© 2002, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News.

Oct. 13--In his years of farming the arid lands south of El Paso, Tyn Davis occasionally needed financial help from the federal government, and he had no difficulty getting it.

Each year from 1994 to 1997, he applied for short-term operating loans from the Farm Service Agency, an arm of the Department of Agriculture. After his cotton or wheat or onions were harvested and sold, he repaid the loans and began preparing for the next season.

"I never had a problem," he says. "I always got the loans on time and repaid them on time."

In 1998, he had an unusually pressing need for the FSA. In January of that year, state agricultural officials ordered him to destroy a wheat crop because of a serious fungus infection. An emergency grant from the state did not allow him to repay the entire FSA loan because he needed some of the money to operate until he could bring in another crop.

What happened next not only startled him, but made him a key player in a lawsuit against the USDA and a key witness at congressional hearings examining, once again, evidence of long-standing and widespread discrimination practiced by the department.

"In April, I went to see Bill McAnally, my FSA loan officer, to tell him that I would be late with my payment because I had to destroy my crop," he says. "He was very understanding and told me it would not be a problem.

"When I was leaving, a Hispanic farmer came in, and he had trouble understanding English. I was almost to my car, and McAnally stopped me and asked if I spoke Spanish. I went back in and translated for the farmer. When we were finished, McAnally asked me how come I spoke Spanish so well. I told him I was half Hispanic ... my mother was Mexican."

Davis, 41, says that what had been a cooperative relationship with the FSA changed immediately. Instead of getting an extension or restructuring of his loan -- a common FSA practice -- he received a letter in May informing him that the agency was foreclosing on his farm. His father, who operates a dairy business, offered to pay the debt and Davis so notified the FSA.

"McAnally said it was too late because the foreclosure had already started," he said.

In midsummer, a truck arrived to remove his equipment.

"I told the driver what was being done to me and he said he would come back in a week," Davis said. "He told me I should get a bankruptcy lawyer."

Bankruptcy enabled him to keep his farm, but he no longer had a relationship with the FSA, a bureaucracy created in the 1930s specifically to assist farmers such as Davis.

The lawsuit by Hispanic farmers from Texas to California alleges, and the history of the USDA suggests, however, that minority farmers are as likely to be harmed as helped by FSA's practices.

As of Sept. 30, according to the USDA Web site, FSA has loaned more than $3.6 billion this year and another $500 million was still available.

The Hispanic farmers argue that they routinely are discouraged from applying for government loans, are required to submit more paperwork, are turned down at a higher rate than Anglos, and, if their application is approved, the money usually arrives after the planting season. They also claim they encounter more difficulty than Anglo farmers in having their debt restructured in the event of disasters brought by weather, insects or disease.

"I would estimate that 90 percent (of failed Hispanic farmers) are put out of business because they are Mexican," says William Arens, a consultant in West Texas who helps farmers apply for FSA loans and appeal negative decisions.

Arens, who estimates he has assisted in more than 3,000 applications, most of them for white farmers, says the FSA often uses "lack of managerial ability" as the reason for denying loans to Hispanics, even if the farmer is experienced and has met the FSA standard of "managerial ability."

"In all my dealings with the FSA loan process, I have met only one young Anglo farmer who was denied a loan because of 'lack of managerial ability." "

Official charges of discrimination in the USDA's farm assistance programs have been around for nearly four decades, beginning with a 1965 report by the U.S. Commission on Civil Rights, which found that the department discriminated "both in internal hiring and external program activities."

The commission revisited the issue in 1982 and reported that "there were widespread prejudicial practices in loan approval and farm management assistance." About the same time, according to the lawsuit, the USDA "secretly dismantled its apparatus for investigating discrimination complaints" -- a move Congress did not learn about until 1998.

In 1990, the House Government Operations Committee concluded that the Farmers Home Administration, forerunner of FSA, "has been a catalyst in the decline of minority farming."

And in 1997, a similar conclusion was drawn by three other agencies -- the General Accounting Office, the Office of Inspector General and the Civil Rights Action Team.

Four years ago, the USDA settled a class-action lawsuit brought by black farmers and, according to recent reports, has since paid out more than $630 million -- and that covers only 40 percent of the 22,000 claims.

USDA officials would not discuss the Hispanic lawsuit, but in the past, charges of discrimination have not been vigorously disputed.

"We recognize that there have been instances of discrimination ... in the past, and we deplore (it)," FSA Administrator Grant Buntrock said in a 1996 statement as black farmers were preparing to demonstrate in Washington, D.C.

Some observers, such as Arens, believe the Hispanic farmers have a stronger case than the black farmers. Stephen Hill, one of the attorneys, points to the example of Lupe Garcia, a New Mexico farmer who is the lead plaintiff, as "crystal clear" evidence of the motive for the discrimination: When one farmer loses his land, he says, another acquires it.

Garcia, 58, has bachelor's and master's degrees in agronomy and has taught agronomy throughout Central America as a visiting professor for Oregon State University. Since the early 1980s, he has farmed near Las Cruces with his sons.

From 1981 through 1983, he received operating loans from USDA but only after securing them "with collateral worth substantially more than the loans."

After 1983, his applications were rejected eight times. Even when a dam broke in 1986 and water destroyed his crop, he was denied disaster relief. Another flood destroyed his crops two years later, and again he received no help from USDA.

"Our farming operation continued to be slowly starved of operating capital," he told a congressional subcommittee. "By about 1990, one of our white neighbors felt sufficiently emboldened to tell us that it was only a matter of time before he would own our land."

Garcia again sought loan restructuring from the USDA in 1994 and was turned down. He appealed and won a favorable decision from the National Appeals Division, but he still did not receive the assistance.

In 1999, even though his land was valued at $2.4 million, it was foreclosed on by his lenders and sold to Anglo farmers for $1 million.

"To add insult to injury," he said at the congressional hearings, "the FSA assisted the Anglo farmers in purchasing our farms. One of the purchasers was the same neighbor who had stated that he would own our farm."

Many of the more than 100 Hispanic farmers seeking class-action status for their lawsuit suffered a fate similar to Garcia's -- loss of their land.

Ray Garza grew up in South Texas but left the family farm years ago to build his own operation in Hockley County, west of Lubbock.

From an initial 300 acres of cotton in 1985, he and his wife, Vicky, slowly expanded and by 1998 were working more than 1,000 acres.

In 1990, amid the expansion, they needed a loan.

"Some people told us not to go to FSA, they wouldn't lend us any money," said Vicky Garza.

They applied anyway and were turned down. They sought help from Arens and got the loan approved.

But there was a catch. They didn't receive the money until late July or August, well past cotton-planting time. They were forced to farm on credit, at high interest rates, and slipped into a cycle of debt.

Arens said FSA rules allow the agency 60 days to process an application and require that the farmer receive the money within 10 days after that.

"I have almost never seen a Hispanic farmer's application processed and closed within that time," he said. "Anglo farmers can usually depend on getting their loan proceeds within the prescribed time."

In addition to having to make numerous changes to their application, Arens said, Ray Garza was required to write essays on his farming operations.

"They were grading his essays," he said.

The Garzas, now in their late 30s, stopped farming in 1998, filed for bankruptcy and moved to Saginaw, north of Fort Worth. He drives a truck, and she works for a fence company.

The most common complaint among Hispanics is the FSA system of having loan applicants screened by county committees, three to five farmers who are elected by their peers.

Critics say they are almost always influential Anglos. A recent report by the Rural Coalition noted that of 695 county committee members in Texas, only 13 are Hispanic.

"They take care of their brothers and their friends and themselves first," Vicky Garza said. "By the time they get to us, they say the money's gone."

There are procedures for filing discrimination complaints but, Arens said, another FSA policy is an effective deterrent to such action.

"If they file a complaint, the processing of their loan applications is stopped," he said. "FSA won't deal with them as long as a complaint is pending."

USDA officials acknowledged that the "county committee" issue is one of several that have been raised before.

"There is an ongoing effort to eradicate any program that is discriminatory," a spokesman said.

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