Federal Price Support for Honey Should Be Phased Out

GAO reviewed the Department of Agriculture's (USDA) mandatory honey price-support program to: (1) evaluate the need for the program; (2) determine who participated in the program; (3) determine why program costs and government inventories were increasing; and (4) evaluate USDA program administration.

GAO found that bee pollination is critical to certain seed and fruit crops, and the crop producers view the cost of pollination as a production cost. Producers believe that pollination service would be cost-effective even if the price rose as a result of price-support reduction or elimination. However, elimination of the program would force some beekeepers out of business. GAO found that comparatively few beekeepers participate in the honey price-support program, and the participants forfeit large quantities of honey to the government under the loan program. GAO found that the costs of the program have increased due to inflation, artificially high support prices, and the costs of managing honey inventories. Most of the honey which is forfeited due to defaulted loans is distributed through government donation programs. The cost of managing honey inventories increased from practically nothing to about $31 million for the 1980-83 period, and overall program costs were about $164 million for that period. GAO found that USDA program administration is not adequate because USDA: (1) did not collect sufficient wholesale price data or honey production data for computing the support price; (2) does not properly ensure that the producers meet the eligibility requirements for loans; and (3) does not perform tests on honey used for loan collateral to ensure that the honey is not imported or adulterated. GAO believes that the mandatory honey price-support program is no longer needed.

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: Resources, Community, and Economic Development Division Phone: (202) 512-9450