Farm Payments

In response to a congressional request, GAO reviewed reported abuses in the Department of Agriculture's (USDA) Payment-in-Kind (PIK) Certificate Program to determine: (1) the volume of grain involved in long-distance transactions, in which commodity certificate holders exploited differing market values; (2) the monetary benefits gained from such transactions; (3) how the benefits were distributed; and (4) the cost to the government.

GAO found that: (1) about 260 million bushels of grain were involved in the transactions; (2) producers gained between $43.2 million and $64.5 million from the transactions; (3) warehouse operators, brokers, and producers received between $18.6 million and $26.9 million; (4) producers paid between $26 million and $39.1 million for the use of grain located in distant warehouses; and (5) the government's net cost from the transactions was between $131 million and $148 million. GAO noted that: (1) the government's costs were not the same as the benefits to producers; and (2) most producers gained substantially through long-distance transactions.