Information on the Department of Agriculture's Commodity Exchange Contracts for the 1983 Payment-In-Kind Program

RCED-85-62: Published: Mar 11, 1985. Publicly Released: Mar 11, 1985.

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In response to a congressional request, GAO reviewed the Department of Agriculture's (USDA) actions in providing commodities to producers participating in the 1983 Payment-in-Kind (PIK) Program by exchanges of commodities between the Commodity Credit Corporation (CCC) and the grain industry.

GAO found that the PIK Program limited the production of five commodities by reducing the number of acres planted in those crops. As a condition of participation, producers agreed to take prescribed portions of acreage out of production and to receive, as compensation, a portion of the commodity they otherwise would have planted and harvested. Payments could be made either from the CCC inventory or producer-owned commodities used as collateral for previous CCC loans. In order to meet its payment obligations to producers, USDA needed to relocate some commodities to make them locally available to the producers. Therefore, USDA exchanged CCC-owned commodities held at warehouses in surplus counties with privately owned commodities held at warehouses in deficit counties. This exchange was conducted through a series of 10 public bid invitations which resulted in 1,259 contract awards to 237 contractors to exchange CCC-owned grain with corresponding contractor-owned commodities. The contracts called for USDA to provide about 433.7 million bushels of grain to contractors and for the contractors to provide about 377.2 million bushels to USDA for use in the PIK Program. The exchanges cost CCC approximately $191.6 million.

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