Letter to Senate Appropriationgs Subcommittee on Agriculture, Rural Development and Related Agencies on USDA's Export Programs

June 15, 2005

Dear Mr. Chairman and Ranking Minority Member Kohl:

We are writing to urge your strong support for maintaining and strengthening funding for USDA's export programs, including the Market Access Program (MAP) and Foreign Market Development (FMD) program, when the Senate Appropriations Subcommittee on Agriculture, Rural Development and Related Agencies considers the FY 06 agriculture appropriations bill. We strongly urge that MAP be funded at no less than $200 million for FY 06, as authorized in the 2002 Farm Bill. In addition, we believe that FMD should be funded at its full authorized level of $34.5 million, as provided in the Farm Bill. We also request that you strongly oppose any efforts that would either eliminate or reduce funding for these important programs.

Farm income and agriculture’s economic well being depend heavily on exports, which account for one-third or more of domestic production. During development of the 2002 Farm Bill, Congress sought to bolster U.S. trade expansion efforts by approving an increase in funding for MAP and FMD, which began to reverse the decline in funding for these important export programs that occurred during the previous decade. It should be noted that MAP was originally authorized in the 1985 Farm Bill at a level of $325 million annually, and actual funding reached a high of $200 million per year in the late 1980’s and early 1990’s.

American agriculture and American workers continue to face strong subsidized foreign competition. In 2003, according to USDA, the European Union (EU) spent more than $3.25 billion on agricultural export subsidies compared to approximately $30 million by the U.S. In other words, the U.S. is being outspent by more than 100 to 1 by the EU alone with regard to the use of export subsidies.

In recent years, the EU, the Cairns group, and other foreign competitors also devoted approximately $1.2 billion on various market development activities to promote their exports of agricultural, forestry, and fishery products. A significant portion of this is carried out in the United States. Because market promotion is permitted under World Trade Organization (WTO) rules, with no limit on public or producer funding, it is increasingly seen as a centerpiece of a winning strategy in the future international trade battleground. Many competitor countries have announced ambitious trade goals and are shaping export programs to target promising growth markets and bring new companies into the export arena.

U.S. imports of agricultural products continue to grow on an annual basis, continuing a 35-year upward trend that has increased at a faster pace recently. Our traditional trade surplus is shrinking because imports are at record levels and continue to rise faster than exports. In FY 99, the U.S. recorded its first agricultural trade deficit with the EU of $1 billion. In FY 05, USDA forecasts that the trade deficit with the EU will grow to $6 billion, the largest agriculture deficit the U.S. runs with any market.

Again, this underscores the importance of and need for USDA’s export programs, especially MAP and FMD. These programs are among the few tools specifically allowed in unlimited amounts under WTO rules to help American agriculture and American workers remain competitive in a global marketplace still characterized by highly subsidized foreign competition. The over 70 U.S. agricultural groups that share in the costs of the MAP and FMD programs fully recognize the export benefits of market development activities. Since 1992, MAP participants have increased their contributions from 30 percent (30 cents for every dollar contributed by USDA) to 166 percent ($1.66 in industry funds for every USDA dollar). For FMD, the contribution rate has risen from 76 percent to the current level of 139 percent.

By any measure, such programs have been tremendously successful and extremely cost-effective in helping maintain and expand U.S. agricultural exports, protect American jobs, and strengthen farm income. Reducing or eliminating funding for these programs in the face of continued highly subsidized foreign competition and while we are in the midst of WTO negotiations would be nothing less than unilateral disarmament.

Again, we urge you to do everything you can to help maintain and fully fund these vitally important programs, as authorized under the 2002 Farm Bill.

Sincerely,

Coalition to Promote U.S. Agricultural Exports (See Attached List)

Cc: Members, Senate Appropriations Subcommittee on Agriculture, Rural Development and Related Agencies

ORGANIZATIONS SIGNING COALITION LETTER TO
HOUSE AND SENATE AGRICULTURE APPROPRIATIONS SUBCOMMITTEES

MAY/JUNE, 2005