Crop Insurance Fraud, Abuse Continue, Says GAO

WASHINGTON, D.C. — The U.S. Government Accountability Office recently published testimony to the House Agriculture Committee which contended that substantial fraud and abuse continue in the crop insurance program.

Among the findings are that USDA’s data analysis of the largest farming operations lacked information on thousands of farms that failed to report all of the individuals or entities with an ownership interest in these operations, as required.

The Government Accountability Office (GAO) estimates that in 2003 alone this oversight resulted in $74 million in improper payments. GAO also found fault with USDA regulations that allow farmers to insure fields individually, encouraging farmers to “switch” reporting of yield among fields to make false claims or build up a higher yield history on a field to increase its eligibility for higher insurance guarantees.

GAO also noted that from 2002 through 2006 USDA paid the insurance companies underwriting gains of $2.8 billion, representing an annual rate of return of 17.8 percent versus a 6.4 percent rate of return for property and casualty insurance in general.

During the same five-year period, USDA paid the crop insurance companies $4 billion to cover administrative and operating costs.

Source: Sustainable Agriculture Coalition