Lax oversight exposes farm subsidies to abuse

Poor enforcement of federal farm subsidy rules allows potentially ineligible people to get a share of billions of dollars sent each year to cotton, grain and soybean growers, a congressional report said on Wednesday.
The General Accounting Office (GAO), the investigative arm of Congress, said neither it nor the Agriculture Department could quantify the scope of the problem because of lax oversight.
"Just about anybody can get a piece of the pie," said Senate Finance Committee chairman Charles Grassley, who requested the report.
The Iowa Republican, himself a farmer, advocates stricter rules to steer payments to small and medium-size farms.
Under the 2002 farm law, producers are limited to a maximum of $360,000 to themselves and two affiliated operations.
The limit can be evaded, however, by splitting farms into smaller units or adding more operators to a farm.
The report said the USDA ought to fix a glaring flaw by setting a standard for judging if someone provides management for a farm.
Under a 1987 law, subsidies go to people who contribute a significant amount of labour or active management to a farm as well as land, capital or equipment.
"By not specifying such a measurable standard, USDA allows individuals who may have limited involvement with the farming operation to qualify for payments," GAO said. It cited several problematic large-scale operations with out-of-state owners or that used interlocking partnerships to enhance payments.
"Surely, we can come up with some quantifiable number," said GAO's Larry Dyckman, who oversaw the report.
A congressionally created commission reached a similar conclusion nine months.
"Some individuals may become eligible," the commission said, even if they "were not contributing in a meaningful way" to a farm's success.
The USDA "should define active personal labour and management through rule-making to ensure the individual's contribution is meaningful and measurable," it said.
During a Finance Committee hearing, Montana Democrat Max Baucus said any change in subsidy rules should wait until Congress overhauls the farm law in 2007.
Arkansas Democrat Blanche Lincoln said further payment limits were inappropriate considering the thin profit margins and high costs of farming.