Commodity Programs

Congress recently began allowing farmers to plants crops other than their designated program crops on up to 25 percent of their base acres. This flexibility was one of the principal elements of the 1990 farm legislation aimed at improving U.S. competitiveness in the international agricultural market. Another law passed that same year eliminates income support payments on 15 percent of the base acres, even when the designated program crops are planted on that land. Taken together, these provisions establish what are commonly known as flex acres. According to the Agriculture Department (USDA), flex acres and other changes in the law will cut government costs by about $12 billion from 1991 through 1995. In addition, USDA officials say that although farmers dislike losing part of their deficiency payments, they generally like the increased flexibility they gain from flex acres and believe that the overall impact on their operations is positive. The net economic impact of flex acres is inconclusive at this time. But given the generally positive views of farmers and the projected savings to the federal government, GAO sees no reason why flex acres should not be continued or expanded in future farm legislation.

GAO found that: (1) although flex acres are designed to reduce the government's agricultural support costs and increase U.S. farmers' market competitiveness, the total impact of flex acres on farm income is unknown; (2) the Department of Agriculture (USDA) estimates that flex acres and other legislative changes will reduce government costs and federal payments to farmers by about $12 billion from 1991 through 1995; (3) farmers have gained greater flexibility by using flex acres and believe that flex acres' overall impact on farm operations has been positive and has improved farmers' crop rotation practices, response to weather conditions, compliance with conservation objectives, and efficiency; (4) farmers have increased their income by using flex acres to plant alternative crops; (5) allowing farmers the flexibility to grow crops outside of federal income support programs gives farmers the opportunity to use their land to respond to market demands; and (6) the government should expand the concept of flex acres in future farm legislation so that farmers can become more responsive to market forces.

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.

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