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Ag Department gives $20 million in powdered milk for catfish feed

Published on 7 November, 2006, Last updated at 12:16 GMT


WASHINGTON - The Agriculture Department was faulted Wednesday for donating $20 million in powdered milk to a Mississippi feed mill that sold it as catfish food.

The department's inspector general said there was no legal authority for the department to donate the milk and urged Agriculture officials to try to recover the value of the milk and the $579,000 cost of shipping it.

At issue is a stockpile of powdered milk stored in manmade caves near Kansas City, Mo., and in warehouses across the country. The government buys the milk to prop up prices paid to dairy farmers, and it has spent more than $20 million annually to store it.

The department was looking for ways to get rid of the powdered milk when a Mississippi State University professor asked for some so he could study its use as a protein substitute in catfish food.

In their eagerness to unload the milk, agriculture officials "did not follow prudent business practices in donating" the milk powder, the audit said.

Officials offered the professor much more milk powder than he requested and also offered to pay for shipments.

The professor, who was not named in the report, worked out a delivery schedule with a privately owned catfish feed mill and its affiliated research center in Indianola, Miss.

"A small portion ... was used for research on catfish nutrition, while the majority of it was incorporated into commercial catfish feed and sold to feed mill customers," the report said.

Officials mistakenly assumed the professor was working with the department's research arm, the Agricultural Research Service, because he had done so on other research, the report said. In fact, the professor made clear in an e-mail that the research service was not involved in the powdered milk study.

The department realized its mistake when officials began trying to arrange for another year's worth of powdered milk for the feed mill, this time at a nominal cost. Shipments were halted and the inspector general was asked to look into the arrangement.

"The issues and problems highlighted by the audit report are serious and require immediate corrective and preventative action," Candace Thompson, acting deputy administrator for commodity operations, said in a written response to the report.

It's not the first time auditors have criticized the use of the taxpayer-funded powdered milk stockpile. A 2005 audit cited misuse of the milk in trading that developed after the milk was given to ranchers to help them get through a drought.


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