State and federal grant programs dole out about $3 million in Minnesota annually, but much of the money goes to questionable enterprises– and relatively few jobs have been created.
Recipients of the so-called “value added” agricultural grants — which some companies collect through both state and federal programs — include “urban farmers,” craft brewers, vineyards and even an organic chocolate bar manufacturer, Watchdog reported Tuesday.
Payments are capped at $150,000 from the state and $250,000 from the federal government, and although firms are not allowed to collect subsidies twice for the same purpose, they can earn grants from both sources as long as the money is used for separate expenditures. (RELATED: Bumper Crop Could Cost Taxpayers Billions in Farm Subsidies)
The grants are intended to increase sales of Minnesota agricultural products by helping agri-business enterprises expand operations, but critics say the handouts are just another way for government to interfere with markets and give favored companies artificial advantages.
Alcohol, for instance, is a particular favorite of grant writers. The top two grant recipients, which are both vineyards, have together received over $1 million from state and federal programs since 2008, and distillers have benefited from the largesse, as well.
In addition, the state also awarded $155,000 to several craft breweries to help them purchase more Minnesota-grown ingredients, and gave $43,900 to the startup ENKI Brewing Company to help it develop a beer made solely from homegrown crops. (RELATED: Politicians Eager to Subsidize Craft Brewers)
ENKI co-owner John Hayes defended the subsidy programs, telling Watchdog, “Our objective is to make sure that the Department of Agriculture gets a fair return on that investment that they’re making in us.”
“I think the bigger question is, what are the reasonable roles of government,” he added. “Is it the government’s responsibility to be promoting Minnesota growers or is it not?”
According to Annette Meeks, CEO of the Freedom Foundation of Minnesota, the answer is no. (RELATED: Sugar Program Isn’t Sweet for Consumers or the Economy)
“This is just another example of a special interest capitalizing on their government connections to get special subsidizes to start or expand a business that may or may not have the market strength to support its on-going business activities,” Meeks told Watchdog. “The biggest problem with crony capitalism is that this gives those businesses who ‘win the government jackpot’ an unfair advantage against their competitors.”
“I don’t see it as being crony at all,” countered Minnesota Department of Agriculture (MDA) Assistant Commissioner Charlie Poster, who administers the state’s grant program. “We work with Minnesota companies that want to increase sales,” he explained, pointing out that, “Increased sales lead to increased employment, so we have a grant program that’s merit-based.”
Watchdog, however, notes that despite spending about $4.4 million in its first two years, the MDA itself only claims to have stimulated the creation of 41 full-time jobs and 61 part-time jobs, which translates to a cost of a little over $40,000 per job.
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