Peanut Program: Changes Are Needed to Make the Program Responsive to Market Forces - GAO Report
|Date:||March 10, 1993|
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Gross national product
USDA Peanut Program
The U.S. Department of Agriculture's (USDA) peanut program has been a steady source of income for farmers and has generally stabilized the U.S. peanut supply. Yet peanut farming, like much of U.S. agriculture, has undergone profound changes since the 1930s. Small farms have gradually been bought out and consolidated into large-scale operations. By 1991, about one-fourth of all producers controlled more than 80 percent of the peanut quota. Today, the small number of producers who hold most of the quota are reaping huge profits from the program. Because the yearly quota support price since 1982 has been well above production costs, quota peanut producers have received, on average, a 51-percent minimum net return after costs. The peanut program also benefits individuals who own farms with assigned quota but choose to sell or rent their quota to others. Economic studies and GAO's analysis show that the peanut program adds from $314 million to $513 million each year to consumers' costs of buying peanuts. At the same time, USDA spends tens of millions of dollars each year to run the peanut program, make mandatory payments to producers, and cover the high cost of peanut products it buys under various food assistance programs. Finally, the program, by boosting the volume of U.S. peanuts available for export, may be lowering prices paid for peanuts abroad.