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. (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, 2 state agencies, and 4 agricultural cooperatives. (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 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. 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. 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 this assistance for brand-name promotions regardless of size. 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. 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.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. 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. Our analysis of FAS data shows that these first-time recipients included 2 cooperatives, 125 small businesses, and 18 large companies. 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, 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. 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. 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 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. 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.” 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 1998 to limit each company to no more than 5 years of MAP funding for brand-name promotions per country.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 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. 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.