Farm Subsidy Rules Called Too Vague
Money Going to Undeserving, GAO Says
By Brian Faler
Special to The Washington Post
Thursday, July 1, 2004; Page A21
The federal government is giving millions of dollars in farm subsidies to people who should not receive them, thanks to vague government regulations and insufficient oversight, according to congressional investigators.
The General Accounting Office, in a June 16 report that sharply criticized the Agriculture Department, said the agency's rules on who qualifies for the subsidies are so loosely written that they allow some who are only marginally involved in farming to collect the payments. The GAO also said the agency's regulations determining when someone may have bilked the program are also too vague, which may be preventing the USDA from adequately enforcing its anti-fraud rules.
Moreover, investigators said that the department does not monitor enough of the farmers who receive the payments and that its reviews are not rigorous enough.
The GAO did not estimate how much money the USDA may have paid to nominally eligible farmers.
"We know that it's millions of dollars," said Lawrence J. Dyckman, who co-wrote the report. "But we don't know if we're talking about hundreds of millions or half a billion. We really don't know and, unfortunately, the USDA doesn't know either because they haven't paid enough attention to this."
John Johnson, the deputy administrator for farm programs at the USDA's Farm Service Agency, said money is not being wasted on ineligible farmers. But, he said, some participants have devised sophisticated -- and legal -- financial arrangements designed to pad their bottom lines.
"You are allowed and able today to structure your operations so to maximize your benefits, just like you can structure your operations to minimize your taxes," he said.
Johnson said the agency is doing a "credible job" of implementing the program's rules. He noted that it is up to Congress to decide whether they need to be more tightly drawn. He rejected the GAO's conclusion that the USDA is not vigorously enforcing its anti-fraud rules. But, he said, the agency has agreed to review how it monitors participants in the program.
Mary Kay Thatcher, director of public policy for the American Farm Bureau Federation, also defended the agency, saying its definitions of who qualifies for the money are about as precise as can be expected given the variety of farming operations in the United States. "The [GAO's] philosophy may be right, but, realistically, it's nearly impossible to implement," she said.
The GAO reported that between 1999 and 2002, the government paid about $15 billion annually in farm subsidies. The money went to about 1.3 million individuals, partnerships and other business entities to help support the production of corn, rice, cotton, wheat, soybeans and other commodities. Individuals and various entities are usually limited to $180,000 in annual farm subsidies each, but they may receive as much as $360,000 per year, if they join as many as three partnerships.
The program, intended to keep the nation's dwindling number of farmers afloat, has been around for decades. In 1987, Congress tightened eligibility requirements after reports surfaced suggesting that payments were going to some individuals who were not involved in farming. It created some new rules, including one, the GAO said, stipulating that only those who demonstrate a "significant contribution" of "active personal management" of a farm may receive the federal aid.
The GAO said the agency has not developed quantifiable standards to determine when farmers have reached that threshold. The USDA may be stymied, the GAO said, by questions as to whether officials must demonstrate "fraudulent intent" when determining whether someone has attempted the cheat the program. The agency is required to withhold payments for two years from those who attempt to bilk the program.
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