-------------------------Indexing Terms------------------------- 
REPORTNUM:   RCED-95-87R						        

TITLE:     Resources, Community, and Economic Development
Division

DATE:   02/03/1995 
				                                                                         
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GAO/RCED-95-87R

GAO United States General Accounting Office

Washington, D. C. 20548 Resources, Community, and Economic Development
Division

B- 260031 February 3, 1995 The Honorable Pat Roberts Chairman The Honorable
E (Kika) de la Garza Ranking Minority Member Committee on Agriculture House
of Representatives

The Food Security Act of 1985 authorized a number of new programs designed,
in part, to reduce wind and water erosion caused on crop- producing land.
Under one of these programs -- the Conservation Reserve Program (CRP)--
farmers could sign lo- to 15- year contracts (beginning in 1986) with the U.
S. Department of Agriculture (USDA) to remove certain erodible or
environmentally sensitive cropland from production in return for annual
federal payments. In preparing for hearings on the 1995 farm bill, you asked
if we could determine on a national basis the proportion of CRP payments
made to tenants versus landlords. We could not make this determination
because USDA does not categorize the approximately 375,000 CRP contracts in
this manner in its data base. USDA categorizes CRP contract holders in its
data base as owner, operator, owner/ operator, or other producer. None of
these categories are clearly tenant or landlord. Although USDA's
classification is not exact, as explained further in this correspondence,
and funding cannot be definitively broken out between tenants and landlords,
some insights can be drawn from the available data. For fiscal years 1990
through 1994, USDA's data base shows that 46 percent of CRP contract holders
are categorized as owner/ operator. USDA officials believe that these
individuals farm their own land and should be neither a tenant nor a
landlord. These contract holders received 53 percent of all payments, or
about $4.2 billion, over the 5- year period.

To determine specifically which of the remaining individual CRP contracts
were held by tenants or landlords would require extensive and timely
reviewing or sampling of GAO/ RCRD- 95- 87R, CRP Payments

B- 260031 the individual CRP contract files in county offices. As agreed
with your offices, we did not attempt to make such a determination because
of the additional work required.

BACKGROUND Under the CRP, farmers who took land meeting certain criteria out
of production for 10 to 15 years received annual federal rental payments on
that land. Beginning in 1986, USDA offered CRP contracts during 12 signup
periods to farmers who agreed to plant cover crops such as grass or trees on
the cropland. As of 1994, 36.4 million acres of

cropland were enrolled in the program. USDA's Consolidated Farm Service
Agency (formerly the Agricultural Stabilization and Conservation Service)
administers the CRP, with assistance from the Department's Natural Resources
Conservation Service (formerly the Soil Conservation Service). CATEGORIES OF
CRP CONTRACT HOLDERS USDA distinguishes between four categories of CRP
contract holders: owner, operator, owner/ operator, and other producer.
Table 1 shows USDA's definitions for the four categories and their possible
relationship to tenants and landlords.

2 GAO/ RCED- 95- 87R, CRP Payments

B- 260031 Table 1: Cateqories of Contract Holders and the Cateqories'
Possible Relationship to Tenants and Landlords

Category's Category relationship to (percent of tenant and contract holders)
Definition landlord

Owner Individual or May or may not (35) entity who include landlords legally
owns or has contract to buy farmland

Operator (11) Individual or May include entity who has tenants general
control of the farming operation for program year

Owner/ Operator (46)

Individual or Should not entity who meets include either both the owner
tenants or and operator landlords definitions Other Producer

(8) Individual or May include entity who uses tenants, but may the farmland
or also include shares in the landlords payments and crops (may be an
operator)

BREAKDOW& OF CRP PAYMENTS According to USDA's data base, CRP contract
holders classified as owner/ operator receive most CRP payments. Figure 1
shows the average percentage of payments going to each category of CRP
contract holder for fiscal years 1990 through 1994. Over this 5- year
period, CRP payments totaled about $8 billion. USDA makes CRP payments to
contract holders at the beginning of each fiscal year.

3 GAOIRCED- 95- 87R, CRP Payments

B- 260031 Fio- ure 1: Averaqe Percentaae of CRP Payments by Catesory of
Recipient, Fiscal Years 1990 Throuqh 1994

6% Other Producer

Operator Owner/ Operator Source: USDA CRP payment and contract files.

- - - - To obtain information for our work, we analyzed CRP contract and
payment data for fiscal years 1990 through 1994 provided by USDA's
Consolidated Farm Service Agency in Kansas City, Missouri. To verify the
proportions of the categories of contract holders and the payments made, we
contacted the agency's county officials in Iowa, Kansas, Montana, North
Dakota, and Texas, where CRP enrollments are relatively large.

Because our analysis of computerized CRP files was for purposes other than
those originally designed, we were able to capture only 95 percent of the
payments made to contract holders. However, because our results were based
on 95 percent of total CRP payments, the results should be meaningful for
all payments made during the 5- year period. 4 GAO/ RCED- 95- 87R, CFLP
Payments

B- 260031 In addition, we confirmed our methodology for obtaining the CRP
payment information with USDA officials.

USDA's classification of CRP contract holders as owner, operator, owner/
operator, and other producer is not precise and may not be current. Agency
officials told us that farm program files supporting the CRP data base allow
input of multiple owners for a farm but only one operator. Additional
operators are categorized as other producers. Any additional owners/
operators on that farm are categorized only as owners; therefore, the
results in the owner/ operator category may be understated. Furthermore, a
USDA official said that the CRP categories of contract holders were accurate
when the contracts were signed, but the CRP data base may not be updated if
these relationships change later. We conducted our work between December
1994 and January 1995 in accordance with generally accepted government
auditing standards. Please contact me at (202) 512- 5138, or Edward Zadjura,
Assistant Director, at (202) 512- 9914 if you or your staff have any
questions.

Director, Food and Agriculture Issues (150542 5 GAO/ RCED- 95- 87R, CRP
Payments

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