USDA market programs boost farmers, economy

By KEVIN MOFFITT

For the Capital Press

The U.S. Department of Agriculture has already begun holding listening sessions for the 2012 Farm Bill. Two of the most successful public-private partnerships consistently funded in previous farm bills are the Market Access Program and the Foreign Market Development program. These programs have been instrumental in increasing U.S. agricultural exports worldwide.

The Foreign Agricultural Service of the USDA recently commissioned Global Insight Inc., a respected private economic and financial firm, to analyze the effects of these two programs. The results demonstrated the varying and positive ways that the MAP and FMD programs help U.S. farmers through increased exports. This in turn can help support jobs not only in the local community but in complementary industries such as packaging, equipment and transportation.

Using econometric models for bulk commodities and high value products, Global Insight isolated the unique long-run trade impacts of market development. Their findings showed that the multi-year impact of the increase in market development expenditures during 2002-2009 by both industry and government is equal to $35 in agricultural export gains for each dollar spent -- 35-to-1 is a good return for anyone's dollar.

In addition, the total economic gain to the U.S. economy from increased market development activity is estimated to be an average of $1.1 billion annually from 2002 to 2009. So these programs not only help the specific commodities involved, but the U.S. economy as a whole, keeping and creating jobs in many sectors.

The programs were shown to help increase U.S. export market share, rising from 18.6 percent in 2002 to 19.9 percent in 2009, with the value of trade rising from $90.5 billion to $96.1 billion. The programs are World Trade Organization compliant, which means that our trading partners, who also outspend the U.S. in providing government funds to increase their exports, cannot use these programs as a legal reason to raise their own barriers to trade.

Technical assistance and trade servicing -- including trade policy support -- accounted for most of USDA's market development programs at 60 percent, while consumer promotions accounted for only 20 percent.

As a public-private partnership, industry is very active in the program. Industry contributions, when added to the current $234.5 million in government funding, bring the total level of funding to over $570 million per year. In addition, the program unites and commits a significant level of industry funding to engage in overseas market development activities that supplement but do not supplant the industry's activities.

Other findings that should be of significant concern showed that a 50 percent decrease, less $280 million, in government and industry spending in these market development programs would result in:

* U.S. share of rest-of-world imports would decline by $8.9 billion from 2009-2018.

* Farm cash receipts would fall by an average of $5.92 billion, 1.8 percent, and net cash income would decrease by $2.0 billion, 2.6 percent, from 2012-18.

* The resulting reduced income and overall farm activity would cause farm assets to decline in value by $44 billion and government farm income support payments to increase $60 million due to lower commodity prices.

The report concludes that an overall loss in economic benefits is approximately 13.5 times greater than the savings taxpayers would see from not funding the program and about 5.7 times greater than the combined cost reduction to taxpayers and cooperators.

This analysis clearly shows the benefit of these programs that provide a basis for coordinated U.S. market development efforts that would otherwise be fragmented, underfunded or nonexistent. The MAP and FMD programs provide an important marketing tool to help farmers compete in the increasingly competitive world economy.

Kevin Moffitt is the president and CEO of the Pear Bureau Northwest and chairman of the U.S. Agricultural Export Development Council, a non-profit private sector trade association acting as a catalyst between the approximately 80 groups that receive FMD and MAP funding and the USDA Foreign Agricultural Service. More information can be found at www.usaedc.org .

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