Video: Fighting farm fraud

By Jane Wells Correspondent
CNBC
updated 2/17/2006 5:22:24 PM ET 2006-02-17T22:22:24

Satellite photos are a common sight on the Internet these days, and most people use them to look at their homes, or cities from space. But they’re also being used to fight fraud.

The risk management agency at the U.S. Department of Agriculture (USDA) is using very detailed satellite photos provided by the U.S. geological survey and two Landsat satellites to monitor for government crop insurance fraud, claiming it is saving taxpayers tens of millions of dollars each year.

Since almost all farmers get loans and subsidies from the government, the government wants to make sure they’re complying with the law.

“The U.S. Department of Agriculture is actually one of our largest users,” said James Lacasse at the Earth Resources Observation Systems (EROS) Data Center (EDC), which manages and archives satellite images of the Earth. “They purchase about 30 percent of our data each year,” he added, noting that collecting, archiving and distributing this data costs $20 million a year.

The USDA says it is saving between $70 million and $110 million a year by uncovering crop insurance fraud, much more than $20 million.

In 2003, for example, the USDA spot checked for irregularities of several farmers who made $222 million in crop insurance claims. The farmers were told they are under review. Those insurance claims dropped to $151 million the following year, and it continues to drop, saving on average about $90 million a year in fraudulent claims.

Federal prosecutors are now using these satellite photos in court cases. In one of the biggest so far, in North Carolina, the photos helped convict a husband and wife who said they were growing tomatoes that were destroyed by the weather when they were actually growing beans.

The couple even faked weather damage by throwing ice cubes in a field. They are going to prison and have been fined millions of dollars. But how do farmers feel about big brother watching from above?

“It doesn’t surprise me at all,” said Andy Hooper of Terry Farms here in Oxnard, Calif. “It makes us pause, but we have nothing to hide.”

In fact, some farmers purchase these photos, but they can be dated. For example, Andy Hooper looked at one of these photos and saw areas where the irrigation could be better, but he also said it shows his farm about 18 months ago. There’s romaine and celery in one of his fields in the photo, but today it’s full of strawberries.

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