Rice Program: Government Support Needs to Be Reassessed
RCED-94-88
Published: May 26, 1994. Publicly Released: Jun 28, 1994.
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Highlights
Pursuant to a congressional request, GAO reviewed the Department of Agriculture's (USDA) rice program, focusing on its impact on the federal government and rice buyers and producers.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| With the anticipated reauthorization of the farm bill in 1995 and the opportunities provided by the General Agreement on Tariffs and Trade and the North American Free Trade Agreement, Congress may wish to consider ways to move rice producers toward greater market orientation and reduce their dependency on government support. For example, Congress could reduce government costs by lowering the target price, incorporating marketing loan gains into the calculation of deficiency payments, eliminating the 50/85 program, and reducing export assistance. | Through the 1996 Farm Bill, the 104th Congress removed the link between rice deficiency payments and prices and provided farmers with a fixed-contract payment for 7 years. The farm bill also provides farmers with much greater flexibility to produce to the dictates of the marketplace and eliminates annual acreage reduction programs. These changes are expected to help move rice producers to a greater market orientation. | |
| Because this approach could have a substantial impact on some producers, Congress may wish to consider options to give producers time to make adjustments in their investment decisions. Congress could, for example, phase out payments to producers over a number of years. | The 1996 Farm Bill provides 7-year declining market transition payments to rice producers to help them transition to a greater reliance on the market place, rather than on government subsidies, in making their production decisions. |
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Agricultural productionAgricultural programsCommodity marketingCost controlExportingFarm income stabilization programsFarm subsidiesGrain and grain productsInternational tradeMicroeconomic analysis