Food and Commodities: Federal Purchases and Major Regulations That
Potentially Affect Prices Paid (Correspondence, 06/15/2000,
GAO/RCED-00-173R).
Pursuant to a congressional request, GAO provided information on the
federal government's food and commodity purchases, focusing on: (1)
details about federal agencies' purchases of food and agricultural
commodities from fiscal year (FY) 1997 through FY 1999; and (2)
information on major regulations that may affect the prices paid by
these agencies for these products.
GAO noted that: (1) five agencies--the Departments of Agriculture,
Defense, Justice, Labor, and Veterans Affairs--made large direct
purchases of food and commodities from FY 1997 through FY 1999; (2) for
example, purchases by these agencies totalled about $4.5 billion in FY
1999 for items ranging from bulk, unprocessed commodities such as grain
and soybean meal to ready-to-eat cereal, canned goods, fruits and
vegetables, dairy products, and military field rations; (3) these
purchases were made for agency programs or for basic mission-related
objectives; (4) for example, Agriculture purchased food to feed children
under the National School Lunch Program, and Veterans Affairs purchased
food for the patients in its 172 medical facilities; (5) in addition,
some of these agencies made food or commodity purchases on behalf of
other agencies; (6) for example, Agriculture made purchases on behalf of
the Department of State's Agency for International Development and
Defense made purchases on behalf of over 20 other agencies; (7) of the
23 major regulations GAO identified as potentially related to food or
agriculture, 11 had impacts on food and commodity prices, according to
the required cost-benefit analyses; (8) Agriculture issued all 11 of
these regulations; (9) the anticipated price effects of these
regulations vary depending on the regulation and the food or commodity
involved; (10) in most cases, the effects identified in the analyses
were on prices that producers or processors could expect to pay or
receive for food or commodities before the products are sold at the
retail level; (11) the 12 regulations and related cost-benefit analyses
that did not provide information on food or commodity price impacts were
issued by Agriculture, the Environmental Protection Agency, or the Food
and Drug Administration; (12) in general, each of the 23 major
regulations GAO reviewed were issued by agencies to accomplish purposes
and programs mandated by Congress in order to benefit the nation; (13)
for example, a 1996 rule on hazard analysis and critical control point
systems issued by the Food Safety and Inspection Service establishes
requirements for slaughterhouses to reduce the numbers of pathogenic
microorganisms on meat and poultry products; and (14) as a result of
this regulation, the economy is expected to receive benefits estimated
at $7.1 to $26.6 billion over 20 years due to a reduction in foodborne
illnesses.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-00-173R
TITLE: Food and Commodities: Federal Purchases and Major
Regulations That Potentially Affect Prices Paid
DATE: 06/15/2000
SUBJECT: Food supply
Agricultural products
Federal regulations
Federal procurement
Prices and pricing
Cost effectiveness analysis
IDENTIFIER: National School Lunch Program
USDA Conservation Reserve Program
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GAO/RCED-00-173R
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices United States General
Accounting Office
Washington, DC 20548 Resources, Community, and
Economic Development Division
B- 285338 June 15, 2000 The Honorable John R. Kasich Chairman, Committee on
the Budget House of Representatives
Subject: Food and Commodities: Federal Purchases and Major Regulations That
Potentially Affect Prices Paid
Dear Mr. Chairman: Each year the federal government purchases a large volume
of food and commodities for its domestic, international, and military
programs. These purchases are made for diverse purposes, such as supporting
commodity prices in domestic markets, providing nutritious meals for
children, supplying humanitarian food aid, and feeding U. S. military
personnel worldwide. Federal agencies make purchases through various means
and at various levels in the marketplace. Bulk commodities, such as
unprocessed grain, are procured directly from producers or processors
through competitive bidding and commodity support programs. Food, such as
ground beef, fruit products, and infant formula, may be purchased directly
for specific items or, as is often the case, under contracts with vendors
for broad categories of items that a program or facility may need. The
prices federal agencies pay for these purchases are influenced by general
market conditions that are also applicable to other consumers of food and
commodities. Among the many conditions affecting the prices at each level of
the food distribution chain- from the farm gate to the dinner table- are
federal regulations. The regulations are issued for a variety of purposes,
such as implementing agricultural programs, regulating agricultural
production, ensuring food safety, and protecting the environment.
Concerned about the impact of federal regulations on the prices of food and
commodities that the federal government purchases, you requested that we
provide (1) details about federal agencies' purchases of food and/ or
agricultural commodities from fiscal year 1997 through fiscal year 1999 and
(2) information on major regulations that may affect the prices paid by
these agencies for these products. To respond to the first objective, as
agreed with your office, we identified federal agencies that individually
purchased at least $50 million in food and/ or commodities annually. To
address the second objective, we agreed to review the cost- benefit analyses
for major regulations issued during the last 4 years- March 29, 1996 through
March 31, 2000- that relate to food or agriculture. These analyses are
required by Executive Order 12866. 1 Under this order, an agency must
conduct an economic analysis of a regulation determined to be economically
significant. 2 The analysis should estimate the costs and benefits of the
proposed regulation to consumers and/ or
1 Regulatory Planning and Review, Sept. 30, 1993. 2 In general, an
economically significant or major regulation is one estimated to have an
annual effect on the economy of $100 million or
more.
B- 285338
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices 2 other sectors of
the economy. While the Office of Management and Budget's (OMB) guidance on
economic analysis indicates that estimates of costs and benefits in terms of
dollars are preferred, OMB recognizes such estimates may not always be
possible. Estimates of the impact of proposed regulations on prices may or
may not be presented in the economic analyses because the focus of the
executive order is on presenting the overall costs and benefits of the
regulations.
In summary, we found the following:
� Five agencies- the departments of Agriculture, Defense, Justice, Labor,
and Veterans Affairs- made large direct purchases of food and/ or
commodities from fiscal year 1997 through fiscal year 1999, as indicated in
figure 1. For example, purchases by these agencies totaled about $4.5
billion in fiscal year 1999 for items ranging from bulk, unprocessed
commodities such as grain and soybean meal to ready- to- eat cereal, canned
goods, fruits and vegetables, dairy products, and military field rations.
These purchases were made for agency programs or for basic missionrelated
objectives. For example, Agriculture purchased food to feed children under
the National School Lunch Program, and Veterans Affairs purchased food for
the patients in its 172 medical facilities. In addition, some of these
agencies made food or commodity purchases on behalf of other agencies. For
example, Agriculture made purchases on behalf of the Department of State's
Agency for International Development and Defense made purchases on behalf of
over 20 other agencies. Enclosure I provides further details on these
purchases.
B- 285338
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices 3
Figure 1: Federal Agency Purchases of Food and/ or Commodities, Fiscal Years
1997- 99
Agriculture Defense Justice Labor Veterans Affairs 0
500 1000
1500 2000
2500 3000
3500 U. S. dollars in millions
FY 1997 FY 1998 FY 1999
Note: Agriculture officials said that their food purchases increased
significantly from 1998 to 1999, primarily because of the Farm Service
Agency's procurement of surplus domestic commodities such as bulgur, corn,
cornmeal, dried milk, flour, and wheat under the Section 416( b) program for
the Foreign Agricultural Service to donate overseas.
Source: GAO's analysis of agencies' data.
� Of the 23 major regulations we identified as potentially related to food
or agriculture, 11 had impacts on food and/ or commodity prices, according
to the required cost- benefit analyses. The Department of Agriculture issued
all 11 of these regulations. The anticipated price effects of these
regulations vary depending on the regulation and the food or commodity
involved. For example, of the 11 analyses, 4 expect price increases, 1
expects both an increase and a decrease, 2 expect prices to be unchanged,
and 4 expect prices to decrease. In most cases, the effects identified in
the analyses were on prices that producers or processors could expect to pay
or receive for food or commodities before the products are sold at the
retail level. For instance, a regulation setting long- term policy for
Agriculture's Conservation Reserve Program was expected to increase
processors' per- bushel prices of barley, corn, oats, sorghum, soybeans, and
wheat. However, in some cases, the analyses discussed effects on the retail
prices of food or commodities. For example, a regulation on importing fresh
pork products from Mexico was expected to decrease the retail price of those
products by 7 to 16 cents per pound. Enclosure II provides further details
on the anticipated price impacts of these 11 regulations.
� The 12 regulations and related cost- benefit analyses that did not provide
information on food or commodity price impacts were issued by Agriculture,
the Environmental Protection Agency, or the Food and Drug Administration.
Enclosure III provides a list of these regulations.
B- 285338
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices 4
� In general, each of the 23 major regulations we reviewed was issued by
agencies to accomplish purposes and programs mandated by the Congress in
order to benefit the nation. For example, a 1996 rule on hazard analysis and
critical control point systems issued by Agriculture's Food Safety and
Inspection Service establishes requirements for slaughterhouses to reduce
the numbers of pathogenic microorganisms on meat and poultry products. As a
result of this regulation, the economy is expected to receive benefits
estimated at $7.1 to $26.6 billion over 20 years due to a reduction in
foodborne illnesses. 3
Agency Comments
We provided a draft of this report to the departments of Agriculture,
Defense, Justice, Labor and Veterans Affairs for review and comment. The
agencies generally agreed with the facts presented in the report. Four of
the agencies- Agriculture, Justice, Labor, and Veterans Affairs- provided
minor technical suggestions, which we incorporated into the report as
appropriate.
Scope and Methodology
To provide details about federal agencies' purchases of food and/ or
commodities, we first identified agencies with at least $50 million in food
and/ or commodity purchases in fiscal year 1999. We did this by reviewing
available reports and documents; interviewing Department of Agriculture
officials, including food procurement experts and Economic Research Service
staff; and asking officials in each agency we contacted to identify other
agencies that purchase food and/ or commodities. We then asked the agencies
identified to provide detailed information on the amounts, types, purposes,
and beneficiaries of their food and/ or commodity purchases, including
outlays made for these purchases from fiscal year 1997 through fiscal year
1999. We instructed these agencies to exclude programs, such as Food Stamps,
that provide resources to clients to make their own food purchases. We also
asked these agencies to exclude food purchases intended for retail sale in
cafeterias or commissaries.
To identify major federal regulations that affect the prices paid by federal
agencies for food and/ or commodities, we considered 241 major regulations
issued during the period from March 1996 through March 2000 that were
submitted to GAO's Office of General Counsel for review in accordance with
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996. 4 Of these, we determined that 23 potentially relate to food or
agriculture. For each of these 23 regulations, we then performed a detailed
review of the regulation and the related cost- benefit analysis to determine
what, if any, food and/ or commodity price impacts were identified. Our
analysis was limited to the information published in the regulations and
associated analyses. Although the cost- benefit analyses for a number of
these regulations do not address food and/ or commodity price effects, this
does not necessarily mean that the regulations have no effect on these
prices. Rather, these effects were not among those analyzed by the agencies
responsible for preparing the analyses.
We conducted our review from December 1999 through June 2000 in accordance
with generally accepted government auditing standards. We did not
independently verify the data provided by the
3 This range of benefits results from uncertainty in the estimates of the
number of cases of foodborne illness and death attributable to pathogens
that enter the meat and poultry supply at slaughterhouses.
4 P. L. 104- 121, Mar. 29,1996. Under this act, GAO's role is to provide the
Congress with a quick review of all “major” rules submitted to
determine if the promulgating agencies have complied with the procedural
steps governing the regulatory process. GAO must provide its report within
15 calendar days. See GAO's testimony before the Subcommittee on Commercial
and Administrative Law, House Committee on the Judiciary, ( Congressional
Review ActGAO/ T- OGC- 97- 29, Mar. 6, 1997) for further explanation.
B- 285338
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices 5 agencies on their
food and/ or commodity purchases. Similarly, we did not independently verify
the
data contained in the cost- benefit analyses we reviewed, nor did we assess
the appropriateness of the variables or assumptions used in these analyses.
----
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will provide copies to the
appropriate congressional committees; interested Members of Congress; the
Honorable Dan Glickman, Secretary of Agriculture; the Honorable William S.
Cohen, Secretary of Defense; the Honorable Janet Reno, Attorney General; the
Honorable Alexis M. Herman, Secretary of Labor; the Honorable Togo D. West,
Jr., Secretary of Veterans Affairs; the Honorable Jacob J. Lew, Director,
Office of Management and Budget; and other interested parties.
If you have any questions about this report, please contact Jim Jones,
Assistant Director, or me at (202) 512- 5138. Other key contributors to this
report were Triana Bash, Carol Bray, John Scott, and Sheldon Wood.
Sincerely yours, Lawrence J. Dyckman Director, Food and
Agriculture Issues
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
6
Five Federal Agencies That Directly Purchase Food or Commodities
Dollars in millions
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Department of Agriculture, Farm
Service Agency (FSA)
6
Food and Nutrition
Service National
School Lunch Program/
National School Lunch
Act of 1946 Food and Nutrition Service coordinates the
distribution of commodity foods to over 94,000 public and private nonprofit
schools
providing meals to students. FSA's commodity purchases represent about 15 to
20 percent of the market value of the food that schools serve in their lunch
and
breakfast programs. Dairy products, corn, cereal,
pasta, peanuts, rice, flour, vegetable oil
$159.8 $149.9 $188.2 Food and
Nutrition Service
The Emergency
Food Assistance
Program/ The Emergency
Food Assistance
Act of 1983 Commodities are available to nonprofit
organizations, such as soup kitchens and shelters, for preparing meals for
the needy.
Other nonprofit organizations, such as food banks, distribute commodities to
the needy
for household use. Each state establishes eligibility criteria for
determining
participation in the program. Dairy products, corn, cereal,
pasta, peanuts, rice, vegetable oil
39.5 33.0 55.9 Food and
Nutrition Service
Child Care and Adult
Care Food Program
Commodities are available to approved day care centers serving meals and
snacks to
children and adults, and to family and group day care homes for children.
These centers
and homes have the option of receiving cash in lieu of commodities, since
the
commodity pack sizes are too large for most of them.
Dairy products, cereal, pasta, peanuts, rice, flour,
vegetable oil 1.1 1. 1 1.1
5 The five federal departments listed in this column purchased at least $50
million in food or commodities in fiscal year 1999.
6 The Farm Service Agency makes some of its purchases on behalf of the
Commodity Credit Corporation (CCC), which is a government- owned and
-operated entity created to
stabilize, support, and protect farm income and prices.
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
7
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Food and Nutrition
Service Commodity
Supplemental Food
Program Food packages are distributed monthly to
supplement the nutritional needs of low income pregnant, postpartum, and
breast
feeding women; infants; children up to age 6; and persons at least 60 years
old
residing in the service areas. A variety of commodities are provided in
household- size
containers. Women, infants, and children must be eligible for benefits under
an
existing federal, state, or local health or welfare program for low- income
persons.
Elderly persons must have incomes at or below 130 percent of federal poverty
income guidelines. Dairy products, corn, cereal,
pasta, peanuts, rice 36.3 34.0 16.1
Food and Nutrition
Service Summer
Food Service Program
Commodities are made available to sites serving needy children during summer
vacations from school. These sites include schools, colleges, and
universities
participating in the National Youth Sports Program, nonprofit summer camps
for
migrant children, and centers for homeless children. All children receive
meals free,
and the Department reimburses local sponsoring organizations for a portion
of the
meals served. Dairy products, cereal, pasta,
peanuts, rice, flour, vegetable oil
0.5 0. 6 0.4 Food and
Nutrition Service
Food Distribution
Program on Indian
Reservations Program is an alternative to the Food
Stamp Program for meeting the nutritional needs of households living on or
near an
Indian reservation or in designated service areas in Oklahoma. Households
qualify for
the program on the basis of their income and resources. Participants receive
a
monthly food package that contains a variety of commodities to help them
maintain a balanced diet. Dairy products, corn, cereal,
pasta, peanuts, rice, flour, vegetable oil
22.4 24.4 19.5
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
8
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Food and Nutrition
Service Nutrition
Program for the
Elderly/ Area Agencies on
Aging Program provides nutritious meals for older
adults, either in congregate meal settings or through home delivery. The
Department
provides cash and commodities to state agencies on aging and tribal
organizations.
Dairy products, cereal, pasta, peanuts, rice, flour,
vegetable oil 0.2 0. 0 0.1
Food and Nutrition
Service Disaster
Feeding Food and Nutrition Service makes
commodities available for distribution to disaster relief agencies, such as
the Red
Cross, when the President declares a disaster, as well as in other
situations of
distress. The commodities are provided to disaster victims through
congregate meal
services and direct distributions to households.
Dairy products, corn, cereal, pasta, peanuts, rice, flour,
vegetable oil 0.2 0. 0 0.7
Foreign Agriculture
Service Sec. 416( b)/
Agricultural Act of 1949
Program provides for overseas donations of surplus commodities acquired by
the CCC.
Donations may not reduce the amounts of commodities that are donated
traditionally
to domestic feeding programs or agencies and may not disrupt normal
commercial
sales. All- purpose and bread flour,
bulgur, corn, cornmeal, varieties of wheat, dried milk
0.0 0. 0 1,155.5 7
U. S. Agency for
International Development
Title II, P. L. 480-
Emergency and Private
Assistance Program provides for the donation of U. S.
agricultural commodities to meet emergency and nonemergency food needs.
Agricultural commodities donated by the U. S. government for emergency needs
may
be provided under government- to government agreements; through public
and private agencies, including intergovernmental organizations; and
through other multilateral organizations. Nonemergency assistance may also
be
provided through private voluntary organizations, cooperatives, and
intergovernmental organizations. Feed grains, rice, vegetable
oil, wheat $721.5 8
$825.4 9
$893.3 10
7 Includes $361.8 million for freight costs, which are contracted for
separately.
8 Includes $308.4 million for freight costs.
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
9
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
U. S. Agency for
International Development
Title III, P. L. 480-- Food for
Development Program provides for government- to government grants to support
long- term
growth in the least developed countries. Donated commodities are sold in the
recipient country, and the revenue generated is used to support economic
development programs. Wheat 40.5 11
32.5 12
21.3 13
Foreign Agriculture
Service Food for
Progress (Title I, P. L.
480)/ Food for Progress
Act of 1985 Program provides commodities to support
countries that have made commitments to expand free enterprise in their
agricultural
economies. Wheat, wheat flour, soybean
meal, soybeans, vegetable oil
40.1 14
63.7 15
264.2 16
Foreign Agriculture
Service Food for
Progress (CCC
funded)/ Food for
Progress Act of 1985
Program provides commodities to support countries that have made commitments
to
expand free enterprise in their agricultural economies.
Tallow, flour, rice, varieties of seeds, varieties of corn
products, varieties of oils, varieties of wheat, beans,
peas, dried milk, pink salmon, varieties of pork
products, soybean meal 76.0 17
108.6 18
93.3 19
Subtotal-- FSA $1,138.2 $1,273.2 $2,709.6
9 Includes $357.6 million for freight costs.
10 Includes $412.2 million for freight costs.
11 Includes $12.4 million for freight costs.
12 Includes $11.2 million for freight costs.
13 Includes $7.6 million for freight costs.
14 Includes $25.4 million for freight costs.
15 Includes $22.8 million for freight costs.
16 Includes $28.9 million for freight costs.
17 Includes $11.7 million for freight costs.
18 Includes $24.7 million for freight costs.
19 Includes $22.2 million for freight costs.
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
10
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Department of Agriculture,
Agricultural Marketing Service
(AMS)
Agricultural Marketing
Service Purchases
for the National
School Lunch Program
under section 32 of the act
of August 24, 1935
These expenditures are part of a permanent appropriation that sets aside a
share of the
tariff duties collected by the U. S. Customs Service. These funds are used
to
encourage domestic consumption of agricultural commodities and fulfill the
entitlement mandate of section 6 of the National School Lunch Act.
Frozen and bulk fruit juice; fresh, frozen, and canned
fruit; fresh, frozen, canned, dehydrated, and dried
vegetables; fresh and frozen chicken; fresh, frozen, and
dried egg products; canned poultry; fresh and frozen
turkey; frozen beef; frozen pork; canned fish; and
canned meat. 399.0 398.0 396.0
Agricultural Marketing
Service Contingency
purchases under section
32 of the act of August 24,
1935 The contingency purchases support the
removal of surplus commodities from the market. Such removal is in the form
of one
time emergency purchases to relieve short term or rapidly developing market
surpluses. Section 32 contingency purchases also support Food Assistance for
Disaster Relief, a program that (1) takes foods from other programs for
states and
disaster assistance organizations to give to disaster victims and (2)
reimburses the
other programs with section 32 funds. Frozen and canned fruit
juice; fresh, frozen, canned, and dried fruit; frozen,
canned, dehydrated, and dried vegetables; nuts; fresh
and frozen chicken; canned poultry; fresh and frozen
turkey; frozen beef; frozen pork; frozen and canned fish;
canned meat; and frozen bison and frozen lamb.
96.0 193.0 135.0 Food and
Nutrition Service
National School Lunch
Program/ Section 6 of
the National School Lunch
Act of 1946 Section 6 of the National School Lunch Act
provides funds for agricultural commodities to be made available to states
and schools
for child nutrition programs, including commodity foods for child and adult
day
care centers. Section 6 prescribes a level of support (by formula) that is
to be
provided to states in commodities as entitlement.
Fresh, frozen, and canned fruit; fresh, frozen, canned,
dehydrated, and dried vegetables; fresh and frozen
chicken; fresh and frozen egg products; fresh and
frozen turkey; frozen beef; and frozen pork.
58.0 59.0 51.0
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
11
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Food and Nutrition
Service The Food
Distribution Programs on
Indian Reservations/
Section 4a of the
Agriculture and
Consumer Protection
Act of 1973. Program distributes food packages to
households on Indian reservations when they elect to receive commodities in
lieu of
food stamps. Canned fruit juice; canned
and dried fruit; fresh, canned, dehydrated, and dried
vegetables; syrup; fresh and frozen chicken; fresh, frozen
and dried egg products; canned poultry; frozen beef;
canned fish; and canned meat.
28.0 31.0 30.0 Food and
Nutrition Service
Nutrition Program for
the Elderly/ Section 311
of the Older Americans
Act of 1965. Program provides commodity support to
senior citizen meal sites. Frozen fruit juice; fresh,
frozen, and canned fruit; fresh, frozen, and canned
vegetables; fresh and frozen chicken; fresh, frozen, and
dried egg products; canned poultry; fresh and frozen
turkey; frozen beef; frozen pork; and canned meat.
4.0 3. 0 3.0 Food and
Nutrition Service
Commodity Supplemental
Food Program/
Section 17 of the Child
Nutrition Act of 1966
Program provides food packages to pregnant and postpartum women and
children who are at nutritional risk. Canned fruit juice; canned
fruit; fresh, canned, dehydrated, and dried
vegetables; dried egg products; canned poultry;
canned fish; and canned meat.
35.0 32.0 34.0 Food and
Nutrition Service
The Emergency
Food Assistance
Program/ The Emergency
Food Assistance
Act of 1983 Program provides food to the homeless and
other needy individuals through food banks and soup kitchens.
Canned fruit juice; fresh, canned, and dried fruit; fresh,
canned, dehydrated, and dried vegetables; syrup;
fresh and frozen chicken; dried egg products; canned
poultry; fresh and frozen turkey; frozen beef; frozen
pork; canned fish; and canned meat.
84.0 69.0 59.0
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
12
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Subtotal- AMS
$704.0 $785.0 $708.0
Subtotal- Agriculture (FSA + AMS)
$1842.2 $2,058.3 $3,417.6 Department of
Justice, Bureau of Prisons
96 federal correctional
institutions Subsistence
program to support basic
mission of the
institutions Program purchases food for prisons on
primarily a local, and sometimes a regional, basis depending on item
involved. Some
institutions purchase eggs, dairy, and bread products through Department of
Defense
contracts. During fiscal year 1999, 546,554 staff and inmates were served
meals in
Bureau of Prisons institutions. Subsistence items such as
canned foods, spices, and jellies; meats, dairy, eggs,
and bread products 87.2 86.9 $94.8
Subtotal- Justice
$87.2 $86.9 $94.8
ENCLOSURE I ENCLOSURE I
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices
13
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Department of Defense, Defense
Supply Center Philadelphia
The military services
Program purchases
food to support the
U. S. military worldwide.
The food is used by military services in dining halls and aboard ships for
peacetime
feeding and is used by the services for field feeding during exercises, for
contingencies
and/ or in support of humanitarian efforts. Dairy, breads and bakery
items, coffee, tea, soda, meats, fresh fruits and
vegetables, juices, meals ready to eat (MREs), and
other operational rations. 676.6 731.7 801.3
Various federal agencies
Program makes food
purchases for other
agencies through its
existing programs
and contracts.
The other agencies taking part in the Defense food program include
Agriculture's
School Lunch and Native American Support programs; Department of Commerce;
Department of the Interior; Department of Justice/ Bureau of Prisons;
Department of
Labor/ Job Corps; Department of State; Department of the Treasury;
Department of
Veterans Affairs; General Services Administration; Federal Emergency
Management Agency; Department of Health and Human Services; National
Aeronautics
and Space Administration; U. S. Soldiers' Home; District of Columbia Public
Schools;
U. S. Information Agency; Agency for International Development; U. S.
Congress
and miscellaneous organizations; U. S. Postal Service; Federal Aviation
Agency;
Department of Energy. Mostly fresh fruit and
vegetables, but some agencies order rations and
prime vendor products 3.8 20
5.2 9. 8
Subtotal- Defense $680.4 $736.9 $811.1 Department of
Veterans Affairs Office of
Acquisition and Materiel
Management
Program purchases
food for 172 Veterans
Affairs facilities
The food is purchased primarily through the Subsistence Prime Vendor program
and
used by all Veterans Affairs medical centers and other facilities. Other
purchases are
made through local vendors. All types of food available
through prime vendors, and other items including fresh
and dried milk and other dairy products, fresh and
frozen bread, produce, and dietary supplements
70.3 75.5 70.9 20
Defense's purchases for other agencies in fiscal year 1997 and subsequent
years have been adjusted to eliminate duplication of purchases for
Agriculture, Justice, Labor and Veterans Affairs that are reported elsewhere
in this table.
ENCLOSURE I ENCLOSURE I
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14
Purchasing agency
5
Administering agency Program Description Type of food
FY 1997 purchases
FY 1998 purchases
FY 1999 purchases
Other government
activities 50 other government facilities have joined
the Veterans Affairs prime vendor contract to purchase food for their
operations: state
veteran homes, Indian health facilities, and Defense health care facilities.
All types of food available through the vendors,
including fresh and dried milk, other dairy products,
fresh and frozen bread, produce, and dietary
supplements 0.0 5. 9 11.5
Veterans Affairs- Subtotal $70.3 $81.4 $82.4 Department of
Labor
Employment and Training
Administration/ Job Corps
Job Corps Centers
provide employment
and training for severely
disadvantag ed youths
The 118 centers provide youths with a comprehensive array of services,
generally
in a residential setting. The services include basic education, vocational
skills
training, social skill instruction, counseling, health care, room and board,
and
recreation. While private and nonprofit contractors operate the majority of
the
centers, the departments of the Interior and Agriculture operate 28 as
Civilian
Conservation Corps programs. About 66,000 youths participate in the program
each year in 48 states and the District of Columbia and Puerto Rico. Program
operators make purchases through prime vendor programs of Defense and
Veterans
Affairs and through other vendors. Proteins, vegetables and
fruits, grain products, and dairy products
48.9 21
50.1 22
51.0 23
Subtotal- Labor $48.9 $50.1 $51.0 Total $2,728.9 $3,013.6 $4,456.9
21 Purchases listed are for the Job Corps' program year ending June 30,1997.
22 Purchases listed are for the Job Corps' program year ending June 30,1998.
23 Purchases listed are for the Job Corps' program year ending June 30,1999.
ENCLOSURE I ENCLOSURE I
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15
Source: GAO's compilation of agencies' data on programs and purchases.
ENCLOSURE II ENCLOSURE II
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16
Eleven Major Federal Regulations With Information on Their Effect on Food
and Commodity Prices
Rule title/ agency/ date/ Federal Register citation
Purpose and statutory authorization of the rule as published in the Federal
Register
Food or commodity
Existing price
(baseline) Projected
price Quantitative and/ or qualitative
conclusion about price change
Pathogen Reduction: Hazard Analysis and Critical Control
Point (HACCP) Systems/ Food Safety and Inspection
Service, Department of Agriculture/ July 25, 1996/ 61
Fed. Reg. 38805 Sets requirements for meat and poultry slaughter
establishments designed to reduce the occurrence and numbers of pathogenic
microorganisms on meat
and poultry products and reduce the incidence of food borne illness
associated with the consumption of those
products. The rule provided a new framework for modernizing the current
system of meat and poultry
inspection. 21 U. S. C. 451- 470, and 601- 695 and 7 U. S. C. 1901- 1906
Meat and poultry
Not provided Not provided 4- year implementation of the rule would increase
prices $0.0011 per to $0.0013 per
pound at retail level. The annual recurring price increase would be $0.0015
to
$0.0018 per pound based on 1993 production.
Dairy Tariff- Rate Import Quota Licensing/ Department
of Agriculture/ Oct. 9, 1996/ 61 Fed. Reg. 53001
Revises regulations governing the administration of the import licensing
system for certain dairy products
that are eligible for in- quota tariff rates. The rule incorporates Uruguay
Round Agreement commitments
relating to increased market access for dairy articles. The United States
agreed to end quantitative
restrictions, replacing them with tariff- rate quotas under which a limited
level of imports are permitted at
a low tariff rate and any imports beyond that level are assessed a tariff at
a higher rate. 19 U. S. C. 1202,
3513 and 3601 Imported
cheese and licensed dairy
products Import license
cost of $0.00138 per
pound of imported
cheese in 1995
Import license cost of
$0.0016 to $0.0017 per
pound of imported
cheese in 1998
Increased cost of import license fees is about $0.0003 per pound and
basically
would have no impact on prices. The rule is not expected to affect prices
and market
share for the U. S. dairy industry as a whole because access to the U. S.
market is
limited by the tariff- rate quota system.
ENCLOSURE II ENCLOSURE II
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17
Rule title/ agency/ date/ Federal Register citation
Purpose and statutory authorization of the rule as published in the Federal
Register
Food or commodity
Existing price
(baseline) Projected
price Quantitative and/ or qualitative
conclusion about price change
Barley $2.57 per bushel in
1997 $2.63 per
bushel Increase of $0.06 per
bushel Corn 2.81 per
bushel in 1997
$2.88 per bushel
Increase of $0.07 per bushel
Oats $1.66 per bushel
$1.75 per bushel
Increase of $0.09 per bushel
Sorghum $2.57 per bushel
$2.63 per bushel
Increase of $0.06 per bushel
Wheat $4.18 per bushel
$4.43 per bushel
Increase of $0.25 per bushel
Conservation Reserve Program- Long- Term Policy/
Farm Service Agency and Commodity Credit Corp.,
Department of Agriculture/ Feb. 19, 1997/ 62 Fed. Reg.
7601 Amends the Conservation Reserve Program to cost effectively target it
to more environmentally sensitive
acreage. Revises the terms and conditions for enrolling acreage, updating
other program eligibility
requirements, and consolidating and reorganizing the program's regulations.
16 U. S. C. 3801- 3847
Soybeans $6.57 per bushel
$6.73 per bushel
Increase of $0.16 per bushel
Overall, the price increases are due
to an increase of program acreage
from 28 to 36.4 million acres.
Continued enrollment of
environmentally sensitive cropland
in the program results in reduced
production, higher prices, increased
producer incomes, and higher prices
to processors. Projected changes
in consumer prices were not provided.
ENCLOSURE II ENCLOSURE II
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18
Rule title/ agency/ date/ Federal Register citation
Purpose and statutory authorization of the rule as published in the Federal
Register
Food or commodity
Existing price
(baseline) Projected
price Quantitative and/ or qualitative
conclusion about price change
Karnal Bunt Disease: Domestic Plant- Related
Quarantine, Final Rule; and Karnal Bunt: Compensation
for the 1995- 96 Crop Season, Final Rule/ Department of
Agriculture, Animal and Plant Health Inspection Service/
Oct. 4, 1996 and May 6, 1997/ 61 Fed. Reg. 52190
and 62 Fed. Reg. 24746 The final rule establishes criteria for levels of
risk for
areas with regard to Karnal bunt, a fungal disease of wheat, and for the
movement of regulated articles
based on those risk areas. It provides for compensation for certain growers
and handlers,
owners of grain storage facilities, and flour millers to mitigate losses
because of Karnal bunt in the 1995- 96
crop season. 7 U. S. C. 150bb, 150dd, 150ee, 150ff, 161, 162, and 164- 167
Wheat $3.85 per bushel
The most likely price
would be $3.63 per
bushel if quarantine
was not implemented
The most likely decrease of 10 percent in exports due to Karnal bunt would
cause a
$0.22- per- bushel drop in wheat prices. The losses estimated nationwide
would have
been $500 million. Under the quarantine, the loss to affected wheat
producers was
estimated at $44 million. Amendment to the Peanut
Poundage Quota Regulations/ Farm Service
Agency, Department of Agriculture/ May 9, 1997/ 62
Fed. Reg. 25433 The amendments to the final rule involve (1)
eliminating the national poundage quota floor; (2) eliminating the
undermarketing carryover provisions;
(3) establishing temporary seed quota allocations; (4) establishing the
ineligibility of certain farms for quota
allocations; (5) authorizing the intercounty transfer of farm poundage
quotas in all states, subject to certain
limitations in some states; (6) eliminating the special allocations of
increased quotas for certain Texas
counties; (7) establishing new provisions for “considered
produced” credit with respect to a farm
whose quota has been transferred; and (8) other minor clarifying and
technical changes. 7 U. S. C. 1301, 1357
et seq. 1372, 1373, 1375 and 7271 Peanuts and
peanut products
$0.30 per pound for
crop year 1996- 97 to
$0.3264 for crop year
2002- 03 $0.27 per
pound for crop year
1996- 97 to $0.2763 for
crop year 2002- 03
$0.03- 0.05 per- pound decrease in the price of peanuts to farmers over the
period. The
agency projects that consumers would save about $75 million on peanut
products
annually.
ENCLOSURE II ENCLOSURE II
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19
Rule title/ agency/ date/ Federal Register citation
Purpose and statutory authorization of the rule as published in the Federal
Register
Food or commodity
Existing price
(baseline) Projected
price Quantitative and/ or qualitative
conclusion about price change
Importation of Pork from Sonora, Mexico/ Department
of Agriculture, Animal and Plant Health Inspection
Service/ May 9, 1997/ 62 Fed. Reg. 25439
Amendment of regulations on importation of animal products to allow, under
certain conditions, the
importation of fresh, chilled, or frozen pork from the state of Sonora,
Mexico. 7 U. S. C. 147a, 150ee, 161,
162 and 450; 19 U. S. C. 1306; 21 U. S. C. 111, 114a, 134a, 134b, 134c,
134f, 136, and 136a; 31 U. S. C.
9701; 42 U. S. C. 4331 and 4332. Fresh pork
products Not provided $0.07 to
$0.16 less per pound
retail Increased supplies of Mexican fresh pork
would lead to lower prices, and consumer savings could range from $10.7
million to
$24.5 million, depending on the volume of Mexican imports and the
sensitivity of U. S.
supply and demand. Importation of Beef from
Argentina/ Department of Agriculture, Animal and Plant
Health Inspection Service/ June 26, 1997/ 62 Fed. Reg.
34385 Amended the regulations on the importation of animal
products in order to prevent the introduction of foot and- mouth disease and
to allow under certain
conditions the importation of fresh, chilled, or frozen beef from Argentina.
This change is in keeping with
provision of trade agreements entered into by the United States by removing
unnecessary restrictions on
these imports. 7 U. S. C. 147a, 150ee, 161,162, and 450; 19 U. S. C. 1306;
21 U. S. C. 111,114a, 134a, 134b,
134c, 134f, 136 and 136a; 31 U. S. C. 9701; 42 U. S. C. 4331 and 4332
Beef products in U. S. market
Wholesale price of
$4,402.17 per metric ton
24 of
carcass weight
equivalent in 1995
Wholesale price of
$4,393.90 per metric ton of
carcass weight
equivalent Wholesale price decline of $8.27 per metric
ton of carcass weight equivalent. Due to the increased imports of beef from
Argentina, consumer savings would be about $89.2 million annually for beef
products if 20,000 metric tons were imported.
Pseudorabies in Swine; Payment of Indemnity, Interim
Rule / Department of Agriculture, Animal and Plant
Health Inspection Service/ Jan. 15, 1999/ 64 Fed. Reg.
2545 Interim rule establishes the animal health regulations
to provide for the payment of indemnity for the voluntary depopulation of
herds of swine (hogs) known
to be infected with pseudorabies and, therefore, will reduce the risk of
other swine becoming infected with
the disease. 21 U. S. C. 111- 113, 114, 114a, 114a- 1, 120, 121, 125 and
134b
Pork products Not provided Not provided By reducing the number of hogs, the
rule will result in increased prices to hog
producers. The agency had insufficient information to estimate the effect on
market
prices. Milk in the New England and
Other Marketing Areas; Order Amending the Orders/
Department of Agriculture, Agricultural Marketing
Service/ Sept. 1, 1999/ 64 Fed. Reg. 47898
To consolidate the number of federal milk marketing orders from 31 to 11 and
add some counties into the
new marketing order areas. 7 U. S. C. 601- 674 and 7253
Fluid milk (Class I)
On average $16.22 per
hundred weight
$0.06 more to $0.09 less
per gallon on avg. for all
areas On average $0.02 less per gallon for all
areas over 6 years. Overall, consumers will save $80.4 million on fluid milk
prices
annually. The price decrease is expected because of an increase in the
quantity of
milk to be made available for fluid uses. 24
2204.62 pounds
ENCLOSURE II ENCLOSURE II
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20
Rule title/ agency/ date/ Federal Register citation
Purpose and statutory authorization of the rule as published in the Federal
Register
Food or commodity
Existing price
(baseline) Projected
price Quantitative and/ or qualitative
conclusion about price change
Milk for soft manufactured
products (Class II)
On average, $13.95 per
hundred weight
On average, $0.50 more
per hundred weight
Overall, the increase in the price of these manufactured products will cost
consumers
$77.6 million more annually. The price increase is due to a decrease in the
quantity of milk available for soft manufactured products.
Milk for cream and other
cheeses (Class III)
On average, $13.65 per
hundred weight
On average, $0.01 more
per hundred weight
On average, prices may be virtually unchanged over the 6- year period.
Milk for butter and milk
powders (Class IV)
On average, $13.76 per
hundred weight
On average, the price
would be unchanged
On average, prices may be virtually unchanged over the 6- year period.
Irradiation of Meat Food Products/ Food Safety and
Inspection Service, Department of Agriculture/
Dec. 23, 1999/ 64 Fed. Reg. 72150
To amend regulations to permit the use of ionizing radiation for treating
refrigerated or frozen, uncooked
meat, meat byproducts and certain other meat food products to reduce the
level of food- borne pathogens
and to extend shelf life. Federal Meat Inspection Act and Poultry Inspection
Act. 7 U. S. C. 138f, 450; 21
U. S. C. 451- 470 Ground beef Not provided $0.02 to
$0.06 more per pound
The annual cost of meat irradiation is estimated to range from $35 million
to $105
million (1995 dollars). Nonfat dried
milk Not provided No change With this program, domestic prices would
not change because the program's purchase price provides a floor under the
current market price. If the program were not extended, prices would be
expected to
fall $0.10 per pound. 1999 Crop and Marketing
Loss Assistance/ Farm Service Agency, Department
of Agriculture/ Feb. 16, 2000/ 65 Fed. Reg. 7942
Implement requirements of the 2000 appropriations acts related to crop and
market loss assistance for
agricultural producers and other provisions related to crop or market loss
provisions. 15 U. S. C. 714b and
714c Honey Not provided No change The analysis does not expect the program
to have an effect on domestic prices.
ENCLOSURE II ENCLOSURE II
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21
Rule title/ agency/ date/ Federal Register citation
Purpose and statutory authorization of the rule as published in the Federal
Register
Food or commodity
Existing price
(baseline) Projected
price Quantitative and/ or qualitative
conclusion about price change
Livestock Not provided No change No measurable effect on market prices is
expected because the program helps
disaster- affected producers to feed livestock rather than send them to
slaughter. Peanuts Not provided No change No measurable effect for consumers
is
expected because the program supports peanut producer incomes rather than
market prices. Source: Text of major regulations as published in the Federal
Register and supporting regulatory impact analyses as submitted to GAO under
the Small Business
Regulatory Enforcement Fairness Act of 1996.
ENCLOSURE III ENCLOSURE III
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices 22
Twelve Major Federal Regulations Without Information on Their Effect, If
Any, on Food and Commodity Prices
Twelve of the 23 major regulations and associated cost- benefit analyses we
reviewed did not provide information on food and/ or commodity price
impacts. However, this does not necessarily mean that the regulations have
no effect on these prices. Rather, these effects were not among those
analyzed by the agencies responsible for preparing the cost- benefit
analyses.
List of the 12 Regulations
“Catastrophic Risk Protection Endorsement,” Final Rule,
Department of Agriculture, Federal Crop Insurance Corporation, Aug. 20,
1996, 61 Fed. Reg. 42979.
“Environmental Quality Incentives Program,” Final Rule,
Department of Agriculture, Natural Resources Conservation Service, May 22,
1997, 62 Fed. Reg. 28258.
“Substances Prohibited From Use in Animal Food or Feed; Animal
Proteins Prohibited in Ruminant Feed,” Final Rule, Department of
Health and Human Services, Food and Drug Administration, June 5, 1997, 62
Fed. Reg. 30936.
“General Administrative Regulations, Subpart U; and Catastrophic Risk
Protection Endorsement; Regulations for the 1999 and Subsequent Reinsurance
Years and General Administrative Regulations, Subpart T- Federal Crop
Insurance Reform, Insurance Implementation; Regulations for the 1999 and
Subsequent Reinsurance Years; and the Common Crop Insurance Regulations;
Basic Provisions; and Various Crop Insurance Provisions,” Interim
Rules, Department of Agriculture, Federal Crop Insurance Corp., July 30,
1998, 63 Fed. Reg. 40630 and 40632.
“Solid Wood Packing Material From China,” Interim Rule,
Department of Agriculture, Animal and Plan Health Inspection Service, Sept.
18, 1998, 63 Fed. Reg. 50100.
“National Primary Drinking Water Regulations: Disinfectants and
Disinfection By- products,” Final Rule, Environmental Protection
Agency, Dec. 16, 1998, 63 Fed. Reg. 69390.
“National Primary Drinking Water Regulations: Interim Enhanced Surface
Water Treatment,” Final Rule, Environmental Protection Agency, Dec.
16, 1998, 63 Fed. Reg. 69478.
“Livestock Assistance Program,” Final Rule, Department of
Agriculture, Commodity Credit Corp., Mar. 19, 1999, 64 Fed. Reg. 13497.
ENCLOSURE III ENCLOSURE III
GAO/ RCED- 00- 173R Regulations' Effect on Food Prices 23 “Phase 2
Emission Standards for New Non- road Spark- Ignition Non- handheld Engines
at or
Below 19 Kilowatts,” Final Rule, Environmental Protection Agency, Mar.
30, 1999, 64 Fed. Reg. 15208.
“1998 Single- Year and Multi- Year Crop Loss Disaster Assistance
Program,” Final Rule, Department of Agriculture, Farm Service Agency,
Apr. 15, 1999, 64 Fed. Reg. 18553.
“Persistent Bioaccumulative Toxic (PBT) Chemicals; Lowering of
Reporting Thresholds for Certain PBT Chemicals; Addition of Certain PBT
Chemicals; Community Right- to- Know Toxic Chemical Reporting,” Final
Rule, Environmental Protection Agency, Oct. 29, 1999, 64 Fed. Reg. 58666.
“National Pollutant Discharge Elimination System- Regulations for
Revision of the Water Pollution Control Program Addressing Storm Water
Discharges,” Final Rule, Environmental Protection Agency, Dec. 8,
1999, 64 Fed. Reg. 68722.
(150164)
*** End of document. ***