On its face, the industry-wide push for reauthorization of the Market Access Program and Foreign Market Development program—to the tune of about $234 million—in the next farm bill seems like a no-brainer.
For starters, both programs have been funded for nearly a decade now—MAP was actually launched almost 30 years ago—and that seniority matters greatly in a Congress bent on curbing “new” spending.
More importantly, as a letter from a virtual who’s who of ag, fish and forestry trade groups to the leadership of the Senate Committee on Agriculture, Nutrition, and Forestry noted, these two export promotion and market development programs housed within USDA represent a “successful partnership between non-profit U.S. agricultural trade associations, farmer cooperatives, non-profit state-regional trade groups, small businesses and USDA to share the costs of international marketing and promotional activities such as consumer promotions, market research, trade shows, and trade servicing.”
In other words, let’s spin this as a small-business investment plan, rather than a funneling of taxpayer dollars to the biggest commodity traders on the planet.
Now, that’s not to say that exports don’t benefit ultimately producers and growers. They certainly help boost the market prices of raw commodities and direct surplus production toward emerging markets—ie, south Asia and Latin America—that otherwise would glut domestic markets. And yes, MAP and FMD are indeed an example of the kind of public-private partnership that creates the growth needed to sustain the larger economy.
But let’s not pretend that pouring money into developing foreign markets for U.S. agricultural production doesn’t raise some warning flags. As the coalition’s letters noted, “Exports are a vital part of the U.S. economic engine, and agricultural exports continue to be its strongest component.”
Indeed. USDA’s projection for the current fiscal year is for ag exports to exceed $130 billion, with each of those billions, according to department studies, accounting for more than 8,400 jobs. I’m no math wizard, but isn’t that only eight and one-half jobs for every million dollars of export value? And how many of those 8,400 jobs are new jobs that wouldn’t exist if not for export sales?
More importantly, wouldn’t $234 million in funding for some other public-private partnership—say, in education, research, energy development—be equally successful in creating jobs?
Sorry—as a job creator, ag export funding is a non-starter.
Raw goods out, finished ones in
But here’s the more worrisome problem with promoting exports as a centerpiece of our national agricultural policy. If you were to define the economic basis for the centuries of colonial expansion as practiced by the European powers, it would be this: The colonies produce raw commodities—food, feed and fiber crops, timber, minerals, oil, etc.—which are shipped to the mother country for processing. In exchange, the colonies (and in the 20th century, the newly independent countries of Africa, Latin America and Asia) earn the cash needed to import the manufactured goods for which they don’t have the infrastructure to make themselves.
Isn’t that pretty much what’s going on in the United States today?
We boast about the growth in value of our ag exports, which are almost universally in the form of raw, unprocessed commodities such as corn, wheat, soybeans, beef, pork, poultry, while at the same time our manufacturing capability continues to wither away.
Here in Washington state, for example, there is not only a rush to throw more subsidies, tax breaks and giveaways to manufacturers such as Boeing, which then continues to outsource more and more of the actual manufacturing work on its airplane building, but also a plan is underway to subsidize a project that will send thousands of trainloads of coal to travel across the state for direct shipment via cargo ships to China.
All in the name of boosting exports and thus creating jobs.
Isn’t that what Third World countries are forced to do? To sell off their natural resources to a limited number of foreign buyers for whatever the market will bear, so that they can pay for higher value imports of the processed and manufactured goods they need to maintain their economies?
I realize that other countries, such as Brazil, and other competitors, such as the EU countries, spend way more on agricultural export market development than we do. And in the end, $234 million isn’t exactly going to break the U.S. Treasury. Hell, if you were running one of the biggest banks during the 2008-2009 financial crisis, you had a name for $234 million:
The problem with MAP and FMD funding isn’t that the ROI calculation is skewed. It isn’t.
And it’s not that we don’t benefit from at least a stab at righting our balance of trade deficit by selling agricultural commodities to some of the same countries from which we import exponentially more valuable manufactured goods.
The problem is that as we’re rushing to export more of our natural resources and more of our farm productivity, shouldn’t we be providing exponentially greater funding for developing the manufacturing and processing capability that would permit as much as possible of those commodities to leave the country as value-added products?
Perhaps that’s a question Congress ought to consider during its ag export funding debates.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.