Expenditures and Activities of
The United States has a sophisticated agricultural export promotion system operating worldwide. It is a partnership between USDA's Foreign Agricultural Service and numerous non-profit private sector commodity and regional associations. U.S. government expenditures on these activities for FY 1998 amounted to $149.2 million. Private sector contributions were $137.7 million. Many of the industry activities are funded by producer and processor check-offs, which have been approved in a referendum by a majority of the affected industry.
The United States is an attractive market for many agricultural products. Consequently, a significant amount of U.S. competitors' promotion expenditures, averaging 10 percent, is spent in the United States. For some countries, such as Canada, Argentina, India, Spain, and Italy, the proportion of promotion expenditures devoted to the United States is as much as 28 percent.
U.S. Promotional Activities
The main U.S. agricultural promotion programs are USDA's Foreign Market Development Cooperator Program (FMD) and Market Access Program (MAP). USDA also provides a number of services to exporters through its overseas offices and its trade show and trade leads programs. Other programs provide technical assistance to develop, maintain, or expand markets for U.S. agricultural exports in emerging markets. USDA also sponsors short-term study and training programs in the United States for senior and middle level specialists and administrators involved in agricultural trade in foreign markets.
The goal of the FMD program, also known as the Cooperator Program, is to aid in the creation, maintenance, and expansion of long-term export markets for U.S. agricultural products. The program, started in the mid-1950s, has fostered a trade promotion partnership between USDA and U.S. agricultural producers and processors. These are represented by nonprofit commodity or trade associations called cooperators. Under this partnership, USDA and the Cooperators pool their technical and financial resources to conduct generic overseas market development activities. These Cooperators compete for USDA funding annually, based on their proposed activities. Preference is given to non-profit U.S. agricultural and trade groups that represent an entire industry or are nationwide in membership and scope.
In 1998, 25 groups received funding for a range of agricultural commodities. Half of the $27.5 million dollars in U.S. government funding under FMD was spent on feedgrains, wheat, and soybeans. Most of the remaining funds went to forest products, meat, rice, and poultry exporters. Japan, Western Europe, China, and Mexico accounted for half of the funded projects. Other Asian countries, the Middle East, and Latin America accounted for the majority of the remaining expenditures. Activities that may be funded include trade servicing, market research, and technical assistance. Market research is often the first step in identifying opportunities. Servicing activities are aimed at improving trade relationships. Technical assistance activities are usually intended to expand the foreign country's capability to use or process U.S. goods.
The MAP program also helps U.S. producers, exporters, private companies and other trade organizations finance promotional activities abroad. While organizations may undertake the same types of activities as the FMD program, MAP is intended to be used for shorter-term, consumer-oriented promotions. It is primarily used for high-value and processed products, while FMD is generally used for bulk commodities. MAP, originally authorized in 1985 as the Targeted Export Assistance Program, has provided cost-share funds to nearly 1,000 U.S. companies, cooperatives, and trade associations to promote their products overseas. Branded promotions are permitted under the MAP, however, the promotion of a branded product in a single country is generally limited to five years.
MAP applicants compete annually for funds. Funds are allocated to proposals which best meet program requirements, such as cost-sharing, strategic planning, export goals and program evaluations. Sixty-five organizations received MAP funding in 1998, 19 of which also participate in the FMD program. Fruit and vegetables, represented by numerous organizations, received more than a quarter of the MAP funds. Substantial allocations were also made for cotton, meat and forest products, as well as to the state regional trade organizations which assist small companies in their regions. Nearly half of the $121.7 million in U.S. government funding for MAP, which includes carry-overs from previous MAP budgets, was directed to the Japanese and European markets. Other Asian markets, the Middle East and Latin America were also major targets for MAP-funded promotions. MAP-funded activities include product promotions, in-store demonstrations and market research.
Other USDA promotion programs include participation in trade shows, and collection and dissemination of buyers lists and trade leads to connect U.S. exporters and foreign buyers. USDA also sponsors U.S. promotions by U.S. embassies overseas. Promotions and trade shows are usually conducted in conjunction with FMD and MAP programs. Trade show costs are usually fully reimbursed by show participants. It is estimated that cooperator organizations fund an additional $75-$80 million in overseas promotions outside of the federally-funded programs. In addition, many of these organizations conduct domestic promotions. Private industry also conducts overseas market promotions, but no information is available on those expenditures.