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Landlords idle cropland: Rice land issues heating up

While Texas rice lands are idled by landlords looking for a short-term payoff, farmers go out of business, support industries terminate jobs, and the environment suffers loss of wildlife and wetlands.

Here are comments from farmers and related industry representatives during a recent USDA listening session on how the landlord/tenant issue has affected them personally. All are speaking directly to Rodney Brown, deputy undersecretary for Research, Education and Economics, USDA, who moderated the session:

Joe Crane, BU Growers, a rice producer who also runs a farm supply business in Bay City, Texas. “I wonder how the 1996 and 2002 farm bills turned out to be so harmful to the rice industry. “Not only is the benefit of the subsidy not getting to the producer, but it's absolutely being detrimental to the industry in Texas.”

Crane stressed that subsidy payments “need to go to the guy out there risking his money to grow a crop. That's pretty clear with me. If our administration wants economic stimulus, just put money in the hands of a producer. I guarantee, he'll turn that money over. He'll spend it, and he'll spend it, and he'll spend it. That's economic stimulus.”

Instead, “these rural economies are just dying on the vine,” Crane said. “The company that my partners and I run today has been in business for over 40 years. I would suggest that on the trend we're on right now, it won't see very many more.

“We have the best producers in the world right here in this room today,” Crane said. “We grow the best-quality rice, and we can compete with anybody. What we need from the government is help getting our rice sold around the world instead of coming out with these payment limitations to cut production.

“Why don't we encourage production,” Crane said. “Why don't we give these farmers — who know what they're doing, who are growing the best rice in the world — the opportunity to sell around the world.

“I hope this listening session is a sincere effort to right a significant wrong,” he said. “This is a contagious problem. It's going to carry over to some of the other states and other commodities. I tell you, my old heart is working so hard, I can hardly talk. It's a personal thing with me if you don't know it by now.”

J.D. “Des” Woods, a rice producer representing the Texas Rice Producers Board and the Texas Rice Research Foundation. “The farm bill (Farm Security and Rural Investment Act of 2002) was supposed to help us survive as farmers.

“But when the landlord jerks the farm and takes the payment and not even has to maintain the farm — that's not what we think was intended by Congress.”

Woods said the base update is a big problem for Texas rice producers. “We aren't able to update our yields (under new farm law), and our yields have almost doubled on a lot of the farms in Texas.”

Bob Little, general manager of Rice Farmers Cooperative of El Campo, Texas. “Non-traditional land purchasers are buying land for recreational purposes — recreational cattle growers and hunting. They can take the land out of production and take the payments — which will pay for the majority of their land payment.”

William Kondo, rice farmer from Beaumont, Texas. “Since the implementation of the 1996 farm bill, I have lost the leases on 2,600 acres of farmland. None of the land I lost is leased to another farmer. Instead, the landowner realized that the fixed payments provided by the farm bill exceeded the land rent he received from the farmer.”

In addition, where tenants have been kicked off land and no crop is being produced, “landlords can receive countercyclical payments in compensation for low market prices even though they did not produce a crop. The decoupling of farm payments from production has served to decouple the tenant farmer from the land.

“What has happened to me has happened to just about every farmer I know,” Kondo said. “Our infrastructure is dying. Our local co-ops went out of business four years ago because there were not enough farmers left to support it. We have lost equipment dealers, aerial applicators, rice dryers and rice mills. While low market prices have been the primary cause of this downtrend, the ability of landowners to receive full farm payments without producing a crop has exacerbated this trend.”

Rick Higgins, executive vice president of Prosperity Bank, Bay City, Texas. The depressed state of the rice industry is having “a ripple effect in these small farming communities. We're seeing rice infrastructure in Texas slowly wither away, including seed companies, rice-drying facilities, ag aviation, equipment dealerships. What this means is increased economic stress in these areas.”

Alan Heskamp, co-owner and general manager of a farm supply business in Texas, which consists of five John Deere dealerships along the Texas Gulf Coast. “We've been in business only since 1996 under our current structure. After enjoying a couple of years of growth, we began a downward trend which has me very concerned. The trend has been primarily due to a decrease in revenue.”

Heskamp noted that sales of John Deere CTS rice combines have been steadily declining since 1999. “Of the 46 machines sold in the last six years, only five were sold in the last three years. The average value of the decline is $2.23 million per year. In a small business like ours, that has a dramatic impact on our financial health.”

Usually farmers will lease combines when revenues are down, but Heskamp noted that his rental revenue is also down “with a net effect on cash flow of negative $900,000. That's one-third of our total payroll.”

What's the cause of the problem? According to Heskamp, “The new farm bill appears to be a wealthy landowner bill that does not help keep the money in a local, rural economy.”

e-mail: [email protected].

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