Watchdog Agency Says Farmers Abuse Subsidies

Some farmers are still gouging the government by collecting crop subsidies in excess of limits set by Congress, the Agriculture Department’s inspection agency said Tuesday.

In one case, the department’s Office of Inspector General said, an individual collected about $2.8 million in subsidies, 56 times the $50,000 limit set by law.

The semiannual report to Congress on investigative and audit activities cited other abuses, including crop insurance overpayments, loopholes in debt restructuring by the Farmers Home Administration and flaws in the export subsidy program.

By law, the crop subsidies, called “deficiency payments,” are not supposed to exceed $50,000 per person a year. These are direct payments to help make up the difference between depressed market prices and higher “target” prices set by the government.

For example, last month the price of corn at the farm was $2.20 a bushel. The target price for 1989 corn is $2.84.

A “person” can be an individual, a joint stock company, a corporation, an association, a trust or some other legal entity.

The report said “abuses in the program continued” despite efforts by Congress in the 1987 Omnibus Reconciliation Act to close loopholes. Overall, in 1987, an estimated $66 million was paid to farmers who dodged the $50,000 limitation.

Investigators have found that big operators often reorganize to qualify additional “persons” for the purpose of collecting larger payments.

In one case, an individual used relatives, employees and business associates as “persons” under the program, the report said. Those totaled at least 21 in 1986 and 29 in 1987. Payments totaled about $2.8 million for the two years, plus more in 1988 and 1989, which are under review by the department’s Agricultural Stabilization and Conservation Service.

“We have recommended that ASCS improve its review procedures and withhold 1989 payments until final eligibility is determined,” the report said.

The chairman of the Senate Agriculture Committee, Sen. Patrick Leahy, (D-Vt.), said: “Outrageous payments such as these undermine public support for farmers. A few bad apples are giving all farmers a bad name.”