By Betty Resnick
One of the many ways that the farm bill supports American farmers, and the American economy, is its support for developing export markets for U.S. farm products. This Market Intel will explore a few of the top programs for export market development, and how they are at risk from an expired farm bill.
Why Agricultural Exports Matter
Agricultural exports are essential to the economy, accounting for approximately 20% of U.S. agricultural production. Exports allow U.S. farmers to find additional customers among the over 95% of the world population that lives outside of our borders, helping to feed, fuel and clothe the world. Exports can especially add value for farmers as foreign customers provide expanded market opportunities for products for which Americans find little or no value. For instance, consumers in Japan, South Korea and other Asian countries are willing to pay large premiums for fruit; and while certain parts of animals – such as beef tongue or chicken feet – are undesirable in the United States, they are delicacies in other cultures.
Agricultural exports are not only important to the farmer, but to the broader U.S. economy. On average, $2.09 of domestic economic activity is created for every $1 of U.S. agricultural exports. This translates to jobs as well, with the USDA estimating that over 6,000 jobs are created for each $1 billion in agricultural exports – equaling approximately 1.25 million jobs in 2022.
Certain crops are more reliant on trade than others. For instance, did you know that California grows roughly 80% of the world’s almonds? The following graph depicts crops that are the most reliant on exports.
Supporting Agricultural Exports in the Farm Bill
Title III of the farm bill is dedicated to trade, including both foreign food aid and export market development programs, and accounts for just 0.4% of farm bill spending. Roughly half of the trade title spending goes to Food for Progress which purchases U.S. agricultural commodities and donates them to recipient countries for subsequent sale in local markets with proceeds funding agricultural, economic and infrastructure development programs. The other half goes toward export market development programs, with the bulk of funding for the Market Access Program (MAP) and Foreign Market Development (FMD) Cooperator Programs, as demonstrated in the following graph. The full breadth of the trade title is explored in a previous Market Intel report.
MAP was established in 1985 and funds overseas marketing and promotional activities that build demand for U.S. agricultural products. MAP funded activities include sponsoring booths at international trade shows, creating websites and social media advertising targeting foreign audiences, hosting educational seminars abroad such as bringing a dietician to educate doctors on the health benefits of certain U.S.-grown products and many others. MAP funding is distributed through a cost-share partnership with nonprofit trade associations and cooperatives. In fiscal 2024, 68 organizations were awarded slightly over $174 million dollars. The use of MAP funding can have huge impacts. For example, immediately prior to using MAP funding for promotion, the U.S. exported $1.1 million of cranberries products to India in 2016. By 2023, exports had increased to $8.5 million - an increase of 673%!
Foreign Market Development Cooperator Program
FMD dates back even further and was first established in 1956. It funds projects that provide trade servicing and trade capacity building through efforts to create, expand and maintain long-term markets for U.S. agricultural products, with an emphasis on generic promotion of U.S. commodities rather than consumer-oriented promotion of branded products. Opportunities funded by FMD include efforts to reduce infrastructural or historical market impediments, improve processing capabilities and modify codes and standards impacting U.S. products. An example of work supported by FMD funding is the global footprint of the U.S. Grains Council which has a full-time presence in 28 locations globally. Global offices with their local, bilingual staffs serve as a connection between customers and U.S. exporters and are on-the-ground problem solvers and technical support. In fiscal 2024, FMD awarded $27 million to 20 organizations.
On average, both MAP and FMD participants provide more than $2.50 in matching contributions for every $1 of federal funding received through the programs. A recent study found that between 1977 and 2019, every $1 invested by the USDA in export market development programs increased U.S. agricultural export value by $24.50. At the farm level between 2002 and 2019, this resulted in an annual increase in farm cash receipts of $12.2 billion (3.4%) and an annual increase of $3.1 billion (4.4%) in net cash farm income.
Smaller, yet very impactful, programs include the Emerging Markets Program (EMP) and the Technical Assistance for Specialty Crops Program (TASC). EMP focuses on promotion of U.S. agricultural products to countries with developing market-oriented economies in the food and agriculture sectors with potential to become viable commercial markets. In practice, the only countries excluded from EMP are those classified as “high income” by the World Bank.
TASC helps combat some of the trickiest obstacles to trade including projects addressing sanitary, phytosanitary and technical barriers to trade that impede exports of U.S. specialty crops. TASC often funds research into pests and diseases with the potential to shut down export markets, or prevent them from opening in the first place, as highlighted in the listed TASC projects in the Fiscal Year 2021 U.S. Specialty Crops Trade Issues Report. Another example of a recent TASC win was when TASC funded research into biodegradable price look up (PLU) labels for produce such as apples and sweet potatoes. Researchers found a way to meet new requirements in foreign markets that PLU stickers must be home compostable. While it was expected to take 5-10 years to develop a compliant PLU sticker, thanks to fiscal 2021 TASC funding, prototypes for a compostable sticker were created by October 2022.
The Priority Trade Fund, created in the 2018 farm bill, provides $3.5 million in additional annual funding to distribute among MAP, FMD, EMP and TASC depending on need.
Impact of Farm Bill Expiration on Trade Title
On Sept. 30, 2024, the 2018 farm bill expired for a second time. The first time it expired – Sept. 30, 2023, an extension was passed on Nov. 19, 2023. The consequences of allowing a farm bill to expire vary widely by program. For the trade title programs, funding is guaranteed through a budget baseline, but the authority to operate is lost. As most trade title programs operate as grant-giving programs, activities supported by the grants will be impacted if funding is delayed.
Typically, grant allocations for the market development programs are announced sometime between late October and mid-November. Due to the gap in farm bill authorization in 2023, announcements were delayed until early January 2024. As many groups receiving funding operate on a calendar year basis, this delayed their ability to implement programs as originally devised. The expiration in 2024 has replicated this uncertainty and will likely again lead to delays in funding and programming.
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