Commodity Programs

Should Farmers Grow Income-Supported Crops on Federal Land? Gao ID: RCED-92-54 January 15, 1992

A media report that a Tennessee farmer received income support payments for not growing crops on federal land prompted congressional concern about the government's policy of allowing farmers who lease federal lands to participate in the U.S. Department of Agriculture's (USDA) income support program. Under that program, the government pays farmers to reduce crop production when income-supported crops are in excess supply. This report describes the basis for the government's policy of allowing federal lessees to participate in the income support program and estimates USDA payments to lessees during crop years 1988 and 1989.

GAO found that: (1) the government allows federal lessees to grow crops eligible for support payments; (2) the government established the policy because the demand for U.S. crop exports was strong and it wanted to encourage increased production to meet demand; (3) the federal lessees policy conflicts with the objectives of the USDA acreage reduction and environmental programs by making more farm land available for production; (4) in crop years 1988 and 1989, the government paid $3.2 million in supplemental income to federal lessees for crops that were not needed, and $350,000 to federal lessees who agreed to produce income-supported crops; (5) the government is paying more than necessary, because the government owns the land and can prohibit production by modifying its policy instead of using financial incentives; and (6) in 1982, USDA determined that production from federal lands was no longer needed, but continued the federal lessees policy because the small amount of production from those lands would not affect national supplies, and with the agricultural industry in a downturn, rural communities depended on those farmers' income.

Recommendations

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