Rice Program

The rice program, run by the Agriculture Department, cost an average of $1 billion annually between 1986 and 1992 to support rice producers and rice exports. These costs remained substantial because of (1) increased government costs resulting from the marketing loan provision and (2) continuing high deficiency payments. In addition, the government spent $157 million annually over this period to promote exports. The rice program has increased the percentage of farmers' income derived from government support. Government payments as a percentage of producers' total rice revenues nearly doubled, from an average of 27 percent in 1982-84 to 50 percent in 1992. Without the program, some producers would probably go out of business. However, with the program, producers receive rice revenues that, on average, exceed the amount needed to stay in business over the long term. Moreover, although all rice producers benefitted from the program, the benefits were concentrated. For the 1990 crop year, 15 percent of the rice farms received 52 percent of the deficiency payments. Despite federal efforts to boost U.S. exports, the U.S. share of the world rice market dropped from 24 percent in 1980 to 15 percent in 1992. This decline occurred because Thailand began exporting rice of comparable quality at a lower price, some countries lowered their rice imports, and U.S. exports were limited by increased domestic consumption and supply restrictions on the U.S. rice program.

GAO found that: (1) the rice program is costly despite USDA attempts to curtail costs; (2) between 1986 and 1992, annual government support costs averaged $863 million and annual export promotion costs averaged $157 million; (3) the rice program increased buyers' expenditures by an average of $12 million annually; (4) the rice program's costs are greater than its benefits because USDA has kept some land from productive use; (5) rice producers' incomes from program payments increased from 27 percent in 1984 to 50 percent in 1992; (6) without the program, some rice producers would have gone out of business; (7) the rice program had the highest participation rate of any commodity program, with 96 percent of all rice acres enrolled in 1992; (8) although Congress has attempted to limit payments under the rice program, producers have reorganized their farm operations so that they can receive multiple payments; (9) in 1992, 15 percent of the rice farms received 52 percent of USDA deficiency payments; (10) despite federal efforts to promote rice exports, the U.S. world market share declined from 24 percent in 1980 to 15 percent in 1992, and the volume of rice exported declined 14 percent; and (11) the reasons for the decline in the world market share include the improved quality of foreign rice, increased price competitiveness, foreign governments' increased protection of their domestic markets, increased domestic consumption, and the rice program's supply restrictions.

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: Team: Phone: