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From 2001 to 2005, the federal government spent nearly $1.2 billion in agricultural subsidies to boost farmers’ incomes and invigorate local economies in this poverty-stricken region of the Mississippi Delta.

Most residents are black, but less than 5 percent of the money went to black farmers. They own relatively little land, and so they generally do not qualify for the payments. Ninety-five percent of the money went to large, commercial farms, virtually all of which have white owners.

In Bolivar County, where Shelby is located, farmers received a total of $200 million in crop subsidies over the five-year period, while just $11 million in Rural Development grants from the Agriculture Department went to replace the abandoned factories, decaying houses and boarded-up downtowns in dozens of dirt-poor, majority-black Delta towns.

Many of these towns are trapped in a long, painful death spiral, plagued by poverty, crime and unemployment. More than 100,000 people — nearly a quarter of the population — have fled in recent decades in search of a better life.

“It’s just a sad situation,” said Judy Hill, who leads a women’s group that is desperately trying to rescue what is left of the small agricultural town of Shelby, which has a cotton gin, two liquor stores and not much else. “There’s no industry, no factories, no hope for the future, nothing to keep the people here. And what the answer is, I don’t know.”

The farm bill that Congress is now crafting is a complex mosaic of competing goals, including income support for farmers, conservation incentives and the preservation of rural communities by spurring economic growth. Farm subsidies are meant to tide growers over when prices fall or when disasters strike. The Rural Development grants, on the other hand, are supposed to help small, struggling communities such as Shelby. Yet in the Delta, farm subsidies are massive, while Rural Development money is relatively scanty. From 2001 to 2005, the Agriculture Department awarded $1.18 billion in subsidies but just $54.8 million in Rural Development grants for housing, new businesses, water systems and other projects, a Washington Post investigation found.

“The policy choice that Congress has made is so stark,” said Charles W. Fluharty, director of the Rural Policy Research Institute at the University of Missouri at Columbia. “You see the effects in lots of poor rural communities. But the tragedy is exacerbated in the minority communities.”

Sen. Thad Cochran (R-Miss.) said the importance of agriculture to the Mississippi Delta economy is “undeniable” because it contributes hundreds of millions in state and federal taxes and is “a driving force” behind progress there in the past few years. “The challenge we face centers around ensuring that we pursue the most responsible and fair policies when seeking to sustain our nation’s agriculture industry,” he told The Post in an e-mail interview.

The wide disparity between subsidies for farmers and Rural Development money for agriculture communities highlights one of the contradictions of federal farm policy, which favors big agriculture over small farms and poor rural towns. In the Delta, it has helped to preserve a two-tiered economy and a widening economic chasm between the races, according to local residents, government officials and researchers.

“You’re in the Delta. Most of the real economy is controlled by large families. It has been that way for 200 to 300 years,” said Ben F. Burkett, a black small farmer who also works part time for the Mississippi Association of Cooperatives. “We’d like to break that cycle and create new businesses. But there’s not much money for that. You see what we get from Rural Development. It’s not much, is it?”

Agriculture Department officials declined to comment for this article.

Farmland in the Mississippi Delta has been passed down from generation to generation and built up through acquisitions, with whites controlling most of the land. In Bolivar County, whites now own 421,000 acres, records show, while blacks own 22,000 acres. Because farm subsides are based on farm size and production, most of the payments go to the large operations.

Farm-state lawmakers have repeatedly argued that the farm subsidies will trickle down to the local economies, spurring growth. But as farms consolidate and become more mechanized, there are fewer jobs, especially for unskilled laborers.

“The problem with agriculture is that it’s not a wealth builder for the people who live here,” said John Greer Jr., director of the Mid-Delta Empowerment Zone in Leflore County. “It’s a wealth builder for the few who own the property and the resources.”

But the farmers say they would not be able to survive without their subsidies. “I am not getting rich on subsidies,” said G. Rives Neblett, a Shelby lawyer and businessman whose family has farmed here for three generations. Farms in which Neblett holds an interest have received about $3 million in federal payments since 2001.

“I understand the disparity and desperately wish there was something we could do about it,” he said. “But without the safety net of subsidies for prices and bad weather, we would have no more agriculture in the Delta, and agriculture is all we’ve got left.”

‘We’ve Lost Generations’

When income supports for farmers were first passed during the Great Depression, nearly 1 in 4 Americans lived on a farm. Today, 1 in 75 lives on a farm, and 1 in 750 on a full-time commercial farm. Still, the subsidies flow, with cotton and rice producers in the Delta among the largest beneficiaries.

Despite the payments, many rural economies have seen their populations wilt and have lost thousands of jobs. That is true in poor, isolated farm towns in the Great Plains states, as well as in the Delta, where sprawling farms abut tiny towns like Shelby and Mound Bayou, which are all but boarded up.

This trend is especially pronounced in this northwest corner of the Mississippi Delta, where subsidies and poverty rank among the highest in the nation.

Bolivar County has lost nearly 5 percent of its population and more than 10 percent of its non-farm jobs since 2001, federal data show. Sunflower County lost 6 percent of its population and 19 percent of its non-farm jobs. Humphreys County lost 6 percent of its population and almost 36 percent of its non-farm jobs.

“We’ve lost entire generations of young blacks because we told them to stay in school and get a good job,” said John Mayo, a state legislator who represents several Delta counties. “But unfortunately there’s not a good job for them to get when they get out. The smart kids are leaving. It leaves us with the families who have given up hope.”

Some officials and residents blame crime, drugs, underperforming schools, an unskilled labor pool and poor work habits for the area’s demise, not a shortage of federal aid. Neblett said that children “don’t have a dog’s chance” of succeeding in some Delta schools.

Mimi Dossett, the Bolivar County administrator, said: “We have had employers who just gave up and left. It takes longer to train people around here because of the poor education . . . and workforce turnover is terrible.”

“It’s a tough situation,” said Willie F. Brown, a member of the Humphreys County Board of Supervisors since 1988. “We hired an economic development person. They leave empty-handed. They come back empty-handed.”

One industry that is succeeding in the Delta is casino gambling, which arrived in Tunica County, near Memphis, in 1993. At the time, the county had an annual budget of $3 million and most of the same problems that the rest of the Delta had. Today, it has a budget of $51 million and uses the money for new roads, recreation centers and housing grants for the elderly and disabled.

“The casinos pay great benefits. The wages average maybe $9 to $10 an hour,” said Clifton Johnson, the chief financial officer for Tunica County. “Some people would probably say that’s not a living wage. But I would say for this area that is a living wage.”

Goal Is ‘One New Business’

Decades ago, the agricultural town of Shelby was a thriving community with stores and restaurants and a busy downtown. Mayor Dorothy Grim recalled traveling here from a nearby town as a child to do her “shopping and trading.” The cotton and rice farms were a source of jobs and money.

But as agriculture changed, so did Shelby. Farms got bigger. Combines went from four rows to six to eight, and now to a dozen. There was less need for unskilled laborers. Less money changing hands.

Small businesses began to close. School integration and a complicated race history accelerated the flight of white families. Today, more than 90 percent of Shelby’s 2,700 residents are black. The median household income of $17,798 is less than half the national average. Most of the stores straddling downtown Beale Street are boarded up. Many neighborhoods are scarred with tumbledown bungalows and weed-choked lots.

A few years back, Grim, Hill and a cluster of other spirited women formed a group called Shelby Women United to tackle the town’s problems. With a state grant and a lot of elbow grease, they helped transform an old train depot into a library. Volunteers tore down 80 dilapidated buildings and removed abandoned cars. Now, the group is searching for ways to attract businesses and start a chamber of commerce.

“The goal is to get one new business to go into one of these abandoned buildings,” said Hill, 66, who moved to Shelby nine years ago and is white. “That would be a good start.”

Shelby has received modest help from the Agriculture Department’s Rural Development program but is seeking much more. From 2001 to 2005, it received a total of $106,000 that was used to buy police cars and a mower.

“We would like to get more help from Rural Development,” Grim said. “But it’s hard because we’re small and don’t have the staff.”

In 2005, Congress slashed the Rural Development budget by $439 million as part of a budget reconciliation. The remaining funding is stretched across 40 programs, including water and sewer projects, rental assistance, and grants for police cars. More than half of the awards are loans and loan guarantees, not grants. Four of the 10 counties studied by The Post received no economic development money.

“It takes an enormous amount of energy and time to get anything done that is not farm-related,” said Robert L. Jackson, a state senator from Quitman County and director of a nonprofit development corporation.

‘They Have No Hope’

Rogers Morris, 61, operates one of the few large black-owned farms in Bolivar County. He grows sweet potatoes, soybeans and vegetables on about 500 acres near Mound Bayou. “We’re not impacted much,” he said of the federal subsidies. “I maybe get $8,000 to $9,000” a year. “It helps a little. But the subsidies basically go to white farmers.”

In the mid-1990s, Morris received a federal grant to help start a sweet-potato processing plant in Mound Bayou. The idea was to provide jobs for some of the young unemployed men during planting and harvest seasons. The potatoes came from the fields of local black farmers. The plant created about 20 temporary jobs, Morris said.

Now, he and several other black farmers hope to get help from Rural Development to expand. Their plan is to use the same facility to clean and process a variety of fresh vegetables and sell them at local markets and to the casinos in Tunica County. “We want to use people who are unskilled, people who are left on the wayside,” Morris said. “So many of our people are on the corners. They have no hope. It is a real struggle.”

Morris has been more fortunate than many black farmers. He grew up in a farm family and returned here after receiving undergraduate and master’s degrees. He has slowly built up his farm and now is able to borrow from a local bank. “Borrowing has always been a problem” for small black farmers, he said. “And borrowing from the government has not been the best, either. That has hampered the black farmer.”

A decade-old lawsuit by black farmers against the Agriculture Department alleged a pattern of discrimination. Settlements are still being sorted out and Morris said that he could possibly receive a cash award. The department has since created a program to help minority farmers, but the impact has been modest. The powerful county farm committees, which hire the county Farm Service Agency executive and help enforce federal farm policies, continue to be dominated by whites. Nationally, there are 7,882 committee members, but just 90 of them are black. In Mississippi there are 236 committee members, only eight of whom are black.

Neblett, the Shelby farmer, worries that the economic and education gaps between whites and blacks in the Delta have grown so wide they may never be bridged. “We’re now to the point that it is such a culture difference between those who are privileged and who had the education that I don’t know how you will close that [gap],” he said.

Pat W. Denton, who is from a prominent white Shelby farm family, recently moved to Cleveland, Miss. He still rents out 1,600 acres back home and is part owner of the local cotton gin. “When I was a kid we had theaters, service stations and steakhouses in Shelby,” he said. “Now, it’s just going down.”

As farmers shift from cotton to corn to take advantage of higher prices, even the cotton gin is emptying out. “We used to do 35,000 bales,” Denton said. “We might do 15,000 this year.”

Said Judy Hill: “That’s what’s happening all over. These Delta towns, they’re just folding up.”