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Farm Policies and the Undoing of an Arizona Family Farmer (the Kime Ordeal)

The agricultural agenda and A.O. Kime's account of farming from 1973-1998

(2nd edition - April 2008) by A.O. Kime
arrow for information on 'renting' this article, see Rent-a-Article

Note: this story is best appreciated by first knowing the circumstances... see The Betrayal of Family Farmers and Farmstead Ideals

A.O. Kime

A typical family farmer?

<< A.O. Kime - circa 1975

Except for not coming from a wealthy family or having a two story house, a lasting marriage or a weathered old barn, I think I was fairly typical... I was 32 years old when I began farming in 1973 and started out on 320 acres of leased farmland. Then in 1979, I bought 160 acres which became my ‘home place’. Uniquely for Arizona, it did happen to have an old farmhouse on it, built in the 1920s. It was too small for us though, only 900 square feet but had a basement, another rarity for Arizona.

Soon however, my wife and I managed to have a brand-new house built, a 1,350 sq. ft. frame house veneered with slump-block. With 480 acres seemingly not enough, I decided to start getting serious about farming so a few years later I leased 640 more acres which I farmed briefly (two years) then dropped it in order to buy a section (640 acres) across the road. Abandoned, it hadn’t been farmed for about 15 years and was in poor shape. Rundown that it was, I was able to buy it at a FmHA auction dirt cheap. So now I had 800 acres of deeded ground plus my original 320 acre state-lease farm for a total of 1,120 acres.

The 1970s were good to me, cotton prices had skyrocketed and cotton was my main crop. I liked the moderate inflation occurring then too, it meant my land value was going up and so too was my net worth. On paper it looked like I was going to get rich fast. However, things started to get chaotic in the early 80s... inflation really went crazy. Farm equipment prices were going up about 30% every year and interest rates were about 17%. And, over the period of only 10 years, natural gas prices increased by 1,100% and electricity went up 500%. These are true figures, no exaggeration... see Cochise Energy Consumers Association.

Cotton prices were also going up but proportionately far-far less. It was also a time when diesel was being rationed which farmers had top priority, and except for during World War II, the only time in history farmers got special consideration. The trucking industry had to play second fiddle and as a result truckers were having a hard time getting fuel. Apparently out-of-diesel truckers weren't as important as controlling the world marketplace. The United States Department of Agriculture (USDA) simply wanted all the production it could get and then some.

Too arid to rely on rain, all southwestern farms require irrigation and, in our valley, water had to be pumped from wells. Most pumps were driven by a variety of natural gas engines but a few farmers preferred electric pumps instead. Since power costs were about a third of our operating budget, the skyrocketing cost for power began to turn the worm. In the early 80s, I had 13 irrigation wells and one particular month my power bill was $38,000.

Yet cotton prices continued to climb. Because of this, in the early 80s I elected to put 1500 bales of cotton into storage figuring I’d make more money by holding the crop. That was what every expert in the world was recommending, and every single solitary farm magazine was predicting a dollar a pound for cotton. At the time it was going for 80-85 cents and I had about 750,000 pounds. Sometime during 1983 I was offered 93 cents a pound but I stupidly turned it down. Cotton prices never did reach a dollar a pound and 93 cents was as high as it ever got. A year or so later, when all means to extend the loan were exhausted, I ended up selling it for about 65 cents. The market, however was 60 cents, the extra five cents was because of my top grades... being told I had the finest lot of cotton available in the entire country. Still, in holding out for an additional seven cents, which would have netted me an extra $50,000, instead I lost $250,000.

The old farmer's maxim

I’ve since wondered when prudent decisions enter into the land of greed. Yet, also in retrospect, I've often wondered if it would have made much difference. Since prices remained bad for quite some time... it may have only delayed the inevitable 2-3 more years. After relating my tale of woe to another farmer, an older and thus seemingly a wiser farmer, he simply said... "you'll never go broke taking a profit". While it was a stinging retort and perhaps a maxim generally true, a small profit won't get someone out of debt or provide a cushion for a bad farming year.

From then on, partly as a result of this loss, things went from bad to worse. The last year I could get financing was in 1983 so I switched to crops which could cash flow themselves, such as alfalfa and vegetables. I could no longer grow a crop which took a year to get paid, as is the case with cotton, grain and other field crops. At times I thought I might recover since I had a few decent years but I never had two good ones in a row. I also had a few bad ones but most often they were break-even years. Rarely is farming profitable enough to play catch-up (so much for that old farmer's maxim). Meanwhile my indebtedness was growing, with interest it was $800,000 whereas the average debt for the area was about $600,000.

During the 1970s and early 80s, Farmers Home Administration (FmHA) loans were easy to come by... being that the farm policy was to maximize production across America. I must say I was grateful for a farm loan at the time. FmHA, the lending agency of the USDA, was the only place I could get financing. I asked for as much as I thought I could get and got everything I asked for.

But when USDA effectively controls the crop prices through acreage and export controls, it’s like borrowing money from a casino to gamble when they also control the payoffs. In other words, they have complete control over one's ability to pay it back. Under these circumstances... should I remain grateful to FmHA for giving me a start? I have mixed feeling. In one respect, because I got the chance to farm, I must say yes, but because of my existing lifelong indebtedness, I must say no. Out of curiosity, I once asked a retired USDA official if he thought a 5% success rate for FmHA farmers was a fair assessment and, without hesitation, he quickly answered “less than that”.

I was persistent though, still believing I could get out of my financial mess. Meanwhile, everything I read suggested that diversifying was the way to go, after all, farming was becoming riskier than ever. As a way to do this, I still had enough money to buy 640 acres (the same section mentioned above) because I knew I could get it real cheap. It was scheduled to be sold by FmHA to the highest bidder for cash. I was the high bidder. My plan was to farm it for a year or two, get it in shape and then re-sell it. I did just that, selling it for double what I paid.

tractor company

With some other trades, which got quite involved, I also ended up with a farm equipment dealership. It was also jointly an auto service center with a tire distributorship. This was a big gamble however since the previous owner had been losing $10,000 a month operating it. Actually I didn’t want this business but I took the equity in lieu of some money due me which I didn’t think I’d get otherwise. Still, I thought I could make it profitable and then re-sell it. After a year and a half, I couldn’t do either, so I shut it down and it was repossessed. I couldn't hold-on longer because I was running out of cash.

The continuing struggle to save the farm

About the same time, and as another way to diversity, I partnered to buy two oil leases in the Midwest with 25 stripper wells for less than 5 cents on the dollar. It was in receivership and my partners and I did some creative footwork to pull it off. We started out getting $26 a barrel but soon oil prices started heading south. After 4-5 years and having previously bought my partners out, I finally bailed out when the price fell further to $13.50... effectively breaking even for my efforts.

lettuce field

All along my farming continued, with some good years, others not so good, but never two good years in a row, something which would have helped immensely. Besides the 1970s, my best year was in 1991 growing lettuce, but only relatively speaking. By that time, the acreage I was farming was down to just my home place, or 160 acres. I had already traded off my rights to the state lease farm to speculate on some freeway property but it, unfortunately, netted nothing. My 1991 spring lettuce crop sold for the unheard of price of $23 a carton and, amazingly, it was also the highest yielding lettuce crop I ever had, or 961 cartons per acre... close to a valley record. I was ecstatic but there just weren’t enough acres involved. Still, my portion netted me nearly $20,000 per acre.

I paid off some bills and bought me a one-year-old sedan. My wife had left me a few years earlier along with our two toddlers so I didn’t have a car anymore, and the leases on my two pickups were about to expire. Besides, I already had an old pickup for the farm and a car, I thought, was insurance. In other words, I needed something reliable if I lost my farm and needed to leave the area. I hated the idea of being trapped where good jobs are scarce. I didn’t want to end up being a farmhand.

After 1991, when my money ran out, I then managed a farm for an absentee owner for a few years. I also did some consulting work in the valley and in Mexico and then volunteered for a USAID project in Nicaragua in 1994. I thought this foreign experience would do me some good. The problem was, even though I had been a licensed consultant, experienced since the early 1960’s, hiring a consultant is the first thing farmers slash from their budget in hard times. Finding consulting work was getting nearly impossible.

Exasperated one particular year, I worked as a tractor driver for another farmer. That was my situation on and off; I’d find an occasional consulting job or else work on other farms either full or part-time, mostly during harvest. As a profession, my consulting business was going nowhere; small farmers weren’t using advisors anymore and the biggest operations, who would normally hire consultants, either went busted or left the valley. I continued to farm my own place on and off for several years and when I didn’t farm it, I leased it out, all along hoping for some settlement with the lien-holder, FmHA. As 1999 approached, my indebtedness with interest was $1.2 million.

By 1998, my anxious attempts to reach a settlement had been going on for 15 tormenting years but only concerned old debts; I hadn’t borrowed any money at all since 1983 (not from any source). Many times it looked like a settlement was within reach, perhaps months away, only to be thwarted by some government bureaucrat. At one point, a signed agreement with the local administrator was overturned by the state administrator. I also won two appeals only to have them overturned by Washington when they got into the act. I then hired an expert to deal with FmHA and, at times, his efforts looked promising but FmHA continued to buck us at every turn. I was forced into Chapter 11 bankruptcy for a short time but elected to have it dismissed after about a year. Then later I filed a Chapter 12 (for farmers only) which I ultimately dismissed as well.

The events surrounding my Chapter 12 bankruptcy is a story unto itself (a hell within a hell), bitterly contested by FmHA. While under the public pretext of assisting family farmers, as if sincerely offering settlements as Congress mandated, they instead ignored this mandate. FmHA, USDA's lending agency, fought me every inch of the way. From 1985 to 1999, they only settled with one southeastern Arizona farmer allowing him to keep his farm. So much for congressional mandates.

The end of a farming career

In February of 1999, having exhausted every means available, even close to having a last minute sale mere hours before the auction, it all came to an end. Trying to thwart my sale attempts, the local FmHA administrator had been calling area farmers telling them my farm would soon be on the auction block. I preferred not to be present at this auction, just as I had stayed away when FmHA auctioned off all my farm equipment a few years earlier (which I soon replaced).

I moved out of the farmhouse that same day and stayed at my daughter’s house the next week or so. We had a yard sale to sell my furniture as I needed money to move elsewhere to find a job. The farmer who bought my farm at the auction was apologetic and was hoping I would understand his reasoning for bidding on it. I did understand and held no grudge. In fact, I was glad he was the one that got it, not someone else. He was very gracious; offering to buy what little was left of my shop equipment for twice its value. I had earlier sold my 2nd set of farm equipment to another farmer who, months earlier, was going to buy my farm but then couldn’t. Nonetheless, the farm equipment money was all gone by then and the reason I needed to sell my furniture. I had very little money when I left for a nearby town to work in construction, first as a laborer and later as an equipment operator.

At 58 years old, I had to start putting my life back together again. Today, nine years later (2008), things have worked out fairly well. That’s not to say I didn’t have some humiliating moments working as a laborer (a dog) for months but thankfully it was only for months, not years. Within a year after losing my farm, I was making $20 an hour as an equipment operator on a road construction job in Tucson. I saved most of that money and also luckily won $5,000 in the lottery. My good fortune continued to improve and now I can say I am retired, although not comfortably so. At least it's tolerable.

Do I miss farming? Sure I do, but I don’t miss the financial aggravation. I hated being in debt, it was gut-wrenching every time I thought about it and that was constantly it seemed. The most aggravating part was realizing my indebtedness to FmHA was actually artificial. FmHA, after all, is a division of the USDA who regulates production (allotments-quotas) and therefore controls one's ability to pay it back. It is USDA's continual policy of overproduction which has kept crop prices below production costs. It should be reason enough for congress to invalidate all FmHA claims concerning unpaid farm loans. After all, they ignored the mandate.

It was my dream to be a lifelong farmer though; I wanted to be one of the biggest around. I also miss the self-respect one has from owning a business. Being ordered around like a dog can blow away one’s self-respect in a hurry, especially after having been your own boss for 25 years. I don’t plan to ever farm again and am willing to chalk it up as history... that is, whenever my debt is forgiven (25 years and still waiting). I really don’t regret farming though, in fact I’m glad I did, I just wish I had a fighting chance.

I can’t conclude this overview without saying what a great feeling it is to watch your own crops growing. It is a strange feeling in a way; I was always completely taken by the magnificence of it all, unable to completely grasp it. I was continually amazed that I, a mere mortal, could grandly transform one cloddy field after another into rows of beautiful greenery with commanding order. I was transfixed by watching this green tender vegetation daily mature, swaying gently with a breeze or watching the crop-duster at work, seemingly willing to risk his life for my growing crops. It is to know you’re a producer, contributing something. It is to imagine people all over the country eating a tossed salad made of your lettuce or wearing a blue shirt made of your cotton. It is to know you’re employing people, supporting the local economy.

Farm Subsidy System Fell Victim to "Mission Creep" - The original article by Allen Kime (A.O. Kime) appearing in the Arizona Range News on July 3, 1996

There is no doubt I loved farming but I still don’t know whether I can claim being a stereotypical 'family farmer' or not, I didn't have a weathered old barn. For a physical object, I think a weathered old barn symbolizes the family farmer more than anything else, it symbolizes Americana. It symbolizes the quality of life bureaucrats are stamping out to achieve globalization.

A.O. Kime

Last modified: 02/09/16