The Iowa Farmer Group Backed by an Insurance Company
Former U.S. Secretary of State Michael R. Pompeo presents to the Iowa Farm Bureau, March 4, 2019. Photo courtesy of the U.S. Department of State via Flickr
Founded in 1918, the Iowa Farm Bureau is perhaps the most powerful agricultural lobbying group in the state of Iowa, if not the country. The organization prides itself as Iowa’s “largest grassroots farm organization” with tens of thousands of members across the state. And it wields substantial power, boasting connections with leading government officials, donating to agriculture research institutions, and funding political campaigns. “It’s extremely influential,” says University of Iowa professor Silvia Secchi. From state-level policy to the research agenda at institutions such as Secchi’s, she says “it’s clear that everything happens in the way Farm Bureau wants.”
But despite its populist, member-based presentation, the Iowa Farm Bureau isn’t fueled by its membership dues. According to its 2019 IRS Form 990, just 8% of the Iowa Farm Bureau’s revenue came from program services (which includes membership dues), while the bulk — more than 80% — was investment income. Most of this investment income comes from the Iowa Farm Bureau’s 61% ownership stake in FBL Financial Group, an insurance and finical services company. Like most insurance companies, FBL is heavily invested in corporate bonds and stocks, including bonds from large food and agribusiness corporations such as Cargill, Tyson, and Bayer, according to its latest financial statements.
While FBL Financial is technically an independent business, watchdogs are raising questions about the relationship between the Iowa Farm Bureau’s operations and its insurance company investments. An investigation published last week by Investigate Midwest and Watchdog Writers Group revealed that at the height of the 2008 financial crisis, the Iowa Farm Bureau failed to report a $25 million loan to the FBL Financial Group. Further, an arrangement with FBL pays the handsome salaries of top Iowa Farm Bureau executives. In 2019 the Iowa Farm Bureau president received $0 from the nonprofit but made some $646,000 from the nonprofit’s “related organizations,” including FBL. Half a dozen other Iowa Farm Bureau executives made high six-figure salaries this same way.
The Iowa Farm Bureau did not respond for a request to comment on its relationship with FBL.
The Iowa Farm Bureau is not the only agriculture lobby group that owns an insurance company or for-profit business, but it is by far the largest and relies the most on funds from its for-profit investments. With $97 million in revenue the Iowa Farm Bureau brings in more than twice as much money as its national counterpart, the American Farm Bureau Federation, and more than 20 times as much revenue as the more left-leaning farm lobby group, the National Farmers Union. Investment incomes make up 81% of the Iowa Farm Bureau’s revenue; comparatively, the next nine-largest state Farm Bureaus derive 32% of their income from investments, on average, and 18% of the National Farmers Union’s revenue came from investments in 2019, according to public tax filings.
As an insurance company, the FBL needs to maintain large reserves to pay off insurance claims into the future. To build these reserves and turn a profit, FBL takes insurance premiums and invests them in a combination of both government and corporate stocks and bonds. FBL owns bonds from a wide range of large corporations, including dominant food and agriculture firms such as Tyson Foods, Cargill, Archer Daniels Midland, Bayer, McDonald’s, Coca-Cola, Pepsi, and John Deere. According to its 2020 annual statement, FBL has bought more than $76 million worth of corporate bonds from these corporations, among other food and agriculture firms. It also invests heavily in energy and fossil fuel companies: FBL’s investment fund held $462 million in fossil fuel investments in 2017, according to financial documents reviewed by InsideClimate News.
These financial stakes will become more obscure in the near future. In May, FBL shareholders approved a deal for an FBL affiliate, the Farm Bureau Property & Casualty Insurance Company, to buy the remaining shares not owned by the Iowa Farm Bureau. The deal will take FBL off the stock market and thereby lower its financial reporting requirements.
Historically, the Iowa Farm Bureau has used its wealth and influence to back conservative politicians, environmental deregulation, and agriculture policy that supports industry and large cash crop farmers. This includes support for federal subsidies to buy crop insurance, which FBL sells (as does Farm Bureau Insurance, an affiliate of the American Farm Bureau Federation). It also includes support for large, confined animal feeding operations, which have consolidated livestock production. Iowa raises nearly one-third of the nation’s hogs, but over the past three decades large industrial farms have driven more than 70% of hog farmers out of business.
Critics such as Austin Frerick, a former Iowa Democratic congressional candidate, argue that the Iowa Farm Bureau’s financial investments skew its advocacy in favor of corporations, harming the environment and even the very farmers it claims to represent. The Iowa Farm Bureau insists that its policy stances come from a democratic process driven by members’ interests. A 2016 poll, indirectly sponsored by the American Farm Bureau Federation, found 70% of farmers identified as Republican or leaning Republican and 40% supported then-candidate Donald Trump.
What We’re Reading
The third-largest U.S. poultry corporation, Sanderson Farms, sent out base pay cut notices shortly after announcing its merger with Wayne Farms. Farmers pushed back, and Sanderson said the timing was merely coincidence, but farmers fear the firm will have more power over them if the deal goes through. (The Food & Environment Reporting Network)
Agriculture Secretary Tom Vilsack testified before the House Agriculture Committee last week on competition issues in cattle markets after the U.S. Department of Agriculture announced it will use $100 million of American Rescue Plan funds to support guaranteed loans for starting or expanding food processing. The funds aim to break supply chain bottlenecks. (AgWeb / USDA)
Thousands of John Deere workers began a strike today demanding wage increases and pension benefits for new employees. They follow striking Kellogg workers in a wave of work stoppages sweeping the food industry and beyond. (The New York Times / The Washington Post)