Farm Payments and Loans:

Consistency Needed in USDA Crop Yield Estimates

RCED-86-118: Published: May 29, 1986. Publicly Released: May 29, 1986.

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In response to a congressional request, GAO reviewed the methods used by the Agricultural Stabilization and Conservation Service (ASCS), the Federal Crop Insurance Corporation (FCIC), and the Farmers Home Administration (FmHA) to estimate crop yields. The review identified: (1) the impact of differences in estimated yields the agencies used; and (2) possible improvements to the yield estimation process.

ASCS, FCIC, and FmHA make payments and loans to farmers who enroll in their programs. Since the agencies' programs have different purposes, farmers enroll their cropland in more than one program. However, because each agency independently develops an estimated yield, the same cropland parcel can receive three different yield estimates. With no consistent basis for loan and payment calculations, farmers' payments under one agency's programs can be overstated or understated when compared with the payments calculated using another agency's yield estimates. GAO estimated how each agency's payments to individual farmers for their 1984 crops would have differed if the other agencies' estimated yields had been used to calculate the payment amounts. GAO found that the impact of different yield estimates was significant for many of the sampled farmers. GAO also determined that some of the principal factors in calculating a yield estimate for a specific parcel of cropland include: (1) the number of years included in the base period; (2) the type and extent of adjustments to actual yield data that would be permitted; and (3) the cost of the estimates. GAO believes that: (1) a long base period is desirable because it will better reflect a cropland unit's historical capacity; and (2) agencies should use an adjusted single-yield estimate in their benefit calculations. GAO concluded that most farmers and Department of Agriculture (USDA) officials favor a single-yield estimate for all department programs.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Each agency's parachial interests have won attention. Neither ASCS, FCIC, nor FmHA is willing to change on this point.

    Recommendation: To ensure an equitable distribution of benefits to the producers participating in ASCS, FCIC, and FmHA programs, and to eliminate the duplicate costs incurred in estimating multiple crop yields for the same cropland, the Secretary of Agriculture should direct the Administrators, ASCS and FmHA, and the Manager, FCIC, to jointly develop one method for estimating a single-crop yield that is consistent with each agency's objectives, and to use the crop yields resulting from this method when determining the level of loans and payments to producers participating in ASCS, FCIC, and FmHA programs.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Not Implemented

    Comments: USDA does not desire a change in this area.

    Recommendation: To ensure an equitable distribution of benefits to the producers participating in ASCS, FCIC, and FmHA programs, and to eliminate the duplicate costs incurred in estimating multiple-crop yields for the same cropland, the Secretary of Agriculture should seek any required legislative change to permit using the yield estimate resulting from the method jointly developed when calculating the amount of loans and payments for producers enrolled in ASCS programs.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Not Implemented

    Comments: The three agencies cannot agree on this point. No action has been taken and none is planned.

    Recommendation: To ensure an equitable distribution of benefits to the producers participating in ASCS, FCIC, and FmHA programs, and to eliminate the duplicate costs incurred in estimating multiple-crop yields for the same cropland, the Secretary of Agriculture should direct the Administrators, ASCS and FmHA, and the Manager, FCIC, to give primary consideration to basing the yield estimation method on the actual historical production from each specific cropland unit.

    Agency Affected: Department of Agriculture

 

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