STATEMENT BY\
COALITION TO PROMOTE U.S. AGRICULTURAL EXPORTS\
TO THE

**SUBCOMMITTEE ON SPECIALTY CROPS, RURAL**

**DEVELOPMENT, AND FOREIGN AGRICULTURE**

**COMMITTEE ON AGRICULTURE\
U.S. HOUSE OF REPRESENTATIVES**

**MAY 10, 2007**

Good morning, Mr. Chairman. My name is James H. Sumner. I am President
of the USA Poultry & Egg Export Council (USAPEEC), which is a trade
association that is dedicated to increasing exports of U.S. poultry and
egg food products. USAPEEC's 200 member companies account for more than
95% of all U.S. poultry and egg exports. Today, I am testifying on
behalf of the Coalition to Promote U.S. Agricultural Exports of which we
are a member. We commend you, Mr. Chairman, and members of the
subcommittee, for holding this hearing to review our agricultural trade
programs and wish to express our appreciation for this opportunity to
share our views.

The Coalition to Promote U.S. Agricultural Exports is an ad hoc
coalition of over 100 organizations, representing farmers and ranchers,
fishermen and forest product producers, cooperatives, small businesses,
regional trade organizations, and the State Departments of Agriculture
(see attached). We believe the U.S. must continue to have in place
policies and programs that help maintain the ability of American
agriculture to compete effectively in a global marketplace still
characterized by highly subsidized foreign competition.

With the 2002 Farm Bill, Congress sought to bolster U.S. trade expansion
efforts by approving an increase in funding for the Market Access
Program (MAP) and the Foreign Market Development (FMD) Program. This
commitment began to reverse the decline in funding for these important
export programs that occurred over the previous decade. For MAP, funding
was increased over the course of the 2002 Farm Bill from \$90 million
annually to \$200 million annually, and FMD was increased from
approximately \$28 million to \$34.5 million annually.

Farm income and agriculture's economic well-being depend heavily on
exports, which account for over 25 percent of U.S. producers' cash
receipts, provide jobs for nearly one million Americans, and make a
positive contribution to our nation's overall trade balance. In FY 07,
U.S. agriculture exports are projected to be \$78 billion, up \$9.3
billion over last year and up \$25 billion since 2002. However, exports
could be significantly higher if it were not for a combination of
factors, including continued high levels of subsidized foreign
competition and competition crushing trade barriers. Agricultural
imports are also forecast to be a record \$70 billion, continuing a
35-year upward trend that has increased at a faster pace recently. If
these projections hold, agriculture's trade surplus is expected to be
\$8 billion, up \$4.7 billion over last year but still a huge decline
from the roughly \$27 billion surplus of FY 96. In FY 99, the U.S.
recorded its first agricultural trade deficit with the EU of \$1
billion. In FY 07, USDA forecasts that the trade deficit with the EU
will grow to \$7.6 billion, the largest agriculture deficit the U.S.
runs with any market.

America's agricultural industry is willing to continue doing its best to
offset the alarming trade deficit confronting our country. However, the
support provided by MAP and FMD (both green box programs) is essential
to this effort.

Both MAP and FMD are administered on a cost-share basis with farmers and
other participants required to contribute up to 50 percent of their own
resources. These programs are among the few tools specifically allowed
in unlimited amounts under World Trade Organization (WTO) rules to help
American agriculture and American workers remain competitive in a global
marketplace still characterized by highly subsidized foreign
competition. The over 70 U.S. agricultural groups that share in the
costs of the MAP and FMD programs fully recognize the export benefits of
market development activities. By any measure, such programs have been
tremendously successful and extremely cost-effective in helping maintain
and expand U.S. agricultural exports, protect American jobs, and
strengthen farm income.

A recent independent cost-benefit analysis of the MAP and FMD programs
prepared for the Department of Agriculture by Global Insight, Inc.---the
world's largest economic analysis and forecasting firm---illustrates the
benefit of these vital market development programs. MAP and FMD are
public-private partnerships that use government funds to attract, not
replace, industry funds. According to Global Insight, total partnership
spending on market development has grown 150% in the past decade to over
\$500 million projected for FY 07 (\$300 million from industry and \$200
million from government). Over this period, industry contributions (up
222%) have grown twice as fast as government funding (up 95%) under MAP
and FMD. Industry funds are now estimated to represent 59% of total
annual spending, up from 46% in 1996 and less than 30% in 1991, which
strongly represents industry commitment to the effort.

Another key finding by Global Insight is that two-thirds of market
development funding through MAP and FMD is directed at technical
assistance and trade servicing, not consumer promotions such as
advertising. This category includes trade policy support, which has
grown rapidly in recent years, as industry groups use program funds to
help address rising levels of SPS barriers that U.S. products face in
global markets. Only 20% of program funds are used in consumer
promotions, largely for high value products supported under MAP.

The Global Insight study clearly illustrates the following favorable
benefits of increased funding for market development and promotion
through MAP and FMD that has occurred under the 2002 Farm Bill:

**Market development increases U.S. competitiveness by boosting the U.S.
share of world agricultural trade.**

-   The study found that the increase in funding for MAP and FMD
    authorized in the 2002 Farm Bill -- combined with the increased
    contributions from industry -- increased the U.S. share of world
    trade since 2001 by over one market share point to 19%, which
    translates into \$3.8 billion in agricultural exports.

    **Market development increases U.S. agricultural exports.**

```{=html}
<!-- -->
```
-   As mentioned above, Global Insight found that U.S. agricultural
    exports are forecast to be \$3.8 billion higher in 2008 than they
    would have been had market development not been increased in the
    2002 Farm Bill. Furthermore, export gains will accrue well beyond
    2008, reaching \$5 billion once the full lagged impacts of market
    development are taken into account. **For every additional dollar
    spent on market development, \$25 in additional exports result
    within 3-7 years.** The study also found that 39% of the export
    benefits of market development accrued to U.S. agricultural products
    other than those that were being promoted. Known as the "halo"
    effect, this provides empirical evidence that the program generates
    substantial export benefits not only for industry partners carrying
    out the activity (they receive 61% of the total export benefit) but
    for other non-recipient agricultural sectors as well (that receive
    39% of the total export benefit).

    **Market development improves producers' income statement and
    balance sheets.**

-   The income statement is improved by the price and output effect that
    higher exports have on cash receipts and farm net cash income.
    Additional cash receipts have increased \$2.2 billion during the
    2002 Farm Bill due to the additional exports from market
    development. Higher cash receipts increased annual farm net cash
    income by \$460 million, representing a \$4 increase in farm income
    for every additional \$1 increase in government spending on market
    development.

In recent years, the EU, the Cairns group, and other foreign competitors
devoted approximately \$1.2 billion on various market development
activities to promote their exports of agricultural, forestry, and
fishery products. A significant portion of this is carried out in the
United States. Market promotion is permitted under WTO rules, with no
limit on public or producer funding, and is not expected to be subject
to any disciplines in the Doha Round negotiations. As a result, it is
increasingly seen as a centerpiece of a winning strategy in the future
trade battleground. Many competitor countries have announced ambitious
trade goals and are shaping export strategies to target promising growth
markets and bring new companies into the export arena. European
countries are expanding their promotional activities in Asia, Latin
America, and Eastern Europe. Canada, Australia, New Zealand, and Brazil
have also budgeted significant investments in export promotion
expenditures worldwide in recent years.

As the EU and our other foreign competitors have made clear, they intend
to continue to be aggressive in their export efforts. For this reason,
we believe the Administration and Congress should strengthen funding for
MAP and FMD as part of a strong trade component in the new Farm Bill,
and also ensure that such programs are fully and aggressively
utilized**. It should be noted that MAP was originally authorized in the
1985 Farm Bill at a level of \$325 million, and the Coalition strongly
supports returning the program to that authorized level of funding from
its current level of \$200 million per year. We also urge that no less
than \$50 million annually be provided for the Foreign Market
Development (FMD) Cooperator Program for cost-share assistance to help
boost U.S. agriculture exports.** For FMD, this proposed increase
reflects approximately the 1986 level of funding, adjusted for
inflation.

We appreciate the Administration's recognition of the merit and value of
MAP in the 2007 Farm Bill proposals by increasing funding for the
program to \$225 million annually, although we strongly believe a higher
funding level of \$325 million annually is needed. Furthermore, we
believe that USDA's Foreign Agricultural Service's (FAS) current system
of funding based upon the competitive merit of applicants' proposals
works well and should not be changed. We do not believe that targeting
funds to specific sectors is necessary.

At this time, I will give several examples of how MAP and FMD, along
with industry initiatives, have helped USAPEEC to improve exports of
U.S. poultry and eggs.

As an approved USDA Cooperator organization, USAPEEC is responsible for
administering funds from both MAP and FMD, which are combined with
industry contributions to fund various market-specific promotional
activities. These activities can be targeted toward consumers, retail,
food service, the HRI trade, or any combination of those market sectors.
In fact, the availability of MAP and FMD funding is an added incentive
for our member companies to contribute to this overall promotion effort.

USAPEEC utilizes its annual MAP allocation largely for promotional
activities. However, it has become an increasing necessity that the
funds be used in part to address the numerous trade issues that hinder
U.S. exports. The FMD allocation helps to maintain USAPEEC offices in
Russia, China, Mexico and Singapore, and is therefore also used largely
to help overcome developing new restrictions on trade. The staffs of
these offices are the industry's eyes and ears in those key markets.
They work closely with key agriculture officials in the local government
and with the U.S. government's embassies and Agricultural Trade Offices,
as well as the import trade. They are essentially a "quick reaction
force" for our industry, and are able to identify trade issues early.
This helps our industry and government to work together to resolve trade
issues involving poultry and eggs quickly and efficiently.

As an example of cooperation between industry and government under MAP,
USAPEEC organized a donation in 2005 of two containers of U.S. chicken
leg quarters to the Vietnamese poultry industry. The Vietnamese industry
then auctioned the donated product to raise funds for its campaign
against highly pathogenic avian influenza that had devastated the
industry. Fear of this disease had also caused a dramatic drop in
chicken consumption in Vietnam. Auction proceeds also helped to calm
consumers' fears about eating chicken.

How did this help to increase exports? As a result of this donation and
auction, USAPEEC has gained the support of the Vietnam Poultry
Association, which actually helped us promote the importation of safe
poultry from the U.S. so that Vietnamese consumers would not sacrifice
poultry from their normal diets. As a result, U.S. chicken exports to
Vietnam which had dropped to just over \$500,000, largely because of AI
fears, climbed back to more than \$6 million by the end of 2006. In the
first two months of 2007, U.S. chicken exports to Vietnam were nearly
\$2.2 million.

Exports of U.S. turkey from major producing states, such as North
Carolina, have become increasingly important. In the Republic of Korea,
USAPEEC has conducted restaurant and deli promotions that have helped to
increase U.S. turkey meat exports to Korea from less than \$1 million in
2004 to \$2.8 million in 2006.

In the Middle East, USAPEEC has coordinated activities to increase
consumer awareness in the retail sector of the versatility of U.S.
turkey parts. Exports of turkey to the Middle East have grown
accordingly, from \$2.3 million in 2004 to \$3.1 million in 2006.

Mexico has been our largest market for U.S. turkey for years. Since
2000, turkey exports have risen from \$138 million to more than \$216
million, an average of \$13 million per year. Mexico is also the
fourth-largest market for U.S. chicken, valued at nearly \$200 million
in 2006. USAPEEC has developed a unique partnership with UNA, the
Mexican Association of Poultry Processors, which has helped to keep that
market thriving. Named the NAFTA Egg and Poultry Partnership (NEPP), the
USAPEEC-UNA collaboration has organized several industry-to-industry
meetings funded by MAP, as well as industry-government technical
symposia on export issues affecting U.S. poultry.

Under NEPP, USAPEEC and UNA worked together to establish a special
safeguard arrangement that was approved by both governments to extend
the NAFTA duty for U.S. chicken leg quarters through the end of 2007.
(In the original NAFTA, all poultry import duties were to be eliminated
in 2002). Had that not happened, radical elements of the Mexican poultry
industry, fearing a deluge of leg quarter imports, were poised to file a
dumping action against the U.S. industry, which would have been
extremely costly. NEPP continues to coordinate industry-to-industry
activities to discuss issues of mutual interest and to formalize
industry recommendations to our respective governments. In fact, our
organization has developed similar relationships in Central America and
South America in support of CAFTA and the ANDEAN Free Trade Agreements.

Also in Mexico, USAPEEC has promoted the use of U.S. processed egg
products (liquid, dried, etc.) among food manufacturers, such as
bakeries, confectioners and mayonnaise makers. Food makers in Mexico,
which has the world's highest per capita consumption of eggs, had
traditionally used locally produced shell eggs to manufacture their
products. Now, however, manufacturers are making the switch to
high-value U.S. processed eggs. Exports of U.S. egg products to Mexico
have grown dramatically, from \$7 million in 2004, to \$13.1 million in
2005 to \$15.8 million in 2006.

On another front, as highly pathogenic avian influenza spread from Asia
into the Middle East and Europe in the fall of 2005, consumption of
poultry plummeted in many countries by as much as 20 to 50%, as fearful
consumers simply stopped eating poultry. In four months, the price of
chicken leg quarters -- a market benchmark -- fell from 48 cents per
pound to less than 10 cents per pound. The estimated cost to the U.S.
industry in lost export income was estimated at \$142 million per month.

In early 2006, USAPEEC launched a worldwide initiative aimed at
countering consumer fears. Funded by \$1 million in combined MAP and
industry contributions, the campaign carried a simple message: "Properly
handled and cooked poultry is safe to eat." The "Just Cook It!" campaign
quickly spread around the world, and gained the endorsement of the World
Health Organization's chief expert on avian influenza, Dr. David
Nabarro. USAPEEC's international offices were instructed to tailor the
message to suit local markets, and USAPEEC shared materials developed
for the campaign with poultry organizations around the globe free of
charge. The campaign helped to reassure consumers worldwide that poultry
is safe to eat. Chicken leg quarter prices have since rebounded to the
mid-40 cent range.

These examples represent only a small sample of the activities in which
the organization is engaged throughout the major export markets. USAPEEC
also works to open new markets, and is actively promoting U.S. products
in underutilized markets in Africa, such as Kenya, Tanzania, Ghana,
Nigeria, Angola and others.

In closing, I cannot overemphasize the importance of MAP and FMD to the
success of U.S. poultry and egg exports. Thank you, Mr. Chairman, for
this opportunity to share with the subcommittee some of our successes,
and I would be pleased to respond to any questions you may have.

#  {#section .unnumbered}

# Alaska Seafood Marketing Institute

American Feed Industry Association

American Forest and Paper Association

American Hardwood Export Council

American Meat Institute

American Peanut Council

American Seed Trade Association

American Sheep Industry Association

American Soybean Association

Blue Diamond Growers

California Agricultural Export Council

California Association of Winegrape Growers

California Dried Plum Board

California Kiwifruit Commission

California Pear Growers

California Stone Fruit Coalition

California Table Grape Commission

Cherry Marketing Institute

CoBank

Florida Citrus Commission

Florida Citrus Mutual

Florida Citrus Packers Association

Florida Citrus Processors Association

Florida Department of Citrus

Florida Peanut Producers Association

Food Export Association of the Midwest USA

Food Export USA - Northeast

Georgia Poultry Federation

Ginseng Board of Wisconsin

Gulf Citrus Growers Association

Highlands County Citrus Growers Association, Inc.

Hop Growers of America, Inc.

Indian River Citrus League

Kansas Livestock Association

Kentucky Distillers' Association

Land O'Lakes, Inc.

Mohair Council of America

National Association of State Departments of Agriculture

National Association of Wheat Growers

National Barley Growers Association

National Cattlemen's Beef Association

National Chicken Council

National Confectioners Association

National Cotton Council

National Council of Farmer Cooperatives

National Grange

National Grape Cooperative Association, Inc.

National Milk Producers Federation

National Oilseed Processors Association

National Pork Producers Council

National Potato Council

National Renderers Association

National Sorghum Producers

National Sunflower Association

National Turkey Federation

North American Millers' Association

Northwest Cherry Growers

Northwest Horticultural Council

Ocean Spray Cranberries, Inc.

Peace River Valley Citrus Growers Association

Pet Food Institute

Produce Marketing Association

Shelf-Stable Food Processors Association

Softwood Export Council

Southern Forest Products Association

Southern U.S. Trade Association

Sunkist Growers

Texas Cattle Feeders Association

The Catfish Institute

The Popcorn Institute

Tree Top, Inc.

United Egg Association

United Egg Producers

United Fresh Fruit and Vegetable Association

USA Dry Pea and Lentil Council

USA Poultry & Egg Export Council

USA Rice Federation

U.S. Apple Association

U.S. Apple Export Council

U.S. Dairy Export Council

U.S. Dry Bean Council

U.S. Hides, Skins & Leather Association

U.S. Livestock Genetics Export, Inc.

U.S. Meat Export Federation

U.S. Wheat Associates, Inc.

Vinifera Wine Growers Association

Washington Apple Commission

Washington State Fruit Commission

Welch Foods Inc., A Cooperative

Western Growers Association

Western Pistachio Association

Western U.S. Agricultural Trade Association

WineAmerica (The National Association of American Wineries)

Winegrape Growers of America

Wine Institute

![](media/image1.png){width="1.7in" height="1.7in"}**COTTON** **USA**
**SOURCING PROGRAM**

**HOSTS SUCCESSFUL TRADE FAIR**

Through the COTTON USA Sourcing Program, and working together with
Cotton Incorporated, 16 U.S. manufacturers and USDA's Foreign
Agricultural Service (FAS), Cotton Council International (CCI) has
developed a robust program of support for U.S. cotton yarn and fabric
manufacturers targeted at Mexico, the Andean region and Central America.
As one cornerstone to the COTTON USA Sourcing Program, CCI created a new
activity -- COTTON USA Trade Fairs -- to help U.S. companies meet
prospective customers for their products.

As one example of such an activity, in June 2006 CCI drew on MAP, FMD
and industry funds to host a COTTON USA Trade Fair in the Dominican
Republic to increase U.S. cotton yarn and fabric exports to the region.
Forty textile and apparel manufacturers from the CBI and Andean Regions
met with 15 U.S. retailers and 15 U.S. textile mills at the fair.

During the 2 1⁄2 day event, buyers and sellers participated in 600
individual meetings that provided U.S. brands/retailers with sourcing
options in the Western Hemisphere that would maximize U.S. cotton yarn
and fabric content.

Gathering representatives from the entire U.S.-Central America-Andean
textile and apparel supply chain proved to be an effective way of
generating business. CBI and Andean participants said they planned to
increase their sales of U.S. cotton products by \$4.6 million and 10.1
million units the next year as a direct result of the fair.

COTTON USA Trade Fairs are part of a comprehensive export promotion
program for U.S. manufactured cotton yarns and fabrics. This COTTON USA
Sourcing Program began in 2000 in response to a combination of U.S.
trade policy initiatives, market conditions and funding from USDA's
Section-108 program. The timing of the COTTON USA Sourcing Program was
opportune as the U.S. government was negotiating the CBTPA, a new trade
law to give preferential treatment to garments manufactured in the CBI
region using U.S. cotton yarns and fabrics. Subsequent trade legislation
-- ATPDEA, DR-CAFTA and pending Free Trade Agreements with Peru and
Colombia -- continue to extend benefits to U.S. cotton textile products.
The Sourcing Program has been actively supported by the U.S. cotton
textile industry, and industry funding has increased from \$50,000 in
2000 to 16 companies directly contributing \$125,000 in 2006.

With the loss of a significant apparel industry in the U.S., exporting
is seen as the key to survival for the U.S. textile manufacturing
industry. U.S. mills participating in the COTTON USA Sourcing Program
have been able to maintain their U.S. operations and cotton consumption
through exporting their products to the Western Hemisphere. Currently,
U.S. mills export 75 percent of all of their production. Exports of U.S.
manufactured products have increased significantly since the beginning
of the COTTON USA Sourcing Program. From 1999 to 2005, U.S. cotton yarn
exports increased from \$43 million to \$540 million, and U.S. knit
fabric exports grew from \$22 to \$421 million.

![](media/image2.jpeg){width="3.9923611111111112in"
height="0.9479166666666666in"}

**Building Soft White Wheat Demand in Latin America**

March 2007 -- A decisively positive trend is evident in export numbers
for American soft white wheat. By working closely with Pacific Northwest
wheat commissions, as well as federal and independent organizations,
Foreign Agricultural Service cooperator U.S. Wheat Associates is opening
new soft white wheat markets in Latin America.

In 2004/2005, Latin American countries bought only 23,500 metric tons of
white wheat. Sales zoomed to 364,000 tons in 2005/2006---an increase
worth at least \$50 million. U.S. Wheat Associates is applying available
funds to demonstrate the advantages of white wheat to meet consumer
demand. A good example is a successful effort to help Central and South
American processors meet a growing demand for Asian-style noodles, best
made with soft white wheat. U.S. Wheat Associates also helped Guatemala
and El Salvador import high quality white wheat by developing
unconventional shipping configurations.

This marketing year, U.S. Wheat Associates has accelerated its technical
assistance to help Latin American millers improve their productivity to
better utilize American white wheat and be more competitive in their
dynamic markets. Soft white wheat sales this year are running at three
and one half times the rapid pace set last year at this time.

Clearly, U.S. Wheat Associates colleagues in Mexico City and Santiago,
Chile, use their resources wisely to provide the support, training and
information that help Latin American wheat buyers *and* soft white wheat
growers in the Pacific Northwest grow their business.

![](media/image3.jpeg){width="3.825in" height="2.8875in"}

*Working with Latin American millers to develop creative ways to import
soft white and hard red spring wheat through the Portland, Oregon, port
is one of the ways U.S. Wheat Associates is building markets for
American producers.*

**United States Potato Board**

**TRAINING FOR PVO's RAISES PROFILE FOR DEHY**

**POTATOES IN FOOD AID**

Having previously cleared the way for US dehydrated potatoes to be used
in US food aid programs, the USPB is now successfully building an
understanding of US dehy benefits among organizations that use these
programs. In October 2005, eleven members from six private voluntary
organizations attended intensive training in US dehydrated potatoes.
This MAP supported activity reached Counterpart International, the World
Food Programme, Africare, MARCH, ASON and World Vision. After learning
about US dehy from the high quality raw product, through the
manufacturing process to end uses and benefits, each PVO was able to
take key messages back to their organizations. In a highly significant
development, Counterpart International received their first Title II
shipment this year, for about 230 MT, with more to come. WFP with their
partners in Haiti, MARCH and ASON, were able to start distributing dehy
in a demonstration/acceptability project for the first time. Africare
requested 70 metric tons of dehy in their Title II AER. World Vision
Zambia implemented a demonstration project and is working closely with
their C-SAFE partners to have dehy implemented in their multi year
activity plans.

**KOREA CONTINUES TO PURCHASE US POTATOES DESPITE PHYTOSANITARY ISSUES**

Korea has been a strong growth market for US fresh chipping potatoes.
Yet after steadily rising in recent years--- up 2665% from 119 MT in MY
01/02 to 3290 MT in MY 04/05---US exports hit a snag last year because
of Columbia Root Knot Nematode (CRKN) finds. To address this, the USPB
worked closely with Korean manufacturers to help them continue using US
chip-stock

potatoes and with the US industry to resolve problems. In the US, the
USPB worked with growers to implement a more vigorous inspection process
to eliminate shipping potatoes with CRKN. In Korea, snack manufacturers
and the USPB worked to get a processing protocol implemented that would
enable US chipping potatoes to safely enter the market despite CRKN
issues. This safeguard system encouraged the major snack manufacturers
to make commercial contracts again for the next marketing year. Korean
manufacturers that were not able to make changes to their production
facilities began purchasing finished chips in bulk from the US as a way
to supplement their production. Thanks to this collaboration of efforts,
US exports of fresh chipping potatoes fell only 39% to 1,995 MT in MY
05/06, and are poised to resume growth in the coming year.

**US FR E S H C H I P - S T O C K POTAT STORIES**

**Chinese Trade Team Visits US**

Dr. Yu Yu, Regional Director, Asia

Since 1997, the **National Renderers Association** (NRA) has been funded
by USDA (MAP) to invite key players from the Chinese feed, broiler, hog
and aquaculture industries, and protein and fat traders to visit the US
for first-hand understanding of the US rendering industry and its
products. This team visit, in June, included feed, and meat packing
plants, leading animal production research institutions, and an
international livestock exhibition. This year's trade team included
decision makers from China's top livestock, pet food and protein trading
companies. Thanks to the hospitality of six NRA members; the team had a
full appreciation of the quality, application and value of US
non-ruminant protein meals. With the domestic price (China) at
US\$1,000/ton of imported fish meal, the team members were all eager to
place orders and sign contracts for US products, for obvious economic
value and proven animal performance as fish meal substitutes. Stops at
the World Pork Expo, University of Arkansas, and United Feeds allowed
the team to learn the latest technologies for improvement in
productivity and efficiency in hog and broiler production. This will
undoubtedly stimulate the desire to make changes at their organizations
for competitiveness guided by science and technology. The busy 10-day
visit was also lightened by R&R at Washington DC, Los Angeles and Las
Vegas. "Work hard and play hard" is good for people all over the world.
At the end of the journey, all team members realized that for animal
proteins, China and the US are perfect complimentary partners, and this
is what the Association has been striving toward during the past decade!

![](media/image4.wmf){width="2.8722222222222222in"
height="1.9381944444444446in"}![](media/image5.wmf){width="2.7555555555555555in"
height="1.9354166666666666in"}

Mountain View

Baker Commodities

![](media/image6.wmf){width="3.59375in" height="2.2291666666666665in"}

University of Arkansas

**U.S. Beef Progress Evident Across Japan**

February 14, 2007

It has been just a little more than six months since Japan removed the
ban on U.S. beef imports. Since then, the **U.S. Meat Export
Federation** (USMEF) has been using a multi-faceted campaign called "We
Care" to help rebuild confidence in U.S. beef among consumers, meat
buyers, retailers and restaurant owners.

And although increases in U.S. beef exports to this region cannot come
fast enough for the U.S. beef industry, USMEF sees encouraging progress
with each passing month.

Just a few weeks ago the second largest beef bowl chain in Japan,
Matsuya, started featuring U.S. beef in yakiniku and karubi meals at all
its 733 locations due to positive customer response. The "We Care"
campaign is utilized in each restaurant on posters, banners and menu
cards.

Since the resumption of U.S. beef imports, Costco has been selling
product with successful monthly results. The retailer sells
approximately 35 to 40 metric tons (mt) per month, which is a 50 to 70
percent increase from August 2006 when the warehouse store restarted
U.S. beef sales.

Costco started with four U.S. beef cuts: chuck eye roll, boneless short
rib, chuck short rib and chuck flap tail. Since U.S. beef sales were
successful, Costco added rib eye roll, strip loin and flap meat, an
underutilized cut.

USMEF is working with Grand Hyatt Fukuoka as the hotel plans to put U.S.
beef back on restaurant menus. An American Beef promotion will kickoff
at the hotel March 11.

A cooking school featuring U.S. beef recipes developed by a well-known
cooking personality will be held Feb. 28 at the Better Home Cooking
School in Shibuya. Several newspapers and magazines have advertised the
event.

In 2006, the United States exported 13,736 mt of beef and beef variety
meat to Japan, worth \$66.5 million.

**Retail Chain Sees Results From USMEF Efforts**

March 14, 2007

Alsuper, a retail chain with 30 outlets in northeastern Mexico, reports
that the **U.S. Meat Export Federation** (USMEF) promotions have helped
the chain increase U.S. meat sales by 3 percent compared to two years
ago. Approximately 80 percent of meat purchases made at the stores come
from the United States.

"USMEF promotions and assistance with developing business relationships
with U.S. meat companies have been very positive," said Ricardo Duran,
Alsuper meat purchasing director.

Duran said meat sales currently comprise 9.4 percent of all sales at
Alsuper. The company has set a goal to increase that number to 10
percent by December.

"With five new stores opening and continued USMEF promotions and
assistance, we believe we can reach that goal," Duran said.

Chad Russell, USMEF regional director for Mexico and the Dominican
Republic, noted Alsuper's experience is an excellent example of how
USMEF marketing efforts help build demand and loyalty for U.S. red meat
in Mexico.

# 

# 

# National Sunflower Association

# 

# 

# Mexican Baker Creates New Bread

Using Foreign Market Development (FMD) funds, grower check-off and
industry dollars the **National Sunflower Association** (NSA) has
aggressively pursued improved market opportunities in Mexico. NSA has
been aggressively promoting the use of confection sunflower kernel in
bakery products in Mexico for the last four years. As a result of this
promotion, the largest Mexican baker is using confection sunflower
kernel in two of its breads. The breads are being distributed nationwide
in all major supermarkets. The baker has imported 350 MT of confection
sunflower kernel valued at \$420,000 in the past six months of this
marketing year. Sales of the breads are expected to double in the next
year. In the past four years, as a result of these activities, the value
of U.S. confection sunflower product exports has averaged over
\$5,700,000 per year.

# 

# MAP Increases Spanish Imports of U.S. Sunflower Seeds

Spain is currently the largest export market for U.S. confection
sunflower seed. The primary use of sunflower seeds in Spain is for
snacks. Five years ago using Market Access Program (MAP), grower
check-off and industry dollars, and in partnership with key Spanish
snack roasters, the **National Sunflower Association** (NSA) kicked off
a national point-of-sale (POS) campaign to promote U.S. confection
sunflower seeds. NSA developed and printed POS materials and our Spanish
partners distributed and maintained them. The POS materials were placed
at points of sale in supermarkets, kiosks, and nut shops throughout
Spain. The display materials highlighted the fact that participating
Spanish roasters' products use USA confection sunflower products that
are high quality and fun-to-eat at a low cost. Red, white, and blue
colors and our 'Pipas USA' logo were used in all materials to show USA
origin. Since the inception of the campaign, exports of U.S. confection
sunflower seeds have grown from just over \$13,000,000 to \$25,350,000
and now account for 52 percent of the total U.S. confection sunflower
seed exports.

***Exported sunflower seed and kernel are value-added products with
processing facilities located in rural locations of North Dakota, South
Dakota, Minnesota and Kansas accounting for approximately 3,100 jobs in
these states. The economic impact of the confection sunflower seed
industry was estimated at \$693 million per year in a NSA-sponsored
study.***

![](media/image7.png) **[Asian Market Diversification]{.underline}**

The California Walnut Industry has actively engaged in marketing
programs in Asia since the mid-1990's. Utilizing MAP funds, the
**California Walnut Commission** (CWC) entered the Japanese and Korean
markets through targeted activities in the trade sector to create demand
for California walnuts as a bakery/pastry/confectionary ingredient while
also generating consumer awareness and purchase of walnuts and walnut
inclusive products. The concentrated efforts in the bakery sector
continue to yield favorable results as over 80% of the customer base in
Japan remains concentrated in this sector while in Korea it accounts for
35%.

Continued growth in these markets has been demonstrated through
diversification within the marketplace. In Korea, high trade awareness
and success with walnut inclusive products lead the CWC to develop
relationships with manufacturers outside the baking sector. Keen
interest from

ice cream manufacturers, confectioneries and beverage manufacturers lead
the CWC to conduct one-on-one meetings introducing possible applications
customized for each company\'s needs, provided technical assistance in
developing new products using California walnuts, and invited key
product development managers to California to assure quality and food
safety of California walnuts.  MAP funds were utilized to engage in
these activities while fostering the relationships.

As a result, an all-time best selling ice cream bar product was launched
by a leading Korean ice cream manufacturer, Haitai, which brought a 30
percent market growth by a single item in the launching year of
2003/04.  Thanks to the great success of this item, the same company
launched various products with the same concept and brand name, i.e. ice
cream in cup, cone, soft candy and sweet bar in the marketing year
2004/05.  This actually made a big boom of \"walnut\" in the
confectionery industry, and in the marketing year 2004/05, many other
leading confectioneries and bread manufacturers like Lotte, Orion,
Samlip and Crown were developing new California walnut items.  Among
them, two items- brownies and cookies using California walnuts -- were
launched by Orion in the beginning of the marketing year 2005/06, and
one steamed bun item with California walnut stuffing was launched by
Samlip.  All these new items from the end of marketing year 2003/04 and
marketing year 2004/05 almost doubled the California walnut market in
Korea over the last two years, growing from 3.2 million pounds in the
2002/03 crop year to 6.8 million pounds in 2004/05. This accounts for a
value increase of 130% from \$6.7 million to \$16.1million over the over
the past two years, making the dairy/ice cream sector now 20 percent of
the total market in Korea.

The success of the above items has lead manufacturers to export some of
the products developed in addition to sparking interest in other
markets, such as Japan in developing walnut inclusive products, to
achieve the success seen in Korea. In the 2005 marketing year the first
ice cream bar including walnuts launched in September followed by line
extensions planned for later in the year. The CWC looks forward to the
growth that mimics that of Korea, should the launches achieve the
success intended.

The Asian market continues to evolve despite unjustified duties in both
markets - 30% in Korea and 10% in Japan. The potential for these markets
to continue to evolve would be even greater if the duties were lifted.
The CWC continues to work with USTR and in-country partners to remove
barriers to trade. Further, MAP funding continues to be of vital
importance to support the industry's efforts to overcome barriers to
trade, as well as develop and evolve markets. Many of the tactics
utilized would not be possible without MAP.

**Technical Support To Latin America Livestock Producers**

**American Soybean Association-International Marketing** (ASA-IM)
activities funded by USDA Foreign Agricultural Service (FAS) developed a
program to provide technical support to Latin America livestock and
poultry producers and feed mill operations. This program divided the
work into three sections: farm and feed mill visits, field days and
seminars, and feed formulation and the development of feeding programs.
Poultry, swine, tilapia, dairy, beef farms, as well as feed mills, were
visited in different Latin American countries under this program. The
purpose of these visits was to teach animal producers different new
nutrition and management techniques, and as a result of this servicing,
animal operations will have implemented modern management practices and
will have improved their technical skills and use more soybean products.
Participating farms were used as an example for other producers,
encouraging them to implement the new technology and thereby impact the
consumption of soybean meal. This program was complemented with the
presentation of conferences, congresses, seminars and field days showing
the importance of using high quality soybean meal in animal diets, as
well as different techniques to improve animal performance. Furthermore,
a 24 hour on-line program was offered to animal producers for the
development of feeding programs and diet formulations to improve the use
of U.S. soybean meal in livestock and poultry diets, as well as animal
performance.

The most important effect was the great amount of diets that were
formulated. It was interesting to observe how each day animal producers
are more interested to use well balanced diets, using corn and soybean
meal as the main ingredients. Every day the concept of buying
ingredients on the basis of the cost per unit of nutrient is adopted by
more animal producers. In many places, the concept of buying by price
has changed to buying by quality. Feed mills are adopting laboratory
techniques to evaluate feed ingredient quality and in the case of
soybean meal, analytical technique procedures for determining protein
solubility values, urease activity and total trypsine inhibitors were
discussed with the quality control staff of the more important feed
mills in Latin America.

In relation to animal performance improvement, the recommendations
presented during the seminars and congresses, as well as the effect of
the changes in the feeding programs, have produced good results in the
livestock operations. Higher weight gain and feed conversions were
reported for pigs, broilers and beef cattle. Increments in milk
production and reproductive efficiency in dairy cattle and higher
percent egg production and egg weight in layers were also reported. Most
of the monogastric producers attributed this improvement in performance
to the use of the "Ideal Protein Concept", which uses as a base the
digestible amino acid content of the different feed ingredients. Big
differences between the cost of diet and the effect on performance were
found when diets are formulated based on digestible amino acid content.

March 2007

**U.S. Hide, Skin and Leather Association**

The biggest export market for U.S. bovine hides is China. Exports to
China have grown from \$640 million in 2005 to \$875 million in 2006.

There are a number of reasons for this, but one that has been singled
out by some of the US hide exporters is the Foreign Market Development
(FMD) program that U.S. Hide, Skin & Leather Association (USHSLA)
participates in.

Through funding provided by the U.S. Department of Agriculture' Foreign
Agricultural Service (USDA/FAS) and matching dollars put up by about a
dozen member companies of USHSLA, we have participated in two shows in
China over the last couple of years - one in Hong Kong and the other in
Shanghai. Both shows bring in hide buyers from all over the world but
primarily from the industrializing Asian nations. China is the main
importer of hides and remains the most dominant buying presence at both
shows. In 2005 these two shows accounted for \$46 million in on-site
sales. In 2006 the two shows accounted for an increased \$74.7 million
in on-site sales.

Would USHSLA's member companies have accounted for this increase of
\$120.7 million if we had not attended the shows? Probably some of this
business may have gotten done, but in addition to an increase in sales
both shows facilitate networking within the global industry which
results in new contacts, new agents signed and additional business
throughout the year.

In fact, according to survey's filled out by participating USHSLA
companies, over \$110.9 million in increased business in 2006 was done
as a result of participation in those two shows. That is nearly equal to
the increase in hide trade in China over the last two years. In addition
to on-site sales USHSLA member companies reported signing 87 new agents
at both shows.

USHSLA and USHSLA members plan to attend these same two shows in 2007.
The Hong Kong show brings traders, transportation companies, tanners and
others from around the world and is the largest hide and leather show in
the world. The Shanghai show is more focused on the growing hide and
leather industry in solely China. Both shows are a vital part of the
growing demand for US hides and leather in Asia. USHSLA's members will
continue to attend these shows in the future and plan on similar
successful results within China because of opportunities allotted to the
U.S. hide and leather industry by participating in the FMD program
funded by the USDA/FAS.

**Alabama Department of Agriculture Helps**

**India Embrace Southern Cuisine**

In January 2006, the **Southern U.S. Trade Association** (SUSTA) focused
on promoting value-added food products and pecans from the southern U.S.
in India. SUSTA representatives from the Alabama Department of
Agriculture participated in two trade events -- the India International
Food and Wine Show (IFOWS) 2006, an event for the retail industry, and
HospitalityWorld 2006, an event for the hospitality, restaurant and
institution industry. These events were followed by cooking
demonstrations and tasting events, a culinary contest with budding
chefs, a press conference, market visits and research assessing
opportunities in India's pet food industry.

At IFOWS 2006, in New Delhi, nearly twenty importers and industry
leaders visited SUSTA's pavilion. The show provided a platform to
establish contact with local importers and introduce them to the
southern U.S. food products. Products from twenty-four companies from
the SUSTA region were featured in the pavilion. The promotion was a
tremendous success. The importers and buyers, several of whom had
one-on-one meetings with SUSTA representatives, expressed interest in
the products and their willingness to import them.

A cooking demonstration and tasting event was carried out by Ms.Vaishali
Sood, SUSTA's brand ambassador chef in India. The event was well
attended with more than fifty people participating. Ms. Sood made pecan
cake and jambalaya, which were an instant success with the attendees.

A culinary contest with twenty-two budding chefs from Banarsidas
Chandiwala Institute of Hotel Management and Catering Technology was
held in New Delhi. These chefs used products from the southern U.S. to
prepare a full course meal. The objective was to establish a
professional platform where up-and-coming culinary professionals could
display their skills and creative talent in a competitive environment.

HospitalityWorld 2006, in Mumbai, provided a unique opportunity for
strategic cross promotion and professional dialogue with the hotel,
restaurant and institutional food sectors. The response from
institutional buyers was overwhelming. A dialogue was established with
Cremica Group, which showed interest in procuring condiments that could
be further processed and consumed in the local market. While in Mumbai,
SUSTA representatives had a one-on-one meeting with Reliance Industries
Limited promoting southern U.S. products. The company is entering the
Indian retail sector in an unprecedented way.

"Power Pecan -- The nutritionally powerful nut" is the mantra used in
SUSTA promotions to create awareness of pecans in India. SUSTA seeks to
familiarize the Indian consumer with the uses and the versatility of the
pecan, as it is not available in India. The press conference at
Hyderabad sought to promote, create awareness and develop brand
recognition for pecans, the power pecan*.* Nuts & Spices, a leading
retail outlet in Chennai that exclusively sells dry fruits and spices,
were enthusiastic to include pecans in their product offering during
their meeting with SUSTA representatives.

**Georgia Department of Agriculture Organizes**

**Market Access Program Generic Promotion in Dubai with Projected Sales
of Over \$8 Million**

Eight companies from the southern U.S. traveled to Dubai, United Arab
Emirates in February 2007 to find success at the Gulfood trade show. The
Georgia Department of Agriculture organized the **Southern U.S. Trade
Association** (SUSTA) booth, along with booths for eight SUSTA region
participants, as a Market Access Program (MAP) Generic promotion. MAP
Generic promotions represent more than one product or commodity and
allow suppliers to participate in trade shows, in-store promotions and
other activities for a reduced cost. The U.S. companies promoted various
food products at the show, including fruit juices, rice, processed meat
products, popcorn and other snack foods.

Importers and buyers visiting the booth were given the opportunity to
meet with U.S. companies, find out more about southern U.S. food
products, and even taste products prepared by a chef in the booth.
Importers and buyers also expressed interest in making additional
contacts with suppliers of nuts, dairy products, honey, confectionery,
spices, oils, fresh vegetables, fresh fruits and sauces.

Five companies participating in the MAP Generic promotion conducted by
SUSTA at Gulfood reported immediate sales totaling \$964,000. Others
indicated that they expected orders within the year, projecting sales to
reach approximately \$8,370,000 as a result of the show.

**The Long Green Road to Success**

In support of the notion that it takes years to tackle a foreign market,
the **Southern U.S. Trade Association** (SUSTA), with the support of the
Southern Nurserymen's Association (SNA), organized the U.S. pavilion at
the Internationale Pflanzen Messe (IPM) in Essen, Germany for the 12th
consecutive year.

IPM, the largest horticulture trade show in the world, includes about
1,350 exhibitors from 37 countries in 19 halls totaling more than 1
million square meters of exhibit space. The four-day event attracts
nearly 60,000 visitors from around the world looking for plant material,
technology, and related goods.

Participants from eight different U.S. nursery companies, including five
first-time exhibitors, took advantage of the institutional knowledge
SUSTA has gained over the last 12 years. In this promotion, a first-time
exhibitor has a leg up on the competition because of the groundwork laid
at the past promotions. Many new exhibitors find a "built-in"
relationship exists with many buyers because of past exhibits and
nursery tours. European buyers return each year to the U.S Pavilion
because it introduces them to a wide range of new U.S. products and
producers.

In their experience, the exhibitors have found that repeated
participation is one of the keys to success in the European market. For
example, an exhibitor the first year may garner interest and a few small
orders. The second-year and third-year exhibitor shows a buyer that the
company is committed to the European market and the relationship is
solidified. This relationship brings about larger and repeated orders.

As in the past, most interest is in young plant material, mostly large
quantities of "bare-root" stock of ornamental trees and shrubs. At the
2006 show, exhibitors reported \$380,000 in sales and anticipated sales.
There are also long term results; many past exhibitors have moved into
growing agreements with European nurseries. In this arrangement, an EU
grower either purchases the rights to grow a licensed plant variety or
actually exclusively purchases young plant material to be grown out
in-country. This partnership allows a U.S. supplier to gain a larger
margin of profit than marketing the product themselves, due to many
issues with trying to sell and ship "finished" nursery products to
Europe.

Exhibitors and participants also point out that gaining new customers
and making sales are not the only reason they attend IPM or go on the
nursery tours. Several participants use the time at the show to seek out
trends that can give them an advantage over their competition or
products that can make their business more efficient. As with most
industries, the nursery industry is constantly changing and evolving.
IPM gives SUSTA participants a chance to stay one step ahead in the
market.

Part of the reason this promotion has been consistently successful is
its multi-layered aspect. Nurserymen are given multiple opportunities to
deal with the market each year. For example, this year's promotion
includes: exhibition at the tradeshow, post-show nursery tours in a
selected country (Italy) and then a follow-up reverse trade mission to
the U.S. the following summer. An exhibitor has the potential to be
introduced to a customer, visit the customer's business and then have
the customer visit his business -- all in one year!

Another reason of continued success is the cooperation of state, federal
and private organizations. A list of this year's cooperators reads like
a who's who: the Southern Nursery Association, North Carolina
Association of Nurserymen, Ohio Florist's Association, Tennessee
Department of Agriculture, North Carolina Department of Agriculture,
Rome FAS office, Berlin FAS office. In the past we have had
participation from APHIS, and a multiple selection of grower
organizations.

**Peanut Farmers Regain Lost Market Share**

Peanuts are a vital crop for farmers in Alabama, Georgia, and North
Carolina. Market Access Program (MAP) funds have been used successfully
to increase exports of peanut butter made in Georgia and other states to
Mexico. Peanut butter exports increased 64% from 2005 to 2006 with an
increase in value from about \$3.5 to \$5 million dollars in one year.
MAP funds have also been used to promote raw peanut exports with exports
increasing 14% from 2005 to 2006, regaining lost market share. The
Market Access Program is also assisting a small peanut processing
company in North Carolina to get a foothold in the export market by
providing market information and advertising support for its products in
Canada and the UK.

**U.S. Dairy Export Council Success Story**

**[Arkansas, Colorado, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky,
Minnesota, Mississippi, Nebraska, Ohio, Pennsylvania, South Carolina and
South Dakota:]{.underline}**

**New Commodity Cheese Imports to Japan**

+----------------------+-----------------------------------------------+
| **Impacted States:** | A company that benefited from this program    |
|                      | has members in the following states:          |
|                      |                                               |
|                      | **Arkansas, Colorado, Georgia, Idaho,         |
|                      | Indiana, Iowa, Kansas, Kentucky, Minnesota,   |
|                      | Mississippi, Nebraska, Ohio, Pennsylvania, S. |
|                      | Carolina and S. Dakota, among others**        |
+----------------------+-----------------------------------------------+
| **Background:**      | U.S. suppliers of cheddar have had difficulty |
|                      | penetrating the Japanese market due to        |
|                      | competitive pricing from New Zealand and      |
|                      | Australia.                                    |
+----------------------+-----------------------------------------------+
| **Goal:**            | Increase awareness and market share of U.S.   |
|                      | commodity cheese                              |
+----------------------+-----------------------------------------------+
| **Strategy:**        | Educate Japanese traders and importers about  |
|                      | the Cooperatives Working Together program     |
|                      | which offers price parity with international  |
|                      | competition and allows product trial.         |
+----------------------+-----------------------------------------------+
| **Tactics:**         | Continuous trade visits                       |
+----------------------+-----------------------------------------------+
| **Results:**         | During the first half of 2006, a major        |
|                      | Japanese company imported 300 metric ton of   |
|                      | cheddar from a U.S. supplier through the CWT  |
|                      | program. These transactions amounted to       |
|                      | approximately \$840,000. The company has      |
|                      | committed to import an additional 200 metric  |
|                      | tons of cheddar from the same U.S. supplier   |
|                      | by the end of the year.                       |
+----------------------+-----------------------------------------------+

**U.S. Dairy Export Council Success Story**

# Sports nutrition mission spurs WPC80 exports to Brazil

Background: A Brazilian bar manufacturer attended a USDEC-sponsored
sports nutrition mission and seminar that was conducted at Cal Poly
University. USDEC promoted the mission and seminar to U.S. dairy
suppliers as an opportunity to learn how to incorporate whey proteins
such as texturized whey into protein and energy bars.

**Goal:** Increase U.S. market share for WPC-80

Strategy: Introduce the Brazilian food supplement industry to U.S.
suppliers and help manufacturers understand how best to incorporate whey
proteins in sports nutrition and energy bars. Assist USDEC members with
documentation issues and other regulatory information.

**Tactics:** - Act as a liaison between the Brazilian food supplement
industry and U.S. suppliers through trade servicing activities

> -Support USDEC members in South America markets

Results: With knowledge obtained through the mission, the Brazilian
company was able to re-launch a better tasting sports nutrition bar that
contained whey proteins. The Brazilian manufacturer also will soon
launch a new beverage using WPI from the United States. The company
purchased 20 tons of instant WPC-80, with an approximate value of
\$5.5/kg. It expects to import about 240 tons in 2006 from the United
States, at an approximate value of about \$1,320,000.

> **USA Poultry & Egg Export Council - RUSSIA**

+----------------------+-------------+-------------+-------------------+
| **Constraint:**      |             |             |                   |
| Russia uses          |             |             |                   |
| veterinary           |             |             |                   |
| requirements as      |             |             |                   |
| technical barriers   |             |             |                   |
| for US poultry       |             |             |                   |
|                      |             |             |                   |
| **Description:** The |             |             |                   |
| Russian Veterinary   |             |             |                   |
| Service (RVS) uses   |             |             |                   |
| differences in U.S.  |             |             |                   |
| and Russian          |             |             |                   |
| standards and risk   |             |             |                   |
| assessment as        |             |             |                   |
| technical barriers   |             |             |                   |
| to limit imports of  |             |             |                   |
| U.S. poultry         |             |             |                   |
+----------------------+-------------+-------------+-------------------+
| **Activities:**      |             |             |                   |
|                      |             |             |                   |
| -   Technical        |             |             |                   |
|     Regulations for  |             |             |                   |
|     Poultry Meat ●   |             |             |                   |
|     US-Russian       |             |             |                   |
|     Technical        |             |             |                   |
|     Consulting       |             |             |                   |
|     Center           |             |             |                   |
|                      |             |             |                   |
| -   Comparative      |             |             |                   |
|     Testing of       |             |             |                   |
|     Poultry Products |             |             |                   |
|     ● Database of    |             |             |                   |
|     official RVS     |             |             |                   |
|     documents        |             |             |                   |
|                      |             |             |                   |
| -   HACCP manuals    |             |             |                   |
|     reprinting and   |             |             |                   |
|     mailing          |             |             |                   |
|     (CANCELLED,      |             |             |                   |
|     FUNDS            |             |             |                   |
|     TRANSFERRED FOR  |             |             |                   |
|     AI)              |             |             |                   |
+----------------------+-------------+-------------+-------------------+
| **Performance        | Benchmark   | Goal        | Current           |
| measures**           |             |             |                   |
+----------------------+-------------+-------------+-------------------+
| 1\. Number of HACCP  | 1,600.0     | 2,500.0     | 1,600             |
| manuals distributed  |             |             |                   |
| in Russia            |             |             |                   |
+----------------------+-------------+-------------+-------------------+
| 2\. Number of new    | Chicken     | Develop     | Analysis          |
| Russian standards    | products:   | draft of    | conducted, RPU    |
| based on the U.S.    | terms and   | technical   | draft blocked     |
| System               | definitions | regulations |                   |
+----------------------+-------------+-------------+-------------------+
| 3\. Number of        | 24          | 50          | 41 (1,700+ pages) |
| translated official  |             |             |                   |
| documents on poultry |             |             |                   |
| meat safety          |             |             |                   |
+----------------------+-------------+-------------+-------------------+

1.  USAPEEC started collecting information about development of new
    technical regulations for poultry. A draft TR initiated by the
    Russian Poultry Union was translated into English and presented for
    analysis to US poultry industry specialist, processors, traders and
    importers.

2.  The U.S.-Russia Technical Consulting Center translated 41 official
    Russian and US technical documents (total of 1,700 pages) regulating
    poultry production and safety control; sets of docs were copied on
    CDs, printed as books and distributed in Russia and US. USAPEEC
    helped organize the US-Russian Meat Safety Conference "A Safe Meat
    Supply -- From Farm to Table" in May. USAPEEC conducted comparative
    tests of official US and Russian analytical methods for salmonella
    detection in poultry.

3.  Together with the National Association for Consumer\'s Rights,
    USAPEEC continued comparative testing of poultry products from
    foreign and domestic producers. The testing proved adequate quality
    of the U.S. poultry product compared to other producers, especially
    Russian ones.

4.  A veterinary information agency was contracted to obtain new
    official documents from the VPSS.

5.  27 articles based on HACCP manuals and U.S. professional print and
    on-line publications were placed in Russian professional veterinary
    periodical publications.

**WINE INSTITUTE**

**US Wines Continue to Gain Market Share in the United Kingdom**

The United Kingdom is the largest, most competitive market for imported
wine in the world. It is also the number one destination for US wines
and those from most producing countries.

In 2006, US wines continued to increase market share in the UK according
to retail sales monitored by AC Nielsen. Because wines shipped to the UK
trade may be bottled in Italy or France or shipped in-bottle from
Belgium or The Netherlands, export shipment statistics to a particular
country are a poor indication of sales growth in the UK.

During 2006, US wines achieved an off-premise market share of 16.0% by
volume (+8.3%) and 16.2% (+8.0%) share by value. This places US wines
third in market share behind Australia (22.3% share) and France (16.4%
share). Considering current growth rates, US wines should overtake
France for second place in the UK during 2007.

In the on-premise market, US wines grew 18% in value and 15% in volume,
although market share is considerably less as European wines still
dominate this sector.