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RCED-00-177R 1 (2000-06-30)

handle is hein.gao/gaobacnvf0001 and id is 1 raw text is: I GAO Accountability * Integrity * Reliability United States General Accounting Office Resources, Community, and Washington, DC 20548 Economic Development Division B-285418 June 30, 2000 The Honorable Dan Glickman The Secretary of Agriculture Subject: Farm Programs: Observations on Market Loss Assistance Payments Dear Mr. Secretary: Since October 1998, the Congress has authorized about $13.8 billion in ad hoc financial assistance to help farmers deal with losses due to drops in crop prices- about $2.8 billion in 1998 and $5.5 billion in both 1999 and 2000. This assistance-- called Market Loss Assistance (MLA)--was targeted to growers of the seven crops that have traditionally been supported by farm programs.' To expedite the delivery of this assistance and to avoid influencing farmers' planting decisions, the payments were distributed to farmers on the basis of the same formula used for distributing production flexibility contract payments under the 1996 Farm Bill-scheduled to expire in 2002. In essence, this formula distributed MLA payments to individual farmers on the basis of the type and amount of crops planted (or that were otherwise considered as planted under farm programs that limited acreage in order to maintain farm prices) from the 1980s through 1995. Because many farmers have changed their production patterns over the past two decades, you and others have raised concerns about whether the resultant MLA payments were distributed to those who have been most adversely affected by recent price declines. However, it was not known precisely how payments would have differed if they had been based on current-year planting information rather than historical data. To help address this information gap, we calculated how MLA payments would have changed if they had been based on current-year planting information instead of the current funding formula. We did not, however, assess the extent to which MLA recipients faced economic hardships due to declining crop prices. We performed this analysis by recalculating MLA payments using the most current planting information rather than historical data. Planting data for 1999 were available for most (over 80 percent) of the MLA payment recipients (representing about $4.5 of the $5.5 billion in total payments) because of reporting requirements 1 The seven program crops are corn, wheat, oats, barley, grain sorghum, cotton, and rice. GAO/RCED-00-1 77R Market Loss Assistance Payments

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