Agricultural Export Provisions of the 2008 Farm Bill
Agricultural Export Provisions
of the 2008 Farm Bill
Charles E. Hanrahan
Senior Specialist in Agricultural Policy
Resources, Science and Industry Division
Summary
Agricultural exports, which are forecast by the U.S. Department of Agriculture to
reach $108.5 billion in 2009, are an important source of employment, income, and
purchasing power in the U.S. economy. Programs that deal with U.S. agricultural
exports are a major focus of Title III, the trade title, in the new omnibus farm bill, the
Food, Conservation, and Energy Act of 2008 (P.L. 110-246, H.R. 6124).1 The enacted
farm bill repeals the major U.S. export subsidy program, and reauthorizes and changes
a number of programs that assist with financing U.S. agricultural exports or that help2
develop markets overseas. Changes include modifying export credit guarantee
programs to conform with U.S. commitments in the World Trade Organization (WTO),
making organic products eligible for export market development programs, and
increasing the funds available to address sanitary and phytosanitary barriers to U.S.
specialty crop exports.
Historically, Congress has mandated programs to help U.S. exporters compete with
subsidies provided by other countries, to assist with financing for exports where credit is
a constraint, or to promote U.S. agricultural exports. Some in Congress have criticized
programs that assist with exports as corporate welfare; others suggest that private entities
could and should themselves finance export activities. The 2008 farm bill extends
funding authority for credit guarantees and export market development through FY2012.
1 The conference agreement on the 2008 farm bill was originally approved by the House and the
Senate as H.R. 2419 and vetoed by the President in May 2008. Both chambers overrode the veto,
making the bill law (P.L. 110-234). However, the trade title was inadvertently excluded from the
enrolled bill. To remedy the situation, both chambers re-passed the farm bill conference
agreement (including the trade title) as H.R. 6124. The President vetoed the measure in June 2008
and both chambers again overrode the veto, which made H.R. 6124 law as P.L. 110-246, and
superseded P.L. 110-234.
2 International food aid programs are the other major focus of the farm bill trade title. For a
discussion of farm bill changes in food aid programs, see CRS Report RS22900, International
Food Aid Provisions of the 2008 Farm Bill.
The enacted farm law repeals legislative authority for the major export subsidy program,
but extends authority for a smaller program that subsidizes dairy product exports. Funded
by using the borrowing authority of the Commodity Credit Corporation (CCC), the farm
bill agricultural export programs are administered by the Foreign Agricultural Service
(FAS) of the U.S. Department of Agriculture (USDA).3
CCC Export Credit Guarantees
CCC export credit guarantees assure payments for commercial financing of the sale
of U.S. agricultural exports. If a foreign buyer defaults on the debt financing incurred, the
CCC assumes the debt. In the 2002 farm bill (P.L. 107-171) Congress authorized $5.5
billion (in export value, not cost to the Treasury) for such guarantees, plus an additional
$1 billion to be made available to countries that are emerging markets.
Four CCC export credit guarantee programs were authorized in the 2002 farm bill.
GSM-102 guaranteed short-term (up to 3 years) financing of U.S. farm products; GSM-
103 guaranteed longer-term (3-10 years) financing. The Supplier Credit Guarantee
Program (SCGP) guaranteed very short-term (up to 1 year) financing of exports. The
Facilities Financing Guarantee Program (FFGP) guaranteed financing of goods and
services exported from the United States to improve or establish agriculture-related
facilities in emerging markets.
In 2006, FAS suspended operation of the GSM-103 program. The suspension was
in response to a WTO dispute panel decision in a case brought by Brazil against U.S.
cotton policy. The panel ruled that GSM programs were prohibited export subsidies
because they did not recover their operating costs.4 Also FAS suspended the SCGP in
FY2006, largely because of a high rate of defaulted obligations and evidence of fraud.
In its farm bill proposals, the Administration requested that Congress formally repeal
legislative authorities for GSM-103 and the SCGP. The Administration also requested
that Congress lift the statutory 1% cap on loan origination fees for GSM-102,which the
WTO cited as a subsidy element in the operation of the export credit guarantee programs.5
3 The Commodity Credit Corporation is a wholly owned government corporation created in 1933
to stabilize, support, and protect farm income and prices (federally chartered by the CCC Charter
Act of 1948, P.L. 80-806). The CCC, which has no staff, is essentially a financing institution for
USDA’s farm price and income support commodity programs and agricultural export programs.
It is authorized to buy, sell, lend, make payments and engage in other activities for the purpose
of increasing production, stabilizing prices, assuring adequate supplies, and facilitating the
efficient marketing of agricultural commodities. The export programs funded through CCC are
administered by employees of the Foreign Agricultural Service. The CCC has the authority to
borrow up to $30 billion from the U.S. Treasury to carry out its obligations. Net losses from its
operations subsequently are restored through the congressional appropriations process.
4 For a fuller discussion of the U.S.-Brazil cotton case and its implications for CCC export credit
guarantee programs, see CRS Report RS22187, Brazil’s WTO Case Against the U.S. Cotton
Program: A Brief Overview.
5 The Administration’s farm bill export program proposals are discussed in [http://www.usda.
gov/ documents/07finalfbp.pdf].
The 2008 farm bill repeals authority for the SCGP, the GSM-103 intermediate credit
guarantee, and the 1% cap on loan origination fees for the GSM-102 program. The new
farm bill caps the credit subsidy for the program at $40 million annually.6 The amount
of GSM-102 credit that CCC must make available each year is set at not less than $5.5
billion, but the $40 million credit subsidy cap, according to the manager’s statement
accompanying the bill, is expected to finance $4 billion annually in export credit
gu arant ees. 7
The 2008 farm bill extends authority for the FFGP to FY2012. It also provides that
the Secretary of Agriculture may waive requirements that U.S. goods be used in the
construction of a facility under this program, if such goods are not available or their use
is not practicable. The new law also permits the Secretary to provide a guarantee for this
program for the term of the depreciation schedule for the facility, not to exceed 20 years.
Export Market Development
The 2002 farm bill authorized four programs to promote U.S. agricultural products
in overseas markets, including the Market Access Program (MAP), the Foreign Market
Development Program (FMDP), the Emerging Markets Program (EMP), and the
Technical Assistance for Specialty Crops Program (TASC). Authorization of CCC funds
for the market development programs expired with the 2002 farm bill in 2007. During the
farm bill debate both the Administration and producers of fruits and vegetables advocated
increased funding for export market development programs, targeted to specialty crops
(fruits and vegetables).
Market Access Program. MAP assists primarily value-added products. Its
purpose is to expand exports over the long term by undertaking activities such as
consumer promotions, technical assistance, trade servicing, and market research. MAP
projects are jointly funded by the federal government and industry groups. Trade
organizations, nonprofit industry organizations, and private firms that are not represented
by an industry group submit proposals for marketing activities to the USDA, which
evaluates proposals and selects recipient organizations. The 2008 farm bill extends MAP
through FY2012, makes organic produce eligible for the program, and keeps the funding
level at the FY2007 level — $200 million — for each of the next five years (FY2008-
FY2012).
Foreign Market Development Program. The 2002 farm bill reauthorized CCC
funding for FMDP through FY2007 at an annual level of $34.5 million. FMDP, which
resembles MAP in most major respects, mainly promotes generic or bulk commodity
exports. The 2008 farm bill extends FMDP through FY2012 without change in the
funding authorization.
Emerging Markets Program. EMP provides funding for technical assistance
activities intended to promote exports of U.S. agricultural commodities and products to
emerging markets in all geographic regions, consistent with U.S. foreign policy. An
6 The credit subsidy is the available budget authority for the cost of the program.
7 The manager’s statement was viewed at [http://agriculture.house.gov/inside/Legislation/110/FB/
Conf/statement_of_managers.pdf].
emerging market is defined in the authorizing legislation (the 2002 farm bill) as any
country that is taking steps toward a market-oriented economy through food, agricultural,
or rural business sectors of the economy of the country. Additionally, an emerging market
country must have the potential to provide a viable and significant market for U.S.
agricultural commodities or products. The 2002 farm bill authorized funding at $10
million annually through FY2007. The 2008 farm bill reauthorizes the Emerging Markets
Program through FY2012 without change.
Technical Assistance for Specialty Crops. TASC aims to assist U.S.
specialty crop exports by providing funds for projects that address sanitary, phytosanitary,
and technical barriers that prohibit or threaten U.S. speciality crop exporters. The 2002
farm bill defined specialty crops as all cultivated plants, and the products thereof,
produced in the United States, except wheat, feed grains, oilseeds, cotton, rice, peanuts,
sugar, and tobacco. The types of activities covered include seminars and workshops,
study tours, field surveys, pest and disease research, and pre-clearance programs. The
2002 farm bill authorized $2 million annually of CCC funds each fiscal year through
FY2007 for the TASC program. The 2008 farm bill extends TASC through FY2012 and
increases funding to $4 million in FY2008; $7 million in FY2009; $8 million in FY2010;
and $9 million in each of FY20011 and FY2012.
Export Subsidies
The 2002 farm bill authorized direct export subsidies of agricultural products
through the Export Enhancement Program (EEP) and the Dairy Export Incentive Program
(DEIP). Both programs subsidized agricultural exports when U.S. domestic prices were
higher than world or international prices. EEP, which mainly subsidized exports of wheat
and wheat flour (around 80% of EEP subsidies), has been little used as U.S. and world
prices have moved closer together. The last year of significant EEP subsidies was 1995;
there were no EEP subsidies during the five years of the 2002 farm bill. DEIP provided
subsidies for dairy product exports; no DEIP subsidies have been provided since 2005.
Agricultural export subsidies are a major issue in the Doha Round of multilateral trade
negotiations, where preliminary agreement has been reached to eliminate them by 2013.
The 2008 farm bill repeals legislative authority for EEP, but extends legislative authority
for DEIP through December 31, 2012. (The DEIP authorization is in Title I, the
Commodities title of the 2008 farm bill.)
Other Provisions
Global Crop Diversity Trust. The 2008 farm bill requires the U.S. Agency for
International Development (USAID) to make a contribution on behalf of the United States
to the Global Crop Diversity Trust of up to $60 million over 5 years. U.S. contributions
to the trust may not exceed one fourth of the total of funds contributed to the trust from
all sources. The Global Diversity Trust is the funding mechanism for the International
Treaty on Plant Genetic Resources for Food and Agriculture, which is an international
agreement for the conservation, exploration, collection, characterization, evaluation and
documentation of plant genetic resources for food and agriculture. The trust, administered
by the United Nations Food and Agriculture Organization, (FAO), assists in funding the
operation of gene banks held by the countries that are party to the treaty.8
Consultative Group to Eliminate the Use of Child Labor and Forced
Labor in Imported Agricultural Products. The 2008 farm bill includes a provision
that requires the Secretary of Agriculture, in cooperation with the Secretary of Labor, to
develop standards that importers of agricultural products into the United States could
choose to use to certify that those products were not produced with the use of abusive
forms of child labor. The consultative group would develop recommendations on
practices that would enable companies to monitor and verify whether the food products
they import are made with the use of child or forced labor.
8 The website of the trust is at [http://www.croptrust.org/main/].