Special allocation for USMEF came out of Korea trade agreement passage

Nov 25, 2011
by WLJ

Agriculture Secretary Tom Vilsack, who announced this year’s allocations to 70 market promotion groups in a call from Vietnam earlier this month, did not highlight the special grant to the U.S. Meat Export Federation (USMEF), but it was included in $21.1 million in funding announced for the Denverbased group.

The total amount of grants Vilsack announced was $213 million. USDA makes the grants in two categories.

Foreign market development, or FMD, funds are used by groups for long-term promotion of U.S. commodities overseas.

Market access program, or MAP, funds are used by U.S. producers, exporters, private companies and trade organizations to finance overseas marketing and promotional activities such as trade shows, market research, consumer promotions, technical assistance, trade servicing and educational seminars.

Many of the groups, including USMEF, get both types of funds. USMEF got a total of $19.7 million in MAP funds, including the $4 million for Korean beef, and $1.4 million in FMD funds.

Max Baucus, D-MT, who announced in May that he had convinced the Obama administration to make a commitment to spend $10 million over five years to promote beef in Korea in exchange for his willingness to move forward with the Korea free trade agreement, told DTN in an email, “Consumer education is critical to our efforts to knock down unscientific trade barriers, because the more folks know about quality American beef, the more they want it. And when demand for American products goes up around the world, that means more jobs here at home.”

Korea banned U.S. beef after the discovery of bovine spongiform encephalopathy in the U.S. in 2003, but it is now accepting some beef products and has agreed to further discussions on beef in the context of the completion of the free trade agreement.

Suzanne Heinen, the acting administrator of the Foreign Agricultural Service (FAS), signed off on the special allocation for USMEF on Oct. 24, according to a decision memorandum obtained by DTN.

Office of Trade Programs (OTP) Deputy Administrator Christian Foster wrote Heinen that OTP was recommending approval of $4 million for the launch of US- MEF’s five-year, $10 million initiative to regain and expand U.S. beef markets in Korea.

Regarding USMEF’s proposal, OTP concluded, “It has the management capability to successfully complete the initiative,” the memo said. The initiative will include promotion of science-based decision making, the adoption of international standards to facilitate trade, and efforts to inform consumers of the safety and quality of U.S. beef, the memo added.

But the memo also included charts showing that the allocation for farm promotion funds for products such as soybeans, feed grains and wheat went down by substantial amounts. There did not appear to be a direct trade-off among products because some other products, such as distilled spirits and almonds, also received substantial increases while many products were cut.

Overall funding for the groups went down from $253.1 million in fiscal year 2011 to $241.3 million in fiscal year 2012.

According to the memo, total funding went down:

- 4.09 percent for American Soybean Association; - 12.69 percent for the U.S.

Grains Council; - 15.78 percent for the USA Rice Federation; - 7.47 percent for U.S.

Wheat Associates.

Without the special Korea grant, USMEF’s allocation would have gone down 3.63 percent.

Combined funding for U.S.

Wheat Associates went down from $12.7 million in fiscal year 2011 to $11.8 million in 2012.

“Our ability to carry out planned program work overseas is hurt by this cut,” said Alan Tracy, president of U.S. Wheat Associates.

But he added, “We hold no grudge against MEF; other than the special Korea promotion, which is only 2 percent of the MAP budget, they have to compete for their allocation just like we do.”

Tracy said U.S. Wheat Associates will be asking its state members— the state wheat commissions—to help fund this shortfall.

“We will probably have to cut some planned expenditures,” he said. “We did get a small increase in our FMD allocation, which helps.”

An FAS official said some FAS officers had questioned whether so much money should be diverted to the marketing of one product in one country. But an official from a country that competes with the U.S. in selling beef in Korea said that the decision was understandable in light of the market loss and the need to regain the attention of the Korean consumer.

Baucus was not shy about his sense of accomplishment when he announced in May that the Obama administration had agreed to the allocation.

“The Korea trade deal will promote American jobs, but it didn’t pass the smell test when it comes to access for Montana beef,” Baucus said. “I didn’t let up until I got an agreement that works for Montana ranchers, and now we can move forward on the Korea trade deal with a renewed focus on opening Korea for Montana ranchers and additional resources to support that effort.”

USMEF did not return an email seeking comment on its exact plans.

A consultant on farm product marketing noted that Korean President Lee Myung Bak has been having a hard time getting his parliament to approve the agreement and said he wondered how the USMEF grant would proceed if approval of the agreement is delayed. — Jerry Hagstrom, DTN