Dozens of big farms in the San Joaquin Valley, some owned by such conglomerates as Bangor Punta, Tenneco, Chevron USA, Shell Oil and Superior Oil, will receive millions of dollars worth of free cotton through the Reagan administration's payment-in-kind (PIK) program.
In Fresno, Kings, Kern and Tulare counties, nearly 50 farms will receive cotton worth $1 million or more each, according to Department of Agriculture records at county offices of the Agriculture Stabilization and Conservation Service. They also show that dozens of smaller farms in the four counties will receive free cotton worth more than $500,000 through the federal program.
Among the beneficiaries is Everett G. (Bud) Rank Jr., chief administrator of the PIK program and head of the Agriculture Department's Stabilization and Conservation Service since 1981. He and four partners in a Fresno County operation, Cinco Farms, will receive 1.3 million pounds of cotton, worth slightly more than $1 million, in return for idling their entire cotton base of 2,163 acres.
The PIK program will give farmers amounts of free cotton, wheat, corn and rice in return for not planting all or part of their 1983 crop. It is intended to reduce market-depressing surpluses and increase farm prices. Last year, net farm income, adjusted for inflation, hit its lowest mark since the Depression.
But PIK is coming under increasing fire in Congress and across the farm belt. Critics, charging that the program is too generous, estimate that it will cost taxpayers $12 billion or more and claim that it undermines farm-supply companies and gives outsized benefits to big farmers, who in many instances need help the least.
Rank, in a meeting with farmers here last week, touched on these issues. He said farm program costs are becoming "kind of embarrassing" and are "bleeding the taxpayer."
"Being from California, our philosophy is for a market-oriented agriculture," Rank said. "We can't expect the American taxpayer to keep subsidizing agriculture . . . . The American taxpayer at some point is going to say 'that's enough' . . . . We farmers bitch about welfare and we all have our hands out. You have to realize the taxpayers are not going to guarantee your profit."
Willoughby Houk, a rancher near the community of Firebaugh who idled 91 acres and stands to get only 98 bales of free cotton, said, "The rich just get richer in this program. They never should have waived that $50,000 limit on federal payments to individual farmers."
As PIK was being designed late last year, Secretary of Agriculture John R. Block insisted that the program would not work unless it was open to all farmers. He argued that it would not attract enough participants if a congressionally imposed limit of $50,000 on federal aid payments to individual farmers was left in place.
The Agriculture Department, which failed to win congressional authorization for the PIK with a waiver of the payment limitation, went ahead on its own. Government lawyers reasoned that the $50,000 limit would not apply because farmers would be given a commodity rather than cash.
That decision has turned out to be a boon for many of the country's largest grain and cotton farmers. In the four major cotton-growing counties of the San Joaquin Valley, 503,479 acres--two of every five eligible acres--have been enrolled in the program.
In this valley, where farmers traditionally have been harsh critics of federal agricultural support programs, yet have been quick to take advantage of them, there is an additional dimension to benefits from Washington.
Federally subsidized irrigation water available to many farmers here at a fraction of its real cost has contributed to extraordinary cotton yields from a desert landscape that otherwise would produce little. Farmers from this area mounted a major lobbying effort to persuade Congress to retain their water subsidies in last year's revision of the Reclamation Act of 1902.
The large PIK payments to the valley's farmers are based on these high yields, which range between two and three bales per acre of high-demand, top-quality cotton, compared with one bale per acre for the typical dry-land farmer in the South and Southeast.
They also are getting another break in the PIK program. Because of the cost of irrigation water here, they have been exempted from the program's requirement to plant their idled fields with cover crops to prevent erosion.
The Agriculture Department also is permitting farmers here to use a "skip-row" cropping technique that will enhance yields further by alternating planted strips of land with idled strips, thus creating more "outside" rows that get more full sunlight. Some farmers in the valley also are being allowed to plant grapevines on idled land if they intend to give up cotton as a crop.
Some of the biggest recipients of PIK cotton here also cashed in handsomely in 1979 when the federal government paid millions of dollars in low-yield disaster payments to cotton farmers stricken by drought the previous year.
One such operation is South Lake Farms, owned by Producers Cotton Oil Co., a subsidiary of the Bangor Punta Corp., a Connecticut-based conglomerate that makes airplanes, boats, firearms, sporting goods and other industrial products. South Lake Farms, in Kings County, received $1 million in disaster aid in 1979. This year it will get at least 4,524,329 pounds of PIK cotton, worth about $3.6 million, according to the government records.
Producers Cotton Oil Co. President Gerald Brewer, who is also president of the National Cotton Council, refused to divulge details of his company's participation in PIK, although he said that the company has farms "in two or three counties." Producers Vice President Sid Cox refused to identify the counties or to name the farms, then hung up the telephone.
South Lake is only one of a number of conglomerate-owned farming operations that will benefit from the cotton portion of PIK.
In Kern County, Belridge Farms, an affiliate of Shell Oil, is due to get 3.1 million pounds of cotton, worth about $2.5 million, plus 37,000 bushels of free federal wheat, worth about $150,000, through another part of the PIK program.
In Kern and Tulare counties, farming subsidiaries of Tenneco West, an arm of the Houston-based Tenneco oil and gas multinational, will get slightly more than 2 million pounds of cotton, with a current resale value of about $1.7 million.
Chevron USA, although not directly involved in farming, will cash in on PIK through its ownership of extensive agricultural land put into the program by farmers who operate on leases.
At least nine of these operations in Kern, Fresno and Kings counties will give Chevron more than 502,000 pounds of cotton, with a value of at least $401,000, as its share from the PIK program. Chevron also stands to get at least 2,346 bushels of PIK-program wheat from two of its Kern lease operations.
In Tulare County, the Superior Farming Co., a subsidiary of Superior Oil, will get 222,707 pounds of cotton through PIK, while the Standard Oil Co., operator of another farm, will receive 43,641 pounds of cotton.
Farmers in Fresno County, the richest agricultural county in the world, stand to get 73.2 million pounds of PIK cotton, with 26 of the growers receiving more than 1 million pounds each. Many of them are in the Westlands Water District, a 600,000-acre federally irrigated zone where farms of 1,000 acres and more with high yields are common.
Westlands farmers, represented by a phalanx of Washington and California lawyers, lobbied Congress to rewrite the 1902 reclamation law in ways that would protect their large holdings and their access to the cheap federal water.
Federal district and appellate courts had held that the 1902 law, limiting an individual to 160 acres of federally irrigated land and requiring owners to reside on the land, had been violated on a wholesale basis in Westlands. The 1982 revision of the law will increase water rates in Westlands, but it wiped out the tight restrictions on farm size and residency.
The biggest PIK recipients from Fresno County include Hillside Farms, owned by Steven H. Hall, and El Dos, operated by Yataro and Isamu Minami, with more than 4.6 million pounds of cotton each. Harris Farms, operated in Westlands by John Harrisll get 3.4 million pounds.
The largest individual PIK recipient in the valley apparently will be C.J. Ritchie Farms in Tulare County, which is scheduled to get 4,798,862 pounds with a market value of $3.8 million.
Don Jackson, who operates alone and in partnerships on about 25,000 acres in Kings and Tulare counties according to government records, will get about 3.5 million pounds of cotton, which could be resold today for more than $2.8 million.
Jackson said in an interview that he had no qualms about accepting federal aid because he felt that federal farm policies were the root of his and other farmers' economic troubles.
"They're helping us out of something they got us into," Jackson said. "It is a salvation for farmers across the United States. There would be wholesale bankruptcies without it . . . . The government uses food as a big hammer over the markets. The whole concept of federal support levels is wrong . . . . If they kept their hands off, we would be okay."