COVID-19 — Coronavirus Food Assistance Program — Direct Support, Inspection Report 03801-0001-31 (USDA Office of Inspector General, September 2023)

Summary

USDA Office of Inspector General Inspection Report 03801-0001-31, COVID-19 - Coronavirus Food Assistance Program - Direct Support, dated September 25, 2023 and addressed to the Administrator of the Farm Service Agency. The report states that its objective was to determine whether FSA provided timely and accurate CFAP direct payments to eligible recipients, and that FSA issued more than $11.8 billion in CFAP payments. It states that FSA made timely payments to eligible recipients but made incorrect CFAP payments to 31 of the 99 sampled producers, resulting in more than $1.28 million in questioned payments. It recommends that FSA review and recover questioned CFAP payments, states that FSA concurred, and carries a digital signature block for the Assistant Inspector General for Audit.

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“COVID-19 — Coronavirus Food Assistance Program — Direct Support, Inspection Report 03801-0001-31 (USDA Office of Inspector General, September 2023).” Original at usdaoig.oversight.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/usda-oig-cfap-direct-support-covid-19-coronavirus-food-assistance-prog-477bd97b5a/, SHA-256 5fd1b25073e125d3c0b02cc3c239c6445f7582e9d92d6264dbc9b4427770a60c.

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OFFICE OF INSPECTOR GENERAL
U. S. DEPARTMENT OF AGRICULTURE

COVID-19 - Coronavirus Food Assistance Program - Direct Support

Inspection Report 03801-0001-31
September 2023
COVID-19 - Coronavirus Food Assistance
Program - Direct Support

Inspection Report 03801-0001-31
We determined whether FSA provided timely and accurate CFAP direct
payments to eligible recipients.

OBJECTIVE WHAT OIG FOUND
Our objective was to determine The Coronavirus Food Assistance Program (CFAP) is
whether FSA provided timely a Farm Service Agency (FSA) program that provided
and accurate CFAP direct payments to producers of agricultural commodities
payments to eligible recipients. so they could absorb the sales losses and increased
marketing costs associated with the coronavirus disease
2019 (COVID-19) pandemic. FSA issued more than $11.8
REVIEWED billion in CFAP payments.

We found that FSA made timely CFAP payments to
We interviewed FSA officials and eligible recipients. However, FSA made incorrect CFAP
reviewed: (1) applicable laws, payments to 31 of the 99 sampled producers. In these
regulations, agency instructions instances, producers provided inaccurate certifications
and notices, and other relevant
on their applications or did not provide support for their
documentation; (2) producer
production data; and (3) producer
certifications as required. As a result, FSA issued more
eligibility information to than $1.28 million in questioned CFAP payments for
evaluate FSA’s actions on CFAP commodities.
applications from May 26, 2020,
to September 11, 2020. FSA concurred with our finding and recommendation. We
accepted management decision for the recommendation.

RECOMMENDS
We recommend FSA review
and recover questioned CFAP
payments.
OFFICE OF INSPECTOR GENERAL
United States Department of Agriculture

DATE: September 25, 2023

INSPECTION
NUMBER: 03801-0001-31

TO: Zach Ducheneaux
Administrator
Farm Service Agency

ATTN: Gary Weishaar
Branch Chief
External Audits and Investigations Division

FROM: Janet Sorensen JANET Digitally signed by JANET
SORENSEN
Assistant Inspector General for Audit SORENSEN Date: 2023.09.25
13:35:09 -05'00'

SUBJECT: COVID-19 - Coronavirus Food Assistance Program - Direct Support

This report presents the results of the subject review. Your written response to the official draft is
included in its entirety at the end of the report. We have incorporated excerpts from your
response, and the Office of Inspector General’s (OIG) position, into the relevant sections of the
report. Based on your written response, we are accepting management decision for the inspection
recommendation in the report, and no further response to this office is necessary. Please follow
your internal agency procedures in forwarding final action correspondence to the Office of the
Chief Financial Officer (OCFO).

In accordance with Departmental Regulation 1720-1, final action needs to be taken within 1 year
of each management decision to prevent being listed in the Department’s annual Agency
Financial Report. For agencies other than OCFO, please follow your internal agency procedures
in forwarding final action correspondence to OCFO.

We appreciate the courtesies and cooperation extended to us by members of your staff during our
inspection fieldwork and subsequent discussions. This report contains publicly available
information and will be posted in its entirety to our website (https://usdaoig.oversight.gov) in the
near future.
Table of Contents

Background and Objectives ................................................................................... 1
Objective Part 1: Did FSA Provide Timely CFAP Payments? ......................... 4
Objective Part 2: Did FSA Provide CFAP Payments to Eligible Recipients? . 4
Objective Part 3: Did FSA Provide Accurate CFAP Payments? ...................... 4
Recommendation 1 ........................................................................................5
Scope and Methodology .......................................................................................... 6
Abbreviations .......................................................................................................... 7
Exhibit A: Summary of Monetary Results .......................................................... 8
Exhibit B: Sampling Methodology ....................................................................... 9
Exhibit C: States and Producers in Our Sample .............................................. 10
Exhibit D: Sampled Producers Paid by Commodity ........................................ 11
Exhibit E: Summary of Commodities for Which Sampled Payments Were
Made ....................................................................................................................... 12
Agency’s Response ................................................................................................ 13
Background and Objectives

Background

The United States Department of Agriculture (USDA) Farm Service Agency’s (FSA) mission is
to equitably serve all producers and agricultural partners by delivering effective, efficient
agricultural programs to all Americans. The agency administers farm loan, commodity,
conservation, and disaster assistance programs through 50 State offices, an area office in Puerto
Rico, and more than 2,100 local and regional service centers to serve producers in the United
States and its territories.

On April 17, 2020, USDA announced the Coronavirus Food Assistance Program (CFAP) in
response to the coronavirus disease 2019 (COVID-19) pandemic. 1 USDA created CFAP to
provide financial assistance to producers of agricultural commodities so they could absorb the
sales losses and increased marketing costs associated with the pandemic. USDA authorized FSA
to provide up to $16 billion in direct payments to eligible producers through CFAP. 2

The CFAP Final Rule 3 established eligibility requirements for CFAP participants. 4 Eligible
commodities for CFAP included dairy, livestock (including cattle, pigs, and sheep), non-
specialty crops (such as corn, soybeans, and wheat), certain specialty crops (such as strawberries
and squash), and other commodities (including aquaculture, cut flowers, and nursery crops).

1
This inspection covers CFAP applications from May 26, 2020, to September 11, 2020. FSA subsequently provided
additional CFAP offerings that are not covered by this review.
2
USDA used CFAP funding from two sources: $9.5 billion provided under the Coronavirus Aid, Relief, and
Economic Stability Act (15 U.S.C. 116 et seq.), and $6.5 billion in Commodity Credit Corporation Charter Act (15
U.S.C. 714 et seq.) funds.
3
Coronavirus Food Assistance Program, 85 Fed. Reg. 30825 (May 21, 2020).
4
To receive CFAP payments, producers were required to: (1) produce eligible agricultural commodities that
suffered a 5-percent or greater price decline as a result of the coronavirus pandemic, or face substantial marketing
costs for inventories; (2) have an average adjusted gross income of less than $900,000 for tax years 2016, 2017, and
2018, or an adjusted gross income of which at least 75 percent derived from farming, ranching, or forestry; and (3)
be in compliance with conservation provisions. Coronavirus Food Assistance Program, 85 Fed. Reg. 30825 (May
21, 2020).

INSPECTION REPORT 03801-0001-31 1
Figure 1: CFAP Payments Categorized by Commodity Category. Figure by the Office of Inspector General
(OIG), Based on May 3, 2023, USDA Data.

CFAP Payment Amounts
$937.1 million $119.2 million
$1,840.1 million
Dairy
$2,666.7 million
Livestock
Non-Specialty
Specialty
Other
$6,264.9 million

As of May 3, 2023, FSA issued CFAP payments to more than 646,000 producers across all 50
States and 5 territories. 5
Figure 2: CFAP Payments by State. Figure by OIG, Based on May 3, 2023, USDA Data.

5
These 5 territories are American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the United States
Virgin Islands. Net CFAP payments to these territories totaled more than $72.7 million.

2 INSPECTION REPORT 03801-0001-31
Producers were able to apply for CFAP with multiple commodities, provided they had a valid
share 6 in each commodity. Therefore, many producers received multiple CFAP payments. We
present a summary of the number of payments made to producers in our file review sample in
Exhibit C and the commodities for which these producers received payments in Exhibit D. A
person or legal entity could receive up to $250,000 in total payments across all eligible CFAP
commodities. However, corporate entities 7 could receive up to $750,000 if at least three of their
individual owners or shareholders met certain requirements. 8

Objectives

Our objective was to determine whether FSA provided timely and accurate CFAP direct
payments to eligible recipients.

6
An eligible producer is a person or legal entity who shares in the risk of producing a crop or livestock and who is
entitled to a share in the crop or livestock available for marketing or would have shared had the crop or livestock
been produced and marketed. USDA FSA, Coronavirus Food Assistance Program, §15A, “Eligible Producer,” 1-
CFAP (May 2020).
7
For purposes of CFAP, corporate entities include corporations, limited liability companies, and limited
partnerships. Coronavirus Food Assistance Program, 85 Fed. Reg. 30825 (May 21, 2020).
8
Coronavirus Food Assistance Program, 85 Fed. Reg. 30825 (May 21, 2020).

INSPECTION REPORT 03801-0001-31 3
Objective Part 1: Did FSA Provide Timely CFAP Payments?
We found that FSA paid our sampled producers timely in accordance with prompt payment
guidance. 9 We identified that FSA did not pay 1 of the 99 producers we reviewed within 30 days
after producers provided all required documents; 10 however, we are not taking exception to this
single late payment because it was attributed to COVID-19 pandemic restrictions in the office.

Objective Part 2: Did FSA Provide CFAP Payments to Eligible
Recipients?
We found that the 99 producers in our CFAP sample met adjusted gross income limitations and
compliance requirements for highly erodible land and wetland conservation.

Objective Part 3: Did FSA Provide Accurate CFAP Payments?
We found that FSA did not make correct CFAP payments to 31 of the 99 producers that we
reviewed. These incorrect payments occurred because producers provided inaccurate
certifications on their applications or did not provide support for their certifications as required. 11
As a result, we questioned FSA CFAP payments totaling more than $1.28 million to these
31 producers.

FSA Handbook 1-CFAP states that producers were responsible for accurately reporting all
required information, as applicable, on their CFAP application. In addition, producers were
required to retain documentation in support of their application and allow USDA representatives
to inspect, examine, and make copies of books, records, or other items for the purpose of
confirming the accuracy of the information provided by the producer. 12

In our review of the 99 sampled producers, we requested and reviewed documentation
supporting the producers’ CFAP applications. Depending on the commodity, producers certified
their production, sales, inventory on hand, and inventory that was unable to be sold due to
market disruptions. We identified that 31 of the samples did not provide adequate documentation
to substantiate the amount certified on their application. Accordingly, we questioned a portion, or
in some cases the entire payments FSA made, to these 31 producers, depending on the
documentation provided.

9
USDA FSA, Handling Prompt Payment Interest Penalties, 61-FI (Revision 2) (June 2017).
10
Required documents include Form AD-3114, Coronavirus Food Assistance Program (CFAP) Application; Form
CCC-941, Average Adjusted Gross Income (AGI) Certification and Consent to Disclosure of Tax Information; Form
AD-1026, Highly Erodible Land Conservation (HELC) and Wetland Conservation (WC) Certification; and Form
CCC-902, Farm Operating Plan for Payment Eligibility (if applicable).
11
CFAP producers were paid based on self-certified production, sales, inventories, and/or acreage, as applicable,
and were to submit documentation to substantiate amounts only if requested. USDA FSA, Coronavirus Food
Assistance Program, §51B, “Reviewing and Acting on AD-3114’s,” 1-CFAP (May 2020).
12
USDA FSA, Coronavirus Food Assistance Program, §3G, “Producer Responsibilities,” 1-CFAP (May 2020).

4 INSPECTION REPORT 03801-0001-31
Among the sampled producers, for example, we found a producer that claimed sales of more
than 200 head of cattle sold during the subject period, but supported less than 50 percent of those
claimed, resulting in an overpayment of more than $23,000. Another producer overstated their
strawberry sales by more than 19 percent while also overstating their strawberry and squash
production not sold by more than 95 percent, for a total overpayment of more than $28,000.
Seven other producers received a total of more than $1.1 million, yet provided no documentation
to support the amounts claimed on their applications.

We discussed the payments and related supporting documentation for all 31 producers with FSA
and reached agreement on the identified issues. We referred all of these questioned producers to
FSA for review and establishing bills for collection.

Recommendation 1

Review and recover the questioned CFAP payments of $1,286,786 resulting from inaccurate
and/or unsupported producer certifications.

Agency Response

FSA concurs with the recommendation. On April 13, 2023, FSA held a conference call
with State Office CFAP Specialists with responsibility for the thirty-one (31) producers
identified as inaccurate. The specialists were instructed to work with the local county
office staff to conduct a full review of the CFAP applications and establish collections for
producers with unsupported claims. Reviews have been completed for the CFAP
applications in question. Based on these reviews, twenty-eight (28) out of thirty-one (31)
producers did not have adequate documentation to substantiate the amounts certified on
their applications. State Specialists were instructed to work with local county office staff
to establish collections for the twenty-eight (28) unsupported claims. The account
receivables were established for the total amount of approximately $985,228.80. The
review of the supporting documentation for the additional three (3) producers in the
amount of $301,557.24 is accurate. These producers were not overpaid. The three (3)
cases (Louisiana, South Carolina, and Tennessee), that the local county committee
reviewed demonstrating all supporting evidence provided by the producer determined no
overpayment of CFAP funds.

OIG Position

We accept management decision for this recommendation.

INSPECTION REPORT 03801-0001-31 5
Scope and Methodology
We conducted this inspection to determine if FSA provided timely and accurate CFAP payments
to eligible participants. The inspection covered CFAP applications from May 26, 2020, to
September 11, 2020. We performed this inspection remotely, and we conducted fieldwork from
October 2020 to July 2023.

To evaluate FSA’s administration of CFAP, we relied on the work of specialists from OIG’s
Office of Analytics and Innovation to develop the sampling methodology and select a statistical
sample of CFAP producers from the universe of more than 637,000 producers who had received
a CFAP payment. See Exhibit B for our sampling methodology. As noted in Exhibit B, the
sample selected did not meet the parameters of the sample design; therefore, we did not project
the results of the sample to the population. We concluded that our sample was sufficient to meet
the inspection objectives.

As of October 26, 2020, FSA had issued more than $10.3 billion in CFAP payments of the
$11.8 billion total paid as of May 3, 2023. We reviewed 99 randomly selected CFAP producers
from 35 States, with total payments of more than $15.6 million. See Exhibit C for a map of
sampled producers by State. We obtained documentation to ensure that the specialists were
qualified professionally and competent in the work we relied on, and that they met independence
standards.

To accomplish our objective, we:

• Reviewed laws, regulations, agency instructions and notices, and other relevant
documentation, as well as gained an understanding of the program through discussions
with FSA officials;
• Obtained and reviewed production data, as applicable;
• Reviewed producer file information provided by FSA county officials and/or producers
to determine eligibility of recipients, and the timeliness and accuracy of payments; and
• Discussed issues found during our inspection with FSA national and county office
officials to obtain their position and response.

To conduct this inspection, we obtained data from FSA’s information system. We assessed the
reliability of the FSA-provided data by comparing: (1) the data obtained with publicly available
CFAP data for completeness, and (2) the data obtained with sampled files for accuracy.

We conducted this inspection in accordance with the Council of the Inspectors General on
Integrity and Efficiency’s Quality Standards for Inspection and Evaluation. Those standards
require that we obtain sufficient, competent, and relevant evidence to provide a reasonable basis
for our findings, conclusions, and recommendations based on our inspection objectives. We
believe that the evidence obtained provides a reasonable basis for our conclusions based on our
inspection objectives. We discussed our findings with FSA management and included their
comments as appropriate.

6 INSPECTION REPORT 03801-0001-31
Abbreviations
CFAP ........................................................................... ........Coronavirus Food Assistance Program
COVID-19.................................................................................coronavirus disease 2019 pandemic
FSA .................................................................................................................Farm Service Agency
OIG ....................................................................................................... Office of Inspector General
USDA............................................................................... United States Department of Agriculture

INSPECTION REPORT 03801-0001-31 7
Exhibit A: Summary of Monetary Results
Exhibit A summarizes the monetary results for our inspection report by finding and
recommendation number.

Finding Recommendation Description Amount Category
1 1 Payments made to $1,286,786 Questioned Costs
producers who did and Loans, Recovery
not substantiate Recommended
amounts claimed

Total $1,286,786

8 INSPECTION REPORT 03801-0001-31
Exhibit B: Sampling Methodology
Objective
This sample was designed to support the OIG inspection of FSA’s CFAP designed to provide
vital assistance to producers of agricultural commodities who have suffered at least a 5-percent
price decline or who had losses because of market supply chain disruptions due to COVID-19
and faced additional significant market costs. The objective of this inspection was to determine
whether FSA provided timely and accurate CFAP direct payments to eligible recipients. A
simple random sample of producers was designed to review several criteria related to program
eligibility, as well as accuracy and timeliness of payments issued by FSA.

Inspection Universe
The universe data was provided by the Farm Production and Conservation Business Center and
consisted of 637,992 producers who received a total of $10,302,576,437 CFAP net payments
between May 26, 2020, and October 26, 2020.

Sample Design
We considered various sample designs and ultimately decided on a simple random sample
without replacement, which allows each sampling unit (i.e., producers) to have an equal
probability of selection. A 50-percent error rate was used because we did not have any reliable
historical information, and because it conservatively will produce the largest sample size needed
to achieve a given precision. A sample size of 100 producers was calculated based on 95-percent
confidence level, ±10-percent precision, and 50-percent error rate.

Due to ongoing investigative activity in one location at the time of our review, we removed
1,151 producers and associated net payments of $34,669,155 from the inspection universe. This
resulted in a final sample of 99 producers with associated net payments of $15,643,244.

Results
The sample selected did not meet the parameters of the sample design; therefore, we did not
project the results of the sample to the population. We concluded that our sample was sufficient
to meet the inspection objectives.

INSPECTION REPORT 03801-0001-31 9
Exhibit C: States and Producers in Our Sample
Our sample included producers selected from a total of 35 states. The map and chart below
summarize the 99 producers included in our sample, by State.

Figure 3: Summary of the producers in our sample by State. Figure by OIG.

10 INSPECTION REPORT 03801-0001-31
Exhibit D: Sampled Producers Paid by Commodity
The 99 producers in our sample received payments for 24 commodities as detailed in the figure
below.

Figure 4: Number of sampled producers that received at least one CFAP payment by commodity. Figure by
OIG.

Producers Receiving Payments for Each Commodity
70
70 63
60

50 44

30 24 24

20
11 11
10 3 4 3
1 1 2 1 2 2 1 1 1 1 1 2 1 1
0

INSPECTION REPORT 03801-0001-31 11
Exhibit E: Summary of Commodities for Which Sampled Payments
Were Made
The 99 producers in our sample received 665 payments (275 unique commodity payments)
across 24 commodities as detailed in the figure below. A number of producers received multiple
payments for the same commodity. For example, different classes of livestock were calculated as
separate payments (e.g., 70 producers received 210 total payments for cattle inventory).
Producers in our sample received between 1 and 20 payments, with 95 producers receiving
multiple payments.

Figure 5: Summary of the payments to sampled producers. Figure by OIG.
Commodity Number of
Payments
1 Apples 1
2 Barley 2
3 Cattle Inventory 210
4 Cattle Sold 191
5 Corn 88
6 Cotton 4
7 Crayfish 1
8 Hogs and Pigs Inventory 17
9 Hogs and Pigs Sold 17
10 Lambs and Sheep Inventory 3
11 Lambs and Sheep Sold 3
12 Lemons 1
13 Milk 48
14 Oats 6
15 Oranges 1
16 Pears 1
17 Pecans 2
18 Potatoes 2
19 Sorghum 4
20 Soybeans 48
21 Squash 2
22 Strawberries 6
23 Tilapia 1
24 Wheat 6
Total 665

12 INSPECTION REPORT 03801-0001-31
Agency’s Response

FSA’s
Response to Inspection Report

INSPECTION REPORT 03801-0001-31 13
Farm Deputy Administrator for Farm Programs
United States Production Farm Mail stop code 0550 Room 3612
Department of and Service 1400 Independence Avenue, S.W.
Agriculture Conservation Agency Washington, DC 20250

DATE: August 30, 2023

TO: Janet Sorenson
Assistant Inspector General for Audit
Office of the Inspector General (OIG)

FROM: John J. Berge /s/
Acting Administrator

THROUGH: Kimberly Graham /s/
Acting Deputy Administrator for Farm Programs

SUBJECT: OIG Inspection Report 03801-0001-31
Title— COVID-19 - Coronavirus Food Assistance Program –
Direct Support

On July 26, 2023, OIG conducted an exit conference for the subject audit. The final draft report
was issued on July 27, 2023. The inspection resulted in one recommendation. Please find the
Farm Service Agency’s (FSA) written response to this recommended action below.

RECOMMENDATION 1

Review and recover the questioned Coronavirus Food Assistance Program (CFAP) payments of
$1,286,786 resulting from inaccurate and/or unsupported producer certifications.

AGENCY RESPONSE

FSA concurs with the recommendation. On April 13, 2023, FSA held a conference call with
State Office CFAP Specialists with responsibility for the thirty-one (31) producers identified as
inaccurate. The specialists were instructed to work with the local county office staff to conduct
a full review of the CFAP applications and establish collections for producers with unsupported
claims. Reviews have been completed for the CFAP applications in question. Based on these
reviews, twenty-eight (28) out of thirty-one (31) producers did not have adequate documentation
to substantiate the amounts certified on their applications. State Specialists were instructed to
work with local county office staff to establish collections for the twenty-eight (28) unsupported
claims. The account receivables were established for the total amount of approximately
$985,228.80. The review of the supporting documentation for the additional three (3) producers
in the amount of $301,557.24 is accurate. These producers were not overpaid. The three (3)
cases (Louisiana, South Carolina, and Tennessee), that the local county committee reviewed
demonstrating all supporting evidence provided by the producer determined no overpayment of
CFAP funds. The actual completion date for the notification of debt was August 11, 2023. An
overview of the determinations for these three (3) samples can be supplied upon request.
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