list .

In an article accompanying the 1998 survey

results, Jeffrey H. Birnbaum wrote about that

year: “Bills that should have been sure-ﬁre failed,

including ones designed to reduce teen smoking

and improve the service of HMOs. . . . How

could this be? The answers lie far from public

view in a region inhabited only by lobbyists,

interest groups and the lawmakers whose votes

they seek. It’s where some of the nation’s most

powerful people play an extraordinarily high-

stakes game of persuasion, where backs are

scratched, arms twisted, favors granted and

redeemed. This is where the business of politics

really gets done.”

Part of the Farm Bureau’s power stems from

the presumption that the organization does

indeed speak for the nation’s farmers. But as this

report illustrates, that impression may be mostly

illusion. Those who have watched the Farm

Bureau’s maneuvering at close quarters speak of

an organization in lockstep with business allies,

pushing for causes that could never be classiﬁed

A M B E R W A V E S O F G A I N

as part of a family-farm agenda. The Farm

Bureau also has won friends on Capitol Hill

through the traditional means of entertaining

politicians and helping them ﬁnance their cam-

paigns. In 1998, AFBF spent $4.56 million on

lobbying in Washington. State farm bureaus

spent another $250,000 on lobbying, according

to documents compiled by the Center for

Responsive Politics, a Washington-based public

interest group. From 1989 to 1997, 18 state-

afﬁliated farm bureau political action committees

(PACs) contributed a total of $1.2 million to

federal candidates. While the Farm Bureau does

not support a national PAC, from 1989 to 1997

AFBF contributed $38,000 in “soft money”

(donations not regulated by campaign ﬁnance

limits) to the national political parties — mostly

to the Republican National Committee. In addi-

tion, employees of the Farm Bureau and related

businesses contributed to individual campaigns.

With a few exceptions, the beneﬁciaries of

Farm Bureau largesse have some of the worst

records in Congress on conservation and envi-

ronmental issues, according to scorecards of the

League of Conservation Voters (LCV). LCV

evaluates legislators on the basis of their votes on

such issues as wetlands preservation and pollu-

tion control. For the most part, the Farm Bureau

has been spending its money on politicians who

generally side against environmental protection.

In making a pitch for contributions to its

PAC, the Arizona Farm Bureau advertised its

activities as “Lobbying that carries power with

punch.” It told members their assistance was crit-

ical to counter labor unions and environmental

groups that are trying “to create self-serving leg-

islative regulation aimed at putting you out of

business . . . and they are only two of the many

groups looking to put farmers and ranchers in

the unemployment line.”

AFBF has lobbied for legislation to bar labor

unions from using membership dues for political

purposes without express consent from individ-

ual members. AFBF also has supported restric-

tions on lobbying by other nonproﬁt groups.

Agricultural organizations, including the Farm

Bureau, were speciﬁcally exempted from these

proposals. It would be interesting to see what

might happen if the Farm Bureau had to abide

by the rules it wants to impose on labor unions.

Labor union members at least get to vote within

their organizations. Much of the money the

Farm Bureau uses for its political activities comes

from membership dues paid by insurance cus-

tomers who are not allowed to vote in Farm

Bureau elections and have no say in Farm Bureau

policies. Those insurance customers constitute

the majority of Farm Bureau members. By some

estimates they make up as much as 80 percent or

more of the organization’s “members.” As this

report points out, many of those insurance-cus-

tomer members are not even aware of how the

Farm Bureau is spending their money.

Tony Dean is one Farm Bureau insurance

customer who has made it his business to ﬁnd

out. “They are opposed to wetland acquisition,

regulations — anything that means a good envi-

ronment,” says Dean, an outdoor writer and

popular South Dakota television and radio show

host. “If the average person saw what their poli-

cies were, the Farm Bureau wouldn’t exist. But

they don’t operate at that level. They are very

A M B E R W A V E S O F G A I N

PAC CONTRIBUTIONS AND ENVIRONMENTAL VOTING RECORDS

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%

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

Recipients

1989-1999

AFBF PAC

contributions*

($)

League of Conservation Voters

National Environmental Scorecard Ratings

A M B E R W A V E S O F G A I N

close to the upper echelon of decision-making in

the state and federal government.”

The South Dakota Farm Bu reau was not

happy when Dean, a re g i s t e red Republican, circ u-

lated a list of Farm Bu reau-endorsed policies in a

campaign bro c h u re for the Democratic candidate

in the race for South Dakota public lands com-

m i s s i o n e r. The Republican candidate for land

commissioner was a board member of the So u t h

Dakota Farm Bu r eau. Dean says he thought the

public ought to know exactly what the Fa r m

Bu reau supports. “I lifted the policies straight out

of the Farm Bu re a u’s manual,” he says. Two days

after the bro c h u re hit the mail, Dean says he got

“s t e a m i n g” letters from Farm Bu reau ofﬁcers and

b o a rd members, along with phone calls accusing

him of being a Communist and left-wing radical.

The Farm Bureau candidate lost. Perhaps

South Dakota voters sensed that someone repre-

senting an organization that consistently opposes

protection of public resources might not be the

best person to put in charge of state-owned

lands. A close look at Farm Bureau policies

reveals a radical agenda with little concern for

protection of treasured national resources.

NO NET LOSS OF PRIV ATE PROPERTY

“We strongly urge that no more private

property be acquired by state or federal govern-

ments for wilderness, national preserve or any

other nonproductive, non-economical use with-

out ﬁrst conducting a binding referendum of

property owners in the county or counties

directly affected.”

— AFBF 1999 policy manual.

Perhaps the Farm Bureau did not intend that

such anti-democratic language sneak into its pol-

icy manual, but the provision on federal land-

acquisition clearly harkens back to a time before

the principle of one-man-one-vote, when only

the landed gentry were allowed a voice in affairs

of state. But if property owners alone will not be

allowed to decide the fate of public land, the

Farm Bureau has a fallback position. “County

governments should have the right to ratify or

reject any proposed wilderness area,” the AFBF

policy manual declares. This would give county

governments veto power over decisions involving

lands that belong to all Americans.

The Farm Bureau opposes all expansion of

wilderness areas and is urging reevaluation of all

existing wilderness designations. In addition,

AFBF wants the National Park Service to “cease

efforts to condemn and acquire privately owned

farmland and ranch land within the boundaries

of national parks.” At the same time, the Farm

Bureau would like the government to improve

roads through national parks to allow more

motorized access.

Furthermore, the Farm Bureau would like to

prohibit the government from acquiring addi-

tional land for any purpose, whether to protect

sensitive watersheds from development or to pro-

tect endangered species habitat. AFBF has adopt-

ed a policy of “no net loss of private property,”

meaning that government agencies could not

purchase land without ﬁrst selling off property to

private buyers. “What happens when the federal

government gobbles up land?” asks a Farm

Bureau website essay. “First, more and more land

becomes inaccessible to the public.”

A M B E R W A V E S O F G A I N

That’s an odd concept, since generally it is

private landowners who forbid trespass and pub-

lic land that most people are allowed to use. But

AFBF takes the bold position that Congress

should sell off all federal public domain and

national forest lands to private individuals. The

sales should include all subsurface oil and mining

rights, AFBF’s policy manual says. If Congress is

not willing to go that far, the Farm Bureau wants

ownership of such federal lands transferred to the

states.

For a number of years it appeared that the

Farm Bureau’s public lands agenda might prevail

in Congress. Now, however, popular demand for

protection of our shared national resources has

become so great that even long-time Farm

Bureau allies in Congress appear to be listening.

“Sensing widespread support for programs to

preserve open spaces, lawmakers from both par-

ties have offered competing proposals that exceed

even the Clinton administration’s record $1.1

billion request to protect open land from devel-

opment,” the New York Times reported on March

11, 1999. “But the differences serve mainly to

underscore the political popularity of spending

more on conservation, demonstrated by the suc-

cess across the country of ballot measures to buy

open space and preserve it for the public good.”

Part of the money for these projects would

come from the Land and Water Conservation

Fund, a program that taxes offshore oil produc-

tion to pay for conservation. AFBF policy calls

for repeal of the Land and Water Conservation

Act, which established the fund. This policy

comes as no surprise. The Farm Bureau has

repeatedly opposed measures that offer protec-

tion for land, water or wildlife. For example:

• The New Mexico Farm and Livestock

Bureau adopted a resolution requesting the state

attorney general to “investigate the activities of

The Nature Conservancy in New Mexico to

determine whether conspiracy exists between it

and government entities.” The Nature

Conservancy has been active in negotiating with

New Mexico landowners for conservation ease-

ments to prevent development of open land.

• The Idaho Farm Bureau pushed a joint

memorial in the 1998 legislature opposing desig-

nation of “any river, watershed or river segment

within the state of Idaho” as an American

Heritage River. The memorial passed the house

but not the senate.

• The Oklahoma Farm Bureau has tried to

block protection of the Red River, which delin-

eates the border between Texas and Oklahoma.

According to its policy manual, the bureau

opposes all proposals “for potential wildlife habi-

tats, parks, ‘wetlands’ preserves, hiking/biking

recreational areas, wilderness designations, game

preserves and Wild and Scenic River designation

on the Red River. All land should remain in pri-

vate ownership.”

AFBF opposes expanding the national wild

and scenic rivers system and wants land already

acquired under the national program to be

“returned to the original owners.” (Presumably

this excludes the Native American tribes who

owned the land before the arrival of white set-

tlers.) AFBF opposes a national policy of “no net

loss of wetlands” and believes isolated wetlands

such as vernal pools and prairie potholes should

not be protected under the Clean Water Act.

AFBF opposes any legislation to regulate the sale

and use of nitrogen fertilizers even where they

have been found to pollute lakes, streams or

estuaries. And AFBF insists that fertilizer runoff

is not contributing to the “dead zone” at the

mouth of the Mississippi River, scientiﬁc evi-

dence to the contrary notwithstanding.

COMPENSATION FOR COMPLIANCE

“We oppose any action that infringes on an

individual’s right to own and manage private

property, including stream beds, stream banks,

water rights, wetlands, mineral rights and

adjacent private lands. . . . We support legisla-

tion protecting the rights and property of pri-

vate property owners against animal rights

activists and environmental activists.”

— Oklahoma Farm Bureau policy

manual.

The Farm Bureau supports a broad interpre-

tation of private property rights that would

require taxpayers to compensate property owners

for the costs of compliance with environmental

regulations. AFBF takes the deﬁnition of proper-

ty rights even further by classifying private use of

public land as a property right. AFBF’s policy

manual insists that taxpayers should compensate

ranchers whenever grazing permits on public

land are revoked or ranchers are required to

reduce cattle numbers on public land.

Federal courts disagree. The Tenth Circuit

U.S. Court of Appeals in Denver recently reject-

ed a claim of New Mexico rancher Kit Laney

that the Forest Service acted illegally when it

revoked his grazing permits in the Gila National

Forest.

Federal scientists had concluded that the

statutory wilderness areas where Laney held leas-

es had been seriously damaged by overgrazing.

Laney claimed that his grazing leases constituted

vested property rights. The court ruled that

ranchers do “not now hold and have never held a

vested private property right to graze cattle on

federal public lands. At the time plaintiffs’ prede-

cessors began ranching, grazing on the public

domain was a privilege tacitly permitted by the

government by an implied license.”

Nonetheless, AFBF continues to argue that

federal agencies should be prohibited from tak-

ing any action to protect public land in areas

where ranchers hold grazing permits. For exam-

ple, the Farm Bureau argues that the government

has no right to fence off streamside riparian

zones within grazing allotments even though

biologists have concluded that cattle grazing has

been a major factor in the destruction of these

fragile ecosystems throughout the West. Riparian

zones provide critical habitat for hundreds of

species, including many that are endangered.

The Farm Bureau’s opposition to protection

of critical streamside habitat ﬁts a pattern that

the organization has followed throughout its his-

tory. As detailed in Chapter Six, whenever policy

questions involve protection of species with no

immediate commercial value, the Farm Bureau

nearly always assumes an adversarial position.

A M B E R W A V E S O F G A I N

C H A P T E R S I X

“The ruling is a major victory for Farm

Bureau. This ruling culminates more than

three years of litigation on this issue. The rul-

ing vindicates the Farm Bureau position that

the wolf reintroduction program failed to

address the concerns of farmers and ranchers,

and represented overzealous regulation by the

government.”

— Dean Kleckner, AFBF president,

December, 1997.

n De c e m b e r, 1997, a federal district judge in

Wyoming dismayed wildlife conserva t i o n i s t s

a c ross the nation with an unexpected ru l i n g .

The judge ruled that the re i n t r oduction of wolve s

by the federal government in 1995 and 1996 in

Ye l l o wstone National Pa r k and on federal lands in

central Idaho had been unlawful and that the new

and thriving wolf populations must be re m o ve d .

The ruling, which was later overturned by a

higher court, was chieﬂy the result of a lawsuit

brought by the American Farm Bureau

Federation (AFBF) and three state farm bureau

federations.

The Farm Bureau has made battling wolf

recovery a cause célèbre. Virtually everywhere

wolf reintroduction has been proposed, AFBF’s

leaders or those of its state afﬁliates have voiced

opposition.

Farm Bu reau leaders claim that the wolves

represent a land grab by federal bureaucrats using

wolf recovery as a pretext for booting cattlemen

off public lands where they have grazed their

livestock for generations. In an essay posted on

the Farm Bureau’s website, Montana Farm

Bureau executive vice president Jake Cummins

argued that environmental leaders “don’t care

whether the wolves live or die” and claimed that

“the whole wolf program was a fraud. The real

goal was to use the Endangered Species Act to

expand federal land use control. Neither the fed-

eral government nor the leaders of the major

environmental groups have ever really cared a

hoot about the welfare of the wolves.” Environ-

mentalists simply want to “redistribute wealth by

consolidating power in the federal bureaucracy,”

he said, suggesting that such people still admire

“the Communist ideal.”

Pushing an Anti-Wildlife Agenda

WHY SAVE WILDLIFE?

“We believe that modern society cannot

continue to operate on the basis that all species

must be preserved at any cost. All state and

federal actions designed to protect alleged

threatened and/or assumed endangered and

threatened species pursuant to the ESA must

demonstrate that the beneﬁts to humans exceed

the cost to humans.”

— AFBF 1999 policy manual.

“Many predators such as the grizzly bear

and some wolf species are contributing very lit-

tle tangible beneﬁt to the American people, and

the extinction of the dinosaur, brontosaurus,

pterodactyl, sabertooth tiger and countless other

species is not hindering the occupation of earth

by the human race. Therefore be it resolved

NMFLB strongly urge that the endangered

species act be reworded....”

— New Mexico Farm and Livestock

Bureau 1999 policy manual.

AFBF’s effort to stop wolf reintroduction is

only one aspect of a much broader anti-wildlife

agenda. AFBF has been urging Congress to

rewrite the Endangered Species Act (ESA) so that

species could be protected only if doing so satis-

ﬁes a strict cost-beneﬁt economic analysis. Under

the AFBF proposal, modiﬁcation of endangered-

species habitat would no longer be prohibited.

Furthermore, the Farm Bureau says no U.S.

species should be listed if it can be found in

another country.

The Farm Bureau would also like to put con-

servation groups at risk if they propose animals

or plants for listing under the act. The Farm

Bureau suggests that anyone proposing a listing

should “be required to post a bond for damages

incurred if the species are subsequently not

found to be endangered or threatened.” In the

event that this altered version of the ESA might

still protect any plants or animals, the Farm

Bureau wants taxpayers to compensate landown-

ers for any resulting “reductions in property val-

ues or for the loss of use of property.”

At AFBF’s 1999 convention, delegates adopt-

ed a wildlife pest and predator control policy

calling for legislation “which would require the

control of wildlife including endangered species”

that damages crops or kills livestock. The policy

recommends that property owners “have the

right to control predators in any way possible” if

the animals cause damage on private land —

meaning that ranchers legally could kill wolves,

grizzlies or other protected species. Delegates also

voted to petition for dropping wolves and grizzly

bears from the endangered species list and to

oppose further introductions of bison on federal

land. Another resolution called for abolishing the

U.S. Fish and Wildlife Service. Other policies on

wildlife approved at the convention ran the spec-

trum from the improbable to the downright

bizarre:

• A resolution on wildlife management

objected to the “federal policy” of allowing

wildlife to graze rent-free on federal lands. This

policy “is discriminatory to other grazing users

who pay for forage on an animal-unit-month

basis,” the resolution said. The same resolution

called for renaming prairie dogs “prairie rats” so

A M B E R W A V E S O F G A I N

that people will no longer think of them as

“comparable to poodles.”

• Another resolution supported everyone’s

right to own a reindeer regardless of race, creed

or national origin. Currently only native

Alaskans are allowed to keep reindeer.

• To help salmon recover, the Farm Bureau

favors eliminating or controlling such salmon

predators as sea lions and seals. AFBF would also

like to “privatize salmon ﬁsheries for stronger

ﬁsh.” The bureau did not explain exactly how

private hatcheries might produce stronger stocks

of salmon — and little scientiﬁc evidence exists

to back up that conclusion. The National Marine

Fisheries Service, the Idaho Fish and Game

Commission and organizations representing uni-

versity biologists have all agreed that breaching

some dams on western rivers would give endan-

gered salmon the best chance of survival. But

AFBF strongly opposes that option.

Over the years, AFBF has regularly opposed

plans to aid wildlife regardless of the impact on

agriculture. And state farm bureaus seem to be

doing all they can to interfere with species pro-

tection and recovery. For example:

• The Idaho Farm Bu reau opposed designa-

tion of the Snake River Bi rds of Prey Na t i o n a l

C o n s e rvation Area which protects the habitat of

No rth America’s densest concentration of raptors.

• The Idaho Farm Bureau also pushed a bill

in the state legislature to require the federal gov-

ernment to obtain the legislature’s permission

before any species could be reintroduced. “We

love this bill,” said a Farm Bureau legislative

alert, “and even though preservationists will

argue that the ESA gives the Feds the right to

trample all over the State of Idaho, this bill sends

the message that we don’t necessarily like it.”

• The Wyoming Farm Bureau staked out a

position against reintroduction of endangered

black-footed ferrets.

• The Illinois Farm Bu r eau listed “delay in the

i n t r oduction of wild elk into rural areas of Il l i n o i s”

as one of its major accomplishments for 1998.

• The Missouri Farm Bureau worked against

a ballot initiative to outlaw bear wrestling.

Animal ﬁghting had been illegal in Missouri for

112 years until the state supreme court over-

turned the law in 1985 as too vague. A 1998 ini-

tiative reinstated penalties for baiting or ﬁghting

animals. The bureau argued that the initiative

“could unintentionally call into question the use

of live ﬁshing bait, prohibit common rodeo prac-

tices by subjugating to a national rodeo associa-

tion the authority to determine what local rodeo

events are legal, and interfere with traditional

quail and raccoon hunting practices.” But voters

approved the bear wrestling ban by a 62.6 per-

cent majority.

PRAIRIE DOGS/PRAIRIE RATS

The South Dakota Farm Bureau is urging the

federal Bureau of Land Management and U.S.

Forest Service to control prairie dogs by any

means necessary. Prairie dogs are keystone

species, that is, their presence in the ecosystem is

critical to many other species. In 1989, De f e n d e r s

of Wildlife sued the En v i ronmental Pro t e c t i o n

Agency (EPA) to stop the use of above-ground

strychnine baits against prairie dogs, ground

squirrels, meadow mice and other animals.

Defenders argued that these pesticides also killed

A M B E R W A V E S O F G A I N

some 60 nontarget, federally protected species,

including 15 threatened or endangered species.

The Farm Bu reau unsuccessfully intervened in the

lawsuit, arguing for continued use of the poisons.

The Colorado Farm Bureau is ﬁghting

attempts to list black-tailed prairie dogs as

threatened. The bureau contends that if the

prairie dog is listed, all hunting and poisoning

programs would have to be discontinued and

landowners might be required to develop habitat

conservation plans. Prairie dog numbers have

declined radically in recent years as the animal’s

habitat has been converted to other uses. This

dwindling species is the sole food source for

endangered black-footed ferrets, arguably the

rarest mammal in North America.

LYNX CONSPIRACY

Efforts to reintroduce the lynx in Colorado

could mean the end of agriculture in the state,

according to the Colorado Farm Bureau. In a let-

ter to the U.S. Fish and Wildlife Service, the

bureau insisted that listing the lynx as threatened

in Colorado could stop agricultural use of public

lands. “This is just a misguided attempt to halt

economic development in struggling rural areas,”

wrote Buford Rice, executive vice president. “If

the lynx is listed, it could effectively terminate

every agricultural activity, existing or proposed,

in Colorado.”

The Colorado Farm Bureau also says it is

concerned that reintroduction of a predator

would put more pressure on livestock, although

the lynx is not known to prey on sheep or cattle.

The lynx is already on Colorado’s endangered

species list. In 1998, the bureau tried unsuccess-

fully to stop the state’s reintroduction of the lynx

in the Rio Grande/San Juan National Forest.

Bureau president Roger Bill Mitchell voiced fear

that introduction of an additional predator

might “place other species in jeopardy of becom-

ing endangered.”

PANTHER FLIP-FLOP

The Florida Farm Bureau in 1998 went on

record opposing reintroduction of endangered

Florida panthers in the northern part of the

state, citing alleged threats to domestic livestock

and private-property-rights restrictions. Panthers

have nearly disappeared from southern Florida,

in part because of inbreeding and highway

deaths. Scientists have also discovered that toxic

chemicals from agricultural runoff and other

sources may interfere with the panthers’ ability

to reproduce. It was hoped that bringing pan-

thers into northern Florida would improve their

chances for survival.

The Florida Farm Bureau’s opposition was a

slap in the face, says Florida Panther Society

president Stephen Williams, because the Farm

Bureau, ironically enough, had won and spent a

$180,000 state grant it had received for a pan-

ther education program. The money came from

the Environmental Education Trust Fund, a vol-

untary program that collects extra fees on auto

license plates to support research and education

programs beneﬁting panthers and endangered

manatees. The Farm Bureau used the grant to

print brochures and mount panther-protection

exhibits around the state.

Bureau president Carl Loop, who is also a

vice president of AFBF, says the Farm Bureau

S O U T H E R N L E S S O N S

believes agriculture can share land with panthers.

“We were in favor of saving the panther, and

they were looking at taking a lot of land for pan-

ther habitat,” he said in an interview. “We

weren’t sure what our position should be, and we

thought an education program would be the best

way to do it.” Loop justiﬁes the later decision to

oppose reintroduction by the fact that northern

Florida is more populated than the south. “I

don’t see it as a contradiction,” he said. “We were

trying to preserve them in their habitat in south

Florida.”

Despite the change of heart, Loop says the

education program “was a good experience for

us. We got a lot of support out of Audubon and

other groups and it helped to build a relation-

ship.... We ﬁnd we have a lot in common. Where

there’s problems, there’s got to be a best way to

solve them, to work together.” Even so, the

Panther Society feels betrayed. In November,

1998, the Florida Game and Fresh Water Fish

Commission said it would abandon efforts to

reintroduce panthers in north Florida because of

strong local landowner opposition.

ANIMAL DAMAGE CONTROL

“As wildlife numbers grow by leaps and

bounds, conﬂicts with humans are increasing,”

wrote AFBF broadcast services director Stewart

Truelsen in a 1998 web posting. AFBF apparent-

ly is satisﬁed that “wildlife numbers are much

higher than in the past” and believes that the

greatest wildlife challenge today is controlling

pest species.

Because of the Farm Bureau, the federal

agency responsible for killing predators on behalf

of ranchers will continue operating with a fat

budget. AFBF lobbyist Jon Doggett acknowl-

edges that the Farm Bureau was instrumental in

reversing a funding cut for the Department of

Agriculture’s Wildlife Services (formerly called

Animal Damage Control), whose agents trap and

poison predators on public and private land. The

House of Representatives voted in June, 1998, to

cut $10 million from the Wildlife Services

appropriation. After intense lobbying by Farm

Bureau representatives in several states, the

House reversed its decision the next day.

In the West over the last ﬁve years, Wildlife

Services has killed or trapped mountain lions,

black bears, coyotes, foxes and golden eagles — a

total of 90,814 predators in 1997 — even in des-

ignated federal wilderness areas, including the

Santa Teresa Wilderness in Arizona and the

Apache Kid Wilderness in New Mexico.

Ranchers had complained that these predators

attacked their calves. “You’d think if there was

one place that should be predator-friendly, it

would be the wilderness,” says John Horning of

the conservation group Forest Guardians. “It

boggles the mind that on the cusp of the 21st

century we are paying federal employees to kill

predators on federal land for the beneﬁt of a

handful of people.”

GRA Y WOLVES AND SPOTTED OWLS

When the New Mexico Farm and Livestock

Bureau and other ranching groups asked a feder-

al court in December, 1998, to bar further

releases of endangered Mexican gray wolves,

A M B E R W A V E S O F G A I N

bureau attorneys argued that the wolves would

take food away from spotted owls from which

ranchers “derive substantial aesthetic enjoyment.”

The Albuquerque Journal chastised the ranching

groups in an editorial saying the court should

consider sanctions for ﬁling frivolous pleadings.

“Crocodile tears over the fate of the spotted owl

are so contrary to the track record of ranching

groups as to be bereft of credibility,” the editorial

said. “Ranchers and their lawyers probably

enjoyed a good guffaw or two over that bit of

‘cowboy biology,’ but it should be no laughing

matter to the court.” Apparently the court didn’t

buy the farm bureau arguments. It dismissed the

lawsuit.

Attacks such as these on wildlife protections

are just one part of a comprehensive anti-envi-

ronment, anti-labor agenda that the Farm

Bureau continues to pursue. And as the next

chapters will illustrate, when it comes to arguing

its point of view, the Farm Bureau doesn’t neces-

sarily rely on truth or scientiﬁc validity.

A M B E R W A V E S O F G A I N

C H A P T E R S E V E N

Spinning the Global Warming Issue

“Our own president and vice president are

embarrassed and ashamed by our warlike her-

itage and our unabashed economic success.

Hence they seek every opportunity to give up

our national sovereignty to world bureaucratic

bodies like the United Nations . . . [giving

them authority] to scold and punish us for our

faults and then redistribute our wealth to the

sick, lame and lazy nations who have suffered

so from our overachievement.”

— Jake Cummins, Montana Farm

Bureau executive vice president, writing

about treaties on climate change.

he anti-environmental campaigns pursued by

the Farm Bureau may be all about business,

but often the rhetoric used takes on an emo-

tional tone. Farm Bureau speeches and literature

on these issues seem designed to inﬂame. The

information provided is sometimes misleading or

downright false. Consider the issue of global cli-

mate change.

At its 1999 convention, AFBF gave members

a videotape titled, “Kyoto in Perspective: A

Flawed Treaty Impacts America.” The title refers

to the Kyoto Protocol, a treaty negotiated in

December, 1997, that commits nations to reduc-

ing emissions that contribute to global warming.

The United States has not signed the Kyoto

Protocol, and AFBF has bragged about its inﬂu-

ence in preventing ratiﬁcation by the Senate.

In the video, Senator Chuck Hagel (R-

Nebraska) warns that “devastating economic con-

sequences to agriculture families would ensue” if

the United States signs the treaty. Even more

frightening, Hagel says, the Kyoto Protocol

would give “United Nations bureaucrats the abil-

ity to go into Nebraska and close down a farm or

a ranch” because “that farmer’s soil might not

comply with the Kyoto treaty. He might have

too much nitrogen in the soil. This is real,”

Hagel says on the tape. “This is in the protocol.”

In reality, this is not in the protocol. The

protocol gives the United Nations no such

power. Nothing in the treaty suggests that any-

one could shut down an individual farm against

an owner’s will. Senator Hagel’s interpretation “is

absolutely incorrect,” says Robert Watson, who

A M B E R W A V E S O F G A I N

chairs the Intergovernmental Panel on Climate

Change. To begin with, Watson says, the treaty

makes it clear that all decisions regarding green-

house gas reductions are entirely up to individual

nations. If the United States ratiﬁed the protocol,

“no one could tell the U.S. how to meet its

reduction targets,” Watson said in an interview.

If the United States does ratify the treaty, the

nation must reduce emissions of carbon dioxide

and other greenhouse gases by seven percent by

the year 2012. Most greenhouse gases come from

burning fossil fuels, and analyses published by

Consumers Union and others show that simply

improving gas mileage in automobiles could go a

long way toward meeting the target. Other

conservation and efﬁciency improvements also

would help, and several economists have argued

that taking these steps actually would make the

United States more competitive in the world

market by reducing the amount of energy need-

ed to produce goods and services.

The Farm Bureau videotape fails to address

any of these arguments, which is not surprising

considering that the tape was produced by the

Global Climate Information Project, an industry

alliance consisting of auto makers, oil companies

and others. The tape, of course, does not reveal

who is behind this Information Project.

As mentioned earlier, the Farm Bureau and

these same industries have worked hard to roll

back requirements for better gas mileage in cars.

Improved mileage would save consumers, includ-

ing farmers, a lot of money and might also help

reduce global warming. But fuel efﬁciency in

American cars has been dropping since this

industry coalition went to work.

Instead of contributing to potential solutions,

the Farm Bureau seems intent on scaring farmers

into believing that efforts to reduce global warm-

ing will mean that energy prices will rise so high

that they will be unable to run their machinery.

A 1997 analysis by AFBF economists predicted

that the climate treaty would cause at least a 24

percent loss in net farm income. According to

that analysis, “net proﬁts for corn growers could

be slashed by 23 to 51 percent. . . . Net proﬁts

for hog producers could be reduced 40-85 per-

cent. . . . Smaller farmers and younger farmers

. . . would ﬁnd their farms unproﬁtable and

abandon agriculture.” Farm Bureau leaders were

still quoting this study in 1999 — without paus-

ing to note that the predicted proﬁt losses have

already taken place, not because of higher energy

prices, but because of monopolistic trends in

agribusiness.

The Farm Bu reau insists that evidence of

global warming is lacking and that no scientiﬁc

consensus exists about the process. “If you look at

some of the scientiﬁc data, there’s nothing that

really proves that dramatic climate changes have

taken place,” Louisiana Farm Bu reau pre s i d e n t

and AFBF board member Ronnie Anderson said

during the 1999 convention. On the videotape

distributed there, Re p re s e n t a t i v e Jo Ann Em e r s o n

( R - Missouri) implies that re p o rts of scientiﬁc

consensus are bogus. “People heard we ‘ve got

2,600 quote-unquote scientists who say global

warming is a problem,” Emerson tells viewe r s .

“ B ut if you look at who’s who, you ﬁnd just a few

geologists, a physician, an OB-GYN! Ps yc h o l o g i s t s .

Two climatologists. They don’t know any more

about global warming than I do.”

A M B E R W A V E S O F G A I N

“That’s absurd,” says Robert Watson, chair-

man of the Intergovernmental Panel on Climate

Change and a former NASA atmospheric

chemist. “Our working groups are made up of

the best scientists in the world in their ﬁelds.”

Indeed, the lists of climate scientists who have

contributed to or reviewed the panel’s studies

comprise many pages of names from the world’s

most prominent institutions. Agriculture special-

ists, economists and scientists from other disci-

plines are also on the panel, Watson says, because

the panel is looking at the potential conse-

quences of global warming as well as atmospheric

processes. “But I can assure you that none of

them are psychologists or OB-GYNs,” he says.

At a 1998 House subcommittee hearing, a

group of scientists told Representative Emerson

she was mistaken and was mixing up two differ-

ent groups. In one case, a public-interest group

had recruited 2,600 people from all walks of life

to sign a petition expressing their concerns about

global warming. The climate change panel, on

the other hand, consists of 2,500 scientists. In

1995 this panel stated unequivocally that because

of continued greenhouse gas emissions, the Earth

had entered a period of climatic instability likely

to cause “widespread economic, social and envi-

ronmental dislocation over the next century.”

Even so, the Farm Bureau has continued to dis-

tribute the misleading video. And all the while,

evidence of climate change continues to build:

• On January 11, 1999, while Senator Hagel

was telling the AFBF convention that the Kyoto

Protocol “threatens the liberties of individual

Americans and U.S. industry,” the National

Aeronautics and Space Administration (NASA)

and the National Oceanic and Atmospheric

Administration (NOAA) were releasing reports

showing that the 1990s were the hottest decade

ever, 1998 was the hottest year and the pace of

warming has accelerated. Higher temperatures

pose a variety of threats to agriculture, including

increases in insect and plant pests and harmful

shifts in rainfall.

• On January 28, 1999, the American

Geophysical Union issued a policy statement say-

ing that there is a “compelling basis for legiti-

mate public concern” about human-induced cli-

matic change and that scientiﬁc uncertainty

“does not justify inaction” in coping with it. The

union is this nation’s most broadly based profes-

sional organization representing earth and space

scientists.

• On March 2, 1999, the New York Times

reported that “separate studies using different

methods in the last three years have found that

as the Earth’s atmosphere warms, spring warmth

is arriving earlier and autumn coolness is coming

later in the Northern Hemisphere.”

• On March 5, the New York Times reported

that highly sophisticated NASA aerial surveys

had found that “the southern half of the

Greenland ice sheet, the second largest expanse

of land-bound ice on earth after Antarctica, has

shrunk substantially in the last ﬁve years.”

• On March 15, the journal Geophysical

Research Letters published results of a University

of Massachusetts and University of Arizona study

ﬁnding that the Northern Hemisphere was

warmer in the 20th century than in any other

century of the last thousand years. The study

concluded that man-made greenhouse gases were

A M B E R W A V E S O F G A I N

primarily responsible. If estimates that the Earth

will warm by 3.5 degrees Celsius during the 21st

Century are correct, the Earth will become

warmer than it has been for millions of years.

THE FORECAST FOR FARMERS

“Even if it is proved that global warming

will occur, who’s to say such a phenomenon

would be detrimental? There are those who

argue that global warming could beneﬁt —

not harm — the environment.”

— C. David Kelly, assistant director of

news services, AFBF.

In its 1995 report, the Intergovernmental

Panel on Climate Change detailed what is likely

to happen as the planet warms. Intensiﬁed

storms, widespread ﬂooding and crop-destroying

droughts were listed. Texas farmers have some

experience with all of those, and whether recent

conditions are related to global warming or not,

the bad weather seems to be getting worse. In

February, 1999, Texas A&M economists reported

that Texas farmers and ranchers lost $2.4 billion

in income because of a 1998 drought. Farm-

dependent businesses in small rural towns lost

another $8 billion. If global warming adds to

these drought problems, it does not bode well for

Texas agriculture.

Scientists in Colorado also have found that

warmer nighttime temperatures are already

killing off grasses that ranchers depend on to

feed their cattle during dry summer months. As

Farm Bureau delegates were gathering for the

1999 convention, the highly respected journal

Science published a study by Colorado State

University ecologist Richard Alward showing

that exotic plants and noxious weeds are taking

over where blue grama grass used to ﬂourish.

Blue grama thrives during hot summers and is

tolerant of drought but needs cool night temper-

atures to survive. It can get cattle through times

when no other nutritious grasses survive.

The Farm Bureau obviously has chosen to

ignore these studies and other credible scientiﬁc

evidence of the threat that climate changes pose

for farmers. Instead, Farm Bureau rhetoric on

global warming appears to be driven by the orga-

nization’s own ﬁnancial interests. As the next

chapter will show, the same pattern is repeated

on issues related to human health.

A M B E R W A V E S O F G A I N

“Tell your members of Congress that they

must regulate the regulators. Bureaucratic

handiwork takes $20 billion a year straight off

of our net farm income.... This law gives the

EPA virtual free rein to pursue their anti-

chemical agenda.”

— Dean Kleckner,

former AFBF president.

he Food Quality Protection Act of 1996

re q u i r es EPA to re e valuate all pesticides and

herbicides used on food to establish a “re a s o n-

able certainty of no harm.” EPA must pay special

attention to the effects of these toxic chemicals on

c h i l d r en and consider all sources of exposure ,

including drinking water and household bug

sprays. Although AFBF supported the legislation,

subsequent implementation has inspired Fa r m

Bu reau leaders to make wild predictions about

the end of agriculture as we know it. “As a farmer

and a father, I’m outraged! And, you should be,

too!” writes Arkansas Farm Bu reau pre s i d e n t

A n d r ew Whisenhunt on the bureau we b s i t e .

“The EPA intends to ban hundreds, maybe thou-

sands, of the most widely used, most successful

pesticides we have and in the process ban food

safety and abundance. Americans young and old

may not get the nutrition we need to stay healthy.

The EPA will be banning the affordability and

a vailability of wholesome food!”

In reality, EPA is considering whether about

40 organophosphates should be restricted or

taken off the market. Organophosphates are neu-

rotoxins developed originally during World War

II as nerve gas agents for chemical warfare. They

work by paralyzing muscles, and they can kill

humans and other species in exactly the same

way they kill bugs. Organophosphates are widely

used as roach and termite killers, and since they

are also used on such crops as cotton, soybeans,

potatoes, corn, carrots, rice, bananas and other

fruit, human exposure is a concern.

EPA has accelerated its review of new, less

toxic alternatives to organophosphates, and sev-

eral are already on the market. But development

of these new pesticides has not stopped the Farm

Bureau’s vitriolic rhetoric. “EPA is moving quick-

ly and not so secretly to eliminate many of our

C H A P T E R E I G H T

Putting Pest Control

Before Human Health

A M B E R W A V E S O F G A I N

most important crop protection tools,” Kleckner

wrote in a 1998 column. “Organophosphates are

in the agency’s sights now. If the agency contin-

ues on the course it has set, farmers will see their

control costs skyrocket, product quality deterio-

rate and crop volumes decline.”

On the Arkansas Farm Bu reau we b s i t e ,

Whisenhunt goes furt h e r, putting the scare into

farmers by telling them that the Food Qu a l i t y

Protection Act “is being wielded carelessly by the

E P A in a way that will not just put American

farmers out of business, it will endanger the safety

of fruits and vegetables.... T h e r e are serious ques-

tions about the ‘s c i e n c e’ the EPA has used to deter-

mine that these pesticides are unsafe. It’s not allow-

ing input from outside scientists (‘p e e r - re v i ew’ )

that ensures its ‘d a t a’ is [sic] valid. Ove rzealous and

c a r eless banning of the most widely used, safe pes-

ticides will cause a major disruption of agricultural

p r oduction and weaken our nation.”

Again, as with global warming, the Farm

Bureau pitch distorts the facts. To begin with,

says EPA’s senior pesticide science adviser Penny

Fenner-Crisp, most of the studies EPA relies on

were provided by pesticide companies. The eval-

uation process is subject to extensive outside peer

review. University, government and chemical

industry scientists sit on an independent science

advisory panel that checks EPA’s work. Another

52-member panel representing everyone from

environmentalists to the Farm Bureau advises

EPA on every step. Former AFBF president

Kleckner even sat on that panel. “We have been

bending over backwards to involve all of the

interested parties as we go through this process,”

says Fenner-Crisp. “We’ve been cranking out

new chemicals at a fairly brisk pace. What else

would they have us do?”

If anything, says World Re s o u rces In s t i t u t e

epidemiologist Devra Davis, EPA is giving chemi-

cal companies too much of a break at the expense

of protecting childre n’s health. Davis objects to

E PA’s practice of keeping pesticide industry stud-

ies secret. Outside scientists are allowed to see

only summaries. And Davis raises an even more

disturbing concern: EPA has been accepting

i n d u s t ry studies of pesticides tested directly and

deliberately on human beings.

HUMAN GUINEA PIGS

When Dow Agrosciences wanted to ﬁnd out

how much of the organophosphate chlorpyrifos

humans could tolerate before suffering serious

nerve damage, the company asked for employee

volunteers to consume measured doses of this

highly toxic chemical. EPA considered the results

of the experiment in setting “safe” limits for

chlorpyrifos exposure.

Although questions have been raised about the

ethics of using human test subjects, a coalition of

farm, food, pest management and manufacturing

g r oups has encouraged chemical companies to test

their wares on humans more often. The coalition,

called the Implementation Wo rking Gro u p , says it

“joined together to address and respond to the

re q u i rements of the Food Quality Protection Ac t . ”

AFBF is a member of the gro u p.

In 1998 this group took the position that

pesticide makers “will ﬁnd it increasingly unde-

sirable” to rely on animal testing “since this cus-

tomarily requires the application of a tenfold

uncertainty factor to account for interspecies

A M B E R W A V E S O F G A I N

variations.... For this reason, there probably will

be an increased reliance by registrants on data

from human studies on acute or short-term toxi-

city of organophosphates that could avoid the

need for that tenfold uncertainty factor.”

In other words, EPA might allow higher pesti-

cide levels in food and water if testing is done on

humans rather than mice. Of course, feeding pesti-

cides to healthy adult males says nothing about the

effects these chemicals might have on children or

p r egnant women. Nor does it shed light on the

effects of long-term, low-dose exposures. Ne ve rt h e-

less, says Ken Cook of the En v i r onmental Wo rk i n g

Gro u p, “pesticide companies have a huge ﬁn a n c i a l

i n c e n t i v e to test people instead of other animals.

They know that U.S. regulations on pesticides are

ﬁnally being tightened. Human tests enable chemi-

cal companies to eliminate safety factors that have

long been applied when nonhuman animals are

used for testing.”

E PA is only now beginning to grapple with

the issue. An announcement of a task force meet-

ing late in 1998 said “the Agency is part i c u l a r l y

i n t e r ested in exploring the issues raised when pri-

vate companies choose to test pesticides in

humans, and submit the results of such re s e a rc h

to EPA. Because EPA neither encourages nor

re q u i r es re s e a rch on pesticide effects in humans it

has not set standards for such studies. A central

issue is how the Agency should assess the scientif-

ic and ethical acceptability of these studies when

they are submitted for its consideration.”

Whatever EPA decides with regard to human

testing, former AFBF president Kleckner said

Farm Bureau lawyers stand ready to ﬁle lawsuits

if Farm Bureau leaders do not like the outcome

of the pesticide reviews. AFBF is also asking leg-

islators to impose a moratorium on EPA regula-

tions and cut the agency’s budget.

Although it may be a coincidence, at least one

Farm Bu reau-linked company manufactures sev-

eral organophosphates. Nova rtis (the multination-

al corporation now in partnership with a Fa r m

Bu re a u - a f ﬁliated cooperative) makes organophos-

phates such as profenofos, a chemical on EPA’s

initial hit list. EPA put profenofos on the list

because the compound is considered one of the

most hazardous insecticides on the market. “We

decided to re e valuate the worst pesticides, the

most dangerous ones ﬁrst,” says Fe n n e r - Cr i s p.

“T h a t’s why we’re looking at organophosphates.”

The Farm Bureau maintains that dangers

from pesticide residues have never been proved,

even for the chemicals EPA considers the greatest

threat to children’s health. “Farm Bureau is

absolutely in favor of protecting children from

the higher risks of pesticides if and when they do

exist — that’s a no-brainer,” says Dennis Stolte,

AFBF deputy director of government relations.

“We think EPA right now is overreaching in

applying the full tenfold margin of safety for

children before we have data to show there are

actual health risks there.... Most food experts

would agree that the health risks from food pesti-

cide residues, if not nonexistent, are certainly

very, very small.”

Pediatrician Philip J. Landrigan of Mount

Sinai Medical Center in New York takes issue

with that conclusion. Landrigan chaired a panel

of the National Academy of Sciences that con-

cluded in 1993 that EPA regulations systemati-

cally underestimated children’s risk from pesti-

A M B E R W A V E S O F G A I N

cides. The academy’s study and similar research

led to passage of the Food Quality Protection

Act, which requires EPA to err on the side of

caution to protect infants and children.

Ac c o rding to Consumers Union, the re s e a rc h

and advocacy group that publishes C o n s u m e r

Re p o rts magazine, two out of eve ry ﬁve toddlers

who eat an American-grown peach are getting too

much of the organophosphate methyl parathion.

A Consumers Union analysis of government data

found that apples, grapes, green beans, peaches,

pears, spinach and winter squash all have unac-

ceptably high levels of pesticide re s i d u e s .

Consumers Union stresses that these residue lev-

els are not acutely toxic. They are not poisonous

in the sense that a child could be sickened fro m

one meal. But over time, if young children eat

food with residues at these levels, it could raise

the risk of cancer and other health pro b l e m s .

The Farm Bureau argues that restrictions on

pesticides will lead to a scarcity of wholesome,

affordable food. But according to Consumers

Union policy analyst Jeannine Kenney, “Many

safer pest-control alternatives exist.” Parents

should be able to feed their children nutritious

fruit and vegetables without exposing them to

potentially unsafe levels of harmful pesticides.

“Phasing out a small fraction of high-risk insecti-

cide uses would substantially reduce children’s

risk while maintaining a productive, sustainable

agriculture,” says Kenney.

Because of consumer demand for safer pro-

duce, organic farming has emerged as an impor-

tant segment of American agriculture. Small

farmers, especially, have discovered that they can

increase per-acre proﬁts dramatically by growing

higher-priced organic food. Yet the Farm Bureau

has done little to foster such development. And

in Iowa, some organic farmers are accusing the

Farm Bureau of making it difﬁcult to keep

organic farms chemical-free.

DRIFTING POISON

“I cannot imagine why the Iowa Farm

Bureau wants to protect farmers and applica-

tors who violate the law. The Farm Bureau

talks about how they want to be good neigh-

bors. If that’s true, I can’t understand why they

are so upset about raising penalties for farmers

who allow pesticides to drift onto their neigh-

bors’ property.”

— Dennis Fett, Iowa organic farmer.

Nearly two decades have passed since

Dennis Fett began raising organic ve g e t a b l e s

and peacocks on his Minden, Iowa, farm. In

that time, he has never used herbicides or insec-

ticides, but Iowa Pesticide Bu reau inve s t i g a t o r s

in 1998 found significant levels of chemicals on

his land, including atrazine and the highly tox i c

herbicides acetochlor and 2,4-D, a major com-

ponent of Agent Orange.

Fett has ﬁled complaints with the state year

after year alleging that pesticide applicators

spraying neighboring farms allow the chemicals

to drift onto his property. A nationally recog-

nized peafowl breeder, Fett blames the death of

one of his prize peacocks on the chemicals.

Other Iowa farmers have blamed pesticide drift

for killing animals and contaminating organic

crops. In 1998, the Iowa Pesticide Bureau

received 146 such complaints. Fett believes

penalties for this offense are too low to motivate

applicators to be more careful.

For the last six years, Fett has campaigned for

a tougher law that would raise ﬁnes from the

current $500 maximum to $1,500. Other mid-

western states impose ﬁnes of as much as $7,500

per offense, but a bill to raise penalties died in a

subcommittee after the Iowa Farm Bureau raised

objections. Says Fett, “We’ll push for the bill

again next year, but I honestly don’t think it will

go through. The Farm Bureau holds way too

much power here.”

Farm Bureau leaders contend that organically

grown foods are no more healthful than the

chemically assisted kind. They are ready to chal-

lenge anyone who says pesticide residues in food

cause harm. In more than a dozen states, farm

bureaus have helped to win passage of anti-dis-

paragement laws making it illegal to report that

chemical residues or other contaminants in food

are harmful unless those claims can be proved

scientiﬁcally.

VEGGIE LIBEL

“You might remember the Alar debacle.

The same kind of junk science that sent moth-

ers scurrying to dump apple juice and snatch

apples out of lunch bags is again staring us in

the face.”

— Dean Kleckner,

former AFBF president.

Equating Alar with junk science is one of the

most enduring myths of environmental debate.

The Farm Bureau, along with a coalition of well-

heeled industrial associations, has helped con-

vince journalists and the public that the Alar

scare was a hoax — that the chemical never

posed any health risks and that apple farmers lost

a great deal of money as the result of public hys-

teria over a nonexistent threat.

The Farm Bureau is wrong on all counts.

Alar was taken off the market in 1989 because

credible peer-reviewed scientiﬁc studies found

that the chemical posed an unacceptable cancer

risk, especially to young children. The American

Academy of Pediatrics had urged EPA to ban

Alar in 1986. Since then, EPA’s independent sci-

ence advisory board has reviewed the evidence

on Alar three times and each time has reached

the same conclusion: Alar residues pose a signiﬁ-

cant health risk and the chemical should not be

used. The World Health Organization’s

International Agency for Research on Cancer

and the National Toxicology Program of the U.S.

Public Health Service both conﬁrmed Alar’s car-

cinogenicity. Further evidence about Alar’s dan-

gers can be found in numerous studies published

in respected peer-reviewed scientiﬁc journals

with exacting standards. To call this work “junk”

debases the very notion of sound science that the

Farm Bureau claims to cherish.

The Farm Bureau also exaggerates the impact

that the Alar controversy had on growers. Alar

was never critically important for producing

healthy apples. It was used to make orchards

ripen on schedule. After a 1989 CBS “60

Minutes” broadcast raised questions about EPA’s

delay in taking action on Alar, Washington apple

growers claimed to have lost $100 million in

A M B E R W A V E S O F G A I N

sales and sued CBS for damages. The Farm

Bureau says “the real loss was close to $450 mil-

lion.” But according to the Department of

Agriculture, apple sales only stumbled momen-

tarily and were back to normal within four

months. A federal court dismissed the growers’

lawsuit, ﬁnding that the “60 Minutes” broadcast

had been substantially correct. In 1996 the U.S.

Supreme Court upheld that ruling.

Why the Farm Bureau has chosen to ignore

these facts remains unclear, but the organization

has taken advantage of the misunderstandings

about Alar to help silence critics who raise con-

cerns about pesticides or food-borne illness. In

every state where farm bureaus have lobbied for

so-called “veggie libel” laws, the organization

consistently raises the specter of Alar and “junk

science.” The tactic has been successful. Farm

bureaus have persuaded legislatures in 13 states

to approve such laws.

Most of these laws remain untested. In one

well-publicized case, cattle growers sued televi-

sion personality Oprah Winfrey under the Texas

veggie libel law, but the court ruled that the law

did not apply to Winfrey’s reports on mad-cow

disease. A jury found in Winfrey’s favor on other

counts. Regardless of that outcome, current post-

ings on the Montana Farm Bureau’s website refer

to the Winfrey case as proof of “why anti-dispar-

agement laws are necessary to protect agricultural

products.”

AFBF has even tried to get the federal gov-

ernment involved in squelching reports of food-

related risks. It has urged the Department of

Agriculture to investigate “unsubstantiated”

media reports and to help producers challenge

them. This position seems ironic for an organiza-

tion that is usually so vocal in criticizing the

intrusiveness of the federal government. Even the

trade magazine Feedstuffs considers it a bad idea.

In an editorial titled, “Absolving Farmers Worst

Step in Food Safety,” Feedstuffs says, “Although

the AFBF means well, such an arrangement

would compromise the USDA’s role as interme-

diary between producers and consumers.”

The New Mexico Farm and Livestock Bureau

would simply cut off all information about

which pesticides are used on which crops, or

which microorganisms are found in whose pro-

cessing plants, or how much manure has run

into which streams, by exempting all agricultural

activities from right-to-know laws. The New

Mexico Farm and Livestock Bureau approved a

resolution calling for such an exemption at its

1998 state convention.

At that same convention, New Mexico dele-

gates adopted a resolution opposing ﬁeld reentry

regulations that the Farm Bureau considers

“unreasonable.” Those rules prohibit growers

from sending workers back into ﬁelds immedi-

ately after they are sprayed. They are based on

manufacturer estimates of how long insecticides

and herbicides remain acutely toxic. The resolu-

tion is just one example of Farm Bureau resis-

tance to even minimal protections for farm

workers.

A M B E R W A V E S O F G A I N

FARM WORKERS AT RISK

“The new regs weren’t anything major that

would be a substantial disruption or expense to

employers, but you should have heard the

screaming and howling. You would have

thought somebody had burned their barns and

run off their stock.”

— David Hall,

Texas Rural Legal Aid attorney.

In the early 1980s, when the Texas

Agriculture Department adopted regulations to

prevent growers from spraying pesticides while

farm workers were in the ﬁelds, the Texas Farm

Bureau nearly succeeded in getting the state leg-

islature to revoke those rules. “The Farm Bureau

acted as though an asteroid had struck Texas,”

says Jim Hightower, then state agriculture com-

missioner. “To hear them talk, you’d think that

this was the end of civilization as we knew it,” he

reﬂected during a recent interview.

Hightower’s agriculture initiatives, including

his efforts to protect workers, so angered the

Texas Farm Bureau that it tried to persuade the

legislature to convert Hightower’s job from an

elective to an appointive position. Bureau

spokesman Gene Hall acknowledges that the

bureau wanted to get rid of Hightower, no mat-

ter how. “I wouldn’t agree that it was an unde-

mocratic move,” Hall said in an interview. “It

was part of a strategy to change the leadership of

the Texas Department of Agriculture.” The bill

failed by one vote.

AFBF lobbyist Dennis Stolte maintains that

the Farm Bureau certainly does not approve of

spraying pesticides on workers. “That’s a totally

indefensible practice,” he says. “Farm Bureau

supports the strongest possible penalties for pro-

ducers who openly violate the law.” But he says

he is not convinced that pesticide exposure has

seriously harmed farm workers. “From the work-

er safety data that I’ve seen, it’s very unclear

whether we can document any deaths from pesti-

cide use,” he said in an interview.

The case of Zacarias Ruiz is well documented

in the medical literature, however. Ruiz was a

Texas ﬁeld hand in the early 1980s when he died

a few hours after exposure to the extremely toxic

herbicide Dinoseb. Although it had been well

established that Dinoseb can be absorbed

through the skin, Ruiz was given no gloves or

protective clothing when he was told to treat a

ﬁeld using a backpack and hand-held sprayer.

His death helped prompt the Texas Agriculture

Department’s new pesticide regulations. In

another case, Ciba Corp. took one of its

organophosphates off the market “after several

farmers using the products were reported to have

died or been hospitalized due to accidental poi-

soning,” according to a 1995 report in European

Chemical News. (One year later Ciba merged

with Sandoz to create Novartis. As mentioned

earlier, Novartis and the Farm Bureau’s

Growmark and Countrymark cooperatives have

since formed partnerships to sell pesticides, seeds

and other products to co-ops.)

Pesticide safety rules are not the only farm

worker protections the Farm Bureau has

opposed. A posting on the Farm Bureau web site

boasts that last year “Farm Bureau worked to

decrease the regulatory burden on thousands of

A M B E R W A V E S O F G A I N

farm employers, due to the Migrant and Seasonal

Worker Protection Act, the Fair Labor Standards

Act, the Worker Protection Standard, the

Occupational Safety and Health Act, as well as

numerous state and local laws.”

In his 1992 book The Corporate Reapers,

agribusiness historian A.V. Krebs details the

Farm Bureau’s extensive record of anti-farm-labor

activity. According to Krebs, the Farm Bureau

played “a major role in excluding agriculture and

farm labor from the provisions of the 1937

National Labor Relations Act.” The signiﬁcance

of that action is critical to understanding the

Farm Bureau’s attitude toward family farmers,

the people AFBF leaders routinely laud as the

backbone of America. In 1937 many of the

nation’s farm workers had quite recently been

family farmers themselves.

The year 1937 marked the height of the

Dust Bowl, a 14-year drought that culminated in

dust storms that destroyed crops and pastureland

throughout the Great Plains. By then, many

thousands of family farmers in Oklahoma, Texas,

Kansas, Colorado and New Mexico had lost their

farms. Because their skills were primarily in

farming, many became farm workers. The Farm

Bureau opposed nearly all measures that would

have given these new farm workers legal protec-

tions, higher wages and better working condi-

tions. By doing so, the Farm Bureau helped to

ensure that these former farming families would

remain in poverty.

Today, the Farm Bureau continues to ﬁght

against farm worker beneﬁts. The organization

has worked against including farm workers under

Social Security and unemployment insurance

and has tried to block minimum wage laws and

workers’ compensation insurance coverage. For

example:

• For years the Farm Bureau successfully

blocked Idaho legislation to require workers’

compensation insurance for farm labor.

According to the Idaho Statesman, Idaho Farm

Bureau president Tom Geary argued that the

insurance was “a socialistic and Communistic

system.” After turning down farm worker cover-

age eight times, the Idaho legislature ﬁnally

adopted the requirement in 1996. That was after

farm worker Javier Tellez Juarez lost both arms

and a leg when his clothing caught in a power

post-hole digger. The burden of his medical costs

went to taxpayers. Now, Idaho Farm Bureau

Mutual Insurance sells workers’ compensation

insurance itself through its subsidiary, Western

Community Insurance Company.

• In Ohio, the Farm Bu reau worked to

retain an exemption from the National Labor

Relations Act for large corporate farms. As a

result of this exemption, workers on egg farms

with millions of laying hens have no pro t e c t i o n

f rom ﬁring or harassment by their bosses if they

t ry to organize labor unions. The exemption has

w o rked to the beneﬁt of companies such as

Bu c k e ye Egg, one of the nation’s largest pro d u c-

ers, with annual sales of $100 million. In 1998,

Bu c k e ye agreed to a $425,000 settlement with

the U.S. Occupational Safety and He a l t h

Administration over substandard working condi-

tions and migrant housing. Neighbors are n’t

happy with Bu c k e ye, either. T h e y’ve complained

about enormous swarms of ﬂies and about

m a n u re pro b l e m s .

A M B E R W A V E S O F G A I N

• The Texas Farm Bu reau opposed legislation

in the 1980s to ban the short-handled hoe.

Growers prefer that workers use this tool

because it enables them to be more precise in

chopping weeds. Un f o rt u n a t e l y, the stooped

position re q u i red to use this hoe can lead to

serious back trouble. In 1999, the New Me x i c o

Farm and Livestock Bu reau successfully opposed

l e g i s l a t i ve efforts to ban the short-handled hoe.

The tool was already off limits under state re g u-

lations, but bill sponsors wanted to add the

f o rce of law by speciﬁcally making the practice

i l l e g a l .

CHILD LABOR

“The child labor provisions of the Fair

Labor Standards Act are outmoded and should

be modernized. Young people 10 to 12 years of

age should be able, with parental consent, to do

certain kinds of safe work on farms during

non-school hours and those aged 12 to 13

should be allowed more latitude in working on

farms with parental consent.”

— AFBF 1999 policy manual.

Family farms are already exempt from the

child-labor provisions of the Fair Labor

Standards Act; work restrictions do not apply to

the children of farmers. The child labor restric-

tions the Farm Bureau wants to change apply to

hired help. Under the Farm Bureau proposal, 12-

year-olds could be employed full time on farms

as long as parents approve.

In the Rio Grande Valley of south Texas,

where big fruit and vegetable growers dominate

agriculture, the U.S. Department of Labor is

called in every now and then to investigate

employment of children. “And sure enough, they

ﬁnd six-, seven- and eight-year-olds working

with mommy and daddy,” Texas Rural Legal Aid

attorney David Hall says.

Hall and other legal-aid attorneys who have

called attention to the number of children work-

ing on farms instead of attending school have

landed on the Farm Bu re a u’s enemies list. Both

AFBF and the Texas Farm Bu reau advocate cut-

ting back or eliminating the Legal Se rvices Corp-

oration, a federal organization that provides legal-

aid attorneys like Hall to assist low-income clients.

“Legal aid lawyers typically have greater re s o u rc e s

to pursue a technical or frivolous claim under laws

g o verning the employment of migrant farm work-

ers,” says the AFBF policy manual.

On labor and a multitude of other issues, the

Farm Bureau has aligned itself with groups on

the far right of the political spectrum. Farm

bureau leaders insist that the organization runs

on principles of fair-mindedness. But the next

chapter will show that the record says otherwise.

A M B E R W A V E S O F G A I N

“We are probably the least selﬁsh occupa-

tional group that there is in America. I don’t

see us taking strong legislative positions where

we set out to be of harm to other parts of our

society. I don’t think we take extreme positions

that hurt other people. We try not to.”

— Dick Newpher, executive director,

AFBF, Washington, D.C., ofﬁce.

“The district attorney should be required to

institute a dependent and neglected action

against any unwed mother ﬁling a second

application for beneﬁts under Aid to Families

with Dependent Children (AFDC). No AFDC

payments should be made beyond the ﬁrst

child.”

— Oklahoma Farm Bureau

1999 policy manual.

“We favor repeal of the Voting Rights Act of

1965, as amended.”

— AFBF 1999 policy manual.

t the 1999 AFBF convention, faces of color

were scarce. A few African-American staff

members were present, but black or

Hispanic voting delegates were notably absent on

the convention ﬂoor, even though the conven-

tion was in New Mexico, a state with a signiﬁ-

cant Hispanic population.

By voice vote without debate, delegates

approved a resolution calling for repeal of the

Voting Rights Act of 1965, the cornerstone of

the nation’s civil rights protection. In an inter-

view during the convention, AFBF’S then presi-

dent Kleckner claimed to know nothing of that

policy plank even though Voting Rights Act

repeal has been part of AFBF policies for years.

“I’ve heard of the Voting Rights Act, but I don’t

know that we have a position on it, either for or

against it,” he said. At a news conference later, he

said he could not explain why AFBF was

opposed to the act or how repeal might beneﬁt

agriculture. “I’m guessing it didn’t get any discus-

sion at all,” he said. “It usually doesn’t, and I

can’t answer the question of why we have it in

C H A P T E R N I N E

Aligning With the Extreme Right

A M B E R W A V E S O F G A I N

there, but it probably came from a state farm

bureau some years ago, and it has been in there

ever since.”

Herman Cain, president of the National

Restaurant Association and the only African-

American to address the full convention, said he

had been unaware of AFBF advocacy of repeal of

the Voting Rights Act and would look into the

matter.

In agreeing to a $300 million settlement with

black farmers in 1998, the U. S. Department of

Agriculture acknowledged that discrimination

against minority farmers is longstanding and

widespread. The department agreed to pay dam-

ages to settle a lawsuit brought by thousands of

black farmers who claimed the department had

systematically denied them loans and other ser-

vices available to white farmers.

In a chapter of his book Dollar Harvest titled

“The Right Wing in Overalls,” Samuel Berger

writes about a link in the late 1940s between the

Arkansas Farm Bureau and Pappy O’Daniel’s

Christian American Association, an extreme

right-wing organization known for racist views.

O’Daniel’s group was permitted to send litera-

ture to members of the Arkansas Farm Bureau,

which worked with O’Daniel’s association to

support anti-labor laws. In his book The

Corporate Reapers, A.V. Krebs reports: “When

questioned about its support of such work,

(Arkansas Farm) Bureau President Ed O’Neal

told a congressional committee that it wasn’t

such a bad idea if farmers joined the Ku Klux

Klan since every farmer should join something.”

Farm Bureau association with right-wing

groups continued. Again from Berger: “In 1967,

the New York Times reported that ‘In several

states . . . there is an increasing identity of inter-

est and an apparent overlap in membership

between the Farm Bureau and the Birch

Society.’”

In 1995 the Farm Bureau joined forces with

Rogelio Maduro, a crony of ultra right-wing

conservative Lyndon LaRouche, to try to block

Senate ratiﬁcation of the global biodiversity

treaty. Negotiated in Rio de Janeiro in 1992, the

treaty had widespread support until the Farm

Bureau stepped in to oppose ratiﬁcation. As a

result, the United States remains the only major

nation in the world that has failed to ratify.

For whatever reason, the national and state

farm bureaus have supported an extensive list of

conservative policies, many with no apparent

connection to agriculture or even to Farm

Bureau business afﬁliates. For example:

• In 1983, the North Carolina Farm Bureau

opposed increasing penalties against individuals

who hold workers in involuntary servitude — in

other words, for people who keep slaves. Ten

people had been convicted on slavery charges in

North Carolina during the previous three years.

• The Texas Farm Bureau sought repeal of

the federal minimum wage and wanted the gov-

ernment to cut food stamps for poor families

whose children also get free lunches at school.

• The Oklahoma Farm Bureau has pressured

the state to prevent teachers from discussing “so-

called animal rights.” The group also called for

abolition of the state’s Advisory Commission on

the Status of Women. Oklahoma and other state

farm bureaus and AFBF also oppose the Equal

Rights Amendment.

A M B E R W A V E S O F G A I N

• The Montana Farm Bureau lobbied to

require that schools teach creationism on an

equal basis with evolution. The bureau also

wanted the state to ship convicted criminals to

Mexico and promoted a resolution urging the

United States to withdraw from the United

Nations.

• The Maryland Farm Bureau supported a

bill designating English as the state’s ofﬁcial lan-

guage.

In New Mexico, the Department of Public

Safety withdrew a police training manual after

the Farm Bureau objected to a passage that

included wise-use groups among organizations

that advocate violence. The manual, titled “The

Extremist Right,” was designed to educate ofﬁ-

cers about potential terrorist threats following

the bombing of the Murrah federal building in

Oklahoma City. It pointed out, “Like other west-

ern states, New Mexico has major land use

issues. Wise-use groups, anti-environmentalists

and land grant activists may prove to be the most

volatile and pose the greatest threat to law

enforcement.” The wise-use movement was

deﬁned as “a coalition of ranchers, loggers, min-

ers and others who want federal environmental

regulations repealed and who want more control

of public lands given to local authorities.”

The Department of Public Safety’s concern

was not unfounded. New Mexico is home to one

of the original county-supremacy movements.

Catron County’s government was the ﬁrst to

adopt ordinances aimed at seizing control of fed-

eral land. The ordinances require federal ofﬁcials

to get local approval for any action affecting

grazing and make it a crime for Forest Service

ofﬁcials to enforce federal laws without ﬁrst get-

ting permission from the county sheriff. More

than 45 western counties have followed suit. In

some areas where county-supremacy and wise-

use movements are active, Forest Service employ-

ees have been attacked and federal property has

been damaged.

The county-supremacy movement is heir to

at least parts of the philosophy of the militant

Posse Comitatus, which means “power of the

county.” That movement, launched in the late

1960s, proclaimed county government as the

highest authority in the land. According to the

police training manual, Posse Comitatus took

advantage of the farm crisis of the 1970s and

1980s to win recruits among bankrupt farmers.

The organization advocated violent resistance to

the government. In 1983, according to the man-

ual, Posse leaders were involved in shootouts in

which several federal marshals were killed or

injured and a local sheriff was killed.

Wise-use groups are supporters of today’s

county-supremacy movement, and some have

been associated with militant militia movements.

Yet the New Mexico Farm and Livestock Bureau

said it was outraged by the police training manu-

al’s reference to that movement and used its

inﬂuence with the governor and state lawmakers

to put pressure on the state police. The New

Mexico farm bureau did not let up until the

Department of Public Safety agreed to withdraw

the manual and recall all copies. By defending its

wise-use friends, the farm bureau may have

deprived law-enforcement agencies of important

information about potential terrorist activities.

According to police, two recent attacks on

the ofﬁces of environmentalists in Santa Fe, New

Mexico, may have been linked to one of the mil-

itant organizations described in the training

manual. On March 19, 1999, a potentially dead-

ly pipe bomb was discovered in the mailbox of

Forest Guardians, a group advocating protection

of wildlife and public lands. The bomb failed to

go off and later was detonated by a Santa Fe

police bomb squad. Police say the ball-bearing-

ﬁlled pipe bomb was powerful enough to kill or

seriously injure anyone nearby.

The next day, a drawing was mailed to Forest

Guardians showing the name of the organization

centered beneath the cross-hairs of a riﬂe scope.

The drawing was signed with the initials M.M.,

which police believe to stand for the Minute

Men. This shadowy group has claimed credit for

other attacks, including a 1998 nighttime shot-

gun blast that shattered windows at the Santa Fe

ofﬁces of Animal Protection of New Mexico.

Before that attack, Animal Protection received a

letter also signed M.M. warning, “You are

approaching a point where we will hurt you. We

are going to make a concerted effort to kill any

wolf reintroduced into the wild and poison bison

as long as you interfere with wildlife issues.”

Both targeted environmental groups have

supported wolf reintroduction. Forest Guardians

also has ﬁled a number of successful lawsuits

leading to curbs on grazing, logging and water

use on public lands and better protection of

endangered species. There is no evidence that the

Farm Bureau has been involved with any of the

militant anti-environmental groups. But some

observers believe that the bureau’s extreme

rhetoric may encourage attacks. “The Farm

Bureau sows the seeds of violence with its hateful

rhetoric and antagonistic stance on wildlife

issues,” says Forest Guardians president Sam

Hitt. “The Farm Bureau has created a bigoted

and intolerant atmosphere in which acts of vio-

lence thrive.” And nowhere is that attitude more

apparent than on the issue of predator reintro-

duction.

RANCHERS AND WOLVES

“We just don’t want ‘em. We don’t think we

need ‘em. We think our technology today, with

our jet planes and our transportation routes

and all of the things that we’ve developed over

200 years, certainly prohibits the reintroduc-

tion of a specie [sic] that lived in the wildlands

long ago.... It’s my feeling and pretty much the

Farm Bureau’s that there is a place for these

wolves whether it be in a zoo or a wild animal

park, but certainly not out on the public range.

And I don’t think we should sacriﬁce our food

supply of America being beef cattle.”

— Norm Plank, New Mexico Farm and

Livestock Bureau executive vice president.

Despite the many pressing issues in agriculture

and the current economic crisis for family farmers,

the Farm Bu r eau continues to rank opposition to

wolf re i n t roduction as one of its top ten priorities.

Defenders of Wildlife and other groups hoped to

persuade the Farm Bu reau to change its policy on

w o l ves at the 1999 AFBF convention, but dele-

gates there adopted a new resolution calling for

return of the Ye l l owstone wolves to Canada. T h a t

plan was never a viable option, howe ve r . In t e r i o r

A M B E R W A V E S O F G A I N

Se c re t a ry Bruce Babbitt told Congress in 1998

that Canada would not take the wolves back.

Norm Pl a n k ’s suggestion that all the wolves be

placed in captivity would not work, either.

Ac c o rding to Sydney Bu t l e r, exe c u t i v e director of

the American Zoo and Aquarium Association,

zoos and wildlife parks could accommodate only a

f ew of the wolves at most.

Defenders of Wildlife ran newspaper adver-

tisements asserting that removing the more than

200 Yellowstone wolves would be “tantamount

to a death sentence” because there is no place for

the wolves to go. The Farm Bureau disputed this

contention. “Farm Bureau has never advocated

killing any wolves,” said former AFBF president

Dean Kleckner. But Montana Farm Bureau exec-

utive vice president Jake Cummins acknowl-

edged that the wolves probably would be killed if

the Farm Bureau prevailed in its legal challenge.

The government “should round [the wolves] up

right now and ship them back to Canada where

they came from,” Cummins wrote in an essay.

“But they won’t. They’ll avoid obeying the law as

long as they can by stringing out the appeal. The

wolves will keep killing livestock. In the end fed-

eral agents will have to shoot the wolves they

brought in and all their offspring.”

At a news conference during AFBF’s 1999

convention in Albuquerque, New Mexico,

Defenders of Wildlife president Rodger

Schlickeisen accused the Farm Bureau of exagger-

ating the threat wolves pose to ranchers. “They

picked the wolf as a particular target for their

rhetoric, and they have tried to inﬂame the farm-

ing and ranching community well beyond any

reasonable measure of the problems that the wolf

represents,” Schlickeisen told reporters.

AFBF’S former president Kleckner insisted

that wolves and other predators cause ranchers

grave economic harm. Losing even a few calves

can make a huge difference in a rancher’s ability

to survive, Kleckner said. To hear Farm Bureau

ofﬁcials tell it, these predators could destroy the

ranching economy. “Our membership really

wonders why the federal government is spending

millions of dollars putting predators into rural

areas where farm and ranch families are having a

real difﬁcult time hanging on to the family

ranch,” said AFBF lobbyist Jon Doggett.

Although Defenders of Wildlife in the last

decade has paid more than $100,000 to compen-

sate ranchers for livestock losses to wolve s ,

Doggett says ranchers do not believe they can

always prove, or even know for sure, that a calf

has been killed by a wolf. But De f e n d e r s’ nort h-

ern Rockies re p re s e n t a t i ve, Hank Fi s c h e r, says

determining whether livestock has been killed by

w o l v es is not difﬁcult. “Wolf kills are way dow n

on the list of things that harm livestock, way

b e l ow being struck by lightning or hit by auto-

mobiles,” he adds. In fact, wolves killed only

s e v en head of cattle in 1996, according to gove r n-

ment re p o rts. Domestic dogs killed nearly twice

as many cattle as mountain lions, bobcats, bears

and wolves combined. “We are talking about a

small level of predation,” Fischer says, “and if

t h a t ’s enough to tip the livestock industry ove r

the edge, it has a pretty uncertain future anyway.”

Department of Agriculture statistics show

that in 1996, the last year for which ﬁgures are

available, all predators combined killed about

117,000 head of cattle — a small number com-

A M B E R W A V E S O F G A I N

pared to the 417,000 lost to bad weather and

more than 2 million felled by respiratory and

digestive problems. The magnitude of health-

related cattle deaths surprised Farm Bureau lead-

ers. “I’ve never heard that before,” AFBF’s then

president Kleckner said in a radio interview dur-

ing the 1999 convention, “and frankly, I don’t

believe it.”

BRIDGING THE CHASM

“It’s kind of like the old saying that you

take stumbling blocks and make them stepping

stones. We’re the only ranch in New Mexico

that came out in favor of reintroduction of the

Mexican wolf because frankly we see it as more

of an opportunity than a threat. I feel that the

interest the wolf would bring to this area

would far outweigh the dangers of it, and any-

way, we’re used to getting along with coyotes

and mountain lions, so I don’t see that wolves

would be that much of a threat to us.”

— Jim Winder, New Mexico rancher.

Fourth-generation rancher Jim Winder runs

cattle on 100,000 acres of public and private

land in southwestern New Mexico, a region

where reintroduced Mexican wolves are likely to

expand. And that’s just ﬁne with Winder. “You

know, they were here ﬁrst, and they’re part of the

land, part of the ecology,” Winder explained dur-

ing a tour of his ranch. “I think we can adapt.

That’s the whole idea with the wolf. You learn to

live with them.”

That isn’t talk you would expect from a

rancher, but Winder is convinced that his

approach to predators and to land conservation

has made his ranch more proﬁtable than others

around him. Mountain lions and hundreds of

coyotes inhabit the territory. Winder quit killing

predators 15 years ago, and since then, he says,

he has lost only two calves to coyotes. To ﬁgure

out the best ways to deter attacks, Winder stud-

ied bison herding patterns. He uses herd dogs to

keep cattle in larger groups so calves are better

protected. Calving season is timed for spring,

when cougars and coyotes have plenty of natural

prey. And before the calves are born, cattle are

moved away from coyote denning areas.

Winder’s Heritage Ranch is the ﬁrst to win

authentication from Defenders of Wildlife for

predator-friendly practices. He has signed a

memorandum of understanding pledging that no

predators will be killed. In exchange, meat from

the ranch carries an Authentic Wolf Country

Beef label and sells for a premium. But more is

at stake here than a few extra cents per pound

for ground beef. Winder looks at what he is

doing as a chance to help bridge a chasm. “We’re

a very traditional lot, ranchers,” he says. “Years

ago I kind of looked at where we were on our

ranch and saw that every year we were doing

worse ﬁnancially. I saw the environmentalists as a

threat.” But instead of ﬁghting, Winder decided

he would rather try to communicate. Through

that experience, he came to understand that pro-

tecting the ecosystem might help save the ranch.

Restoring wetlands and riparian areas, for

instance, means more water available for live-

stock, a greater abundance of vegetation and less

spent on cattle feed.

Winder now believes this ecological approach

A M B E R W A V E S O F G A I N

to ranching is the only way to survive. “A lot of

ranchers are seeing that now is the time to make

some changes,” he says. “They realize that envi-

ronmentalists are not our enemies.”

During AFBF’s 1999 New Mexico conven-

tion, several hundred Farm Bureau members

attended a country dance and barbecue spon-

sored by Defenders and featuring Winder’s Wolf

Country Beef. Many were skeptical about

prospects for coexistence with wolves. But most

agreed with what North Dakota rancher Bill

Gackle said: “The predators are just a minor

problem compared to the prices that we’re cur-

rently receiving. The predators are in no way

running the farmers off the land, whereas the

prices, the economy, are.”

People are eating less beef these days. A lot of

ranch land has been damaged by overgrazing and

other abuse and cannot sustain as many cattle as

in the past. On top of that, the beef market is

controlled by near-monopolies. Ranchers are in

trouble, says Rocky Mountain Farmers Union

president Dave Carter, but not because of

wolves. “We do have some concerns about the

wolf reintroduction,” he says, “but on the whole

we’re more concerned about the wolves in the

marketplace than the wolves up in Yellowstone.”

The National Farmers Union competes

directly with the Farm Bureau but is smaller and

takes a much different approach to agricultural

and environmental issues. The Farmers Union is

heir to an agrarian populist tradition that began

around the turn of the century as a ﬁght against

usurious banking practices, unscrupulous grain

dealers and market speculators. Back then, in the

1920s, Farm Bureau leaders railed against the

“radicalism” of these populists and pledged to

work against any policies that might help them.

Some of that old enmity still lingers. Rocky

Mountain Farmers Union legislative coordinator

Melissa Elliott says she has been disappointed

that the Farm Bureau has not helped more with

issues that make a real difference in the West.

“The market is deﬁnitely a bigger problem

because every independent producer is affected,

and it’s literally driving people out of business,”

she says. “The wolf isn’t doing that. Unfortun-

ately we’re always on opposite side of the coin

[from the Farm Bureau], and I wish that weren’t

so. We’re all in the same boat. We need to be

rowing in the same direction.”

FREE-TRADE FACADE

“The FB is essentially lying to their produc-

ers about what the real issues are, so they are

fueling the problem rather than helping to

address the problem. . . . The issues of private

property rights, the environment, the wolves in

Yellowstone Park, do not matter if we lose our

farmers and ranchers because of price ﬁxing

and predatory practices by major global corpo-

rations.”

— Mike Callicrate, Cattlemen’s Legal

Foundation.

When Mike Callicrate came to speak in Ft.

Pi e r re, South Dakota, in 1998, more than 2,000

ranchers showed up at the town hall. Callicrate’s

topic was corporate monopolies and international

trade agreements that he says are underc u t t i n g

U.S. cattlemen and forcing many out of business.

A M B E R W A V E S O F G A I N

Callicrate runs the Cattlemen’s Legal Fund, a

rancher group that has taken monopolistic

agribusinesses to court. The Kansas rancher says

he took on the activist role reluctantly but didn’t

see much choice. As huge corporations took ove r

m o re and more of the beef market, independent

ranchers we r e feeling the squeeze, and Callicrate

says the Farm Bu reau failed to offer ranchers any

h e l p . “I think it is sinful what the Farm Bu re a u

has done,” he said in an interv i ew. “To me, it’s

almost a fraud to even call it a farm organization.”

Callicrate’s group has petitioned the U.S.

International Trade Commission for an investiga-

tion into unfair trading practices by both Canada

and Mexico. It also has sought an investigation

of alleged price manipulation by big meat pack-

ers. Callicrate says the Farm Bureau refused assis-

tance in both cases.

New Mexico Farm and Livestock Bureau

executive vice president Norm Plank agrees that

the time has come for the Farm Bureau to take a

hard look at ways to break up agricultural

monopolies. But in an interview he complained,

“We’re limited on how much court time we can

spend. It’s very, very costly. . . . We are limited

on our funding, so we have to pick and choose.”

“You’ve got to be very careful when you start

monkeying with the free-enterprise system,” adds

the New Mexico Farm and Livestock Bureau’s

Erik Ness. “There are some things wrong with it,

and this may be one of them. And we are work-

ing to get the cattle industry more spread out.”

Just as in the hog business, Farm Bureau agri-

cultural cooperatives are closely tied to the

nation’s biggest beef packing corporations. Farm

Bureau afﬁliate Growmark is in business with

ADM, which owns 14 percent of IBP, the

nation’s largest beef packer. ConAgra, the second

largest packer, runs a joint export facility with

ADM. Farmland National Beef, the fourth

largest, is part of Farmland Cooperative, which

has extensive ties to several Farm Bureau-linked

co-ops. Together, these four largest packers con-

trol 79 percent of the nation’s beef supply.

Bill Christisen, president of the National

Family Farm Coalition, echoes Callicrate’s frus-

tration in dealing with the Farm Bureau. The

coalition, which represents 100,000 farming

families in 35 states, often ﬁnds itself on the

opposite side of issues from AFBF. “We’re con-

cerned that the Farm Bureau continues to antag-

onize environmental groups rather than focusing

on the causes of low farm prices,” Christisen told

reporters at a news conference during the 1999

ABFB convention. The coalition has made a

number of proposals to break up corporate agri-

cultural monopolies, Christisen says, but all have

failed. “AFBF leaders lobbied to kill those mea-

sures,” he says. “The truth is, whenever we try to

implement better agricultural policies, our worst

opponent is almost always the AFBF.”

The Farm Bu re a u ’s primary response to the

economic difﬁculties faced by ranchers and farm-

ers can be summarized in the words “f ree trade.”

A g g re s s i v e export strategies are seen as the key.

Ac c o rding to AFBF leaders, increased demand “is

the future of the U.S. cattle and beef industry. ”

The Farm Bu r eau has become such a stro n g

b e l i e v er in free trade that in Ja n u a ry, 1999, AFBF

took the unprecedented step of calling for normal-

i z ed trade relations with Cuba. The Texas Fa r m

Bu reau followed up in Se p t e m b e r, 1999, by send-

A M B E R W A V E S O F G A I N

ing a trade mission to Cuba. “If full trade could

be developed quickly, or allowed with Cuba, it

could be a billion dollars in sales ve ry quickly with

another billion in sales down the road in a few

m o r e years,” said AFBF president Kleckner at a

c o n vention news conference. On top of that,

AFBF delegates agreed to a proposal for expanded

trade with China and Vietnam. Cu r i o u s l y, they

also re a f ﬁrmed support for a longstanding Fa r m

Bu reau condemnation of Communism.

Besides opening trade with Communist

nations, the Farm Bureau also pins great hope on

“fast-track” negotiations aimed at speeding up

the process of concluding free-trade agreements

with other governments. But whether these

aggressive free-trade strategies will help indepen-

dent producers as much as they help multina-

tional agribusinesses remains unclear. Several

family-farm groups oppose fast-track negotia-

tions, contending that free-trade agreements have

hurt farmers. Senator Byron Dorgan (D-North

Dakota) contends that this country’s free-trade

agreements with Canada turned a $1.1 billion

agricultural surplus into a $400 million deﬁcit.

A M B E R W A V E S O F G A I N

“The Farm Bureau has tried to drive a

wedge between the environmental community

and the family-farming community, which

really should be natural allies. Family farmers

help protect the land, and we want to promote

their continuation. I wish the Farm Bureau

would focus attention on bridging the gap,

because we’d be the ﬁrst ones to get up on that

bridge and meet them halfway.”

— Rodger Schlickeisen, Defenders of

Wildlife president.

udging from dozens of interviews conducted

for this report, plenty of farmers and ranchers

see common ground with environmentalists.

Some are Farm Bureau members who cannot

penetrate the entrenched structure of the organi-

zation to make their voices heard. Others are for-

mer members working for change through other

means. As this report illustrates, the Farm Bureau

has pursued a deliberate strategy of fostering

enmity between farmers and environmentalists,

two groups that could beneﬁt each other consid-

erably by working together. Ranchers like Jim

Winder and Mike Callicrate and farmers like

Scott Dye and Bill Christisen have seen past the

Farm Bureau’s facade. They believe it is time to

put antagonism aside and concentrate on the

common goals of protecting the environment

and preserving the tradition of family farms.

Attacking the wolf, environmental-protection

laws and the federal government diverts attention

from the more important and complicated ques-

tions about who controls agriculture in this

country and how that control is sustained.The

Farm Bureau has successfully dodged these ques-

tions since Representative Joseph Resnick ﬁrst

raised them 33 years ago. By joining forces, per-

haps family farmers and environmentalists can

ﬁnally get some answers.

C O N C L U S I O N

A Call to Common Ground

A M B E R W A V E S O F G A I N

A P P E N D I X O N E

INSURANCE COMPANIES

The following insurance companies are afﬁliated

with state farm bureaus:

American Agricultural Insurance Co.

American Agricultural Insurance Agency

American Farm Bureau Insurance Services

Colorado Farm Bureau Mutual Insurance Co.

Country Companies (IL, NV, OR)

- Country Life Insurance Co.

- Country Mutual Insurance Co.

- Country Medical Plans, Inc.

- Country Casualty Insurance Co.

Farm Bureau Annuity Co. ( MI)

Farm Bureau General Insurance Co. of Michigan

Farm Bureau Mutual Insurance Co. of Michigan

Farm Bureau Life Insurance Co. of Michigan

Farm Bureau Life Insurance Co. of Missouri

Farm Family Holding Co. (VT, NY, CT, NH,

WV, ME, MA, NJ, RI)

- United Farm Family Insurance Co.

- Farm Family Casualty Insurance

- Farm Family Insurance Co.

- Farm Family Life Insurance Co.

Farm Bureau Insurance of North Carolina

Farm Bureau Mutual Insurance Co. of Arkansas

Farm Bureau Town and Country Insurance of

Missouri

Farm Bureau Insurance Co. of Nebraska

Farm Bureau County Mutual Insurance Co. of

Texas

Farm Bureau of Idaho Group

- Farm Bureau Mutual Insurance Co. of Idaho

- Farm Bureau Finance Co.

- Western Community Insurance Co.

FBL Financial Group/Farm Bureau Group of

Iowa (UT, IA, ID, AZ, SD, ND, )

- Farm Bureau Life Insurance Co.

- Western Farm Bureau Life Insurance Co.

- Farm Bureau Mutual Insurance Co.

- South Dakota Farm Bureau Mutual

Insurance Co.

- Utah Farm Bureau Insurance Co.

- Western Agricultural Insurance Co.

- Western Farm Bureau Mutual Insurance Co.

- EquiTrust Life Insurance Co.

- Universal Assurors Life Insurance Co.

Florida Farm Bureau Casualty

Insurance Co.

Florida Farm Bureau General

Insurance Co.

Farm Bureau Connections

Georgia Farm Bureau Mutual

Insurance Co.

Indiana Farm Bureau Insurance Co.

Kansas Farm Bureau Life Insurance Co.

Kentucky Farm Bureau Mutual

Insurance Co.

Louisiana Farm Bureau Mutual Insurance

Missouri Farm Bureau Insurance

Brokerage

Nodak Mutual Insurance (ND)

North Carolina Farm Bureau Mutual Insurance

Co.

Rural Mutual Insurance Co. (WI)

Southern Farm Bureau Group (AL, AR, FL, GA,

KY, LA, MS, NC, SC, TX, VA)

- Southern Farm Bureau Property

Insurance Co.

- Southern Farm Bureau Annuity

Insurance Co.

- Southern Farm Bureau Casualty Group

- Southern Farm Bureau Casualty

Insurance Co.

- Southern Farm Bureau Life Insurance Co.

- Southern Farm Bureau Universal Life

Insurance Co.

Tennessee Farmer’s Life Insurance Co.

Tennessee Fa r m e r’s Mutual Insurance Co.

United Farm Bureau Family Life Insurance Co.

United Farm Bu r eau Mutual Insurance Cos. (IN)

OTHER BUSINESS AFFILIATIONS

The following companies are majority owned by the

AFBF or its state afﬁliates as noted in parentheses:

American Agricultural Marketing Assoc. (53.5%

- AFBF)

American Farm Bureau, Inc. (100% - AFBF)

Colorado Farm Bureau Consumers Corp.

(100% - CO)

Colorado Farm Bureau Marketing Assoc. (100%

- CO)

Community Service Acceptance Co.

(100% - MI)

Connecticut Farm Bureau Service Co.

(100% - CT)

Connecticut Agricultural Cooperative Assoc.

(91.7% - CT)

Corporate Services, Inc. (60% - MI)

Farm Bureau Equity Sales Corp. of Michigan

(100% - MI)

Farm Bureau Investment Corp. (100% - SC)

Farm Bureau Management Corp.

(100% - IA)

Farm Bureau Service Co. (100% - ID)

Farm Bureau Service Co. (100% - IN)

Farm Employers Labor Service (100% - CA)

Farmers Petroleum Cooperative (67% - MI)

Florida Farm Bureau Agency (100% - FL)

Florida Farm Bureau Enterprises

(100% - FL)

Florida Farm Bureau Holding Co.

(100% - FL)

Georgia Farm Bureau, Inc. (100% - GA)

Georgia Farm Bureau Marketing Assoc. (100% -

GA)

Georgia Farm Bureau Holding Co.

(100% - GA)

Georgia Farm Bureau Real Estate Co.

(100% - GA)

Georgia Farm Bureau Service Co.

(100% - GA)

* Illinois Agricultural Holding Co.

(100% - IL)

A M B E R W A V E S O F G A I N

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

A M B E R W A V E S O F G A I N

Indiana Agricultural Marketing Assoc.

(100% - IN)

Kansas Farm Bureau Services (100% - KS)

Kansas Agricultural Marketing Assoc.

(98% - KS)

Kentucky Farm Bureau Investment Corp.

(100% - KY)

Kentucky Farm Bureau Development Corp.

(100% - KY)

Louisiana Farm Bureau Investment

(100% - LA)

Louisiana Farm Bureau Service (99.6% - LA)

Maine Farm Bureau Service (92.25% - ME)

Maine Farm Bureau Building (100% - ME)

Maine Farmer’s Service (88.83% - ME)

Maine Agricultural Marketing Assoc.

(51.74% - ME)

Maryland Farm Bureau Service Co.

(100% - MD)

Media West, Inc. (100% - UT)

Michigan Farm Bureau Financial Corp.

(100% - MI)

Michigan Agricultural Cooperative Marketing

Assoc. (57% - MI)

Michigan Farm Bureau Group Purchasing, Inc.

(100% - MI)

Missouri Farm Bureau Services, Inc.

(100% - MO)

Nebraska Farm Administration Corp.

(100% - NE)

New York Farm Bureau Member Services, Inc.

(100% - NY)

North Carolina Farm Bureau Investment Corp.,

Inc. (% - not available)

North Carolina Farm Bureau Service Co., Inc.

and Subsidiaries (100% - NC)

North Dakota Farm Bureau Trade Development

and Service Corp.

(100% - ND)

Ohio Agricultural Marketing Assoc.

(53% - OH)

Ohio Farm Bureau Synfuels (100% - OH)

Ohio Farm Bureau Development Corp.

(100% - OH)

Oklahoma Farm Bureau Building Corp. (OK)

Salina Marketing Services (54% - UT)

South Carolina Farm Bureau Marketing Corp.

(100% - SC)

South Dakota Farm Bureau Service Co. (100% -

SD)

Synfuels Capital Corp. (100% - OH)

Tennessee Farm Bureau Federation Corporation

(100% - TN)

Texas Farm Bureau Building Corp.

(100% - TX)

Texas Farm Bureau Investment Corp.

(100% - TX)

Texas Farm Bureau Management Corp.

(100% - TX)

Utah Farm Bureau Service Co. (100% - UT)

West Virginia Farm Bureau Service Corp. (100%

- WV)

West Virginia Agricultural Marketing Assoc.

(100% - WV)

Wisconsin Farm Bureau Service Corp.

(100% - WI)

Wyoming Farm Bureau Management, Inc.

(100% - WY)

Note: Illinois Agricultural Holding Co., 100%

owned and controlled by the Illinois Farm Bureau,

has a major interest in the companies listed here:

1105433 Ontario Inc.

ABC Dairy, Inc.

Alliance Agency, L.L.C.

American Quality Pork, L.L.C.

CC Services, Inc.

Country Capital Management Co.

Country Casualty Insurance Co.

Country Preferred Insurance Co.

Country Life Insurance Co.

Country Investors Life Assurance Co.

Country Medical Plans Inc.

Country Mutual Insurance Co.

East Side Jersey Dairy, Inc.

FS Energy, Inc.

FS Financial Services Corp.

FS Structures of Iowa, L.L.C.

FS Credit Corp.

FS Export Services, Inc.

FS Services Ontario Ltd.

GMS Transport Co.

Growmark, Inc.

Henry Foods, L.L.C.

Hoosier Dairy, Inc.

IAA Federal Credit Union

IAA Trust Growth Fund, Inc.

IAA Trust Tax Exempt Bond Fund, Inc.

IAA Trust Asset Allocation Fund, Inc.

IAA Trust Co.

IAA Trust Taxable Fixed Income Series Fund,

Inc.

Ice Cream Specialties, Inc.

Illinois Agricultural Auditing Assoc.

Illinois Agricultural Service Co.

Illinois Livestock Marketing Co.

lllinois Milk Producers Assoc.

Interstate Producers Livestock Assoc.

Lakeland FS, Inc.

Mid-America Brokerage, Inc. (Oklahoma)

Mid-America Services of Alaska, Inc.

Mid-America Services of Nevada, Inc.

Mid-America Services of Oregon, Inc.

Mid-America Services of Washington, Inc.

Mid-CO Commodities, Inc.

Middlesex Mutual Assurance Co.

Midﬁeld Corp.

Mo-Kan Express, Inc.

Muller-Pinehurst Dairy, Inc.

P.F.D. Supply Corp.

Prairie Farms Dairy, Inc.

Project Explorer Corp.

Project Explorer Mark II Corp.

Southwest FS, Inc.

UCO Petroleum, Inc.

TRI-FS, Inc.

WISE-USE MOVEMENT CONNECTIONS

According to the Environmental Working Group’s

Clearinghouse on Environmental Advocacy and

Research (CLEAR), the following farm bureau

organizations are wise-use groups:

Alabama Farm Bureau

Albany County (NY) Farm Bureau

American Farm Bureau Federation

California Farm Bureau

Carroll County (TX) Farm Bureau

Colorado Farm Bureau

Delaware Farm Bureau Federation

Elko County (NV) Farm Bureau

Farm Bureau News (Olympia, WA)

A M B E R W A V E S O F G A I N

Florida Farm Bureau

Idaho County (ID) Farm Bureau

Idaho Farm Bureau

Indiana Farm Bureau

Kansas Farm Bureau

King County (WA) Farm Bureau

Maine Farm Bureau

Massachusetts Farm Bureau Federation, Inc.

Minnesota Farm Bureau

Mississippi Farm Bureau Federation

Modoc County (CA) Farm Bureau

Montana Farm Bureau Federation

Nevada Farm Bureau

New Hanover County (NC) Farm Bureau

New York Farm Bureau

Ogle County (IL) Farm Bureau

Oklahoma Farm Bureau

Oregon Farm Bureau

Pike County (IL) Farm Bureau

Polk County (AR) Farm Bureau

Ravalli County (MT) Farm Bureau

Rhode Island Farm Bureau

Riverside County (CA) Farm Bureau

San Bernardino County (CA) Farm Bureau

San Diego County (CA) Farm Bureau

Santa Clara County (CA) Farm Bureau

Siskiyou County (CA) Farm Bureau

Texas Farm Bureau

The Farm Bureau of Snohomish County (WA)

Utah Farm Bureau Federation

Vermont Farm Bureau Federation

Virginia Farm Bureau

Washington State Farm Bureau

Wyoming Farm Bureau

According to CLEAR, the following wise-use groups

are supported by farm bureau organizations:

Alliance Defense Fund

Cato Institute

Coalition for Vehicle Choice

Council for Agricultural Science and

Technology

National Endangered Species Act Reform

Coalition

National Wetlands Coalition

Paciﬁc Legal Foundation

Reason Foundation

Environmental Conservation Organization

(ECO)

Oregon Lands Coalition

Wilderness Impact Research Foundation

Western States Coalition

Environmental Issues Council

Foundation for Clean Air Progress

Air Quality Standards Institute

Heartland Institute

Global Climate Information Project

Center for the New West

People for the U.S.A.

(Formerly People for the West!)

Pennsylvania Landowners Association

American Land Rights Association

National Inholders Association

Multiple Use Alliance

A M B E R W A V E S O F G A I N

ongress quietly slipped the farm bureau sys-

tem a lucrative gift in the 1996 Tax Act.

was tucked in as Section 1115, which gives

tax exemption for farm bureau income from vir-

tually any kind of “membership dues.”

This seemingly arcane provision props open a

huge back door through which the farm bureau

system draws in tens of millions of tax-free dol-

lars from unrelated business activities — and

from individuals who have little connection with

farm bureau objectives. When enacting that pro-

vision, Congress brushed aside growing Internal

Revenue Service (IRS) concerns that farm

bureaus, along with other tax-exempt organiza-

tions, were creating artiﬁcial membership cate-

gories primarily to circumvent the tax laws.

Enactment of Section 1115 is a case study of

how the farm bureau system parlays its “small

farmer” image into big-time political power and

ﬁnancial gain.

TAX EXEMPTION

The federal income tax has always exempted

certain nonproﬁt organizations to (1) help these

organizations perform functions for which gov-

ernment would otherwise have to pay, (2) pro-

vide a subsidy for solving societal problems in

ways unavailable to government, and (3) com-

pensate nonproﬁt organizations for restraints on

their ability to raise capital.

Section 501(c) of the U.S. Tax Code speciﬁes

25 categories of organizations eligible for tax

exemption.

The American Farm Bureau Federation

(AFBF) and its afﬁliates are exempt under

Section 501(c)(5), which applies to labor and

agricultural organizations

. To qualify, an organi-

zation must have one or more of the following

exempt purposes: (1) bettering the conditions of

persons engaged in the pursuits of labor or agri-

culture, (2) improving the grade of their prod-

ucts, or (3) developing a higher degree of efﬁ-

ciency in their occupations.

In its annual returns

to IRS, AFBF states that its purpose is “to pro-

mote and advocate the economic, social, and

educational interest of its members, and to pro-

mote agriculture in general.”

Farm bureaus are given unusual latitude

A P P E N D I X T W O

Tax Treatment of Unrelated Business Income

For Agricultural and Horticultural Org a n i z a t i o n s

A M B E R W A V E S O F G A I N

under the tax code. Section 501(c)(5) does not

limit farm bureau membership to persons actual-

ly engaged in agricultural pursuits.

And, unlike

most other tax exempt organizations, a 501(c)(5)

organization may engage in (1) lobbying that is

germane to its exempt purposes and (2) some

political activity, so long as that is not the orga-

nization’s primary activity.

The farm bureau system has turned tax laws

into a unique license to make money and wield

political inﬂuence.

POTENTIAL FOR ABUSE

Since tax-exemption creates strong tempta-

tions for abuse, Congress and IRS have been

especially concerned with (1) preventing legiti-

mately tax-exempt organizations from unfairly

competing against tax-paying businesses, and (2)

preventing essentially commercial enterprises

from obtaining Section 501(c) exemption to

evade taxation.

The tax-exempt sector issue has far-reaching

consequences for the private economy and the

federal budget. This sector is large and, for

decades, has grown almost three times faster than

the rest of the economy.

Between 1975 and

1995, the ﬁnancial resources of 501(c) organiza-

tions reporting to IRS more than tripled to $1.9

trillion in assets and $899 billion in annual rev-

enues. IRS estimates that in 1995 the total rev-

enues of exempt organizations equaled about

12.4 percent of gross domestic product (GDP)

— more than double the percentage 20 years

earlier.

Moreover, more than two thirds of the

exempt sector’s ﬁnancial resources are controlled

by a small number of large organizations that can

wield substantial ﬁnancial clout when entering

into competition with tax-paying businesses.

Because of its decentralized stru c t u r e, the farm

b u r eau system is able to camouﬂage its large size .

The AFBF’s Form 990 re p o rted 1997 re v enues of

only $18.6 million — $17.1 million of which was

f rom membership dues. AFBF does not provide

aggregate ﬁnancial reports for its afﬁliated state

and county farm bureaus. Farm bureau opera-

tions receive very little congressional scrutiny. In

early 1995, the General Accounting Ofﬁce

(GAO) noted that press reports and congre-

ssional hearings had focused on charitable orga-

nizations but had not given the same level of

scrutiny to other categories of tax-exempt organi-

zations. Nevertheless, when GAO itself studied

these other categories — reviewing 285 exempt

organizations, of which 46 were Section

501(c)(5) organizations — it included only one

agricultural organization, a farm bureau in one

state.

UNRELATED BUSINESS INCOME TAX

The Tax Code does not prohibit tax-exempt

organizations from generating proﬁts from activi-

ties in which they are engaged. In fact, tax-

exempt organizations have long derived most of

their revenues from proﬁt-making activities. A

1998 IRS report states that Section 501(c) orga-

nizations received about 69 percent of their 1995

revenues from income-producing activities.

Prior to 1950, all revenues of tax-exempt

organizations went untaxed. But after taxpaying

businesses protested that tax-exempts were

increasingly moving in as their direct competi-

A M B E R W A V E S O F G A I N

tors, Congress enacted the Unrelated Business

Income Tax (UBIT) as part of the Revenue Act

of 1950.

Under current law, an activity of an exempt

organization is subject to UBIT if the activity is:

• A trade or business, that is carried on for

the production of income from providing the

services;

• Regularly carried on; and

• Not substantially related to the organiza-

tion’s exempt purpose.

IRS regulations provide that a trade or busi-

ness is “related” to the organization’s exempt pur-

pose only if the activities have a direct causal

relationship to the achievement of exempt pur-

poses. It is not sufﬁcient that these activities pro-

duce income needed to carry out those exempt

purposes.

The variety of proﬁtable activities and the

creativity of tax-exempt organizations have kept

IRS and the courts busy trying to maintain a

clear line between what is and what is not sub-

ject to UBIT.

The farm bureau system has been an aggres-

sive leader in unrelated business activities, as

deﬁned by IRS. A nationwide network of farm

bureau insurance companies sells life insurance,

retirement annuities, car insurance, home insur-

ance, business insurance, health and disability

insurance and more.

In 1998, the farm bureau

system began expanding into direct banking.

While these for-proﬁt subsidiaries have

turned the farm bureau membership base into a

lucrative commercial asset, farm bureaus present

themselves as local or regional membership orga-

nizations that derive little revenue from income

producing activities. AFBF’s IRS returns for the

tax years 1995 through 1997 claim that member

dues accounted for about 95 percent of its total

reported revenue.

AFBF reported that only 0.2

percent of its revenues come from program ser-

vice income.

An IRS summary report, which relies on that

information, suggests that labor and agricultural

organizations beneﬁt much less from income-

producing activities than do other classes of

exempt organizations.

That public image is quite at odds with the

true extent of the farm bureau system’s for-proﬁt

corporate reach.

ASSOCIATE MEMBER DUES

The peculiar way the tax laws treat their

member dues makes it easy for the farm bureaus

to understate their unrelated business income.

Dues are a handy device for tax avoidance.

Since a 501(c) membership organization’s dues

income is generally not subject to taxation, the

organization has a clear incentive to characterize

income as nontaxable membership dues – even

when the income is derived from the sale of

unrelated business products or services marketed

beyond the organization’s regular members.

An easy way to accomplish that task is to

establish artiﬁcial classes of “membership” for

purchasers of those unrelated business products.

Farm bureaus, for example, have created a

class of “associate members” who cannot vote or

hold ofﬁce in the organization but pay “dues”

primarily to gain access to unrelated business ser-

vices, such as insurance.

To see how this can be a very lucrative sub-

A M B E R W A V E S O F G A I N

terfuge, consider two cases with identical cash

ﬂows to a farm bureau. In the ﬁrst case, an insur-

ance company pays a farm bureau, say, $80

whenever it issues an insurance policy to a non-

member. That payment is income to the farm

bureau from unrelated business and thus subject

to UBIT.

In the second case, the farm bureau (1) has

its insurance subsidiary issue policies only to

farm bureau members and (2) requires each non-

member insurance applicant to pay the farm

bureau $80 in dues to join as an “associate mem-

ber.”

Now the farm bureau does not pay UBIT

on this “dues” income.

This second method enables the farm bureau

system to tap large amounts of tax-free income

from customers of its unrelated businesses, while

restricting farm bureau voting membership to

individuals who are most likely to support the

leadership’s established political objectives and

operating methods.

Although the farm bureau system does not

release information on the amount of income it

derives from associate member dues, the amount

is very large. One typical state farm bureau

reported that “associate members” accounted for

51 percent of its total membership and 63 per-

cent of its new members in 1998.

Other available evidence suggests that most

farm bureau revenue growth is coming from

“associate memberships.” Creation of the Farm

Bureau Bank greatly expands the number of

potential associate members.

“Associate membership” in a farm bureau is

sold with little regard to an individual’s interest

in or support for the organization’s tax-exempt

activities or policy agenda. As noted, most “asso-

ciate members” pay dues to gain access to farm

bureau insurance. Farm bureau materials empha-

size that the cost of membership can be more

than recouped through such other beneﬁts as

free-death beneﬁts and discounts on automotive

parts, medication, lube jobs and other products.

An IRS technical advisory memorandum

stated the following: “A random survey conduct-

ed in August 1990 indicates that accessibility to

insurance programs offered by [the farm

bureau’s] afﬁliates is the major reason that associ-

ate members join [the farm bureau]. The report

reveals that 96 percent of those associate mem-

bers surveyed were aware of [the farm bureau’s]

insurance programs; 95 percent of those who

were aware actually purchased insurance; and 91

percent of associate members have one or more

insurance policies.

“Although all of [the farm bureau’s] beneﬁt

programs are available to associate members,

those associate members surveyed cite insurance

programs (45 percent), lower rates (33 percent)

and their insurance agent (12 percent) as their

primary reasons for being members of [the farm

bureau]. According to the study, this correlates

with the high percentage of associate members

who own one or more insurance policies. In con-

trast to regular members, only ﬁve percent of

associate members surveyed indicate they had

purchased a membership because of an interest

in agricultural activities.”

In 1983, under the Reagan administration,

the IRS held that, while an exempt organization’s

income from insurance activities was taxable,

associate member dues were not taxable if associ-

A M B E R W A V E S O F G A I N

ate members received member beneﬁts other

than eligibility for the insurance.

Farm bureaus were not, of course, the only

exempt organizations to exploit this opportunity.

By the late 1980s the “associate membership”

problem attracted much closer IRS scrutiny.

The issue gained momentum in 1991 when

two circuit courts held that postal unions would

have to pay UBIT on associate member dues if

the dues were paid primarily to obtain lower cost

group insurance.

In 1994, when auditing a state farm bureau,

IRS issued a revised position on associate mem-

ber dues.

IRS now focused, not on the variety

of member beneﬁts, as in 1983, but on the asso-

ciate member’s reasons for paying the dues. The

revised position held that associate member dues

are subject to UBIT because:

“[P]roviding access to insurance coverage

available from a subsidiary is not consistent with

the purposes of tax-exempt agricultural organiza-

tions. [The state farm bureau] promotes and

administers its program as would any private,

commercial entity. … [I]ndividuals who are not

bona ﬁde members of an exempt organization

are required to make a payment to the organiza-

tion in order to obtain insurance.”

IRS found that associate members could not

vote, represent their counties as voting delegates

at annual meetings or serve on the board of

directors. They could serve as ofﬁcers, but the

only ones who did so were also full-time employ-

ees of the farm bureau. The revised IRS position

was consistent with the ﬁndings in several other

court cases that turned on the nature of these

associate memberships.

IRS applied this policy

across the country and pressed lawsuits for pay-

ment of back taxes against farm bureaus in 11

states — Alabama, Florida, Georgia, Illinois,

Kentucky, Michigan, Missouri, North Carolina,

Tennessee, Texas and Washington. The farm

bureaus promptly took their case to Congress.

CAMP-P AYNE BILL

On February 1, 1995, Congressmen David

Camp (R-Michigan) and L.F. Payne (D-Virginia)

introduced “The Tax Fairness for Agriculture

Act” (H.R. 783), which was designed explicitly

to overturn the revised IRS position and reinstate

the 1983 policy for ﬁnding of the previous year.

In summary, the bill provided special aid to agri-

cultural organizations by:

• Exempting from UBIT any portion of

annual membership dues that did not exceed

$100 in calendar 1996, adjusted for inﬂation

annually thereafter; and

• Prohibiting IRS from collecting UBIT on

prior year membership dues if the organization

had a “reasonable basis” for not treating the dues

as income from an unrelated trade or business.

Of the 38 original cosponsors, 28 were

Republicans and ten were Democrats. The bill

eventually attracted 126 House cosponsors.

IRS REVENUE PROCEDURES 95-21

Less than two months after H.R. 783 was

i n t roduced, IRS revised its standard for determin-

ing the tax exemption of associate member dues.

2 8

In Revenue Procedure 95-21, IRS announced

it would no longer consider why individuals

chose to become associate members of an agri-

cultural organization. For future years, “other

A M B E R W A V E S O F G A I N

than where the statute or regulation speciﬁcally

provides a method for allocating a portion of

dues payments to unrelated business taxable

income, the Service will treat dues payments

from associate members as not [subject to UBIT]

if the associate member category has been

formed or availed of for the principal purpose of

furthering the organization’s exempt purposes”

— rather than producing unrelated business

income.

IRS seemed to be retreating to a more easily

defended position. It dropped its concern with

an associate member’s reasons for paying dues.

And it agreed not to assume automatically that

associate member dues are subject to UBIT.

However, it was trying to retain its right (1) to

pursue collection of UBIT payments for prior

years, (2) to determine on a case-by-case basis

whether an organization was using associate

memberships primarily to produce unrelated

business income, and (3) to establish speciﬁc

methods for subjecting a portion of the associate

member dues to UBIT. The IRS motives cannot

be known with certainty, but experienced

observers believe the tactical objective was to

ward off legislative intervention that would set

costly and disruptive precedents.

SMALL BUSINESS JOB PROTECTION ACT

Nevertheless, Congress took up the farm

bureau’s associate member cause when it acted

on the 1996 tax bill, “The Small Business Job

Protection Act” (H.R. 3448). Several aspects of

the legislative action are particularly revealing.

Tax exemption for associate member dues was a

major farm bureau priority in the 1996 tax bill.

However, farm bureau lobbyists and congression-

al supporters kept the effort low-proﬁle — out of

media attention.

During 1995 and 1996, farm bureau afﬁliat-

ed political action committees (PACs) gave

$109,824 to many of the cosponsors of this bill,

including $16,480 for Camp. The Texas Farm

Bureau PAC gave $5,000 in 1996 to Senator

Phil Gramm (R-Texas), a key supporter of the

provision in the Senate.

IRS continued to press strongly behind the

scenes to limit the impact of congressional inter-

vention. During negotiations with senators,

including Chairman William V. Roth (R-

Delaware) and ranking member Daniel P.

Moynihan (D-New York) of the Senate Finance

Committee, IRS stated that it had decided, in

accordance with Rev. Proc. 95-21, not to treat

associate member dues as subject to UBIT in the

future. However, IRS would not agree to drop

pending litigation to recover back taxes.

Non-farm organizations found themselves in

an uncomfortable position. They had little hope

of stopping or signiﬁcantly changing this special-

interest legislation — but its enactment would

weaken the farm bureaus’ incentive to ease IRS

enforcement.

The American Society of Association

Executives (ASAE) tried to strike a balance in its

testimony before the House Ways and Means

Committee. ASAE’s ofﬁcial position was that it

opposed “any abridgment of tax exemption for

associations including, but not limited to, taxa-

tion of dues income.” ASAE stated, however,

that the pending legislation was not broad

enough because it only beneﬁted agricultural

A M B E R W A V E S O F G A I N

organizations. ASAE favored making all mem-

bership dues tax-free unless income generation

was the organization’s principal purpose for hav-

ing the class of members.

Surprisingly, the Joint Tax Committee, which

provides technical analysis of pending tax legisla-

tion, advised Congress that the farm bureau dues

provision would have negligible revenue impact.

If that were the case, it is unlikely IRS would be

taking farm bureaus to court.

Subsequently, the committee staff has given

two reasons for its estimate, both of which are

questionable.

One reason given is that Revised Procedure

95-21 would exempt agricultural membership

dues from UBIT in the future. The IRS regula-

tion did not, however, provide the blanket

exemption provided in the bill.

Another reason given is that farm bure a u s

could avoid UBIT law by simply conve rting their

associate members to voting members. But, as

noted above, the farm bureau leadership could

n e ver do that since it would ove rt h row the powe r

relationships within the established system.

The Joint Tax Committee staff may simply

have overlooked this issue. But experienced

observers believe it is more likely that farm

bureau advocates in Congress actively pressed for

a revenue estimate that would make Section

1115 more easily accepted.

Most members of Congress accepted the

farm bureau’s self-projected image as the “voice

of farming.” Staff recall that Section 1115 had

broad, bipartisan support and was generally con-

sidered a noncontroversial, pro-farming vote.

Important also was that Section 1115 gave

members of Congress an easy opportunity to side

with taxpayers against the IRS

House ﬂoor

action. Section 1115 was not mentioned on May

22, 1996, during House ﬂoor debate on the tax

bill.

The committee report states blandly: “The

Committee believes that it is appropriate to clari-

fy the treatment of certain limited dues pay-

ments from associate members of organizations

described in section 501(c)(5) to curtail expen-

sive and time-consuming controversies regarding

the treatment of such payments for purposes of

the UBIT and to facilitate administration of the

Code.”

The House-passed bill provided UBIT

exemption for all agricultural organization mem-

ber dues up to $100 starting in tax years after

1995, with adjustments for inﬂation thereafter.

Only one dues payment per member would be

so exempted.

Senator Gramm was the only senator to men-

tion Section 1115 during ﬂoor debate. He stated

that the provision would stop IRS from “t rying to

f o r ce the Farm Bu reau to pay taxes they do not

owe . ”

3 4

In his ﬂoor re m a rks, Senator Gr a m m

said: “[B]eing part of the Farm Bu reau is being

p a rt of agriculture.... The position of the IRS is

indefensible in the opinion of the vast majority of

Members of Congress and is indefensible in the

opinion of the vast majority of the American peo-

ple. We not only want the IRS to stop doing this

in the future, we want them to go back to these

old lawsuits and end this harassment once and for

all.” The Senate unanimously accepted a package

of amendments including one that applied the

farm bureaus’ UBIT exemption all the way back

A M B E R W A V E S O F G A I N

to 1986, thus pulling the rug out from under

pending litigation.

IRS regulations currently reﬂect this “safe

harbor” exemption for all membership dues paid

to agricultural organizations.

A SHARP CONTRAST: AARP

The kid-glove treatment the farm bureaus

received from Congress in this instance is rarely

extended to other nonproﬁt organizations —

even politically powerful ones.

A starkly different reception was given the

American Association of Retired Persons

(AARP), which is generally considered one of the

more inﬂuential organizations in Washington.

In June of 1995, AARP practices were exposed to

two days of aggressive hearings by the Senate

Finance Committee’s Subcommittee on Social

Security and Family Policy, chaired by Senator

Alan Simpson (R-Wyoming).

Senator Simpson in his opening statement

said, “People know something is wrong when an

organization that gets more than half of its

income from commercial business activities

simultaneously spends millions annually to

lobby, with a claim that they represent the inter-

ests of seniors and the elderly.”

That logic evi-

dently does not apply to the Farm Bureau.

1 The Small Business Job Protection Act of 1996

(H.R. 4338; P.L. 104-188).

2 In this paper, the term “agricultural organization”

refers to an agricultural organization or a horticul-

tural organization, as deﬁned in the Tax Code.

3 IRS Handbook 7.8 - Exempt Organization

Handbook, Chapter 5.5.

4 American Farm Bureau Federation Form 990 for

tax years 1995, 1996 and 1997 provided for public

inspection in accordance with IRC 6104(b).

5 IRS Handbook 7.8 op. cit.

6 Testimony of Natwar M. Gandhi on behalf of the

U.S. General Accounting Ofﬁce, Hearings before

the Senate Finance Committee, Subcommittee on

Social Security and Family Policy, June 13, 1995,

Washington, D.C.

7 A 20-year Review of the Non-proﬁt Sector,

1975-95, Alicia Meckstroth and Paul Arnsberger,

Statistics of Income Bulletin, IRS, Fall of 1998.

pp. 149 ff.

8 Competition between Tax-Exempt Organizations

and Taxable Businesses, GAO/GGD-87-40BR,

Feb. 27, 1987. Followup analysis by GAO found

that the ﬁnancial concentration continued in

1989 (Gandhi, op. cit, p. 78).

9 The interlocking structure of the farm bureau sys-

tem is described in other analyses prepared by

Defenders of Wildlife.

10 Competition, op. cit. p. 61.

11 Meckstroth and Arnsberger, op. cit. p. 164.

12 P.L. 81-814, September 23, 1950; IRC 511(a)

13 IRC 512(a)(1), 513(a).

14 IRS Reg. 1.513-1(d)(2).

N O T E S

A M B E R W A V E S O F G A I N

15 The complex corporate and ﬁnancial relationship

between the farm bureau system and its insurance

afﬁliates is described elsewhere in analyses by

Defenders of Wildlife.

16 On April 21, 1999, FB BanCorp received formal

approval from the federal Ofﬁce of Thrift

Supervision to establish a de novo federal savings

bank. FB BanCorp is a Nevada corporation

whose stock is owned by 21 state farm bureau

federations and 19 of their afﬁliated insurance

companies. The Farm Bureau Bank is headquar-

tered in Sparks, Nevada, and has its operations

center in San Antonio, Texas. The bank currently

offers consumer banking services to 3 million

Farm Bureau members in 39 states. It has assets

of more than $150 million.

17 American Farm Bureau Federation Form 990 for

tax years 1995, 1996 and 1997, made available by

AFBF for public inspection in accordance with

IRC 6104(b).

18 Meckstroth and Arnsberger, op. cit. p. 164.

19 Farm bureau associate members usually pay the

same dues as voting members.

20 In actual practice, farm bureau insurance compa-

nies collect these “associate membership” dues in

conjunction with initial premiums and forward

payment to a farm bureau. State, local and

national afﬁliates share the revenue.

21 Wisconsin Farm Bureau, 1998 Annual Report.

22 ibid. “Facts.”

23 TAM 83-02-009 and TAM 83-02-010.

24 American Postal Workers Union, AFL-CIO v.

United States, 925 F.2d 480 (D.C. Cir. 1991)

and National Association of Postal Supervisors v.

United States, 944 F.2d 859 (Fed. Cir. 1991).

25 TAM 94-16-002.

26 ibid “Rationale.”

27 National Association of Life Underwriters, Inc. v.

Commissioner, 64 CCH Tax Ct. Mem. 3779

(1992); Hunt v. Washington Apple Advertising

Commission, 432 U.S. 333 (1977); Health

Research Group v. Kennedy, 82 F.R.D. 21

(1979); FEC v. National Right to Work

Committee, 459 U.S. 197 (1982).

28 Rev. Proc. 95-21, 1995-1 C.B. 686, 1995-15

I.R.B. 22. Published March 23, 1995.

29 ibid.

30 Letter to Senator Phil Gramm from Donald C.

Lubick, Acting Assistant Secretary (Tax Policy)

June 24, 1996, 104 C.R. p. S7426f.

31 House Ways and Means Committee Hearings on

H.R. 3448.

32 ibid.

33 H.Rept. 104-568.

34 op. cit 104 CR.

35 After being audited by IRS, AARP in 1994 agreed

to pay $135 million in lieu of taxes to resolve dis-

putes for the years 1985 through 1993. At issue

were AARP revenues from the sale of insurance

and other services, not associate membership

dues. The dispute was ﬁnally settled in June,

1999. cf. Wall Street Journal, June 29, 1999.

36 Business and Financial Practices of the AARP,

Hearings before the Subcommittee on Social

Security and Family Policy of the Committee on

Finance, U.S. Senate, 104th Congress, First

Session, June 13 and June 20, 1995. S. Hrg. 104-

109, p. 4.