Part 5: The Bidding War

The Easterday empire is being broken apart. Some of the most valuable farmland in America is up for sale, and the billionaires are coming to town. The bidding war over water-rich lands shows the shift in how America farms.

It started as an American success story. The Easterday family took a couple hundred acres of farmland in southeast Washington and grew it into a farming and ranching empire worth millions. Then, it all came crashing down.

Ghost Herd tells the story of Cody Easterday, the man at the center of one of the largest cattle swindles in U.S. history. Easterday invented a “ghost herd” of 265,000 cattle that only existed on paper … and swindled companies including an agriculture giant to the tune of $244 million dollars. Correspondent Anna King has spent two years following the fallout of the crime and its impact on a tight-knit rural community.

Ghost Herd is a story of family and fraud, but also a story about the value of dirt and the shifting powers in the American West.

Listen to all episodes of Ghost Herd, and see behind-the-scenes extras at GhostHerd.org. Or search for Ghost Herd in your podcast app.

Ghost Herd is a joint production of KUOW Puget Sound Public Radio and Northwest Public Broadcasting, both members of the NPR Network.

Episode 5: The Bidding War

Transcript:

Anna King narration: A large white sign. A sentinel. The size you'd see along the highway -- guards one of the Easterday's farms near the Columbia River. On the white background in big maroon writing it says: "Easterday Farms. Private Road. No Trespassing." The big steer head family brand is stamped there too.

Beyond the sign and a big metal gate, rolls a ribbon of freshly graded gravel road. It slices through the verdant fields, down a hill and beyond it, the Columbia River. But this big ol' sign is coming down.

The Easterday family was forced to sell off this massive farm and several others. It's all a result of the ag-titan's major bankruptcy. The value of this land is incredible. But really ...

... it's the water.

The Columbia Basin is a desert. Until you put water on it. Out here, rainwater is measured by the hundredths-of-an-inch that drops onto dryland wheat fields. Or, it's guzzled out of the mighty Columbia River and raced through a circulatory system of irrigation pivots and sprinkler heads to high-value crops.

Water's that valuable, because crops on land -- given the right fertilizer and a summer's worth of sun -- equals big money.

An additional five inches of water can mean all the difference on the same field of wheat. Six inches can mean ruin. While eleven inches means plenty. That's just five inches difference for a total bust or a thrilling bin-buster yield.

And the Easterday's property is right on the Columbia River.

Darryll Olsen: if you'd not been on the Columbia and you, you stand there, the size is extremely impressive, particularly at that location.

Anna King narration: This is Darryll Olsen. He's the head of a group that advocates for farmer-irrigators across Eastern Washington.

And that impressive, cold, deep Columbia River water greens up the Easterday farm.

Darryll Olsen: And it's, it's somewhat sublime in that you can stand there and you can't take it all in, you know, you, you literally can't see the whole property unless you're in an airplane. So it just seems vast. It seems endless. It's green and it's being irrigated with main stem, Columbia river water rights.

Anna: God's country?

Darryll Olsen: Better than that.

Anna King narration: The Easterdays had reached the pinnacle of their power. They had some of the most valuable land on the planet.

But on this episode, we'll examine what Cody Easterday and his family will lose. When their property was sold it triggered a bidding war pitting some of the wealthiest people and religious institutions -- yeah, a big church -- against each other.

It's a clash of titans over Easterday's sprawling and treasured farmland. This is a story of the value of Western land ... and water.

This is Ghost Herd. I'm Anna King.

The GPS of this John Deere combine sounds off as the tractor slowly cuts down a big swath of wheat. Inside the cab, things are calm and cool. The AC makes sure of that.

But outside the protective bubble, a 30-foot wide circular blade cuts down the cracklin', dry golden wheat. This iconic green and yellow tractor then sucks up all that cut wheat into the guts of the machine, a lot like your lawn mower at home. All the while kicking up a cloud of dust and bits of chaff into the stubble it leaves behind. It's harvest time on this 600 acre parcel at the Berg family farm.

Nicole Berg: We've had some tough, tough weather, you know, trying to get through that. And then it, it wasn't very hot this summer, you know, until the very end.

And so the bluegrass was a little tough to harvest

Anna King narration: Nicole Berg stands at the corner of Bert James Road and Sellards Road -- a remote intersection in the Horse Heaven Hills, about an hour south of Basin City. She surveys the field, and the work, as her nephew Ben works the combine. Nicole is the fourth generation to own this farm. This type of operation is what we tend to think of when we buy our bread, eggs or meat.

Her great-grandfather started as a sheep farmer on this land in 1934. But it was her grandfather, Art Berg, that really taught Nicole how to farm. And she says her grandpa preferred the old machines of his youth, to these new, fancy John Deeres.

Nicole Berg: So my grandpa, he, uh, didn't like these combines cuz they, they have cabs. And he said that you always need to eat more dirt. And so back in his day, the combines didn't even have cabs. Or air conditioning. Can you imagine not having air conditioning in a combine? It would be miserable and dirty.

Anna King narration: Nicole tells me her grandpa believed eating dirt was the only way to understand farming. And Art ate a lot of that fresh dirt.

Nicole started to take this dryland wheat ranch over from her parents and uncle in 1997. She was a fresh generation of farmer. She went into business alongside her brothers.

Nicole Berg: I've always said it's kind of hard to farm with somebody who you, you threw a bowl of cereal at.

Anna King narration: And they've grown the operation, both to sustain them and to leave something for the next generation. Nicole has one niece and four nephews, many of whom want to come back and farm. But this kind of succession of family farmers is becoming a lot more rare these days. More than 40 percent of America's farmland is owned by people over the age of 65.

Addie Candib: so we estimate that around 370 million acres of farmland, that's about one third of U.S. farmland is likely to transition in the next 15 years.

Anna King narration: That's Addie Candib. She is the head of the Northwest region of American Farmland Trust.

We are at a transitional period for America's farmland. And the Cody Easterday saga highlights the changes we are seeing.

After Cody's court battle with Tyson and the bankruptcy, the cowboy was backed into a corner. He was forced to sell his 22,000 acres of farmland. It's the empire of dirt he had spent his entire life piling up.

This was land Cody used to grow his big-money crops like potatoes and onions. And now, the money from the sale would be used to pay back Tyson and the millions he owed to other creditors from his big cattle swindle.

So right out of the gate, some big-time investors were eyeing Cody's big spread. The top dog of this group is a name you might recognize.

Bill Gates. The Microsoft founder is one of the richest people in the world and through his investment firms, he is the largest owner of private farmland in America.

According to the trade journal "Land Report," he owns 242,000 acres nationwide, an empire worth $5 billion dollars.

Last year at a Reddit virtual session where he was promoting his book, How to Avoid a Climate Disaster, Gates was asked why buy so much farmland? He said, his investment group decided on it -- it's not connected to climate.

Addie Candib: farmland typically will become part of a corporate farm management portfolio where a company manages that land as part of a suite of other lands.

Anna King narration: Farmland has become an asset for wealthy investors. It's one way to diversify. Farmland returns often do better than the returns from the stock market.

Addie Candib: So institutional investors like universities and pension plans have known this for a long time. They typically keep about 10 percent of their portfolios in natural resources.

Anna King narration: It's like that old saying, "Buy land. They're not making it anymore." Addie says that investors understand a core value of farmland is the ability to produce food.

Addie Candib: They understand that our population is growing. Farmland is dwindling and climate change is making agriculture riskier and more unpredictable, which makes every available acre that much more valuable

Anna King narration: But the real value of the Easterday property goes beyond just the land. It's the water. And this giant farm guarantees its buyer access to the steady flow of the Columbia.

Water rights are how our government divvied up a scarce resource in the West. It's sort of like a deed -- a piece of paper that means you own the use of that water. It's usually tied to a particular parcel of land.

Water rights rule the West. If you have them, they make you money.

In Washington state, the most valuable water rights are senior water rights. Those are the really old ones, think pioneers circa 1850s. Those senior water rights were given to the first white settlers -- they divvied up the rivers.

There are also junior water rights, newer ones. They get reduced or cut off in drought years.

But senior rights always get their draw of water. And in the Northwest, there are no new water rights. So without them: You can't build new developments, water crops or even keep water in streams for fish.

That is what makes Cody's Easterday's farms along the Columbia River so valuable. They come with those senior water rights attached. And that's why big investors are so interested in his land. And they know the value will only increase in this time of climate change.

Darryll Olsen: I mean, there is no doubt. That Western United States is seeing the effects of climate change. I mean, that's, that's verified.

Anna King narration: This is Darryll Olsen again. He's fought for Northwest farmers' water rights for 30 years.

Darryll Olsen: So water supply under changing climate conditions in Western United States is going to decline. That's all there is to it. And again, the one major exception is what we're doing on the main stem snake and Columbia.

Anna King narration: Darryll says we're lucky here in the Northwest because the Columbia River watershed is fed by snow from the Canadian mountains. So even if Washington and Oregon are in drought, there's often still plentiful water in the Columbia. Like on the Easterday farm -- they have senior water rights to the Columbia River. Meaning whoever owns this land will almost never be out of water.

Darryll Olsen: I mean the handwriting's on the wall.

You, you need to be somewhere where you've got a long term stable supply of water. If you're in California, I, I guarantee people are looking up here with a great deal of envy at the main stem snake and Columbia and the system that we have and the water rights that we have available

Anna King narration: Darryll says the Easterday land -- with this stable supply of water -- will become more and more valuable in the future. So it's no wonder, Gates, and his investment firms, are interested in this Washington desert jewel.

Anna: and water rights. Like this don't come up that often. Like they're not, they're not on the open market, very often?

Darryll Olsen: Not a block this size, as we go forward, you know, Easterday, that level of, uh, quantity of water, the quality of the water rights, the location, um, we're probably not gonna see anything like that.

Again, at least not in my lifetime.

Anna King narration: But all this valuable water, also piqued the interest of another large investor.

Enter The Church of Jesus Christ of Latter-day Saints. Famous for the The Tabernacle Choir ...

... and owning vast swaths of American farmland.

The church invests heavily in farmland. The church operates a tax paying entity called AgReserves that owns and operates large agricultural properties across the U.S., Latin America, and Europe. They actually own more than 2 percent of the state of Florida. And the church is in the top five private land owners in the country.

Betsy Gaines Quammen: And now you have a very, very wealthy church that can buy some of the most prime properties in the United States.

Anna King narration: That's Betsy Gaines Quammen. She's an environmental historian. She lives in Bozeman, Montana, and specializes in Mormon settlement and public land conflicts.

Betsy Gaines Quammen: And that's what they're doing. Competing with people like Bill Gates.

Anna King narration: But why would a church be interested in owning farmland? One, for the same reason as everybody else ... it is just a good investment.

But they also hold some deeper reasons for wanting the land.

When the LDS refugees arrived in Utah in 1847, they emphasized building a Mormon empire. They sent settlers throughout the West to claim land for the church. They were building Zion -- a holy land where all believers could come and live in harmony.

To understand the Latter-day Saints drive to cultivate land, look at the book of Isaiah Chapter 35, Verse 1. It says: "The wilderness and the solitary place shall be glad for them; and the desert shall rejoice and blossom as the rose."

Betsy Gaines Quammen: There's an emphasis on making the desert bloom. And this was very much a part of early church theology.

It was making the desert, which was Zion, bloom like the rose and early church members were able to build irrigation systems to make very difficult land arable and in doing so, they were able to grow all sorts of amazing fruits, different kinds of apples, quince, plums, grapes, all these things in very marginal lands that, as I said, other white settlers had overlooked.

Anna King narration: Of course, indigenous people were using this landscape long before the LDS members settled here, planted quince and plums. Native Americans were moving with the seasons, gathering and hunting on these lands. And the LDS people tended to settle around the water springs and key areas that indigenous people relied on too. That displacement, actually caused many native peoples to starve in the Great Basin. And there were also bloody conflicts with Native Americans. Those battles have names like: Bear River and Circleville.

Later, LDS people assimilated and indoctrinated native children in schools and adopted them into white families.

Despite that hard-to-hear history, The Church of Jesus Christ of Latter-day Saints is focused keenly on the future. They believe there will be a second coming of Christ. And a need to prepare their people.

Gordon B. Hinkley, a former president of the church, summed up why they are so willing to spend millions on farmland.

Gordon B Hinkley: We have felt that good farms over a long period represent a safe investment where the assets of the church may be preserved and enhanced while at the same time they are available as an agricultural resource to feed people should there come a time of need.

Anna King narration: And a time of need requires preparation: Food. Money. Farmland. There is an emphasis on being ready for the end of days.

Betsy Gaines Quammen: and that's not a stretch. I mean, these are the Latter-day Saints. So that, that really is an, a part of, of identity. So land becomes important for all those different reasons.

Anna King narration: So the table was set. It was a bidding war. Bill Gates and his billions vs. the LDS church and its billions.

Skye Root: Now let's go have an auction.

Anna King narration: That bidding war starts after this break.

BREAK

Anna King narration: So, this Easterday land is about to go up for auction to the highest bidder. The man in charge of that auction is Skye Root.

Skye Root: I know who the big buyers are. I know who I, I know who can write a big check, who has the money, who wants to own.

Anna King narration: When large pieces of farmland like this are up for auction, Skye organizes it all. He'll make calls and send emails to potential buyers to gauge interest.

Skye Root: On these big transactions, it's usually sign an NDA. Uh, and you know, non-disclosure agreement and we'll send you some information and you can tell us if you're interested or not in, in looking at the deal.

And so that's normally how that process would run. Uh, and that's how that process ran, you know, here as well.

Anna King narration: There were a few local buyers that were interested in the land. But they didn't want to buy the entire property all together. They wanted the 22,000 acres to be broken up and sold as smaller parcels.

Skye Root: We went down the, the road of dividing it up

Anna King narration: Dividing up the Easterday land would have allowed for slightly smaller-scale regional farmers to be able to play. Skye says they considered that. But ultimately his job is to get the most money for the land.

Skye Root: We couldn't maximize value breaking this farm up. and, we tried. But at the end of the day, uh, the, the whole selling it as a whole unit, um, was how we maximize value.

Anna King narration: The 22,000 acres sold as one block would push the price tag into the hundreds of millions of dollars. That cut out most local farmers. Only big, institutional investors could afford to bid.

The auction was the culmination of weeks of work. Skye took potential bidders for in-person tours of the land. He told me his truck knew that farm well by the closing.

In mid-June of 2021, teams of lawyers and finance experts from each of the sides logged into a secure video call.

Skye Root: in the middle of the COVID issues. So, uh, but yeah, there were groups of people that were together at different places throughout the country, really

Anna King narration: There isn't an actual auctioneer talking fast in a setting like this. It's just lawyers on behalf of a few parties. Some in jackets and ties. Everyone on a video call, in their own offices, meticulously going through the process, bid after bid.

Skye Root: There were multiple rounds. Uh, like, I, I couldn't even tell you how many rounds, but there were many rounds of the. auction And with the price going up and up and up and up and up

Anna King narration: Skye says the whole thing took hours.

Skye Root: We worked through the bids in a very systematic process and, uh, and got to a, a winner

Anna King narration: The LDS Church won the auction for $209 million dollars. The Easterday property now belonged to Salt Lake. Twenty-two-thousand-acres in the Columbia Basin. And all those valuable senior water rights.

Big land dealer, Skye Root, says massive land deals like this are what's ahead. He sees big farmers getting bigger and institutions buying more farmland. More land will be owned by less hands.

Skye Root: Instead of, you know, grandma, all the grandmas and grandpas of the, of the United States owning 80 acres, apiece which has been generally the kind of history. I see more and more large farmers that, uh, that, you know, privately own ground.

They're big farmers they've taken that risk. And, uh, and so it's, you know, in some ways it's efficient for our food system. Um, but it's sad for, uh, you know, what I contemplate my upbringing and growing up on a, on a farm and. And, uh, and all of that did for me as a person and my siblings and all that kinda stuff.

That's the sad part is that, uh, unfortunately my opinion is that in 15, 20 years from now, we're gonna see less and less connection to the farmland, I mean, we're already seeing it. I'm not prophesizing anything that's not already happening, but I think we're just gonna see more of it.

Anna King narration: All these recent huge investments in farmland are driving up the price for farmers themselves. From 2020 to 2021, farmland values in the Northwest increased between 5 and 10 percent.

It's making it harder for family farmers -- like Nicole Berg -- to compete. And hand down the land to the next generation.

Nicole Berg: When I see that kind of bidding war going on between LDS and, and like Bill Gates, it kind of makes you as a family farm going, man, I'm out. I, I can't, we can't afford that. I mean probably could, but I don't want to, because it doesn't, it doesn't pencil as far as a, a farming business.

And so they've taken other equity from other places and brought it into agriculture. And so is it right wrong or indifferent? I don't know. We still need to feed what 9 billion people across the world. And so I, I do look at that side of the humanitarian aspect of it, but then on the flip side, There's a true passion across the country for farmers and family farmers to stay in business and to keep family farming.

Anna King narration: Farmers are getting squeezed. And that's making it harder to own land. That's crushing to any aspiring farmer.

Ever since white farmers came into this region and started planting their crops ... their prosperity and power has always come from having control of the land.

Addie Candib, with the American Farmland Trust, says land ownership is fundamental to the psyche of our country.

Addie Candib: The west was settled by people who were promised land because land meant wealth. And if you could go somewhere and get your hands on a piece of land, there was the possibility to acquire more and build a future for yourself. So land as wealth is not new. And I think as we. Start to look askance at people who are amassing significant well through land.

We have to look at our legacy because that's where it all started

Anna King narration: On what was once the Easterday's prized farm, the last bolt in a new sign is affixed into place. Unlike the Easterday's sign, this one reads: "AgriNorthwest." A new farm name for this beautiful place. And new management. But the same crops: Corn is growing tall here again.

On the final episode of Ghost Herd, we'll look at how big institutions gobbling up ag lands is turning American farmers into renters.

Darrell Miles: Growing up on a farm, but never owning a farm, I farm here because it's what I can get.

Anna King narration: We'll examine the mythology of the West.

And it's judgment day for Cody Easterday.

This is Ghost Herd. I'm Anna King.

Credits

Anna King narration: Ghost Herd is a joint production of KUOW Puget Sound Public Radio and Northwest Public Broadcasting, both members of the NPR Network, a coalition of public media podcast makers. To support our work, contribute to KUOW, NWPB or your local NPR station … and tell a friend or two about this podcast. It helps.

Ghost Herd is produced by Matt Martin, and me, Anna King. Whitney Henry-Lester is our project manager.

Jim Gates is our editor.

Fact Checking by Lauren Vespoli

Cultural edit by Jiselle Halfmoon

Our logo artwork is designed by Heather Willoughby.

Original music written and performed by James Dean Kindle

Recorded by Addison Schulberg

With additional musicians Roger Conley, Andy Steel and Adam Lange

I'm your host Anna King.

If you have thoughts or questions about Ghost Herd, we’re listening. Get in touch at KUOW.org/feedback