Earning Farm Subsidies … on the Upper East Side?

38 Monroe Street, on the Lower East Side of Manhattan, is a 13-story brick apartment building a block and a half from the Manhattan Bridge. It is part of the Knickerbocker Village complex, built in the 1930s as part of an early slum-clearance program, and the building retains an institutional blankness.

One thing it does not resemble is a farm, which is significant only because one building resident, located on the 12th floor, has an odd distinction. According to data from the Environmental Working Group, one unit at 38 Monroe Street is home to K & T Farm Corp, which received $100,000 in farm subsidies in 2010 – more than anyone else in New York City.

The farm, records show, is actually located in Burlington County, N.J., and much of the subsidy was a disaster recovery payment for storms and flooding that hit the state in 2008. The farm’s owner of record, Tin Sang Ip of Monroe Street, could not be reached for comment. But the payments – along with about $54,000 in 2008 and a few thousand dollars in previous years – put him in eclectic company, among the top farm subsidy recipients based in Manhattan, that least rural of American counties.

Local link to a national debate

With negotiations well underway on the 2012 revision of the federal Farm Bill and congressional leaders across party lines eyeing spending cuts, subsidy payments nationwide are under scrutiny. And while farm subsidy payments to New York residents are a relative drop in the bucket – the state received $62.5 million in subsidies in 2010, or 0.4 percent of the $15.2 billion that was given out nationally – the list of the city’s top recipients illustrates the quirks and complexities of federal farm support programs.

Besides Ip, of K & T, they include Scamman & Co., LLC, an entity that runs a farm in Missouri and is partly owned by a Bloomberg News energy reporter. Also on the list is Rohde Sisters Farm, in North Dakota, owned by two sisters who grew up in the state – one a Washington lobbyist and the other a public relations executive who lives on the Upper East Side.

They’re joined by a former Lehman Brothers financial adviser with a farm in Illinois and a Queens neurologist with a farm in Wilcox County, Ala.

Receiving the second-highest subsidy in 2010 was Romano-Johnstone LLC, an entity controlled by people and trusts in Fort Worth, Texas and Tulsa, Okla. The farm it operates is in Kearny County, Kan. The subsidy checks – $71,211 in 2010, a combination of disaster relief and direct subsidies for barley, sorghum and wheat – go to an apartment on Amsterdam Avenue.

‘Temporary’ help looks permanent

While the federal government has provided financial support for agriculture for more than a century, subsidies grew dramatically in the 1930s as part of the New Deal. Programs introduced in that era, many of which remained in place for decades, included guaranteed minimum crop prices, government purchases of excess crops, and payments to farmers to stop using some land – a move intended to curb overproduction and keep prices up.

Today, in the national debate over farm subsidies, the direct payments given to producers of specified Program Crops are the most controversial.

The Program Crops arrangement was established in 1996 under the “Freedom to Farm” law, an effort by free-market proponents to help growers of corn, soybeans, wheat, cotton and rice reduce their dependency on subsidies over time.

The idea was to pay traditional growers of those crops a fixed annual amount, regardless of what they actually choose to grow. Since the payments do not require owners of land that has traditionally been used for, say, corn to grow corn, the owner, in theory, is free to risk introducing other crops without losing steady income. Under the original law, the fixed payments were to decrease over time as farmers of the Program Crops diversified and eventually required less support.

But in practice, critics say, changes through the years have effectively made the payments permanent, providing a steady revenue stream for a relative handful of large and wealthy landowners who don’t need the money. As critics, including the Environmental Working Group, point out, the payments are steady from year to year – not pegged to need or to crops’ market value.

“You have a good year, you have a bad year, you get a huge check,” said Joel Berg, executive director of the New York City Coalition Against Hunger and a prominent critic of direct subsidies. “These are the poster child for a broken political system.”

In recent years, the top New York City subsidy recipients have not tended to receive direct payments, though there are exceptions. Romano-Johnstone has taken in about $23,000 a year in such direct subsidies, mostly for wheat, every year since 2007. The third- and fourth-largest subsidy recipients in the city in 2010, Dina Shapiro Fried and Pamela Shapiro, were among four family members with ownership interests in EBS Associates LLC, a farm in Slate Hill, in upstate New York. That farm took in $781,743, mostly for corn, between 1995 and 2010 – though the corn subsidies slowed to a trickle in 2009 and 2010.

Paid not to grow

In their place, since 2008, Fried and Shapiro have received subsidies under the Conservation Reserve Program – the source of much of the subsidy money directed to New York City’s top recipients. That program, in essence, pays landowners not to farm property that they could be using to grow crops, with the aim of preventing erosion and restoring wildlife habitats.

The government, which restricts the type and location of land that is eligible for the program, distributes rental payments to property owners who establish what it calls “resource-conserving covers” – including grasses, trees and other plantings. Unlike the Program Crops program, where farmers can raise new crops on land formerly used for different produce, land subsidized under the Conservation Reserve Program is, theoretically, not farmed at all. In 2010, about 30 million acres fell under conservation subsidy programs, which paid about $2 billion nationally. Direct payments, by contrast, totaled about $4.3 billion.

In 2010, Dina Shapiro Fried received $43,936 in rental payments from the conservation program, and Pamela Shapiro got $35,698. The money was sent, according to the Environmental Working Group data, to a penthouse co-op apartment at 339 E. 58th Street. Neither Fried – a lawyer whose husband owns a development company—nor Shapiro could be reached for comment.

Another of the top city recipients, Ricardo L. Rengifo of Whitestone, Queens, also draws the bulk of his subsidy payments from the conservation program – about $24,000 a year, with annual payments going back decades. Rengifo, a neurologist who is originally from Colombia, also receives about $5,000 a year in direct subsidies for wheat, but the conservation subsidies, he said in a telephone interview, cover other parts of his 1,400-acre Alabama farm.

“You get some money to grow timber in parts of the land, the ones that are supposed to be good for the environment, and good for the wild animals,” he said.

Rengifo, who said his son also owns about 900 acres of farmland in the same area, said the subsidies had been a great help to farmers who are at the mercy of unpredictable weather.

“You’re sending your kids to college, you’re paying your taxes, you’re helping the town, and all of a sudden everybody’s broke,” Rengifo, 79, said. There are blights to consider, he said, like Japanese beetles that eat some crops. And, he added, “When it’s too dry and we have the storms like Katrina, it knocks down the trees, so then it becomes a problem once again.”

While the farm has been in Rengifo’s family for decades, though, he said does not farm it himself, and neither do his sons – though the family has enjoyed spending time on the property over the years.

He said, though, that he sympathizes with the problems faced by tenants who do farm there, adding, “Being a farmer is more difficult than being a neurologist in New York City.”

Time to means-test?

Berg, of the Coalition Against Hunger, called the conservation payments “less egregious” than direct subsidies, since they are more likely to go to family farms that need them – including to fruit and vegetable producers, who are not eligible for most other subsidies.

Still, he said, there is the question of whether the people receiving the money actually need it. Those who are conservation-minded but comfortable financially could simply donate their development rights to a nonprofit organization, he argued. Even considering the conservation program’s benefits, he added, “We do have income limits for every other good thing. You’d say food stamps are a good thing, but millionaires don’t get that.”

Reformers from across the political spectrum have proposed restrictions on who can receive subsidies, including income caps, requirements that recipients actually work on the land, or rules that recipients must live near the land for which they receive payments. Others, like the libertarian Cato Institute, have proposed more drastic measures – in Cato’s case, ending crop subsidies altogether.

In October, bipartisan support emerged in Congress for a move to stop some subsidies to millionaires: The Senate voted 84 to 15 to end direct payments to anyone with an income over $1 million.

One New York millionaire who receives subsidies is Mark Rockefeller, who received the eleventh-highest amount in the city in 2010. Rockefeller, the son of former governor Nelson Rockefeller and the chairman of the board of the National Fish and Wildlife Foundation, received $13,384 in 2010 – and $329,250 since 2001 – in conservation payments for land he owns in Bonneville County, Idaho, near a hunting and fishing resort he also owns.

Those payments won’t stop under the new income cap, though – it doesn’t apply to conservation subsidies.

Ties to the land

Some New York City farm owners, though, say their attachment to the farms for which they receive taxpayer subsidies is about more than money.

W. Phillip Walsh, the financial advisor formerly with Lehman Brothers, noted that he grew up on a farm in Illinois, the state where he receives conservation subsidy payments. Walsh, who records show bought a $2.95 million condominium in the Financial District in 2008 and who now works at Wells Fargo, did not comment further.

Jim Polson, who covers the energy industry for Bloomberg News, said that with or without subsidies, he would probably never sell the farm in Missouri where he grew up. He says he was raised not to by his late mother, who left the farm to him and his sister when she died in 2004.

Instead, Polson, who lives on the Upper West Side, has an arrangement by which a cousin – who works on the land – pays some rent and shares some of the profits. The farm, which produces corn and soybeans, receives about $7,000 a year in direct payments for those crops, and took in $27,742 in 2010, mostly because of a $20,760 disaster payment that year.

“I don’t know that my sister and I need farm subsidies,” Polson said in an interview. “One reason being that this land has been in the family for generations and it doesn’t have any debt on it.”

Another reason, he said, is that the government now requires ethanol as an additive in gasoline – a boon to corn producers.

Still, he said, farming is unpredictable. His cousin’s son, who has a nearby farm of his own, struggles to make money because of debt incurred buying equipment. One year’s subsidy payments on his own farm, Polson said, were part of a government program to buy new high-efficiency irrigators. These were rendered superfluous, he said, when the land began flooding.

In general, Polson said, subsidies have fallen short of their goal of protecting small farmers. His own family, he said, has gotten out of the cattle business because it cannot compete with large-scale feedlots. Much of its corn, he added, is shipped to Kansas City for processing – in part for high-fructose corn syrup – or to Texas to feed livestock.

“The fact is that, if you talk to my cousin, he will tell you that he’s one of those fighting giant corporate agriculture, and fighting for family farms, and it’s a losing battle,” Polson said. Besides, he added, “If I had just gone through five years of drought, I might very well tell you that I needed that money.”