Food and Commodities

Federal Purchases and Major Regulations That Potentially Affect Prices Paid Gao ID: RCED-00-173R June 15, 2000

Pursuant to a congressional request, GAO provided information on the federal government's food and commodity purchases, focusing on: (1) details about federal agencies' purchases of food and agricultural commodities from fiscal year (FY) 1997 through FY 1999; and (2) information on major regulations that may affect the prices paid by these agencies for these products.

GAO noted that: (1) five agencies--the Departments of Agriculture, Defense, Justice, Labor, and Veterans Affairs--made large direct purchases of food and commodities from FY 1997 through FY 1999; (2) for example, purchases by these agencies totalled about $4.5 billion in FY 1999 for items ranging from bulk, unprocessed commodities such as grain and soybean meal to ready-to-eat cereal, canned goods, fruits and vegetables, dairy products, and military field rations; (3) these purchases were made for agency programs or for basic mission-related objectives; (4) for example, Agriculture purchased food to feed children under the National School Lunch Program, and Veterans Affairs purchased food for the patients in its 172 medical facilities; (5) in addition, some of these agencies made food or commodity purchases on behalf of other agencies; (6) for example, Agriculture made purchases on behalf of the Department of State's Agency for International Development and Defense made purchases on behalf of over 20 other agencies; (7) of the 23 major regulations GAO identified as potentially related to food or agriculture, 11 had impacts on food and commodity prices, according to the required cost-benefit analyses; (8) Agriculture issued all 11 of these regulations; (9) the anticipated price effects of these regulations vary depending on the regulation and the food or commodity involved; (10) in most cases, the effects identified in the analyses were on prices that producers or processors could expect to pay or receive for food or commodities before the products are sold at the retail level; (11) the 12 regulations and related cost-benefit analyses that did not provide information on food or commodity price impacts were issued by Agriculture, the Environmental Protection Agency, or the Food and Drug Administration; (12) in general, each of the 23 major regulations GAO reviewed were issued by agencies to accomplish purposes and programs mandated by Congress in order to benefit the nation; (13) for example, a 1996 rule on hazard analysis and critical control point systems issued by the Food Safety and Inspection Service establishes requirements for slaughterhouses to reduce the numbers of pathogenic microorganisms on meat and poultry products; and (14) as a result of this regulation, the economy is expected to receive benefits estimated at $7.1 to $26.6 billion over 20 years due to a reduction in foodborne illnesses.

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