Farm Programs: Information on Payments [Reissued with Revisions Jun. 05, 2018]
USDA makes billions of dollars in payments to people and businesses that are actively engaged in farming, and who provide significant contributions of management and labor. Our review found that for 2015:
USDA made about $2.7 billion in payments, which were distributed among 95,417 farming operations;
The top 50 farming operations received an average of $884,495 in payments, and USDA paid $3.7 million to one such operation; and
USDA generally made the highest payments to partnerships. These are farming operations consisting of two or more people and formed under state law.
(On June 5, 2018, GAO revised this product’s number to GAO-18-384R.)
Photo of a soybean field.Reissued with Revisions Jun 05, 2018
On June 5, 2018, GAO revised this product’s number to GAO-18-384R.
What GAO Found
For the 2015 crop year--the most recent year for which data were available--the U.S. Department of Agriculture (USDA) made about $2.7 billion in payments to entities for which being actively engaged in farming was a requirement. To meet this requirement, entities' members are to, among other things, contribute (1) active personal management, (2) personal labor, or (3) a combination of active personal management and personal labor. Active personal management includes such tasks as arranging financing and marketing crops. For personal labor, the contribution is expressed as hours of labor contributed annually. In analyzing 2015 USDA data, GAO determined:
- The $2.7 billion in payments was distributed to 95,417 entities such as corporations, general partnerships, joint ventures, and limited liability companies.
- USDA distributed an average of $884,495 in payments to the 50 farming operations receiving the highest payments for 2015.
- General partnership members' payments were predominantly based on members' claimed contributions of combined management and labor (74.6 percent) and management (23.1 percent), while labor was 2.3 percent.
Why GAO Did This Study
For each crop year, USDA makes billions of dollars in payments to agricultural producers for which being actively engaged in farming is a requirement. Under the Agricultural Act of 2014 (2014 Farm Bill), each member of a farming operation that is a general partnership can generally receive directly or indirectly up to $125,000 per year through the applicable programs if the member meets eligibility requirements, including being determined to be actively engaged in farming. For an individual to meet the criteria for being actively engaged in farming under the act, he or she must make significant contributions to a farming operation in two areas: (1) capital, land, or equipment (or some combination of the three) and (2) active personal management or personal labor (or a combination of the two). For an entity, such as a corporation, to meet these criteria, it must separately make a significant contribution of capital, land, or equipment, and its members must collectively make a significant contribution of active personal management or personal labor to the farming operation.
GAO was asked to update selected information from its September 2013 report, specifically information on program payments to farming operations and the contributions these operations' members claimed in order to qualify as being actively engaged in farming. GAO's objective was to provide 2015 crop year information on (1) the distribution and amount of payments to farming operations by type of entity, (2) entities with the highest farm program payments, and (3) general partnership members' claimed contributions of active personal management or personal labor. To address this objective, GAO analyzed USDA Farm Service Agency (FSA) data on applicable farm program payments made to entities for the 2015 crop year, which was the most recent year for which data were available at the time GAO obtained data for this analysis. In addition, GAO analyzed FSA data on (1) farming operation members' contributions of active personal management, personal labor, or a combination of both to farming operations to meet the requirements to be actively engaged in farming and (2) applicable farm program payments attributed to these members.