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Study: Ag market development adds $9.6b in export value

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USDA export market development programs highly effective at generating extremely high return on investment.

Programs to help U.S. farmers build markets overseas boosted agricultural exports by an average of $9.6 billion annually from 1977 to 2019, an annual lift of 13.7% in export revenues and returning $24.5 for every dollar invested.

Those are the key conclusions from a study commissioned by the U.S. Grains Council on behalf of members of the U.S. Agricultural Export Development Council (USAEDC) to evaluate USDA’s Market Access Program (MAP) and Foreign Market Development (FMD) program.

“We have known for quite some time that the export programs in which we participate are highly effective at boosting agricultural exports and a huge benefit to our nation’s economy and the importing nations industries and consumers,” noted Jim Sutter, Board Chair of the USAEDC, and CEO of the U.S. Soybean Export Council.

Developed by IHS Markit in cooperation with Dr. Gary Williams and Dr. Oral Capps at Texas A&M University, both experts on evaluating the economic performance of trade promotion programs, the study updated a 2016 edition also evaluating MAP and FMD, which are currently authorized by the 2018 Farm Bill. The new study also took a first look at the impact of investments through the Agricultural Trade Promotion (ATP) program.

The study’s results supported the conclusions of prior studies of USDA export market development programs, finding they are “highly effective at generating an extremely high return on investment and account for a high percentage of the level of U.S. agricultural exports.”

It reported that market development programs effectively leveraged cooperator and industry contributions, averaging between 70-77% of expenditures from 2013 to 2019, valued at an estimated annual average of $567 million.

Using econometric models to examine the impact of market development programs on bulk/intermediate and high-value commodity exports - including seafood, forest products and ethanol for the first time - the research generated results that were then used to assess the impact on the general economy.

Though not strictly comparable, reported results were similar and consistent to prior studies conducted since 2006 that suggested the program investments are highly effective.

The study found that from 2002 to 2019, market development investment:

  • Increased farm cash receipts by $12.2 billion (3.4%).
  • Benefited the overall economy with an additional $45 billion annually in economic output and $22.3 billion annually in gross domestic product.
  • Created an estimated 225,800 jobs across the entire economy.

The ATP program offered $300 million to cooperating organizations, to which they added $90 million in contributions of cash and goods and services, primarily from farmer organizations. Between 2019 and 2026, these cumulative investments are projected to generate:

  • $11.1 billion in additional agricultural export revenue, about $1.4 billion annually.
  • $6.44 billion in farm cash receipts, about $810 million annually.
  • $11.2 billion added to the U.S. GDP, about $1.4 billion annually.

“The results of this work support the conclusions of previous studies showing USDA export market development programs, into which both taxpayers and the ag industry invest, are highly effective at generating an extremely high return on investment and account for a high percentage of the level of U.S. agricultural exports despite the different analytical methods used, different time periods of the studies, and different data sets used in the various studies over the years,” Williams said.

U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom said the study quantifies the effectiveness of the programs and confirms the positive impact the investments have on the bottom line of U.S. farmers and ranchers and everyone in the U.S. supply chain.

“The remarkable rate of growth for U.S. red meat exports would not have been possible without critical investments available through the USDA Market Access Program and Foreign Market Development Program. More recently, the Agricultural Trade Promotion Program also helped offset the impact of retaliatory measures imposed by some trading partners,” said Halstrom. “USMEF thanks USAEDC and the U.S. Grains Council for organizing the study and for making this information available to policy makers and key stakeholders.”

The new study is available in full here.

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