Agricultural Export Assistance Update: Quarterly Report
FY 2001 Summary

Public Law 104-127, the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act), was signed into law on April 4, 1996. The FAIR Act oriented programs toward greater market development, with increased emphasis on high-value and value-added products. It reauthorized and revised such longstanding export assistance programs as Public Law 480, short- and intermediate-term export credit guarantees (GSM-102 and GSM-103), the Export Enhancement Program, the Dairy Export Incentive Program, and the Market Access Program (formerly the Market Promotion Program). The FAIR Act also provided for the creation of the Supplier Credit Guarantee Program and the Facility Guarantee Program.

The U.S. Department of Agriculture administers the export assistance programs contained in the FAIR Act, except for Titles II and III of the revised P.L. 480, which are assigned by law to the Agency for International Development. Within USDA, the Foreign Agricultural Service (FAS) is the leader in developing and executing these programs and initiatives.

Food Aid Programs

The FAIR Act reauthorized and added activities to one of the oldest U.S. export assistance programs -- P.L. 480, also known as Food for Peace. Fiscal year 2001 commodity programming for food aid under P.L. 480 is estimated at $595 million, including $156 million for Title I (including Title I-funded Food for Progress), and $439 million for Title II (including Title II/World Food Program). The $595 million in P.L. 480 food assistance supported the shipment of approximately 3.2 million metric tons of commodities.

The FAIR Act reauthorized Title I government-to-government concessional sales and included the authority to sign agreements with private entities. It also modified the repayment terms for Title I credit, eliminating the minimum repayment period of 10 years and reducing the maximum grace period from 7 to 5 years. Agricultural trade organizations are permitted to carry out projects or programs in developing countries using funds from the sale of Title I commodities if the organization has a market development plan approved by the Secretary of Agriculture.

In FY 2001, concessional sales and donations of about 1.1 million metric tons of commodities valued at $156 million were programmed to 17 countries under Title I and the Food for Progress program using Title I funds. These amounts include Title I-funded Food for Progress donations of about 311,000 metric tons of commodities valued at approximately $51 million.

The FAIR Act reauthorized the Title II emergency and private assistance donations program. It increased the maximum level of funding that can be provided as overseas administrative support from $13.5 million to $28 million and added intergovernmental organizations such as the World Food Program to the list of organizations eligible to receive these funds. In FY 2001, donations of about 2.1 million metric tons of commodities valued at an estimated $439 million were programmed under Title II, including Title II donations through the World Food Program.

The FAIR Act reauthorized the Title III Food for Development program. This program provides government-to-government food assistance grants to least-developed countries. Local sales proceeds can be used to support a variety of economic development and related activities in recipient countries. No commodities were programmed under Title III in FY 2001. 

The Food for Progress Program is carried out using commodities available for distribution under Section 416(b), funds available to the Commodity Credit Corporation (CCC), or funds appropriated under P.L. 480, Title I. This program provides commodities to needy countries as a reward for having undertaken economic or agricultural reform. The FAIR Act extended the authority for the Food for Progress program to provide assistance in the administration and monitoring of food assistance programs to strengthen private sector agriculture in recipient countries through 2002.The authority was also expanded to include intergovernmental organizations in Food for Progress programming, to make sales on credit terms to all eligible countries in addition to the former Soviet Union, and to include the provision of technical assistance for monetization programs. 

In FY 2001, Food for Progress bilateral agreements using Title I authority were signed with Ecuador, Guyana, and Mozambique totaling about 107,000 metric tons valued at approximately $16 million. In addition, Food for Progress agreements with private entities using the Title I authority were signed with Albania, Azerbaijan, Bosnia-Herzegovina, El Salvador, Indonesia, Russia, the South Balkans/Kosovo, Togo, and Turkmenistan for 204,000 metric tons valued at about $35 million. Food for Progress programs using CCC funds were implemented with U.S. private voluntary organizations for projects in ten countries totaling 126,000 metric tons of commodities valued at about $56 million. The Food for Progress program is limited by a global 500,000-metric-ton legislative ceiling and caps of $30 million on transportation costs and $10 million on administrative costs paid directly by CCC.

The FAIR Act reauthorized the Farmer-to-Farmer Program, which can include middle-income countries and emerging markets. AIR also increased the minimum percentage of P.L. 480 funding for the Farmer-to-Farmer Program from 0.2 to 0.4 percent.

Section 416(b) of the Agricultural Act of 1949 provides for the donation to needy countries of eligible commodities held by the Cochin FY 2001, 3.0 million metric tons of commodities valued at approximately $630 million were donated to 60 countries under the Section 416(b) program. Of this total, 487,000 metric tons of commodities valued at approximately $111 million were donated to 36 countries under the Global Food for Education Initiative (GFE).The GFE is an international school feeding program to improve school enrollment, attendance, and performance in poor countries using commodities donated under the authority of the Section 416(b) program. The World Food Program, private entities, and the government of the Dominican Republic are implementing projects expected to benefit approximately nine million students.

In FY 2001, U.S. food assistance under the programs administered by USDA (P.L. 480, Title I; the Food for Progress program; and the Section 416(b) program) totaled about 4.2 million metric tons valued at $842 million.

Commercial Export Credit Guarantee Programs

A minimum annual program level of $5.7 billion is available for the Export Credit Guarantee Program (GSM-102) and the Intermediate Export Credit Guarantee Program (GSM-103). The FAIR Act mandates a minimum annual program level of $5.5 billion for GSM-102 and GSM-103, but it allows flexibility in how much is made available for each program. Provisions of the Food, Agriculture, Conservation, and Trade (FACT) Act of 1990 mandate that a minimum of $1.0 billion be made available for direct credits or export credit guarantees to emerging markets during fiscal years 1996-2002. Under this mandate, $200 million is made available annually, increasing the minimum annual program level for GSM-102 and GSM-103 from $5.5 billion to $5.7 billion. 

The GSM-102 program guarantees repayments of short-term credits (90 days to 3 years) extended by U.S. financial institutions to eligible banks in countries that purchase U.S. farm products. In FY 2001, GSM-102 allocations of about $4.7 billion were announced to 24 countries and 11 regions, including the Baltic, Caribbean, Central America, Central Europe, China/Hong Kong, East Africa, South America, Southeast Asia, Southeast Europe, Southern Africa, and West Africa regions.  Under this availability, GSM-102 registrations totaled approximately $3.0 billion for exports to 15 countries and six regions.

Guarantees issued under the GSM-103 program can cover financing periods of more than 3 and up to 10 years. This program is designed to help developing nations make the transition from concessional financing to cash purchases. In FY 2001, $193 million in intermediate credit guarantees were made available for sales to ten countries and three regions, including the Central America, South America, and Southern Africa regions. Under this availability, GSM-103 registrations totaled $42.3 million to five countries.

The Supplier Credit Guarantee Program (SCGP) became operational in late FY 1996. This program is designed to encourage U.S. exporters to expand, maintain, and develop markets for U.S. agricultural products in areas where commercial financing may not be available without a CCC payment guarantee. The program can help U.S. exporters who wish to provide short-term credit (180 days or less) directly to their foreign buyers.

In FY 2001, SCGP allocations totaled $720 million in coverage for sales to 14 countries and ten regions, including the Baltic, Caribbean, Central America, Central Europe, China/Hong Kong, South America, Southeast Asia, Southeast Balkans, Southeast Europe, and West Africa regions. Under the announced availability, registrations totaled $226 million to ten countries and seven regions.

The Facility Guarantee Program (FGP) was implemented in December 1997 to extend credit guarantees for export sales of U.S. capital goods and services to improve agriculture-related facilities in emerging markets. No sales were registered under this program in FY 2001.

Export Assistance Programs

The Export Enhancement Program (EEP), announced by USDA on May 15, 1985, operates under the authority of the Agricultural Trade Act of 1978 as amended, the Uruguay Round Agreements Act, and the FAIR Act. The EEP permits USDA to provide bonuses to make U.S. commodities more competitive in the world marketplace and to offset the adverse effects of unfair trade practices or subsidies. The FAIR Act set maximum funding levels for CCC to make available for the EEP each fiscal year through 2002 as follows: FY 1996, $350 million; FY 1997, $250 million; FY 1998, $500 million; FY 1999, $550 million; FY 2000, $579 million; FY 2001, $478 million; and FY 2002, $478 million. 

On June 30, 2000, a one-year allocation for 20,210 metric tons of frozen poultry to six Middle Eastern countries under the EEP was announced in accordance with the quantity limitations of the Uruguay Round Agreement on Agriculture. Aside from the poultry allocation, the Uruguay Round Agreement would permit export subsidies for wheat, wheat flour, barley, malting barley, malt, sorghum, rice, vegetable oils, and table eggs. However, EEP was made operational only for frozen poultry. For FY 2001, bonuses of about $6.8 million were awarded for 11,090 metric tons of frozen poultry.

Section 148 of the FAIR Act extended the Dairy Export Incentive Program (DEIP) through FY 2002. Section 148 focuses the DEIP on market development, providing full authority and funding to reach the volume or spending limits consistent with U.S. obligations as a member of the World Trade Organization. The DEIP operates on a bid bonus system similar to EEP, with cash bonus payments. The DEIP program helps exporters of U.S. dairy products meet prevailing world prices and develop foreign markets for the targeted products.

Allocations under the current DEIP program for marketing year July 1, 2001, through June 30, 2002, were announced on Aug. 2, 2001. Allocations were announced for 68,201 metric tons of nonfat dry milk, 21,097 metric tons of butterfat, and 3,030 metric tons of cheeses. An invitation was issued for 3,030 metric tons of cheese on Aug. 9, 2001. For FY 2001, bonuses totaling $1,760,700 were awarded for 3,030 metric tons of cheese, and bonuses totaling $6,727,167 were awarded for 55,451 metric tons of nonfat dry milk. The major markets assisted in FY 2001 include the Caribbean, Central and South America region and the Asia and Former Soviet Union region.

Market Development Programs

The Market Access Program (MAP) was authorized by Section 203 of the Agricultural Trade Act of 1978, as amended. The MAP is funded at $90 million annually for FY 1996 through 2002 and is designed to encourage the creation, maintenance, and expansion of foreign markets for U.S. agricultural, fishery, and forestry products. The MAP forms a public-private sector partnership to share the costs of eligible overseas marketing and promotional activities, using the experience of specialists deployed around the world. This partnership links small U.S. businesses, U.S. agricultural cooperatives, nonprofit state-regional trade groups, nonprofit U.S. agricultural trade associations, and USDA. Eligible activities include consumer promotions, market research, trade shows, and trade servicing. On June 14, 2001, USDA announced FY 2001 MAP allocations of $90 million to 65 U.S. trade organizations for export promotion activities in foreign markets. Applications for the FY 2002 MAP program were due by March 11, 2002.

The Foreign Market Development Cooperator Program (FMD) also provides cost-share assistance to eligible nonprofit agricultural trade organizations to conduct approved international market development activities. USDA enters into agreements with nonprofit U.S. trade organizations that have the broadest producer representation of the commodity being promoted. Priority is given to those organizations that are nationwide in membership and scope. Activities conducted under this program generally address long-term foreign import constraints and are designed to create, maintain, and expand long-term growth in demand for U.S. agricultural, fishery, and forestry products. On Dec. 13, 2000, USDA announced an FY 2001 Cooperator program level of $33.5 million, allocated among 25 U.S. trade organizations. The FY 2002  program was announced on Nov. 30, 2001, and applications for the FY 2003 program were due by March 11, 2002.

The pilot Quality Samples Program (QSP) was announced on Nov. 18, 1999, to help U.S. agricultural trade organizations provide samples of U.S. agricultural products to potential importers in emerging markets. Focusing on industry and manufacturing uses, this program stimulates interest in U.S. products by giving potential customers the opportunity to test the products and discover U.S. quality. The QSP is used to fund projects that broadly benefit agricultural industries rather than individual exporters. Under the program, participants export samples of U.S. agricultural products to foreign buyers and provide technical demonstrations on how to use the products. When the project is completed, USDA reimburses the costs of procuring and exporting the samples. On June 25, 2001, USDA announced that 21 recipients would share $1.2 million in funding made available for FY 2001, the second year of the pilot program. Applications for the FY 2002 QSP program were due on March 11, 2002.