Revisiting Agricultural Trade and Food Assistance Programs in the Farm Bill

Market Intel / October 12, 2022

Credit: U.S. Army Corps of Engineers / CC BY 2.0 

Title III of the 2018 farm bill, commonly referred to as the trade title, includes international food assistance programs, export market development programs, export credit guarantee programs and international science and technical exchange programs and provisions. Over many years, these programs have helped to lift U.S. agricultural exports a record level of nearly $177 billion in 2021. Despite a strong dollar and a tumultuous global market, through the first eight months of 2022, U.S. agricultural exports by value are up over 16% compared to the first eight months of 2021. Developing long-term customers, in long-term markets is worth the investment. We detail those programs here.

International Food Assistance Programs

The United States is the largest international food assistance donor in the world. The benefits of food aid are many, both for the recipient countries and for the United States. In addition to the obvious benefit of providing hunger relief, food assistance stimulates growth in the world’s poorest regions and increases global stability. International food aid in the modern era began in 1954 with the passage of the Food for Peace Act (PL 83-480), commonly referred to as PL 480, which established the Food for Peace programs. Since then, Congress has authorized additional programs, which fall into two buckets: those established in agriculture legislation and those established in foreign affairs legislation. The programs established through agriculture legislation - Food for Peace Title II Program, McGovern-Dole International Food for Education and Child Nutrition Program, Food for Progress Program, the Bill Emerson Humanitarian Trust, Local and Regional Food Aid Procurement Program and the Farmer-to-Farmer Program (FFP Title V) - are reauthorized through the farm bill.

U.S. International Food Assistance: An Overview, a Congressional Research Service report, states that “U.S. international food assistance programs provide support through two distinct methods: (1) in-kind aid, which ships U.S. commodities to regions in need, and (2) market-based assistance, which provides recipients with vouchers, direct cash transfers, or locally and regionally procured food.” The programs under the Senate and House Agriculture committees’ jurisdiction, those authorized under the farm bill, are based primarily on in-kind aid.

The Food for Peace (FFP) Title II Program donates U.S. commodities to recipients in foreign countries. Since the 2018 farm bill went into effect through 2021, more than $7.5 billion in assistance under Title II of the Food for Peace Act has funded the procurement of more than 6.2 million metric tons (MT) of food, serving more than 116.4 million beneficiaries.

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The McGovern-Dole International Food for Education and Child Nutrition Program provides U.S. commodities to developing countries for school feeding programs and for pregnant and nursing mothers. Between fiscal year 2018 and 2022, McGovern-Dole has provided nearly $1.1 billion in assistance, with more than 5.7 million beneficiaries.

The Food for Progress Program (FPPr) monetizes U.S. commodities in recipient countries to fund humanitarian or development projects. Between fiscal year 2018 and 2022, Food for Progress has provided more than $721 million in assistance to nearly 1 million beneficiaries. USDA’s Foreign Agriculture Service helpfully maintains a map of their active McGovern-Dole and FPPr food assistance projects.

The Bill Emerson Humanitarian Trust (BEHT) is a mandatory reserve of funds held by USDA that can supplement FFP Title II assistance when FFP Title II alone cannot meet emergency food needs. In April 2022, as part of USDA’s and U.S. Agency for International Development’s global food insecurity response, the fund was drawn down by the full balance of $282 million in order to procure U.S. food commodities to bolster existing emergency food operations in six countries facing severe food insecurity – Ethiopia, Kenya, Somalia, Sudan, South Sudan and Yemen. This was the first utilization of the BEHT since 2014.

The Local and Regional Food Aid Procurement Program (LRP Program) provides locally and regionally procured food to recipients instead of food procured from the United States. Between fiscal year 2018 and 2019, LRP provided nearly $25 million in assistance, with nearly 165,000 beneficiaries. There have been no program outlays since FY 2019.

Export Market Development Programs

A core component of Title III is the five export market development programs. These programs - Market Access Program (MAP), Foreign Market Development Cooperator Program (FMD), E. (Kika) de la Garza Emerging Markets Program (EMP), Technical Assistance for Specialty Crops (TASC) and the Priority Trade Fund - are designed to provide support for the expansion of U.S. agricultural exports.

Prior to the 2018 farm bill two Title III trade programs lacked baseline. This included the FMD and TASC. With estimated mandatory spending of $34.5 million per year and $9 million per year, for FMD and TASC, respectively, these programs lacked baseline because they fell below the $50 million scoring threshold. The lack of baseline meant that these programs were potentially on the chopping block during each and every farm bill.

The 2018 farm bill resolved the issue by creating the Agricultural Trade Promotion and Facilitation Program, which consolidated four of USDA’s market development and export promotion programs, providing mandatory annual CCC funding of $255 million. Of that money, not less than $200 million was to be spent on MAP, not less than $34.5 million on FMD, not more than $8 million on EMP, not more than $9 million on TASC and $3.5 million on the Priority Trade Fund. The 2018 funding level for MAP and FMD was unchanged from the 2014 farm bill. In fact, funding levels for MAP and FMD have not changed since fiscal year 2006 and fiscal year 2002, respectively. In the 2018 farm bill, EMP and TASC were each authorized at $1 million less than in the 2014 farm bill.

The Market Access Program provides cost-sharing of overseas marketing and promotional activities that help build commercial markets for U.S. agricultural exports. The MAP program began in 1985. MAP funding is used for both generic and brand promotion of processed products, fruits, vegetables, nuts and other consumer-oriented or high-value products as well as some bulk and intermediate products. In fiscal year 2022, the MAP program allocated $175.6 million in funding to 67 agricultural trade organizations.

The Foreign Market Development Cooperator Program funds projects that provide trade servicing and trade capacity building through efforts to open, expand and maintain long-term markets for U.S. agricultural products. The FMD program was first established in 1956 under authority of public law 480 and then reauthorized by Title VII of the Agricultural Trade Act of 1978. In fiscal year 2022, the FMD program allocated $26.8 million in funding to 21 agricultural trade organizations.

A study released in 2022, commissioned by USDA's FAS as required by Congress and conducted by IHS Markit working with Texas A&M University economists, showed that on an annual basis between 2002 and 2019 ag export revenue increased by an average of $9.6 billion because of MAP and FMD program activities. At the farm level, the MAP and FMD programs led to an annual increase in farm cash receipts of $12.2 billion (3.4%) and an annual increase of $3.1 billion in net cash farm income. The annual lift in export revenues in this study for 1977 to 2019 was 13.7%.

The Emerging Markets Program helps U.S. organizations promote exports of U.S. agricultural products to countries that have -- or are developing -- market-oriented economies and that have the potential to be viable commercial markets. Sample EMP projects include technical assistance activities such as feasibility studies, market research, sectorial assessments, orientation visits, specialized training and business workshops. The EMP supports exports of generic U.S. agricultural commodities and products, meaning projects that endorse or promote branded products or specific companies are not eligible. There is no fixed list of "emerging market" countries.

The Technical Assistance for Specialty Crops Program funds projects that address sanitary, phytosanitary and technical barriers that prohibit or threaten the export of U.S. specialty crops. The TASC program is intended to benefit an entire industry or commodity rather than a specific company or brand. Eligible activities include seminars and workshops, study tours, field surveys, pest and disease research, and pre-clearance programs. Eligible crops include all cultivated plants and their products produced in the United States except wheat, feed grains, oilseeds, cotton, rice, peanuts, sugar and tobacco. Awards are for a maximum of $500,000 per year and for projects of up to five years.

The Priority Trade Fund was created in the 2018 farm bill to provide additional funding to be allocated among the other programs as needed. The fund supports activities to access, develop, maintain and expand markets for U.S. agricultural exports.

Export Credit Guarantee Programs

The 2018 farm bill reauthorized $1 billion annually through fiscal year 2023 in direct credits or export credit guarantees for exports to emerging markets. Under two programs, the Commodity Credit Corporation provides payment guarantees on commercial financing and assumes the risk of default on payments by the foreign purchasers on loans to facilitate U.S. exports.

The GSM-102 Program guarantees credit extended by U.S. private lenders (or, less commonly, by a U.S. exporter) to approved foreign financial institutions of up to $5.5 billion annually for up to 24 months for the purchase of U.S. farm and food products. GSM-102 is primarily used to guarantee exports to developing countries. According to a report from CRS, “the total GSM guarantees for FY2020 were $2.2 billion, over 86% of which went to Latin America. Over 99% of the guarantees in FY2020 supported export sales of grains, soybeans and flour, soybean meal, or soybean oil.”

The United States is bound by its World Trade Organization (WTO) commitments made in Nairobi in 2015 on Export Competition, and specifically on the export credit provisions that cover the GSM-102 program. As a result of the Nairobi decision, developed and developing country members may only offer a maximum repayment term for export financing support of no more than 18 months. However, least-developed and net food-importing developing countries listed in G/AG/5/Rev.10 are accorded differential and more favorable treatment, which allows those countries a repayment term between 36 and 54 months for the acquisition of basic foodstuffs. High global food prices, have spurred interest in exploring ways to expand the repayment term for these countries.

The Facility Guarantee Program (FGP) provides payment guarantees to improve or establish agriculture-related facilities in emerging markets. As described by FAS, “By supporting such facilities, the FGP is designed to enhance the sale of U.S. agricultural commodities and products to emerging markets where the demand may be limited due to inadequate storage, processing, handling, or distribution capabilities.” FGP covers credit terms of up to 10 years. Available fiscal year 2022 FGP allocations totaled $500 million. A list of eligible countries can be found here.

International Science and Technology Programs and Provisions

The international science and technology programs are designed to strengthen and enhance trade linkages between eligible countries and agricultural interests in the United States. Over the years, AFBF has welcomed countless groups into our headquarters through these programs.

The Borlaug Fellowship promotes food security and economic growth by providing training and research opportunities to fellows from low- and middle-income countries. Borlaug Fellows are generally scientists, researchers or policymakers who are in the early or middle stages of their careers. By improving participants' understanding of agricultural science, the program helps foster science-based trade policies that improve international market access for U.S. agricultural products. The 2018 farm bill added as a purpose the development of agricultural Extension services in foreign countries and authorizes such sums as are necessary.

The Cochran Fellowship provides short-term training opportunities to agricultural professionals from developing countries. Fellows receive hands-on training to enhance their technical knowledge and skills in areas related to agricultural trade, agribusiness development, management, policy and marketing. The 2018 farm bill allows for training in or at colleges or universities overseas with specific U.S. ties and increases annual authorized appropriations, without fiscal year limitation, to $3 million for middle-income countries, $4 million for countries with ongoing relations and $6 million for newly democratic countries. An infographic from USDA FAS details that as of 2018, more than 18,000 agricultural professionals from 126 countries have participated in the Cochran Fellowship program.

The International Agricultural Education Fellowship Program provides fellowships to eligible U.S. citizens to assist developing countries in establishing school-based agricultural education and youth Extension programs. The program was established in 2018 and authorizes annual appropriations of $5 million. In fiscal year 2020, Texas A&M and Catholic Relief Services received funding for projects in Ghana and Uganda, respectively. In fiscal year 2021, Texas A&M received funding for a project in Guatemala.

The Biotechnology and Agricultural Trade Program addresses trade barriers to products produced with agricultural biotechnology and other agricultural technologies. The program was originally part of the Food Agriculture and Conservation Act of 1990 and was appropriated $6 million annually from 2002 to 2007. The program lapsed in 2007 and was re-authorized $2 million annually under the 2018 farm bill until fiscal year 2023.

The descriptions for the following two programs come from the CRS report: 2018 Farm Bill Primer: Agricultural Trade and Food Assistance. An International Food Security Technical Assistance provision defines “international food security” as “access by any person at any time to food and nutrition that is sufficient for a healthy and productive life.” It authorizes $1 million annually, through 2023, for the Secretary of Agriculture to collect and make available to the public information related to international food security including foreign governments, non-governmental organizations and international organizations. It also authorizes USDA to provide technical assistance to users of this data upon request.

The Global Crop Diversity Trust is a program administered by USAID for conservation of food crop genetic diversity. The 2018 farm bill provides an authorization not to exceed $5.5 million annually or 33% (a change from prior 25%) of the total amount of funds contributed to the trust from all sources.

Conclusion

Trade and international aid programs in the Farm Bill provide a critical link to international markets, deliver critical humanitarian support and help develop foreign countries to become better partners and customers. These programs serve as another reminder of the critical role that agriculture plays at home and around the world.

Contact:
Veronica Nigh
Senior Economist
(202) 406-3622
veronican@fb.org
 

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