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, firstname.lastname@example.org
Center for Rural Affairs
Values. Worth. Action.