USDA Export Market Development and Export Credit Programs: Selected Issues

Agricultural exports are important to both farmers and the U.S. economy. With the productivity of U.S. agriculture growing faster than domestic demand, farmers and agriculturally oriented firms rely heavily on export markets to sustain prices and revenue. The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79) authorizes a number of programs to promote farm exports that are administered by the U.S. Department of Agriculture (USDA). There are two main types of agricultural trade and export promotion programs: Export market development programs assist efforts to build, maintain, and expand overseas markets for U.S. agricultural products. Programs include 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). Export financing assistance programs provide payment guarantees on commercial financing to facilitate U.S. agricultural exports. Programs include the Export Credit Guarantee Program (GSM-102) and the Facility Guarantee Program (FGP). Annual funding for USDA’s export market promotion programs is authorized at about $255 million (not including reductions due to sequestration). In addition, USDA’s export credit guarantee programs provide commercial bank financing of up to $5.5 billion of U.S. agricultural exports annually. Funding for USDA’s programs is mandatory through the Commodity Credit Corporation and is not subject to annual appropriations. USDA has commissioned a number of economic studies to assess the effects of its export market development programs on U.S. agricultural exports, export revenue, and other economy-wide effects. Most studies measure the “economic return ratio” or the ratio of the estimated returns compared to the estimated costs. USDA’s most recently commissioned study claims that MAP and FMDP return $28 for each dollar spent. USDA’s studies also claim broader economy-wide returns in terms of farm revenue, economic output, and full-time jobs. However, the U.S. Government Accountability Office (GAO) has raised many questions regarding USDA’s export promotion programs. GAO’s reports have generally been critical of USDA-reported estimates of the economic effects of USDA’s programs on U.S. agricultural exports, export revenue, and other economy-wide effects. The most recent GAO report expressed ongoing concerns about USDA’s assessment methodologies for estimating program effectiveness, citing the need for improved methods and cost-benefit analysis. USDA’s Office of Inspector General (OIG) also conducted a review of its export market development programs and recommended certain changes with regard to data and information collection by program participants. In anticipation of the next farm bill debate, legislation introduced in both the House and Senate (Cultivating Revitalization by Expanding American Agricultural Trade and Exports Act or CREAATE Act, H.R. 2321/S. 1839) would progressively double annual funding for MAP and FMDP to $400 million and $69 million, respectively, by 2023. The Coalition to Promote U.S. Agricultural Exports and the National Association of State Departments of Agriculture also support doubling funding for MAP and FMDP. However, some in Congress have long opposed USDA’s export and market promotion programs, especially MAP, calling for its elimination and/or reduced program funding. President Trump’s FY2018 budget proposes to eliminate both MAP and FMDP.