YUBA CITY, Calif. -- His home? In a former walnut grove turned housing development. His childhood neighborhood, where he used to pedal between the bread-baking grandma and the pie-making grandma? A swath of disappearing peach orchards. That rise in the landscape that everyone calls Chicken Hill? A one-time chicken ranch turned into a housing development of 5-acre lots.
"This is what I don't want to see happen to the rice land," says Keith Davis. "I want it to remain farmland."
Davis, a rice farmer in northern California for more than three decades, will probably get that wish, even as calls are growing across the country to limit the government subsidies that have helped keep afloat the growers of commodity crops -- rice, corn, wheat -- as other farmers fall by the wayside.
Davis and his wife received almost $335,000 in subsidies last year, and he says it would be impossible to keep farming without such assistance.
The subsidies paid by the federal government loom as the central issue of the huge farm bill being thrashed out on Capitol Hill. Subsidies have jumped to staggering proportions recently -- $21 billion last year -- but they have rarely gathered widespread attention in a country where farmers make up just 2 percent of the population.
But in the past several months, subsidies have drawn the spotlight and unwanted notoriety largely because the Washington-based Environmental Working Group (EWG) published a database on the Internet revealing surprising information on who receives this federal largess and how much.
Multimillionaires such as Charles Schwab, of the investment firm bearing his name, NBA basketball player Scottie Pippen and even former Enron Chief Executive Kenneth L. Lay have received subsidies, the database showed, signaling just how far the measure has strayed from its origins as a Depression-era program to assist impoverished farmers through desperate times.
The database was compiled after the group successfully filed Freedom of Information Act requests for U.S. Department of Agriculture documents.
It shows that while subsidies are described as a means of keeping the small family farm going when the trend in agriculture favors larger agribusinesses, most of the payments go to the biggest growers: The top 10 percent of recipients receive nearly 70 percent of subsidies.
And 60 percent of farmers don't receive any subsidies at all because they do not grow the crops covered by the program.
"We need to close the loopholes so you don't see the large majority of funding going to the largest agribusinesses," says Susanne Fleek, EWG's director of governmental affairs, who says limiting the subsidies is a first step in correcting the imbalances of the subsidy program.
A bill passed by the Senate would limit the amount of subsidies a farmer can receive to $250,000, or $275,000 if married; the House agreed to accept that limit in a vote Thursday. Other points of the bill must be reconciled in a conference committee before the bill becomes law.
The new limits will save taxpayers $1.3 billion over the next decade, according to congressional budget analysts.
Fleek calls imposing limits "a start" but says, "You also need to look at the whole system of subsidies, and see how most farmers aren't even eligible for payments. Look at the drought now, in a state like Maryland: What is the safety net for those farmers?"
The EWG is particularly concerned that conservation programs -- in which farmers and others can receive benefits for preserving open spaces, protecting water quality and maintaining wildlife habitats -- do not lose out as they have in the past because money is instead shifted to pay for subsidies.
In California rice country, the Sacramento Valley north of the state's capital city, those who grow, mill and sell the grain say the EWG database offers a misleading portrait of the farm subsidy program.
Take, for example, the Farmers Rice Cooperative in Sacramento, which received $1.8 million from the USDA last year, making it the state's top subsidy recipient. But that single figure alone doesn't tell the whole story, says Bill Huffman, a spokesman for Farmers Rice.
"They give out the total, but they don't explain this is a co-op owned by 920 members," Huffman says. "They are family farmers, and they are the ones who are the beneficiaries."
The co-op operates two mills at the port of Sacramento that churn out tons of rice in various guises -- the premium Nishiki brand rice favored by sushi makers, rice milled to Kellogg's preferences for Rice Krispies, rice polished down to the endosperm for sake makers, broken rice grains that go into Nestle's Crunch bars or baby food, to name just a few.
Farmers say it would be impossible in today's climate to stay in business without subsidies -- it simply costs more to produce rice than farmers are paid for it after harvest.
Davis says it costs about $900 to plant and grow an acre of rice. In a good year, he says, that acre will yield about 8,000 pounds of rice. But, by current USDA estimates, Davis will sell that rice for less than $350.
The difference is where subsidies come in -- Davis receives payments for the difference between the loan he took out on his crop and the market price.
"We would all like to be in a position where you don't have to depend on [subsidies]," he says. "But you can't make a profit without them today, not with the way the world market price is."
Congress has long wrestled with subsidies; critics have long considered them a boondoggle that often had an effect opposite to its intent. Even after decades of subsidies, the trend in agriculture continues to be consolidation: The number of farms is decreasing although their average size is increasing.
Additionally, farmers have become more efficient, producing larger yields, which results in flooded markets and low prices for their crops. And subsidies have the effect of exacerbating the problem -- they encourage farmers to plant more anyway because they can count on payments from the government to make up the difference, which continues the cycle of oversupply and depressed prices.
Congress tried to wean farmers off subsidies with the "Freedom to Farm" act of 1996, which gradually reduced payments year by year. But so many farmers ended up in the red -- they started calling the act "Freedom to Fail" -- that Congress ultimately passed emergency measures to bail them out, essentially another form of subsidy.
Subsidies survive largely for political reasons, critics say, as lawmakers are loath to lose the farm vote, particularly in an election year such as this one.
And in fact, California's two senators, Democrats Dianne Feinstein and Barbara Boxer, were persuaded by the cotton and rice farmers of their state to drop their initial support of a limit on subsidies.
Average wholesale rice prices are the lowest they've been in 15 years, according to the USDA, while supplies are at record peaks. The most logical response would be for farmers to plant less, but Davis says it's not that simple.
For one thing, he says, you still have the same amount of equipment to pay for and maintain regardless of the acreage planted. Additionally, California farmers aren't the only ones who grow rice -- they have competition elsewhere in the United States (from Missouri, Arkansas, Mississippi, Louisiana and Texas) and around the world.
"We're in a world economy. We can't, say, plant 15 percent less in California and think that that will raise the price 20 to 25 percent," Davis says. "We don't set the price."
Nor do they have much control over the other end of the process, the markets: Rice farmers would love to sell to Cuba, Iran and Iraq, but U.S. sanctions prohibit it. And while about 25 percent of California's rice is exported to Japan, that country protects its farmers by limiting the amount of foreign products allowed in and by subsidizing its farmers at a much higher rate than the United States does.
Davis, 55, is from a farming family. His fields are near the original 22 acres that his grandparents bought when they moved here from Oklahoma. His father farmed as well, originally peaches and other crops, switching to rice in part as a way of attracting his son, then in college and considering other jobs, back to farming.
"It was a much more stable crop," says Davis, who began growing rice with his father as a senior in college in 1969. "I didn't see how I would be able to support a family growing peaches."
Today, Davis farms a total of about 2,200 acres spread out over several parcels here in the Sacramento Valley, where his flat rice land offers vistas of mountains in the distance. He grows rice and wild rice -- most of the latter is sold to Uncle Ben -- and also does custom farming for other people as a way of getting more out of his equipment.
"My father probably made as much on his 500 acres as I do on all of my acres today," says Davis, who leases rather than owns his farmland. "Prices were higher in his day, and costs were lower."
Should Congress decide to limit subsidy payments, Davis says he probably would have to cut back on the acreage he farms. But that is an inefficient solution, he says.
"I still have all my equipment, and the only way to make money is you try to operate with some sort of economy of scale," he says.
Davis, like other California rice farmers, is readying his fields for planting. Fields are laser-leveled to extreme flatness -- a half-inch or less grade -- and then seed grooves are etched into the soil. Planes flying overhead will shoot seeds over the fields, and the seeds will roll into the grooves. The fields are flooded to about 5 inches of water above ground, which the rice but not the weeds can grow above.
Farmers also flood their fields over the winter, providing a habitat for migrating waterfowl and often leasing their land to hunters.
The wetlands that rice farmers create take the place of the natural ones that have been lost in the state through urbanization and development, says Tim Johnson, director of the California Rice Commission. The rice fields provide habitat for 140 species of wildlife, some of which are endangered, he says.
Johnson considers the wetlands just one of the benefits that agriculture, and thus subsidies, brings to a state that has already lost much of its connection to its past.
"It's not really about the farmer," Johnson says of the controversy over subsidies. "The farmer is just a conduit. Farming offers a huge economic base for counties such as these. This is really an agricultural state, bracketed by urban areas. That's our heritage; that's who we are.":
