Foreign Market Development cooperators face funding gap
September 20, 2018
If Congress does not pass a new farm bill by Sept. 30, 23 organizations that use government funds to promote purchases of U.S. commodities in foreign countries will face an immediate funding gap that could cause some of them to start letting staff go and closing overseas offices, a key farm lobbyist told The Hagstrom Report late Wednesday.
"In this time of trade uncertainty and low prices, to have to close offices and let staff go is to send a signal to our competitors that we are ceding the market to you," said Scott Shearer, a lobbyist who is representing the groups, which are known as "cooperators" in the Foreign Market Development Program.
The situation could also cause complications for the Trump administration's plans to increase trade promotion programs to help farmers hurt by the tariffs that foreign countries have imposed on U.S. farm products in retaliation for the tariffs that President Donald Trump has imposed on their products.
"Many if not all of the FMD participants are preparing proposals for the new Agricultural Trade Promotion program in the trade aid package, but it will not award money until the first of the year, and those funds will be for programs, not staffing and office costs covered by FMD," said Melissa Kessler, the director of strategic relations for the U.S. Grains Council.
The 23 groups got a total of $26.5 million in fiscal year 2018 and range from the American Soybean Association, which got more than $6 million, to cotton, feed grains and wheat groups that got more than $3 million each, to the Mohair Council of America, which got $4,600.
In between are the American Hardwood Export Council ($2.6 million), the USA Rice Federation ($1.5 million), the U.S. Meat Export Federation ($1 million), and other groups that get a few hundred thousand dollars.
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The problem has arisen because the Congressional Budget Office says that programs that are under $50 million go to a zero baseline in their last year of authorization, and only a new farm bill — not an extension of the 2014 farm bill — will solve the problem, Shearer said.
In past years, USDA has issued new allocations of funds in November, but USDA will not be able to provide more money until Congress acts on a new farm bill.
The problem is particularly acute for the smaller organizations with smaller budgets, Shearer said, but larger organizations have also expressed their concerns.
Mike Snow of the American Hardwood Export Council said in a memo, "The impacts of the elimination of the FMD program on AHEC and the American hardwood industry would be immediate and straightforward: closure our offices in Europe, China, Mexico and Japan, and the loss of 20 highly experienced staff and consultants, triggering USDA contingent liability payments of nearly $400,000."
"The ongoing impacts, however, would be far-reaching and potentially disastrous for an industry dominated by small, family-owned firms, and already reeling from the on-going trade war with China, by far our biggest export market."
Shearer said the groups have been meeting with the House and Senate agriculture committees and the appropriations subcommittees for more than a year about the situation, but that the only solution appears to be to pass a new farm bill as soon as possible.