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Study Shows Agricultural Export Promotion Investment is an International Priority
June 10, 2013
U.S. farmers and ranchers are competing in a very active international agri-food trade environment with many countries that invest significant public and private funds through a variety of programs to develop markets and promote their products. That is a primary conclusion of a major study just completed on behalf of several U.S. agri-food export market development organizations by Agralytica Consulting, Alexandria, Va.

“This is the first study to take an in-depth look at both competing export market development programs as well as the source and amount of funding,” said Shannon Schlecht, vice president of policy at U.S. Wheat Associates (USW), Arlington, Va. “Exports are vital to U.S. agricultural producers with 95 percent of consumers living outside our borders. The analysis was designed to give organizations like ours strategic, competitive information we can use to help make our export promotion plans more effective for the farmers, ranchers and small businesses we represent.”

USW led a team of USDA Foreign Agricultural Service (FAS) cooperator organizations that directed the study. Funding came from a portion of the FAS Market Access Program (MAP) to encourage multi-market, cross-commodity projects that address common challenges and opportunities.

These organizations and Agralytica selected 12 countries and the European Union (EU) central government programs for in-depth study including desk research, in-person interviews and consultation with U.S. Agricultural Trade Offices in the target countries. The study provided new information about competing export development activities, program structure, funding and evaluation methods. Key insights include:
· Together in 2011 the 12 countries and the EU central government spent an estimated $1.8 billion, including $700 million in public funds and $1.1 billion in private funds, on export promotion for agri-food products. For comparison, in 2011 the United States spent an estimated $650 million, including $256 million in public funds and $394 million in private investment, on agri-food export promotion.
· The EU 27 central government alone allocated an estimated total of $360 million of public funds in 2011 to Member States for export promotion; the additional public investment by governments in France, Italy, Spain and The Netherlands brought that total to $460 million. The research indicates that promotion funds are budgeted to increase significantly in the EU 2014 to 2020 budget.
· Trade shows are universally recognized as effective and essential activities requiring government support.
· Public support to small and medium sized enterprises (SMEs) is a key objective of competitor programs.
· Trade missions, both inward and outward, are viewed as effective and used by most of our competitors.
· Focus on market access is growing. In general, monitoring trade policies and securing market access are seen as essential components of market development.
· In contrast to U.S. federal rules for export development programs, some counties allow more flexibility in eligibility while others limit it based on product sectors and/or target markets. Some countries allow for multi-year funding of export promotion programs.

“The analysis clearly indicates that agricultural producers everywhere recognize the importance of competing in international markets,” Schlecht said. “Now we have evidence that competitors are likely to keep increasing their investment in export development and promotion.”

The study also makes comparisons between competing programs and U.S. market development programs administered by FAS, including MAP and the Foreign Market Development (FMD) program. The summary report states that U.S. programs “provide an effective solution to many issues faced by competitors.” The study did not examine such other programs as export finance, tax policy or farm support programs.

The summary report is available for review at and may be downloaded from:

USW is the industry’s market development organization working in more than 100 countries. Its mission is to “develop, maintain, and expand international markets to enhance the profitability of U.S. wheat producers and their customers.” USW activities are made possible through producer checkoff dollars managed by 19 state wheat commissions and cost-share funding provided by USDA’s Foreign Agricultural Service. USW maintains 17 offices strategically located around the world to help wheat buyers, millers, bakers, wheat food processors and government officials understand the quality, value and reliability of all six classes of U.S. wheat.
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Questions and Answers

What is the objective of this study?

Exports have become a primary engine of growth for U.S. farmers, ranchers and agriculturally based small business enterprises (SME). Yet U.S. agri-food exporters face increasing competition and a gap existed in knowledge about how competitors approach export promotion.

So the main objective of the project was to provide an understanding of the scope and content of export development programs, the level of investment in those programs and policies related to export promotion by some of the key countries competing with USDA Foreign Agricultural Service (FAS) cooperator organizations including non-profit U.S. agricultural trade associations, non-profit U.S. agricultural cooperatives, non-profit state and regional trade groups and small U.S. businesses. These organizations now have new strategic, competitive information they can use to help make export promotion plans more effective for the farmers, ranchers and small businesses they represent.

Who funded and directed the study?

The public-private partnership between FAS and U.S. agricultural organizations has been a critical factor in familiarizing the world with high-quality U.S. products and the strong growth of U.S. agricultural exports. FAS strives to foster innovation to keep market development efforts relevant in today’s ever-changing global marketplace.

FAS earmarks a portion of its Market Access Program (MAP) funds to encourage multi-market, cross-commodity projects that address common challenges and opportunities. Several cooperator organizations applied for funding for this study as part of their annual Unified Export Strategy plans submitted to FAS.

Those cooperators, including U.S. Wheat Associates (USW), Arlington, Va., prepared and distributed a request for proposal to several research firms. The cooperators selected Agralytica Consulting, Alexandria, Va., and USW took the lead in directing the study.

Can you characterize the scope of the study?

In-depth research was conducted on promotional activities of the European Union central government and 12 individual countries: France, Italy, Spain, Netherlands, Australia, New Zealand, Brazil, Chile, Canada, China, South Africa and Turkey. Together, they represent about one-third of world agricultural trade.

The study covered all food, feed and fiber products traded in unprocessed or processed forms, collectively referred to as agri-food products. This included the products of all conventionally classified agricultural and horticultural products, aquatic products, forest products, and biomass products (based on grains, oilseeds and other renewable raw materials). Finished non-food processed products such as textiles and furniture were excluded.

This study focused exclusively on measures to promote agri-food products internationally, whether through market development activities or product promotion efforts. It did not include any other measures that governments might take to directly or indirectly support exports such as funding of export sales through subsidies, the provision of export credits, export credit guarantees, tax concessions, or domestic support programs to improve the productivity of an agri-food sector (even if that was directed to improve export performance). In addition, the research attempted to identify the sources of funding, the organizations involved and the public and private monetary investment.

How was the information obtained?

The research involved desk research, 160 in-person interviews with senior executives at government agencies and industry organizations, and consultation with officers at the U.S. Agricultural Trade Offices in the target countries and with US industry organizations involved in export development.

For most countries, published information on promotional budgets for both government and/or sector programs was obtained. In many cases the interviews provided at least some of the information missing from published documents. However, a few countries did not publish expenditure information and the interviews could not fill all gaps. This was the case for the following:
· In South Africa, information on budgets was sparse. For most key organizations, either the industry match or the government contribution was assumed, based on the government’s 50/50 co-funding program, or agency budgets.
· In Turkey, no expenditure data were available. Consequently, trade show attendance data, along with documented activities eligible for government support, were used to develop expenditure estimates.
· In China, only information on national government support was available; provincial and local support was not. Trade show participation and funding was estimated based on information about China’s participation in international trade shows most of which appears to be funded at the provincial level.

In addition to the information outlined in the news release, what other interesting findings did the study reveal?

Total estimated export promotion expenditure of the 12 countries reviewed has increased by 38 percent, compared to competitive export market development spending in 2002 that was reported in a 2004 USDA country study. Also compared to that study’s results, competitive public funds spent on export promotion have increased by 103 percent and industry funds by 18 percent. As a reference point, U.S. public and private export promotion expenditures also increased during this period. However, relative to agricultural production value, the US public spending for market development is among the lowest of the countries examined. Additionally:
· Export promotion expenditures in France and Chile have remained almost unchanged.
· The largest increase is observed in Italy; this is accounted for almost exclusively by wine.
· Spain’s expenditure has more than doubled, attributed to increased EU funding for wine promotion.
· In Canada, export promotion expenditure has quadrupled due to a significant increase of both public and industry funds.
· In Australia, public funding levels have not changed but industry spending has tripled.
· Public funding in Netherlands has remained unchanged, but industry funding has decreased as commodity sectors have turned their backs on compulsory levies (check-offs).
· Similarly, South Africa seems to be spending less now than 10 years ago. Deregulation of South African industry in the 1990s was followed by almost a decade of virtually no export promotion, which has only begun to pick up in recent years.

Where can anyone read more about the study?

The summary report is posted online at:

(See attached file: Study Shows Agricultural Export Investment is an International Priority.pdf)(See attached file: Agricultural Export Investment - FAS Cooperators - Summary Report.pdf)

File Name
Study Shows Agricultural Export Investment is an International Priority.pdf
Agricultural Export Investment - FAS Cooperators - Summary Report.pdf
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