The Iowa Farm Bureau recently reported total revenue of about $100 million, the most of any farm bureau by far and nearly three times that of the influential national umbrella group, the American Farm Bureau Federation. Today its investment portfolio is worth more than a billion dollars. Executive compensation is in the high six figures.

The Farm Bureau has reaped these gains while many farmers have suffered through expensive seed and fertilizer prices but low sale prices for their products. The bureau’s stated mission is to provide a “vibrant future” to farm families, but it has been criticized for piling up cash while Iowa farmers struggle. In recent years, Iowa farmers have suffered through low-to-negative profit margins, according to Iowa State University research reviewing 1999 to 2015. And, in the 2010s, Iowa continued its trend of losing farms as operator income dropped 21%, according to U.S. Department of Agriculture data.

“By every metric, they’ve failed their membership,” said Austin Frerick, a native Iowan who has studied the Farm Bureau and been a vocal critic. In the 2018 Congressional midterms, he ran as a Democratic. “The economic situation is getting worse for farmers in Iowa, and (it) keeps getting bigger, and that’s the crux. They are not what their mission states. They are actually working against it.”

FBL, the insurance company, is the engine behind much of the Farm Bureau’s profits. It also illustrates the inherent tension within the Farm Bureau’s for-profit and nonprofit entities. A previously unreported loan to FBL, extended in 2008, drives to the heart of these tensions. 

In 2008, the Iowa Farm Bureau feared that FBL was poised to fail. That fall, the insurer’s stock was cratering in the midst of the global financial crisis. This posed a personal problem for senior Farm Bureau executives — they were compensated by the insurance business. They took action. As the stock price fell, according to court records, the Farm Bureau loaned its struggling subsidiary $25 million. 

Transactions between related entities within such an organization are often scrutinized because of their potential for malfeasance. They are not problematic in and of themselves, but it is important that organizations impose strict controls, such as conflict of interest policies and the public reporting of insider transactions. This helps ensure that nonprofit leaders don’t use supposedly independent entities to enrich themselves or execute sweetheart deals like loans with below-market interest rates. 

The 2008 loan Farm Bureau extended to FBL could raise red flags among regulators if it wasn’t properly controlled or reported. Several experts said the loan was questionable because the Farm Bureau and FBL share executives and the loan was not reported in financial filings. (Now that FBL is private, it’s not subject to the same reporting requirements imposed on publicly traded businesses.)

When asked about the loan, Iowa Farm Bureau spokesman Andrew Wheeler said the bureau “has never directly participated in a loan to FBL Financial Group, Inc. Any information to the contrary would be incorrect or out of context.” Wheeler did not return multiple requests for clarification over the past three months.

The Farm Bureau also did not respond to a list of detailed questions about the loan or parts of this story, such as criticism about the disparity between its finances and those of many Iowa farmers. In its tax documents, the Farm Bureau said it does not make its conflict of interest policies available publicly. A committee reviews potential conflicts of interest each year and makes judgments, according to its tax forms.

The loan

The seeds for the $25 million loan, and the Farm Bureau’s financial growth, were planted when the country began convulsing from the 2008 financial crisis. 

While the nonprofit part of the Farm Bureau might have been more insulated from market gyrations, the company’s insurance business was not. At particular risk was FBL, which had been formed in 1944 as the Farm Bureau Life Insurance Company. In 1996, the Farm Bureau took FBL public. Prior to 2008, the Farm Bureau’s return from FBL was rising steadily. In late 2007, FBL’s stock price reached a high of about $33.

Then, the financial crisis hit, putting FBL in deep jeopardy. The company faced the possibility that its policyholders might stop paying their insurance premiums, gutting its revenue. It would need to raise more money, it said, in order to keep operating normally. “Without sufficient capital, we could be forced to curtail certain of our operations, and our business could suffer,” the company reported to the Securities and Exchange Commission.

By the end of October 2008, FBL’s stock had fallen to about $14.

The effort to save FBL involved the top leaders of the Iowa Farm Bureau, who are charged with looking after the nonprofit’s financial health. 

In late 2008, the Farm Bureau’s general counsel, Edward Parker, contacted First American Bank, according to documents in a state court case. Parker, who is still with the Farm Bureau, has taken no salary from the bureau since he became its general counsel in October 2007, according to nonprofit tax forms collected by ProPublica’s Nonprofit Explorer. 

On Nov. 5, 2008, Parker signed an agreement under which the nonprofit Farm Bureau would loan $25 million to FBL, with the bank facilitating the transaction. 

The loan was not recorded on the Farm Bureau’s public disclosure form, called a 990, although transactions such as these are supposed to be, according to the tax forms collected by ProPublica. 

When asked about the discrepancy, Wheeler, the Farm Bureau’s spokesman, provided the statement saying the bureau was not “directly” involved in the transaction. But there is evidence that Parker, the general counsel, was directly involved.

In a deposition given during a 2016 deposition for the lawsuit, Jim Gardner, who’s worked on the Farm Bureau’s finances since 1996 and is now the chief financial officer, agreed the Farm Bureau’s plan was to loan FBL money. A lawyer asked if Parker was involved with the plan.

“Yes,” Gardner said. 

“And was he involved?” the attorney pressed.

“Yes,” Gardner replied.

But, in 2008, the Farm Bureau had a different story for federal authorities. The day after Parker signed the agreement with the bank, on Nov. 6, 2008, FBL submitted an update to the SEC, saying that “an investment affiliate” of the Farm Bureau had acquired the $25 million loan.

By law, transactions of more than $120,000 between related entities are supposed to be disclosed. If the SEC had discovered the nondisclosure within the 5-year statute of limitations, it could have pursued a case, said Adam Pritchard, a securities law expert at the University of Michigan. 

But the SEC has limited resources, and, generally, instances where shareholders lose money get more attention. “It’s a big problem only if the loan goes bad,” Pritchard said. “People only go looking for false disclosures if something bad happens.”

This wasn’t the case with the loan to FBL. The company’s stock rebounded as the economy recovered, and then spiked in the years after. At the same time, the Farm Bureau’s executives cashed in.

These profits highlight another conflict inherent in loans like the one to FBL. 

Nonprofit executives are supposed to operate in the best interest of the nonprofit, not themselves. But, by not taking salaries and having their income tied to FBL’s performance, the Farm Bureau’s executives open themselves up to questions. 

“Do they have a self-interest in it? It seems to me the answer on the surface is yes,” said Michael Granof, an expert in non-profit accounting at the University of Texas. “They’re not getting paid by the not-for-profit. Therefore, their salary, their well-being, depends on the survival of the insurance company.”

In 2008, Parker’s compensation from the Farm Bureau itself was $0, according to that year’s 990. But his pay from related organizations, including FBL, was about $370,000. Similarly, the executive director made $0 from the Farm Bureau but about $750,000 from related organizations including FBL. And Craig Lang, the president at the time, brought in about half a million from FBL and related organizations. (Lang did not return requests to comment to his personal email address.)

In 2019, the latest year available, Parker’s income from the Farm Bureau was again $0, but his total compensation from FBL and other related organizations was about $840,000. The executive director made almost $1 million this way. Hill, the current president, brought in about $650,000, as well. 

The Iowa Farm Bureau did not respond when asked about the experts’ comments on the loan or the bureau’s executive pay.

Hill told The Gazette, an Iowa newspaper, in 2017 the bureau learned its lesson from the financial crisis. 

“That fear created by the financial crisis gave us a pause to think and rethink about our investments,” he told the newspaper. “We’re trying to put money into more diversified portfolios so we don’t have all our eggs in one basket.”

After the loan

Over time, profits from the Farm Bureau’s companies have helped its nonprofit arm become one of the most influential political organizations in Iowa.

In the early 2010s, text in a state plan to address fertilizer runoff closely mirrored wording the Farm Bureau had proposed, according to the Des Moines Register. In 2016, the Storm Lake Times reported the Farm Bureau was one of a handful of agricultural groups that bankrolled a legal challenge to an effort to curtail harmful runoff. And, in 2018, the state exempted health insurance plans provided by the Farm Bureau from federal regulations governing the minimum coverage health plans are supposed to offer; the plans have been criticized as “skimpy.”

For Josh Nelson, an Iowa farmer who serves at the county level on the bureau’s soil and water conservation commission, the bureau is very effective at advocating for its members.

“Sometimes it’s a little lopsided because people think of agriculture and they think of Farm Bureau,” he said. “I would probably argue the majority of farmers that I’ve dealt with broadly align with the political stances Farm Bureau takes, but I don’t know if it necessarily services all of agriculture, all the farmers, everybody out there like they say they do.” 

As for its insurance business, Nelson said, he sees it as another way to exert power in the state.

“They realize how having private, for-profit companies can give that non-profit an outsized influence and outsized voice,” he said, “because it’s easy to rack up a lot of influence if you’ve got a pretty successful business on the side.”

Steve Garrison of Watchdog Writers Group contributed reporting. 

The supervising editor is Christopher Leonard of Watchdog Writers Group. 

The post The Iowa Farm Bureau is a small nonprofit. It’s sitting on a huge business empire. appeared first on The Counter.

In addition to virtually inspecting workplaces, OSHA conducted far fewer inspections in general.

Total complaints increased 15 percent between Feb. 1 and Oct. 26 last year over the same period in 2019, but overall inspections—those related to Covid-19 and otherwise—decreased by 50 percent, according to the inspector general’s report. 

“While some OSHA inspections have been done using entirely remote methods, OSHA inspectors have entered workplaces to conduct inspections, throughout the pandemic,” a DOL spokesperson told the Midwest Center on Tuesday. “OSHA will continue to conduct inspections using either onsite or a combination of onsite and remote methods, where it is safe to do so.”

Sonny Perdue, agriculture secretary under Trump, said repeatedly during the pandemic USDA was not tasked with worker safety.

In the wake of this collaboration, OSHA issued small fines at only a handful of meatpacking plants months after plants were widely known as Covid-19 hotspots and almost 200 workers had died.

Instead, OSHA should have issued hefty fines early in the pandemic and publicized them well, said David Michaels, the head of OSHA during the Obama administration who now teaches at the George Washington University School of Public Health.

“OSHA enforcement is meant to send a message to other employers,” he said, “because OSHA can’t inspect every plant.”

In an email to the Midwest Center, Sweatt defended OSHA’s approach to the coronavirus. She did not answer questions about her actions as laid out in the emails or address meatpacking plants specifically.

“Unfortunately, some critics have chosen to ignore OSHA’s efforts in the name of political gamesmanship—one I will not be playing,” she said. “I respect the work of OSHA’s career staff and their dedication to the mission to protect our nation’s workers. Unlike others, I will not jeopardize any enforcement actions taken by commenting any further.”

Brashears, who took over as FSIS head in March 2020, could not be reached for comment.

The new Biden administration has promised to take a more aggressive stance on worker safety. On his second day in office, President Joe Biden signed an executive order commanding OSHA to review its Covid-19 policies and identify ways to better protect workers.

And the congressional committee devoted to the coronavirus recently announced an investigation into OSHA and the three largest meatpacking companies, JBS, Tyson, and Smithfield.

At OSHA, Sweatt has been replaced by Biden’s choice for the job, Jim Frederick. Brashears’ position was vacant as of Feb. 5.

The USDA did not return a request for comment about the emails.

OSHA would not answer questions about what happened under the previous administration. In a statement, it said it was now focused on the health and safety of all workers.

“OSHA is working to re-affirm its commitment to worker safety and re-establish trust that the agency is advocating for workers—including those most vulnerable to the risks of Covid-19,” a Department of Labor spokesperson said.

Delayed response

The federal government had known for years meatpacking plants would likely be hotspots during a pandemic. According to ProPublica, the Bush administration in 2007 warned companies they should be prepared.

On March 23, 2020, Reuters reported a Sanderson Farms employee in Mississippi had tested positive for the virus. Around the country, other meatpacking workers were falling ill, and, in the coming weeks, several plants would report outbreaks.

By April 10, an outbreak involving hundreds of workers forced a JBS plant in Greeley, Colorado, to close. The next day, Sweatt emailed Brashears.

“Apologies in advance for intruding on your Saturday,” Sweatt wrote. “Is FSIS doing guidance for meat packers in the world of Covid-19? If so, is there anything OSHA can do to be of assistance?”

Brashears emailed back to say she’d like to see any guidance documents OSHA had.

Later that day, another OSHA official reached out to members of USDA’s emergency management office.

“OSHA is looking for a USDA contact who could tell us if your agency is doing anything on meatpacking worker safety during the Covid-19 pandemic,” the official wrote.

The emergency management official wrote back that the “appropriate connection” had been made earlier, when Sweatt emailed Brashears.

USDA advice on safety document

In late April, the Centers for Disease Control and OSHA jointly published guidelines for meatpacking plants on how to keep workers safe.

On April 24, two days before their publication, Brashears emailed Sweatt and a CDC official about the soon-to-be-published safety guidelines. Brashears emphasized the importance of keeping plants open.

“As we have reviewed the CDC/OSHA document for meat and poultry establishments, we feel that it would be useful to add the information,” she wrote. “This can help facilitate re-opening and give them a path forward to keep the food supply chain moving.”

The “information” she’s referring to is not included in the emails.

Multiple agencies offering advice is not unusual, said Public Citizen’s Pulver, who used to work for the Department of Labor, and Michaels, the former OSHA head. But USDA’s mission does not include keeping workers safe.

“FSIS has for many years seen industry as their client,” Michaels said. “They’ve never been sympathetic to worker injuries.”

He cited the FSIS’s attempt to speed up production lines in poultry plants during the Obama administration. Poultry plant workers already deal with injuries from repeatedly making the same movements, according to Government Accountability Office reports, and increasing line speeds could exacerbate those injuries.

It’s unclear from the new emails whether the information USDA wanted included ultimately made its way into the guidelines.

Any suggestion that was not about protecting workers should have been “unacceptable,” Michaels said.

“We would never have considered including recommendations other than ones related to worker safety,” he said.

Maximize production

The new emails, as well as previous emails Public Citizen obtained, show that the industry pressured USDA to emphasize that plants were expected to maximize production while dealing with absenteeism from sick and dying workers.

On May 15, Julie Ann Potts, the meat institute’s president and CEO, emailed Brashears California’s guidelines on safely reopening plants. Potts highlighted one part in yellow: practice six-foot distancing “even if this means production slows down.”

Brashears responded three minutes later.

“Thank you so much,” she wrote. “We will discuss ASAP and get back to you.”

Four days later, after a call with industry stakeholders, a USDA official passed along a comment to Sweatt, OSHA’s head: “USDA and its partner agencies need to confirm that the term ‘if possible’ means ‘if possible while also maintaining maximum operating capacity.’”

It’s unclear from the emails who submitted the comment.

The official suggested editing a question for a FAQ about the virus on USDA’s website to include reference to maintaining “safe operations at maximum capacity possible.” That version remained on the USDA’s website as of Feb. 5.

The post OSHA and USDA waited months to tackle Covid outbreaks in meatpacking plants, emails reveal appeared first on The Counter.

ARM offers operating loans that mature in less than a year, Moore said. The interest rates it offers vary but are typically higher than banks, he said. The Wall Street Journal reported ARM charged interest rates of about 8 percent. Moore didn’t want to specifically say what his company’s rates were, but he said the rates could be higher than what the paper reported. More traditional lenders offer interest rates between 4 to 6 percent, Smith said.

Based in Texas, ARM has offices in the Midwest, the South and Texas. In a press release, it said it aims to bring “Wall Street financial solutions to rural America.”

The American Farm Bureau Federation’s policies on creditors states that farmers, to meet their financial needs, require “a variety of credit sources at the lowest possible interest rates,” Gary Joiner, the Texas Farm Bureau’s spokesperson, said in an email.

The Market Facilitation Program was created to help farmers affected by the Trump Administration’s trade wars by giving them direct payments, but difficult economic conditions in the Midwest persist.

This year, the share of loans with “major” or “severe” repayment problems hit a 20-year high, according to a survey released in August by the Federal Reserve Bank of Chicago, which examines economies in Illinois, Indiana, Iowa, Michigan and Wisconsin.

In November, the Federal Reserve Bank of Kansas City, which includes Missouri and Nebraska, reported loan repayment rates were declining.

Through October 2019, about $9 billion in payments have been disbursed under the 2018 market facilitation program, and about $6.5 billion has been disbursed under the 2019 program, according to the USDA data. Up to $14.5 billion could be disbursed under the 2019 program.

The large majority of market facilitation payments have gone straight to farmers, according to the analysis of the data. Banks and members of the Farm Credit System, regulated by the Farm Credit Administration, have also received payments.