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U.S. Department of Agriculture: Marketing Assistance Loan Program Should Better Reflect Market Conditions

RCED-00-9 Published: Nov 23, 1999. Publicly Released: Nov 23, 1999.
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Highlights

Pursuant to a congressional request, GAO reviewed the effects of the marketing assistance loan program on cash payments to farm producers, focusing on: (1) which producers received cash payments through the program, by type of crop and state; (2) why some producers did not participate in the program; and (3) what types of concerns have been raised about the program's effect on cash payments and potential forfeitures.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To respond to the problems producers have encountered in using the marketing assistance loan program and to address the increased potential for loan forfeitures, the Secretary of Agriculture should develop and implement administrative changes--or, if lacking authority to do this, seek legislative changes from Congress--to revise the program to provide financing and price guarantees that better reflect market conditions. These changes should address the following: (1) the process to establish and update the national and local loan rates for each crop; (2) the process to estimate local market prices; (3) the cost to the government of these changes; and (4) the financial impact these changes would have on producers in different regions of the country.
Closed – Implemented
In the Farm Security and Rural Investment Act of 2002, the Congress revised the process for setting rates to establish and update the national and local loan rates for each crop to provide financing and price guarantees that better reflect market conditions.

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Topics

Agricultural productsAgricultural programsEligibility criteriaFarm income stabilization programsLoan defaultsLoan repaymentsPrices and pricingGrain and grain productsCropsAgricultural marketing assistance