An inspection of the department's crop insurance, disaster assistance and conservation programs found that $36.6 million had been issued to deceased recipients, the nonpartisan Government Accountability Office said Monday.
The report said the findings "may call into question whether these farm safety net programs are benefiting the agricultural sector as intended."
While the abuse represents a fraction of the $20 billion in annual federal subsidies for farm incomes, the report comes at a sensitive time when Congress is fighting over the cost of a yet-to-be-passed $1-trillion farm bill.
Federal auditors said the biggest offender was the USDA's Risk Management Agency, which is responsible for issuing crop insurance. Between 2008 and 2012, an estimated 3,434 policyholders received $22 million in subsidies one or two years after their death.
During the same time the Natural Resources Conservation Service improperly issued $10.6 million in payments to 1,103 individuals one year or more after their death.
Meanwhile, the Farm Service Agency, which provides disaster assistance, was found to have handed out $3.3 million in subsidies to 1,799 deceased farmers since 2007.
The GAO report said neither the Risk Management Agency or Natural Resources Conservation Service had a system in place to cross check subsidy recipients with the Social Security Administration, which monitors the names of deceased Americans.
In a letter to the GAO, the USDA said it "generally agrees with the report's findings" and had recently received approval to use the Social Security Administration's death records.