An independent study by IHS Global Insight, Inc. found that the U.S. Department of Agriculture’s international market development programs have had a positive and significant impact on U.S. agricultural trade.
The study evaluated the effects of the Market Access Program (MAP) and the Foreign Market Development Program (FMD) administered by USDA’s Foreign Agricultural Service (FAS).
The report updates a larger study conducted in 2006 and focuses on the period from 2002 through 2009. By 2009, the report concludes, the increase in market development spending since 2002 increased U.S. export market share by 1.3 percentage points and the annual value of U.S. agricultural exports by $6.1 billion.
“This study shows that USDA’s market development partnership with industry has had a significant positive impact on U.S. agricultural exports and increased returns to our farmers and ranchers by effectively and efficiently leveraging resources from the private and public sectors.”
The study concluded that increased investment in market development resulted in the following:
• For every additional $1 expended by government and industry on market development, U.S. food and agricultural exports increased by $35.
• Without the increased investment in market development since 2002, U.S. agricultural exports would have been $6.1 billion lower in 2009.
• Export gains associated with the programs increased the average annual level of U.S. farm cash receipts by $4.4 billion and net cash farm income by $1.5 billion. At the same time, U.S. domestic support payments were reduced by roughly $54 million annually due to higher prices from increased demand abroad, thus reducing the net cost of the programs.
Through the MAP and FMD programs, USDA provides resources to U.S. non-profit agricultural trade organizations, State Regional Trade Groups, state agencies and cooperatives, in support of participant’s overseas strategic objectives. Program activities include: market research; educational and promotional activities; in-country representation and trade servicing; and efforts to counter access issues.
The Global Insight study, “A Cost-Benefit Analysis of USDA’s International Market Development Programs,” followed the Office of Management and Budget (OMB) Circular A-94, which establishes the guidelines and discount rates for benefit-cost analysis of federal programs. FAS commissioned the study.
For more information about FAS market development programs, contact the Office of Trade Programs at (202) 720-4327, or visit http://www.fas.usda.gov/mos/marketdev.asp.