More Can Be Done To Improve the Department of Agriculture's Commodity Donation Program

CED-81-83: Published: Jul 9, 1981. Publicly Released: Jul 9, 1981.

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In fiscal year 1980, state and local programs to feed students, the elderly, needy families, and others received over $900 million worth of food through the Department of Agriculture's (USDA) commodity donation program. About 90 percent of the donated food was for the school lunch program administered by the Food and Nutrition Service (FNS). Two other USDA agencies provide the commodities.

USDA has not fully and accurately determined users' commodity needs, and states order commodities without determining user needs or preferences. GAO recognizes the difficulty of balancing the program objective of purchasing commodities for surplus removal and price support with the objective of purchasing commodities that user agencies prefer and need. However, GAO believes that improvements can be made. At times, commodities are received too late for use or without advance notice. Occasionally, recipients have to purchase food items locally which they would normally receive through the program. USDA allows states to restrict the mode of transportation to truck or rail, which can result in excessive transportation charges. The Department should consider increased use of the free-on-board (FOB) destination basis for procurement. It has been suggested that the commodity donation program be replaced with a cash or letter-of-credit voucher system. This would allow recipient agencies to purchase desired food items locally using cash or credit vouchers provided by the Department. Opponents fear a possible increase in opportunities for fraud and abuse, an increase in program costs, and a lessening of market surplus response capability. GAO believes that testing should provide Congress with needed data on the pros and cons of the alternative systems.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should establish specific procedures and a required reporting format to ensure that school districts' views on commodity preferences and needs are fully, accurately, and uniformly reflected in reports sent to state educational agencies by the state food distribution advisory councils.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should specifically show in the annual purchase plan how user needs and preferences affect the amount of funds that may be spent on commodity purchases. Analyses should be included showing the weights given such factors as commodity availability, market prices, and fund availability.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should require state distributing agencies to order commodities for recipient agencies based on demonstrated use and need rather than judgment and personal opinion.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Not Implemented

    Comments: The agency has revised its monitoring handbook to provide better guidance on proper monitoring of recipient agencies, inventory levels, and processes. Because of this change, program regulations do not need to be revised.

    Recommendation: The Secretary of Agriculture should revise appropriate program regulations to require FNS to develop a formal monitoring system setting forth data to be maintained by state distributing and recipient agencies, how the data should be analyzed, and who is responsible for the analyses.

    Agency Affected: Department of Agriculture

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should require that all recipient agencies: (1) maintain perpetual book inventories; (2) take periodic physical inventories and submit the results to the state along with copies of the source documents used; (3) explain any differences between physical inventory counts and perpetual inventory balances; and (4) develop and report monthly to state distributing agencies data showing, at a minimum, beginning inventory, commodities received during the month, commodities used during the month, ending inventory, and the value of commodities used per meal prepared.

    Agency Affected: Department of Agriculture

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should direct FNS to develop a monitoring plan to be followed by state distributing agencies in monitoring commodity inventory levels at recipient agencies. The plan should require that, at a minimum, the state agencies: (1) analyze monthly inventory reports submitted by the recipient agencies to identify excess and/or low inventory levels, poor inventory controls, and ineffective use of commodities; (2) identify causes of the problems, recommend positive action to alleviate them, and follow up to determine that corrective action is taken; and (3) visit a specified number of recipient agencies each year to take a physical inventory and review inventory control procedures.

    Agency Affected: Department of Agriculture

  7. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should direct FNS to fully evaluate commodity inventory levels at the state distributing agencies by developing a monitoring plan that: (1) requires states to continue to report commodity inventory levels as well as inventory levels in state-owned or -leased storage facilities, and to report inventory levels by program; (2) identifies the monitoring responsibilities of FNS headquarters and its regional offices; (3) specifies how those involved in monitoring should analyze the state inventory data and establishes reasonable timeframes for completing the analyses; and (4) specifies actions to be taken when FNS identifies problems with untimely, inaccurate, or incomplete reporting, excessive inventories, or lack of adequate inventory controls.

    Agency Affected: Department of Agriculture

  8. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should direct FNS to require that states develop procedures for distributing commodities to recipient agencies based on reported needs rather than allocating commodities based on the number of meals served.

    Agency Affected: Department of Agriculture

  9. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should evaluate the potential and actual effects of the USDA section 32 commodity purchases on the market prices and quantities available.

    Agency Affected: Department of Agriculture

  10. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Agriculture should: (1) revise USDA procedures to require that shippers provide specific written documentation regarding their inability to supply needed transportation and dates when the vendor requested transportation; (2) emphasize to the Agricultural Stabilization and Conservation Service the need to completely review vendor appeal cases and to sufficiently document its actions; (3) monitor FNS regional office efforts in getting states to adopt greater flexibility in the way they take delivery on commodities and, if necessary, require states to annually update their delivery capabilities; and (4) monitor the FOB-destination procurement of fruits and vegetables for the needy family program and, where cost-justified, expand such procurement of fruits and vegetables to other programs receiving donated commodities.

    Agency Affected: Department of Agriculture

 

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