More Can Be Done To Improve the Department of Agriculture's Commodity Donation Program

Gao ID: CED-81-83 July 9, 1981

In fiscal year 1980, state and local programs to feed students, the elderly, needy families, and others received over $900 million worth of food through the Department of Agriculture's (USDA) commodity donation program. About 90 percent of the donated food was for the school lunch program administered by the Food and Nutrition Service (FNS). Two other USDA agencies provide the commodities.

USDA has not fully and accurately determined users' commodity needs, and states order commodities without determining user needs or preferences. GAO recognizes the difficulty of balancing the program objective of purchasing commodities for surplus removal and price support with the objective of purchasing commodities that user agencies prefer and need. However, GAO believes that improvements can be made. At times, commodities are received too late for use or without advance notice. Occasionally, recipients have to purchase food items locally which they would normally receive through the program. USDA allows states to restrict the mode of transportation to truck or rail, which can result in excessive transportation charges. The Department should consider increased use of the free-on-board (FOB) destination basis for procurement. It has been suggested that the commodity donation program be replaced with a cash or letter-of-credit voucher system. This would allow recipient agencies to purchase desired food items locally using cash or credit vouchers provided by the Department. Opponents fear a possible increase in opportunities for fraud and abuse, an increase in program costs, and a lessening of market surplus response capability. GAO believes that testing should provide Congress with needed data on the pros and cons of the alternative systems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Brian P. Crowley Team: General Accounting Office: Community and Economic Development Division Phone: (202) 512-9450


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