GAO: Crop Insurance: Opportunities Exist to Improve Program Delivery and Reduce Costs
To implement the federal crop insurance program, USDA partners with private insurance companies, which sell and service policies. In 2010, USDA negotiated a set rate of return with these companies—that is, how much companies can profit from these insurance policies.
However, GAO found that this expected rate of return was too high compared with market conditions. Reducing it could save the federal crop insurance program hundreds of millions of dollars a year. Report.
GAO: Crop Insurance: Reducing Subsidies for Highest Income Participants Could Save Federal Dollars with Minimal Effect on the Program
In recent years, the government’s costs for the crop insurance program have increased substantially. GAO was asked to examine the potential effects of reducing premium subsidies for the highest income crop insurance participants.
If premium subsidies had been reduced by 15 percentage points for the highest income participants from 2009 through 2013, the federal government would have saved more than $70 million over the 5-year period. Report.
Free Beacon: Federal Crop Subsidies Went to Billionaires
GAO: Crop Insurance: Considerations in Reducing Federal Premium Subsidies
The cost of the federal crop insurance program and farm sector income and wealth grew significantly from 2003 through 2012. The cost of crop insurance averaged $3.4 billion a year from fiscal years 2003 through 2007, but it increased to $8.4 billion a year for fiscal years 2008 through 2012. According to the U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA), the agency that administers the crop insurance program, subsidies for crop insurance premiums accounted for $42.1 billion─or about 72 percent─of the $58.7 billion total program costs from 2003 through 2012.
Reducing premium subsidies for revenue policies could potentially result in hundreds of millions of dollars in annual budgetary savings with limited costs to individual farmers. For example, the federal government would have potentially saved more than $400 million in 2012 by reducing premium subsidies by 5 percentage points, and the savings would have been nearly $2 billion by reducing these subsidies by 20 percentage points. Report.
GAO: USDA Farm Programs: Farmers Have Been Eligible for Multiple Programs and Further Efforts Could Help Prevent Duplicative Payments
USDA administers farm programs to provide financial assistance to farmers, particularly when they experience losses. GAO was asked to examine the potential for overlap and duplication among USDA’s farm programs.
From fiscal years 2008 through 2012, the U.S. Department of Agriculture (USDA) reported spending about $114 billion on 60 programs providing financial assistance to farmers, including about $28 billion in crop insurance subsidies.
While there was not sufficient evidence to conclude that these programs were duplicative, GAO recommended that RMA and FSA (1) monitor to identify the extent of duplicative payments and (2) develop a plan to prevent or recover any duplicative payments in 2014 involving a pilot RMA crop insurance policy. Report.
GAO: Farm Programs: Additional Steps Needed to Help Prevent Payments to Participants Whose Incomes Exceed Limits
In light of high farm incomes and constrained federal budgets, the cost of federal farm and conservation programs—about $15 billion annually from 2009 through 2012—has come under scrutiny.
GAO’s review of 115 tax return files from selected state offices found that some files met agency guidance and had no apparent errors. Other files did not meet agency guidance or contained errors, resulting in some potentially improper payments to participants whose incomes exceeded the limits.
For example, GAO found errors in 19 of the 22 tax return files it reviewed from FSA offices in two states; one of these errors led to a potentially improper payment of $40,000. Report.
Taxpayers for Common Sense: New Report Finds Millionaires Still Receive Farm Subsidies
GAO: Farm Programs: Changes Are Needed to Eligibility Requirements for Being Actively Involved in Farming
Agricultural producers receive about $5 billion annually in farm program payments for which being actively engaged in farming is required by the Farm Program Payments Integrity Act. GAO was asked to review FSA’s processes for implementing actively engaged in farming regulations to determine payment eligibility.
Compliance reviews conducted by the U.S. Department of Agriculture’s Farm Service Agency (FSA) to determine if farming operation members (individuals and entities) meet the payment requirements for being actively engaged in farming are hindered by broad and subjective requirements and difficulty in verifying individuals’ evidence of claimed contributions.
To be actively engaged in farming, an individual is to make significant contributions to that operation in personal labor or active personal management (or both). However, the definition of active personal management in FSA regulations is broad and can be satisfied by an individual performing at least one of eight services representing categories such as supervision of activities necessary in the farming operation. Also, FSA regulations allow farming operation members to make contributions of management without visiting the operation, enabling individuals who live significant distances from an operation to claim such contributions. Report.
GAO: Farm Programs: USDA Needs to Do More to Prevent Improper Payments to Deceased Individuals
Since 2007, the Department of Agriculture’s (USDA) Farm Service Agency (FSA), which administers various programs for farmers that help support farm incomes and provide disaster assistance, has established procedures for preventing improper payments to deceased individuals, including, on a quarterly basis, matching payments to program participants with the Social Security Administration’s (SSA) data on deceased individuals. Overall, these procedures have enabled FSA to identify thousands of deceased individuals who were paid $3.3 million in improper payments after their dates of death, of which FSA has recovered approximately $1 million.
The Natural Resources Conservation Service (NRCS), a USDA agency that administers voluntary conservation programs, does not have procedures to prevent potentially improper payments to deceased individuals. GAO did a data review for fiscal year 2008 to April 2012, and estimates that NRCS made $10.6 million payments on behalf of 1,103 deceased individuals 1 year or more after their death.
USDA’s Risk Management Agency (RMA), which administers crop insurance programs, does not have procedures in place consistent with federal internal control standards to prevent potentially improper subsidies on behalf of deceased individuals.
GAO matched every policyholder’s Social Security number in RMA’s crop insurance subsidy and administrative allowance data for crop insurance years 2008 to 2012 with SSA’s master list of deceased individuals and found that $22 million in subsidies and allowances may have been provided on behalf of an estimated 3,434 program policyholders 2 or more years after death. Report.
Fox News: Watchdog report finds millions in gov't payments to dead farmers
CAGW: Payments to the Recently Deceased
Huffington Post: GAO Audit: USDA Paid Millions To Thousands Of Dead Farmers
GAO: Farm Programs: Direct Payments Should Be Reconsidered
From 2003 through 2011, the U.S. Department of Agriculture (USDA) made more than $46 billion in direct payments to farmers and other producers.
Cumulatively, USDA paid $10.6 billion—almost one-fourth of total direct payments made from 2003 through 2011—to producers who did not, in a given year, grow the crop associated with their qualifying acres, which they are allowed to do.
Continuing to provide payments that generally do not align with principles significant to integrity, effectiveness, and efficiency in farm bill programs raises questions about the purpose and need for direct payments. Report.
GAO: Crop Insurance: Savings Would Result from Program Changes and Greater Use of Data Mining
The U.S. Department of Agriculture (USDA) administers the federal crop insurance program with private insurance companies. In 2011, the program provided about $113 billion in insurance coverage for over 1 million policies. Program costs include subsidies to pay for part of farmers’ premiums. According to the Congressional Budget Office, for fiscal years 2013 through 2022, the program costs—primarily premium subsidies—will average $8.9 billion annually.
If a limit of $40,000 had been applied to individual farmers’ crop insurance premium subsidies, as it is for other farm programs, the federal government would have saved up to $1 billion in crop insurance program costs in 2011, according to GAO’s analysis of U.S. Department of Agriculture (USDA) data. Report.
New York Times: Report Says a Crop Subsidy Cap Could Save Billions