Agriculture's Statistics Agency:

--Computation of Average Market Price of Rice Questioned--Independent Evaluation and Unimpeded GAO Access to Records Needed

CED-79-85: Published: Jun 25, 1979. Publicly Released: Jun 25, 1979.

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The Department of Agriculture's (USDA) Economics, Statistics, and Cooperatives Service needs to develop better price data for determining the national average market price farmers will receive for rice as the data are used to calculate federal deficiency payments. Neither the program's authorizing legislation nor its legislative history indicates how the average price should be determined.

The Service has not provided its state statistics offices with adequate written procedures for compiling data and maintaining records. The cost of drying green rice, an important factor, was omitted in determining the price farmers receive for their rice and caused deficiency payments to be about $10.6 million more than otherwise would have been for the 1976 crop and $5 million more for the 1978 crop. GAO asked the Service to provide workpapers and reports so that it could evaluate how the reports were used to determine the average price farmers received for the 1976 crop. The Service and USDA denied GAO access to the reports for about a year. After GAO questioned the Service's computations, the Service revised the figures and an $11 million savings were realized.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should amend the rice program legislation to provide that: (1) the quantities and amounts paid on rice purchases be compiled on a common basis in computing the national average price of rice; (2) the Secretary, USDA, invite comments from and consult with trade, farmers, and other appropriate sources in establishing the specific methodology for the computation; and (3) the national average price of rice be established on a 12-month marketing year basis.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary, USDA, should direct the Economics, Statistics, and Cooperatives Service to negotiate with rice cooperatives to obtain price data that would be useful in computing the average price and provide better procedures to its state statistics offices for compiling data and maintaining records on average prices of commodities for which deficiency payments are authorized. GAO indicates that it would be beneficial to have an outside independent statistical group evaluate the USDA statistical operations. It is recommended that the Secretary should ensure that the independent evaluation includes an overview of the methodologies for the statistical series on prices received by farmers.

    Agency Affected:

 

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