Department of Agriculture Is Using Improved Payment Procedures for Its 1984 Farm Programs

In response to a congressional request, GAO examined whether: (1) Department of Agriculture (USDA) procedures for 1983 farm programs allow a farmer to receive payments based on the average yields of land rather than on the yield of the land actually set aside; (2) individual farmers received payments beyond the production capability of the land actually set aside; and (3) there are any cost-effective administrative remedies available to USDA which would preclude farm payments that do not reflect the actual yield capability of the land set aside.

GAO found that USDA procedures allow farmers to receive program payments for corn, wheat, and sorghum based on average yields of land. However, some lower yielding dry land which is set aside receives payment on the basis of higher yielding irrigated land. With respect to rice and cotton crops, payments are based on historical yields. Overall, farmers receive payments for corn, wheat, and sorghum based on average and irrigated crop yields that would have been lower if the payments were based on the expected yield of the land actually set aside. USDA could have lowered its payment amounts; however, GAO did find instances where payments to individual farmers would have been larger if based on land actually set aside. This occurred when farmers chose to set aside higher yielding irrigable land but were paid on the basis of lower yielding dry land. GAO found that there are administrative remedies available to USDA and that USDA has already take remedial action to prevent future payments on the basis of average or irrigated yields. The revised procedures will make use of existing data and procedures already available at the county level so that no significant amount of additional work or costs is involved. In view of this, GAO believes that the USDA action will be cost effective.