Mar 8, 2018

Export Subsidies: Market Access Program

Tad DeHaven Research Analyst

Bipartisan legislation introduced in the House and Senate would double authorized funding for the US Department of Agriculture’s (USDA) Market Access Program (MAP) from $200 million to $400 million annually. Although the legislation remains at the committee level, a new farm bill is on the horizon. The timing suggests that commercial interests and their congressional benefactors are laying the foundation for a sweetened pot of taxpayer money come Farm Bill negotiation time.

The proposed doubling in funding comes as the Trump administration’s budget request once again calls for the program to be eliminated. Calling for a program to be eliminated (easy) and working to have it eliminated (not easy) are different ducks. The administration’s budget appendix merely mentions that MAP is one of several USDA programs that should be eliminated because they serve “no Federal purpose” or are duplicative.

While that’s true, it doesn’t tell us much. So, let’s start with the explanation on the USDA’s Foreign Agricultural Service’s website:

“Through the Market Access Program (MAP), FAS partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities that help build commercial export markets for U.S. agricultural products and commodities.”

Translation: The Market Access Program takes money the government took from taxpayers–including companies that don’t receive government handouts–and gives it to politically-privileged commercial interests to promote their exports.

The USDA website provides tables listing the recipients and the amounts received over the five most recent fiscal years. The names on the list are largely the same from year to year. The 2018 table lists sixty-six recipients, including everything from the California Prune Board ($2.9m) to Sunkist Growers, Inc. ($1.7m) to the Wine Institute ($5.5m).

Sunkist–a “not-for-profit marketing cooperative” owned and operated by western citrus growers–has been around for 125 years. Last year it issued a press release celebrating that it had issued “billion dollar [cooperative] member payments for the third year in a row.” The federal government shouldn’t subsidize businesses of any size but giving a $1.7 million subsidy to a successful billion-dollar commercial operation that’s been around since Grover Cleveland was sworn in as our 24th president is particularly dubious.

It is not an accident that the program’s defenders try to justify it on the basis that it helps “small businesses” and “family farms.” There was a time when a previous incarnation of the program gave taxpayer money directly to companies like McDonald’s. Instead, the bulk of the funds now go to trade associations, which sounds more publicly palatable but still ends up supporting the financial interests of businesses that are hardly of the “mom and pop” variety.

Take, for example, the US Meat Export Federation. This year taxpayers will finance a $13.2 million federal handout to the organization. But the real beneficiaries are the members of the Meat Export Federation, which are listed here. Names like Sysco International Food Groups–a subsidiary of Sysco Corporation, which had $55 billion in revenues last year–should raise eyebrows.

There are, of course, smaller commercial entities that benefit. But regardless of size, the proper role of the government is to be a neutral referee, not a dispenser of financial privilege to select firms. And while proponents of subsidy programs like MAP are quick to tout the alleged benefits, there are substantial economic and social costs that go beyond the price tag that should be taken into consideration, which my colleague, Matthew Mitchell, explains in his booklet The Pathology of Privilege.

I’ll conclude by noting that there are policies the federal government can undertake that would benefit all exporters, cost taxpayers virtually nothing, and provide the economic and social benefits that political privileging inhibits. For example, the government could help facilitate the exchange of goods and services across borders by working with other nations to lower trade barriers. Unfortunately, president Trump has that ship headed in the wrong direction. And while it’s good that his staff included the elimination of MAP in the administration’s budget, a string of tweets defending the proposal is probably not forthcoming.

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