Farm Programs: Administrative Requirements Reduced and Further Program
Delivery Changes Possible (Letter Report, 04/20/98, GAO/RCED-98-98).
Pursuant to a congressional request, GAO examined the administrative
requirements placed on farmers participating in the revamped farm
programs, as well as the Department of Agriculture's (USDA) efficiency
in delivering program services to farmers, focusing on the: (1) extent
to which the changes to the farm programs resulting from the Federal
Agriculture Improvement and Reform Act of 1996 have reduced farmers'
administrative requirements; and (2) possibility of having USDA use
alternative delivery methods to more efficiently administer farm
programs.
GAO noted that: (1) farmers are now generally spending less time on
administrative requirements than they did before the 1996 act; (2) the
number of required visits to county offices has declined, as has the
amount of time spent completing paperwork for the farm programs; (3) the
Farm Service Agency (FSA) could transact more with business farmers
through the mail and by telephone and computer, thus increasing the
efficiency of its operations; (4) using alternative delivery methods
should allow USDA to operate with fewer staff and offices, which could
reduce expenses by millions of dollars; (5) while GAO found no statutory
or regulatory requirements that direct farmers to visit county offices,
changing delivery methods to rely more on such approaches will require
fundamental changes in the FSA's long-standing practices and
relationships with farmers; and (6) in particular, such methods would
reduce farmers' personal contact with county office staff and place
greater administrative responsibility on farmers to ensure that required
paperwork is completed and submitted in a timely fashion.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-98-98
TITLE: Farm Programs: Administrative Requirements Reduced and
Further Program Delivery Changes Possible
DATE: 04/20/98
SUBJECT: Land management
Reporting requirements
Locally administered programs
Federal downsizing
Cost control
Agricultural programs
Federal agency reorganization
IDENTIFIER: Farm Credit System
USDA Conservation Reserve Program
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Cover
================================================================ COVER
Report to the Chairman, Committee on Agriculture, Nutrition, and
Forestry
U.S. Senate
April 1998
FARM PROGRAMS - ADMINISTRATIVE
REQUIREMENTS REDUCED AND FURTHER
PROGRAM DELIVERY CHANGES POSSIBLE
GAO/RCED-98-98
Reductions in FSA's Administrative Requirements
(150073)
Abbreviations
=============================================================== ABBREV
CRP - Conservation Reserve Program
FAIR - Federal Agriculture Improvement and Reform Act of 1996
FSA - Farm Service Agency
NAP - Noninsured Crop Disaster Assistance Program
NRCS - Natural Resources Conservation Service
USDA - U.S. Department of Agriculture
Letter
=============================================================== LETTER
B-279351
April 20, 1998
The Honorable Richard G. Lugar
Chairman, Committee on Agriculture,
Nutrition, and Forestry
United States Senate
Dear Mr. Chairman:
The Federal Agriculture Improvement and Reform Act of 1996,\1
commonly known as the FAIR act, significantly changed many of the
U.S. Department of Agriculture's (USDA) farm programs. The most
far-reaching change concerned the federal government's role in
supporting the production of major crops (wheat, feed grains, cotton,
and rice). The act discontinued the complex programs in which
farmers received payments in exchange for accepting federal controls
over crops and the amount of acreage they could put into production.
Instead of participating in these programs, farmers sign up once to
receive fixed annual payments established in production contracts and
generally can plant whatever crops they choose. The act also made a
number of changes to other farm programs. USDA's Farm Service Agency
(FSA) is generally responsible for administering the farm programs.
You expressed interest in examining the administrative requirements
placed on farmers participating in the revamped farm programs, as
well as USDA's efficiency in delivering program services to
farmers.\2 In particular, you asked us to determine (1) the extent to
which the changes to the farm programs resulting from the 1996 act
have reduced farmers' administrative requirements and (2) the
possibility of having USDA use alternative delivery methods to more
efficiently administer farm programs.
--------------------
\1 P.L. 104-127 (Apr. 4, 1996).
\2 For the purpose of this report, administrative requirements are
defined as the time farmers spend on paperwork and personal visits to
the county offices administered by the U.S. Department of
Agriculture's Farm Service Agency.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
Farmers are now generally spending less time on administrative
requirements than they did before the 1996 act. The number of
required visits to county offices has declined, as has the amount of
time spent completing paperwork for the farm programs.
The Farm Service Agency could transact more business with farmers
through the mail and by telephone and computer, thus increasing the
efficiency of its operations. Using alternative delivery methods
should allow the U.S. Department of Agriculture to operate with
fewer staff and offices, which could reduce expenses by millions of
dollars. While we found no statutory or regulatory requirements that
direct farmers to visit county offices, changing delivery methods to
rely more on such approaches will require fundamental changes in the
Farm Service Agency's long-standing practices and relationships with
farmers. In particular, such methods would reduce farmers' personal
contact with county office staff and place greater administrative
responsibility on farmers to ensure that required paperwork is
completed and submitted in a timely fashion.
BACKGROUND
------------------------------------------------------------ Letter :2
FSA is USDA's primary federal agency charged with administering farm
programs at the local level.\3 FSA's fiscal year 1997 salary and
expenses were $956 million. This amount provided funding for 17,269
federal and nonfederal employees at the national office, 50 state
offices, and 2,440 county offices. In fiscal year 1997, more than
1.6 million farmers participated in USDA's farm support programs and
received more than $7.4 billion in benefits.
Most farm support programs are implemented at the county office level
under the direction of a county committee of locally elected farmers.
This county committee hires a county executive director, who manages
the local county office staff. As a condition of participation in
any USDA farm program, farmers generally visit their FSA county
office in person to identify the particular tract of cropland that is
being enrolled in a program. This information ties the individual to
the tract of land in order to ensure compliance with various statutes
dealing with program eligibility, payment limitations, and
conservation requirements. FSA employees review program requirements
with the participating farmer and complete most of the paperwork that
the farmer signs. Much of the paperwork associated with farm
programs consists of contractual agreements between the farmer and
USDA. For example, the marketing assistance loan form is a legal
agreement between USDA and the farmer in which the farmer agrees to
repay the loan within a specified period of time.
The current county-based delivery structure for farm program benefits
originated in the 1930s, when the first agricultural acts established
farm support programs. At that time, more than one-fourth of
Americans were involved in farming, and the lack of an extensive
communications and transportation network limited the geographic
boundaries that could be effectively served by a single field office.
Over the past several years, the Department has made a number of
changes to the delivery structure that were recommended by us and
others.\4 USDA has collocated agencies; consolidated agencies; closed
smaller, less efficient county offices; and streamlined some program
requirements. However, despite advancements in technology and
communications, farmers generally still deal with USDA in person at
their local FSA office. See appendix I for more information on the
recent changes USDA has made.
--------------------
\3 FSA was created in 1994, when the Department reorganized its
operations, incorporating programs from the Agricultural
Stabilization and Conservation Service and the Farmers Home
Administration into one agency. In 1995 and 1996, the Federal Crop
Insurance Corporation, now the separate Risk Management Agency, was
part of FSA as well.
\4 U.S. Department of Agriculture: Interim Report on Ways to
Enhance Management (GAO/RCED-90-19, Oct. 26, 1989).
CHANGES RESULTING FROM 1996 ACT
HAVE REDUCED THE ADMINISTRATIVE
REQUIREMENTS FOR FARMERS
------------------------------------------------------------ Letter :3
Farmers who participated in USDA's commodity programs for major crops
saw a reduction in their administrative requirements because of the
program changes resulting from the 1996 act. The savings in time
spent on paperwork are due mainly to farmers' not having to make
decisions about program participation and planting alternatives. The
reduction in the number of visits results from eliminating the
requirements that farmers report the number of acres they plant,
except for fruits and vegetables. For farm programs other than the
commodity programs, we found no substantial change in the amount of
time farmers spend on paperwork and the number of visits they make to
county offices.
ADMINISTRATIVE REQUIREMENTS
FOR COMMODITY PROGRAM
PARTICIPATION WERE REDUCED
BY THE 1996 ACT
---------------------------------------------------------- Letter :3.1
The 1996 act significantly changed USDA's administrative requirements
for the commodity programs. Farmers saw their time spent on
paperwork reduced from a minimum of 1-1/2 hours to about 15 minutes
annually and the number of office visits reduced from twice to once a
year.
Under the federal commodity programs in existence until 1995, USDA
regulated agricultural production by controlling the crops that
farmers could grow and the amount of acreage that they could plant.
USDA provided annual payments to participating farmers that were
based on annual calculations involving historical acreage and yields
devoted to agricultural production, market prices for crops, and
support prices set by the Congress and the Secretary of Agriculture.
Signing up for the programs normally required that farmers visit the
county office annually in order to determine the optimal planting
option that they should follow for that year. More specifically, if
farmers decided to participate in a commodity program, they selected
from several available planting options, such as (1) idling a
percentage of land, receiving benefits, and producing a commodity or
(2) not planting anything and receiving 92 percent of the benefits.
FSA staff completed participation worksheets and calculated benefits
using different scenarios as many times as the farmers deemed
necessary to determine which annual program provisions best met their
needs. After the farmers selected an option, FSA staff generated the
contract for their signature.
Subsequently, the farmers returned to the office to report the
acreage actually planted on the farm. The farmer reported the types
of crops planted, the number of acres of each crop planted, and the
number and location of acres that were not planted. Farmers could
use FSA's aerial photographs to identify fields planted to program
crops or idled. Because incorrect reporting could lead to the loss
of benefits, farmers often requested measurement services from FSA to
guarantee compliance. According to county office staff and
participating farmers, these sign-up and acreage reporting visits
took a minimum of 1-1/2 hours altogether and two visits to the county
office.
The 1996 act eliminated annual sign-ups for the commodity programs
and allowed eligible farmers to enter cropland previously enrolled in
USDA's commodity programs into 7-year production contracts. The new
program is far less complicated than the commodity programs because
once farmers chose to participate in the 7-year program, annual
decisions on participation or planting alternatives were no longer
necessary. Instead, farmers receive fixed annual payments that are
based upon the enrolled land's previous crop production history.
Furthermore, farmers are no longer required to report the acreage
planted unless they plant fruits and vegetables.\5
In some cases, farmers do not need to visit the county office during
the duration of the 7-year contract. Farmers who own and operate
their cropland could make payment designations for all 7 years of the
contract during their initial visit. However, many farmers who lease
land will visit the county office annually because payment
designations can be made only for the length of the lease. Because
most farmers lease cropland for one season (1 year) at a time, they
are required to visit the county office annually to designate the
cropland they will farm in order for FSA to determine the payments
they are eligible for. According to the farmers and county office
staff we interviewed, this process generally involves one visit of
about 15 minutes.
--------------------
\5 Farmers participating in other programs such as the Quota Tobacco,
Quota Peanut, and the Noninsured Crop Disaster Assistance Program are
still required by statute to file acreage reports.
ADMINISTRATIVE REQUIREMENTS
FOR OTHER USDA FARM SUPPORT
PROGRAMS WERE GENERALLY NOT
AFFECTED BY THE 1996 ACT
---------------------------------------------------------- Letter :3.2
The 1996 act generally did not change administrative requirements for
other farm support programs, such as the Conservation Reserve Program
(CRP), direct farm loans, and the Noninsured Crop Disaster Assistance
Program (NAP). Accordingly, the amount of paperwork associated with
these programs generally did not change. The number of participants
in these programs is relatively small in comparison with the number
of participants in the commodity programs. For example, in 1996, 1.6
million farmers signed production contracts and 64,000 farmers
participated in CRP.
See appendix II for more information on the administrative
requirements associated with these other farm support programs.
FSA COULD USE ALTERNATIVE
DELIVERY METHODS, BUT SUCH
CHANGES WOULD REQUIRE
FUNDAMENTAL SHIFTS IN ITS
RELATIONSHIP WITH FARMERS
------------------------------------------------------------ Letter :4
FSA could use alternative methods--such as mail and
telecommunications--to enroll farmers in programs and deliver program
benefits more efficiently. However, shifting to alternative delivery
methods would require FSA to change its long-standing tradition of
providing personal service to farmers and would shift the burden of
completing many administrative requirements to farmers.
USDA COULD USE ALTERNATIVE
METHODS TO DELIVER FARM
SUPPORT PROGRAMS
---------------------------------------------------------- Letter :4.1
USDA could use a number of alternatives that could improve the
efficiency of its program delivery. These could include greater use
of the U.S. mail, telecommunications, and computer technologies.
Generally, using these resources should allow USDA to operate with
fewer staff and offices and could save millions of dollars annually.
However, absent detailed study, the extent to which delivery
efficiencies would be achieved is uncertain.
We found no statutory or regulatory requirements that direct farmers
to visit a county office in order to meet paperwork requirements.
Furthermore, while it may be desirable for farmers to visit the
county office to identify cropland and ownership when initially
enrolling in USDA farm programs, once enrolled, farmers could obtain
the forms they need and comply with program requirements by using
alternative methods, such as the mail, telephone, or computers.
During the course of our review, we talked to farmers who indicated
that they had, or could have, used these alternatives to conduct
business with FSA. Several farmers we talked with already conducted
some of their business with FSA by mail, such as enrolling acreage
coming out of CRP in a new production contract. However, most of the
farmers stated that because the office was conveniently located, they
preferred to conduct business in person.
Our discussions with county executive directors and farmers also
suggest that more opportunities exist to use these alternative
methods to conduct business. For example, a participant could mail
acreage reports to the county office, call the office to apply for
assistance, and receive benefits (if qualified) electronically
without ever visiting the county office. In the case of the direct
loan program, a farmer could complete the loan application on a
computer and send this information electronically to FSA for
approval. Institutions such as the Farm Credit System--a commercial
lender that provides credit to agricultural producers and
cooperatives--now accept farm loan applications over the Internet.
The use of alternatives such as these could reduce the number of
visits farmers make to local offices but will not completely
eliminate the need for FSA staff to visit farms to inspect and verify
loan collateral and carry out compliance activities.
Federal agencies and private companies with much larger customer
bases than FSA already use some of these alternative delivery methods
to reduce the need for customers to visit an office. For example,
the Internal Revenue Service has used the U.S. mail for years and
now allows individuals to file tax returns electronically or by
telephone and deposits refunds directly into customers' bank
accounts. The Social Security Administration has a free telephone
service to answer questions and handle simple transactions, such as a
change of address. Banks use automatic teller machines to conduct
simple transactions, and individuals can apply for loans using the
telephone. Similarly, FSA could make greater use of the mail and
telecommunications to deliver farm programs to reduce the need for
farmers to visit a county office.
Using alternative delivery methods should allow USDA to operate with
fewer staff and offices, which could reduce personnel expenses by
millions of dollars. For every staff-year reduced, FSA could save
more than $32,000 in personnel expenses. However, the actual
efficiencies attained would depend largely on how USDA restructured
its operations using alternative delivery methods.
ALTERNATIVE DELIVERY METHODS
WOULD NEED TO OVERCOME
LONG-STANDING CULTURAL
RELATIONSHIP
---------------------------------------------------------- Letter :4.2
Changing the current delivery system, which is based on county
offices, can only occur with a fundamental shift in the long-standing
practices and relationships that FSA has with participating farmers.
While farmers we talked to said that they could conduct business by
mail, telephone, or computer, they generally prefer the personal
service they receive at the county office. This is in part because
many farmers rely on FSA staff to help them fill out forms for the
program.
FSA county offices have long provided a high level of personal
service to farmers. Historically, this service has included
reminding farmers 15 days prior to the ending date of a sign-up
period that they had not enrolled in the current year's commodity
program. Likewise, farmers have been able to walk into a county
office without an appointment to receive service.
Shifting to the use of alternative delivery methods may reduce FSA's
costs of operation but would have several effects that could be
considered undesirable. First, because farmers would receive less
personal assistance from FSA staff, alternative delivery methods
would place greater responsibility on farmers for knowing which
programs are available and what the procedures are for enrolling in
them. For example, if FSA consolidated its operations into fewer
locations and made greater use of the mail, telephone, and computers,
FSA staff could be reduced, and fewer staff would be available to
meet face-to-face with farmers and complete their paperwork. The
available FSA staff could still be used to carry out required
functions, such as explaining program requirements, processing
applications, and determining program eligibility.
Second, the closure of county offices that could result from
alternative delivery methods would increase USDA's distance from many
farmers. This increase would probably have the biggest impact on
farmers who are members of a minority and those with small farms, who
generally have fewer alternative resources available to assist them
and may have the greatest need for USDA's assistance. Minority
farmers have criticized USDA recently for not providing adequate
service to them. In addition farmers, who as a group are generally
older, may not be able to drive greater distances in order to obtain
whatever personal service is available.
Third, alternative delivery methods could result in less local
control. FSA officials told us that farmers who serve on local
committees are a valuable resource because they know the farmers in
their county and help monitor their compliance with program
requirements.
In addition to these consequences, many farmers may not have access
to the technology needed to conduct business with alternative
methods. According to a recent USDA survey, only 30 percent of
farmers own a computer. In addition, because farmers are normally
located in rural areas, local access to the Internet may not be
available.
CONCLUSIONS
------------------------------------------------------------ Letter :5
The role of the county office and its relationship to farmers has not
changed significantly since USDA began delivering programs at the
local level in the 1930s. Even though improvements have been made in
the transportation and communications infrastructure, and the number
of farmers living in rural America has declined, USDA continues to
provide the same kind of personalized service in the county office
that it did 60 years ago. However, this service comes at a cost of
almost $1 billion annually. While many farmers prefer this kind of
service, some taxpayers may be unwilling to support its high cost
over the long term. Using alternative delivery methods should allow
USDA to operate with fewer staff and offices, which could reduce
personnel expenses by millions of dollars.
However, any changes in USDA's field office structure need to take
into account the culture that has existed for decades at the county
office level. Making significant changes to this structure to reduce
government expenses and improve program efficiency could increase the
administrative requirements for, and thereby the costs to, farmers
who participate in farm programs.
RECOMMENDATION TO THE SECRETARY
OF AGRICULTURE
------------------------------------------------------------ Letter :6
Although farmers prefer the current level of personalized service,
continued pressure to reduce federal expenditures requires USDA to
look for ways to deliver these services more efficiently.
Accordingly, we recommend that the Secretary of Agriculture direct
the Administrator of the Farm Service Agency, in coordination with
the Natural Resources Conservation Service and the Rural Development
mission area (the Farm Service Agency's Service Center partners), to
study the costs and benefits of using alternative delivery methods to
accomplish mission objectives.
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
We provided USDA with a draft of this report for its review and
comment. We met with departmental officials, including the Associate
Administrator of the Farm Service Agency. USDA generally agreed with
the information presented in the report. While the Department agreed
with the intent of our recommendation, it stated that any study of
alternative delivery methods should include the Natural Resources
Conservation Service and the Rural Development mission area. We have
expanded our recommendation in response to this comment. USDA also
commented that while most farmers experienced reductions in their
administrative requirements, some farmers participating in programs
not substantially affected by the 1996 act, such as those for peanuts
and tobacco, experienced no change or slightly increased
administrative requirements. In addition, the Department noted that
while alternative delivery methods may reduce government expenses,
such changes could increase costs and administrative requirements for
the farmers themselves. We provided additional language in the
report to recognize these comments. USDA also provided technical and
clarifying comments that were incorporated as appropriate.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8
To determine the extent to which the changes in the farm programs
resulting from the 1996 act have reduced farmers' administrative
requirements, we discussed the administrative requirements for major
farm programs prior to and after the 1996 act with USDA headquarters,
state, and county officials. We reviewed the documentation that USDA
submitted to the Office of Management and Budget to justify the need
for the paperwork requirements for these programs, as well as the
time associated with completing the forms. In considering changes in
administrative requirements directed by the 1996 act, our analysis
does not consider changes in requirements after 2002, when the
current law expires. In looking at alternative delivery methods, we
did not analyze the implications of changes in delivery methods on
USDA's process for gathering the farm data used by other USDA
agencies.
We met with USDA headquarters, state, and county officials, as well
as farmers, to obtain their views on whether USDA could use
alternative methods to deliver farm support programs. We visited
county offices located in California, Connecticut, Georgia, Illinois,
Massachusetts, Missouri, Nebraska, North Carolina, and Washington
State. In these offices, we met with the county executive director,
the manager for agricultural credit, and farmers from the FSA county
committee. In six of these states, we also met with the FSA state
executive director, and in one state, we met with a member of the
state FSA committee.
We also called farmers across the nation who were enrolled in CRP,
the direct loan program, and the commodity programs for major crops
and who had participated in USDA's customer satisfaction survey to
obtain first-hand information on their personal visits and time spent
in FSA county offices before and after the 1996 act.\6
We conducted our work from September 1997 through March 1998 in
accordance with generally accepted government auditing standards.
--------------------
\6 USDA conducted a nationwide survey of over 4,000 farmers in
various farm programs between Feb. and Apr. 1997.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Chairman, House Committee
on Agriculture; other interested congressional committees; the
Secretary of Agriculture; and the Director, Office of Management and
Budget. We will also make copies available to others on request.
Please call me at (202) 512-5138 if you or your staff have any
questions about this report. Major contributors to this report are
listed in appendix III.
Sincerely yours,
Robert A. Robinson
Director, Food and
Agriculture Issues
RECENT USDA EFFORTS TO IMPROVE
DELIVERY OF FSA PROGRAMS
=========================================================== Appendix I
The U.S. Department of Agriculture's (USDA) recent efforts to
improve its delivery of farm programs include a wide range of
efforts. These efforts are only incremental measures, however, that
cut at the margins of existing operations. They do not address
large-scale concerns affecting the Department's overall design,
mission, and service delivery method.
More specifically, since 1994, USDA has consolidated two of its
former county-based agencies--the Agricultural Stabilization and
Conservation Service, and the Farmers Home Administration--into the
Farm Service Agency (FSA). USDA has also collocated these FSA
offices with the Natural Resources Conservation Service (NRCS), and
the Rural Development mission area into one-stop shopping centers for
farmers. With this arrangement, farmers can get farm program
information and complete necessary paperwork requirements at one
location.
In addition, FSA is reviewing its paperwork requirements for farm
programs. The Paperwork Reduction Act of 1995 requires federal
agencies, including USDA, to reduce their paperwork burden by 25
percent by 1999. USDA has established teams to review its paperwork
requirements to determine how they can be streamlined.
Furthermore, USDA is undertaking an effort to streamline its
administrative activities at the state and national level. In
December 1997, the Secretary of Agriculture approved an
administrative convergence plan that will consolidate a number of
administrative activities at headquarters and in state offices. The
plan establishes a Support Services Bureau in headquarters and one
state administrative support unit in each state. This organization
will provide administrative services, including financial management,
human resources, civil rights, information technology, and management
services (including procurement), to field-based agencies.
USDA also has contracted for an independent study to examine FSA,
NRCS, and the Rural Development mission area for opportunities to
improve overall customer service and the efficiency of the delivery
system. Results of this study will be incorporated into the future
iterations of FSA's strategic plan.
ADMINISTRATIVE PROCESSES AND
PAPERWORK REQUIREMENTS FOR
SELECTED FSA FARM PROGRAMS
========================================================== Appendix II
The administrative processes and paperwork requirements for many of
FSA's major farm programs--Conservation Reserve, Nonrecourse
Marketing Assistance Loans, Peanuts, Tobacco, Direct Loans, and
Noninsured Crop Disaster Assistance--are described below.
THE CONSERVATION RESERVE
PROGRAM
------------------------------------------------------ Appendix II:0.1
The Conservation Reserve Program (CRP) makes annual rental payments
to farmers to retire environmentally sensitive land from production,
usually for 10 years. The 1996 act made several changes to CRP to
extend, simplify, and refocus the program. We found that farmers
spent three visits totaling a minimum of 1 hour to complete the
paperwork requirements for CRP. Because there were two CRP signups
in 1997, some farmers made more than three visits to an FSA office.
On a farmer's first visit to enroll land in CRP, the farmer reviews
an FSA map and indicates the tracts of land he or she is interested
in enrolling in the program. FSA staff enter the tract
identification information on a CRP worksheet, and the farmer
certifies that this information is correct. If the land is
determined to be eligible for CRP, the farmer returns to the FSA
office to indicate the rental rate he or she will bid and signs a CRP
contract, agreeing to the terms and conditions set forth in the
appendix to the contract. FSA staff enter the bid amount on a CRP
contract, which the farmer signs. FSA selects bids from across the
country. The farmers whose bids are accepted return to the county
office to review and sign a conservation plan prepared by NRCS.
NONRECOURSE MARKETING
ASSISTANCE LOANS
------------------------------------------------------ Appendix II:0.2
Marketing assistance loans provide farmers with interim financing,
using the crop as collateral. These loans allow farmers to hold
their crops for sale at a later date, when prices may be higher than
they would have been at harvest. Farmers make two to three visits
and spend a minimum of 1 hour in total to obtain and repay a
marketing assistance loan.
On the first visit to obtain a nonrecourse marketing assistance loan,
the farmer files an acreage report, unless one has already been
filed. Depending on the crop, the farmer brings warehouse receipts
or bin measurements to the FSA office and signs a Commodity Credit
Corporation Note and Security Agreement, which states that the farmer
agrees to pay back the loan or forfeit the collateral, which is the
crop. To satisfy the loan, the farmer can either sell the commodity
and bring the check for FSA's signature to pay off the loan or
forfeit the loan and arrange for delivery of the commodity to the
government.
THE PEANUT PROGRAM
------------------------------------------------------ Appendix II:0.3
The peanut program establishes annual poundage quotas to limit
production as a way of supporting crop prices. The program requires
FSA to keep a record of the acreage planted and the sales of this
commodity to ensure that farmers stay within their quotas. Farmers
generally make about five to six office visits and spend a minimum of
1 hour in total to complete paperwork and obtain marketing cards. In
1997, 25,000 farmers participated in the peanut program.
On the first visit to participate in the peanut program, the farmer
may request FSA's measurement services to accurately determine his or
her peanut acreage. After planting, the farmer visits the FSA office
to certify the acreage actually planted. The farmer then completes a
Report of Seed Peanuts, which FSA uses to determine if the amount
planted is reasonable for the acreage reported. On the basis of the
acreage planted, FSA allocates a temporary seed quota to cover the
producer's purchase of seed. After harvest, the farmer may visit the
FSA office to obtain a Peanut Marketing Card. After selling the
peanuts, the farmer must bring his or her Peanut Marketing Card to
the FSA office and review a Poundage Sales summary, which reflects
the sales of the farmer's peanuts in the marketplace. In addition,
if the farmer has excess quota or needs additional quota, he or she
will need to make one or more additional visits to the FSA office to
complete a Temporary Lease and Transfer of Peanut Quota, which
requires witnessed signatures.
THE TOBACCO PROGRAM
------------------------------------------------------ Appendix II:0.4
The tobacco program establishes annual marketing quotas to limit
production as a way of supporting crop prices. The program requires
FSA to keep a record of the acreage planted (except Burley tobacco)
and the sale of this commodity to ensure that farmers stay within
their quotas. Farmers generally make about five to six office visits
and spend a minimum of 1 hour in total to complete paperwork and
obtain marketing cards. In 1997, 330,000 farmers participated in the
tobacco program.
Farmers may visit the FSA county office to request measurement
services to accurately determine their tobacco acreage. After
planting, the farmer visits the FSA office to certify the acreage
actually planted in tobacco, except for Burley tobacco. After
harvest, the farmer visits the FSA office to obtain a Tobacco
Marketing Card and sign the Certification of Eligibility to Receive
Price Support on Tobacco. If the farmer has excess quota or needs
additional quota, he or she will need to make one or more additional
visits to the FSA office to complete a Temporary Lease and Transfer
of Tobacco Quota, which requires witnessed signatures. At the end of
the selling season, the farmer must return, either in person or by
mail, the marketing cards and complete a Report of Unmarketed
Tobacco.
THE DIRECT LOAN PROGRAM
------------------------------------------------------ Appendix II:0.5
The direct loan program provides operating and ownership loans to
farmers who cannot obtain credit elsewhere. There are statutory
limitations on the size of these loans. Farmers visit their county
office three to four times and spend a minimum of 3 hours in total
completing paperwork to obtain a loan.
To obtain a direct loan, a farmer generally visits the FSA county
office to obtain a Farm Programs Application Package, which includes
all of the forms a farmer must complete. A farmer may complete some
of these forms during this visit or may gather documentation and
complete some of the paperwork before returning to the county office.
Credit managers indicated that they usually scheduled a visit to
review the application. A complete application package generally
includes a Request for Direct Loan Assistance; a Farm and Home Plan
showing projected production, income, and expenses; financial records
for the past 5 years; and various other documents that describe the
applicant's operations. A farmer makes additional visits to provide
more information and, if the loan is approved, to sign the loan
agreement.
After the loan is approved, a farmer may be required to visit the
county office to get signatures on the checks that the farmer
receives for selling commodities or to pay back the loan.
THE NONINSURED CROP DISASTER
ASSISTANCE PROGRAM
------------------------------------------------------ Appendix II:0.6
The Noninsured Crop Disaster Assistance Program (NAP) protects the
growers of many crops for which federal crop insurance is not
available. FSA makes NAP payments to eligible farmers when an area's
expected yield is less than 65 percent of the normal yield. Farmers
who participate in NAP make at least one visit for a minimum of 15
minutes to the county office each year to file an acreage report. If
they suffer a disaster, they will make two additional visits and
spend a minimum of 30 minutes for these two visits to apply for
assistance.
To be eligible for NAP, a farmer must file an acreage report annually
with the local FSA office. If a farmer suffers a disaster, that
farmer can visit the FSA office to complete a Request for
Acreage/Disaster Credit. After the area has been declared a
disaster, the farmer signs the NAP Certification of Income
Eligibility; provides production records, if needed; and signs a Crop
Insurance Acreage Report and a Production Yield Report.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
Ronald E. Maxon, Jr., Assistant Director
Fred Light
Renee McGhee-Lenart
Paul Pansini
Carol Herrnstadt Shulman
Janice Turner
*** End of document. ***