Commodity Programs:

Should Farmers Grow Income-Supported Crops on Federal Land?

RCED-92-54: Published: Jan 15, 1992. Publicly Released: Feb 21, 1992.

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Pursuant to a congressional request, GAO reviewed the Department of Agriculture's (USDA) income support program, focusing on: (1) the basis for the government's policy of allowing lessees to participate in the income support program; and (2) estimates of payments USDA made to lessees during crop years 1988 and 1989.

GAO found that: (1) the government allows federal lessees to grow crops eligible for support payments; (2) the government established the policy because the demand for U.S. crop exports was strong and it wanted to encourage increased production to meet demand; (3) the federal lessees policy conflicts with the objectives of the USDA acreage reduction and environmental programs by making more farm land available for production; (4) in crop years 1988 and 1989, the government paid $3.2 million in supplemental income to federal lessees for crops that were not needed, and $350,000 to federal lessees who agreed to produce income-supported crops; (5) the government is paying more than necessary, because the government owns the land and can prohibit production by modifying its policy instead of using financial incentives; and (6) in 1982, USDA determined that production from federal lands was no longer needed, but continued the federal lessees policy because the small amount of production from those lands would not affect national supplies, and with the agricultural industry in a downturn, rural communities depended on those farmers' income.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Federal Agriculture Improvement and Reform Act of 1996 replaces deficiency payments to farmers with 7-year market transition payments and eliminates restrictions on the crops that farmers can grow. Therefore, this recommendation is no longer applicable.

    Recommendation: The Director, Office of Management and Budget (OMB), should modify the government's federal lessees policy: (1) to prohibit lessees from growing income-supported crops whenever a prohibition is consistent with national agricultural production and environmental goals; and (2) prohibit federal lessees from receiving the 92-percent payment for not growing crops on federal land. In implementing those policy changes, the Director should determine if a transition period is needed for federal lessees to adjust to the changes.

    Agency Affected: Executive Office of the President: Office of Management and Budget


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