Members of a House Agriculture Committee subcommittee heard about the immense return on investment provided by USDA overseas market development programs at a hearing held Thursday to examine them.
The Committee heard from two panels, the first made up solely by John Brewer, administrator of USDA’s Foreign Agricultural Service, which runs key programs including the Market Access Program (MAP) and the Foreign Market Development (FMD) program. Both of these share the costs of overseas market development efforts of U.S. nonprofit agricultural trade organizations, including U.S. Wheat Associates.
Brewer provided essential background information on the programs, discussing in depth the history, purpose and results they achieve – key information for a Committee that has many new Members guiding agriculture policy for a Congress that is seeking to drastically cut funding in the coming years.
Witnesses on the second panel, made up of industry representatives, included Mike Wootton, a senior vice president of Sunkist Growers and chairman of the Coalition to Promote U.S. Agricultural Exports.
He told Members that the programs designed to help American agricultural producers develop new markets are essential to combating the far greater export incentives offered by other countries.
Wootton told Members that according to its most recent World Trade Organization (WTO) notification, the European Union spends more than $1.4 billion annually in export promotion activities – more than four times the amount the United States spends in a year on similar programs. Brazil, Canada, Australia and New Zealand also are spending heavily on market development.
He also stressed the importance of ag exports to boosting farm income and creating economic growth that benefits the whole economy.
These assertions are backed up by a growing stable of research.
A recent report on MAP and FMD commissioned by USDA from IHS Global Insights, an economic research firm, found that the two programs have boosted agricultural exports by $6.1 billion and provided a 35-to-1 return on investment.
The report also showed that from 2002 to 2009, export gains associated with MAP and FMD increased U.S. farm cash receipts by $4.4 billion and increased net farm income by $1.5 billion.
Of particular interest to Members who are struggling to reduce federal outlays, it also found that farm support payments were reduced by roughly $54 million annually due to higher prices resulting from increased demand.
The USDA study results are consistent with the conclusions of an economic analysis of wheat export promotion released in January 2010.
That study showed U.S. wheat producers received $23 in net revenue for every $1 they invested in export promotion between 2000 and 2007.
One of the econometric models used in the study also showed that the entire wheat industry received an average of $115 in gross revenue for every dollar jointly invested by producers and FAS programs.
The U.S. wheat industry strongly supports full funding as authorized in the 2008 Farm Bill for MAP and FMD and is working to educate Members of Congress and the Administration about their continued importance to the economy.
Important information about how the wheat industry uses these programs is available from U.S. Wheat Associates at http://www.uswheat.org/whatWeDo/buyers.
More about the hearing, including written testimony submitted, is available at http://agriculture.house.gov/hearings/hearingDetails.aspx?NewsID=1349.