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CREAATEing market demand gets praise

Senate introduces bill to increase funding for Market Access Program and Foreign Market Development program.

U.S. agriculture producers may be one of the most productive in the world, but without markets for those products it offers them no help. In the age of public and private partnerships, many agricultural groups are praising the Senate introduction of a bill to increase funding for programs which helps promote and expand U.S. agricultural exports.

Tuesday the Cultivating Revitalization by Expanding American Agricultural Trade and Exports (CREAATE) Act was introduced by Sens. Angus King, I-Maine, Joni Ernst, R-Iowa, Joe Donnelly, D-Ind., and Susan Collins, R-Maine. The introduction of the CREAATE Act in the Senate follows the House version, H.R. 2321, introduced May 3 by Rep. Dan Newhouse, R-Wash., and Rep. Chellie Pingree, D-Maine.

Whereas President Trump’s budget earlier this year sought to zero out funding for Market Access Program (MAP) and Foreign Market Development (FMD), CREAATE seeks to expand the MAP and FMD program to boost trade's impact on U.S. farmer profitability and the U.S. economy.

The bill would increase statutory funding for the programs, which are now authorized at $200 million per year for MAP and $34.5 million per year for FMD. Both have faced stagnant funding and eroding real dollar impact due to inflation, sequestration, administrative costs and increased global competition. CREAATE calls for phasing in additional annual funding for MAP to $400 million in FY 2023 and additional annual funding for FMD to $69 million in FY 2023.

The Coalition to Promote U.S. Agricultural Exports and the Agribusiness Coalition for Foreign Market Development said there is convincing evidence that such increases would generate very “positive, incremental returns.” A November 2016 econometric study by Informa Economics, IEG, found that increased public funding for MAP and FMD, coupled with increasing private contributions from farmers and others, would:

  • increase average annual agricultural export value by $3.4 to $4.5 billion;
  • increase farm cash income by $500 million to $700 million;
  • increase U.S. gross domestic product by $4.5 to $6.0 billion; and
  • create up to 85,000 new and part-time jobs.

For decades, USDA export promotion programs have helped American farmers create, expand and maintain access to foreign markets, cultivating hundreds of billions of dollars in exports and creating millions of American jobs in the agriculture sector and support industries. Several independent evaluations have shown that the activities funded by MAP and FMD are consistently effective at increasing demand overseas and raising farm income at home.  

Yet the real, effective federal funding that reaches agricultural cooperator organizations carrying out market development work with these programs has steadily eroded even while international competitors continue to greatly outspend the United States, according to members of the coalition.

In FY 2017, for example, just $173.5 of the $200 million MAP appropriation was allocated to 68 non-profit commodity organizations participating in the program. Just $26.6 million of the FMD appropriation was allocated to 23 non-profit commodity organizations participating in the program. Taking inflation into account, this means the $200.1 million total that FAS awarded for MAP and FMD in FY 2017 had an actual promotional power of only about $140 million. Meanwhile, as trade becomes an increasingly important part of farm income, applications for funding have come to far exceed the actual allocated amount available.

The success of these programs has been sustained through increasing support and resolve from the participating non-profit U.S. agricultural trade associations, farmer cooperatives, non-profit state-regional trade groups and small businesses partners. These groups contributed more than 70% of available funds in 2016, which is well above program requirements.

Meanwhile, America's competitors have ramped up their own export promotion. For example, the European Union spends more than $255 million per year just to promote wine exports, more than the U.S. spends for the promotion of all commodities through MAP and FMD.

“If this trend continues, the disadvantage in the global marketplace for American producers will only worsen,” said the agricultural export coalition.

MAP and FMD are public-private partnerships that promote U.S. agriculture. Together, they are responsible for 15% of U.S. agricultural export revenue—$309 billion since 1977.

American Soybean Assn. (ASA) vice president John Heisdorffer said MAP and FMD are two of the real success stories when it comes to partnerships between American farmers and the federal government. “We work together with the U.S. Soybean Export Council to leverage MAP and FMD funds to establish and expand markets for American soy in all corners of the globe, and the CREAATE Act will go a long way to ensuring that good work can and will continue,” he said.

“These are programs that yield exponential benefits for farmers and for our economy, generating almost $30 in net return for every dollar invested,” Heisdorffer added. “Those dollars have gone to expanding overseas demand in the fields of animal agriculture, cooking oils, and the emerging field of aquaculture, which will be key as our industry works to provide protein to a growing global population in places like Southeast Asia and Latin America.”

Wesley Spurlock, a Texas farmer and president of the National Corn Growers Assn., said these programs deliver a strong return on investment. “Every $1 invested in MAP and FMD generates $28 in exports—that means more American jobs, and more money coming into our communities. Now more than ever, we need to invest in export and market development programs like these to build global demand and help farmers’ bottom lines,” said Spurlock.

 

 

 

TAGS: Trade
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