Wednesday, July 04, 2012

GAO Disses Direct Payments

GAO issued a report yesterday critical of FSA 's direct payment programs.

They ding them on several grounds, but I'd highlight the last:
Oversight: Oversight of direct payments is weak. With regard to oversight, USDA has not systematically reported on land that may no longer be eligible for direct payments because it has been converted to nonfarm uses, as required for annual reporting to Congress. In addition, GAO identified weaknesses in USDA’s end-of-year compliance review process. For example, USDA conducts relatively few reviews and generally does not complete these reviews within expected time frames.

Their recommendations for USDA/FSA:

  • "...develop and implement a systematic process to report on land that may no longer be usable for agriculture, as required for annual reporting to Congress.
  • ...ensure the more timely and consistent regular collection and distribution of geospatial imagery needed to corroborate that payments are only made for lands usable for agriculture.
  • ...consider options within given budget constraints to improve FSA’s end-of-year reviews by selecting a larger sample of cases to review and ensuring that these reviews are completed in a timely manner.
  • ...maintain comprehensive data on misrepresentation and enforcement actions taken nationwide, as needed for management oversight and reporting purposes."

 The main thrust of the report is for Congress to end direct payment programs:

"Direct payments generally do not align with the principles significant to integrity, effectiveness, and efficiency in farm bill programs that GAO identified in an April 2012 report. These payments align with the principle of being “distinctive,” in that they do not overlap or duplicate other farm programs. However, direct payments do not align with five other principles. Specifically, they do not align with the following principles:
  • Relevance: When the precursors to direct payments were first authorized in 1996 legislation, they were expected to be transitional, but subsequent legislation passed in 2002 and 2008 has continued these payments as direct payments. However, in April 2012, draft legislation for reauthorizing agricultural programs through 2017 proposed eliminating direct payments.
  • Targeting: Direct payments do not appropriately distribute benefits consistent with contemporary assessments of need. For example, they are concentrated among the largest recipients based on farm size and income; in 2011, the top 25 percent of payment recipients received 73 percent of direct payments.
  • Affordability: Direct payments may no longer be affordable given the United States’ current deficit and debt levels.
  • Effectiveness: Direct payments may have unintended consequences. Direct payments may have less potential than other farm programs to distort prices and production, but economic distortions can result from these payments. For example, GAO identified cases where direct payments support recipients who USDA officials said own farmland that is not economically viable in the absence of these payments.''

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