Changes Are Needed To Assure Accurate and Valid Wheat Deficiency Payments

RCED-83-50: Published: Mar 29, 1983. Publicly Released: Mar 29, 1983.

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GAO reviewed the Department of Agriculture's (USDA) system for making deficiency payments to wheat farmers. These payments are designed to supplement eligible wheat farmers' income in the years when wheat prices are low.

Farmers participating in the wheat crop program receive deficiency payments from USDA based on the difference between a target price and the lower national average market price of wheat. GAO believes that changes are necessary to ensure that accurate and valid payments are being made. Under the current system, overpayments or underpayments to farmers could be caused by: (1) inaccurate data which are used to establish the national average market price; (2) procedures used to determine production for the purpose of computing program payment amounts which overstate farmers' actual production; and (3) the imprecise method being used to calculate yields for farmers submitting evidence of actual production.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: USDA implemented a new quality control system, Edit and Summary, which includes standardized survey questionnaires.

    Recommendation: The Secretary of Agriculture should direct the Administrator of the Statistical Reporting Service to adopt procedures to: (1) institute a system of quality control for the prices-received survey as suggested by the 1980 statisticians' report; (2) convey to enumerators the need for them to perform their job correctly and follow up to ensure that they do; (3) provide to each state a standard survey questionnaire with reporting instructions to eliminate possible reporting bias resulting from differing instructions and that clearly explain the purpose and importance of the survey; and (4) institute a follow-up program to obtain missing reports of quantities sold and amounts paid from grain buyers who were unable to provide requested data during the reported month; this would allow grain buyers more time to report accurate data and eliminate the need for using estimated average prices to compute the estimated average market price.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Not Implemented

    Comments: ASCS revised regulations to require a review of unharvested acreage to adjust yields. GAO made more comprehensive recommendations on ASCS yields in RCED-86-118.

    Recommendation: The Secretary of Agriculture should direct the Administrator of the Agricultural Stabilization and Conservation Service (ASCS) to: (1) develop an acceptable adjustment for the deficiency payment program that properly accounts for the unharvested acreage on which payments are made; and (2) conduct a comprehensive analysis of the crop yield distributions to determine the extent to which program yields are inadequately assigned and develop crop yield frequency distributions for counties or similar areas to assist county committees in assigning yields to individual farms.

    Agency Affected: Department of Agriculture


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