oversight

Trade Adjustment Assistance: USDA Has Enhanced Technical Assistance for Farmers and Fishermen, but Steps Are Needed to Better Evaluate Program Effectiveness

Published by the Government Accountability Office on 2012-07-12.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States Government Accountability Office

GAO          Report to Congressional Committees




July 2012
             TRADE
             ADJUSTMENT
             ASSISTANCE
             USDA Has Enhanced
             Technical Assistance
             for Farmers and
             Fishermen, but Steps
             Are Needed to Better
             Evaluate Program
             Effectiveness




GAO-12-731
                                           July 2012

                                           TRADE ADJUSTMENT ASSISTANCE
                                           USDA Has Enhanced Technical Assistance for
                                           Farmers and Fishermen, but Steps Are Needed to
                                           Better Evaluate Program Effectiveness
Highlights of GAO-12-731, a report to
congressional committees




Why GAO Did This Study                     What GAO Found
Agricultural imports—including imports     The U.S. Department of Agriculture (USDA) certified relatively few commodities
of fruit, vegetables, seafood, and other   under its Trade Adjustment Assistance (TAA) for Farmers program, as
commodities that directly compete with     reauthorized by the Trade and Globalization Adjustment Assistance Act of 2009,
U.S. products—have more than               but provided assistance to most individual farmers and fishermen who produced
doubled over the last decade,              certified commodities and applied for assistance. Specifically, USDA certified 5 of
according to data from USDA. The           the 18 commodities for which it received petitions. As of April 2012, USDA
department’s TAA for Farmers               approved 9,852, or about 90 percent, of the applicants who produced a certified
program provides technical and             commodity to participate in the program. In addition, out of the $202.5 million in
financial assistance to producers of
                                           appropriations for the reauthorized program, USDA paid nearly $50 million in
commodities certified by USDA as
                                           financial assistance to help producers implement long-term business plans in
eligible for assistance. The Trade and
Globalization Adjustment Assistance
                                           order to become more competitive. GAO identified two issues regarding USDA’s
Act of 2009 reauthorized and amended       process for approving applications from spouses of producers and providing
the program and directed GAO to            financial assistance:
prepare and submit a report on the         •   USDA determined that producers’ spouses also shared in the risk of
operation and effectiveness of the             producing a commodity and could thus separately apply for assistance as
amendments. In particular, GAO
                                               individual producers. However, unlike other producers, spouses did not need
examined (1) the commodities and
                                               to submit documentation showing how they contributed to and shared in the
producers USDA approved for
                                               risk of production. USDA officials said they disapproved applications if
assistance and the type and amount of
assistance it provided, and (2) the            spouses voluntarily disclosed that they did not contribute to producing a
approach USDA is taking to evaluate            commodity but they likely approved applications from other spouses who
the program’s effectiveness and                similarly did not contribute. As a result, USDA did not have assurance that it
limitations, if any, in this approach.         targeted assistance to individuals who shared in the risk of production.
GAO analyzed USDA data and                 •   USDA made financial assistance payments without requiring producers to
documents; interviewed USDA
                                               show that the assistance would be used for the intended purpose. Under the
officials, their academic partners,
                                               2009 legislation, payments for completion of approved long-term business
producer groups, and commodity
experts; and conducted fieldwork in            plans are to be used to implement the plans, but approval of plans was not
two states to meet with producer               contingent on producers documenting how payments would be used. USDA
groups for certified commodities.              officials said they received feedback that led them to believe that some
                                               producers used payments for unrelated expenses, such as housing costs.
What GAO Recommends                        USDA’s approach to evaluating the TAA for Farmers program relies on
                                           performance measures and a series of surveys administered to producers. This
GAO recommends that, as part of any
                                           approach provides USDA with data on producers’ completion of program
future TAA for Farmers program
funding, USDA require spouses              requirements and perceptions of effectiveness, but the approach has several
applying for assistance to submit          limitations that hinder USDA’s ability to fully determine the extent to which the
documentation on how they contribute       program as a whole is effective. In particular, the performance measures do not
to producing a commodity, take steps       measure outcomes, such as the percentage of producers who are able to remain
to help ensure the program’s financial     in business. Leading practices indicate that outcome-oriented goals and
assistance is used for the intended        quantifiable performance measures are important tools to determine if a program
purpose, and broaden its program           is achieving intended results. In addition, the time frame for administering the
evaluation approach. USDA generally        surveys is too short to gather producers’ perceptions of long-term effectiveness.
agreed with the recommendations.           Moreover, the surveys provide little information on producer perceptions of the
                                           program’s financial assistance, and USDA has not corroborated survey results by
                                           collecting data to help determine whether improvements in producers’ conditions
View GAO-12-731. For more information,     are due to the program or some external factor. It can be difficult to isolate the
contact Lisa Shames at (202) 512-3841 or   causal impact of programs from other influences on outcomes, but the use of
shamesl@gao.gov.
                                           multiple sources of data can help overcome this challenge.
                                                                                   United States Government Accountability Office
Contents


Letter                                                                                     1
               Background                                                                  4
               USDA Certified Relatively Few Commodities but Has Provided
                 Assistance to Most Covered Applicants                                     8
               USDA’s Program Evaluation Approach Relies on Performance
                 Measures and Surveys That Do Not Fully Assess Effectiveness             16
               Conclusions                                                               20
               Recommendations for Executive Action                                      21
               Agency Comments and Our Evaluation                                        22

Appendix I     Scope and Methodology                                                     24



Appendix II    Commodities Certified and Denied for TAA for Farmers Assistance           27



Appendix III   Technical and Financial Assistance Provided to Producers
               Approved for TAA for Farmers Assistance                                   30



Appendix IV    Comments from the U.S. Department of Agriculture                          33



Appendix V     GAO Contact and Staff Acknowledgments                                     36



Tables
               Table 1: USDA’s Use of $202.5 Million in Trade and Globalization
                        Adjustment Assistance Act of 2009 Appropriations for the
                        TAA for Farmers Program                                          14
               Table 2: Commodities Certified for Assistance under the 2009
                        Reauthorization of the TAA for Farmers Program                   27
               Table 3: Basis Cited by FAS for Denying Commodities under the
                        2009 Reauthorization of the TAA for Farmers Program              28
               Table 4: Number of TAA for Farmers Applicants as of April 2012,
                        by Certified Commodity and Application Status                    30
               Table 5: Financial Assistance Provided to Producers as of April
                        2012, by Certified Commodity (Dollars in Millions)               31


               Page i                                  GAO-12-731 Trade Adjustment Assistance
Figures
          Figure 1: USDA Agency Roles in TAA for Farmers Program                                    7
          Figure 2: Commodities and Geographic Areas Certified as Eligible
                   for or Denied TAA for Farmers Assistance                                         9




          Abbreviations
          FAS                  Foreign Agricultural Service
          GPRA                 Government Performance and Results Act of 1993, as
                               amended
          NIFA                 National Institute of Food and Agriculture
          Recovery Act         American Recovery and Reinvestment Act of 2009
          TAA                  Trade Adjustment Assistance
          USDA                 U.S. Department of Agriculture



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          Page ii                                           GAO-12-731 Trade Adjustment Assistance
United States Government Accountability Office
Washington, DC 20548




                                   July 12, 2012

                                   The Honorable Max Baucus
                                   Chairman
                                   The Honorable Orrin G. Hatch
                                   Ranking Member
                                   Committee on Finance
                                   United States Senate

                                   The Honorable Dave Camp
                                   Chairman
                                   The Honorable Sander Levin
                                   Ranking Member
                                   Committee on Ways and Means
                                   House of Representatives

                                   Data from the U.S. Department of Agriculture (USDA) show that
                                   agricultural imports have more than doubled over the last decade.
                                   According to these data, the imports include fruit, vegetables, seafood,
                                   and other commodities that directly compete with U.S. agricultural
                                   products. USDA’s Trade Adjustment Assistance (TAA) for Farmers
                                   program offers assistance to farmers and fishermen hurt by competition
                                   from such imports. In particular, the program provides help to individual
                                   producers of raw agricultural commodities, such as farmers and
                                   fishermen, to become more competitive in producing their current
                                   commodity or transitioning to a different commodity. 1

                                   Producers apply for TAA for Farmers assistance through a two-step
                                   process, which USDA publicizes through its website, news releases, and
                                   other means when funding to implement the program is available. First, a
                                   group of producers of a particular commodity, or an association that
                                   represents producers, must submit a petition for certification of eligibility
                                   for assistance. Petitions cover all producers of that commodity in the
                                   United States or in one or more specifically identified states. Petitions
                                   must be submitted within the filing period announced by USDA and
                                   provide supporting information, such as national data showing that the
                                   commodity’s price declined in the most recent year for which such data



                                   1
                                    In this report, we refer to both farmers and fishermen as producers.




                                   Page 1                                            GAO-12-731 Trade Adjustment Assistance
are available. Second, after USDA certifies a commodity as eligible, any
producer of the commodity who is interested in participating in the
program must apply for assistance within 90 days of the certification. The
benefits of the program include both technical and financial assistance.
The technical assistance, which must be completed within the 3-year
period following a commodity’s certification, includes a minimum of 12
hours of training geared toward improving producers’ competitiveness, as
well as assistance in developing business plans. Individuals who
complete approved business plans are entitled to receive payments of up
to $12,000 to help them implement the plans.

The TAA for Farmers program was established by the Trade Act of 2002,
which appropriated funding for the program at $90 million per year for
fiscal years 2003 through 2007. In December 2006, we reported that the
criteria for program eligibility were difficult for many producers to meet
and that USDA spending for the program was well below the amount
provided for by the Trade Act. 2 We also reported that the program’s
technical and financial assistance appeared to assist producers in
adjusting to the effects of import competition on a limited, short-term
basis. Funding for the program lapsed in fiscal year 2008.

The Trade and Globalization Adjustment Assistance Act of 2009, which
was enacted as part of the American Recovery and Reinvestment Act of
2009 (Recovery Act), reauthorized and amended the program. 3
Appropriations for the reauthorized program were $90 million per year in
fiscal years 2009 and 2010 and $22.5 million for the first quarter of fiscal
year 2011. 4 USDA accepted petitions and certified commodities under the
reauthorized program in 2010 and later that year began providing
assistance to producers of certified commodities. These producers have
until 2013 to complete the program’s technical assistance. The Trade
Adjustment Assistance Extension Act of 2011 reauthorized the program


2
 GAO, Trade Adjustment Assistance: New Program for Farmers Provides Some
Assistance, but Has Had Limited Participation and Low Program Expenditures,
GAO-07-201 (Washington, D.C.: Dec. 18, 2006).
3
 The Trade and Globalization Adjustment Assistance Act of 2009, Pub. L. No. 111-5, div.
B, tit. I, subtit. I, 123 Stat. 367, 367-423.
4
 The Omnibus Trade Act of 2010 also appropriated $10.4 million for the program for the 6-
week period from January 1, 2011, to February 12, 2011, but USDA did not use this
funding because it determined that it was not able to certify petitions for assistance within
a 6-week time frame.




Page 2                                             GAO-12-731 Trade Adjustment Assistance
through the first quarter of fiscal year 2014 but did not appropriate funds.
USDA is continuing to spend funds to complete the program as
reauthorized in 2009 but does not have funding to accept additional
petitions for certification of commodities and continue the program.

The 2009 legislation mandated that GAO prepare and submit a report on
the operation and effectiveness of the amendments to the TAA for
Farmers program. In response, we examined (1) the commodities and
producers that USDA approved for assistance under the program as
reauthorized in 2009 and the type and amount of assistance it provided
and (2) the approach USDA is taking to evaluate the program’s
effectiveness and limitations, if any, in this approach.

To examine the commodities and producers USDA approved for
assistance and the type and amount of assistance it provided, we
reviewed four key areas of the TAA for Farmers program as amended:
the commodity certification process, the producer application process,
technical assistance, and financial assistance. In particular, for
commodity certification, we reviewed the criteria established by the 2009
legislation for USDA to use when certifying commodities, petitions
submitted by groups of commodity producers, and USDA’s
documentation explaining the basis for its decisions to certify or deny
commodities. We examined the producer application process by
reviewing eligibility requirements for individual producers of certified
commodities and USDA data on applications from individual producers,
including the numbers approved and disapproved and the reasons for
disapproval. We examined the amount of technical and financial
assistance USDA provided to approved producers by reviewing data from
USDA. We assessed the reliability of USDA data by checking for obvious
errors in accuracy and completeness and through other means. We
determined that the data were sufficiently reliable for reporting on the
number of approved and disapproved applicants and the amount of
technical and financial assistance provided to producers.

To examine the approach USDA is taking to evaluate the program’s
effectiveness and to identify any limitations in this approach, we reviewed
USDA’s performance measures for the program, and we analyzed
surveys of producers participating in the program and preliminary survey
results as of December 2011. We compared USDA’s approach to
principles for evaluating the effectiveness of programs, such as those
embodied in the Government Performance and Results Act of 1993, as
amended (GPRA), GAO guidance on designing evaluations, and federal
standards for internal control.


Page 3                                    GAO-12-731 Trade Adjustment Assistance
             For further explanation regarding both of our objectives, we interviewed
             USDA officials, USDA’s academic partners for organizing and overseeing
             the program’s technical assistance, and a nonprobability sample of
             producer groups that submitted petitions. Because we selected a
             nonprobability sample of producer groups to interview, the information we
             obtained from these interviews cannot be generalized to other groups.
             The interviews instead provided us with the perspectives of various
             producer groups about the program. We also interviewed the USDA
             Office of the Inspector General team conducting a separate review of the
             TAA for Farmers program. We planned our audit to minimize duplication
             in areas evaluated by the Office of Inspector General, such as USDA
             internal controls over the application of eligibility requirements for
             individual producers. Appendix I presents a more detailed description of
             the scope and methodology of our review.

             We conducted this performance audit from September 2011 to July 2012
             in accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             In its amendments to the TAA for Farmers program, the Trade and
Background   Globalization Adjustment Assistance Act of 2009 changed the program in
             four key areas:

             •   Commodity certification. The act changed the criteria for groups of
                 commodity producers to demonstrate they had been harmed by import
                 competition and for USDA to certify commodities. Prior to the
                 amendments, USDA certified a commodity if (1) imports of a “like or
                 directly competitive” commodity—that is, imports that are substantially
                 identical in inherent or intrinsic characteristics or substantially
                 equivalent for commercial purposes—had increased and (2) the
                 average price of the commodity submitted for certification decreased by
                 more than 20 percent compared to the average of the previous 5 years.
                 If these two criteria were met, USDA had to determine that the imports
                 contributed importantly to the decrease in price, with “contributed
                 importantly” defined by the TAA for Farmers legislation as a cause that
                 is important but not necessarily more important than any other cause.
                 Under the 2009 reauthorization, imports must have increased
                 compared to the average of the previous 3 years. In addition, the act



             Page 4                                   GAO-12-731 Trade Adjustment Assistance
    lowered the threshold for a decrease in price to more than 15 percent
    compared to the average of the previous 3 years. Furthermore, the act
    allowed groups of commodity producers to demonstrate harm on the
    basis of a more than 15 percent decrease in any one of three factors
    other than price: quantity of production, value of production, and cash
    receipts. The act retained the criterion for an increase in imports to
    have contributed importantly to a commodity’s harm.

•   Producer application. The act eliminated a requirement that a
    producer of a certified commodity experience a decline in net farm
    income. The act instead required a producer to have produced the
    commodity in the year covered by a certification and in at least 1 of
    the 3 years preceding the certification. In addition, the act required a
    producer to demonstrate a decrease in the individual producer’s
    production quantity, or a decrease in the commodity’s price—either
    the actual price received by the producer or the average price at the
    local level. Moreover, the act required that individual producers’
    applications for assistance include sufficient information to establish
    that a producer is not receiving benefits under another TAA for
    Farmers petition or under related TAA programs for workers or firms.

•   Technical assistance. The act modified the technical assistance
    benefit that the program provides to eligible producers, which
    previously consisted of a workshop and counseling to improve
    competitiveness and profitability. Specifically, the act provided for a
    series of courses to help producers become more competitive in
    producing their current commodity or to transition to producing
    another commodity, and it required that eligible producers complete
    initial and long-term business plans before receiving financial
    assistance. The act specified that for an initial business plan to be
    approved, it must reflect the skills producers gained through the
    program’s courses and demonstrate how those skills are to be applied
    to the circumstances of the producer. The act also specified criteria
    for approval of long-term business plans, including that plans
    incorporate steps to adjust to changing market conditions, take into
    consideration the interests of workers employed by producers, and
    demonstrate sufficient resources to implement the plans.

•   Financial assistance. The act eliminated a formula that USDA was
    previously required to use to calculate the amount of financial
    assistance to a producer. The act instead entitled producers who
    complete an approved initial business plan to receive payments of up
    to $4,000 to implement the plan or develop a long-term business plan.
    The act further entitled producers who complete an approved long-


Page 5                                    GAO-12-731 Trade Adjustment Assistance
    term business plan to receive additional payments of up to $8,000 to
    implement the plan.

The Foreign Agricultural Service (FAS), which works to improve foreign
market access for U.S. products, is the lead USDA agency for
administering the TAA for Farmers program and is responsible for
accepting petitions for assistance from groups or associations of
commodity producers and certifying or denying commodities. After the
reauthorization of the program in February 2009, FAS began developing
regulations for the program, as amended, and completed the regulations
in March 2010. FAS accepted petitions under the reauthorized program
during two filing periods, first under the program’s fiscal year 2010
appropriation of $90 million and then under the fiscal year 2011
appropriation of $22.5 million. Both filing periods occurred in 2010 after
FAS completed regulations for the program—the first from March 11
through April 14, and the second from May 21 through July 16. The
second filing period presented producer groups with an opportunity to
resubmit petitions filed during the first period, either to provide additional
supporting information (for denied commodities) or to petition for
recertification of a commodity and thereby extend the 90-day
postcertification period in which individual producers could apply for
assistance (for certified commodities).

In addition to FAS, several other USDA agencies play or have played a
role in implementing the program. The Economic Research Service,
which conducts economic research and provides information related to
agriculture, conducted analyses after FAS received petitions to verify the
decline in the price, quantity of production, value of production, or cash
receipts for petitioned commodities and to assess possible causes,
including imports. A petition review committee with representatives from
four USDA agencies—the Office of the Chief Economist, the Farm
Service Agency, the Agricultural Marketing Service, and FAS—reviewed
the analyses and made recommendations to FAS to certify or deny
commodities. For commodities that FAS certified, the Farm Service
Agency, which administers programs for farmers and ranchers, drew on
its network of state and county offices to establish a system for accepting
and approving individual applications for assistance and distributing
payments to approved producers who have completed relevant program
requirements. The National Institute of Food and Agriculture (NIFA),
which supports state and local research and education efforts related to
agriculture, administers the program’s technical assistance component.
After the 2009 reauthorization of the program, NIFA entered into a
cooperative agreement with a lead academic partner—the Center for


Page 6                                     GAO-12-731 Trade Adjustment Assistance
                                      Farm Financial Management at the University of Minnesota, which had
                                      been involved in implementing the initial TAA for Farmers program—to
                                      organize and oversee the program’s technical assistance. The Center for
                                      Farm Financial Management established relationships with other
                                      academic partners across the country to promote the availability of
                                      assistance to producer groups and individual producers of certified
                                      commodities and to coordinate the delivery of technical assistance.
                                      Figure 1 depicts the roles of these agencies in administering the program.

Figure 1: USDA Agency Roles in TAA for Farmers Program




                                      a
                                      The petition review committee includes representatives from four USDA agencies: the Office of the
                                      Chief Economist, the Farm Service Agency, the Agricultural Marketing Service, and FAS.
                                      b
                                       The Farm Service Agency approves applications, and FAS decides whether to disapprove
                                      applications that do not meet eligibility requirements and whether to approve or deny appeals.


                                      The TAA for Farmers program is one of four trade adjustment assistance
                                      programs; the other three provide assistance for workers, firms, and
                                      communities harmed by international trade. Under the TAA for Workers
                                      program, the Department of Labor provides services and benefits, such



                                      Page 7                                                 GAO-12-731 Trade Adjustment Assistance
                           as training and re-employment services and income support, to eligible
                           workers in manufacturing and service industries. The Department of
                           Commerce administers a TAA program that provides funds for
                           manufacturing and other types of firms to develop and implement a
                           business recovery plan. Under a TAA program to assist trade-affected
                           communities, the Department of Labor awards grants to institutions of
                           higher education for expanding or improving education and career
                           training programs for persons eligible for training under the TAA for
                           Workers program, and the Department of Commerce provides technical
                           assistance to trade-affected communities and awards and oversees
                           strategic planning and implementation grants. In addition to mandating
                           that GAO report on the TAA for Farmers program, the Trade and
                           Globalization Adjustment Assistance Act of 2009 mandated that GAO
                           report on the other TAA programs. Our reports on the other TAA
                           programs are forthcoming.


                           USDA certified relatively few commodities as eligible for assistance under
USDA Certified             the reauthorized TAA for Farmers program, but it has provided technical
Relatively Few             and financial assistance to most individual applicants who produced a
                           certified commodity. Specifically, FAS, the lead agency for administering
Commodities but Has        the program, certified 5 of the 18 commodities for which it received
Provided Assistance        petitions under the reauthorized program. For the 5 certified commodities,
to Most Covered            the Farm Service Agency approved most applications from individual
                           producers, including from producers’ spouses, who were not required to
Applicants                 show how they contributed to production. Producers who were approved
                           to participate in the program received technical assistance that was
                           tailored to their individual needs. In addition, as of April 2012, the Farm
                           Service Agency paid close to $50 million in financial assistance to
                           producers who completed initial and long-term business plans. The Trade
                           and Globalization Adjustment Assistance Act of 2009 specifies that
                           producers are to use payments for long-term business plans to implement
                           those plans; however, approval of long-term business plans was not
                           contingent on producers documenting how payments would be used to
                           implement the plans.


FAS Certified Relatively   FAS certified 5 of the 18 commodities for which it received petitions under
Few Commodities            the reauthorized program (see fig. 2). The commodities for which FAS
                           received petitions included seafood and specialty crops, such as fruits
                           and vegetables, as opposed to commodities such as grains. Two of the 5
                           certifications—for asparagus and catfish—covered producers nationwide.
                           All other petitions covered producers of a commodity in a particular state


                           Page 8                                   GAO-12-731 Trade Adjustment Assistance
or group of states. (See app. II for further information on the certified and
denied commodities.)

Figure 2: Commodities and Geographic Areas Certified as Eligible for or Denied
TAA for Farmers Assistance




a
Multispecies fish includes various species of fish, such as cod and halibut.


The 2009 changes to the TAA for Farmers program’s certification criteria
were a factor in the decision to support 4 of the 5 commodity certifications,
according to our review of the Economic Research Service’s analyses of
petitions under the reauthorized program and FAS’s decision memos. For
example, FAS would likely not have been able to certify asparagus or
shrimp on the basis of a decrease in price—a requirement under the
previous certification criteria—because the analysis of petitions for both



Page 9                                                  GAO-12-731 Trade Adjustment Assistance
commodities indicated that their prices had increased from the average of
the 3 previous years. Under the modified certification criteria, FAS was
instead able to certify these two commodities on the basis of a factor other
than price, specifically a decrease in the quantity of production. For
example, the Economic Research Service found that asparagus producers
had reduced the number of acres harvested to adjust to the rapidly rising
volume of imports.

The most common reason FAS cited for denying commodities was that the
petitions for such commodities did not meet the criteria for both an increase
in imports and a decrease in price or another factor. For example, the
Economic Research Service found that Hawaiian coffee met the criterion
for a decrease in price, but FAS denied the commodity because coffee
imports had declined. FAS also denied several commodities that it
determined did not meet the criterion for imports to have contributed
importantly to a decline in price or another factor. For example, according
to FAS’s documentation explaining the basis for its determination, the
agency found that California prunes met the criteria for both an increase in
imports and a decrease in price but that imports were not an important
factor in determining the price. FAS instead determined that the price
decline had been affected by an increase in domestic production and other
factors. To support such determinations on whether imports contributed
importantly to a commodity’s harm, the Economic Research Service
conducted qualitative analyses that examined the impact of other factors,
such as domestic production, consumption, and exports.

Through our interviews and analyses, we identified additional factors that
contributed to FAS’s denial of commodities. Because the certification
criteria take into account a number of factors, it is difficult to identify these
factors as the direct cause for a commodity being denied:

•   The time frame over which import competition had occurred. Under
    the certification criteria, a commodity can face competition from
    imports over a long time frame but still be denied if, in the year
    covered by the petition, imports that compete with the commodity do
    not increase compared to the average of the 3 previous years. For
    example, an FAS official said that Florida fishermen of spiny lobsters
    had competed against imports over a long time frame but that FAS
    denied the commodity because imports that compete with such
    lobsters declined in 2009, the year covered by the petition and the
    most recent calendar year for which data were available during the
    period FAS accepted petitions under the reauthorized program. The
    FAS official attributed the decline in these imports to the economic



Page 10                                     GAO-12-731 Trade Adjustment Assistance
                               recession. According to data compiled by the U.S. International Trade
                               Commission, overall imports of agricultural products declined in
                               2009—a year characterized by a significant economic downturn. A
                               USDA official who was a member of the committee that made
                               recommendations to FAS to certify or deny petitions said that the
                               certification criteria favor commodities that have experienced a surge
                               in imports, as opposed to slow, steady erosion that occurs over time
                               as a result of sustained competition from imports.

                           •   Information presented by producer groups in their petitions. The
                               outcome of the certification process depended in part on information
                               producer groups presented in their petitions, such as which states to
                               include in a petition and whether to submit a petition for a commodity
                               that is frozen or fresh. For example, FAS certified frozen wild
                               blueberries from Maine on the basis of an Economic Research
                               Service analysis showing that the commodity met the criteria for a
                               decrease in price and an increase in imports. In contrast, FAS denied
                               fresh wild blueberries from New Hampshire in part because the
                               quantity of production—the factor cited in the petition for
                               demonstrating harm from import competition—had increased rather
                               than decreased.


USDA Approved Most         In contrast to the relatively small proportion of commodities that were
Individual Applications,   certified as eligible for TAA for Farmers assistance, most applications
Including from Spouses     submitted by individual producers of certified commodities were
                           approved. Specifically, as of April 2012, the Farm Service Agency had
Who Were Not Required to   approved 9,852, or about 90 percent, of the approximately 11,000
Show They Contributed to   applications from individual producers.
Producing a Commodity
                           The shrimp and lobster certifications accounted for 8,596 (87 percent) of
                           the approved applications, and the asparagus, catfish, and frozen wild
                           blueberry certifications accounted for the remaining 1,256 (13 percent).
                           The distribution reflects the relative numbers of fishing or farming
                           operations for the certified commodities. For example, according to data
                           collected by the Maine Department of Marine Resources, in 2011 there
                           were 4,341 active commercial lobster harvesters in the state (one of the
                           five states covered by the certification for lobster). In contrast, according
                           to USDA data, in 2011 there were 389 catfish operations in Alabama,
                           Arkansas, and Mississippi, which are the three major catfish producing
                           states. (See app. III for additional detail on individual applications.)




                           Page 11                                    GAO-12-731 Trade Adjustment Assistance
FAS officials said the agency took steps to broaden the scope of
individuals eligible to apply for assistance in order to implement the
program as reauthorized in 2009 and to increase program participation.
For example, FAS determined that certain employees of eligible
producers of certified commodities, such as crew members helping to
harvest lobster or shrimp, met the definition of agricultural commodity
producers as sharing in the risk of producing a commodity and could thus
separately apply for assistance as individuals. To be approved for
assistance, such individuals needed to provide sufficient documentation
to establish that they were paid through a share of production—for
example, by being paid through a portion of a lobster or shrimp catch.

FAS determined that spouses of eligible producers also shared in the risk
of producing a commodity and could thus separately apply for assistance
as individual producers. For example, according to the lead FAS official
for the TAA for Farmers program, a spouse could share in the risk by
performing the same type of work as a crew member. However, unlike
crew members, spouses did not need to submit documentation showing
their contribution to and share in the risk of producing a certified
commodity. Several FAS officials said the agency disapproved the
applications of spouses who voluntarily disclosed information indicating
that they did not contribute to producing a certified commodity. The
officials said that, because such information was not required, they likely
approved applications from other spouses who did not contribute, but
they did not have an estimate of the potential number of such spouses.
Without requiring spouses applying for assistance as individual producers
to submit documentation on how they contributed to producing a certified
commodity, FAS did not have assurance that it targeted assistance to
individuals who shared in the risk of production.

FAS disapproved about 10 percent of applications from individual
producers for various reasons, such as when applicants did not provide
evidence of producing a certified commodity in the year covered by the
petition. According to an FAS official, the legislative requirement to have
produced a commodity in the petition year excluded certain blueberry
growers because the crop is generally harvested every other year, and
not all Maine growers harvested their crop in the year covered by the
certification. Other reasons for FAS disapproval of applications included
individuals not submitting an application within the 90-day period following
a commodity’s certification, not being a U.S. citizen or lawful alien, or
receiving benefits under another TAA for Farmers petition or under one of
the TAA programs for workers or firms.



Page 12                                  GAO-12-731 Trade Adjustment Assistance
USDA Provided Most          According to Farm Service Agency data, as of April 2012, 7,781
Applicants with Technical   producers, or about three-quarters of the 9,852 producers approved to
Assistance Tailored to      participate, had fully or partially completed the TAA for Farmers technical
                            assistance, including training and the development of business plans.
Individual Needs            Specifically, 5,073 producers had completed the 12 hours of required
                            training and the development of initial and long-term business plans.
                            Another 2,708 producers had completed the training and submitted an
                            approved initial business plan but had not yet submitted an approved
                            long-term business plan. (See app. III for more detail.)

                            According to our analysis, the applicants received technical assistance
                            tailored to their individual needs. Specifically, NIFA’s academic partners
                            responsible for coordinating the technical assistance took the following
                            steps:

                            •   Commodity-specific courses. Because of the differences among
                                commodities, NIFA’s academic partners developed separate courses
                                for each certified commodity. For example, courses for lobstermen
                                included information on how to harvest more efficiently and reduce
                                fuel consumption, and courses for wild blueberry growers included
                                fertilizer management practices to optimize inputs and reduce costs.
                                In some cases, the courses also provided information on alternatives
                                to producing the certified commodity. For example, the courses for
                                shrimpers included information on obtaining licenses needed to
                                operate a charter fishing boat. Courses could be taken in person and
                                through a website.

                            •   One-on-one business planning assistance. NIFA’s academic partners
                                assigned business consultants to provide one-on-one assistance to
                                approved producers in developing long-term business plans. At a
                                meeting of business consultants we attended, the consultants
                                described various ways they helped producers develop or improve on
                                their business plans—for example, by explaining financial statements
                                and helping analyze the financial impact of a business expansion.


USDA Paid Close to $50      According to USDA summary data, the department obligated $81.1
Million in Financial        million, or 40 percent of the $202.5 million in Trade and Globalization
Assistance but Did Not      Adjustment Assistance Act of 2009 appropriations for the TAA for
                            Farmers program, for financial assistance payments to producers. As of
Require That Producers      April 2012, the Farm Service Agency paid close to $50 million of the
Show How Assistance         $81.1 million obligated for financial assistance payments. The remainder
Would Be Used               of the obligated funds went toward USDA costs for administering the



                            Page 13                                  GAO-12-731 Trade Adjustment Assistance
program and the cooperative agreement with NIFA’s lead academic
partner for organizing and overseeing the program’s technical assistance.
In addition, USDA did not obligate all of the appropriated funds because,
for example, FAS did not complete regulations for the amended program
until March 2010 and thus was not able to use fiscal year 2009 funding to
make financial assistance payments to producers. The funds that were
not obligated are no longer available for implementation of the program.
(See table 1 on USDA’s use of appropriations for the program.)

Table 1: USDA’s Use of $202.5 Million in Trade and Globalization Adjustment
Assistance Act of 2009 Appropriations for the TAA for Farmers Program

                                                                         Amount
 Category                                                               (millions)   Percentage
 Financial assistance payments                                              $81.1           40
 USDA administrative costs                                                  $12.0            6
 Cooperative agreement for organizing and overseeing                        $34.0           17
 technical assistance
 Not obligated                                                              $75.3           37
 Total                                                                     $202.5          100
Source: GAO analysis of USDA data.

Note: Dollar figures do not add up to $202.5 million due to rounding.


The final amount of payments will depend on the number of approved
business plans that producers complete within the 3-year period following
FAS’s certification of commodities under the 2009 reauthorization of the
program. For plans that do not initially meet the criteria for approval,
individuals may continue to work on plans and resubmit them. The nearly
$50 million paid as of April 2012 included

•     about $20.2 million to producers who had completed initial business
      plans that met the criteria for approval,

•     about $29.5 million to producers who had completed long-term
      business plans that met the criteria for approval, and

•     about $60,000 for producers’ transportation and related expenses to
      attend an initial orientation to the program.

Spouses that completed business plans received separate payments.
According to guidance for the program, a spouse of a producer had to




Page 14                                                 GAO-12-731 Trade Adjustment Assistance
complete a separate business plan before receiving a payment, but the
plans of a spouse and a producer could be nearly identical.

Some producers received full financial assistance payments of $4,000 for
completion of an initial business plan and an additional $8,000 for
completion of a long-term business plan. Specifically, the fiscal year 2010
appropriation for the TAA for Farmers program was sufficient to allow full
payments to producers approved under certifications from the first petition
filing period (March through April 2010), which included certifications for
asparagus, catfish, and shrimp. In contrast, FAS determined that it needed
to prorate payments to producers approved under certifications from the
second filing period (May through July 2010), which resulted in
certifications for lobster and wild blueberries, as well as a recertified petition
for shrimp. These certifications accounted for about 55 percent of
producers participating in the program. To ensure sufficient funding for all
individuals approved for assistance under these certifications, FAS
calculated prorated amounts of about $971 for completion of an initial
business plan and about $1,943 for completion of a long-term plan, for a
total of about $2,914. FAS needed to prorate the payments in part because
it certified the second round of petitions using the first quarter fiscal year
2011 appropriation of $22.5 million—one-quarter the amount appropriated
for each of the 2 previous fiscal years. According to an FAS letter to
producers, FAS may issue a third payment to producers receiving prorated
cash benefits at the end of the program, depending on the availability of
funding and on the number of producers who complete technical
assistance and are therefore eligible for cash benefits. (See app. III for
more detailed data on financial assistance payments.)

According to FAS, NIFA, and Farm Service Agency officials, the Farm
Service Agency paid producers without the producers being required to
show that the financial assistance would be used for the intended
purpose. Under the Trade and Globalization Adjustment Assistance Act of
2009, payments for completion of long-term business plans are to be
used to implement the plans. However, approval of long-term business
plans was not contingent on producers documenting how payments
would be used to implement the plans. FAS and NIFA officials cited
various reasons for not requiring producers to document how payments
would be used, including that technical assistance was a primary benefit
of the program. The officials acknowledged, however, that they have
received feedback that led them to believe that at least some producers
used payments for expenses unrelated to their business plans, such as to
cover housing costs.



Page 15                                      GAO-12-731 Trade Adjustment Assistance
                           FAS is evaluating the effectiveness of the TAA for Farmers program by
USDA’s Program             using performance measures and a series of producer surveys that focus
Evaluation Approach        on technical assistance. These tools provide USDA with data on some
                           aspects of the program’s effectiveness, but they have several limitations
Relies on                  that hinder FAS’s ability to fully determine the extent to which the program
Performance                as a whole is effective. For example, the performance measures do not
Measures and Surveys       provide information on long-term program effectiveness, and the surveys
                           capture producers’ perceptions of program effectiveness that FAS has not
That Do Not Fully          corroborated through other means.
Assess Effectiveness

USDA’s Performance         Measuring performance allows agencies to track progress toward their
Measures Do Not Provide    goals and gives managers crucial information on which to base decisions.
Information on Long-Term   Congress enacted the Government Performance and Results Act of 1993
                           to improve the effectiveness of federal programs, among other purposes,
Effectiveness or All Key   and to establish a system for agencies to set goals for program
Program Areas              performance and to measure results. Federal agencies must comply with
                           GPRA requirements, but we have reported that these requirements also
                           can serve as leading practices at lower levels within federal agencies,
                           such as individual divisions, programs, or initiatives. Leading practices
                           embodied in GPRA indicate that outcome-oriented goals, along with
                           objective and quantifiable performance measures, are important
                           performance management tools for agencies. 5 Performance measures
                           gauge progress in meeting goals to determine if a program is achieving
                           intended results.

                           FAS, with the input of the Farm Service Agency and NIFA, developed five
                           performance measures as part of its approach to evaluating the
                           effectiveness of the TAA for Farmers program. The first four measures
                           consist of the number of producers completing each stage of the
                           program’s technical assistance, including

                           •   initial orientation,

                           •   12 hours of required training,




                           5
                           GAO, Designing Evaluations, GAO-12-208G (Washington, D.C.: January 2012).




                           Page 16                                     GAO-12-731 Trade Adjustment Assistance
•   an approved initial business plan, and

•   an approved long-term business plan.

The fifth performance measure consists of categorizing the amount of
assistance provided, such as by certified commodity. NIFA’s academic
partners communicate data on the first four performance measures
through weekly progress reports, and USDA communicates data on the
fifth performance measure through its annual report on the program to
Congress. According to lead FAS program officials, the performance
measures help FAS understand how effectively the program is operating
over the short term because they track producers’ participation
throughout the stages of the program and producers’ completion of
program requirements.

These performance measures do not provide information on the
program’s effectiveness over the long-term, however, because they do
not measure outcomes. Outcome-oriented goals and performance
measures assess the results of a program compared to its intended
purpose and are important for ensuring accountability. For example, the
Department of Labor’s performance measures for the TAA for Workers
program include several outcome-oriented measures, such as the
percentage of participants that find jobs after exiting the program.
According to the lead NIFA official, technical assistance programs such
as TAA for Farmers are intended to promote changes in producers’
knowledge, changes in producers’ behavior when they act upon what
they have learned, and ultimately improvements in producers’ condition.
Therefore, appropriate goals and performance measures for this program
would capture changes in producers’ knowledge, behavior, and condition.
Given the purpose of the program’s technical assistance to help
producers better compete with imports or transition to the production of
other commodities, such measures might include the percentage of
producers who are able to remain in business because they have become
more competitive, or the percentage of producers who successfully
transition to producing another commodity.

Moreover, FAS’s performance measures focus on the program’s technical
assistance, as opposed to other areas of the program—such as
producers’ use of financial assistance payments. Financial assistance is
also an important component of the TAA for Farmers program, however—
both as a benefit to producers and in terms of the programs’ budget.
Because FAS does not have performance measures on all key program




Page 17                                  GAO-12-731 Trade Adjustment Assistance
                            areas, including financial assistance, FAS cannot comprehensively
                            evaluate the program.

                            FAS officials said that, because technical assistance is the main benefit of
                            the program, they are most interested in tracking progress in that area.
                            Nevertheless, FAS and NIFA officials acknowledged that the performance
                            measures do not measure outcomes and therefore cannot be used to
                            evaluate the long-term effectiveness of the program. The officials
                            explained that the reporting requirements of the 2009 legislation—which
                            focuses on short-term economic stimulus—led them to select measures
                            that could be tracked over the short term. The FAS officials added that
                            they eventually plan to develop performance measures to report on the
                            program’s outcomes. However, because outcome measures were not
                            selected in advance, the potential to collect objective data may be lost.


Surveys Capture             Surveys developed by NIFA’s academic partners are the other main tool
Producers’ Perceptions of   that FAS is using to evaluate the effectiveness of the TAA for Farmers
the Effectiveness of        program. The surveys are to be administered to producers participating in
                            the program after each stage of technical assistance, including after
Technical Assistance but    producers complete each training course and after they complete their
Do Not Provide a            initial and long-term business plans. As of March 2012, NIFA’s academic
Complete Picture of         partners developed six producer surveys out of a planned seven and
Program Effectiveness       were still drafting the seventh. According to our analysis of the six
                            developed surveys, including versions adapted to each certified
                            commodity, the surveys are well designed and appropriate to provide
                            adequate data on producers’ perceptions of the program—including
                            perceived changes in their knowledge, behavior, and condition as a result
                            of the technical assistance.

                            To provide survey results for our review, NIFA’s academic partners
                            analyzed the preliminary results of surveys received as of December
                            2011 (the survey results may not be representative of all producers
                            participating in the program). According to the lead NIFA official, the
                            survey results are too preliminary to assess any changes in producers’
                            condition—the ultimate goal of the technical assistance—but the results
                            suggest that producers find the program’s technical assistance to be
                            effective in helping them improve their knowledge and begin to change
                            their behavior. For example, responses from about 1,800 producers
                            (approximately 19 percent of the producers who were approved to
                            participate in the program) surveyed after completion of their initial
                            business plans, indicate the following:



                            Page 18                                  GAO-12-731 Trade Adjustment Assistance
•   Knowledge. About 56 percent of producers who responded to the
    survey learned “quite a bit” or “a great deal” from the training that
    would benefit their business. Almost 34 percent said they learned
    “some,” almost 9 percent said they learned “a little,” and less than 2
    percent said they learned “nothing.”

•   Behavior. Over 57 percent of producers who responded to the survey
    felt that developing an initial business plan was “very” or “completely”
    helpful in assisting them identify changes they could make to their
    business operations. About 28 percent felt it was “moderately” helpful,
    and about 14 percent said it was of “slight” or “no” help.

NIFA’s academic partners also collected anecdotes from producers to
provide specific examples of the TAA for Farmers program’s value. For
example, according to an anecdote from a lobster producer in Maine, the
direct marketing workshop provided ideas on how to market lobster
differently from other vendors, such as having lobster certified as organic.
According to another anecdote from a catfish producer in Arkansas, the
training helped him understand the need to look at every aspect of the
cost of his operation and control the spread of disease among his stock.

The surveys can be used to gather insights into producers’ perceptions of
the program, but limitations in the surveys’ design will hinder FAS and
NIFA’s ability to use them as a program evaluation tool. In particular,

•   The surveys’ time frame is insufficient to gather insights into
    producers’ perceptions of long-term effectiveness. According to
    NIFA’s academic partners, they will administer the final survey 6 to 12
    months after producers complete the program’s technical assistance
    in 2013. The lead NIFA official said, however, that technical
    assistance programs require at least 3 years after program completion
    to begin demonstrating results because long-term behavioral changes
    are not easily or quickly adopted. The official added that the academic
    partners would like to administer a final follow-up survey 3 to 5 years
    after program completion but said there is currently no funding
    available for such a survey.

•   The surveys provide little information on producers’ perceptions of the
    effectiveness of the program’s financial assistance. Like USDA’s
    performance measures, the surveys focus primarily on the program’s
    technical assistance. The lead NIFA official explained that the agency
    tasked its academic partners with evaluating only the program’s
    technical assistance. Without evaluating the program’s financial



Page 19                                   GAO-12-731 Trade Adjustment Assistance
                  assistance as well as its technical assistance, however, NIFA and
                  FAS cannot know the extent to which the program as a whole is
                  effective in helping producers become more competitive. For
                  example, some commodity experts we spoke with suggested that the
                  financial assistance for producers of capital-intensive commodities,
                  such as catfish, may be less effective than such assistance for
                  producers of labor-intensive commodities, such as blueberries,
                  because the assistance constitutes a smaller percentage of the
                  amount needed to make changes to the production of capital-
                  intensive commodities.

              In addition to these limitations, FAS has not corroborated the survey
              results by collecting data to help determine whether improvements in
              producers’ conditions are due to the TAA for Farmers program or some
              external factor. In November 2009, we reported that program evaluation
              methods to rule out plausible alternative explanations for outcomes that
              may be influenced by a variety of external factors, such as changes in the
              economy, can help strengthen the evaluations. 6 In practice, it is generally
              difficult to isolate the causal impact of programs from other influences on
              outcomes, but use of multiple sources of data can help address concerns
              about using only one source. FAS officials explained that there were
              challenges to collecting data on producers and their businesses because
              of privacy and other constraints and that FAS did not want to discourage
              producer participation by appearing too invasive. FAS officials also
              acknowledged that there are some types of data they could have
              collected, such as producers’ cost structures before they participated in
              the program, and that FAS could have potentially collected this
              information through producers’ individual applications.


              USDA provided enhanced technical assistance to most producers of
Conclusions   certified commodities who applied for TAA for Farmers assistance. In
              determining which individual applicants qualified, USDA considered
              certain employees as well as spouses of producers to be eligible on the
              grounds that they shared in the risk of producing the agricultural
              commodities. However, USDA did not require spouses applying for
              assistance to submit documentation on how they contributed to producing
              a certified commodity. As a result, USDA may have approved the


              6
               GAO, Program Evaluation: A Variety of Rigorous Methods Can Help Identify Effective
              Interventions, GAO-10-30 (Washington, D.C.: Nov. 23, 2009).




              Page 20                                        GAO-12-731 Trade Adjustment Assistance
                      applications of spouses who did not contribute to producing a certified
                      commodity and therefore does not have assurance that it targeted
                      assistance to individuals who are intended to benefit from the program. In
                      addition, USDA made financial assistance payments to producers without
                      the producers being required to show how payments would be used to
                      implement their long-term business plans. Under the Trade and
                      Globalization Adjustment Assistance Act of 2009, the payments for
                      completion of long-term business plans are to be used to implement
                      those plans. USDA officials acknowledged that some producers likely use
                      the payments for unrelated expenses.

                      The performance measures and surveys USDA is using as part of its
                      approach to evaluate the TAA for Farmers program are well designed for
                      measuring the number of producers completing the program and for
                      capturing producer perceptions of the effectiveness of the program’s
                      technical assistance. However, USDA cannot use its current performance
                      measures to fully evaluate the program’s effectiveness because they do
                      not measure quantifiable outcomes or cover all key areas of the program.
                      Furthermore, the surveys have several limitations. For example, the time
                      frame for administering the final survey—6 to 12 months after producers
                      complete the program—is insufficient to gather insights into producers’
                      perceptions of the program’s long-term effectiveness. In addition, USDA
                      has not corroborated the survey results to help isolate the impact of the
                      TAA for Farmers program from other influences. Because of limitations
                      with USDA’s program evaluation approach, USDA cannot establish the
                      extent to which the program as a whole is ultimately effective. Performing
                      comprehensive program evaluations can be difficult for agencies because
                      of resource constraints and data collection challenges. Nonetheless, a
                      broader program evaluation approach could enable USDA to better
                      evaluate the impact of the TAA for Farmers program on producers’
                      competitiveness. The TAA for Farmers program as reauthorized in 2009
                      is almost over, and no new funds have been appropriated. If the program
                      receives future reauthorizations and funding, USDA will have an
                      opportunity to improve the operation and evaluation of the program.


                      We recommend that the Secretary of Agriculture direct the Administrators
Recommendations for   of FAS and the Farm Service Agency and the Director of NIFA, as
Executive Action      appropriate, to take the following three actions, as applicable under the
                      structure of any future round of trade adjustment assistance for farmers
                      and fishermen for which Congress may appropriate funds:




                      Page 21                                 GAO-12-731 Trade Adjustment Assistance
                     •   Require spouses who may be eligible to apply for assistance to
                         submit documentation on how they contribute to a commodity’s
                         production.

                     •   Take steps to help ensure that any financial assistance payments that
                         may be provided under the program are used for the intended
                         purpose—for example, by requiring producers to state in their
                         business plans how they intend to use the payments.

                     •   Broaden the program’s evaluation approach to help ensure that USDA
                         can comprehensively evaluate the effectiveness of the program.
                         Steps to broaden the program’s evaluation approach could include
                         developing quantifiable outcome-oriented performance goals and
                         measures for all key areas of the program and collecting data to help
                         isolate the impact of the TAA for Farmers program from other
                         influences.


                     We provided a copy of our draft report to USDA for review and comment.
Agency Comments      In written comments from the department, FAS stated that the department
and Our Evaluation   generally agrees with our recommendations. In addition, FAS stated that,
                     assuming any future TAA for Farmers program has the same statutory
                     requirements, the department will make every effort to address our
                     recommendations in order to strengthen and improve the program.

                     We recognize that the statutory requirements for any future TAA for
                     Farmers program may differ from current requirements. For example, as
                     noted in our report, the Trade and Globalization Adjustment Assistance
                     Act of 2009 amended the program, making changes to the program in key
                     areas. Given the potential for future changes to the program’s statutory
                     requirements, we revised our recommendations related to the eligibility
                     requirements for spouses and the use of financial assistance payments
                     toward implementation of business plans. In particular, we revised the
                     wording of these two recommendations to account for the potential that a
                     future reauthorization of the program may make further changes to the
                     program’s eligibility requirements or to the technical and financial
                     assistance provided to producers.




                     Page 22                                 GAO-12-731 Trade Adjustment Assistance
We are sending copies of this report to the Secretary of Agriculture, the
appropriate congressional committees, and other interested parties. In
addition, the report is available at no charge on GAO’s website at
http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-3841 or shamesl@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made key contributions to this
report are listed in appendix V.




Lisa Shames
Director, Natural Resources
  and Environment




Page 23                                  GAO-12-731 Trade Adjustment Assistance
Appendix I: Scope and Methodology
             Appendix I: Scope and Methodology




             To examine the commodities and producers approved for assistance
             under the 2009 reauthorization of the Trade Adjustment Assistance (TAA)
             for Farmers program and the type and amount of assistance provided, we
             reviewed four areas of the program:

             •   Commodity certification. We reviewed petitions submitted by groups
                 of commodity producers, Economic Research Service analyses,
                 petition review committee decision memos with recommendations to
                 the Foreign Agricultural Service (FAS) on whether to certify
                 commodities, and FAS letters to producer groups and Federal
                 Register notices announcing whether commodities had been certified
                 or denied. We analyzed the documentation to determine the basis for
                 FAS’s determinations and the extent to which the 2009 changes to the
                 certification criteria were a factor in commodities being certified.

             •   Producer application. We reviewed Farm Service Agency documents
                 describing the application process and individual eligibility
                 requirements, including the requirements for crew members and
                 spouses of eligible producers. In addition, we obtained and analyzed
                 Farm Service Agency data on the number of applicants for each
                 certified commodity, including the number approved and disapproved
                 and the reasons for disapproval.

             •   Technical assistance. We reviewed documents prepared by the
                 National Institute of Food and Agriculture’s (NIFA) academic partners
                 for organizing and overseeing the program’s technical assistance, a
                 list of training courses provided to producers, templates for initial and
                 long-term business plans, and sample long-term business plans. We
                 also analyzed Farm Service Agency data on producers’ completion of
                 each stage of technical assistance.

             •   Financial assistance. We analyzed Farm Service Agency data on
                 payments to producers who completed initial and long-term business
                 plans, as well as for transportation and related expenses to attend an
                 initial orientation to the program. In addition, we reviewed summary
                 data from the U.S. Department of Agriculture (USDA) on its use of
                 appropriations for the program.

             We assessed the reliability of Farm Service Agency data by checking for
             obvious errors in accuracy and completeness. In addition, we assessed
             the data’s consistency with equivalent data maintained by the Center for
             Farm Financial Management on producers’ completion of technical
             assistance. We also reviewed documentation describing the Farm



             Page 24                                   GAO-12-731 Trade Adjustment Assistance
Appendix I: Scope and Methodology




Service Agency database used to produce the data, and we interviewed
Farm Service Agency officials who had knowledge of the data. We
determined that the data were sufficiently reliable for reporting on the
number of approved and disapproved applicants and the amount of
technical and financial assistance provided to producers.

To examine the approach USDA is taking to evaluate the program’s
effectiveness and to identify any limitations in this approach, we reviewed
USDA’s performance measures and producer surveys:

•   Performance measures. We reviewed the performance measures
    FAS selected for program reporting purposes and compared the
    performance measures against guidelines embodied in the
    Government Performance and Results Act of 1993, as amended
    (GPRA). We also reviewed available data on these measures to
    understand how FAS and NIFA’s academic partners were tracking
    and using the performance measures.

•   Producer surveys. We reviewed templates developed by NIFA’s
    academic partners for surveys of producers participating in the
    program. The templates included the surveys to be completed after
    each stage of the program’s technical assistance. We evaluated the
    templates and the academic partners’ survey development
    methodology against GAO guidelines for designing evaluations and
    the Office of Management and Budget’s (OMB) Standards and
    Guidelines for Statistical Surveys to understand the extent to which
    the academic partners incorporated generally accepted survey
    research practices. In addition, we reviewed an analysis of preliminary
    survey results, as of December 2011, that NIFA’s academic partners
    prepared for purposes of our audit.

For further explanation regarding both of our objectives, we interviewed
USDA officials involved in administering each stage of the program,
including officials from FAS, the Economic Research Service, the TAA for
Farmers petition review committee, the Farm Service Agency, and NIFA.
In addition, we interviewed NIFA’s academic partners and representatives
of the teams established to develop commodity-specific training courses,
and we attended a meeting of TAA of Farmers business consultants
organized by NIFA’s lead academic partner. The meeting provided us
with the opportunity to obtain business consultants’ perspectives on
various aspects of the program and to learn about their experiences
working with producers. To better understand the type of information
contained in long-term business plans, we reviewed sample plans (with



Page 25                                  GAO-12-731 Trade Adjustment Assistance
Appendix I: Scope and Methodology




personal information removed) that NIFA’s academic partners selected to
serve as a basis for discussing the criteria for approval of the plans at the
meeting of business consultants. We also interviewed members of the
USDA Office of the Inspector General team conducting a review of the
TAA for Farmers program during the same time we conducted our review.
We planned our audit to minimize duplication of effort in areas evaluated
by the Office of Inspector General, such as FAS and Farm Service
Agency internal controls over the application of eligibility requirements for
producers of certified commodities.

To gather additional perspectives, we interviewed a nonprobability
sample of producer groups that submitted petitions for TAA for Farmers
assistance. Because we selected a nonprobability sample of producer
groups to interview, the information we obtained from these interviews
cannot be generalized to other groups. The interviews instead provided
us with the perspectives of various producer groups regarding the
program. We conducted interviews by phone and in person as part of
fieldwork in Maine and Mississippi, during which we also interviewed two
producers (a catfish producer and a shrimp producer) regarding the
impact the program has had on their businesses. We selected these two
states in order to meet with representatives of producer groups for three
of the five certified commodities (catfish, lobster, and frozen wild
blueberries). In addition, Maine accounted for the majority of approved
lobster producers and all approved wild blueberry producers, and
Mississippi accounted for the largest number of approved catfish
producers.

We conducted this performance audit from September 2011 to July 2012
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




Page 26                                   GAO-12-731 Trade Adjustment Assistance
Appendix II: Commodities Certified and
                                           Appendix II: Commodities Certified and Denied
                                           for TAA for Farmers Assistance



Denied for TAA for Farmers Assistance

                                           Table 2 summarizes our analysis of the basis for FAS’s certification of five
                                           commodities under the 2009 reauthorization of the TAA for Farmers
                                           program, including the Economic Research Service analyses of petitions
                                           and FAS decision memos. FAS certified four commodities on the basis of
                                           a decrease in factors added as options (in addition to price) for
                                           demonstrating harm from imports: quantity of production and value of
                                           production. None of the certifications were based on a decrease in cash
                                           receipts (the third factor added for demonstrating harm). In its analyses of
                                           petitions for lobster, shrimp and frozen wild blueberries, the Economic
                                           Research Service identified factors other than imports that contributed to
                                           a decline in the commodity’s price or other factor. Nevertheless, FAS
                                           found that the commodities met the requirement for an increase in
                                           imports to have contributed importantly to the decline.

Table 2: Commodities Certified for Assistance under the 2009 Reauthorization of the TAA for Farmers Program

Commodity and                                                                                                                 Other contributing factors cited
year covered by     Area covered by the                Basis for FAS’s                             Increase in                by the Economic Research
the petition        certification                      determinationa                              importsa                   Service
Asparagus (2009)    Nationwideb                        17 percent decline in                       17 percent                 None
                                                       quantity of production
Catfish (2009)      Nationwide                         16 percent decline in value                 48 percent                 None
                                                       of production
Lobster (2009)c     Connecticut, Maine,         State-level declines in the                        6 percent                  Increased domestic production
                    Massachusetts, New          value of production ranging
                    Hampshire, and Rhode Island from 16 percent to 36
                                                percent
Shrimp (2008)d      Alabama, Alaska, Florida,          22 percent decline in the                   5 percent                  A natural variation in harvest and
                    Georgia, Louisiana,                quantity of production                                                 a rapid increase in the price of
                    Mississippi, North Carolina,                                                                              diesel fuel
                    South Carolina, and Texas
Wild blueberries,   Maine                              56 percent decline in                       3 percent                  Increased domestic production,
frozen (2009)                                          average annual price                                                   high inventory levels from previous
                                                                                                                              years, and decreased exports
                                           Source: GAO analysis of FAS determinations to certify TAA for Farmers petitions.
                                           a
                                               Percentage changes are in comparison to the average of the 3 preceding years.
                                           b
                                            FAS received petitions from asparagus producers in California, Michigan, Pennsylvania, and
                                           Washington. FAS certified producers of asparagus nationwide on the basis of data from the top
                                           asparagus-producing states (California, Michigan, and Washington).
                                           c
                                            FAS initially denied a nationwide petition for lobster in part because imports decreased in 2008.
                                           Producer groups from five New England states submitted separate petitions during the second filing
                                           period FAS announced in 2010. The petitions used more recent data that had become available for
                                           2009, when imports had increased.
                                           d
                                            FAS certified petitions submitted during both the first and second filing periods. Recertification of the
                                           initial petition extended the 90-day postcertification period in which individual producers could apply
                                           for assistance. In addition, producers in Alaska joined the second petition. Producers of both wild and
                                           pond-raised shrimp and prawns were eligible to apply for assistance.




                                           Page 27                                                                  GAO-12-731 Trade Adjustment Assistance
                                            Appendix II: Commodities Certified and Denied
                                            for TAA for Farmers Assistance




                                            Table 3 summarizes our analysis of the basis cited by FAS when denying
                                            commodities. Reasons for denial included not meeting the requirements for
                                            both an increase in imports and a decrease in price or another factor and
                                            not meeting the requirement for an increase in imports to have contributed
                                            importantly to a commodity’s harm. In cases in which FAS found that
                                            imports had not contributed importantly to a commodity’s harm, the
                                            Economic Research Service identified other contributing factors, such as
                                            an increase in domestic production. For several commodities, including
                                            apples, coffee, and cranberries, FAS received separate state petitions and
                                            cited differing reasons for not certifying the commodities in those states.

Table 3: Basis Cited by FAS for Denying Commodities under the 2009 Reauthorization of the TAA for Farmers Program

                                                                                                          Basis for FAS’s determinations
                                                                                     Requirement for     Imports                                 Factors other than
                                                                                     greater than 15 decreased in the                           imports contributed
                                                                                     percent decline year covered by                            to a greater than 15
Commodity                 Area covered by petitions                                      not met       the petition                               percent decline
Apples                    Maine                                                             X               X
                          Michigan and New York                                                                                                          X
                          Minnesota                                                                                           X
Blue crabs                Georgia                                                                                             X
Coffee                    Hawaii                                                                                              X
                          Puerto Rico                                                            X                            X
Cranberries               New Jersey                                                             X                            X
                          Oregon and Washington                                                                                                          X
Crawfish                  Louisiana                                                                                           X
Cut lilies                Georgia, North Carolina, South Carolina,                               X
                          and Virginia
Lamb                      Idaho, Montana, Ohio, Utah, and Wyoming                                X                            X
Multispecies fish         Connecticut, Maine, Maryland,                                                                       X
                          Massachusetts, New Hampshire, New
                          Jersey, New York, and Rhode Island
Prunesa                   California                                                                                                                     X
Spiny lobster             Florida                                                                                             X
Tilapia                   Arkansas                                                               X                            X
Wild blueberries, fresh   New Hampshire                                                          X
Wool                      Idaho, Kansas, Montana, Ohio, Utah, and                                                             X
                          Wyoming
                                            Source: GAO analysis of FAS decision memos, letters to petitioners, and Federal Register notices.
                                            a
                                             FAS received two petitions for California prunes, one during each of the two filing periods announced
                                            in 2010. For the first petition, FAS found, based on partial year data, that imports had declined. For
                                            the second petition, FAS found that imports had increased but that imports were not an important
                                            factor in determining the average price.




                                            Page 28                                                                  GAO-12-731 Trade Adjustment Assistance
Appendix II: Commodities Certified and Denied
for TAA for Farmers Assistance




Several commodities for which FAS received TAA for Farmers petitions
have been the subject of other federal efforts addressing the impact of
imports. For example, the Food, Conservation and Energy Act of 2008
appropriated $15 million for USDA to compensate producers of
asparagus (a commodity certified for TAA for Farmers assistance) for
market loss and reduced prices resulting from an increase in imports. In
addition, the U.S. International Trade Commission, an independent
federal agency that conducts investigations that can lead to the imposition
of antidumping duties on imports sold at less than fair value, has
conducted investigations into imports of shrimp and crawfish, two
commodities for which FAS received petitions for TAA for Farmers
assistance. The TAA for Farmers certification criteria, however, differ from
the criteria used by the U.S. International Trade Commission to support
the imposition of antidumping duties. As a result, the outcomes of
certification process and commission investigations also differed. In
particular, FAS certified shrimp but denied crawfish even though
antidumping duties have been imposed on both commodities.




Page 29                                         GAO-12-731 Trade Adjustment Assistance
Appendix III: Technical and Financial
              Appendix III: Technical and Financial
              Assistance Provided to Producers Approved
              for TAA for Farmers Assistance


Assistance Provided to Producers Approved
for TAA for Farmers Assistance
              Farm Service Agency data on individual applicants under the five
              commodities certified for TAA for Farmers assistance included the
              numbers of approved applicants, disapproved applicants, and applicants
              waiting for a decision on their application or appeal of disapproval (see
              table 4). Shrimp producers included those who applied in the 90-day
              period following the commodity’s initial certification, as well as those who
              applied in the period following the commodity’s recertification.

              Table 4: Number of TAA for Farmers Applicants as of April 2012, by Certified
              Commodity and Application Status

                  Commodity                                       Approved    Disapproved      Pendinga        Total
                  Asparagus                                            259              13                8     280
                  Catfish                                              743              40                2     785
                  Lobster                                            3,842             340                -    4,182
                  Shrimp (initial certification)                     3,405             485                7    3,897
                  Shrimp (recertification)                           1,349             204                1    1,554
                  Wild blueberries, frozen                             254              24                -     278
                  Total                                              9,852           1,106            18      10,976
              Source: GAO analysis of Farm Service Agency data.
              a
              Includes applicants waiting for a decision on their application or appeal of disapproval.


              A FAS official estimated that about 80 percent of the approved applicants
              met the eligibility requirement for a decrease in the price received for a
              commodity through a process whereby industry officials could submit data
              for all producers in a state or certain counties within a state. For example,
              FAS allowed all asparagus growers in Michigan to rely on such data when
              applying for assistance rather than submit their own price data. According
              to information from FAS and the Farm Service Agency, less than 1
              percent of the total number of approved applicants did not meet the
              program’s eligibility requirements but partially or fully completed the initial
              training requirements after receiving approval letters that were sent in
              error. In consideration of the time such applicants spent on technical
              assistance, the Deputy Under Secretary for Farm and Foreign Agricultural
              Services granted equitable relief to the applicants, meaning they were
              allowed to continue to participate in the program and receive cash
              benefits. According to an official in the Farm Service Agency, the agency
              did not develop software to track applicants until after it began accepting
              applications. As a result, staff needed to manually enter applicant data
              into spreadsheets, which led to data entry errors and approval letters
              being inadvertently sent to some applicants who did not meet eligibility
              requirements.


              Page 30                                                        GAO-12-731 Trade Adjustment Assistance
                                              Appendix III: Technical and Financial
                                              Assistance Provided to Producers Approved
                                              for TAA for Farmers Assistance




                                              Table 5 summarizes Farm Service Agency data on the number and
                                              percentage of approved producers for each certified commodity who
                                              completed initial and long-term business plans as of April 2012, as well as
                                              the total amount of financial assistance payments to the producers.

Table 5: Financial Assistance Provided to Producers as of April 2012, by Certified Commodity (Dollars in Millions)

                                       Initial business plans                          Long-term business plans
                                 Number (percent)                                  Number (percent)                             Total cash benefits,
                                 of producers with                                 of producers with              Cash     including transportation
Commodity                          approved plans      Cash benefits                 approved plans             benefits      and related expenses
Asparagus                               218 (84%)                     $0.9                         73 (28%)         $0.6                       $1.5
Catfish                                 668 (90%)                     $2.7                        452 (61%)         $3.6                       $6.3
Lobster                               2,237 (58%)                     $2.2                  1,040 (27%)             $2.0                       $4.2
Shrimp (initial certification)        3,272 (96%)                   $13.1                   2,716 (80%)            $21.7                      $34.8
Shrimp (recertification)              1,180 (87%)                     $1.1                        729 (54%)         $1.4                       $2.6
Wild blueberries                        206 (81%)                     $0.2                         63 (25%)         $0.1                       $0.3
Total                                 7,781 (79%)                   $20.2                   5,073 (51%)            $29.5                      $49.7
                                              Source: GAO analysis of Farm Service Agency data.

                                              Note: Column and row totals may not add up due to rounding. In addition, the column for total cash
                                              benefits includes about $60,000, distributed among the certified commodities, for producers’
                                              transportation and related expenses to attend an initial orientation to the program.


                                              NIFA’s academic partners developed separate templates and approval
                                              criteria for the initial business plans and long-term business plans. The
                                              template for the initial business plan is two pages, with space for
                                              producers to provide brief descriptions of their businesses, key
                                              challenges, skills gained from the TAA for Farmers training courses, plans
                                              for applying those skills, changes being considered to improve business
                                              profitability and the ability to compete with imports, and whether
                                              producers intend to complete a long-term business plan. According to the
                                              TAA for Farmers technical assistance procedures guide, producers had
                                              the option of completing the initial business plans during the last 30
                                              minutes of a training course on how to develop a long-term business plan.
                                              NIFA’s academic partners said they designed the initial business plan to
                                              serve primarily as a starting point for developing a long-term plan. They
                                              said that, as a result, they approved most initial business plans without
                                              returning them to producers for additional work.

                                              NIFA’s academic partners developed templates for several different types
                                              of long-term business plans that producers could choose to develop to
                                              suit their individual needs: a traditional business plan with separate
                                              versions for farmers and fishermen, a plan to pass a business on to


                                              Page 31                                                         GAO-12-731 Trade Adjustment Assistance
Appendix III: Technical and Financial
Assistance Provided to Producers Approved
for TAA for Farmers Assistance




successors and plan for retirement, and a career plan for producers such
as crew members who do not own a business. The templates were also
translated for the benefit of shrimpers who speak Vietnamese as a first
language. According to the technical assistance procedures guide, the
long-term plans are to undergo two levels of review before they are
approved and producers can receive their payments—first by the
business consultant assigned to work with a producer, and then by
NIFA’s academic partners. In addition, the templates for the long-term
business plans are more extensive than the template for the initial
business plans. For example, the template for traditional long-term
business plans includes sections for

•   a business description, including location, facilities, business history,
    and ownership structure.

•   business operations, including management of inventory, product
    quality, customer service, and risk; compliance with regulations; and
    an implementation timeline for any changes.

•   a marketing plan with subsections for an analysis of the market, the
    business’s competitive position and market segments to be targeted,
    and pricing, promotion, and distribution plans.

•   management of the business, including new positions to be filled and
    the plan for finding and training people for those positions.

•   a financial plan with subsections for a balance sheet showing assets,
    liabilities, and net worth; historical performance and projections; asset
    management; and capital requests.




Page 32                                     GAO-12-731 Trade Adjustment Assistance
Appendix IV: Comments from the U.S.
              Appendix IV: Comments from the U.S.
              Department of Agriculture



Department of Agriculture




              Page 33                               GAO-12-731 Trade Adjustment Assistance
Appendix IV: Comments from the U.S.
Department of Agriculture




Page 34                               GAO-12-731 Trade Adjustment Assistance
Appendix IV: Comments from the U.S.
Department of Agriculture




Page 35                               GAO-12-731 Trade Adjustment Assistance
Appendix V: GAO Contact and Staff
                  Appendix V: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Lisa Shames, (202) 512-3841 or shamesl@gao.gov
GAO Contact
                  In addition to the contact named above, Mary Denigan-Macauley
Staff             (Assistant Director), Kevin Bray, Joseph Cook, Barbara El Osta, Cynthia
Acknowledgments   Norris, Anne Rhodes-Kline, and Heather Salinas made key contributions
                  to this report.




(361338)
                  Page 36                                GAO-12-731 Trade Adjustment Assistance
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