Farmers Home Administration:

Implementation Issues Concerning Four Sections of the Food Security Act

RCED-89-71: Published: Jun 19, 1989. Publicly Released: Jun 19, 1989.

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Pursuant to a congressional request, GAO reviewed the Farmers Home Administration's (FmHA) lack of progress in applying the homestead protection, lease/buy-back, conservation easement, and softwood timber provisions of the Food Security Act of 1985.

GAO found that: (1) because of inadequate FmHA records, it could not fully determine why some of the provisions were not more widely used and could not offer suggestions for increasing activity; (2) distressed FmHA farm program borrowers have not used the four provisions extensively; (3) FmHA allows borrowers to receive benefits for the same land under more than one Department of Agriculture (USDA) program; (4) as of June 1988, FmHA approved five borrowers for the softwood timber program; and (5) FmHA charged interest rates on softwood timber loans that were generally below the maximum rate permitted by legislation and used simple interest in its calculations.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Although Congress had the opportunity to implement this recommendation when developing the 1990 Farm Bill, it did not. Given this lack of action and the fact that the recommendation is 2 years old, GAO is closing this recommendation out.

    Matter: The law is silent on whether Congress intended to provide benefits for the same land under the: (1) softwood timber provision and the conservation reserve program; and (2) conservation easement provision and the conservation reserve program. Congress may wish to consider whether both benefits for the same land should be allowed under these programs.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Given the age of this recommendation and the fact that FmHA does not intend to act on it, GAO is closing it out.

    Recommendation: The Secretary of Agriculture should require the Administrator, FmHA, to: (1) approve future softwood timber loans at an interest rate that equals the average yield on marketable U.S. obligations with periods to maturity comparable to the average maturities of the softwood timber loans; and (2) modify previous FmHA instructions governing the softwood timber program to require that interest on future softwood timber loans be computed on a compound, rather than simple, interest basis.

    Agency Affected: Department of Agriculture

 

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