USDA milk powder worth $19.7 million sold in commercial catfish feed
The USDA Office of Inspector General (OIG) has criticized as inappropriate a major donation of Nonfat Dry Milk to Mississippi State University (MSU), ostensibly for catfish nutrition research.
The Farm Service Agency (FSA) acquires various surplus and price-supported agricultural commodities, including dairy products that are used to provide food assistance through domestic and foreign aid programs. On May 12, 2005, the former FSA Administrator requested that the Office of Inspector General (OIG) perform a review of two incidents related to the disposition of Commodity Credit Corporation CCC-owned Nonfat Dry Milk (NDM).
One incident, in 2005, involved the sale of 15 million pounds of NDM to Mississippi State University (MSU). The Administrator was concerned that the sale had been made in a manner contrary to the legal advice of the Office of the General Counsel (OGC). Because of his concerns, the contract was voided and NDM shipments in route were diverted to other authorized locations.
The other incident occurred during 2003 and involved the donation of 27 million pounds of NDM to the same university. The Administrator asked OIG to determine whether Agency officials properly followed procedures for the 2005 sale of NDM and whether the 2003 donation of NDM was properly made. He also asked OIG to determine if further actions should be taken.
OIG found that between February and November 2003, FSA donated approximately 24.71 million pounds of NDM to a private feed mill and affiliated research center for “catfish nutrition research” without determining their legal authority to do so, understanding the relationships of the parties involved or obtaining a signed agreement defining the project’s objectives and outcomes to be achieved.
FSA officials mistakenly believed they were donating NDM to the university. FSA officials also believed they had authority to donate CCC commodities for research purposes. It was not until additional quantities were requested for donation in November 2003, that FSA staff questioned whether FSA had the authority to donate such large quantities of NDM to MSU. In response to this inquiry, OGC determined that the CCC Charter Act authorizes the donation of CCC commodities for research only when the research is conducted through, or in coordination with, a U. S. Department of Agriculture (USDA) research agency.
No USDA research agency, however, was involved in this endeavor.
FSA offered and donated substantially more NDM than requested by the principal contact because large quantities of NDM were in CCC inventory. Although only a pallet load or two of NDM was initially requested by the principal contact, FSA donated 24.7 million pounds valued at $19.7 million. Only about 2,000 pounds were actually used in a controlled research study performed by the private research entity and the remainder was incorporated into catfish feed and was sold to the private feed mill’s customers.
FSA also paid transportation costs exceeding $579,000 to deliver the NDM to the feed mill and its affiliated research center. FSA charged this expenditure to the Price Support Program and did not request an apportionment from the Office of Management and Budget (OMB).
