Federal Price Support for Honey Should Be Phased Out

RCED-85-107: Published: Aug 19, 1985. Publicly Released: Aug 19, 1985.

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GAO reviewed the Department of Agriculture's (USDA) mandatory honey price-support program to: (1) evaluate the need for the program; (2) determine who participated in the program; (3) determine why program costs and government inventories were increasing; and (4) evaluate USDA program administration.

GAO found that bee pollination is critical to certain seed and fruit crops, and the crop producers view the cost of pollination as a production cost. Producers believe that pollination service would be cost-effective even if the price rose as a result of price-support reduction or elimination. However, elimination of the program would force some beekeepers out of business. GAO found that comparatively few beekeepers participate in the honey price-support program, and the participants forfeit large quantities of honey to the government under the loan program. GAO found that the costs of the program have increased due to inflation, artificially high support prices, and the costs of managing honey inventories. Most of the honey which is forfeited due to defaulted loans is distributed through government donation programs. The cost of managing honey inventories increased from practically nothing to about $31 million for the 1980-83 period, and overall program costs were about $164 million for that period. GAO found that USDA program administration is not adequate because USDA: (1) did not collect sufficient wholesale price data or honey production data for computing the support price; (2) does not properly ensure that the producers meet the eligibility requirements for loans; and (3) does not perform tests on honey used for loan collateral to ensure that the honey is not imported or adulterated. GAO believes that the mandatory honey price-support program is no longer needed.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The report was used extensively by the Senate during the Farm Bill debate in an attempt to eliminate the program. Although the Farm Bill allowed the program to continue, the program was amended to reduce the loan rate and purchase level each year through 1990. Increasing costs was one of the issues GAO addressed in the report.

    Matter: Congress should pass legislation to repeal the mandatory honey price-support program, 7 U.S.C. 1446(b). If Congress repeals the mandatory program, it should consider directing the Secretary of Agriculture to use his existing discretionary authority under 7 U.S.C. 1447 to provide price support to honey producers and to reduce this support incrementally over a period of time to ensure an orderly phaseout of the program and minimize the undue adverse impact on the beekeeping industry.

 

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