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Report Raises Questions About Direct Payments

Report Raises Questions About Direct Payments

GAO recommends eliminating or reducing direct payments and improving oversight of the program.

The Government Accountability Office released a new report Tuesday examining USDA direct payments to producers for the years 2003 to 2011, finding that the direct payment program no longer meets the needs of the nation's farmers and the USDA.

The GAO determined that the payments should be "reconsidered," citing five major principles that the direct payments do not follow:

Relevance: The GAO says direct payments were expected to be transitional when authorized in 1996, but legislation in 2002 and 2008 continued the payments.

GAO recommends eliminating or reducing direct payments and improving oversight of the program.

Targeting: Direct payments don't distribute benefits appropriately, providing payments to recipients with the largest amount of income and the largest farm size. The GAO reports that the top 25% of payment recipients in 2011 received 73% of direct payments.

Affordability: The GAO says that the current state of the economy makes direct payments unaffordable.

Effectiveness: Direct payments may have less potential to distort prices, but they have more potential to distort the economy, the GAO says. Additionally, the office examined cases where direct payments were received, but the farmland that qualified was not economically viable in the absence of payments.

Oversight: The GAO reports that the USDA has not followed up with land that may no longer be eligible for direct payments. They also found areas of non-compliance that the USDA has overlooked.

"Maintaining a safety net for farmers is worthwhile, but during times of record-high crop prices and farm incomes, providing payments that do not align with principles significant to integrity, effectiveness, and efficiency in farm bill programs raises questions about the continued need for direct payments," the report said.

GAO recommended that the Farm Service Agency, which monitors land use and prepares a review to oversee direct payments and other farm programs, develop a process to report on land that may not be used for agricultural purposes, ensure collection and distribution of data to corroborate direct payments, consider selecting a larger group of cases to review, and maintaining data on misrepresentation and enforcement actions to better manage oversight.

The Senate farm bill, which was passed on June 21, eliminated direct payments. House markup of the farm bill is expected this month.

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