United States General Accounting Office

GAO Report to Congressional Requesters

April 1999 AGRICULTURAL

TRADE

Changes Made to

Market Access

Program, but

Questions Remain on

Economic Impact

GAO/NSIAD-99-38

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-281456 

April 5, 1999

The Honorable Charles Schumer

United States Senate

The Honorable Steve Chabot

The Honorable Eddie Bernice Johnson

The Honorable Ron Kind

The Honorable Marty Meehan

The Honorable Rob Portman

The Honorable Edward Royce

House of Representatives

This report responds to your request that we examine the U.S. Department

of Agriculture’s (USDA) implementation of legislative reforms to the Market

Access Program (MAP) and their impact on program participation. Since

1986, MAP has provided funds to nonprofit organizations and commercial

firms to help support their promotions of U.S. agricultural products in

overseas markets.1

 The Foreign Agricultural Service (FAS), an agency of

USDA, administers this program and estimates that there are substantial

economic benefits associated with MAP. Over the years, some Members of

Congress have questioned MAP’s long-term economic returns to the

taxpayer and expressed concerns about program operations—specifically

that large corporations were using MAP to support their brand-name

promotions and that there were no requirements for companies to

graduate from the program. In addition, there was concern that these

federal dollars were displacing private sector expenditures already

planned for market development activities.2

In response to these concerns, Congress enacted legislative reforms

beginning in fiscal year 1993 that, among other things, directed FAS to

(1) give small businesses priority when funding MAP promotion of

brand-name products in foreign markets and, with certain exceptions,

prohibit direct assistance to large companies; (2) establish a graduation

requirement by limiting to 5 years the amount of time MAP funds can be

used to promote brand-name products in a single market; and (3) require

each recipient to certify that any federal funds received supplement, not

1

MAP has had two predecessors. In 1996, MAP replaced the Market Promotion Program, which was

established in 1990 to replace the Targeted Export Assistance program authorized in 1985.

2

See International Trade: Changes Needed to Improve Effectiveness of the Market Promotion Program

(GAO/GGD-93-125, July 7, 1993) and International Trade: Effectiveness of Market Promotion Program

Remains Unclear (GAO/GGD-93-103, June 4, 1993).

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B-281456 

supplant, its expenditures for promotions in foreign markets.3 As

requested, this report provides information on and analysis of FAS’

implementation of each of these requirements. It also responds to your

request that we review assessments of the economic benefits of MAP.

Results in Brief As directed by Congress, the Foreign Agricultural Service implemented

operational changes to the Market Access Program; these changes have

affected program participation and distribution of funds. Since fiscal 

year 1994, FAS has increased the number of small businesses participating

in MAP to promote brand-name products as well as small businesses’ share

of program funds. As required by statute, FAS prohibited direct assistance

for brand-name promotions to large companies beginning in fiscal year

1996. This prohibition does not apply to cooperatives and certain

associations. Also, beginning in fiscal year 1998, FAS prohibited indirect

assistance to large companies (excluding cooperatives and certain

associations).

Furthermore, FAS implemented a graduation requirement that will affect

about a quarter of the small businesses with brand-name promotions

totaling $4.3 million in fiscal year 1999, as well as the number of MAP

brand-name promotions conducted in individual country markets. This

graduation requirement also could have affected about half of the

cooperatives; however, in December 1998, FAS chose to use its statutory

authority and waive the graduation requirement for all cooperatives, citing

special considerations.

Since fiscal year 1995, FAS has required all participants to self-certify that

MAP funds supplement, not supplant, their activities to develop new foreign

markets for their products. While FAS regularly verifies that the

participants and the companies they fund have completed their

certification statements, FAS’ Director of Compliance Review Staff reports

that it is difficult to assure that these funds are additional because it is

hard to determine what would have been spent in the absence of MAP

funds. Also, this requirement has had no apparent impact on program

participation.

Questions remain about the overall economic benefits derived from MAP

funding. FAS estimates of MAP’s macroeconomic impact are overstated

because they rely on a methodology that assumes that the resources used

3

The Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66, sec. 1302, Aug. 10, 1993) and the Federal

Agriculture Improvement and Reform Act of 1996 (P.L. 104-127, sec. 244, Apr. 4, 1996).

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B-281456 

were not employed prior to the funding. We note that this is inconsistent

with Office of Management and Budget (OMB) cost/benefit guidelines. In

addition, the evidence from market-level studies is inconclusive regarding

MAP’s impact on specific commodities in specific markets.

Background In fiscal year 1997, Congress allocated $90 million for MAP to support the

overseas promotion of agricultural goods such as grains, cotton, forest

products, fruits, nuts, seafood, meat, alcoholic beverages, and processed

goods.4

 (See fig. I.1 in app. I for MAP appropriations since fiscal year 1986.)

During fiscal year 1997, FAS provided MAP funds directly to 65 participating

organizations consisting of 54 nonprofit agricultural trade associations, 

5 nonprofit state regional groups,5

 2 state agencies, and 4 agricultural

cooperatives.6

 (See app. I, table I.1, for a list of fiscal year 1997 MAP

participating organizations and their budgets).

MAP funds can be used to support both generic promotions and

brand-name promotions. In fiscal year 1997, about 76 percent of MAP’s

budget supported generic promotions, with the remaining funds

supporting brand-name promotions. Generic promotions are undertaken

by nonprofit trade associations, state regional groups, and state agencies

to increase demand for a specific commodity with no emphasis on a

particular brand, for example, U.S. peas and lentils, catfish, and cotton.

Brand-name promotions, on the other hand, are conducted by companies

and cooperatives to establish consumer loyalty for their brand-name

products. Trade associations and others using MAP funds to support

generic promotions must contribute at least 10 percent of the promotion

cost; entities using MAP funds to support brand-name promotions must

make a minimum 50 percent contribution.

In order to receive MAP funds, participating organizations must submit, and

FAS must approve, marketing plans specifically describing the manner in

which MAP assistance will be expended. Under these plans, the MAP funds

may be spent by participating organizations themselves (direct) and/or

redistributed to entities that have applied to participating organizations for

4

At the time of our review, the most current year with complete MAP data with company detail

available was fiscal year 1997. A fiscal year represents the year for which the MAP funds were

authorized and allocated; however, these funds may have been expended the following fiscal year

depending on the recipient’s marketing year.

5

State regional groups are associations of state Departments of Agriculture.

6

These agricultural cooperatives are agricultural producer companies that market and sell the

production of individual growers.

Page 3 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

MAP assistance (indirect). In fiscal year 1997, there were 453 individual

companies and 20 cooperatives that indirectly received assistance for

brand-name promotions. These companies and cooperatives applied for

MAP funds through 19 participating organizations.

Eligible MAP expenses include production and distribution of advertising

and promotional materials (for example, posters, recipes, and brochures);

in-store and food service promotions; product demonstrations; and fees

for participation in exhibits. Funds used to support generic promotions

may only be spent on the generic aspects of a campaign rather than on any

promotional material or advertising that specifies a single company or

brand.7

MAP supported generic and brand-name promotions in 100 countries during

fiscal year 1997; 10 country markets accounted for 65 percent of the funds

(see app. I, fig. I.2, for top country markets). With regard to the MAP

brand-name program, a total of 475 companies and cooperatives received

assistance in fiscal year 1997. The amount of MAP funds awarded to each

ranged from $1,500 to $2.6 million; however, almost half of the awards

were in amounts less than $25,000 (see app. I, table I.2, for size of fiscal

year 1997 MAP awards).

FAS’ Strategic Plan 1997-2002 contains estimates of the economic impact of

FAS foreign market promotion programs, including MAP. This plan fulfills

the requirement established under the Government Performance and

Results Act of 1993 (Results Act) (P.L. 103-62) whereby federal agencies

must prepare strategic and annual performance plans covering the

program activities set out in the agencies’ budgets. For purposes of

conducting cost/benefit analyses of government programs, OMB has

established guidelines.8

MAP Brand-name

Promotions Target

Small Businesses

Since fiscal year 1994, FAS has significantly increased the number of small

businesses participating in MAP’s brand-name program as well as their

share of MAP funds. In fiscal year 1996, as required by statute, FAS

discontinued providing direct assistance to large businesses other than

cooperatives and certain associations, which by law are eligible to receive

7

Any activity that involves two or more companies is considered a generic promotion as long as MAP

funds are not used on items that identify the company, and all other companies had equal opportunity

to participate in the promotion.

8

See “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs,” OMB Circular

A-94 (Washington, D.C.: Oct. 29, 1992).

Page 4 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

this assistance for brand-name promotions regardless of size.9 In fiscal

year 1998, FAS eliminated MAP funding for brand-name promotions by large

companies entirely, by prohibiting their indirect participation in the

brand-name program.

Small Business Share of

MAP Brand-name

Assistance Has Increased

Congress enacted legislation in 1993 directing FAS to give priority to small

businesses when allocating MAP funds for brand-name promotions 

(P.L. 103-66). FAS requires businesses that are applying for brand-name

assistance to certify that they are a small-sized entity based on their own

assessment using the Small Business Administration’s (SBA) criteria.10

Since fiscal year 1994, FAS has increased the number of small businesses

participating in MAP’s brand-name program and raised the total amount

allocated to small businesses while decreasing the total amount allocated

to large companies. The number of small businesses participating in the

MAP brand-name program increased from 312 to 370 between fiscal 

years 1994 and 1997. Also, the share of MAP brand-name program funds

allocated to small businesses increased from 41 percent to 61 percent, and

the share allocated to large companies decreased from 35 percent to

16 percent during that period (see fig. 1). During the same period, the

share allocated to cooperatives remained about the same, around

23 percent.11

9

The prohibition on direct MAP assistance for brand-name promotions does not apply to cooperatives,

nonprofit trade associations, and Capper-Volstead associations (P.L. 104-127, Apr. 4, 1996).

10The thresholds for establishing company size under SBA’s criteria depend on the type of business

and are based on either the maximum number of employees or annual receipts. Under 13 C.F.R. part

121, SBA established criteria to classify companies as small businesses for each industry according to

their Standard Industrial Classification codes. For example, agricultural producers cannot exceed a

production value of $500,000, and most types of wholesalers cannot have more than 100 employees. In

calculating a firm’s number of employees or annual receipts, the SBA criteria require that all affiliated

companies, whether parent or subsidiary, foreign or domestic, are included.

11Of the 22 cooperatives that received MAP assistance in fiscal year 1997, 3 cooperatives had annual

receipts or total employees that would place them within the SBA criteria for small businesses.

Page 5 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

Figure 1: MAP Brand-name Allocations by Type of Recipient, Fiscal Years 1994 and 1997

41%

35%

24%

Fiscal year 1994 allocation

Cooperatives 

(16)

Large companies 

(105) 

Small companies

(312) 

Small companies

(370)

Fiscal year 1997 allocation

61%

16%

23% Cooperatives 

(22)

Large companies

(83)

Note: The fiscal year 1994 allocation represents expenditures amounting to $26.1 million, and the

fiscal year 1997 allocation represents a budgeted amount of $29 million. The figures in

parenthesis represent the total number of companies or cooperatives.

Source: USDA.

According to FAS officials, these results have been achieved by conducting

presentations throughout the United States encouraging small companies

to promote their products overseas. In addition, FAS has provided state

regional groups with additional funds to expand their outreach activities.

We estimate there were 145 first-time recipients of MAP funds for

brand-name promotions in fiscal year 1997.12 Our analysis of FAS data

shows that these first-time recipients included 2 cooperatives, 125 small

businesses, and 18 large companies.

12Our classification of a recipient as a first-time recipient is based on the fact that a recipient had not

received brand-name program funds for fiscal years 1994-96. This methodology may overstate the

number of first-time recipients if any had received funding in prior years; however, detailed company

information is not available for earlier years to determine whether these recipients received

brand-name funds before 1994.

Page 6 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

Changes to MAP

Brand-name Allocations

Based on Recipient Size

Legislation enacted in 1996 prohibited FAS from providing direct assistance

for brand-name promotions to companies that are not recognized as small

business concerns under the Small Business Act. Nonprofit trade

associations, Capper-Volstead associations,13 and cooperatives were

specifically exempted from this prohibition. As a result, FAS ended direct

assistance to six large companies that had received direct assistance in

fiscal year 1995. One of these large companies continued to receive MAP

funds indirectly for brand-name promotions in fiscal years 1996 and 1997

by applying through two state regional groups.

While the 1996 legislation prohibits only direct assistance to large

companies, FAS recently decided to prohibit large companies (excluding

cooperatives and certain associations) from receiving MAP brand-name

funds indirectly through the trade associations, state regional groups, and

state agencies. Fiscal year 1997 was the last year that FAS allowed large

companies to participate, either directly or indirectly, in the MAP

brand-name program. Consequently, 83 large companies that had received

MAP brand-name assistance in fiscal year 1997 were expected to be

eliminated from the brand-name program in fiscal year 1998.14 Large

businesses can still take part in MAP’s generic promotions. According to FAS

officials, their decision to entirely eliminate large companies from the

allocation of MAP funds for brand-name promotions responded to

criticisms that MAP represented “corporate welfare” and recognized that

small businesses need greater assistance in exporting.

Graduation Affects

Brand-name

Promotions, but

Waivers Reduce

Impact

FAS first issued regulations in fiscal year 1995 to implement the statutory

direction to establish a graduation requirement for MAP participants. These

regulations limited assistance to 5 years per specific branded product per

single market. They were later revised to limit assistance to 5 years per

company per country market. Our projection, based on FAS data, suggests

that the graduation requirement could affect half of the cooperatives and

about a quarter of the small businesses that used MAP funds in fiscal

year 1997 to promote their brand-name products. These entities face the

prospect of losing MAP assistance for approximately 40 percent of their

13The Capper-Volstead Act (7 U.S.C. sec. 291) authorizes persons engaged in the production of

agricultural products to act together in association for the purpose of processing, preparing for

market, handling, and marketing such products. The act establishes a qualified immunity for such

associations from the antitrust laws. The act applies to growers and processors of fruit, dairy products,

trees, and general agricultural products. Nonprofit agricultural cooperatives, as well as cooperatives

having capital stock, can qualify as associations under the act.

14Fiscal year 1998 data was not available at the time of our review and, therefore, we could not confirm

that large companies did not receive MAP assistance for brand-name promotions in fiscal year 1998.

Page 7 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

current promotions, totaling $9.2 million in fiscal year 1999. However, FAS

used its statutory authority in December 1998 and waived the graduation

requirement for all cooperatives. The effect of this decision reduced the

impact of the graduation requirement on program participation to

$4.3 million, affecting only brand-name promotions conducted by small

businesses.

Graduation Requirement

Applies to All Company

Products in a Single

Country

To implement the graduation requirement, FAS established regulations in

February 1995 limiting a company or a cooperative to 5 years of MAP

assistance per “single market” per “specific brand product.”15 FAS first

applied the graduation requirement to companies receiving assistance for

brand-name promotions in fiscal year 1994. While FAS officials recognize

that many market segments can exist within a single country (for example,

a particular geographic region, target audience, or demographic group),

the rule defines “single market” as a “single country” to reduce the

administrative burden on both the participant and FAS as well as to

eliminate the need for interpretation. Under the 1995 regulations, FAS had

discretion to determine whether two or more brand-name products were

substantially the same product or different products. Some participants

requested that FAS use its discretion to more narrowly define the term

“single product.” For example, representatives from an almond producers’

cooperative told us that they thought they should be able to follow a 5-year

MAP promotion of their brand-name almonds in frozen yogurt in a

particular country with a MAP promotion of their almonds in ice cream

because they would be promoting a different type of brand-name product.

FAS revised the regulations in June 199816 to limit each company to no

more than 5 years of MAP funding for brand-name promotions per country.17

According to FAS officials, the new regulation simplifies program

administration and allows FAS to share its resources more effectively with

a wider variety of U.S. exporters and markets. After 5 years of assistance

in a country, FAS officials told us, a company should have established itself

in that market and be able to finance 100 percent of its market

development costs. Upon graduating from these markets, companies are

not excluded from the MAP program, because they can receive funds for

157 C.F.R. 1485.14(d)(2), Federal Register, Vol. 60, No. 21 (Feb. 1, 1995), p. 6366.

167 C.F.R. 1485.14 (d)(2), Federal Register, Vol. 63, No. 105 (June 2, 1998), p. 29940.

17A company is limited to a total of 5 years of MAP assistance (consecutive or nonconsecutive) for its

promotions in a particular country beginning with fiscal year 1994 allocations. Fiscal year 1998 is the

first year any company would graduate from a particular country market, meaning the company will

have to continue its promotion without MAP assistance in fiscal year 1999.

Page 8 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

brand-name promotions in other countries or take part in MAP’s generic

program. FAS officials hope that the graduation requirement might

encourage companies to enter new and promising markets that have been

previously ignored.

Graduation Affects Many

Companies and Country

Markets

Our projection of FAS data suggests that 11 of the 22 cooperatives

(50 percent) and 87 of the 370 small businesses (24 percent) that received

MAP funds for brand-name promotions in fiscal year 1997 could be affected

by the 5-year graduation requirement in fiscal year 1999.18 These 

11 cooperatives and 87 small businesses conducted a total of 445

brand-name promotions in fiscal year 1997, of which an estimated 183 of

these promotions (or 41 percent) would not qualify for MAP funding in

fiscal year 1999 if there were no waivers to the graduation requirement.19

The graduation requirement could impact MAP brand-name promotions in

some country markets more than in others (see table 1). Almost two-thirds

of MAP’s $29 million budget for brand-name promotions supported

company and cooperative promotions in nine countries in fiscal year 1997.

Our analysis estimates that 7 percent of the companies and cooperatives

with brand-name promotions in Korea and Taiwan could graduate from

MAP assistance in fiscal year 1999 compared to the approximately

25 percent share of companies and cooperatives that face graduation in

Japan, the United Kingdom, and Canada. However, some country markets

will not be as significantly affected by the graduation requirement; for

example, 65 percent of the companies and cooperatives conducting

MAP-assisted brand-name promotions in the People’s Republic of China

were using the program for the first time in that country in fiscal 

year 1997.

18Fiscal year 1998 data was not available at the time of our study, so we projected the number of

companies and cooperatives expected to graduate from certain country markets in fiscal year 1998

based on their funding history for each country. In other words, if a company received 4 consecutive

years of MAP funds for a certain country (fiscal years 1994-97), we assumed it will receive funds for

the same country in fiscal year 1998.

19The graduation requirement does not apply to those companies, cooperatives, and trade associations

receiving MAP funds for generic promotions, which represented 76 percent of the total MAP program

budget in fiscal year 1997. Trade associations that receive MAP funds to support their generic

promotions face no restrictions on the number of years they can receive assistance in a country. For

example, since 1986 almost $87.2 million in MAP funds has been spent by one trade association for the

generic promotion of U.S. meat in Japan, with annual MAP expenditures ranging between $3.9 million

and $18.8 million (in 1997 dollars). Similarly, over $15 million in MAP funds has been spent by one

trade association on the generic promotion of U.S. wine in the United Kingdom, with annual MAP

expenditures ranging between $614,000 and $4.7 million (in 1997 dollars).

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B-281456 

Table 1: Country Markets With Largest MAP Brand-name Budgets, Fiscal Year 1997

First-time recipients in countrya

Companies projected to

graduate in FY 1998b

Number of companies in fiscal year 1997

Country markets

Budget

FY 1997

(in millions) Total number Number Percent Number Percent

Japan $5.0 160 74 46 36 23

United Kingdom 2.9 118 44 37 31 26

Canada 2.3 111 40 36 30 27

Hong Kong 1.9 71 36 51 14 20

Germany 1.8 123 67 54 19 15

Mexico 1.5 77 39 51 12 16

People’s Republic of

China 1.0 72 47 65 0 0

Taiwan 1.0 55 30 55 4 7

Republic of Korea 1.0 54 34 63 4 7

Legend:

FY=fiscal year

Note: In this table, the number of companies represents the total number of companies and

cooperatives.

aWe projected the number of companies and cooperatives that used MAP funds for brand-name

promotions for the first time in fiscal year 1997 based on the observation that they had not

received MAP funds for fiscal years 1994-97.

bWe projected the number of companies and cooperatives that will have received MAP

brand-name assistance for 5 years based on funding history for each country (that is, the

company or cooperative received MAP assistance for fiscal years 1994-97, and we assume they

will receive funds in fiscal year 1998).

Source: Our analysis of USDA data.

To study the long-term impact of the graduation requirement on MAP

participation, we analyzed the top 10 cooperatives and small businesses

that received MAP brand-name funds in fiscal year 1997. Our analysis

estimates that 9 of the 10 recipients would graduate from at least one

country market in fiscal year 1998. In addition, four recipients would face

the prospect of graduating from at least half of their country markets in

fiscal year 1998 (see table 2). For example, International American

Supermarkets is expected to graduate in fiscal year 1998 from seven of its

nine Middle Eastern markets. In addition, this company is expected to

graduate from its remaining two country markets in fiscal year 2000.

International American Supermarkets has received over $3.1 million (in

1997 dollars) since 1989 to promote grocery products in these markets.

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Table 2: Small Businesses and Cooperatives With Largest MAP Brand-name Awards in Fiscal Year 1997 and Projected

Graduations From Country Markets

Projected graduations from MAPa

Number of country markets

Company name Type Commodity types

Budget

allocation

FY 1997

Total

FY 97 FY98 FY99 FY00 FY01

Sunkist Growers Coop Fresh citrus $2,594,000 5 5 0 0 0

Blue Diamond Coop Almonds,

pistachios

1,419,000 9 4 2 0 3

Welch Foods Coop Grape juice 740,000 6 2 3 0 1

Sunsweet Coop Prunes 616,000 3 3 0 0 0

IntlAmSupMkts Small Bakery,snacks,vegs 475,000 9 7 0 2 0

ASB Group Intl Small Snack food 350,000 2 1 1 0 0

Ocean Spray Coop Cranberries &

products, fresh

grapefruit

320,000 3 1 0 1 1

Herman Goelitz Small Confectionery 265,000 6 2 1 1 2

Org Log Cabin Homes Small Log cabins 250,000 1 0 0 1 0

Wente Bros Small Wine 250,000 9 4 2 1 2

Legend:

FY=fiscal year

Note: These top 10 recipients received 25 percent of the brand-name budget.

aWe projected the number of countries the company is expected to graduate from based on

funding history (that is, the company received MAP funds for a certain country for fiscal years

1994-97, and we assume that it will receive funds in fiscal year 1998).

Source: Our analysis of USDA data.

Waivers Reduce Impact of

Graduation Requirement

The impact of the graduation requirement was reduced when FAS decided

in December 1998 to waive the graduation requirement for all

cooperatives. While the legislation encourages graduation, it also gives the

Secretary of Agriculture authority to waive the graduation requirement

and extend MAP brand-name assistance beyond 5 years for a particular

company if it is determined that further assistance is necessary to meet the

objectives of the program. According to FAS’ Deputy Administrator for

Commodity and Market Programs, FAS extended MAP assistance to all

cooperatives for brand-name promotions beyond the 5 year limit for two

reasons: (1) some cooperatives represent the interests of thousands of

individual growers and (2) some cooperatives represent a large share of

Page 11 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

U.S. production and could be viewed as trade associations that promote a

generic product.20

We estimated that absent a waiver, small companies and cooperatives with

promotions totaling $9.2 million would have graduated in fiscal year 1998.21

 However, the potential impact of the graduation requirement was reduced

to $4.3 million when FAS waived the requirement for all cooperatives. The

lower figure represents 15 percent of the $29 million MAP budget for

brand-name promotions, or about 4 percent of MAP’s total budget of

$118.8 million in fiscal year 1997.

Of the 11 cooperatives that could have been impacted by the graduation

requirement in fiscal year 1999, 4 of them have been in some country

markets since the program’s inception. For example, our projections

indicate that Sunkist and Blue Diamond Growers would graduate from 9 of

their 14 country markets in 1998 if FAS had not waived the graduation

requirement. Sunkist has received a total of $70.6 million in program funds

to promote fruit in five countries, and Blue Diamond has received

$27.4 million to promote almonds in four countries between 1986 and 1997

(in 1997 dollars).22

Difficult to Verify That

MAP Funds

Supplement Recipient

Expenditures

Beginning with the fiscal year 1994 budget allocations, participants that

receive MAP funds directly from FAS must certify that the assistance

supplements, not supplants, their own funding for foreign market

development (the concept of “additionality”). Furthermore, trade

associations, state regional groups, and state agencies must assure that

applications for indirect MAP assistance include completed and accurate

certification statements. The certification requirement is meant to ensure

20Among cooperatives participating in MAP, the number of producers in a cooperative and its market

share vary greatly. For example, Sunkist has total sales over $1 billion in 1997, represents nearly 

60 percent of the domestic market for navel oranges, and is owned by 6,500 citrus farmers in California

and Arizona. Land O’Lakes Food Ingredients with sales at $3 billion represents over 300,000 producers

in 30 states organized in local cooperatives. However, other cooperatives represent a smaller number

of growers. For example, Bard Valley Medjool Date Growers Association with sales of $13 million has 

9 growers, and Naturipe Berry Growers has 50 grower associates and sale revenues of $72 million.

21Fiscal year 1998 data was not available at the time of our study, so we projected the amount of funds

that could potentially be released as a result of the graduation requirement by (1) estimating the

number of companies expected to graduate from certain countries in fiscal year 1998 (see fn. 18) and

(2) assuming that the amount of MAP funds they would have received in fiscal year 1998 would be the

same as the amount the company received for the country promotion in fiscal year 1997.

22Since 1986, Sunkist has received the following amounts of MAP funds (1997 dollars) for these

country markets: Canada, $7 million; Hong Kong, $11.8 million; Japan, $42.1 million; Malaysia,

$4.8 million; and Singapore, $4.9 million. Blue Diamond Growers received the following amounts of

MAP funds for these country markets (1997 dollars): India, $437,000; Japan, $19.8 million; Korea,

$6.3 million; and Thailand, $838,000.

Page 12 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

that MAP funds do not substitute for promotional expenditures recipients

would have otherwise undertaken with their own funds. According to FAS

officials, no recipients have been disqualified from the program because

they failed to meet the certification requirement.

FAS’ Compliance Review Staff (CRS) regularly audits the participants that

receive direct MAP funding and verifies that these participants and the

recipients they fund have completed their certification statements. To

determine whether MAP assistance (generic or brand-name) has not

supplanted a participant’s foreign market development expenditures, the

Director of CRS told us that they review the participant’s foreign market

development budget and verify that it is spending at least as much as it

spent the previous year. CRS also considers variations in a recipient’s

promotional strategies within a country and in new markets. According to

the Director, CRS reviews supporting documentation each year for about

5 percent of all indirect recipients (15-20 companies and cooperatives).

The Director reported that it is difficult to verify whether MAP funds

supplement a participant’s own funds for foreign market development

activities because it is hard to determine what a participant would have

spent in the absence of MAP funds.

According to FAS officials, they have no evidence based on the CRS audits

that any participant has falsely certified regarding additionality.

Nonetheless, a private consulting firm has been hired to review the

effectiveness of MAP, and one component of the work plan includes a

section that addresses the issue of whether MAP funds supplement or

supplant the funds of MAP participants. FAS officials expect this project to

provide the best analysis to date on the topic of additionality.

Economic Benefits of

MAP Unclear

FAS officials continue to attribute substantial macroeconomic and

market-level benefits, including increased income and employment, to MAP.

Specifically, FAS estimates that the cumulative effect of MAP expenditures

since 1986 is $5 billion of additional agricultural exports in 1997 which, in

turn, FAS says generate 86,500 jobs and $12 billion in additional economic

activity.23 This estimate is based on the projected impact of $1.25 billion

(1997 dollars) of spending between 1986 and 1997 on consumer food

23Foreign Agricultural Service Strategic Plan: 1997-2002 (Washington, D.C.: USDA/FAS, 1997), p. 7. The

Foreign Market Development Program, also known as the Cooperator Program, provides funds to

nonprofit associations to help develop export markets and promote U.S. agricultural

commodities—typically bulk (wheat, corn, soybeans) or generic products. Historically, USDA’s

contribution to this program has averaged approximately $30 million a year.

Page 13 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

export promotion through MAP (including an estimated $5 million per year

in Foreign Market Development Program expenditures).

Our review of the recent estimates of MAP’s impact on the macroeconomy

and the methodology used to derive them suggests that the benefits

attributed to MAP by FAS are overstated. The model FAS used to generate

these estimates assumes that all of the resources (land, labor, and other

inputs) associated with additional agricultural exports would be

unemployed in the absence of government market promotion efforts.24 As

we previously reported, this approach is inconsistent with OMB cost-benefit

guidelines, which instruct agencies to assume that resources would be

fully employed, and leads to an overstatement of benefits of the program.25

In addition, FAS continues to assume that all of the market development

efforts subsidized through MAP funding are in addition to what the private

sector would do in the absence of the government program efforts. This

position differs from the view of the Trade Promotion Coordinating

Committee (TPCC).26 In its 1998 annual report, the TPCC concluded that

government agencies currently do not have the means to measure whether

exports would have taken place without government intervention and that

the results of studies of net economic effects of export promotion are

speculative.

24The methodology used by FAS is developed in Evaluating the Effectiveness of the Market Promotion

Program on U.S. High-Value Agricultural Exports, FAS Staff Paper 1-95 (Washington, D.C.: Feb. 1995).

25For another discussion of the assumptions in the FAS model, see U.S. Agricultural Exports: Strong

Growth Likely, But U.S. Export Assistance Programs’ Contribution Uncertain (GAO/NSIAD-97-260,

Sept. 30, 1997). See also OMB Circular No. A-94. The circular states: “Generally, analyses should treat

resources as if they were likely to be fully employed.” When the economy is near or at full

employment, government promotion activities largely reallocate production, employment, and income

between sectors and are therefore less likely to generate additional economic activity.

26The National Export Strategy: Staying the Course, Trade Promotion Coordinating Committee, Sixth

Annual Report to the U.S. Congress (Washington, D.C.: TPCC, Oct. 1998). The TPCC was established

by the President under authority of the Export Enhancement Act of 1992 (P.L. 102-429). Members of

the TPCC include representatives from government Departments and agencies such as the

Departments of Agriculture, Commerce, and State; the Small Business Administration; the Overseas

Private Investment Corporation; and the U.S. Trade Representative. The TPCC is responsible for

coordinating the development of the trade promotion polices and programs of the U.S. government

and establishing a set of priorities for federal activities in support of U.S. exports.

Page 14 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

FAS officials directed us to academic studies that they identified as

demonstrating the positive effect of MAP on agricultural exports.27 We

examined the relevant studies of MAP’s impact in specific markets and

found that they reveal mixed results. Of the studies that estimate MAP’s

impact on agricultural exports in specific foreign markets, all report

positive benefits in one or more of the targeted markets, but most of these

studies also report that MAP funding failed to influence exports in other

targeted markets. Moreover, caution should be used in interpreting the

benefits ascribed to MAP in these studies, since the studies that report

positive effects from MAP funding employ a methodology that results in an

upward bias on the estimated benefits (see app. II for a more detailed

review of these studies). Thus, it is difficult to generalize about the impact

of MAP based on the results of these market-level studies.

FAS officials responsible for developing agency strategic and performance

plans in accordance with Results Act requirements are undertaking steps

to redesign performance measures as a basis for developing market-level

strategies. FAS recently requested the National Association of State

Departments of Agriculture to develop performance measures in order to

improve the system for evaluating MAP’s effectiveness in selected markets

and for assessing the overall impact of the program. The goal of this

initiative is to develop a more effective mechanism for allocating MAP

program resources through new market-level studies. This initiative

provides an opportunity for FAS to overcome the limitations of existing

studies by carrying out a more rigorous analysis of the impact of the

program. This new approach is reinforced by a direction in a recent

Appropriations Committee conference report that the Secretary of

Agriculture produce a comprehensive analysis of the economic impact of

MAP.

28

27Specifically, FAS officials directed us to studies carried out by the Research Committee on

Commodity Promotion (NEC-63) and the National Institute for Commodity Promotion Research and

Evaluation (NICPRE), which are both university-affiliated organizations that carry out research in

agriculture and related fields. The majority of studies of MAP-funded promotions in specific markets

have been carried out under the auspices of these organizations.

28See the Conference Report on the Omnibus Consolidated and Emergency Supplemental

Appropriations Act, 1999 (P.L. 105-277, Oct. 21, 1998). The report directs the Secretary of Agriculture

to “produce a report on the MAP which should include an analysis of the costs and benefits of the

program for compliance with OMB Circular A-94; estimate the impact of MAP on the agricultural

sector, on consumers, and other sectors of the economy in the United States; assess the relation

between the priorities and spending levels of programs carried out under MAP and the privately

funded market promotion activities undertaken by participants in the programs; and evaluate the

additional spending of participants and the amount of export additionality resulting from the MAP.”

H. Conf. Rept. No. 105-825, 105th Cong., 2d Sess. (1998), p. 989-90.

Page 15 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

Agency Comments

and Our Evaluation

We obtained oral comments from FAS on a draft of this report. FAS said that

it agreed with the report’s presentation of the operational changes to MAP

that FAS has implemented in response to legislative direction.

However, FAS officials disagreed with the report’s conclusion that their

economic analyses tended to overstate MAP’s macroeconomic benefits.

They said that FAS uses a standard USDA methodology to convert MAP’s

estimated export impacts to “supported employment” effects. These

multipliers are taken from the input-output model of the U.S. economy

developed and updated each year by USDA’s Economic Research Service.

They also said that they recognize that their methodology is not consistent

with OMB Circular A-94 guidance that “generally, analyses should treat

resources as if they were likely to be fully employed.” FAS officials said

they believe that OMB’s guidance is unrealistic and unduly restrictive. FAS

analysis assumes slack (less than fully employed) resources, especially

labor. FAS officials cite evidence of labor unemployment as proof of slack

resources in the U.S. economy. FAS officials state that their estimate of the

number of jobs supported by MAP is small compared to the total number of

new jobs created each month in the U.S. economy and this reinforces their

belief that OMB’s full employment assumption is unrealistic for a small

program like MAP. Furthermore, FAS officials note that USDA is not the only

government agency that uses employment multipliers to estimate the

macroeconomic benefits of exports.

We note that the guidelines in OMB Circular A-94 apply to all agencies of

the executive branch and for any analysis used to support government

decisions to renew programs such as MAP.

29 We believe that the guidelines

provide a sound basis on which to evaluate programs such as the MAP and

their contributions to the national economy.

FAS also provided some technical comments and, where appropriate, they

have been incorporated.

Scope and

Methodology

To report on actions FAS took to implement legislative reforms enacted by

Congress in the mid-1990s, we reviewed MAP legislation and regulations.

We also interviewed and collected documents from FAS officials from the

Commodity and Marketing Programs Division who are responsible for the

29The OMB Circular A-94 guidelines “apply to any analysis used to support Government decisions to

initiate, renew, or expand programs or projects which would result in a series of measurable benefits

or costs extending for three or more years into the future.” Some decisions are exempted from the

scope of the circular concerning: water resource projects, the acquisition of commercial-type services

by government or contractor operation, and federal energy management programs.

Page 16 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

management and oversight of MAP, as well as officials from FAS’

Compliance Review Staff and USDA’s Office of Inspector General. In

addition, we interviewed and gathered documents from five MAP

participants to understand how different types of program participants

(that is, trade associations, state regional groups, and cooperatives)

participated in the program. Our review of the program relied on data from

fiscal years 1986 to 1997. At the time of our review, fiscal year 1998 data on

company participation in the MAP brand-name program was not available.

A fiscal year represents the year for which the MAP funds were authorized

and allocated; however, these funds may have been expended the

following fiscal year depending on the recipient’s marketing year. For the

years of available data, we analyzed actual expenditure data, with the

exception of fiscal year 1997, because only budget data was available at

the time of our review.30 We did not verify the accuracy or completeness of

the electronic data.

To determine the impact of FAS’ implementation of legislative reforms to

give priority to small-sized businesses when funding the MAP brand-name

program in fiscal years 1994 and 1997, we analyzed changes in the number

and shares of small businesses participating in MAP’s brand-name program.

We also examined the size of the 22 cooperatives participating in the

brand-name program for fiscal year 1997 by comparing the SBA

criteria—the same criteria used by companies to qualify themselves as

small-sized businesses for MAP brand-name funds—to data obtained from

business references and other sources on the total number of employees

and annual sales for each cooperative.31

To determine the impact of the graduation requirement on MAP

participation, we projected the number of companies and their promotions

that might be affected. Fiscal year 1998 data was not available at the time

of our review, so we estimated the number of companies and cooperatives

expected to graduate from certain country markets in fiscal year 1998

based on their funding history for each country. To estimate the amount of

funds expected to be released due to the graduation requirement, we

assumed the amount of MAP funds these graduating companies and

cooperatives would have received in fiscal year 1998 would be the same as

the amount they received for the country promotion in fiscal year 1997.

Our review of graduation did not include any consideration of the number

30Program data included statistics on the allocation of MAP funds by participant, company, country,

and type of MAP promotions, that is, generic or brand-name.

31Whenever possible, we used data from Dunn and Bradstreet (Bethlehem, PA: 1998); otherwise, we

used data from Standard & Poor’s (New York, NY: 1998) and the Standard Directory of Advertisers

(New Providence, NJ: 1998).

Page 17 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

of years that trade associations, cooperatives, and companies had received

MAP funds to support their country-specific generic promotions; this was

outside the scope of our review.

To determine the impact of the legislative requirement that MAP

participants certify that MAP funds supplement, not supplant, their

expenditures for promotions in foreign markets on MAP participation, we

interviewed FAS officials responsible for the management and oversight of

MAP, including representatives from FAS’ Commodity and Marketing

Programs Division and Compliance Review Staff. We also reviewed

compliance reports and other documents provided by the Compliance

Review Staff.32

In order to provide a review of the economic impact of MAP, we focused

our analysis on those studies that estimated or analyzed the economic

impact of MAP and its predecessors (the Market Promotion Program and

the Targeted Export Assistance program). We revisited some of the

studies that were analyzed in a prior review of all FAS export promotion

programs as well as more recent estimates by FAS of the program’s

economic impact.

In our review of studies of MAP’s impact on U.S. agricultural exports and

related effects on employment and gross national product, we performed

two tasks. First, we relied on our previous analysis of FAS’ methodology for

estimating effects from MAP funding on agricultural exports, employment

generation, and income effects and compared this methodology with OMB

guidelines for cost-benefit analysis. We spoke with FAS officials charged

with the development and implementation of the 1993 Government

Performance and Results Act-mandated strategic and annual performance

plans to gather their opinion of the applicability and reliability of FAS

estimates and methodology. Also, we considered the methodology FAS

used to derive its macroeconomic estimates from the perspective of

standard economic analysis of the effects of subsidies on the target sector

and related sectors. In addition, we also reviewed how the TPCC reported

benefits of MAP and other export promotional spending in its annual

National Export Strategy.

Second, to obtain evidence on the impact of MAP on sectoral exports, we

reviewed analyses provided to us by FAS as well as other applicable

research analyses from academic publications of the impact of the

32This review of documentation included compliance reports for 10 MAP participants, audit schedules

for fiscal years 1993-97, and accomplishment reports for fiscal years 1994-96.

Page 18 GAO/NSIAD-99-38 Agricultural Trade
B-281456 

program on particular markets. When reviewing these studies for the

current analysis, we focused on both the findings of economic impact and

the methodology used to derive results. The available studies focused on

MAP-funded generic promotions. We synthesized this information to

present an overview of the impact of MAP funding on exports and the U.S.

economy. We spoke to officials at FAS and the National Association of

State Departments of Agriculture, which is collaborating with FAS in

developing performance indicators for the MAP program, and we reviewed

the National Association of State Departments of Agriculture’s Request for

Proposal for an evaluation project for MAP.

We conducted our work at FAS in Washington, D.C., and completed

telephone interviews with representatives from three trade associations,

one cooperative, and one state regional group located throughout the

United States.

We performed our review from January 1998 to December 1998 in

accordance with generally accepted government auditing standards.

As agreed with your offices, we will send copies of this report to Senator

Richard G. Lugar, Chairman, and Senator Tom Harken, Ranking Minority

Member, Senate Committee on Agriculture, Nutrition, and Forestry;

Representative Larry Combest, Chairman, and Representative Charles W.

Stenholm, Ranking Minority Member, House Committee on Agriculture.

We are also sending copies of this report to the Honorable Daniel

Glickman, Secretary of Agriculture. We will also make copies available to

others on request.

This review was done under the direction of JayEtta Z. Hecker, Associate

Director. If you or your staff have any questions concerning this report,

please contact Phillip Thomas, Assistant Director, at (202) 512-9892. Major

contributors to this report are listed in appendix III.

Benjamin F. Nelson, Director

International Relations and Trade Issues

Page 19 GAO/NSIAD-99-38 Agricultural Trade
Contents

Letter 1

Appendix I 

Statistics on

Participation in the

Market Access

Program

22

Appendix II 

Review of

Market-Level Studies

of MAP

29

Appendix III 

Major Contributors to

This Report

32

Tables Table 1: Country Markets With Largest MAP Brand-name

Budgets, Fiscal Year 1997

10

Table 2: Small Businesses and Cooperatives With Largest MAP

Brand-name Awards in Fiscal Year 1997 and Projected

Graduations From Country Markets

11

Table I.1: MAP Participants and Budgets—Generic and

Brand-name—Fiscal Year 1997

24

Table I.2: Size of MAP Brand-name Awards by Type of Recipient,

Fiscal Year 1997

28

Figures Figure 1: MAP Brand-name Allocations by Type of Recipient,

Fiscal Years 1994 and 1997

6

Figure I.1: Annual MAP Appropriations, Fiscal Years 1986-97 23

Figure I.2: Country Markets With Largest MAP Budgets, Fiscal

Year 1997

27

Page 20 GAO/NSIAD-99-38 Agricultural Trade
Contents

Abbreviations

CRS Compliance Review Staff

FAS Foreign Agricultural Service

MAP Market Access Program

MPP Market Promotion Program

NEC-63 Research Committee on Commodity Promotion

NICPRE National Institute for Commodity Promotion Research and

Evaluation

OMB Office of Management and Budget

SBA Small Business Administration

TEA Targeted Export Assistance

TPCC Trade Promotion Coordinating Committee

USDA U.S. Department of Agriculture

Page 21 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

Since its inception in 1986, the Market Access Program (MAP) and its

predecessors, the Targeted Export Assistance program (TEA) and the

Market Promotion Program (MPP), have provided funds to commercial

firms and nonprofit organizations to support the promotion of U.S.

agricultural goods in foreign markets. TEA was first authorized in 1985 to

reverse a decline in U.S. agricultural exports and to counter the unfair

trade practices of foreign competitors.1

 Only those commodities adversely

affected by unfair foreign competitor practices were eligible for

assistance. When Congress reauthorized the program in 1990, it was

renamed the Market Promotion Program, and assistance was no longer

restricted to commodities adversely affected by unfair competitor

practices.2

In 1993 Congress initiated three major program changes. The first directed

that the Foreign Agricultural Service (FAS) give small businesses priority in

the allocation of MAP funds for brand-name promotions. The second

change established a graduation requirement with a 5-year limit on the use

of MAP funds to promote a “specific branded product” in a “single market”

unless FAS determines that further assistance is deemed necessary to meet

program objectives. The third change was a requirement that each

participant certify that MAP funds supplement its foreign market

development expenditures.3

With the Market Promotion Program’s 1996 reauthorization, Congress

changed the program name to MAP, and, among other things, prohibited

direct assistance to companies that are not recognized as small business

concerns under the Small Business Act, except for cooperatives and

certain associations.4

 The 1996 reauthorizing legislation also capped

annual funding for MAP at $90 million for fiscal years 1996-2002 (see fig. I.1

for annual MAP appropriations, fiscal years 1986-97).

1

The Food Security Act of 1985 (P.L. 99-198, sec. 1124, Dec. 23, 1985).

2

The Food, Agriculture, Conservation, and Trade Act of 1990 (P.L. 101-624, sec. 1531, Nov. 28, 1990).

3

The Omnibus Budget Reconciliation Act of 1993 (P.L. 103-66, sec. 1302, Aug. 10, 1993).

4

The Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127, sec. 244, Apr. 4, 1996).

Page 22 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

Figure I.1: Annual MAP Appropriations, Fiscal Years 1986-97

86 87 88 89 90 91 92 93 94 95 96 97

0

50

100

150

200

250

110 110 110

200 200 200 200

148

100

110

90 90

Fiscal year

Dollars in millions

Note: The budget for MAP in fiscal year 1997 was $118.8 million (this figure includes the 1997

annual appropriations plus carryover from the prior year).

Source: U.S. Department of Agriculture (USDA).

Page 23 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

Table I.1 presents a list of all participants who received MAP funds directly

during fiscal year 1997 along with the amount of MAP funding they were

allocated and the percent they spent on generic and brand-name

promotions.

Table I.1: MAP Participants and Budgets—Generic and Brand-name—Fiscal Year 1997

Participant

1997

MAP budget

Percent

generic

Percent

brand-name

Trade Associations

Almond Board of California $504,043 100 0

American Brandy Association 230,000 66 34

American Forest & Paper Association 7,568,704 100 0

American Jojoba Association 200,000 100 0

American Indian Trade and Development Council 75,318 100 0

American Seafood Institute/Rhode Island Seafood Council 637,249 58 42

American Sheep Industry Association 170,000 100 0

American Soybean Association 2,373,422 100 0

Asparagus USA 258,103 100 0

California Agricultural Export Council 611,787 100 0

California Cling Peach Growers Advisory Board 798,931 100 0

California Kiwifruit Commission 158,000 100 0

California Pistachio Commission 979,103 91 9

California Prune Board 2,563,500 76 24

California Strawberry Commission 508,567 100 0

California Table Grape Commission 2,348,272 100 0

California Tree Fruit Agreement 774,664 100 0

California Walnut Commission 2,593,772 100 0

Cherry Marketing Institute 165,292 100 0

Chocolate Manufacturers Association 1,695,376 12 88

Cotton Council International 9,753,438 100 0

Hop Growers of America 125,000 100 0

Kentucky Distillers Association 847,952 60 40

Mohair Council of America 75,000 100 0

National Dry Bean Council 728,469 100 0

National Honey Board 144,382 67 33

National Peanut Council 1,155,000 100 0

National Potato Research & Promotion Board 1,674,984 100 0

National Renderers Association 286,967 100 0

(continued)

Page 24 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

Participant

1997

MAP budget

Percent

generic

Percent

brand-name

National Sunflower Association 999,958 100 0

New York Wine and Grape Foundation 152,814 79 21

North American Blueberry Council 92,000 100 0

North American Export Grain Association 194,950 100 0

Northwest Wine Promotion Coalition 280,664 100 0

Oregon Seed Council 197,858 100 0

Oregon-Washington-California Pear Bureau 1,065,813 100 0

Pet Food Institute 991,030 100 0

Raisin Administrative Committee 2,444,619 91 9

Texas Produce Export Association 123,930 100 0

The Catfish Institute 309,905 100 0

The Popcorn Institute 502,077 100 0

USA Dry Pea & Lentil Council 577,918 100 0

USA Fresh Sweet Cherry Promotion 858,020 100 0

USA Poultry and Egg Export Council 3,952,570 78 22

USA Rice Federation 3,497,075 100 0

USA Tomato (CA FL tomatoes) 653,396 100 0

US Apple Association 505,548 100 0

US Dairy Export Council 1,934,781 100 0

US Feed Grains Council 3,945,878 100 0

US Livestock Genetics Export, Inc. 1,077,468 75 25

US Meat Export Federation 9,875,166 98 2

US Wheat Associates 2,278,750 100 0

Washington Apple Commission 3,198,266 100 0

Wine Institute 4,454,000 59 41

State regional groups

Eastern US Agricultural & Food Export Council (USEAFEC) 4,287,219 25 75

Mid-America International Agri-Trade Council (MIATCO) 6,378,167 16 84

National Association of State Departments of Agriculture (NASDA) 600,000 100 0

Southern United States Trade Association (SUSTA) 4,336,616 23 77

Western US Agricultural Trade Association (WUSATA) 6,989,000 19 81

State agencies

Alaska Seafood Marketing Institute 2,569,203 100 0

(continued)

Page 25 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

Participant

1997

MAP budget

Percent

generic

Percent

brand-name

Florida Department of Citrus 4,498,525 100 0

Cooperatives

Blue Diamond Growers 1,375,000 0 100

Ocean Spray International, Inc. 319,848 0 100

Sunkist Growers, Inc. 2,593,546 0 100

Welch Foods Inc. (National Grape Cooperative) 664,261 0 100

Total $118,781,134 76 24

Source: USDA.

The 10 country markets with the largest MAP budgets in fiscal year 1997

represent all countries that had MAP generic and brand-name promotions

totaling $2 million or more (see fig. I.2). Approximately 65 percent (or

$77 million) of the total $118.8 million in MAP funds was budgeted for

promotions in these markets in fiscal year 1997. The remaining 35 percent

of the MAP funds was budgeted for generic and brand-name promotions in

90 other country markets.

Approximately $2.2 million of the MAP budget in fiscal year 1997 supported

efforts conducted in the United States that underpinned foreign market

development activities. About 32 percent of the budget covered

administrative costs expected to be incurred by four state regional groups

for such items as rent, salaries, and supplies. Approximately 17 percent of

the funds were budgeted for anticipated travel expenses by staff from

seven trade associations and three state regional groups. Another

28 percent supported activities such as demonstrations, media, public

relations, promotions, and trade shows. The majority of these funds

supported preparations at the largest food export trade show in the United

States.

Page 26 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

Figure I.2: Country Markets With Largest MAP Budgets, Fiscal Year 1997

United States - $2.2 million 

12 trade organizations received

$2.2 generic funds

$0 brand-name fundsa

Canada - $4.8 million 

19 trade organizations received $2.5 

generic funds

111 companies received $2.3

brand-name funds

United Kingdom - $8.0 million 

27 trade organizations received $5.1 generic funds

118 companies received $2.9 brand-name funds

Germany - $5.9 million 

24 trade organizations received $4.1 generic funds

123 companies received $1.8 brand-name funds

People's Republic of China - $4.6 million 

23 trade organizations received $3.6 generic funds 

72 companies received $1.0 brand-name funds 

Hong Kong - $5.1 million 

18 trade organizations received $3.2 generic funds

71 companies received $1.9 brand-name funds

Taiwan - $4.6 million 

19 trade organizations received $3.6 

generic funds 

55 companies received $1.0

brand-name funds 

Republic of Korea - $6.3 million 

21 trade organizations received $5.3

generic funds

54 companies received $0.9

brand-name funds 

Japan - $27.8 million 

32 trade organizations received $22.8

generic funds

160 companies received $5.0

brand-name funds

Mexico - $7.6 million 

31 trade organizations received $6.1 generic funds

77 companies received $1.5 brand-name funds

aDue to rounding, this amount does not reflect the $8,000 of MAP funds supporting one

brand-name promotion in the United States.

Source: Our map based on USDA data.

Page 27 GAO/NSIAD-99-38 Agricultural Trade
Appendix I 

Statistics on Participation in the Market

Access Program

A total of 475 recipients participated in the MAP brand-name program in

fiscal year 1997. Four cooperatives (Sunkist, Welch Foods Inc., Ocean

Spray, and Blue Diamond) received MAP funds for brand-name promotions

directly from FAS.

5

 All other companies and cooperatives applied indirectly

to FAS for MAP funds for brand-name promotions through trade

associations, state regional groups, and state agencies. The amount of

brand-name assistance awarded to each recipient ranged from $1,500 to

$2.6 million; however, almost half of the awards were in amounts less than

$25,000 (see table I.2).

Table I.2: Size of MAP Brand-name Awards by Type of Recipient, Fiscal Year 1997

Large companies Small companies Cooperatives

Size of award Number Percent Number Percent Number Percent

Below $25,000 37 45 187 51 6 2 7

$25,000-$99,999 35 42 126 34 8 36

$100,000-$299,999 9 11 55 15 3 14

$300,000 and over 2a 2 2b 1 5c 23

Total 83 100 370 101d 22 100

aLarge company awards amounted to $440,000 and $597,874.

bSmall company awards amounted to $350,000 and $475,000.

cCooperative awards amounted to $319,848, $616,000, $740,261, $1.4 million, and $2.6 million.

dGreater than 100 percent due to rounding.

Source: Our analysis of USDA data.

5

Two of these cooperatives, Welch Foods Inc. and Blue Diamond, also received MAP funds for

brand-name promotions indirectly through state regional groups.

Page 28 GAO/NSIAD-99-38 Agricultural Trade
Appendix II 

Review of Market-Level Studies of MAP

The studies that analyzed the effect of MAP and its predecessor programs

were for the most part carried out under the auspices of

university-affiliated institutes and organizations. Nine universities are

affiliated with the National Institute for Commodity Promotion Research

and Evaluation (NICPRE). NICPRE is an offshoot of the Research Committee

on Commodity Promotion (NEC-63), which is a component of the land grant

committee structure to coordinate research in agriculture and related

fields.

FAS officials identified a number of market-level studies published by

NICPRE and NEC-63 that they said showed MAP’s economic benefits to

agriculture through increased exports and market shares for specific

commodities. Our review found that the studies provide mixed evidence

of a positive impact of MAP-funded promotions at the market-level unit of

analysis. The studies also vary in terms of their functional forms,

assumptions, and independent variables. Some models are more

completely specified in that they include variables measuring income, the

prices of substitute and complementary goods, exchange rates, and

long-term trends. However, others lack one or more of these important

variables, raising the possibility of biased estimators due to model

misspecification.1

 The presentation of the econometric estimation of the

models also varies. Some studies are rigorous, while others fail to present

complete diagnostics of the model performance.

Few studies show an unambiguously positive effect of government

promotional activities on exports. For example, a study of the effects of

FAS-funded promotions for U.S. red meat (pork, veal, and beef) in the

Pacific Rim countries showed a positive result in the case of South Korea

and insignificant results for the other three countries included in the

analysis.2

 Also, an analysis of the effects of government-funded

promotions of meat in Japan showed a positive influence on the demand

for U.S. beef but found no evidence that advertising and promotion

1

See the discussion by Karen Z. Ackerman and Shida Rastegari Henneberry in “Economic Impacts of

Export Market Promotion,” Commodity Promotion Policy in a Global Economy, Proceedings of a

Symposium (Arlington, VA: Oct. 22-3, 1992).

2

See Cong Tru Le, Harry M. Kaiser, and William G. Tomek, “Export Promotion and Import Demand for

U.S. Red Meat in Selected Pacific Rim Countries,” NICPRE 97-04 (Ithaca, NY: Cornell University, Sept.

1997).

Page 29 GAO/NSIAD-99-38 Agricultural Trade
Appendix II 

Review of Market-Level Studies of MAP

expenditures had an expansionary effect on the demand for U.S. pork and

poultry products.3

Additionally, a number of the market-level studies that find positive effects

associated with government-subsidized programs are incomplete in their

analysis and result in an upward bias on the estimated effects of

MAP-funded promotions. They exclude factors that could permit program

administrators to assure that the impact is positive even after accounting

for increased costs. Most studies only calculate the expansion of exports

associated with a dollar input of MAP advertising. For example, one study

finds that “$1,000 spent in Japan yields an increased revenue of

approximately $5,850” (the cumulative effect after 40 years) for U.S.

walnut producers.4

 This and similar types of estimates that report “gross

returns” do not consider the production and transportation costs of these

additional exports and thus fail to determine whether the promotion has

positive net economic returns.5

 Also, as one study notes, it is not always

possible to take into account the potentially large advertising and

promotion expenditures made by private firms, which would reduce the

computed increase in exports attributed to Market Access Program

efforts.6

It should be added that only a few of these studies take into account the

effects of promotional activities on other agricultural exports or on market

shares of competitor countries. Advertising and promotion of U.S.

brand-name and generic products can have considerable spinoff effects

(sometimes called “halo effects”), both positive and negative, for related

products and competitor firms and/or countries. A study of U.S. apple

exports to Singapore and the United Kingdom found that while U.S.

3

See Allison Comeau, Ron C. Mittelhammer, and Thomas I. Wahl, “Assessing the Effectiveness of MPP

Meat Advertising and Promotion in the Japanese Market,” NICPRE 96-10, R.B. 96-20 (Ithaca, NY:

Cornell University, Dec. 1996). In contrast, Shida Rastegari Henneberry and Marco De Brito, “An

Analysis of the Effectiveness of U.S. Non-Price Promotion Programs: The Case of Red Meats in Japan,”

in Promotion in the Marketing Mix: What Works, Where and Why, Proceedings from the NEC-63

Conference, Toronto, Canada (Apr. 28-29, 1994) found evidence that the Market Promotion Program

expenditures increased exports of beef offal to Japan, but there was no evidence of its supporting

increased exports of pork or of other cuts of beef.

4

See Kenneth R. Weiss, Richard D. Green, and Arthur M. Havenner, “Walnuts in Japan: A Case Study of

Generic Promotion under the USDA’s Market Promotion Program,” in Agricultural Commodity

Promotion Policies and Programs in the Global Agri-Food System, Proceedings from the NEC-63

Conference, Cancun, Mexico (May 26-27, 1996).

5

See also “An Analysis of the Effectiveness of U.S. Non-Price Promotion Programs: The Case of Red

Meats in Japan,” and Karen Halliburton and Shida Rastegari Henneberry, “The Effectiveness of U.S.

Nonprice Promotion of Almonds in the Pacific Rim,” Journal of Agricultural and Resource Economics,

Vol. 20, No. 1 (July 1995).

6

“Assessing the Effectiveness of MPP Meat Advertising and Promotion in the Japanese Market.”

Page 30 GAO/NSIAD-99-38 Agricultural Trade
Appendix II 

Review of Market-Level Studies of MAP

government-subsidized marketing and advertising had a positive impact on

the U.S. market share and value of exports to the United Kingdom,

U.S.-funded promotions in Singapore mainly benefited the foreign

competitors in the market. According to that study, which FAS officials cite

as evidence of successful MAP funding, Chilean and French apple

producers would be the main beneficiaries of the MAP promotions in

Singapore, experiencing increases in export shares 3 to 10 times greater

than the U.S. producers.7

 This result shows the importance of taking into

account both direct and indirect effects and concomitant advertising by

other U.S. firms and sectors and by major competitors.8

In summary, the market-level studies that we reviewed revealed mixed

results and do not allow generalization about MAP’s impact on agricultural

exports. Estimations revealed both positive and insignificant effects

associated with MAP promotional spending. In some cases, the

methodology employed results in an upward bias on the estimated effect

of MAP. Also, the effects on other U.S. agricultural markets or on the

agricultural exports of competitor nations are unclear.

7

Timothy Richards, et al., “A Two-Stage Analysis of the Effectiveness of Promotion Programs for U.S.

Apples,” in Agricultural Commodity Promotion Policies and Programs in the Global Agri-Food System,

Proceedings from the NEC-63 Conference, Cancun, Mexico (May 26-27, 1996).

8

The importance of this effect is demonstrated in a study that analyzed the effects of U.S. and

Canadian expenditures in research and advertising and found that the “results suggest that Canadian

producers would be better off giving C$100,000 to the U.S. generic advertising campaign” due to

spinoff effects of U.S. advertising on the demand for Canadian beef in the United States. See Daniel

Sellen, Ellen Goddard, and Stephen Duff, “Returns from Research and Advertising in the North

American Hog and Pork Industry,” in Economic Analysis of Research and Promotion, Proceedings

from the symposium sponsored by Agricultural Research and Development and NEC-63, New Orleans,

LA (Mar. 21-22, 1997).

Page 31 GAO/NSIAD-99-38 Agricultural Trade
Appendix III 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Phillip J. Thomas

Emil E. Friberg, Jr.

Kimberly M. Gianopoulos

Rona H. Mendelsohn

Samantha C. Roberts

Office of the General

Counsel, Washington,

D.C.

Ernie E. Jackson

Office of the Chief

Economist,

Washington, D.C.

Daniel E. Coates

San Francisco Field

Office

Christine M. Broderick

May M. Lee

(711359) Page 32 GAO/NSIAD-99-38 Agricultural Trade
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