GAO: Crop Insurance Program Still Needs Improvement

The Government Accountability Office says Congress should grant USDA's Risk Management Agency new authority in the next farm bill to make federal crop insurance more efficient.

Published on: Jun 8, 2007

The Government Accountability Office reviewed the federal crop insurance program, and it recommends that Congress grant USDA's Risk Management Agency the authority to periodically renegotiate financial terms with companies to provide cost allowances. GAO says the program's cost of $3.5 billion in 2006 included millions lost from fraud, waste, and abuse.

According to the GAO report, USDA's Risk Management Agency, which administers the federal crop insurance program along with private insurers, can make better use of its tools to reduce inefficiencies the crop insurance program.

RMA has followed some of the recommendations of an earlier report, GAO says, including helping UDSA' Farm Service Agency to provide timelier inspections during the growing season, and sharing information with FSA to protect against program abuse, potentially recovering up to $74 million in improper payments from 2003.

However, GAO says some aspects of RMA's regulations get in the way of its ability to stop program abuse. For instance, farmers are often able to "switch" reporting of yield among fields to make false claims because current regulations let farmers insure fields individually rather than together. RMA disagreed with GAO's recommendation to address the problems with insuring individual fields.