Blog for Rural America

The Center for Rural Affairs, a private, non-profit organization, is working to strengthen small businesses, family farms and ranches, and rural communities. Permission to reprint items from this web log is hereby granted, on the condition that clear credit is given to the original source of the material. If the blog provides information for a story, please let us know by sending an email to johnc@cfra.org.

Friday, July 14, 2006

Rep. Marion Berry's Farm Subsidy Adventure

According to an Arkansas Democrat Gazette report by the newspaper’s Washington Bureau Chief Paul Barton, the farm corporation established by Representative Marion Berry (D-AR) received more than $800,000 in farm payments since 1994. The structure of Marion Berry Inc. “might not have withstood close scrutiny by agriculture and tax officials.”

In 1994, Rep. Berry transferred stock in his farm corporation to his son Mitchell Berry and farm manager Danny Sloate. Giving Mitchell Berry and Sloate each 25 percent of the farm corporation allowed Rep. Berry to reduce his ownership while giving operational control of the farm and, theoretically, legal control of the corporation to Sloate. Barton wrote, “Experts on farm subsidies say the way Berry divided ownership kept his corporation eligible for payments even though he would no longer be living nearby.” A unique buyback provision in Berry’s stock divestiture allowed him to reclaim either 25 percent for $5,000 at any time for any reason. This calls the validity of the transfer of ownership and corporate structure into question, along with the farm payments that were predicated on that structure and transfer.

According to Barton, Iowa State University Professor Neil Harl said the transfer of ownership should not have passed muster with the Farm Service Agency. Barton quoted Harl, “I’ve never seen anything as bald as [the buyback provision]. That undercuts the bona fides of the whole thing.”

Barton also wrote that the Center’s Chuck Hassebrook “said agreements such as Berry’s should prompt Congress to immediately address the Farm Service Agency supervision of farming corporations, saying the Agriculture Department too often fails to examine ‘the legitimacy of ownership transfers.’”

post a question or comment here or contact John Crabtree, johnc@cfra.org

Center for Rural Affairs
Values. Worth. Action.

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