Agricultural Export Programs:
Background and Issues
Charles E. Hanrahan
Senior Specialist in Agricultural Policy
June 18, 2013
Congressional Research Service
7-5700
www.crs.gov
R41202
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Agricultural Export Programs: Background and Issues
Summary
U.S. agricultural exports have exceeded agricultural imports in every year since 1970, according
to the U.S. Department of Agriculture (USDA). The most recent forecast for FY2013 is that U.S.
agricultural exports will reach $139.5 billion, an all-time high. If this forecast holds, the FY2013
forecast will have exceeded the record high of $137.4 billion in FY2011. U.S. agricultural
imports are forecast to reach $111 billion in FY2013, resulting in a $28.5 billion export surplus
for U.S. agricultural trade.
The United States operates a number of programs that aim to develop overseas markets for U.S.
agricultural products. The 2008 farm bill, which authorized these trade programs, expired in
2012. “Fiscal cliff” legislation (P.L. 112-240) extended provisions of the 2008 farm bill, including
those for export programs, until September 30, 2013. Congress is currently considering a 2013
farm bill (the Senate-passed S. 954 and the House Agriculture Committee-reported H.R. 1947)
that would reauthorize export programs through 2018. Funding for agricultural export programs
is mandatory, and thus not subject to annual appropriations. Annual appropriations acts, however,
have sometimes imposed spending conditions on these mandatory programs.
The trade title of the 2008 farm bill, the Food, Conservation, and Energy Act of 2008 (Title III of
P.L. 110-246), authorized, amended, and repealed three main types of agricultural export
programs:
• Export market development programs. The Foreign Agricultural Service (FAS) of
the U.S. Department of Agriculture (USDA) administers five market development
programs that aim is to assist U.S. industry efforts to build, maintain, and expand
overseas markets for U.S. agricultural products. These are the Market Access Program
(MAP); the Foreign Market Development Program (FMDP); the Emerging Markets
Program (EMP); the Quality Samples Program (QSP), and the Technical Assistance for
Specialty Crops Program (TASC). The 2008 farm bill made organic products eligible
for market development programs and increased funds available to address sanitary
and phytosanitary barriers to U.S. specialty crops;
• Export credit guarantee programs. Through the GSM-102 Program and the Facility
Guarantee Program, USDA’s CCC guarantees loans so that private U.S. financial
institutions will extend financing to buyers in emerging markets that want to purchase
U.S. agricultural exports. The 2008 farm bill made changes to export credit programs
to conform to U.S. commitments in the World Trade Organization (WTO).
• Direct export subsidy programs. The 2008 farm bill reauthorized the Dairy
Export Incentive Program (DEIP) and repealed authority for the Export
Enhancement Program (EEP), which had been inactive since FY2002.
Important factors affecting U.S. agricultural exports in FY2013 include the value of the U.S.
dollar vis-a-vis currencies of trading partners and the pace of economic growth, particularly in
developing and emerging countries. According to USDA forecasters, moderate depreciation of the
U.S. dollar and higher rates of economic growth in developing and emerging markets are
contributing to a promising outlook for U.S. agricultural trade in FY2013. Issues for Congress
include determining the role and effectiveness of the public vs. private sector for investing in the
development of new markets; the Brazil WTO case against U.S. cotton subsidies and implications
for trade relations; and the U.S. Trade Representative’s approach to addressing agricultural trade
barriers, primarily related to sanitary and phytosanitary issues.
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Agricultural Export Programs: Background and Issues
Contents
U.S. Agricultural Exports................................................................................................................. 1
Economic Factors Affecting Agricultural Trade .............................................................................. 4
USDA’s Agricultural Export Programs ............................................................................................ 5
Market Development Programs ................................................................................................. 6
Market Access Program (MAP) .......................................................................................... 7
Foreign Market Development Program (FMDP) ................................................................ 7
Emerging Markets Program (EMP) .................................................................................... 8
Quality Samples Program (QSP) ......................................................................................... 8
Technical Assistance for Specialty Crops (TASC) Program ............................................... 8
Export Credit Guarantees .......................................................................................................... 9
GSM-102 Program .............................................................................................................. 9
Facility Guarantee Program (FGP).................................................................................... 10
Other Export Guarantee Programs Repealed .................................................................... 11
Direct Export Subsidy Programs ............................................................................................. 11
Dairy Export Incentive Program (DEIP) ................................................................................. 11
Export Enhancement Program (EEP) Repealed ................................................................ 12
Funding .................................................................................................................................... 12
Issues for Congress ........................................................................................................................ 13
Public Sector Role and Effectiveness in Export Promotion .................................................... 13
WTO Trade Dispute................................................................................................................. 14
Addressing Trade Barriers ....................................................................................................... 15
Agricultural Export Programs in the FY2013 Farm Bill ......................................................... 15
Figures
Figure 1. Value of U.S. Agricultural Trade, FY1970-FY2013F ...................................................... 1
Tables
Table 1. Top U.S. Agricultural Export Destinations, by Value, FY2012 ......................................... 2
Table 2. Top U.S. Agricultural Export Commodities, by Value, FY2012 ........................................ 3
Table 3. Top Exporting States of Agricultural Commodities, CY2011 ........................................... 3
Table 4. Macroeconomic Variables Affecting U.S. Agricultural Exports ........................................ 5
Table 5. GSM-102 Allocation by Country and Region, FY2012................................................... 10
Table 6. USDA International Export Program Activity, FY2004-FY2014F .................................. 12
Appendixes
Appendix A. Value of U.S. Agricultural Trade, FY1970-FY2013F .............................................. 17
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Agricultural Export Programs: Background and Issues
Contacts
Author Contact Information........................................................................................................... 18
Acknowledgments ......................................................................................................................... 18
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Agricultural Export Programs: Background and Issues
U.S. Agricultural Exports
Agricultural exports are important both to farmers and to the U.S. economy. With the productivity
of U.S. agriculture growing faster than domestic demand, farmers and agricultural firms rely
heavily on export markets to sustain prices and revenue. According to the U.S. Department of
Agriculture’s Economic Research Service (ERS), agricultural exports have exceeded agricultural
imports in every year since 1970. (Figure 1). In FY2012, U.S. agricultural exports reached
$135.8 billion, a decline from the record high of $137.4 billion in FY2011. With agricultural
imports of $103.4 billion, the FY2012 agricultural trade surplus was $32.4 billion, $10 billion
less than in FY2011. The agricultural trade outlook for FY2013 has exports rebounding to $139.5
billion, which would be a new record high.1 U.S. agricultural imports are forecast to rise to $111
billion in FY2013, which would result in a $28.5 billion trade surplus for agricultural goods.
Figure 1. Value of U.S. Agricultural Trade, FY1970-FY2013F
(US$ billions)
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
1970
1975
1980
1985
1990
1995
2000
2005
2010
Exports
Imports
Trade Balance
F = Forecast
Source: USDA Economic Research Service (ERS). See Appendix A.
Notes: U.S. foreign agricultural trade data can be obtained at http://www.ers.usda.gov/data-products/foreign-
agricultural-trade-of-the-united-states-(fatus).aspx.
USDA estimates that from 26% to 30% of farm cash receipts in any one year come from exports.2
The United States exports 64% of its almond crop; 74% of its cotton; 89% of cattle hides; 49% of
1 USDA Economic Research Service, “Outlook for U.S. Agricultural Trade,” May 30, 2013, http://www.ers.usda.gov/
media/1121567/aes78.pdf.
2 See USDA Foreign Agricultural Service Factsheet: http://www.fas.usda.gov/info/NEI/NEInewrev.pdf.
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rice; 50% of wheat; and 34% of soybeans. According to a USDA study, each dollar received from
agricultural exports stimulated an additional $1.65 in supporting activities to produce those
exports. Agricultural exports generate over 1 million U.S. jobs both on and off the farm.3
According to a study by agricultural economists from Texas A & M University, agricultural
exports in 2009 resulted in direct farm and indirect (nonfarm) employment of 1.6 million jobs.4
The top country destinations for U.S. agricultural exports in FY2012 are given in Table 1. While
North American Free Trade Agreement (NAFTA) partners Canada and Mexico have been the
largest two markets for U.S. agricultural exports over the past few years, in FY2012 China
surpassed Canada as the leading U.S. agricultural export destination.
Table 1. Top U.S. Agricultural Export Destinations, by Value, FY2012
Rank
Country
US$ billions
% of Total
1 China
23.4
17.2
2
Canada
20.0
14.7
3 Mexico
18.9
13.9
4 Japan
13.7
10.1
5 European
Union-27
8.9
6.5
6 South
Korea
6.2
4.6
7 Hong
Kong
3.4
2.5
8 Taiwan
3.1
2.3
9
Indonesia
2.5
1.8
10
Philippines
2.3
1.7
11 Turkey
1.9
1.4
12 Egypt
1.8
1.3
13 Russia
1.5
1.1
14 Venezuela
1.5
1.1
15
Vietnam
1.5
1.1
Source: Rank compiled by CRS using data from the USDA Economic Research Service, “Outlook for U.S.
Agricultural Trade,” May 30, 2013, http://www.ers.usda.gov/media/1121567/aes78.pdf.
Notes: In FY2012, the total value of U.S. agricultural exports was $135.8 billion.
The top exported commodities in FY2012 are given in Table 2. Strong demand, especially from
China, helped make soybeans and products the largest U.S. agricultural export commodity in
FY2012.
3 William Edmondson, U.S. Agricultural Trade Boosts Overall Economy, USDA Economic Research Service, FAU-
124, Washington, DC, April 2008, http://www.ers.usda.gov/Publications/FAU/2008/04Apr/FAU124/FAU124.pdf.
4 M. Paggi, C. Par Rosson, F Adcock, and D. Hanselka, “National and Regional Impacts of U.S. Agricultural Exports”,
Choices, September 5, 2012.
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Table 2. Top U.S. Agricultural Export Commodities, by Value, FY2012
Rank
Commodity
US$ millions
% of Total
1
Soybeans and Products
19,797
14.6
2
Corn
11,240
8.3
3
Wheat Unmilled
8,353
6.2
4
Cotton
6,553
4.8
5
Other Feeds & Fodder
5,998
4.4
6
Pork Products
4,961
3.7
7
Misc. Horticultural Products
4,790
3.5
8
Beef & Veal Products
4,596
3.4
9
Chicken Products
3,902
2.9
10
Soybean Meal
3,844
2.8
11
Other Grain Products
3,521
2.6
12
Almonds
3,299
2.4
13
Rice-Paddy Mil ed
1,977
1.5
14
Other Veg Oils/Waxes
1,818
1.3
15
Related Sugar Products
1,797
1.3
Source: USDA Economic Research Service, http://www.ers.usda.gov/data-products/foreign-agricultural-trade-of-
the-united-states-(fatus).aspx.
Notes: In FY2012, the total value of U.S. agricultural exports was $135.8 billion.
Nearly every state exports agricultural commodities. Table 3 gives the 10 states with the greatest
shares of U.S. agricultural exports by value in calendar year (CY) 2011. These 10 states
accounted for 56% of total U.S. agricultural exports in FY2011.5
Table 3. Top Exporting States of Agricultural Commodities, CY2011
Rank
State
US$ millions
% of Total
1 California
17,844.4
13.1
2 Iowa
10,576.6
7.8
3 Illinois
8,238.3
6.0
4 Texas
7,552.6
5.5
5 Nebraska
6,930.0
5.1
6 Minnesota
6,737.9
4.9
7 Kansas
5,264.7
3.9
8 Indiana
4,655.3
3.4
9 North
Dakota
3,947.9
2.9
10 Missouri
3,879.1
2.8
Source: USDA, ERS.
Notes: For CY2011, the total value of U.S. agricultural exports was $136.4 billion.
5 Agricultural export data by state is available from USDA’s Economic Research Service at http://www.ers.usda.gov/
data-products/state-export-data.aspx.
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Economic Factors Affecting Agricultural Trade
U.S. and global trade are greatly affected by the growth and stability of world markets.6 Changes
in world population, economic growth, and income, tastes and preferences in foreign markets,
and exchange rates are most likely to alter global food demand. U.S. domestic farm policies that
affect price and supply, and trade agreements with other countries, also influence the level of U.S.
agricultural exports.
Global economic growth is projected to average 2.3% in 2013, mostly due to resumed high
growth rates in emerging market countries such as China and India and a return to strong growth
in other developing countries. Developing countries account for a major portion of the projected
increase in world agricultural imports. Countries in Africa and the Middle East account for 60%
of the growth in poultry and meat imports and are projected to account for 50% of the increase in
world wheat imports, 40% of the growth in rice and coarse grain imports, and 13% of the rise in
soybean oil imports. Food consumption and feed use are particularly responsive to income growth
in those countries, with movement away from staple and traditional food crops and toward
increased diversification of diets. Demand from developing countries is further reinforced by
population growth rates nearly twice those of developed countries.
Since 2002, the U.S. dollar has depreciated in value, and this trend is expected to remain over
the next decade. The depreciation of the dollar makes U.S. agricultural exports increasingly
competitive in international markets, lowering the price of U.S. goods in global markets
relative to competing goods priced in appreciating currencies. Similarly, a weak dollar tends
to dampen imports by raising the price of foreign goods priced in appreciating currencies
relative to U.S. domestic goods. Combined with a return to global economic growth, with
gains in developing countries particularly important for agricultural demand, prospects for
U.S. agricultural exports are improved.7
Two of the most important factors affecting U.S. agricultural trade—rate of growth in gross
domestic product (GDP) and exchange rates for 2012 and 2013—are shown for several
geographic regions and countries in Table 4.
While many economic factors are beyond the scope of congressional action, farm bills have
typically included programs that promote commercial agricultural exports.
6 For more information about U.S. agricultural trade, see CRS Report 98-253, U.S. Agricultural Trade: Trends,
Composition, Direction, and Policy, by Charles E. Hanrahan, Carol Canada, and Beverly A. Banks.
7 May Peters, Mathew Shane, and David Torgerson, What the 2008/2009 World Economic Crisis Means for Global
Agricultural Trade, USDA Economic Research Service, WRS-09-05, Washington, DC, August 2009,
http://www.ers.usda.gov/Publications/WRS0905/WRS0905.pdf.
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Table 4. Macroeconomic Variables Affecting U.S. Agricultural Exports
Real Exchange Real Exchange
Ratea
Rate
Share of
2012 GDP
2013 GDP
Region/Country
World GDP
Growth Rate
Growth Rate
2012
2013
World
100
2.3 2.3 2.7 1.1
NAFTA
30.3
2.1
2.5
-0.2
-0.1
Canada 2.4 1.8 1.9 1.6 1.6
United
States
26.2
2.2 2.5 0.0 0.0
Mexico 1.6
4.0 3.6
-5.4
-3.6
Latin America and
Caribbean
7.2 2.2 3.3 2.6 5.8
Argentina 0.5 2.0 2.9 2.0 10.0
Brazil
2.4 0.9 2.9 13.4 6.5
Europe 30.1
-0.3
-0.3
8.0
-0.5
Asia
and
Oceania
26.6
4.4 4.1 0.3 3.1
China 7.5
7.8
7.7
-3.0
-1.2
Japan
8.8 2.0 1.0 2.2 7.5
South
Korea
2.0 2.0 2.6 1.6 -2.5
Indonesia 0.8 6.2 5.9 4.8 -1.7
Vietnam 0.1 5.0 5.4 4.8 -1.7
India
2.3 5.1 5.8 1.7 7.6
Australia 1.6 3.6 2.7 -0.1 2.4
New Zealand
0.2
3.1
3.5
-1.4
1.4
Middle
East 3.2 3.1 3.5 1.0 0.5
Turkey 0.8 2.3 3.7 0.4 -3.4
Africa 2.4
5.2
5.6
-1.0
-1.0
Source: Calculations and compilation by USDA’s Economic Research Service using data from Global Insight, the
International Monetary Fund, and Oxford Economics.
Notes:
a. Local currency per U.S. dollar. A negative rate indicates a depreciation of the dollar. Real exchange rates
have a 2005 base year.
USDA’s Agricultural Export Programs
The USDA’s Foreign Agricultural Service (FAS) works to improve the competitive position of
U.S. agriculture in the global marketplace.8 To that end, FAS administers several export programs
aimed at improving foreign market access for U.S. agricultural goods. The trade title of the 2008
farm bill, the Food, Conservation, and Energy Act of 2008 (Title III of P.L. 110-246), authorized
8 An overview of the Foreign Agricultural Service is available at http://www.fas.usda.gov/aboutfas.asp.
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and amended USDA’s foreign agricultural export programs, which are funded through the
borrowing authority of the Commodity Credit Corporation (CCC).9 Fiscal cliff legislation (P.L.
112-240) extended all these programs at FY2012 funding levels until the end of FY2013. The
113th Congress is considering a new five-year farm bill that would reauthorize export market
development and credit guarantee programs. Agricultural export programs include:
• export market development programs;
• export credit guarantee programs; and
• direct export subsidies.
The 2008 farm bill made changes to a number of programs that assist with financing U.S.
agricultural exports or that help develop markets overseas.10 Changes included modifying export
credit guarantee programs to conform with U.S. commitments in the World Trade Organization
(WTO), making organic products eligible for export market development programs, and
increasing the funds available to address sanitary and phytosanitary barriers to U.S. specialty crop
exports. In addition, the 2008 farm bill repealed the major U.S. export subsidy program (the
Export Enhancement Program), and repealed two export credit guarantee programs (the GSM-
103 program and the Supplier Credit Guarantee Program).
Market Development Programs
FAS supports U.S industry efforts to build, maintain, and expand overseas markets for U.S. food
and agricultural products. FAS administers five market development programs:
• Market Access Program (MAP)
• Foreign Market Development Program (FMDP)
• Emerging Markets Program (EMP)
• Quality Samples Program (QSP)
• Technical Assistance for Specialty Crops Program (TASC)
In general, these programs provide matching funds to U.S. organizations to conduct a wide range
of activities including market research, consumer promotion, trade servicing, capacity building,
and market access support. FAS also facilitates U.S. participation in a range of international trade
shows. The 2008 farm bill extended legislative authorization of CCC funds for the market
development programs until the end of FY2012. P.L. 112-240 extended the authorization for these
programs through FY2013. Export programs are funded through the borrowing authority of the
CCC.
9 The CCC is a U.S. government-owned and -operated corporation, created in 1933, with broad powers to support farm
income and prices and to assist in the export of U.S. agricultural products. Toward this end, the CCC finances USDA’s
domestic price and income support programs and its export programs using its permanent authority to borrow up to $30
billion at any one time from the U.S. Treasury.
10 For more information about agricultural export provisions in the 2008 farm bill, see CRS Report RS22905,
Agricultural Export Provisions of the 2008 Farm Bill, by Charles E. Hanrahan.
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Market Access Program (MAP)11
The Market Access Program (MAP), which aids in the creation, expansion, and maintenance of
foreign markets for U.S. agricultural products, was originally authorized by the Agricultural
Trade Act of 1978 (P.L. 95-501, as amended) and is administered by FAS.12 MAP provides
funding to nonprofit U.S. agricultural trade associations, nonprofit U.S. agricultural cooperatives,
nonprofit state-regional trade groups, and small U.S. businesses for overseas marketing and
promotional activities, such as trade shows, market research, consumer promotions for retail
products, technical capacity building, and seminars to educate overseas customers. MAP funds
assist primarily value-added products and can be used to support both generic promotions and
brand-name promotions. Generic promotions are undertaken by nonprofit trade associations, state
regional groups, and state agencies to increase demand for a specific commodity (e.g. peas,
lentils, cotton) with no emphasis on a particular brand. MAP funds may be spent by the
participating organizations themselves (direct funding) and/or can be redistributed to entities that
have applied to participating organizations for MAP assistance (indirect funding). Since FY1998,
USDA policy has been to prohibit the allocation of MAP funds to large U.S. companies.
Agricultural cooperatives and small U.S. companies13 can receive assistance under the brand
program, which seeks to establish consumer loyalty for their brand-name products.14 To conduct
branded product promotion activities, individual companies must provide a funding match of at
least 50% of the total marketing cost. For generic promotion activities, trade associations and
others must meet a minimum 10% match requirement.
Although MAP is a mandatory program and hence does not require an annual appropriation,
agriculture appropriations acts have on occasion capped the amounts that could be spent on the
program or imposed other restraints on programming. For example, the FY1996 Agriculture
Appropriations Act prohibited MAP spending to promote exports of mink pelts or garments.
Since 1993, no MAP funds may be used to promote tobacco exports. MAP has been targeted for
cuts by some Members of Congress who maintain that it is a form of corporate welfare, or to help
offset increased expenditures on other programs, but such efforts have been unsuccessful. MAP
funding steadily increased from $90 million in FY2000 to $200 million in FY2006, where it has
remained. MAP was reauthorized most recently in the 2008 farm bill (P.L.112-240) and in fiscal
cliff legislation (P.L. 112-240), at $200 million annually through FY2012.
Foreign Market Development Program (FMDP)15
The Foreign Market Development Program (FMDP) was established in 1955, and like MAP has
the primary objective to assist industry organizations in the expansion of export opportunities.
The 2008 farm bill reauthorized CCC funding for FMDP for FY2008-FY2012 at an annual level
of $34.5 million. FMDP funds industry groups, with a match requirement, to undertake activities
such as consumer promotions, technical assistance, trade servicing, and market research by the
11 Additional information on MAP is available at http://www.fas.usda.gov/mos/programs/map.asp.
12 MAP had two predecessor programs. In 1996, MAP replaced the Market Promotion Program, which was established
in 1990 to replace the Targeted Export Assistance Program authorized in 1985.
13 As defined by the Small Business Administration.
14 A list of MAP participants for FY2012 is available at http://www.fas.usda.gov/mos/programs/
Final_MAP_January%202011_updated.pdf.
15 Additional information on FMDP is available at http://www.fas.usda.gov/mos/programs/fmdprogram.asp.
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government and industry groups. Unlike MAP, which mainly promotes consumer goods and
brand-name products, FMDP mainly promotes generic or bulk commodities.
The 1996 farm bill provided new statutory authority for the program and authorized it through
2002. Funds allocated for FMDP in FY2001 were $28 million. The 2002 farm bill increased the
annual funding level to $34.5 million. The 2008 farm bill (and P.L. 112-240) maintained the
funding level authorized in the 2002 farm bill.
Emerging Markets Program (EMP)16
The Emerging Markets Program (EMP) provides funding for technical assistance activities
intended to promote exports of U.S. agricultural commodities and products to emerging markets
in all geographic regions, consistent with U.S. foreign policy. An emerging market is defined in
the 2008 farm bill (P.L. 110-246) as “any country that is taking steps toward a market-oriented
economy through food, agricultural, or rural business sectors of the economy of the country.”
Additionally, an emerging market country must have the potential to provide a viable and
significant market for U.S. agricultural commodities or products. FAS limits EMP projects to
countries with per capita incomes below $11,455, whose populations are greater than 1 million.17
The 2008 farm bill authorized funding for EMP at $10 million each fiscal year from FY2008
through FY2012. P.L. 112-240 extended this authorization through FY2013.
Quality Samples Program (QSP)18
The Quality Samples Program (QSP) assists U.S. agricultural trade organizations in providing
small samples of their agricultural products to potential importers in emerging markets overseas.
The QSP focuses on industrial and manufacturing users of products, not end-use consumers, and
allows manufacturers overseas to do test runs to assess how U.S. food and fiber products can best
meet their production needs. Priority is given to projects targeting developing nations or regions
with a per capita income of less than $10,725 and a population greater than 1 million. Priority is
also given to projects designed to expand exports where a U.S. commodity’s market share is 10%
or less. Under the authority of the CCC Charter Act of 1948, FAS uses up to $2 million of CCC
funds to carry out the program.
Technical Assistance for Specialty Crops (TASC) Program19
The Technical Assistance for Specialty Crops (TASC) Program aims to assist U.S. organizations
by providing funds for projects that address sanitary, phytosanitary, and technical barriers that
prohibit or limit U.S. specialty crop exporters. The 2008 farm bill defines specialty crops as all
cultivated plants, and the products thereof, produced in the United States, except wheat, feed
grains, oilseeds, cotton, rice, peanuts, sugar, and tobacco. The types of activities covered include
seminars and workshops, study tours, field surveys, pest and disease research, and preclearance
programs. Under the 2002 farm bill, TASC funding was authorized at $2 million per fiscal year.
16 Additional information on the Emerging Markets Program is available at http://www.fas.usda.gov/mos/em-markets/
em-markets.html.
17 This is the current ceiling on upper middle income economies as determined by the World Bank.
18 Additional information on the QSP is available at http://www.fas.usda.gov/mos/programs/QSP.asp.
19 Additional information on the TASC program is available at http://www.fas.usda.gov/mos/tasc/tasc.asp.
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The 2008 farm bill extended authority for TASC from FY2008 through FY2012 and increased
funding levels to $4 million in FY2008; $7 million in FY2009; $8 million in FY2010; and $9
million in each of FY20011 and FY2012. The fiscal cliff bill extended authorization for TASC at
this level through FY2013.
Export Credit Guarantees
For FY2008 through FY2012, the 2008 farm bill reauthorized USDA-operated export credit
guarantee programs, which were first established in the Agricultural Trade Act of 1978 (P.L. 95-
501) to facilitate sales of U.S. agricultural exports. Authority to operate export credit guarantees
continues under the fiscal cliff act through FY2013. Under these programs, private U.S. financial
institutions extend financing at prevailing market interest rates to countries that want to purchase
U.S. agricultural exports and are guaranteed by the CCC that the loans will be repaid. In making
available a guarantee for such loans, the CCC assumes the risk of default on payments by the
foreign purchasers on loans for U.S. farm exports. There are two export credit guarantee
programs: the short-term credit guarantee program (GSM-102) and the Facility Guarantee
Program (FGP).
GSM-102 Program20
The GSM-102 program guarantees repayment of short-term financing (typically six months to
three years) extended by approved foreign banks, mainly in developing countries, for purchases
of U.S. food and agricultural products by foreign buyers. The GSM-102 program aims to
encourage U.S. agricultural exports among buyers in countries where credit is necessary to
maintain or increase U.S. sales, but where financing may not be available without CCC
guarantees. Eligible countries are those that USDA determines can service the debt backed by
guarantees. Use of guarantees for foreign aid, foreign policy, or debt rescheduling purposes is
prohibited. CCC selects agricultural commodities and products according to market potential and
eligibility based on applicable legislative and regulatory requirements. All products must be
entirely produced in the United States.21 The GSM-102 program helps ensure that credit is
available to finance commercial exports of U.S. agricultural products to developing countries,
while providing competitive credit terms in these countries.
The biggest recipients of export credit guarantees over the years have been Mexico, South Korea,
Iraq, Algeria, and the former Soviet Union. In FY2012, the major beneficiary countries were
South Korea ($715 million), Turkey ($700 million), and Mexico ($400 million). On a regional
basis,22 the largest allocation of guarantees in FY2012 went to Central America ($510 million),
Southeast Asia ($486 million) and South America ($472 million). Guarantees facilitate sales of a
broad range of commodities, but in FY2012 mainly benefited exports of wheat, meat and poultry,
20 The acronym GSM refers to the General Sales Manager, an official of FAS who administers the credit, and other,
export programs. Additional information on GSM-102 export credit guarantees is at http://www.fas.usda.gov/excredits/
exp-cred-guar-new.asp.
21 A list of eligible commodities and products under the GSM-102 program can be found at http://www.fas.usda.gov/
excredits/gsmcommodities.html.
22 Major individual country recipients of export credit guarantees, such as Korea, Turkey, and Russia, are not included
in the regional funding figures.
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oilseeds, feed grains, protein meals, and cotton. Table 5 provides GSM-102 funding by country
or region for FY2012.
Table 5. GSM-102 Allocation by Country and Region, FY2012
Region US$
millions
Africa and Middle East
329
Caribbean 131
Central America
510
China, Hong Kong
139
Korea, South
715
Mexico 400
Russia 250
South America
472
Southeast Asia
486
Turkey 700
Total 4,132
Source: USDA, Foreign Agricultural Service.
Notes: FY2012 GSM-102 allocation is available at http://www.fas.usda.gov/excredits/Monthly/2012/
12_10_01.pdf.
The 2008 farm bill authorized export credit guarantees of up to $5.5 billion worth of agricultural
exports annually from FY2008 through FY2012, and provided for an additional $1 billion
targeted to “emerging markets,” countries and/or regions that are in the process of becoming
commercial markets for U.S. agricultural products. P.L. 112-240 continued these authorizations
through FY2013.The 2008 farm bill also capped the credit subsidy for the GSM-102 program at
$40 million annually.23 The actual level of guarantees depends on market conditions and the
demand for financing by eligible countries. A provision in the statute allows guarantees to be used
when the bank issuing the underlying letter of credit is located in a country other than the
importing country. The farm bill permits credit guarantees for high-value products with at least
90% U.S. content by weight, allowing for some components of foreign origin. The 2008 farm bill
also removed the 1% cap on loan origination fees for the GSM-102 program.
Facility Guarantee Program (FGP)24
The CCC also provides funding to guarantee financing under the Facility Guarantee Program
(FGP). FGP guarantees financing of goods and services exported from the United States to
improve or establish agriculture-related facilities in emerging markets. Eligible projects must
improve the handling, marketing, storage, or distribution of imported U.S. agricultural
commodities and products. The farm bill authorizes guarantees of $100 million annually through
FY2013 for the FGP.
23 The credit subsidy is the available budget authority for the cost of the program.
24 Additional information on the FGP is available at http://www.fas.usda.gov/excredits/facility-new.asp.
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The 2008 farm bill reauthorized FGP and extended authority through the end of FY2012. It also
provided that the Secretary of Agriculture may waive requirements that U.S. goods be used in the
construction of a facility under this program, if such goods are not available or their use is not
feasible. The farm bill also permits the Secretary to provide a guarantee for this program for the
term of the depreciation schedule for the facility, not to exceed 20 years.
Other Export Guarantee Programs Repealed
Two other export guarantee programs, previously authorized, were repealed by the 2008 farm bill.
These were the GSM-103 program, which guaranteed longer-term (3-10 years) financing, and the
Supplier Credit Guarantee Program (SCGP), which guaranteed very short-term (up to 1 year)
financing of exports without bank intermediation. The repeal of the GSM-103 program (and
lifting the cap on origination fees for the GSM-102 program) was done in response to a WTO
dispute panel decision in a case brought by Brazil against U.S. cotton policy (see “Issues for
Congress,” below). Legislative authority for the SCGP was suspended largely because of a high
rate of defaulted obligations and evidence of fraud.
Direct Export Subsidy Programs
The 2008 farm bill authorized only one direct export subsidy program for agricultural products,
the Dairy Export Incentive Program (DEIP), and repealed authority for the historically largest
export subsidy program, the Export Enhancement Program (EEP).
Dairy Export Incentive Program (DEIP)25
The Dairy Export Incentive Program (DEIP) was established under the 1985 farm bill (P.L. 99-
198) to assist in the export of U.S. dairy products. DEIP was most recently reauthorized in the
commodity program title, not the trade title, of the 2008 farm bill (P.L. 110-246) and by the farm
bill extension in P.L. 112-240. DEIP aims to develop international export markets in regions
where U.S. dairy products are not competitive due to the presence of subsidized products from
other countries. The original purpose of the program was to counter the adverse effects of foreign
dairy product subsidies, primarily those of the European Union (EU). Eligible commodities under
DEIP include milk powder, butterfat, and various cheeses. DEIP can potentially increase the U.S.
price of milk if enough dairy products are removed from the domestic market. Early bonus
payments were in the form of sales from CCC-owned dairy stocks, and later ones were in the
form of generic commodity certificates from CCC inventories. Currently, USDA pays cash to
exporters as bonuses. Each year, FAS announces amounts of dairy products that may be
subsidized under the program. Actual invitations for offers may or may not be issued depending
on market conditions for dairy product exports.
The program level for DEIP has varied over the past few years depending on the dairy price
situation. In FY2003, DEIP levels were $32 million, and in FY2004, they were $3 million. No
DEIP bonuses were awarded from FY2005 through FY2008. Starting in late 2008 and continuing
through most of 2009, U.S. dairy farmers experienced low returns due to a sharp decline in milk
25 Additional information on DEIP is available at http://www.fas.usda.gov/excredits/deip/deip-new.asp.
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prices and relatively high production costs.26 As a result, USDA reactivated DEIP in July 2009 to
provide support in FY2009-FY2010. The have been no DEIP subsidies provided since FY2010.
The Administration’s FY2014 budget request does not include any DEIP subsidies.
Agricultural export subsidies are on the agenda of currently stalled WTO multilateral trade
negotiations, the Doha Round. In these negotiations, the United States, along with other trading
partners who subsidize exports, have agreed to phase out all agricultural export subsidies,
contingent upon reaching a multilateral Doha Round agreement.27 The elimination of agricultural
export subsidies has been a longstanding objective of U.S. agricultural trade policy. These WTO
export subsidy commitments would apply to DEIP.
Export Enhancement Program (EEP) Repealed
Under the Export Enhancement Program (EEP), exporters were awarded generic commodity
certificates that were redeemable for commodities held in CCC stores, thus enabling them to sell
commodities to designated countries at prices below those on the U.S. market. The 2008 farm bill
repealed legislative authority for EEP. The program, which mainly subsidized exports of wheat
and wheat flour (around 80% of EEP subsidies), had been little used as U.S. and world prices
moved closer together. The last year of significant EEP subsidies was 1995. There were no EEP
subsidies during the five years of the 2002 farm bill. The repeal of EEP reflected the fact that the
program had been little used since 1995 and was also consistent with the U.S. position to adhere
to its promised WTO commitment to eliminate export subsidies by 2013.
Funding
As mentioned above, USDA’s agricultural export programs are funded through the authority of
the CCC at levels established in statute. Annual appropriations acts, however, sometimes amend
the spending limits on these mandatory programs. Table 6 shows USDA foreign export budget
authority levels for FY2004 through FY2014F, and also includes the Administration’s FY2011
request for these programs.
Table 6. USDA International Export Program Activity, FY2004-FY2014F
(US$ millions)
Program FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014F
DEIPa
3 0 0 0 0
100 2 0 0 0 0
MAPb
125 140 200 200 200 200 200 200 200 200 200
FMDPc
34 34 34 34 34 34 34 34 34 34 —
EMPd
10 10 10 4 10 10 9 10 10 10 —
TASCe
2 2 2 1 4 7 8 9 9 9 —
26 For background about the dairy sector and policy, see CRS Report R40205, Dairy Market and Policy Issues, by
Dennis A. Shields.
27 For a discussion of agriculture and Doha Round negotiations, see CRS Report RS22927, WTO Doha Round:
Implications for U.S. Agriculture, by Randy Schnepf and Charles E. Hanrahan.
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Program FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014F
QSPf
2 2 2 1
1.4 2 2 2 3 3 3
GSM-102g 2,926 2,170 1,363 1,445 3,115 5,357 3,090 4,123 5,400 5,400 5,500
Sources: USDA, Annual Budget Summaries, various issues, and personal communication. These data are budget
authority levels, except GSM-102 program, which includes the value of exports financed through the program.
Note: FY2013 numbers are estimates; FY2014 numbers reflect the Administration’s request.
a. Dairy Export Incentive Program. No DEIP funding is anticipated in FY2014.
b. Market Access Program. The FY2014 budget request assumes that MAP will be extended in the next farm
bill at the level of funding in the 2012 farm bill.
c. Foreign Market Development Program. Emerging Markets Program. The President’s budget request makes
no assumption concerning future authorization of the FMDP.
d. Emerging Market Program.
e. Technical Assistance for Specialty Crops. In FY2006, an additional $0.6 million was provided for TASC
activities through a FAS direct appropriation. The President’s budget request makes no assumption
concerning future authorization of the FMDP.
f.
Quality Samples Program.
g. General Sales Manager (GSM) Export Credit Guarantee Program. The values given represent the values of
exports financed through the program, not budget authority.
Issues for Congress
Public Sector Role and Effectiveness in Export Promotion
Historically, many Members have been highly supportive of the Market Access Program (MAP)
and cite the benefits the program brings to U.S. agricultural industries through export market
development abroad. Strong support for export market development programs is reflected in
Congress’s rejection in FY2010 and FY2011 of the Administration’s proposals to reduce MAP
funding by 20% in each of those years. The Administration has not requested reductions in MAP
funding since FY2011. At the same time, a concern raised by some Members of Congress with
respect to MAP and the Foreign Market Development Program (FMDP) is whether the federal
government should have an active role at all in helping agricultural producers and agribusinesses
market their products overseas. Some argue that MAP and FMDP are forms of corporate welfare
in that they fund activities that private firms would and could fund for themselves.28 Other critics
argue that the principal beneficiaries are foreign consumers and that funds could be better spent,
for example, to educate U.S. firms on how to export. Program supporters emphasize that foreign
competitors, especially EU member countries, also spend money on market promotion, and that
U.S. marketing programs help keep U.S. products competitive in third-country markets.
In the early 1990s, some Members raised specific concerns about the effectiveness of MAP
operations, specifically questioning the program’s cost-effectiveness and impact, and citing its
lack of support for small businesses and displacement of private sector marketing funds. In
28 See for example, http://www.fpif.org/articles/corporate_welfare_and_foreign_policy; and http://councilfor.cagw.org/
site/News2?page=NewsArticle&id=11742.
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response to these concerns Congress directed USDA to enact significant changes to MAP. In
1996, Congress through the appropriations process prohibited FAS from providing direct
assistance for brand-name promotions to companies that are not recognized as small businesses
under the Small Business Act. In 1997, Congress prohibited large companies from receiving
indirect assistance from MAP as well. Giving priority to small businesses did result in a
substantial increase in the small business share of MAP assistance for brand-name promotion by
1997. FAS also established a five-year limit (graduation requirement) on the use of MAP funds
for companies that use funds to promote a “specific branded product” in a “single market,” unless
FAS determined that further assistance was still necessary to meet program objectives (generic
marketing was not subject to the graduation requirement). FAS later revised the regulations in
1998 to limit each company to no more than five years (consecutive or nonconsecutive) of MAP
funding for brand-name promotions per country, which some participating companies currently
feel is too restrictive. Finally, a requirement was added that each participant certify that MAP
funds supplement, not supplant, its own foreign market development expenditures. Though FAS
regularly audits the participants and verifies that the certification statement has been completed,
FAS also admits that it is difficult to verify whether MAP funds are additional to what a company
would have spent in the absence of MAP funds.
A 1999 study by the Government Accountability Office (GAO) reviewed a number of studies
looking at MAP’s effectiveness and concluded that while changes had been made to the program,
the economic benefits of export programs (including MAP) were unclear. It stated that “few
studies show an unambiguously positive effect of government promotional activity on exports.”29
In 2009 testimony before the Senate Finance Committee, GAO said that U.S. export promotion
activities were in need of strengthened performance management systems.30
A 2010 report by IHS Global Insight sponsored by USDA’s Foreign Agricultural Service
concluded that USDA’s market development expenditures have had a positive and significant
impact on U.S. agricultural trade.31 Global Insight concluded that increased spending on market
development (MAP and FMDP) over the period 2002-2009 is estimated to have increased U.S.
agricultural export market share from 18.6% to 19.9% and the value of exports from $90.5 billion
to $96.1 billion.
WTO Trade Dispute
Brazil has had a long-running dispute with the United States over U.S. cotton programs. In 2005
and again in 2008, the World Trade Organization (WTO) found that certain U.S. agricultural
programs are inconsistent with WTO commitments, including payments to cotton producers
under the marketing loan and counter-cyclical programs; and export credit guarantees under the
GSM-102 Program.32
29 U.S. General Accounting Office (GAO), Changes Made to Market Access Program, but Questions Remain on
Economic Impact, NSIAD-99-38, Washington, DC, April 1999, http://www.gao.gov/archive/1999/ns99038.pdf.
30 L. Yager, “International Trade: Observations on U.S. and Foreign Countries’ Export Promotion Activities,” GAO
testimony to Subcommittee on International Trade, Customs, and Global Competitiveness, Senate Committee on
Finance, December 2009.
31 IHS Global Insight, A Cost-Benefit Analysis of USDA’s International Market Development Programs, submitted to
FAS, March 10, 2010, viewed at http://www.wheatworld.org/wp-content/uploads/trade-global-insight-map-report-
march2010-20100423.pdf.
32 For more information, see CRS Report RL32571, Brazil’s WTO Case Against the U.S. Cotton Program, by Randy
(continued...)
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In December 2009, Brazil announced that it was authorized by the WTO arbitrators to impose
trade countermeasures against the United States in excess of $800 million in 2010 (based on 2008
data). The WTO arbitration awards provided the level of countermeasures that Brazil could
impose against U.S. trade annually in two parts: (1) a fixed amount of $147.3 million for the
cotton payments; and (2) an amount for the GSM-102 program that varies based upon program
usage. In March 2010, Brazil released a list of 102 goods of U.S. origin valued at $591 million
that would be subjected to import tariffs and released a preliminary list of U.S. patents and
intellectual property rights it could restrict, barring a joint settlement.
After several meetings between U.S. and Brazilian officials, the government of Brazil agreed to
suspend countermeasures on U.S. trade, and the United States agreed to work with Brazil to
establish a fund of approximately $147.3 million per year on a pro rata basis to provide technical
assistance and capacity building for Brazilian farmers until the passage of the next farm bill or a
mutually agreed solution to the cotton dispute, whichever is sooner. The United States also agreed
to make some near-term modifications to the operation of the GSM-102 Export Credit Guarantee
Program, and to engage with the government of Brazil in technical discussions regarding further
operation of the program. The U.S. hope is that continuing negotiations will lead to an agreement
that avoids Brazil imposing retaliatory measures under WTO rules. Congress will likely continue
to monitor developments in the WTO cotton case and its implications for the GSM-102 program.
Addressing Trade Barriers
The U.S. Trade Representative (USTR) releases to Congress annually a report that outlines key
sanitary and phytosanitary (SPS) trade barriers that American agricultural and food producers
face when trying to export their products.33 Key trade barrier issues addressed in the report
include avian influenza, biotechnology, bovine spongiform encephalopathy (BSE), H1N1
influenza, maximum residue limits for pesticides, pathogens, and ractopamine, a veterinary drug
used to promote lean meat growth in pigs, cattle, and turkeys. In addition to monitoring how
USTR addresses SPS issues, Congress is considering the Administration’s request for continued
funding for the Technical Assistance for Specialty Crops (TASC) Program, which targets SPS
barriers to exports.
Agricultural Export Programs in the FY2013 Farm Bill
Title III of the farm bill deals with statutes concerning U.S. agricultural export programs. The
provisions of Title III of H.R. 1947, as reported, and S. 954, as passed, are nearly identical to the
Title III provisions in the farm bills reported by the House Agriculture Committee (H.R. 6083)
and passed by the Senate (S. 3240) in the 112th Congress with one exception. S. 954 includes a
provision (not included in S. 3240) requiring a reorganization plan for the trade functions of the
U.S. Department of Agriculture and the appointment of an Under Secretary of Agriculture for
Trade and Foreign Agricultural Affairs.34
(...continued)
Schnepf.
33 See U.S. Trade Representative website at http://www.ustr.gov/about-us/press-office/fact-sheets/2010/march/key-
sanitary-and-phytosanitary-barriers-american-export.
34 See CRS Report R43076, The 2013 Farm Bill: A Comparison of the Senate-Passed Bill (S. 954) and House-Reported
Bill (H.R. 1947) with Current Law, coordinated by Ralph M. Chite, June 14, 2013.
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Both bills reauthorize funding for the Commodity Credit Corporation (CCC) Export Credit
Guarantee program and various agricultural export market promotion programs. S. 954 reduces
the value of U.S. agricultural exports that can benefit from export credit guarantees from $5.5
billion to $4.5 billion annually. The House bill retains the $5.5 billion level of guarantees. Both
bills authorize CCC funding of $200 million annually for the Market Access Program (MAP),
which finances promotional activities for both generic and branded U.S. agricultural products.
MAP had been targeted in a number of deficit reduction proposals for elimination. Authorized
CCC funding for the Foreign Market Development Program (FMDP), a generic commodity
promotion program, continues in both bills at $34.5 million annually through F2017. H.R. 1947
authorizes the Secretary of Agriculture to establish the position of Under Secretary of Agriculture
for Foreign Agricultural Services. S. 954 requires the Secretary, in consultation with the House
and Senate Agriculture Committees and House and Senate Appropriations Committees to propose
a plan for reorganization of the trade functions of USDA, including the establishment of an
Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs. The Secretary is
required to report on the plan 180 days after the farm bill’s enactment. Within one year of
submission of the report, the Secretary is required to implement the reorganization plan
including establishment of the Under Secretary position.
During House floor debate on the 2014 farm bill (H.R. 1947) amendments to repeal MAP,
FMDP, and EMP were defeated.
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Appendix A. Value of U.S. Agricultural Trade,
FY1970-FY2013F
(US$ millions)
Year Exports
Imports Trade
Balance
1970
6.96 5.69 1.27
1971
7.96 6.13 1.83
1972
8.24 5.94 2.31
1973 14.98
7.74
7.25
1974
21.56 10.03 11.53
1975 21.82
9.44
12.38
1976
22.74 10.49 12.25
1977
23.97 13.36 10.61
1978
27.29 13.89 13.40
1979
31.98 16.19 15.79
1980
40.47 17.29 23.18
1981
43.78 17.34 26.44
1982
39.10 15.46 23.64
1983
34.77 16.28 18.49
1984
38.03 18.91 19.12
1985
31.20 19.74 11.46
1986 26.31
20.88
5.43
1987 27.88
20.65
7.23
1988
35.32 21.01 14.30
1989
39.67 21.57 18.10
1990
40.35 22.71 17.64
1991
37.86 22.74 15.13
1992
42.55 24.50 18.06
1993
43.06 24.60 18.46
1994
43.89 26.56 17.33
1995
54.61 29.79 24.82
1996
59.79 32.44 27.34
1997
57.31 35.65 21.65
1998
53.66 36.83 16.83
1999
49.12 37.29 11.83
2000
50.76 38.86 11.90
2001
52.72 39.03 13.69
2002
53.32 40.96 12.36
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Year Exports
Imports Trade
Balance
2003
56.01 45.69 10.32
2004 62.41
52.67
9.74
2005 62.52
57.71
4.81
2006 68.59
64.03
4.57
2007
82.22 70.06 12.15
2008 114.91
79.32
35.59
2009
96.30 73.40 22.89
2010 108.56
78.96
29.60
2011 137.38
94.51
42.87
2012 135.77
103.37
32.40
2013F 139.5
111.00
28.5
Source: U.S. foreign agricultural trade data can be obtained at http://www.ers.usda.gov/data-products/foreign-
agricultural-trade-of-the-united-states-(fatus).aspx.
F = Forecast
Author Contact Information
Charles E. Hanrahan
Senior Specialist in Agricultural Policy
chanrahan@crs.loc.gov, 7-7235
Acknowledgments
Melissa Ho, formerly with CRS, co-authored an earlier version of this report.
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