Disaster Assistance:

Problems in Administering Payments for Nonprogram Crops

RCED-91-137: Published: Jun 28, 1991. Publicly Released: Jul 5, 1991.

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Pursuant to a congressional request, GAO reviewed the Department of Agriculture's procedures for administering disaster assistance to crop producers that did not have federal price supports, focusing on the: (1) Agricultural Stabilization and Conservation Service's (ASCS) effectiveness in verifying producer-provided data; (2) methodology and supporting data state ASCS offices used to establish payment rates and expected nonprogram crop yields; and (3) difference between the levels of disaster payments provided and estimated production costs incurred.

GAO found that: (1) ASCS was unable to verify many of the producers' data on types of crops grown, numbers of acres planted, and actual crop production harvested, primarily because disaster assistance legislation was not enacted until August of each year, and by the time the producers submitted their loss claims the evidence had generally been harvested and sold, or plowed under and destroyed; (2) ASCS lacked assurance that the $1.3 billion in payments it made to producers of nonprogram crops were accurate and free from fraud, waste, and abuse; (3) adequate controls needed to verify producers' data may not be cost-effective to implement, since obtaining and verifying producers' crop data would be costly and still not ensure their accuracy; (4) in the 4 states GAO visited, about one-third of the payment rates and expected yields established on 378 nonprogram crops were based on the required 5 years of historical data; (5) since ASCS lacked legislative authority or funding to maintain historical data on payment rates and crop yields for nonprogram crops, efforts to establish reliable rate and yield estimates for such crops will continue to be a problem for disaster assistance programs; (6) for 14 major nonprogram crops reviewed in 2 states, producers received disaster payments ranging from 80 percent to over 190 percent of costs incurred prior to harvest; (7) a legislative requirement that market-based payment rates be used as a basis for all payments led to unnecessarily high program costs for the federal government; and (8) although such excessive and inequitable disaster payments on nonprogram crops may encourage producers to change crop plantings in order to increase their payments, obtaining data on the cost of production for such crops would be costly.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Congress authorized disaster assistance to cover nonprogram crop losses in 1990 and 1991, and the Dire Emergency Supplemental Appropriations Act provided $995 million for those losses. Legislative provisions indicate that producers are responsible for proving their crop losses, or USDA can determine the losses for them. Such provisions are ineffective in ensuring correct disaster claims.

    Matter: If Congress continues to provide disaster assistance to producers of nonprogram crops, Congress should consider ways of ensuring payment integrity at reasonable costs. This could be done through legislation that requires producers to keep historic production, cost, and sales records. Such records could then serve as a basis for determining the extent of disaster payments.

 

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