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the 2008 farm bill, the Food, Conservation, and Energy Act of 2008 (Title III of P.L. 110-246), authorized, amended and repealed certain U.S. agricultural export programs.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the Dairy Export Incentive Program (DEIP), which was reactivated in FY2009 due to falling dairy prices, and repealed authority for the Export Enhancement Program (EEP), which has been inactive since FY2002; 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
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Food Safety: Foodborne Illness and Selected Recalls of FDA-Regulated Foods

Sarah A. Lister
Specialist in Public Health and Epidemiology

Geoffrey S. Becker
Specialist in Agricultural Policy

The 111th Congress is considering legislation to revise the U.S. food safety system, focusing primarily on those laws and programs administered by the Food and Drug Administration (FDA) within the Department of Health and Human Services (HHS). The House has passed a comprehensive bill, H.R. 2749, and the Senate Committee on Health, Education, Labor, and Pensions has reported its comprehensive proposal, S. 510. The ultimate goal of both bills is to reduce the burden of foodborne illness, which is a considerable and persistent public health problem in the United States. However, an understanding of the true burden of illness caused by foodborne hazards, the risks associated with various types of foods, and the types of regulatory and other approaches that can effectively address these problems has been elusive. 

Public health officials monitor and investigate foodborne illnesses in a number of ways. For example, active surveillance is used to track trends in the incidence of several common bacterial and parasitic foodborne illnesses. Outbreaks of foodborne illness are tracked to help improve approaches to investigation and to identify the foods that cause illnesses, among other things. Genetic "fingerprinting" is used to identify infections from a common source, including large multistate outbreaks, and can also help identify the foods that cause illnesses. These systems are administered jointly by various federal agencies, in partnership with state health officials. Collectively, these tools and others can shed light on the burden of foodborne illness in the United States, and ways to decrease it. However, these systems also have two significant shortcomings. First, because they monitor a limited number of known food safety threats, and because foodborne illnesses are substantially underreported, these systems do not, individually or collectively, capture the magnitude of foodborne illness that occurs each year. Second, these systems often detect or track the contaminant that causes illness, rather than the type of food that was contaminated, although it is the latter that government officials actually regulate. 

Consumers and the media often focus on recalls—particularly those that are extensive and/or that involve widely consumed products—as indicators of the safety of the U.S. food supply. In many but certainly not all cases, products subject to a recall may have sickened or killed people or other animals. It is not always clear, however, how useful recall data are as a measure of the burden of foodborne illness or the effectiveness of federal food safety programs. For example, does a relatively high number of recalls signify a failure of the system to keep unsafe products from being consumed? Or is it actually an indication that the safety net is working by finding and getting tainted products off the market? Conversely, is a relatively low number of recalls an indication of the system's effectiveness, or simply of not reporting or finding all defective food products? Because of these questions, caution should be exercised in using recall data as the basis for concluding that certain changes are needed in the nation's food safety systems. 

This report describes several systems to monitor foodborne illnesses, discussing their strengths and the gaps that remain in understanding the burden of foodborne illness in the United States. Next, this report presents recent data on more serious recalls of FDA-regulated foods, also discussing the strengths and gaps associated with the information. Finally, this report describes three recent foodborne outbreaks that led to nationwide recalls of FDA-regulated foods: (1) Salmonella in peanut products, (2) melamine in pet foods and dairy products, and (3) E. coli in spinach. Following each description are discussions of associated policy issues, and, if applicable, how these issues are addressed in food safety legislation pending before the 111th Congress. Descriptions of selected authorities in the Federal Food, Drug, and Cosmetic Act (FFDCA), FDA's principal food safety law, are provided in the Appendix.


Date of Report: April 15, 2010
Number of Pages: 30
Order Number: R40916
Price: $29.95

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Actual Farm Bill Spending and Cost Estimates

Jim Monke
Specialist in Agricultural Policy

Renée Johnson
Specialist in Agricultural Policy

The Food, Conservation, and Energy Act of 2008 (P.L. 110-246), enacted into law in June 2008, is the most recent omnibus farm bill and guides most federal farm and food policies. The 112th Congress likely will consider reauthorization of the 2008 farm bill, because much of the current law expires in 2012. The omnibus nature of the farm bill—including diverse constituencies supporting farm subsidies, food stamps, conservation, bioenergy, and international food aid— helps generate interest across Congress to support passage. However, increasingly tight budgetary resources are prompting the chairman of the House Agriculture Committee to initiate hearings starting as early as spring 2010. The Administration already has submitted budget proposals to reduce farm supports, an approach at odds with that of many farm sector advocates who support the status quo. 

When the 2008 farm bill was enacted, the Congressional Budget Office (CBO) estimated its total cost (i.e., baseline plus new funding outlays, using the March 2007 baseline) at $284 billion over five years (FY2008-FY2012) and $604 billion over ten years (FY2008-FY2017). These costs reflected mandatory outlays that do not require appropriations action. Available information reflecting more recent CBO estimates for FY2010-FY2012 and actual expenditures for FY2008- FY2009 indicate that five-year spending on most major farm bill programs will likely be below that estimated by CBO in 2008, while spending for domestic food assistance programs under the 2008 farm bill will almost certainly be much greater than previously estimated. 

For example, when the 2008 farm bill was enacted, CBO estimated that the five-year cost (FY2008-FY2012) for the major farm support programs—commodities, conservation, crop insurance, renewable energy, and exports—would be $83.3 billion, or an average of $16.7 billion per year. More current CBO projections, which include actual spending in FY2008 and FY2009 for these programs, shows that spending for these programs is expected to total $88.7 billion (an average of $17.7 billion per year), or $5.5 billion above the five-year 2008 CBO estimate. Most of the difference between the 2008 estimate and more recent estimates is attributable to higher than expected crop insurance spending ($8.2 billion above estimates in 2008), offset by lower than expected spending for farm commodity and farm conservation programs. Estimated spending for the Supplemental Nutrition Assistance Program or SNAP (food stamps) over the five-year period is significantly higher than originally projected in 2008 ($188.9 billion estimated in 2008, compared to the more current estimate of $314.9 billion), reflecting additional spending because of provisions in the American Recovery and Reinvestment Act (ARRA), higher food costs, and increasing program participation rates due to the recession. 

Similar to the conditions during debate of the 2008 farm bill, the upcoming farm bill debate is likely to be driven in part by relatively large budget deficits and growing demands for fiscal constraint. As Congress moves toward considering reauthorization of the omnibus farm bill, questions about the cost of the farm bill and cost considerations among different farm bill programs will become more prominent. Among the types of questions frequently asked about farm bill spending are: What is the estimated cost of the current 2008 farm bill? How much more or less has actually been spent on the 2008 farm bill than was estimated at the time of enactment? What is the estimated cost of some of the major programs in the 2008 farm bill? This report begins to answer some of these questions and provides updated information on actual expenditures for some programs and baseline projections by CBO for spending under current law.


Date of Report: April 20, 2010
Number of Pages: 12
Order Number: R41195
Price: $29.95

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Brazil’s WTO Case Against the U.S. Cotton Program

Randy Schnepf
Specialist in Agricultural Policy

On April 5, 2010, Brazil's Foreign Trade Council (CAMEX) approved a resolution that would postpone until April 22 the implementation of WTO-approved countermeasures by Brazil against U.S. imports in relation to a long-running dispute over U.S. cotton subsidies. Earlier, on March 10, 2010, Brazil had released a list of 102 goods of U.S. origin valued at $561 million that would be subject to import tariffs of up to 100% within 30 days unless a last-minute agreement was reached. Five days later, on March 15, Brazil released a preliminary list of U.S. patents and intellectual property rights it could restrict, barring a joint settlement. In light of the temporary suspension of countermeasures, negotiations between the United States and Brazil on a proposed settlement continue. If preliminary objectives (discussed in the report) are achieved, it may result in the permanent suspension of any countermeasures related to this case. 

This trade dispute had its origins in 2002, when Brazil—a major cotton export competitor— expressed its growing concerns about U.S. cotton subsidies by initiating a World Trade Organization (WTO) dispute settlement case (DS267) against specific provisions of the U.S. cotton program. On September 8, 2004, a WTO dispute settlement panel ruled against the United States on several key issues. It found both (1) prohibited U.S. export subsidies (related to Step 2 program payments and export credit guarantees under the GSM-102 program) and (2) actionable U.S. domestic support measures (i.e., marketing loan benefits and counter-cyclical program payments) that resulted in adverse effects against Brazil's commercial interests. 

The United States appealed the ruling, but on March 3, 2005, a WTO Appellate Body upheld the panel's ruling and provided specific deadlines for removal or modification of the offending U.S. subsidies. Shortly after the March 2005 ruling, the United States made several changes to its cotton programs in an attempt to bring them into compliance with the WTO recommendations. However, Brazil argued that the U.S. response was inadequate, and requested the establishment of a WTO compliance panel in August 2006 to review whether the United States had fully complied with the previous rulings. The compliance panel ruled against the United States in December 2007, and the ruling was upheld on appeal in June 2008. 

On August 31, 2009, a WTO arbitration panel (reviewing Brazil's retaliation proposal of nearly $3 billion) released its decision, generally finding in favor of Brazil's retaliation requests but at levels substantially reduced from those requested by Brazil. However, in a key decision, the panel ruled that Brazil would be entitled to cross-retaliation if the overall retaliation amount exceeded a formula-based variable annual threshold. Cross-retaliation involves countermeasures in sectors outside of the trade in goods, most notably in the area of U.S. copyrights and patents. 

On December 21, 2009, Brazil announced that it was authorized by the WTO to impose trade retaliation against up to $829.3 million in U.S. goods in 2010 (based on 2008 data). The countermeasure included a fixed annual amount of $147.3 million, reflecting the adverse effects from U.S. price-contingent subsidies, and a balance related to the volume of U.S. export credit guarantees, which may vary annually. The WTO also established a threshold value (related to the value of Brazil's consumer goods imports from the United States) for determining the extent of permissible cross-retaliatory countermeasures. The threshold varies annually based on changes in Brazil's total imports from the United States, but is currently estimated at $561 million, yielding a remaining value of $268.3 million ($829.3 million - $561 million) in eligible cross-retaliatory countermeasures.


Date of Report: April 6, 2010
Number of Pages: 41
Order Number: RL32571
Price: $29.95

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Selected Issues Related to an Expansion of theRenewable Fuel Standard (RFS)

Randy Schnepf
Specialist in Agricultural Policy

Brent D. Yacobucci
Specialist in Energy and Environmental Policy

Federal policy has played a key role in the emergence of the U.S. biofuels industry. Policy measures include minimum renewable fuel usage requirements, blending and production tax credits, an import tariff, loans and loan guarantees, and research grants. This report focuses on the mandated minimum usage requirements—referred to as the Renewable Fuel Standard (RFS)— whereby a minimum volume of biofuels is to be used in the national transportation fuel supply. It describes the general nature of the RFS mandate and its implementation, and outlines some emerging issues related to the sustainability of the continued growth in U.S. biofuels production needed to fulfill the expanding RFS mandate, as well as the emergence of potential unintended consequences of this rapid expansion. 

Congress first established an RFS with the enactment of the Energy Policy Act of 2005 (EPAct, P.L. 109-58). This initial RFS (referred to as RFS1) mandated that a minimum of 4 billion gallons be used in 2006, and that this minimum usage volume rise to 7.5 billion gallons by 2012. Two years later, the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140) superseded and greatly expanded the biofuels blending mandate. The expanded RFS (referred to as RFS2) required the annual use of 9 billion gallons of biofuels in 2008 and expanded the mandate to 36 billion gallons annually in 2022, of which only 15 billion gallons can be ethanol from corn starch. In addition, EISA carved out specific requirements for "advanced biofuels," biomass-based biodiesel, and cellulosic biofuels. 

The Environmental Protection Agency (EPA) is responsible for establishing and implementing regulations to ensure that the nation's transportation fuel supply contains the mandated biofuels volumes. EPA's initial regulations for administering RFS1 (issued in April 2007) established detailed compliance standards for fuel suppliers, a tracking system based on renewable identification numbers (RINs) with credit verification and trading, special treatment of small refineries, and general waiver provisions. EPA rules for administering RFS2 (issued in February 2010) built upon the earlier RFS1 regulations; however, there are four major distinctions. First, mandated volumes are greatly expanded and the time frame over which the volumes ramp up is extended through at least 2022. Second, the total renewable fuel requirement is divided into four separate, but nested categories—total renewable fuels, advanced biofuels, biomass-based diesel, and cellulosic ethanol—each with its own volume requirement. Third, biofuels qualifying under each category must achieve certain minimum thresholds of lifecycle green house gas (GHG) emission reductions, with certain exceptions applicable to existing facilities. Fourth, all renewable fuel must be made from feedstocks that meet a new definition of renewable biomass, including certain land use restrictions. 

In the long term, the expanded RFS is likely to play a dominant role in the development of the U.S. biofuels sector, but with considerable uncertainty regarding potential spillover effects in other markets and on other important policy goals. Emerging resource constraints related to the rapid expansion of U.S. corn ethanol production have provoked questions about its long-run sustainability and the possibility of unintended consequences in other markets as well as on the environment. Questions also exist about the ability of the U.S. biofuels industry to meet the expanding mandate for biofuels from non-corn sources such as cellulosic biomass materials, whose production capacity has been slow to develop, or biomass-based biodiesel, which remains expensive to produce owing to the relatively high prices of its feedstocks. Finally, considerable uncertainty remains regarding the development of the infrastructure capacity (e.g., trucks, pipelines, pumps, etc.) needed to deliver the expanding biofuels mandate to consumers.


Date of Report: April 6, 2010
Number of Pages: 31
Order Number: R40155
Price: $29.95

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