Wheat Commodity Program:
Despite Reforms, Government's Involvement Remains Substantial
RCED-93-30, Mar 18, 1993
Pursuant to a congressional request, GAO reviewed the effects of the 1985 and 1990 U.S. wheat program reforms, focusing on the: (1) reforms' effect on farmers' production decisions; (2) government's costs in managing wheat stocks; and (3) government's involvement in wheat-related supports.
GAO found that: (1) the 1985 and 1990 wheat program reforms reoriented farmers' production decisions toward market forces and reduced the federal government's involvement and costs in managing surplus wheat; (2) the reforms lowered farm supports and target prices, changed the way the government calculated deficiency payments to farmers, and linked acreage levels to wheat stock levels; (3) although the government's role in wheat farmers' production decisions has been reduced, the government continued to provide producers $2.3 billion in deficiency payments between 1990 and 1991; (4) 1985 reforms that reduced the government's costs for managing wheat stocks also reduced price supports, established mechanisms to reduce accumulated stocks, and expanded U.S. export markets; (5) the cost of the Conservation Reserve Program and the Export Enhancement Program totalled about $800 million annually, but program costs were offset by reduced deficiency payments resulting from lower domestic supplies and associated higher market prices; and (6) although governmental costs varied depending on weather conditions and international wheat prices, future government costs are expected to decline.