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GAO-18-384R 1 (2018-05-18)

handle is hein.gao/gaobacpjy0001 and id is 1 raw text is: c(AO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 May 18, 2018 On June 5, 2018, GAO revised this product's number to GAO-18-384R. The Honorable Charles E. Grassley Chairman Committee on the Judiciary United States Senate Farm Programs: Information on Payments Dear Mr. Chairman: For each crop year,1 the U.S. Department of Agriculture (USDA) makes billions of dollars in payments to agricultural producers for which being actively engaged in farming is a requirement.2 The largest programs in terms of payments are the Price Loss Coverage program, which makes payments in years in which a crop's market price is less than a statutorily set price, and the Agriculture Risk Coverage program, which makes payments in years in which a crop's revenue is less than a revenue guarantee.3 These payments are to go to producers, both individuals and entities, such as partnerships, corporations, and trusts.4 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. After publicized instances of farm payments going to individuals not involved in farming, Congress enacted the Agricultural Reconciliation Act of 1987, commonly referred to as the Farm 1For these farm programs, USDA makes payments by program, or crop, year-that is, the year in which the crop is harvested. According to USDA, a crop year is the 12-month period starting with the month when the harvest of a specific crop typically begins. 2Being actively engaged in farming is not required for numerous USDA program benefits. For example, being actively engaged in farming is not required for payments made through USDA's conservation and disaster assistance programs or for participation in USDA's federal crop insurance program. 3Under the Agricultural Act of 2014 (2014 Farm Bill), Pub. L. No. 113-79, 128 Stat. 649, for each eligible crop, farmers had a one-time choice between participating in the Price Loss Coverage or the Agriculture Risk Coverage programs. Price Loss Coverage payments make up the difference between a crop's statutory reference price and its national season average farm price. Agriculture Risk Coverage payments generally make up the difference between a county revenue guarantee and actual crop revenue. 4Entities also include other legal organizations such as joint ventures, limited liability companies, limited partnerships, limited liability partnerships, estates, and charitable organizations. 5A farming operation is a business enterprise engaged in the production of agricultural products, commodities, or livestock that is operated by an individual legal entity or joint operation. A farming operation member can be either an individual or an entity. According to an FSA handbook, a general partnership is composed of two or more individuals or entities, formed under state law and subject to the terms of a formalized agreement. In a general partnership, members share responsibility for management, profits, and the liability for debts. GAO-18-384R Farm Programs Page 1

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