Trade Adjustment Assistance:

New Program for Farmers Provides Some Assistance, but Has Had Limited Participation and Low Program Expenditures

GAO-07-201: Published: Dec 18, 2006. Publicly Released: Jan 18, 2007.

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Sigurd R. Nilsen
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While tens of thousands of manufacturing workers have received services through the Trade Adjustment Assistance (TAA) program, until 2002, farmers and fishermen impacted by imports did not have access to similar assistance. The Trade Act of 2002 (Trade Act) established a new program, TAA for Farmers, administered by the U.S. Department of Agriculture (USDA) to provide technical assistance, a cash payment of up to $10,000 a year, and access to Department of Labor (Labor) training and reemployment services for farmers and fishermen who face significant price declines due to increased imports. The Trade Act provides for up to $90 million each year through fiscal year 2007 for the costs to carry out the program. Trade Act programs are due for reauthorization in 2007. To be eligible for benefits, farmers and fishermen--called producers--must complete a two-part process each year. First, a group of producers of a commodity must submit a petition to USDA on behalf of all producers in one or more states. The petition must demonstrate that the price of the commodity for the most recent marketing year declined by at least 20 percent from the average price for the previous 5 years and that imports contributed importantly to the decline in price. If USDA certifies the petition, any producer of that commodity in the region covered by the petition may then apply for benefits under the program. Individual producers must meet additional conditions to receive cash payments. For example, their net farm or fishing income must be less in the petition year than it was in the previous year. The TAA for Farmers program was first authorized in 2002, and no comprehensive review has been completed to guide reauthorizing the program. To help prepare for reauthorization, you asked us to assess the status of implementation of the TAA for Farmers program. Specifically, we examined: (1) how the USDA promotes the TAA for Farmers program and the extent to which the agency has received and certified petitions from producers, (2) the extent to which participants have received benefits, including technical assistance and cash payments, and (3) what is known about the results of the program.

In summary, we found that, while USDA uses various means to promote TAA for Farmers, the numbers of both petition submissions and certifications are lower in fiscal year 2006 than they were in 2005. USDA officials attribute the decline to the difficulty farmers and fishermen have in meeting the eligibility criteria. Out of 101 petitions submitted for the program to date, USDA reviewed the 64 that were complete, appropriate and timely. Of these, 30 petitions were certified and 34 were denied. Producers of Concord grapes, lychees, olives, wild blueberries, fresh potatoes, Florida avocados, snapdragons, shrimp, salmon, and catfish were among those that were certified under the program. The number of petitions submitted by producers declined by nearly half from fiscal year 2004 to 2006, while the number of petitions USDA denied more than doubled between 2005 and 2006. Most of the petitions that were denied were up for recertification and no longer met key program eligibility criteria. Officials attribute this to two factors--the requirement to demonstrate a 20-percent price decline and the requirement to show a further increase in imports for petitions up for recertification. For example, in 2006, 14 of the 15 petitions that were denied were up for recertification and were not recertified because imports did not increase over the previous year's level. TAA for Farmers is a new program and we have only an early view of how this program is working. While the cash benefits and technical assistance appear to assist farmers and fishermen in adjusting to the effects of import competition on a limited, short-term basis, the cash payments are relatively low and must be approved each year. Furthermore, the criteria for program eligibility are difficult for many farmers and fishermen to meet and the low cash payments may discourage others from applying. As a result, USDA spending for this program is well below the amount provided for by the Trade Act.

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    Priority Open Recommendations:

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