WASHINGTON, August 2, 2012 -USDA’s Farm Service Agency (FSA) failed to ensure that the soil rental rates it used for the 2010 Conservation Reserve Program signup were reasonable, the Office of Inspector General said in an audit report released Tuesday. It questions about $140 million paid to producers for a signup that had about 46,000 contracts involving about 4.3 million acres, annual payments totaling about $200 million and potentially $2 billion over the 10-year life of the contracts.

FSA failed to use the most recent Natural Resources Conservation Service soil productivity factors and did not adhere to FSA policies and regulations that were established to ensure the reasonableness of county average rental rates, OIG said.

After looking at 3,114 county average rental rates and 332,393 soil rental rates FSA established for the 39th CRP signup, OIG said that it found “significant problems with how the agency determined both the productivity of soil and the county average rental rate ‑ the factors used to determine soil rental rates.”

Instead of using the up-to-date NRCS calculations of the ability of soils, landscapes, and climates to foster crop productivity on non-irrigated soil, “FSA instead relied on productivity factors that were established more than 15 years ago,” OIG said. It faulted FSA for relying on older, existing factors to arrive at rental rates that did not properly reflect new soil productivity data.

“Although the agency had access to NASS survey results, it also allowed states and counties to propose alternate rates and did not always follow its policies and procedures for reviewing and approving those alternate rates,” the audit continued. “FSA national officials did not follow prescribed agency procedures for evidentiary support and accepted county average rental rates based on insufficient or inadequate evidence,” OIG said, “because they were facing time constraints for initiating the signup and a former senior agency official believed that the NASS rates might not accurately reflect the actual market value in some counties.”

OIG recalculated payments in 331 counties – nearly one of every ten counties in which CRP operates – and found annual overpayments amounted to $12.7 million, or about $127 million over the life of the contracts. It urged FAS to consult with the Office of the General Counsel to ascertain whether contracts can be adjusted, if permissible, to recover about $12.7 million in unsupported payments. The report said that FSA generally concurred with the findings but, in some instances, “did not provide sufficient detail regarding its planned corrective actions.”



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