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Friday, April 30, 2010

Agricultural Export Programs: Background and Issues

Melissa D. Ho
Analyst in Agricultural Policy

Charles E. Hanrahan
Senior Specialist in Agricultural Policy

Agricultural exports are important both to farmers and to the U.S. economy. According to the U.S. Department of Agriculture's Economic Research Service (ERS), agricultural exports have exceeded imports since the early 1970s. The most recent outlook for FY2010 has U.S. agricultural exports estimated at $100 billion. While the FY2010 forecast is down from the record level seen in FY2008, the forecast is still the second highest on record. U.S. agricultural imports are forecast to reach $77.5 billion in FY2010, which would result in a $22.5 billion trade surplus for 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the 2008 farm bill, the Food, Conservation, and Energy Act of 2008 (Title III of P.L. 110-246), authorized, amended and repealed certain U.S. agricultural export programs. USDA's Foreign Agricultural Service (FAS) administers three main types of agricultural export programs, which are funded through the borrowing authority of the Commodity Credit Corporation (CCC). Annual appropriations acts, however, sometimes amend the spending limits on these mandatory programs. USDA agricultural export programs include: 

• Direct export subsidy programs: The 2008 farm bill reauthorized the Dairy Export Incentive Program (DEIP), which was reactivated in FY2009 due to falling dairy prices, and repealed authority for the Export Enhancement Program (EEP), which has been inactive since FY2002; 

• Export market development programs: FAS administers five market development programs, whose primary 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). The 2008 farm bill also repealed two other export guarantee programs. 

The President's FY2011 budget request includes an additional $53.5 million for agricultural export programs for the Administration's National Export Initiative. Important factors affecting U.S. agricultural exports include the recent global recession (2007-2008), which led to a sharp curtailment of global trade, including agricultural commodities; the depreciation in value of the U.S. dollar, which makes U.S. agricultural exports increasingly competitive in a global market; and increasing global economic growth, particularly in developing and emerging countries, which will likely increase demand for U.S. agricultural commodities in the coming year. Issues for Congress include determining the role and effectiveness of public vs. private sector for investing in the development of new markets; the Brazil WTO case against the U.S. cotton subsidies and implications for trade relations; and the U.S. Trade Representative's approach for addressing agricultural trade barriers, primarily related to sanitary and phytosanitary issues.

Date of Report: April 19, 2010
Number of Pages: 21
Order Number: R41202
Price: $29.95

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