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Why Big Ag Loves the Drought

image of Ted Genoways
Even as their crops withered and died, big Midwestern farming operations harvested record profits this year. How can that be? A Nebraska native investigates.

It was a scorching day in late July: bone-dry, heat washboarding the air. “It’s 105 in the shade,” my father deadpanned, “and there’s no shade.” Together with Dad’s double-cousin Austin (their fathers were brothers, their mothers sisters), we climbed a high sandy bluff to the north of Bayard, the small town in western Nebraska where they grew up together -- and where Austin still lives. Atop the tiny knob, we looked back toward the green North Platte River Valley below us, its neatly rowed fields of corn and beans irrigated by the snaking Tri-State Canal.

“Now is this a view or what?” Austin asked. Everything about his intonation and delivery -- from his flat nasal accent to his gentle stammer -- is the voice of my grandfather. When my dad was a kid, my grandfather was a “ditch rider” on this part of the Tri-State -- one of about a dozen men whose job was to keep water flowing through what was then some 75 miles of canal and more than 300 miles of ditches that fork out to irrigate 65,000 acres of otherwise arid fields.

Today Austin oversees this whole section -- about 25 miles of the main canal. “Everything from there going damned-near to Bridgeport is my area,” he said, pointing back toward a drainage ditch to the west. “So what you see is basically what I control. This is my bailiwick.” Austin is 69 and says after more than four decades as a ditch rider, this year on the Tri-State will be his last. The burdens of managing the water are becoming too great, he told me; he’s tired of the bitterness that comes from the high-stakes business that farming has become.

“Farmers are the biggest gamblers there is,” he said, “but they’re their own worst enemies.” They gamble by getting out as early as possible to plant, by waiting as late as possible to irrigate. In good years, like last year, when everything goes right, the harvest is high. But in years when something goes wrong -- a sudden hailstorm, an infestation of cutworms, too little rain (or too much) -- they can lose big.

This year, things went very wrong. Unusually warm weather in the Rockies produced almost no snowpack last winter, yielding little runoff to feed Wyoming’s rivers and streams. The equally mild spring encouraged farmers to get out early to plant, so, when the moderate April turned into a blistering June, everything was high in the fields -- especially the corn. For weeks, the mercury pushed north of 100 nearly every day. Acres of corn went from stout green stalks to brown skeletal rows; many crops withered in the fields before farmers could even harvest them for silage.

With only three weeks left to go, 2012 is almost certain to be the hottest year since the National Oceanic and Atmospheric Administration started keeping records in 1895, and in Nebraska -- like every other state from Illinois to Wyoming -- it also threatens to be the driest since the Dust Bowl. Last week’s U.S. Drought Monitor report from the University of Nebraska–Lincoln finds that nearly two-thirds of the continental United States is experiencing some form of drought, which is expected to persist in all but a few areas over at least the next three months. The New York Times reports that just over a quarter of the nation’s wheat crop, planted this fall, is in poor condition -- the worst since the U.S. Department of Agriculture began keeping records in 1986. The Nebraska Wheat Board told the Times that the state’s farmers are planting in dehydrated soil, hoping future rain or snow will allow the seeds to sprout. Wyoming’s Pathfinder reservoir, which supplies much of western Nebraska with water, is below half its normal levels.

Kevin Adams, who manages the Tri-State canal, told me he feared that next year the state’s irrigation system would have “about a 30-day water supply for our farmers,” when they typically need at least three times that to supply a good harvest. As devastating as this year’s drought has been, think how much worse next year will be if farmers in Wyoming, Colorado, and Nebraska are trying to grow without benefit of irrigation.

And yet, even as crops wither and food prices soar, things couldn’t be better for Big Ag’s bottom line. As much as corporate farms may succeed in years of plenty, they succeed even more in years of scarcity -- thanks to government support of insurance premiums and high payouts due to crop loss. The U.S. Department of Agriculture is predicting that the farming sector will see a record $122 billion in profits this year -- up 3.7 percent from last year’s profits, which also set a record. But those record profits could also be covering up fatal flaws in the system. With concern mounting that 2013 will be even hotter and drier, is the American farm being stretched to the breaking point?

* * *

My grandfather left the Omaha stockyards for western Nebraska in 1936 -- the worst year of the Dust Bowl, the dry time against which all other dry times are measured. He worked as a tenant farmer, raising sugar beets and beans, and my grandma got them through lean seasons on her teacher’s salary in the county schools. They hung on, year to year, until the blizzard of ’49 pushed the family over into bankruptcy. Grandpa took a job as a ditch rider, and for three generations now, my family has watched big business triumph over family farming with the help of government intervention and market manipulation.

You can start by blaming Richard Nixon -- or at least his controversial Secretary of Agriculture, Earl Butz, who, despite growing up on an Indiana dairy farm, spent most of his career in academia, industry, and government as a key voice for transforming small-scale farming into big business. (His famous rejoinder to farmers who complained: “Get big or get out.”) Butz gutted farming policies designed to discourage overproduction that had been in place since the New Deal, exhorting farmers instead to “plant fencerow to fencerow” and unloading any excess crops on the global market. That included selling the U.S. grain reserve -- established after the Dust Bowl to guard against future droughts and food shortages -- to the Soviets in 1972.

To take advantage of the new policies, farmers acquired more land, invested in new and more advanced equipment, and bought more fertilizers and pesticides and engineered seeds. Interest rates were low, so farmers without capital could afford massive loans, using their land as collateral. Those growers who felt squeamish about so much overhead often “got out,” as Butz had instructed, keeping a ready supply of land available at bargain prices for still further expansion.

“People used to have an 80-acre farm and raise a family,” cousin Austin said. “Now you’ve got eight-thousand-acre farms. Four, five, or six families live off that farm, but one guy owns it, and everyone else is hired help. It’s just like a corporation.”

Big companies, with lots of resources, can afford to irrigate and fertilize and spray against pests; their yield increases, but it also drives down prices. Everyone gets locked into a system where farms carry outrageous overhead and need outsized grosses just to show a profit. So, to insulate themselves against total ruin in bad years, large-scale farmers began taking out more crop insurance starting in the 1990s -- especially after the U.S. Department of Agriculture began covering premiums during the Clinton administration.

Production kicked into high gear. Today you drive around the sandy bluffs outside Bayard, and you see crops (especially corn) planted in places no farmer would have dared waste seed, much less water, a generation ago. Aside from misguided policies, new technology -- everything from the GPS-mapped furrows to computer-controlled irrigation systems -- helped make it possible. Plus, the more farmers planted, the more they stood to profit. And if they suffered losses, no problem -- insurance would cover it. And if crop prices drop, federal subsidies kick in to make farmers whole.

But, as small farmers are quick to point out, that profit is far from evenly distributed. Of the $277.3 billion allocated for farm subsidies from the expansion of the program in 1995 until last year, roughly 75 percent of the money went to the top 10 percent of farmers. If you expand to look at the top 20 percent of farms, nearly 90 percent of the allocations are accounted for. In real dollars, that means that the average corporate farm receives more than $31,000 per year, while the average small farm receives less than $600, in a typical year. And nearly two-thirds of American farmers collect no subsidies at all. In years of crop failure, Big Ag actually makes out even better, because of the way the subsidies are calculated. Indeed, if trends from past years hold true for 2012, the top 20 percent of recipients will garner an average of more than $45,000 from the government, compared to less than $1,000 for the remaining 80 percent.

So programs designed to save family farms are, instead, helping big business out-compete them, and eventually gobble them up, all while using their dollars and political clout to push for larger subsidies and more protection -- big beef and pork producers are currently trying to get into the act -- as agribusiness lobbyists in Washington cloak their efforts in the guise of defending small farmers.

“It’s the most egregious case of identity theft in American history,” John Hansen, state president of the Nebraska Farmers Union, told me. “It’s the abuser assuming the identity of his victims in order to victimize them.” But farmers are often reluctant to publicly decry the system. Even small operations are often partly or wholly dependent on larger producers like Cargill and Monsanto. They aren’t about to endanger relationships that they may rely on in order to stay in business, especially in drought years like this one, when business is bad -- and getting worse.

* * *

Mike Leever isn’t afraid to get dirty. In fact, according to my cousin Austin, he may be the most dogged and single-minded farmer and feedlot operator in the North Platte River Valley -- a man with the reputation for working a crew one-third his age into the ground and only taking two weeks off each year to go salmon fishing in Alaska. Otherwise, he’s on his property, grinding it out from sunup until suppertime every day, and when Austin introduced us, Leever was sweat-drenched from repairing equipment in his machine shed, the brim of his Dupont Pioneer seed cap crusted with rings of sweat. So when, amid the blanketing July heat, he pounded the passenger seat of his feed truck to welcome me in, sending layers of dust billowing in great clouds, he offered only a half-hearted shrug by way of apology.

We rode down the center lane of Leever’s feedlot, the side chute of his truck emptying a mix of wet distillers grain (a high-protein byproduct of ethanol production) and ground-up straw and oats into the feed troughs. But the day was so relentlessly sweltering that the cattle barely stirred, only a few deigning to poke their heads through the fence to eat. “They love the stuff,” Leever said, “but it’s just too hot.” He said that his feedlot was packed compared to normal at that time of year. He had to bring his own black angus in from pasture early, because there was no forage in the fields and no hay to feed. And ranchers from as far away as Missouri had been selling off to Leever, because they had no access to water and were simply unable to sustain their herds. (Carla DeKay at the Ogallala Livestock Auction Market in Ogallala, Nebraska, told me that they saw ranchers selling off two months early.) But bringing cattle into feedlots in the dry heat had its hazards too; the lots are typically unshaded, and Leever told me he had lost four head the week before to dust pneumonia -- a painful, smothering death caused by the lungs filling with dust and clogging the alveoli.

But Leever didn’t buy into the talk of the drought bankrupting farmers and causing another crisis. “Back in the ’80s we sold farmers out two a day,” he told me. “But the ones that quit, more or less, just farmed beets and beans -- and sold out to guys who were more diversified. You had some cows and calves and something else, when one was bad, the other one made up for it. Like anything, the more diversified you are, the better chance you stand of surviving.” It may be easier for Leever to take this long view: his family has been around Bayard for more than a century. But he conceded that each successive generation has had to grow more, diversify more, and that has meant more and more work each day -- and, in Leever’s case, for more years. “My great-grandpa, he quit in 1947,” Leever said. “My grandpa lived just north of us. He quit in ’67. Dad moved five miles away -- out east of Austin’s; he had his auction in ’87. I should have got to quit in 2007.” But Leever, at 63, has four years left until Medicare kicks in.

“You ticked off four generations there,” I said.

“Fifth quit -- didn’t want to do it,” Leever jumped in. He said it matter-of-factly, but the regret was clear in his voice. “But farming is not the family farming that it used to be. We do everything fast -- not better, just faster, with less manpower.” A big part of that, he said, was the arrival of Eastern interests -- many of them farmers bought out by developers in the Mid-Atlantic -- who don’t understand the unique demands of growing in western Nebraska. They want to treat all land as if it were the same soil composition and required the same amount of water, he said, and they want to farm remotely. “They push a button and irrigate,” he said. The center-pivots come on, but no one is checking the fields. If their crops fail, so what? They’ll just collect the insurance, and Leever told me he spent the whole summer managing his water while watching mega-operations roll their center-pivots across dead fields.

Thus, in the midst of what appears to be the worst drought since the 1950s -- perhaps the 1930s -- Big Ag has been able to cash in by squandering water and natural fertilizer and to deplete the soil, and by filing big insurance claims and pulling in top-level subsidies. Meanwhile, the scarcity of key resources has smaller producers worried that Big Ag may be steering us intentionally toward crisis, in order to achieve still greater consolidation.

In particular, my cousin Austin is concerned about the unprecedented burden placed on the reservoirs in Wyoming by big farming operations that keep watering their crops in the middle of a drought -- regardless of whether they’re already withered and died. From our vantage on the bluff above Bayard, overlooking the Tri-State Canal, Austin had pointed toward the dun-colored Wildcat Hills in the distance, a stark contrast to the valley below us -- which was kept green by the water flowing through “his” canals.

What will happen next year, he wondered, if the region’s overextended farmers don’t get enough precipitation to replenish their already-dwindling water supply, and the valley fades to brown like those distant hills. With the Midwestern drought already predicted to extend at least another three months, the prospects aren’t good.

“You can have one bad year and survive it,” he told me. “You can’t have two. If we get snow in the mountains this year, everything will be fine. But if we don’t get a good snowpack, we could be back to the dirty ’30s.”

image of Ted Genoways
Ted Genoways, OnEarth's editor-at-large, is the author of The Chain: Farm, Factory, and the Fate of Our Food (HarperCollins, online at www.tedgenoways.com), an examination of Hormel Foods and the great recession. The recipient of a 2010 Guggenheim fe... READ MORE >
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