Farm Reorganizations and Payments to Foreign Owners of U.S. Cropland

GAO discussed the impact of farm reorganizations on Department of Agriculture (USDA) farm payments and the $50,000-per-person payment limitation. GAO found that: (1) there was an increasing trend in reorganizations from 1984 through 1986, which resulted in an additional $328 million in program costs and added almost 9,000 new persons to USDA payment rolls; (2) the dramatic increase in the number of persons receiving direct payments of $40,000 in 1985 was an incentive to many farmers to reorganize their operations when they met the payment limit; (3) as more farmers met the payment limit, the number of new persons receiving payments in succeeding years increased due to high per-unit payment rates and crop yields; and (4) although farm program payments to foreign owners of U.S. cropland were relatively small, USDA expects that the overall payments for the 1986 program will be higher. GAO also found that USDA had problems implementing the payment limitation because county offices inconsistently applied the regulations that governed payments to farmers and did not document reorganization plans. GAO believes that USDA could improve the effectiveness of payment limitations and tighten the provision that allows individuals to form partnerships that qualify for separate payments by limiting payments to persons who are actively engaged in farming.