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RCED-85-167 1 (1985-09-18)

handle is hein.gao/gaobabfhz0001 and id is 1 raw text is: BY THE U.S. GENERAL ACCOUNTING OFFCE Report To The Honorable Howard M. Metzenbaum United States Senate Losses In The Department Of Agriculture's Tobacco Program The Department of Agriculture (USDA) stands to lose money on loans made to support 1976-1981 flue-cured tobacco--the primary U.S. tobacco. On October 26,1984, USDA offered substantial discounts on this tobacco. If all of the tobacco had been sold at the discount prices of that date, USDA's total losses would have been about $415 million. As of June 30, 1985, however, only about 11 percent was sold. The remaining tobacco continues to incur additional costs for storage and interest, and how much USDA will ultimately receive for the tobacco is unknown. Accordingly, the actual losses will not be known until all the tobacco is sold. In addition, since the No Net Cost Tobacco Program Act of 1982 was enacted, USDA is to operate the tobacco program at no net cost to the federal government. How- ever, as GAO reported in February 1985, USDA continues to lose money on its loans because it does not recover all of the interest costs it incurs. For example, as of June 1985, USDA charged about $16 million less in interest on the 1982 flue-cured crop loans than it paid to borrow the money. GAO/RCED-85-167 1cO SEPTEMBER 18, 1985

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