Disaster Assistance:

Problems in Administering Agriculture Payments

T-RCED-94-187: Published: Apr 13, 1994. Publicly Released: Apr 13, 1994.

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GAO discussed federal disaster assistance and crop insurance reform, focusing on the difficulties the Department of Agriculture (USDA) has in administering disaster assistance payments and ensuring that the combination of disaster assistance and crop insurance payments does not exceed legislative limits. GAO noted that: (1) between 1988 and 1993, USDA paid about $6.5 billion in disaster assistance payments to producers of crops that were eligible for coverage under the Federal Crop Insurance Program; (2) disaster assistance programs, which are created on an ad hoc basis, are very complex for USDA to administer; (3) the Federal Crop Insurance Corporation estimates that it offers insurance on about 75 percent of agricultural production, but participation in the program has not exceeded 40 percent of eligible acreage; (4) USDA does not routinely collect the data it needs to administer disaster assistance payments for nonprogram crops, which has resulted in overpayments for some losses; (5) USDA is required to collect disaster relief overpayments within 90 days after it makes payment; (6) USDA does not ensure that disaster assistance recipients purchase crop insurance in the year after they receive disaster assistance, as required; and (7) USDA does not have adequate procedures to ensure that combined disaster relief and crop insurance payments do not exceed legislative limits.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In October 1994, Congress enacted an integrated disaster assistance and crop insurance bill. An accomplishment report has been approved for $343 million.

    Matter: Congress should consider integrating crop insurance and disaster assistance programs to improve risk management, reduce administrative costs, improve equity to all farmers, and encourage complementary public-private risk enterprise.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In October 1994, Congress integrated the crop insurance and disaster assistance programs beginning fiscal year 1995. Congress also directed specific improvements in internal controls for the 1994 disaster assistance program estimated to save $16.6 million for which an accomplishment report was approved.

    Recommendation: USDA needs to collect data on nonprogram crops to ensure that disaster assistance payments for those crops are appropriate.

    Agency Affected: Department of Agriculture


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