Agricultural Export and Food Aid Programs

Publication Date: April 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: International relations; Trade

Type:

Abstract:

The U.S. Department of Agriculture (USDA) administers programs to promote agricultural exports and to provide food aid, all authorized in the 2002 farm bill, the Farm Security and Rural Investment Act (FSRIA, P.L. 107-171), or in permanent legislation. These programs include direct export subsidies, export market development, export credit guarantees, and foreign food aid. Legislative authority for most of these activities expires with the 2002 farm bill in 2007, and the 110th Congress has begun deliberations on a new farm bill. The Administration also has made proposals for significant change in the export and food aid programs. In addition,

USDA's international programs could be affected by the outcome of agricultural trade negotiations in the World Trade Organization (WTO) or WTO trade litigation. USDA's direct export subsidies include the Export Enhancement Program (EEP) and the Dairy Export Incentive Program (DEIP). EEP spending has been negligible since 1996, and DEIP spending has been declining since 2002. Export subsidies, but not other U.S. export and food aid programs, are subject to reduction commitments agreed to in multilateral trade negotiations. Export market development programs include the Market Access Program (MAP) and the Foreign Market Development or "Cooperator" Program (FMDP). Although criticized by some as corporate welfare, these programs are considered to be non-trade-distorting by the World Trade Organization (WTO) and thus are exempt from multilateral spending constraints. The FSRIA authorizes MAP spending of $200 million annually in FY2006 and FY2007 and sets FMDP spending at $34.5 million annually through FY2007. The FSRIA authorizes export credit guarantees by USDA's Commodity Credit Corporation (CCC) of up to $5.5 billion worth of farm exports annually plus an additional $1 billion for emerging markets through 2007. Actual levels guaranteed depend on economic conditions and the demand for financing by eligible countries.

The 2002 farm bill also authorizes, through FY2007, foreign food aid programs including P.L. 480 Food for Peace, Food for Progress, the Emerson Trust (a reserve of commodities and cash), and a new international school feeding program. Section 416(b), permanently authorized in the Agricultural Act of 1949, also can provide surplus commodities for donation overseas. Global food emergencies are putting pressure on the ability of food aid providers, including the United States, to meet estimated need. Increased allocations of U.S. food aid for emergency relief has reduced the volume of food aid available for development projects.

The 109th Congress adjourned without enacting an agriculture appropriations measure that would have included funding for USDA's international programs. Provisions of the continuing resolution (P.L. 110-5) limit international programs whose funding is discretionary (P.L. 480, Food for Education, the Foreign Agricultural Service) to FY2006 spending levels. Spending on export programs (and some food aid) is mandatory and unaffected by the continuing resolution.

This report will be updated periodically.