Agricultural Trade: USDA Is Monitoring Market Development Programs as Required but Could Improve Analysis of Impact Page: 2 of 65
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Highlights of GAO-13-740, a report to the
Ranking Member, Committee on Homeland
Security and Governmental Affairs, U.S.
Why GAO Did This Study
USDA administers five programs to
assist U.S. agricultural industry efforts
to build, maintain, and expand
overseas markets. However, members
of Congress continue to debate the
level of funding for this assistance and
its impact on agricultural exports.
USDA provides about $250 million
annually for the five market
development programs. MAP and FMD
received about 90 percent of this
funding in fiscal year 2012, with
allocations of $200 million and $34.5
GAO was asked to review USDA's
market development programs. This
report (1) describes participation and
expenditures in these market
development programs, particularly
MAP and FMD; (2) examines FAS's
management and monitoring of its
market development programs; and (3)
assesses FAS's cost-benefit analysis
of MAP's and FMD's impact on the
U.S. economy. GAO analyzed USDA
expenditure data from 2002 through
2011 and reviewed key agency and
program participant documents. GAO
also assessed a sample of participants'
annual progress reports and assessed
economic cost-benefit analyses of
MAP and FMD commissioned by
What GAO Recommends
GAO recommends that USDA (1)
emphasize that market development
program participants' annual progress
reports should identify the
methodologies used to assess results
and (2) ensure that any economic
models used in future cost-benefit
analyses of the programs include
industry-specific variables and
sensitivity analyses of key
assumptions. USDA concurred with
View GAO-13-740. For more information,
contact Lawrance Evans at (202) 512-4802 or
USDA Is Monitoring Market Development Programs
as Required but Could Improve Analysis of Impact
What GAO Found
Market development program participants use program funds to support a variety
of activities intended to raise awareness or acceptance of U.S. agricultural
products in overseas markets. Common activities include, among others, market
research, consumer and retail promotion, and participation in international trade
shows. GAO's analysis of expenditure data from 2007 through 2011 shows that
participants in the Market Access Program (MAP) and the Foreign Market
Development Program (FMD)-the largest of the five market development
programs-remained generally consistent during that period. The program
participants with the largest shares of funding and the countries where the largest
shares of funds were spent also remained relatively consistent. Expenditure data
for 2011 show that MAP and FMD participants met or exceeded FAS contribution
requirements that they match minimum percentages of the program funding they
receive. Unlike funding for the other programs, a portion of MAP funds is used for
promotion of branded products. In 2011, MAP participants spent about 85
percent of program funding on overseas promotion of generic commodities. More
than 600 small companies and seven agricultural cooperatives spent the
remaining 15 percent of MAP funding to promote branded products.
The U.S. Department of Agriculture's (USDA) Foreign Agricultural Service (FAS)
uses several management and monitoring processes to reduce the risk of
duplication among the five programs. FAS uses an integrated system to process
funding applications for multiple programs and to monitor expenditures, which
reduces the risk of duplication. According to FAS officials, FAS also monitors
participants' expenses for all programs through its compliance review process. In
addition, FAS guidance requires program participants to submit annual progress
reports on the results of their market development activities. GAO found that
performance measures in a sample of progress reports generally reflected
selected FAS guidance and key attributes of successful performance measures
that GAO had identified. However, the sampled reports did not always outline the
methodologies used to assess activity results as required by FAS guidelines. In
these cases, it would be difficult for FAS to determine the reliability of the
reported results and the impact of market development activities.
A 2007 cost-benefit analysis of MAP and FMD, commissioned by FAS, found that
the programs increased U.S. agricultural exports and benefited the U.S.
economy, but methodological limitations may affect the magnitude of the
estimated benefits. Overall, the analysis asserted that the government's
expenditures for the two programs resulted in greater increases in U.S.
agricultural exports and greater benefit to the U.S. economy than would have
occurred without the expenditures. However, an economic model used to
estimate the programs' impact on U.S. market share omitted important variables,
such as commodity prices. Also, the study did not include sensitivity analyses of
certain key assumptions underlying its estimates of impacts on U.S. exports. For
example, analyses of the possible effects of varying levels of program funding
would provide a clearer picture of the potential impact of increased or decreased
funding on U.S. exports and the economy. FAS officials reported that they plan to
commission a new cost-benefit analysis in 2014 but have not yet identified the
methodologies that the new analysis will use.
United States Government Accountability Office
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United States. Government Accountability Office. Agricultural Trade: USDA Is Monitoring Market Development Programs as Required but Could Improve Analysis of Impact, report, July 31, 2013; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc301706/m1/2/: accessed January 18, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.