Let’s keep watch on export promotions
April 5, 2011
Without forecasting any progress by the Congress in facing up to the need to reduce federal spending it seems likely that the U.S. Department of Agriculture’s budget is going to be the focus of debating about government outlays. The commission named by President Obama to consider tax and spending matters singled out the U.S.D.A. for a $3 billion cut coincident with its recommended decreases in Social Security and Medicare and Medicaid and revenue increases that would include changes in the deductibility of interest paid on home mortgages. As might be expected of something bordering on the sacrosanct, the mortgage interest proposal prompted protests. The same might be said of the commission’s suggestion that Defense spending be carefully examined at the same time changes are considered in retirement and health benefits that in the past avoided even hints of changes. Once also considered nearly untouchable, farm program spending by the federal government suddenly looms as an easy area where spending cuts might be made. This possibility is of huge importance to grain-based foods.
Places where the U.S.D.A. budget might be subject to paring cover a wide range. Direct payments to farmers participating in programs that affect the level of wheat and corn production seem the most logical target of budget cutters because of the vast sums. Alas, these broad programs, which not just relate to production but also to farmland values, may escape any slashing. Instead, it is probable that the U.S.D.A. cuts, if chosen as an effective but less politically offensive way of reducing overall spending, might center on programs that have relevance to the well-being not just of agriculture but of grain-based foods.
What is at stake came to the fore in a commentary from Washington listing government actions of national importance. A recent issue, headed “Pigs at the trough,” called attention to what it said was “an underplayed Department of Agriculture release” revealing “$250 million worth of payments to more than 100 farm lobbying groups to finance overseas promotion of their products.” To emphasize its disdain for such spending, the commentary alleged that “much of the taxpayer funds are used for foreign television and newspaper advertising.”
It is hard to imagine an attack on government spending that is less justified than this. By promoting U.S. wheat and other agricultural products to foreign buyers, these programs — all of which require funding participation up to 50 per cent of the federal outlays — deserve credit for ebullient world demand. Their success has significantly reduced the cost of domestic supports and has managed to earn trade surpluses, which benefit the entire U.S. economy. If there’s success in foreign trade for America this year, it is booming grain exports. By familiarizing foreign buyers with the qualities of what American farmers produce, programs with names like Foreign Market Development and Market Access have educated foreign buyers on the quality and advantages of dealing with the United States as a reliable supplier.
Flour millers and bakers, even at times when export surges prompt upturns in ingredient costs, have learned over the years that successful export programs also have benefits. It is export demand that helps to assure the large crops that provide flexibility to domestic users in the origin and quality of raw materials. These industries recognize that U.S. Wheat Associates and the U.S. Grains Council conduct overseas programs that have domestic benefits. Nineteen state wheat commissions, financed by levies paid by wheat farmers, provide funding for these promotions.
Sure, it is easy to make fun of government funding of such activities. But carried to the extreme, reducing these efforts would create a vacuum in global marketing that America can ill afford. No one doubts the need to curtail spending, but doing that well, particularly in the U.S. Department of Agriculture, requires careful watch by an industry like grain-based foods that has a stake in many programs that might not be readily apparent.