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Published on Wednesday, December 19, 2001 in the San Francisco Chronicle
Rich Get Richer on Subsidies
Schwab Duck Club Qualifies for Federal Rice Crop Supports
   by Glen Martin

There's not much to mark the place -- a steel gate topped with stylized silhouettes of ducks, a metal sign engraved with the legend, "Casa de Patos." A driveway wends through a grove of oaks. Rice fields stretch to the west, and a thick woodland jungle hugs Butte Creek, the eastern border of the property. Locals know this 1,550-acre expanse of marsh and cropland owned by stockbroker Charles Schwab as one of the finest duck clubs in the Sacramento Valley.

True, Schwab raises rice on his property, but his primary reason for ownership is duck and goose hunting. He and his guests shoot over the property's permanent wetlands and seasonally flooded rice fields just north of the Butte Sink, a prime area for migratory waterfowl.
  But Schwab -- whose net worth is estimated to be $4 billion -- doesn't have to foot the entire bill for Casa de Patos. He gets plenty of financial help in the pursuit of his sport. Last year, he and his family received $564,000 in federal price supports for rice.

Subsidies for agricultural commodities -- rice, cotton, corn, wheat and soybeans -- long have been a staple of the federal farm bill, which is adopted at multiyear intervals.

CLOSER SCRUTINY OF SUBSIDIES
But as Congress debates this year's farm bill -- a behemoth piece of legislation involving expenditures of $170 billion -- commodity payments are engendering increasing controversy, especially when the recipients, like Schwab, are rich.

   Although such subsidies are made in the name of family farms, small farms are not their main recipients. In fact, financial tycoons and Fortune 500 corporations reap bales of cash from farm programs. Payments go to farmers residing in such unlikely places as Aspen and Atherton.

Critics of the crop subsidy structure say Schwab is a textbook example of what is wrong with the system.   "There are plenty of family farmers who are struggling and need help in California," said Susanne Fleek, director of government relations for the Environmental Working Group, a Washington, D.C., group that has compiled individual subsidy data for the first time.

"But Charles Schwab is not among them," Fleek said. "I doubt anyone would even call him a farmer. The payments to Schwab are doing nothing to keep land in agricultural production, and that mocks one of the basic tenets of the subsidy program."

 A Schwab spokesman said Schwab declined to comment.

Supporters of U.S. farm policy counter that the commodity subsidy programs are necessary to keep land in production, farmers working, food prices low and rural communities healthy.

While California is the nation's biggest agricultural producer, most of the crop subsidies go to Midwest grain farmers. Only 9 percent of California's farmers, mainly large Central Valley cotton and rice growers, get crop subsidies.

RICE PAYS TWICE
Like most of California's 2,500 rice farmers, Schwab gets his rice money from two different U.S. Department of Agriculture programs.   The first pays a subsidy based on production: The more rice produced, the greater the payment. The second program makes up the difference between the loan a farmer typically takes out each year to plant a crop and the price received for a crop.

The programs assure that Schwab's rice will always be sold at a profit. Essentially, his crop is insured by the government -- at zero cost.

   Criticism of the current crop subsidy structure is coming from the right as well as the left. "Cases like (Schwab's) are representative of the problem in a nutshell," said Cena Swisher, a senior program director for Taxpayers for Common Sense, a Washington, D.C., budget watchdog group.

  "Study after study proves that these commodity payments go to large corporate farms," Swisher said. "You end up with people like Mr. Schwab, people who don't need the money, asking the taxpayer to beef up their bottom line -- or help them hunt ducks."

   But rice industry advocates, government farm service agents and even many environmentalists contend that there is great public benefit to promoting rice cultivation in the northern Sacramento Valley -- regardless of who receives the subsidies.

   Rice culture is essential to the region's economic and social fabric, said Donald Perez, the executive director for the Glenn County office of the federal Farm Service Agency in Willows. The agency issues federal commodity payment checks to eligible growers.

   "What do you have in Glenn County?" asked Perez. "In Willows, you have government -- county, state and federal -- and businesses that support agriculture. In the rest of the county, you have rice. That's it. Without rice supports, this entire area would depopulate."

  
ENVIRONMENTAL BENEFITS

 Federal rice subsidies have also had tremendous environmental benefit, supporters argue.

   "Ten or 15 years ago, the Sacramento Valley held about 3 million overwintering waterfowl," said Tim Johnson, the president of the California Rice Commission. "Now the number of birds have more than doubled, and that's because of rice."

   Most rice fields were burned after harvest to destroy the stubble. But clean air regulations changed that -- now they're flooded. The flooded fields constitute a tremendous habitat for migratory waterfowl, which feed on leftover grain and aquatic invertebrates.   "What you end up with are thousands of acres of seasonal wetlands," Johnson said. "That's a terrific benefit to all kinds of wildlife -- not just ducks and geese."   Environmentalists acknowledge the wildlife benefits of rice planting but say there must be greater equity in the way federal farm subsidies are distributed.   "When we're spending $20 billion a year in public dollars on these programs,   it's absolutely necessary we make sure the money is going to the people who need it the most," said Fleek, of the Environmental Working Group. "We do not see why it's necessary to give Charles Schwab these payments, when they obviously aren't necessary to keep him farming."   Perez, of the Farm Service Agency, said that the question of commodity payment eligibility is a legitimate one -- and that it is also beyond the purview of the Farm Service Agency.   "That's decided at the congressional level," he said. "If you want to put a new means test to eligibility, you can -- you can make a case for it either way. But right now, if you grow rice, you're entitled to the payments. It doesn't matter who you are."   ©2001 San Francisco Chronicle