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Farm Program Pays $1.3 Billion to People Who Don't Farm

Petty informed potential buyers that because their land had once been an active rice field, they could collect an annual payment from the USDA on the portion that was not developed. They did not have to grow rice or anything else.

"If you have 10 acres and build a house on one, you can continue to get farm payments on those other nine acres without farming," the USDA's Johnson said.

Petty used it as a selling point.

"Does it increase the marketability?" Petty asked. "Sure it does."

Duane Korenek bought 17 acres at the site and is building a house. Korenek said it was "common knowledge around here" that the new owners could collect farm payments. He has received about $2,550, USDA records show.

A few hundred yards up a gravel and dirt road, oilman Rene Hamman purchased 20 acres in May 2003. His two-story house and garage sit on part of the land and are appraised at $338,140, records show. His payments have been about $4,500, according to USDA records. "The money is free," Hamman, 48, said, adding that he thought the money should go to real farmers. "You don't have to do anything but keep the ground."

When Donald Matthews bought his 18-acre tract from Petty in 2002, he never expected to receive farm subsidies on his property, appraised at $381,000.

"I was informed by Mr. Petty that there was a 'rice base' and I was entitled. I said, 'What do you mean I'm entitled? I'm not going to farm rice.' "

But nine of Matthews's acres are classified as agricultural land, for which he has received more than $5,000, records show.

Matthews said he originally was not going to take the money. But he said Petty told him that it would just go to other landowners. "I thought, heck, why should I do that? I wasn't going to give it to somebody else to put in their pocket." Instead, he uses the money to fund scholarships at the county fair and two local high schools, he said.

"Still, I get money I don't think I'm entitled to," he said.

In some Texas counties, the federal payments open the door to another benefit: property tax reductions.

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