USDA helps support farmers through a number of programs. However, the agency could improve the effectiveness and efficiency of some of these programs.
The U.S. Department of Agriculture (USDA) administers a number of programs to support farm income, assist farmers after disasters, and conserve natural resources. USDA has also provided ad-hoc assistance to farmers who faced trade disruptions or who have lost sales due to the coronavirus pandemic. In fiscal year 2019, USDA spent about $24.5 billion on programs supporting farmers. Our recent work provides information on these programs and, in some cases, identifies key considerations when evaluating their effectiveness.
- As a result of the coronavirus pandemic, prices for many major agricultural commodities significantly decreased, which meant a loss in income for many producers. In addition, the closure of institutions (schools, restaurants, hotels) has made it difficult for agricultural producers to market their commodities. To help, USDA has begun buying about $3 billion in fruits, vegetables, dairy products, and meat; packaging the food in family-sized boxes; and transporting it to food banks and other organizations. It delivered over 74 million of these boxes between May 15, 2020 and August 27, 2020. However, the agency hasn't evaluated what worked and what didn't to inform a possible extension of this program.
- In our review of the distribution of payments of the 2019 Market Facilitation Program we provided information on the payments by location, farming operation, and type of commodity. For example, for 2019, the average payments per farmer ranged from a high of about $42,500 in Georgia to less than $2,000 in Rhode Island. Additionally, the average payment per farming operation was $22,312, but 25 farming operations collectively received $37 million in payments.
Average MFP Payment Per Farming Operation for 2019, by County
- USDA also makes billions of dollars in payments annually to farmers to support their income. For example, the Price Loss Coverage program made payments totaling about $2 billion in fiscal year 2019. Like many farm programs, these payments are subject to a payment limit per person. The total payment that a farming operation can receive depends on the number of persons who are members of the operation and eligible to receive payments. In some cases, farming operations that are made up of multiple members may receive large payments. In 2018, we reported that the average payment for the largest 50 farming operations was about $884,500.
- To implement the federal crop insurance program, USDA partners with private insurance companies that sell and service policies to farmers in order to subsidize these policies. In 2010, USDA negotiated a set rate of return with these companies—that is, how much companies can profit from these insurance policies. However, we found that this expected rate of return was too high compared with market conditions. Reducing this expected rate of return could save the federal crop insurance program hundreds of millions of dollars a year.
- Agricultural production can have harmful effects on natural resources, such as when animal waste runs off into waterways. Conservation practices (such as installing structures to store animal waste) can help mitigate these effects. USDA's Environmental Quality Incentives Program provides financial and technical help to landowners who voluntarily implement conservation practices. This program provided about $1.4 billion in payments in fiscal year 2019. However, it could use better information and tools to more effectively target funds and evaluate program applications.