THE U.S. Department of Agriculture provides about $250 million annually for five market development programs that are intended to help agricultural producers increase their exports by building, maintaining and expanding overseas markets.
The Government Accountability Office (GAO) recently released a report recognizing that USDA's Foreign Agricultural Service (FAS) monitors its market development programs as required but recommending that the agency could improve its analysis of their impact.
The two largest of USDA's five market development programs — the Market Access Program (MAP) and the Foreign Market Development Program (FMD) — received authorizations of $200 million and $34.5 million, respectively, of USDA's annual market development program funding in fiscal 2012.
For many years, MAP and FMD have provided continuing assistance to an established pool of agricultural trade associations primarily to promote generic commodities overseas, GAO explained.
FAS has developed a performance monitoring framework in which FMD and MAP participants are expected to develop measurable objectives — that is, constraints and opportunities — linked to performance measures that allow them to annually compare their results with established baselines and goals.
"Participants generally followed this framework successfully; however, many of the participants' annual country progress reports that we reviewed did not identify, as FAS guidelines require, the methodologies used to assess results for each performance measure," GAO said in its report. "These gaps limit FAS's ability to determine the reliability of program results reported by participants and to accurately assess participants' progress and success in achieving program objectives."
The U.S. Grains Council (USGC) received $9.6 million in MAP funds and $4.7 million in FMD funds this fiscal year.
Erick Erickson, USGC director of global strategies, agreed with the GAO recommendations and said the report offers some credible advice to FAS and USGC in an attempt to continually evaluate the effectiveness of programs administered.
"I think one of the toughest things about export market development is documenting the benefits because we aren't always the ones buying or selling but, rather, setting up an environment for demand to be there," Erickson said. "We're always arms-length removed from concrete economic results."
FAS requires that program participants conduct evaluations of their program activities when appropriate or required by FAS. Current MAP regulations define a program evaluation as a review of the participant's entire program or an appropriate portion of the program, as agreed to by the participant and FAS.
These reviews can range from external, third-party evaluations, such as cost/benefit analyses, to participants' internal re-evaluations of their approaches to market development activities.
According to GAO, FAS officials reported that they received a combined total of 71 third-party program evaluations from 43 participants in 2010 and 2011.
Additionally, eight of 10 U.S. agricultural export promotion groups surveyed by an industry contractor reported that they conducted country, regional or global evaluations during the last three years.
"Because the program evaluations are conducted on a case-by-case basis and may cover only a portion of a participant's market development activities (e.g., market development efforts in one of 20 countries where a participant conducts its activities), it is difficult to determine what portion of all market development efforts are assessed through these evaluations," GAO said.
Erickson concurred with this observation, noting that because USGC has projects and offices around the world, it is difficult to continually evaluate each. He added that there is interest in conducting third-party audits, but that also can be more expensive and time consuming.
One FAS contractor who had previously conducted third-party evaluations for MAP and FMD participants told GAO that factors such as the size of the participant and the value the participant places on monitoring and evaluation affected the frequency, depth and usefulness of evaluations his firm had conducted.
Erickson said FAS supports doing outside audits but noted that it is a matter of taking time and money away from other projects to beef up performance measure auditing.
"We're actually quite anxious to continue to enhance the quality of those performance measure reports, and the impetus is on us to try to refine that process," he said.
GAO also recommended that USDA ensure that any economic models used in future cost/benefit analyses of the export market programs include industry-specific variables and sensitivity analyses of key assumptions.
USDA has not determined yet what economic modeling will be used for an updated analysis that's expected to be conducted in 2014.