Engine of Growth
USDA trade promotion program helps almond growers build export markets and America create jobs
Appeared in May/June 1996 issue of Almond Facts magazine
For members of Blue Diamond Growers cooperative
By Gray Allen, managing editor
Blue Diamond, its members, and co-op huller-shellers produce a powerful, economic ripple effect through California's economy. Each dollar earned from growing, processing, and marketing almonds helps fuel a stronger economy by creating jobs, income, and output. This is all the more significant because 70 percent of the industry's sales are to foreign markets, bringing new wealth to California and the nation as a whole.
This makes you, a Blue Diamond almond grower, an important exporter. Your almonds are on grocery shelves in 94 countries around the world, from Japan to Germany, Mexico to India. Your (Blue Diamond's) exports, along with those of other California almond shippers, are among the leading engines of economic growth in America.
Almonds are California's leading food export in most years and the United States' sixth largest food export. U.S. farm shipments abroad support nearly one million well-paying domestic jobs and over $100 billion in related economic activity.
However, your future success in the export arena depends to a significant degree on a very successful but frequently criticized government program whose continued existence needs your support: the Market Access Program (MAP), formerly known as the Market Promotion Program (MPP). MAP has been a powerful ally for agricultural commodities whose combined sales to export markets last year totaled over $50 billion.
MAP is a USDA export promotional program. It consistently accomplishes what it is supposed to, pays its own way, creates millions of jobs, and generates vast new wealth in America. It has been strengthening the American economy for nearly 40 years. Blue Diamond was among the first agricultural organizations to use this program. USDA's support of the co-op's efforts to open the Japanese market was critical to Blue Diamond's success there.
Promoting Farm Exports
Through MAP, the U.S. government provides funds on a cost-share basis to farmers, ranchers, and related businesses to help them maintain, develop, and expand export markets, and to compete abroad with subsidized foreign competitors. MAP focuses on the promotion of processed commodities and higher-valued products such as fruits, nuts and vegetables, meats, and grocery items.
Last year, MAP helped boost the U.S. agricultural trade surplus to a record $30 billion, helping make this country's farm exports one of the few bright spots in America's trade picture.
Pays Its Own Way
Even more important, the jobs and business growth that MAP helps create each year generate billions of dollars in additional tax revenues, which more than offset USDA's spending on the program.
Surprisingly, however, this government-private sector partnership that does so much to strengthen farm income and the national economy year after year receives little praise or support from the news media or urban politicians. That's because urban politicians want a bigger piece of a shrinking budget and want to sacrifice the export program to fund their own projects. Every time an omnibus farm bill is debated in Congress, politicians and editors alike criticize the MAP portions of the legislation for "providing taxpayer dollars to private businesses to help them sell their products abroad."
These attacks distort the facts while obscuring the goals and accomplishments of MAP. No wonder the public is sometimes confused on the issue.
The Facts Win Support
But given the facts, John and Jane Doe line up solidly behind public support of farm exports. In a poll of 800 Americans last January, questioners asked: "If other countries are providing subsidies and other assistance to help promote their agricultural exports, do you support or oppose the U.S. government providing subsidies or financial assistance to help American farmers compete against subsidized foreign competition and to protect American jobs?"
Nearly 75 percent of the respondents enthusiastically supported U.S. government assistance.
The poll was conducted by New York-based Penn+Schoen on behalf of the Coalition to Promote U.S. Agricultural Exports, which represents nearly 100 organizations representing farmers, ranchers, agricultural cooperatives, and state departments of agriculture.
The publics' wisdom when they are properly informed is impressive - and encouraging. In hopes of adding to that base of understanding, the remainder of this article will attempt to set the record straight on the MAP issue. We will show why you should help convince others - especially your local news media and your legislators - of the value and importance of these programs to all Americans - urbanite and ruralite alike.
Why Promote Farm Exports?
The underlying issue is: "How important, really, are almond exports - and farm exports, generally - to America's economic well-being?"
The answer is: "Extremely important. Agricultural exports create jobs and fuel economic growth."
Each $1 billion in farm exports supports nearly 20,000 jobs in the United States - jobs in production, processing, packaging, transportation, and related industries and services. California's billion-dollar almond industry creates some 20,000 jobs as well. Most of the jobs created by agricultural exports, some 60 percent, are in towns and cities.
U.S. farm exports in 1996 are expected to top $60 billion for a total of 1.3 million jobs owed to farm exports. These jobs create tax revenues that exceed the federal government's program costs.
Exports are also vital to rural America. In 1995, farm shipments abroad accounted for over 23 percent of gross farm receipts derived from the marketplace - nearly 1 in 4 farm dollars. In the almond industry, exports account for 7 in 10 farm dollars!
Why Involve the U.S. Government?
In an economy devoted to private, free enterprise, why should the federal government invest in building and maintaining markets for private businesses?
In an ideal world where everyone played by the same rules, it probably would not be necessary for the U.S. government to become involved in promoting the sales of private firms' products, but this is not an ideal world. Every country engaged in international trade has policies and programs to help it compete more effectively, and to expand its share of the world market. The European Union (EU) and other foreign competitors heavily outspend the U.S. in this respect. Without a strong commitment from our government to U.S. agricultural export programs, America's farmers and workers will be at a substantial disadvantage in world trade.
National Council of Farmer Cooperatives President Wayne Boutwell puts the issue succinctly: "The choice is simple - we can export our products or we can export our jobs."
Competing in the EU
Consider the EU, for example. Over two-thirds of the California almond industry's exports are shipped to EU countries. Spain, a member of the EU, is the world's second-largest producer and shipper of almonds, and Spain heavily subsidizes its growers. Without MAP to help promote almond sales in the EU, California producers would be at a serious disadvantage.
The EU outspends the U.S. in terms of export subsidies by a 10 to 1 margin. In 1995, the EU allocated over $9 billion to help subsidize their agricultural exports. The U.S. spent less than $1 billion. The French government alone spends more money promoting French wines than the U.S. spends through MAP for all agricultural export commodities.
The EU also helps its farmers and agricultural industries engage in market development and promotion. According to the USDA, the EU has allocated over $680 million for these efforts. Last year the EU spent $242 million to promote horticultural products, which includes tree nuts, for export, including to other EU states. The EU also provided $317 million in export subsidies for horticultural products.
By comparison, U.S. government support of food exports is eroding. Ten years ago, MAP's predecessor program provided a total of $200 million to spread across all commodities, with the almond industry's portion a mere $6 million.
But for 1996-67, Congress funded only $90 million of promotional support. The almond industry's allocation dropped to just $1.4 million for this year!
Meanwhile, nations around the world continue to subsidize their growers, levy heavy duties on imports and raise nontariff barriers to free trade, making it more difficult for California almond growers to compete in foreign markets. The MAP partnership provides the necessary leverage to maintain and expand markets worldwide.
Another factor makes government export programs for almond growers essential: Agriculture is still an industry characterized by small businesses. Mobilizing a foreign market development program is a costly proposition, far too great an undertaking for an individual farmer. It entails trained and experienced personnel, overseas offices, extensive travel, and expertise in coping with the many obstacles and complexities encountered in marketing agricultural products abroad.
Agricultural products are subject to numerous health and safety regulations as well as other rules of commerce that vary greatly from country to country, but the ultimate trade barrier can be the consumer. Exporters must convince foreign consumers that U.S. products are worth trying, often in direct competition with a foreign government agency that sells food directly to consumers.
Since most U.S. farms are owned and operated by individuals, farmers pool their resources to establish organizations and cooperatives, such as Blue Diamond, to market their products and handle the intricacies of developing foreign markets. These organizations engage the support of USDA to help them maneuver through the maze of foreign government rules and regulations. And they engage USDA programs such as MAP to help them promote their products and brands overseas.
MAP is especially valuable to cooperatives, which are made up of small- to medium-size farms. The average Blue Diamond member, for example, farms about 45 acres of almonds, far too small a unit to develop an export market on his or her own. But with their cooperative's and MAP's assistance, these growers have been able to pioneer and develop overseas markets.
How MAP Helps
The principle of MAP is simple. It is a public-private partnership in which the U.S. government provides cost-share assistance to U.S. agricultural producers and their organizations to help them maintain, develop, and expand export markets under the Blue Diamond brand, and to compete with subsidized foreign firms.
To receive MAP assistance, an organization must submit a market by market strategy and an activity plan to USDA detailing the promotional activities that are planned, the expected cost, and the amount that the organization will contribute to those costs.
Blue Diamond, like all branded companies in this program, typically spends one dollar for every dollar provided by USDA. These funds pay for consumer and trade advertising, supermarket demonstrations, point-of-sale promotions, and more.
How Effective Is MAP?
Studies by USDA show that every dollar invested in foreign trade translates into $16 in additional exports - a 16-to-1 return on investment! In Japan, MAP's partnership with the almond industry has produced a 100 percent increase in sales over the past 15 years. In Malaysia and Singapore, a new market for MAP, almond sales have doubled, as they have in Western Europe over the past 15 years. And almond sales to India have tripled in less than 10 years. Thanks to MAP, Blue Diamond has led the way in opening and expanding almond markets in 94 countries around the world.
Bottom Line Impact
Clearly, MAP is working. The additional exports that MAP helped generate increased U.S. net farm income by $642 million in 1992, and will generate $1 billion in total farm income by 2000. Every federal dollar invested in the MAP program boosted net farm income by $3.05 in 1992, a figure that is expected to rise to $7.20 by 2000.
The effort to maintain and expand agricultural exports is critically important to the U.S. economy. At a time when the U.S. economy needs more jobs, more income, and more growth, it makes sense to build on U.S. agriculture's proven export market development programs to create a solid economic base for America's international trade.
MAP has proven that it is the little engine that could - that it is a powerful force for economic growth for all Americans. It deserves to continue, to be fully funded, and to grow.
You Can Help!
Blue Diamond is forming a team of member growers called the Issues Action Team, which will be trained to explain how MAP sells more almonds and the impact that has on the economy and jobs in America. Team members will participate in a variety of activities designed to give Blue Diamond almond growers a stronger voice on issues that affect their farm businesses. If you are interested in more information, call Susan Brauner, Director of Public Affairs, at (916) 446-8354 or talk to your fieldman.