The Agriculture Department failed to adequately guard against fraudulent claims by producers for payments under the $31 billion Coronavirus Food Assistance Program the Trump administration launched in 2020, the Government Accountability Office says.
GAO, the watchdog arm of Congress, looked into a sample of claims that appeared to be at high risk for improper payments. Some 48 of the 90 claims that were reviewed did not have adequate support, according to a GAO report released Thursday.
The 48 cases, which involved potentially improper payments totaling $87.3 million, were referred to USDA’s Inspector General for further investigation.
Thirty-three of those producers provided sales receipts and documentation of a lesser amount than the farmers claimed. Nine producers failed to prove they owned the commodities for which they claimed payments.
In some cases, there was evidence of fraud, the report says.
“While programs such as CFAP may be developed and implemented quickly, FSA (Farm Service Agency) could better ensure the integrity of billions of dollars in CFAP payments by conducting additional reviews using a more rigorous process that addresses the limitations that we identified,” the report says.
In one case that USDA reviewed, a general partnership that produces field and specialty crops claimed $2 million in payments despite reporting commodity sales that occurred outside the dates eligible for CFAP. The producer also indicated the sales occurred between affiliated entities, “calling into question whether the producer has suffered a price loss as a result of the pandemic,” GAO says.
Twenty-four of the potential improper payments involved livestock producers, nine involved dairy and 15 were related to other commodities.
The Farm Service Agency conducted spot checks of CFAP payments, but GAO says those reviews had limited value, in part because the agency selected cases “without fully considering risk factors, such as large claims for livestock.”
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During the spot checks, FSA county offices also accepted producer-generated spreadsheets and other documents that are hard to verify. FSA state offices didn’t monitor the quality of the reviews the county offices did, the report says.
In a letter attached to the report, FSA Deputy Administrator Scott Marlow outlined steps the agency was taking to better base spot checks on the risk of improper payments.
He also noted that congressional leaders and farm groups pushed the agency to address concerns that there were gaps among producers who received CFAP payments.
Under the CFAP program, USDA paid producers $13.8 billion for field crops, $9.8 billion for livestock; $3.0 billion for dairy; and $4.4 billion for other commodities, including fruits, vegetables and tree nuts.
According to data included in the report, livestock producers received some of the largest payments made through the program. A joint venture identified as being located in the West received nearly $6.8 million, while a general partnership in the Midwest received more than $6.5 million.
The third largest recipient was a general partnership in the West that received nearly $4 million, divided between dairy, field crops, livestock and other commodities.
Iowa producers received the largest share of CFAP payments, nearly $2.7 billion. But California had the highest average payment per producer at $97,619, according to the report. Idaho producers weren’t far behind with an average payment of $64,001. Connecticut ranked third with an average payment of $62,699.
Farmers who are socially disadvantaged collected $869 million, or an average of $20,396 per producer, GAO found. Beginning farmers got $349 million, or an average of $19,859.
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