Peanut Program: Impact on Peanut Producers, Users, and the Government

GAO discussed the Department of Agriculture's (USDA) Peanut Program, focusing on: (1) changes in peanut farming since the program was created; (2) the program's impact on producers, consumers, the government, and international trade; and (3) needed changes in the program. GAO noted that: (1) the number of peanut farms has decreased and the size of the remaining farms has increased since 1930; (2) in 1991, less than 22 percent of all peanut producers held over 80 percent of the available government quota, resulting in program benefits being concentrated among a small percentage of peanut producers; (3) U.S. peanut buyers are spending hundreds of millions of dollars more each year for peanuts, since program costs are transferred directly to producers as income; (4) USDA spends tens of millions of dollars annually to administer the program, make mandatory payments to producers, and cover the extra cost of peanut products it buys under various food assistance programs; (5) the peanut program may affect international trade by influencing the volume of U.S. peanuts available for export; and (6) Congress could make the program more responsive to market forces by reducing the annual quota support price to more closely parallel the cost of producing peanuts and the world market price.