,. _ . -. 74Q5f -g REPORT TO THE CONGRESS ’ Balance-Of-Payments Benefits khieved’ky The - Department Of Agriculture Through An Increased Agricultural Barter Program B- 163536 BY THE COMPTROLLER GENERAL OF THE UNITED STATES COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON, D.C. 20548 B-163536 To the President of the Senate and the c Speaker of the House of Representatives This is our report on the balance-of-payments benefits J-q.CL* /I achieved by the Department of Agriculture through an increased Jo agricultural barter program. Our review was made pursuant to the Budget and Account- ing Act, 1921 (31 U,S.C, 53), and the Accounting and Auditing Act of 1950 (31 u.s.c. 67). Copies of this report are being sent to the Director, Office of Management and Budget, and to the Secretary of Agriculture. Comptroller General of the United States I I I I I I I I COMPTROLLERGENERAL'S I REPORTTO THE CONGRESS BALANCE-OF-PAYMENTS BENEFITSACHIEVED BY I THE DEPARTMENTOF AGRICULTURE THROUGH AN I I INCREASED AGRICULTURAL BARTER PROGRAM I B-163536 I I I I I DIGEST ------ I I I I WHYTHE REVIEW WASMADE I I I The barter program, administered by the Department of Agriculture under I the Commodity Credit Corporation Charter Act and the Agricultural Trade I I Development and Assistance Act and other statutes, has varied purposes I including the increase of exports of American agricultural commodities I and the reduction of the adverse impact of foreign procurement on the I I balance of payments. I I I Under the program, agricultural commodities are used in place of dol- lars to acquire goods and services needed in U.S. overseas operations. Dollars that would be spent abroad for this purpose are kept in the United States. I I During a prior review of this program, the General Accounting Office (GAO) identified nearly $700 million worth of Government expenditures abroad as qualifying for payment from barter transactions annually com- pared with $260 million worth actually bartered. GAO believed that a relaxation of existing barter constraints would increase American agri- I cultural exports and thereby benefit our balance-of-payments position. I I I From that review, GAO concluded that the Department should adopt a pol- I icy of letting market conditions determine the size of the barter pro- I gram rather than attempt to hold the size below a theoretical or ad- I I ministrative limit, The thrust of GAO's report was that the Department I should accept a higher percentage of bids even if that meant some in- I I crease in the barter premiums paid. The purpose of this review was to I determine whether th~,.~~~i,~~~~~~~ti~.~~ res~.i~.t-i~,s--,had.~bee,r! relaxed so .-".".".W.-Iu.".II.~.~~~, I I ampF%?-z'Tncrease ",J__d%>e,l*I*c%-- ..u*T- - .in+ag.ricuLtural exports through the barter I pro r-3.m. GAO's examination was limited to contracts awardedunder AID I I an --zF DOD funding arrangements. (See p. 22.) I I I I FINDINGS AND CONCLUSIONS I I I The Department has taken certain actions to increase agricultural ex- I ports through the barter program thereby benefiting our balance-of- I I payments position. These actions include increasing the size of the I barter program by increasing the barter premium that the Department is I I I I Tear Sheet I I I I E i I I I I willing to pay, including additional free market stocks to the list of ; commodities eligible for barter, and revising the destination list to I which the commodities may be exported. These actions have resulted in I an increased barter program. I I During fiscal year 1970, barter contracts awarded under funding arrange-i ments amounted to $4'29 million, compared with $181 million for fiscal I year 1969. The contracts signed during fiscal year 1970 are the high- / est amount for any period in the history of the program. (See p. 20.) , I I I RECOMMENDATIONS OR SUGGESTIONS I I The actions taken by the Department, in GAO's opinion, are satisfactory i and eliminate the need for additional actions or studies at this time, I AGENCYACTIONSAND UNRESOLVED ISSUES I I Department officials agreed, in general, with the contents of this re- ; port and had no major comments or suggestions. (See app. V, p. 31.) , MATTERSFOR CONSIDERATION BY THE CONGRESS GAO believes that this report has congressional significance because i of the size of the barter export accomplishments achieved over the past ; year and a half. I I I Contents Page DIGEST 1 CHAPTER 1 INTRODUCTION 3 2 NATUREAND MECMICS OF THE BARTERPROGRAM 4 3 DYNAMICSAFFECTING THE OVERALL LEVEL OF THE BARTERPROGRAM 7 Competitive position of U.S. contractors as a result of the barter program 10 Regulation of the barter program level through premium payments allowed 13 4 AGENCYACTIONS TAKEN SINCE ISSUANCEOF PRIOR REPORT 15 Increasing the size of the program by increasing the barter premium 17 Adding free market stocks to list of eligible barter commodities 18 Revising the destination restriction list to which commodities may be ex- ported 19 Effects of the actions taken 20 Conclusion 20 Comments by USDA 21 5 SCOPEOF REVIEW 22 APPENDIX I Barter program contracts negotiated by De- partment of Agriculture Fiscal years 1967 through 1970 25 II Solicitations for DOD and AID funding ar- rangements, bids received, contracts awarded, and bids rejected, fiscal years 1968 through 1970 26 APPENDIX Page III Dollar value of agricultural commodities exported under the barter program during fiscal years 1967 through 1970 29 IV Summarization of the Department of Agri- culture's system which is to minimize the likelihood that barter transactions dis- place commercial sales 30 V Letter dated December 14, 1970, from the Acting General Sales Manager, Export Marketing Service, Department of Agricul- ture, to the Director, International Divi- sion, General Accounting Office. 31 VI Principal officials having responsibility for matters discussed in this report 32 ABBREVIATIONS AID Agency for International Development ccc Commodity Credit Corporation DOD Department of Defense GAO General Accounting Office IGA International Grains Arrangement USDA United States Department of Agriculture COMPTR-OLLER GENERAL'S REPORTTO THE CONGRESS BALANCE-OF-PAYMENTS BENEFITS ACHIEVED BY THE DEPARTMENTOF AGRICULTURE THROUGH AN INCREASED AGRICULTURAL BARTER PROGRAM B-l 63536 DIGEST ------ WHYTHE REVIEW WASMADE The barter program, administered by the Department of Agriculture under the Commodity Credit Corporation Charter Act and the Agricultural Trade Development and Assistance Act and other statutes, has varied purposes including the increase of exports of American agricultural commodities and the reduction of the adverse impact of foreign procurement on the balance of payments. Under the program, agricultural commodities are used in place of do1- lars to acquire goods and services needed in U.S. overseas operations. Dollars that would be spent abroad for this purpose are kept in the United States. During a prior review of this program, the General Accounting Office (GAO) identified nearly $700 million worth of Government expenditures abroad as qualifying for payment from barter transactions annually com- pared with $260 million worth actually bartered. GAObelieved that a relaxation of existing barter constraints would increase American agri- cultural exports and thereby benefit our balance-of-payments position. From that review, GAO concluded that the Department should adopt a pol- icy of letting market conditions determine the size of the barter pro- gram rather than attempt to hold the size below a theoretical or ad- ministrative limit. The thrust of GAO's report was that the Department should accept a higher percentage of bids even if that meant some in- crease in the barter premiums paid. The purpose of this review was to determine whether the administrative restrictions had been relaxed so as to permit an increase in agricultural exports through the barter program. GAO's examination was limited to contracts awarded under AID and DODfunding arrangements. (See p. 22.) FINDINGS AND CONCLUSIONS The Department has taken certain actions to increase agricultural ex- ports through the barter program thereby benefiting our balance-of- payments position. Thes-e actions include increasing the size of the barter program by increasing the barter premium that the Department is 1 willing to pay, including additional free market stocks to the list of commodities eligible for barter, and revising the destination list to which the commodities may be exported. These actions have resulted in an increased barter program. During fiscal year 1970, barter contracts awarded under funding arrange- ments amounted to $429 million, compared with $181 million for fiscal year 1969. The contracts signed during fiscal year 1970 are the high- est amount for any period in the history of the program. (See pa 20.) RECOhWENDATIONS OR SUGGESTIONS The actions taken by the Department, in GAO's opinion, are satisfactory and eliminate the need for additional actions or studies at this time. AGENCYACTIONSAND UNRESOLVED ISSUES Department officials agreed, in general, with the contents of this re- port and had no major comments or suggestions. (See app. V, pa 31.) MATTERSFOR CONSIDERATION BY THE CONGRESS GAO believes that this report has congressional significance because of the size of the barter export accomplishments achieved over the past year and a half. 2 CHAPTER1 INTRODUCTION The General Accounting Office has reviewed the proce- dures and policies being followed by the Department of Agri- culture in managing its program for bartering agricultural commodities abroad. Our purpose was to learn whether revisions had been made in the management of the program since issuance of the GAO report on management of the program entitled "Opportu- nity to Improve United States Balance of Payments Through An Increased Agricultural Barter Program" (B-163536, May 1968). The 1968 report discussed operations of the program through June 1967 and concluded that the program was being operated at a level well under its potential because of re- strictive bid evaluation procedures being followed by the Department of Agriculture. It recommended a study to ex- plore the best ways and means of maximizing benefits from the program and made some specific suggestions which, GAO believed, the Cabinet Committee on Balance of Payments should take into account. The scope of review is shown on page 22. Principal officials having responsibility for the ad- ministration of the matters discussed in this report are listed in Appendix V. CHAPTEK-2 NATUREAND MECHANICS OF THE BARTERPROGRAM -- The barter program is carried out under the authority contained in the Commodity Credit Corporation (CCC> Charter Act and the Agricultural Trade Development and Assistance Act of 1954, as amended. Major goals of the program are to --increase exports of U.S. agricultural commodities, --realize balance-of-payments advantages, and --help in achieving international policy goals. Between 1955 and 1962, the barter program was primarily used as a means of paying for foreign raw materials needed in strategic stockpiles. It was a way of paying for these materials with surplus agricultural products rather than dollars. Today, however, few transactiotis involving stra- tegic materials take place. Starting in 1963, the program took a new turn. Since that time, the idea was to use proceeds from bartered agri- cultural commodities to help pay overseas costs of the U.S. military establishment and to finance commodities under the U.S. foreign aid program. Appendix I presents details on contracts negotiated, by type, from fiscal year 1967 through fiscal year 1970. Barter transactions are carried out through contracts between CCC and private U.S. companies. Under the terms of the contracts, CCC either makes agricultural commodities available to the contractors for export or compensates the contractors for the value of the commodities exported from private stocks. The contractors in turn are required to either (1) use proceeds from the sales to buy materials for delivery to the Government agencies or ('2) provide funds directly to the Government agencies for their use in making the procurements abroad. These agencies then pay CCC for the agricultural commodities, and dollars that would other- wise be spent abroad are kept in the United States. Most barter transactions provide funds directly to Gov- ernment agencies for their use in making offshore procure- ments. As shown in our earlier report, well over half the barter contracts in fiscal years 1967 were of this type. This pattern continued in fiscal years 1968 through 1970. During that period, about 90 percent of the barter transac- tions were of the type which provided funds directly to the government agency to be used, in lieu of dollars, for off- shore procurements. For the most part, these offshore procurements are made by the Department of Defense (DOD). The Agency for Interna- tional Development (AID) also participates. The following table illustrates the extent to which each of these agencies have participated in the barter-funding-type arrangements. Total -- (millions) Fiscal year 1968 $37.6 $149.5 $187.1 0 " 1969 17.9 163.9 181.8 11 " 1970 - 439.3 439.3 A barter-funding transaction starts, for example, when a DOD installation abroad advises the Department of Agricul- ture that it plans to acquire abroad supplies and services of a specified dollar amount over a designated period, such as a fiscal year. DOD is required to assure USDA that dol- lars will be expended abroad in the absence of barter funds. After advising the overseas installation that the planned procurements are of a type susceptible to barter- funding arrangements, USDA publicly invites offers of the lowest barter cost (premium) for which a U.S. firm will agree to export agricultural commodities and to make an equivalent amount of funds available to the overseas installation. 5 After evaluating bids, USDA then awards contracts on the basis of the lowest proposed barter premium. As pre- viously mentioned, USDA agrees to either provide the neces- sary agricultural commodities from surplus stocks or relm- burse the contractor if the commodities are acquired from private stocks. USDA agrees also to pay the barter contrac- tor the premium specified in its bid. The premium is stated in terms of a percentage of the funds provided by the barter contractor. One restriction placed upon barter transactions is stated in section 303 of Public Law 85-931 (U.S.C. 1962) which directs the Secretary of Agriculture to take reason- able precautions to safeguard usual marketings (i.e., usual levels of commercial sales) of the United States and to en- sure that barters or exchanges do not unduly disrupt world prices for agricultural commodities or replace cash sales for dollars. It probably is not possible to establish any system which will guarantee absolutely that barter exports will not displace any commercial exports. This was a conclusion of the Cabinet Committee on Balance of Payments after a 1964 study of barter activities and the conclusion holds true to- day. It is possible, however, to take measures which effec- tively minimize the likelihood that barter transactions dis- place commercial sales and the Department of Agriculture has established a rather elaborate system for so doing. The sys- tem is summarized in more detail in Appendix IV. Considering the requirement of the law and the system established by USDA, there can be little doubt that barter sales are largely additional to other commercial sales of U.S. agricultural commodities. The benefits to be derived from the additional commer- cial sales, however, are not without certain drawbacks. Some of the benefits and drawbacks are discussed in greater detail in a subsequent section of this report. DYNAMICSAFFECTING THE QVERALL LEVEL OF THE BARTERPROGRAM Much confusion about the barter program arises because the term "barter" does not accurately describe its nature. The term implies that agricultural commodities are swapped for goods and services. Actually most of the commodities are sold abroad and sales proceeds are remitted to the U.S. Government for use in reducing dollar expenditures abroad. The only real difference between a barter transaction and an outright commercial sale is that the barter "contrac- tors are allowed discounts (premium payments) averaging be- tween 2 and 3 percent to make it worth their while to enter into the transactions. The barter contractors are private U.S. firms which deal directly with foreign buyers. They cm, if necessary, pass on part or all of the discounts to the foreign buyers and capture sales that they otherwise might not have been able to make. The advantages of barter transactions are obvious and may be summarized as follows: --To the extent that a barter sale does not displace sales that otherwise would be made2 American exports of agricultural commodities are increased. --The increase in agricultural exports helps the inter- national balance-of-payments position of the United States. The proceeds from barter exports reduce dol- lar expenditures of-the Department of Defense and the Agency for International Development abroad. --U.S. balance-of-payments advantages are achieved at less cost than other Government programs. The addi- tional premium costs associated with barter transac- tions are a fraction of the premium costs associated with "Buy America" programs. --Overall, the United States achieves budgetary savings when surplus agricultural commodities are exported 7 under the barter program. The Department of Agricul- ture makes the commodities available to barter con- tractors who sell them abroad and remit the proceeds to U.S. Government agencies, such as the Department of Defense and the Agency for International Develop- ment. These agencies pay their expenses abroad with the sales proceeds and pay the Department of Agricul- ture with an equivalent amount of dollars. Thus, ap- propriated funds which would have been paid to sources outside the Government are transferred from one Government agency to another and no overall bud- getary cost is incurred. (As noted below, the Depart- ment of Agriculture does have to absorb an additional cost in the form * of a barter premium.) --The barter program helps expand agricultural markets on a selective basis. It can be an effective device for increasing American exports to countries which historically have bought little or no American agri- cultural commodities on commercial terms. It can act as a transitional device for shifting from foreign currency programs and long-term dollar sales programs (under title I, Public Law 480) to commercial sales. It can be used to build up trade relationships be- tween foreign importers and American exporters. These advantages are sound arguments for a large barter program; however, there are associated disadvantages which are less obvious but which must be taken into consideration in managing the program. The disadvantages may be summa- rized as follows: --The discount allowed to barter contractors is little more than a form of export subsidy. Like any export subsidy, the danger exists that other countries may retaliate, that less subsidized American commercial exports may be displaced, and that world market prices may be lowered. --It is difficult to measure the impact of barter trans- actions on commercial exports and world market prices. It probably is not possible to establish any system which will guarantee absolutely that barter ex- ports will not displace any commercial exports. --If the barter transaction replaces a commercial ex- port 9 the cost to the United States will be increased to the extent of the barter premium but there will be no balance-of-payment gain. 9 COMPETITIVE POSITION OF U.S. CONTRACTORS AS A RESULT OF THE DARTERPROGRAM To the extent that the barter premiums are passed on to the foreign buyer in the form of reduced prices, the barter program undoubtedly permits the U.S. contractor to be more competitive in the world market. Depending upon the world market price and the amount of the premium awarded by USDA, barter contractors may be able to sell the commodities at less than the world market price. Under such circumstances it appears that U.S. ex- ports would continue to increase until the market became saturated, or until other exporting nations complained or took some form of retaliatory action. Such was the case of U.S. wheat being exported under the barter program, At the end of fiscal year 1967, the maximum barter pre- mium being awarded by USDA was about 2 percent. Since that time, however, the premium has increased and was at about the 2,5-percent level at the end of December 1969. During our review, we noted that, in December 1969, USDA initiated action to limit the premium on wheat to around 1 percent. USDA personnel stated that this action was ta'ken because of complaints by other wheat-exporting nations, The United States is a member of the International Grains Arrangement (IGA). Other IGA members, also major wheat exporters, complained that U.S. exporters were under- cutting world market price for wheat. Rather than have the complaining members take some form of retaliatory action, USDA limited the premium which would be awarded for wheat exports. USDA personnel stated that they had evaluated the situation and had concluded that the action taken would still permit U.S. exporters to be competitive in the world market. The action taken by USDA did not apply to barter con- tracts in existence at that time. Therefore, in some in- stances, wheat may still be exported under contracts which provided for the higher premium. Because of this, and the fact that the limitation was just recently set, the effect of the action on barter exports of wheat could not be deter- mined at the time of our review. Assuming that the premiums awarded by USDA are suffi- ciently high, the barter program no doubt helps the U.S. exporters in their attempts to compete for the world market. This apparently prompted the complaints by the ICA members. In our opinion, however, the position of the U.S. exporters, as a result of the barter program, is no better than that of foreign exporters. Certain foreign exporters enjoy priv- ileged positions in some markets because of bilateral trade agreements which exist with other nations. U.S. exporters are effectively excluded from competing for these markets. Foreign exporters also receive assistance in the form of export subsidies. An example of this is the subsidy paid to grain-exporting members of the European Community. The amount of the subsidy is roughly equal to the difference between the domestic price in the European Community export- ing country and the price at which the grain can be sold in third-country markets. The following details of the Euro- pean Community export subsidy were explained in a USDA pub- licationl dated October 1969. Export subsidy rates vary not only by type of grain but also by destination of the shipment. Following is an exam- ple of how the export subsidy per metric ton of barley is calculated. South Destination America Japan Price f.o.b. Rouen $ 94.50 $ 94.50 Freight 9.50 13.00 Miscellaneous charges 1.00 1.00 Price c.i.f. 105.00 108.50 Price of competing barley 61.50 60.50 Export subsidy needed $ 43.50 $ 48.00 1"The European Community's Common Agricultural Policy - Im- plication for U.S. Trade," 11 The extent to which the European Community is willing to subsidize grain to move it onto the world market is illus- trated by the sales of French wheat to Communist China in February and March 1968. The prevailing price for soft wheat at that time was $109.70 a metric ton, f.o.b. French port. The export subsidy rate announced by the European Community Commission for wheat destined for Communist China was $52.90 a metric ton. The French then received permission from the Commission to grant a special subsidy of $11 and a freight subsidy of $2 a metric ton on offers totaling 600,000 metric tons. Therefore, the total subsidy on this sale was $65.90 a metric ton, or 60 percent of the f.o.b. price, and the wheat arrived in Communist China at $43.80 a metric ton. If the Chinese purchase the entire amount, the total expense to the European Agricultural Guidance and Guarantee Fund will amount to $39.5 million. Although such extremely low prices for wheat would now be inconsistent with the International Grains arrangement price range, the European Community may still apply as large a subsidy as necessary to export feed grains. From this illustration of export subsidies paid to foreign exporters, it can readily be seen that U.S. export- ers face stiff competition in their attempt to export, for example, feed grains. We believe, therefore, that, rather than placing U.S. exporters in a more favorable position, the barter program merely helps them to compete more effec- tively for markets. 12 REGULATIONOF THE BARTERPROGRiMl2XEL THROUGH PREXIUMPAYMENTSALL~ One of the tools available to USDA In regulating the size of the barter program is the amount of premiums it is willing to pay to move any given amount of con-modfties. The higher the premium, the higher the amount of commodities that can be exported. During the period fiscal year 1967 through fiscal year 1969, USDA limited the dollar amount of barter exports to a predetermined level. Contracts were awarded to the low bidders (premium) ‘so as to export a predetermined quantity and the remainder of the bids were rejected. The desired level, about $180 million, was reached for each of the fis- cal.years 1967 through 1969. The desired level of barter exports was reached without much difficulty in fiscal years 1967 and 1968, and over half the bids (dollar amount) were rejected. The desired level was reached again in fiscal year 1969; however, the bidder response was not so great as in prior years. Consequently, only about 15 percent of the bids were rejected. Since fiscal year 1969, USDA has ex- panded the program. As shoti below9 fiscal year 1970 has exceeded the level for prior years by more than 133 percent and only slightly over 2 percent of all bids were rejected. (See p. 170f this' report.) AID and DOD Punding Arrangements Contracts awarded Bids re-jetted Dollar Dollar Amount Average Amount Average (note a> Premium (note a.> Premium IT.1967 $177.8b 2.146% $179.6 2.273% FY 1968 183.3 2.047 226.5 2.073 FY 1969 181.1 2.470 31.8 2.678 FY 1970 429.0 2.417 10.2 2.550 %llions. b An additional $6.7 million in funding arrangements awards was made by AID; the total amount awarded in fiscal year 1967 amounted to $184.5 million. 13 As indicated on the preceding page, the average pre- mium bid accepted decreased to near the 2.4-percent level in fiscal year 1970. This decrease from the fiscal year 1969 level, however, is the result of the l-percent pre- mium level placed on wheat by USDA. (See p.10 of this re- port.) When the "wheat only" contracts awarded during fiscal year 1970 at the l-percent premium limit were excluded from the above tabulation, the average premium for contracts awarded remained near the 2.5-percent level of fiscal year 1969. The average premium rejected was higher than the ac- ceptable level of 2.5 percent. During fiscal year 1970, USDA accepted all but a few premium bids under the 2.5- percent acceptable level. In some cases where the premium bid was just above 2.5 percent, USDA has negotiated with the contractors to reduce the bid to an amount just below the acceptable level--say 2.495 percent. By accepting nearly all the bids received, USDA has expanded the barter program and increased commercial ex- ports of agricultural commodities. To do this, USDA has increased the premium it was willing to accept at the time of our 1968 report. Although this perhaps has resulted in somewhat greater barter costs to CCC, it has also resulted in a benefit to our balance-of-payments position by avoid- ing offshore expenditure of dollars for goods and services. 14 . CHAPTER4 AGENCYACTIONS TAKEN SINCE ISSUANCE OF PRIOR REPORT In our earlier report, we concluded that USDA should adopt a policy of letting market conditions determine the size of the barter prcgram rather than attempt to hold the size below a theoretical level or administrative limit. The thrust of our report was that USDA should accept a higher percentage of bids even if this meant some increase in the barter premiums paid. A draft of that report,soliciting the agency's comments, was furnished USDA in February 1968. Immediately prior to that time, the market was such that the contractors' bids were much greater than the limit set . by USDA, and about half of the bids received were being re- jected. Contractors' bids fell off sharply in the last half of fiscal year 1968-- apparently because of the market situa- tion for the various commodities. The chart, as shown on the following page, illustrates, by quarters, the extent to which USDA has accepted and re- jected bids for the period fiscal year 1966 through fiscal year 1970. As can be seen by the illustration, during the last half of fiscal year 1968 and fiscal year 1969, the bid- der response was not too great and fewer bids had to be re- jected to maintain the predetermined level of barter exports. Subsequent to issuance of our earlier report, USDA has taken certain actions designed to expand the barter program. These actions include (1) increasing the size of the pro- gram, by increasing the barter premium it is willing to pay, (2) adding additional private stock to the list of commodi- ties eligible for barter, and (3) revising the destination list to which bartered commodities may be exported. _ _._ .-__ ..... ..... :::::__ _~- BIDS RECEIVED &ND COHTRACTS AWARDED IN RESPONSE TO SOLICITATIONS ...... FOR FUNDING-TYPE BARTER EXPORTS __---__ . -. ..... .--_ -_ .‘- Millions Millions ::::: .::::: of of - .... Dollsts DDIICXS ...... ......... ..... BIDS ACCEPTED, CONTRACTS AWARDED .~ ::::: .::::: )‘.?? .:::) - .-*.*s ~-~“i! _-- _ _ ___ _ ._ _ ..l_ -.---. -..- . _ _--.- -.__. _“_..^_.. _I_ ---_-.-.--.--m BIDS REJECTED I6 11 1; - _-_ ..-_ ._ -- a - 1st 2nd 3rd 4th 1st 2nd 3rd 4th QUARTERS QUARTERS QUARTERS QUARTERS QUARTERS FY 1966 FY 1967 FY i9bS FY 1969 FY 1970 INCREASING THE SIZE OF THE PROGRAMBY INCREASINGTHE BARTERPREMIUM Throughout fiscal years 1968 and 1969, USDA continued to limit the barter program to a predetermined level. As shown in a preceding section of this reports the amount of contract awards was limited to about $180 million for each of the fiscal years 1967 through 1969. These limitations, however, have been relaxed. During fiscal year 1970, USDA awarded barter contracts amounting to about $429 million-- over twice the amount awarded during fiscal year 1969. Prior to fiscal year 1970, USDA limited the program by rejecting bids. As previously mentioned, in some years over half of the bids received (dollar amount> were rejected. During fiscal year 1970, however, USDA accepted about $429 million or 98 percent of a total of about $439 million in barter contract bids received. As noted in our earlier report, the amount of barter premium paid during fiscal year 1967, averaged about 2.1 per- cent. Throughout most of fiscal year 1968 the premium rate remained almost constantly in the 1.8-to 2-percent range. In the second half of fiscal year 1968, the quantity of bids received fell off sharply and, within a few months, the pre- mium rate rose to 2.49 percent. During fiscal years 1969 and 1970, the premium rate averaged about 2.43 percent. In commenting on the decline in the number of bids re- ceived and awarded, USDA officials stated that there had been two major causes for the decline. First, the export market had declined for U.S. grains, especially wheat, be- cause of exceedingly good crop years in most importing coun- tries. Second, just prior to February 1968, U.S. contrac- tors had large outstanding obligations to meet under exist- ing barter contracts. Starting in February 1968, the outstanding obligations declined, indicating that the contractors were exporting these commodities. A USDA official advanced the theory that this caused the foreign markets to become saturated thus re- sulting in a reduced export market for U.S. agricultural 17 commodities. Under such circumstances, many contractors would not submit bids and others would obligate themselves only for a higher premium. The higher premium was needed so that the contractor could offer a more competitive price. ADDING -- FREE MARKET STOCKSTO LIST OF ELIGIBLE BARTERCOMMODITIES Commodities eligible for export under the barter pro- gram consist of CCC-owned commodities and private stock com- modities. In the case of private stock commodities, the barter contractor may already hold stocks of the desired commodity or may acquire them in the commercial market. Private stock commodities eligible during fiscal year 1967 were corn, grain sorghum, wheat and wheat flour, cotton- seed and soybean oil, and tobacco. These commodities have continued to be available since 1967. Additional private stock commodities have since been made eligible for export. These commodities and the dates they were made eligible are as follows: Commodity Oats Mar. 1968 Cotton Apr. 1968 Barley July 1968 Rice Jan. 1969 Inedible tallow and grease May 1969 Of the private stock commodities added to the list as eligible for barter export, only rice and inedible tallow and grease have shown any noticeable increase. As shown in appendix III, barter exports of oats and barley have been minimal; and barter exports of cotton decreased after being added as a private stock commodity eligible for export. A USDA official stated that there had been various reasons for the decline of cotton exports during fiscal year 1969. He stated that our cotton crops had been good, but the yield was less than anticipated. This forced the prices up and did not enhance our export prospects. Another reason for the decline was the lengthy dock workers strike at gulf ports, from which most cotton is shipped. As shown in ap- pendix III, however, barter exports of cotton have shown a substantial increase during fiscal year 1970. REVISING THE DESTINATION RESTRICTION LIST TO WHICH COMMODITIESMAY BE EXPORTED Appendix IV points out that countries to which bartered commodities may be exported are designated as countries to which barter exports may be made only after "additionality" has been determined by the USDA, countries to which there are no barter export restrictions, or countries to which no barter exports are allowed. The destination restriction list, l%ommodity - Country Designations for Exportation of Agricultural Commodities," has had four revisions during the past 6 years. These revi- sions took place in August 1964, March 1965, June 1967, and July 1969. Since the July 1969 revision there have been three interim changes as follows: (1) during the period from June 19, 1969, through December 31, 1969, private stocks of wheat and wheat flour were made eligible for ex- port to Argentina without an '"additionality' determination" by USDA, (2) as of September 17, 1969, tobacco was made eli- gible for export to Austria, Denmark, Ireland, and Norway without an additionality determination by USDA, and (3) dur- ing the period November 25, 1969, through June 30, 1970, feed grains were made eligible for export to Spain under barter contracts involving reimbursable procurements of U.S. Government agencies without prior approval of individual ex- port proposals. With regard to exports of cotton, the July 1969 revision modified existing restriction by (1) making all countries, to which barter cotton exports were previously prohibited, eligible to receive bartered cotton and (2) allowing barter contractors to export cotton to all countries without an additionality determination by USDA. The only requirement of the contractors was to inform USDA of their intention to ship to certain countries. The revision recognized the sharp drop in U.S. cotton exports and was intended'to stimu- late U.S. cotton sales abroad, thereby improving our balance- of-payments position. 19 EFFECTS OF THE ACTIONS TAKEN The graphic illustration presented earlier in this chapter shows that barter exports have increased sharply during fiscal year 1970 when compared with the exports of the preceding years. In this regard, a USDA press release dated February 17, 1970, noted that the barter contracts signed during the first half of fiscal year 1970 was the highest amount for any 6-month period in the history of the agricultural export program. On the basis of our analysis, we believe that the in- creased premium USDAwas willing to pay represented the main factor resulting in an expanded barter program which is a benefit to our balance-of-payments position. CONCLUSION In our earlier report, we recommended that a study be undertaken to explore the best ways and means of maximizing benefits from the barter program. We concluded that the Cabinet Committee on Balance of Payments would be the most logical body to undertake the study. Our follow-up review, however, shows that USDA has taken certain actions, since the issuance of our earlier report, to increase agricultural exports through the barter program thereby benefiting our balance-of-payments position. These actions include (1) increasing the size of the barter program by increasing the barter premium, (2) adding free market stocks to the list of commodities eligible for barter, and (3) revising the destination list to which the commodi- ties may be exported. These actions have resulted in increased barter exports. The contracts signed during fiscal year 1970 are the highest in dollar amounts for any period in the history of the bar- ter program. The actions taken by USDA, in our opinion, are satis- factory and eliminate the need for additional actions or studies at this time. 20 COMMENTS BY USDA Copies of our draft report were sent to USDA. Its re- ply agreed, in general, with the contents of our draft re- port. USDA stated that the draft report reflected a good understanding of the barter program and a thoughtful anal- ysis of its effects on the U.S. balance of payment. (See app. V, p, 31,) The Department had no major comments or suggestions on the draft report. 21 CHAPTER5 SCOPEOF REVIEW Our review was directed toward obtaining data on bar- ter activities since the time of our last review and to de- termine whether administrative restrictions, existing at that time, have been relaxed to permit an increase in ex- ports under the barter program. Our review was carried out at USDA headquarters in Washington, D.C., and included (1) discussions with respon- sible officials and examination of documents concerning current policy on administrative restrictions on the barter program, (2) examination of agency records containing data on solicitations, contract awards, and barter exports, (3) discussions in Washington with private export firms regarding their response to USDA solicitations for barter contracts. Our examination was limited to contracts awarded under aID and DOD funding arrangements. 22 APPENDIXES 23 APPENDIX I BARTER PROGRAMCONTRACTS NEGOTIATED BY DEPARTMENTOF AGRICULTURE (FISCAL YEAR 1967 TI-IROUGH FISCAL YEAR 1970) Offshore procurement Funding arrangements Direct Supplier Fiscal Stockpile (note a) barter type year material AID DOD (note b) (note c> Total (millions) 1967 $8.8 $ 6.9 $181.6 .$33.9 $28.4 $259.6 1968 37.6 149.5 35.8 61.6 284.7 1969 17.9 163.9 24.1 66.4 272.3 1970 443.2 15.6 27.8 486.6 aAmounts listed under funding arrangements include items that were subsequently withdrawn and/or canceled and differ in that respect from the amounts actually awarded. (See app. II.) b Under direct barter the U.S. barter contractor agrees to procure off- shore and deliver a specific commodity needed by the U.S. Government in a designated country, rather than just furnish funds as under the funding arrangements. The contractor is furnished the agricultural commodities for export equal to the unit price quoted by him for de- livery of the needed procurement. The premium paid by CCC is in- cluded in this unit price bid by the contractor. 'Supplier-type barter contracts are similar to the funding-type con- tracts in that the barter contractors respond to solicitations with a premium they would be willing to accept. The supplier-type con- tracts, however, are usually for a specific service or supplies needed by DOD at a specific foreign designation. The U.S. barter contractor deals directly with the foreign supplier rather than fur- nishing DOD with the needed funds. 25 APPENDIX II Page 1 St~LfCITATIC!IStOR Don xI:D AID FLXDIK LWJ.‘v-ZEt4TS , EIDS KFXI‘IVED, COKIItKTS A'r'AVnS~Wl, A'iD blDS RF^K'I~Il FISCAL YL4R 1968 --- Ccntracts awarded ~-Fa-*--ll~ Bids z-elected .-__I_ Bid Amomt Barter SOliCi- in bid Total pW?4UPl Dollar preelhI!n Dollar tation SOlfCi- of bids Auomt percmtege barter percenta;e barter dnte cati received htr a) renge preniw -Ainount ranp.e premium (in thousands of dollars) 7- 7-67 s 7,500 1.89 to 1.98 $ 144.7 $ 26.000 1.98 to 2.15 s 534.1 7-14-67 15;000 41;ooo 15,000 1.93 to 1.977 293.4 26;OO0 1.977 to 2.20 540.1 7-25-67 10,000 26,ODO 10.000 1.90 to 2.033 198.9 16,000 2.033 to 2.20 336.3 8- 7-67 10,GOO 22,000 10,000 1.98 to 2.08 202.7 12,000 2.08 to 2.20 255.2 &la-b7 3,500 10,000 3,500 1.94 to 1.985 69.0 6,500 1.99 to 2.10 133.6 8-30-67 10,000 19,750 lG,OOO 1.9DB to 2.027 195.6 9,750 2.027 to 2.20 205.5 g-14-67 10,000 4.750 2,500 1.98 to 2.06 50.8 2,250 2.141 to 2.171 48.5 9-?9- 67 7,500 3,000 s m 3,000 2.069 2.19 to 63.6 10-25-67 7,500 30,250 7,500 1.875 to 1.945 144.1 22,750 1.945 to 2.14 450.8 ll- b-b7 12,000 13,250 6,750 1.90 to 2.01 131.2 6.500 2.052 to 2.16 136.9 11-16-67 5,500 20,000 5,500 1.85 to 1.895 103.5 14,500 1.902 to 2.05 281.0 12- 1-67 7.500 35,000 7,500 1.77 to 1.829 135.9 27,500 1.829 to 1.976 515.6 12- 8-67 10,om 20,750 10.000 1.70 to 1.94 181.6 10,750 1.949 to 2.38 226.9 12-18-67 10,030 14.250 10.000 1.735 to 1.98 187.8 4,250 1.98 to 2.15 86.5 17-29-67 5,GGO 9.750 5,000 1.84 t0 1.975 96.9 4,750 1.975 to 2.05 95.6 12-29-67 3,500 8,500 3,500 1.84 to 1.915 65.8 5,000 1.915 to 1.96 96.8 l- b-68 6,000 5,350 5,350 1.95 to 2.05 106.4 1-17-68 lO.CCO 1,500 1,000 1.999 to 2.10 20.6 -500 2.18 10.9 l-31-68 10,GrJO 15,000 10,000 2.035 tci 2.15 208.8 5,000 2.18 to 2.19 109.1 -2-1-i-68 10,WXl 17,750 10,000 1.925 to 2.15 209.7 7,750 2.15 to 2.45 177.1 2-23-68 10.000 1,000 - - 1,000 2.19 21.9 3- b-68 10,000 2,000 2,000 1.995 39.9 - 3-20-m 12,000 11,750 6.750 2.07 to 2.33 151.5 5,000 2.48 124.0 4- 5-68 9,000 4.500 1,500 1.98 to 2.29 33.5 3,000 2.49 74.7 4-19-68 12,OGO lb.000 12,COO 2.29 to 2.43 283.7 4.000 2.49 to 2.54 100.6 5- 1-68 4,370 5,800 4,370 2.30 to 2.425 104.2 1,430 2,425 to 2.49 35.3 5-10-68 10,000 4,000 3,000 2.4% 73.2 1,000 2.49 24.9 5-22-68 10,000 6,750 6,500 158.1 250 2.47 6.2 5-31-68 10,000 3,000 3,000 73.2 b-34-68 12,@00 3,700 3,600 88.4 100 2.60 -2.6 b-27-68 ,&@ 26 APPENDIX II Page 2 SOLICITATIONSFOR DODAN3 AID Corh_n_cts ewrded Bids relccted Bid Amount BArL@r B.arter solici- in bfd Total PlCI2fGUl Dollar pt~l!li~ Dollar tation solicf- of bids Amount percentage barter percentage barter date ration received (note a) I.* @WI -- Amount EnnRe premium (in thousands of dollars) 7-l O-68 s 12,000 $ 3,200 $ 3.200 2.45 to 2.495 $ 79.8 - 7-25-60 12,000 9,500 8.500 2.449 to 2.495 210.0 $ 1.000 2.56 S ;5.6 8- 7-68 15.000 15.250 12.750 2.45 to 2.49 314.2 2.50 to 2.54 63;3 8-19-68 io;ooo -4;tloo -4;eoo 2.473 to 2.48 119.0 w w S-30-68 12,000 500 500 2.48 12.4 9-10-68 12,000 9.700 9,700 2.47 to 2.496 241.5 . 9-l?- 68 1,000 - s 9-20- t8 10,000 3,500 3,500 2.49 to 2.50 07.4 w lo- l-68 1,000 - m lo- l-68 10,000 6,000 4.000 2.49 69.6 2,000 2.54 50.8 IO-11-b8 10,000 11.500 10,000 y; to 2.492 249.1 1.500 2.50 to 2.60 38.2 10-14-68 1,000 2,000 1,000 24.9 1.000 2.494 24.9 10-16-68 10.000 3,000 3,000 2148 to 2.495 74.6 - - 10-29-68 7,000 9,000 7,000 2.481 173.7 2,000 2.495 to 2.50 ;0.0 11-14-68 10,ocQ 11,5(10 10.000 2.635 to 2.466 244.4 1.500 2.468 to 2.495 37.3 11-M-68 2.800 4,050 2.800 2.35 65.8 1,250 2.49 to 2.495 31.2 11-22-m 17,600 4,000 4,000 2.39 to 2.44 94.6 .a 1% 4-68 13,600 3,500 3,500 2.495 87.3 w 12-17-68 10,100 4,000 4,000 2.482 99.3 12-18-68 5.000 5,000 1,200 2.49 29.9 2.75 to 2.95 109.7 12-19-68 10.000 11,500 4.000 2.49 99.6 2.75 to 2.95 217.3 1- 3-69 6.100 i ,800 3.600 2.494 to 2.495 44.9 m 1-16-69 7,000 2,000 2,000 2.465 49.3 m l-30-69 5,000 3,000 3,000 2.49 74.7 - 2-11-69 4,300 4,150 4,150 2.39 to 2.500 102.9 s 2-26-69 5.000 4,000 4,000 2.401 to 2.48 97.0 - 2-26-69 10,000 3,500 3,500 2.467 td 2.49 86.4 m 3-11-69 6,500 10,700 6,500 2.462 to 2.47 160.1 3,700 2.48 to 2.51 92.2 3-20-69 15,000 6,250 6,250 2.44 to 2.495 155.5 4- 3-69 10,000 3,500 3,500 2.485 to 2.495 87.1 4-14-69 10,000 1,000 1,000 2.500 25.0 4-25-69 10,000 3,100 3.100 2.45 to 2.495 77.1 - 5- 8-69 10,000 12,000 12,000 2.48 to 2.49 298.2 - 5-16-69 12,000 3,720 3,720 2.299 to 2.495 92.2 S-28-69 8,000 15.600 13,600 2.43 to 2.48 335.6 2,000 2.55 5-28-69 3,000 3,600 3,600 2.43 to 2.49 89.1 - 6-10-69 12,000 8,200 8,200 2.30 to 2.485 200.5 m 6-26-59 10,000 5,760 3,760 2.309 to 2.49 91.6 2,000 2.94 total FY 1969 $W $2&&6&g S&750 27 APPENDIX II Page 3 SOLlCIiArlCN FOR DOa UD AID FUNDING ABfir'A!I:Fw'ZL?TS,BIDS RECEIVU), CONTRACTS AWARDE3, MD BIUS REJECTED FISCAL PM 1970 Contracts awarded Bids >e]ected Btd- Amount Barrti- -xEtfr WliCI- in bid Total premium Dollar p~~~iU~ Dollar 1ati0n SOllCi- of Lids Pmaunr percentage barter percentage barter date tat1on p-cc- (-0 - premium Amount B premium (in thousands of dallarsr--------- s ;y$ s 11.800 5 11.80') 2.24 to 2.490 S 280.4 - 2.488 to 2.49 10:030 1,800 300 1,600 :I:;::; 7-29-69 15.OOO -1;soo 1.100 300 1,100 1.800 2.488 2.413 tc. 2.486 l;EJO 2.500 a-13-69 10,000 6,330 6,300 2.475 to 2.498 E-27-69 10,DOO 28,220 28.2;; 2.473 to 2.493 8-277c9 3,200 1,020 2.49 2.99 s 9- 5-69 12.000 23,160 22.68') 2.458 to 2.488 q-16-69 15,000 9,143 b;7&0 2.459 to 2.443 9-2b-69 15,033 16,500 16.600 2.47 to 2.496 2.5 lo- 3-69 15,000 10,920 10,923 2.47 to 2.498 270.3 10-10-69 10,000 9.350 9,150 2.40 to 2.498 226.3 2.52 -:.; 10-17-69 15,o'Jo 9.300 9.700 2.35 to 2.49 228.8 2.6 . 10-24-69 10,000 5,700 5.700 2.489 to 2.500 112.0 10-31-69 15.030 1,500 300 2.487 7.5 2.564 i0.e ll- 7-69 10,000 9,465 9,445 2.47 to 2.490 235.3 11-14-69 lO.GO3 12,100 11.950 2.40 to 2.49 297.5 2.524 -3.8 11-21-69 12,000 21.900 18.900 2.40 to 2.49 469.3 11-28-69 10,000 17,350 1y'e; 2.444 to 2.48 421.2 12-12-b9d 12,000 3,280 .96 to .996 32.4 12-19-69 15,000 25.950 2;:;;; 2.30 to 2.49 637.3 l- b-70d 10.000 2,000 .989 19.8 l- b-70 15.000 4,120 4:120 2.40 to 2.492 102.5 5.5OD 924 9 24 2.465 to 2.477 22.8 :: ;I’: 10,030 2,200 2.200 2.49 to 2.494 54.9 l-23-50 15,GSO 4,317 4.317 2.479 LO 2.49 107.3 - l-23-70 4.000 2- 3-70 6,030 G.341 81541 2.45 to 2.b70 iO9.8 2.49 LO 2.495 94.8 2- b-?Od 6,090 3,400 3.400 .98 to .995 33.5 10,000 10,900 10,900, 2.46 ta 2.475 268.9 :I1;::: 15,ouo 10,885 lo,ea5 2.47 to 2.48 269.8 - Z-23-70 10,000 16.~30 16,400 2.44 to 2.40 404.2 - 2-27-73' 3.000 4.300 4,000 .987 to .998 39.6 - 3- b-70 15,000 7.934 7.904 2.47 to 2.48 195.5 - 3-13-70 15,000 4,6DO 3,b!JO 2.47 88.9 2.495 25.0 3-13-70d 5,030 3,403 3.400 .98 to .998 33.5 4- l-70 15,000 18,535 18,535 2.46 to 2.49 460.1 - o-10-70 10,000 9,368 9,368 2.419 to 2.484 231.6 - 4-22-70 10,000 29,910 29.910 2.40 to 2.40 732.3 5- l-70 15,050 12,500 12.500 2.45 to 2.49 309.7 - 5-11-70 10. Ml0 14.204 14.204 2.46 to 2.49 5-18-70 15.000 3.804 3.374 2.477 to 2.49 '2: 2.75 is.8 10,030 8,310 8.310 2.47 to 2.49 205:8 - 5-25-70 15,000 10,100 10.100 2.46 LO 2.49 251.0 10,~OO 9,300 9.300 2.47 to 2.49 230.7 - 15po 11,320 11,320 2.48 LO 2.495 282.1 A Iota1 FY 1970 5=%,577 S418>92 ~vrrape ..--A- ___ - -_ x.417 S10,366.2 :A- $10,170 ---- bwrage -= - 2.550 S-252 -- 51 $18,595.6 $268.650 $5-t-.-2- 741 i .A-065 J 407 -- 5793 &? -- _- - l ,.lth.,qh auarded in the fiscal year as shorn. actual erport of sorr.e commdities may have taken place in the subse- gueo: fiscal year. (See app. III.) BAG additional conttact for 5300,000 was awarded but later canceled. P his sollcitntlon w.15 for xhcnt only. The tarter premium ~8s about 1 percent for wheat BS compared with 2.5 Per- cent for other comodlties. 28 APPENDIX III OOILAR VALUE OF AGRICL?.TURAL COMMODITIES EXPORTED UNDER 'IKE bARTER PROGRAM DURJNG FISCAL YEARS 1967 THROUGB 1970 (in thousands of dollars) Fiscal year 1967 Fiscal year 19G8 Fiscal year -- 1969 Fiscal year 1970 Percent Percent Percent Percent of Of of of Commodity Amount --total Amount total Amount -- -total Amount -- total Wheat $114,927 38.9 $139,327 46.1 $ 84,765 31.8 $ 89,351 19.1 Corn 14,569 4.9 27,158 9.0 37,644 14.1 50,429 10.7 Tobacco 84,609 28.6 75,324 24.9 91,524 34.3 140,002 29.9 Cotton 44,469 15.0 42,144 13.9 30,078 11.3 78,967 16.8 Soybean oil 20,404 6.9 7,573 2.5 6,681 2.5 36,932 - 7.9 Cottonseed oil 5,584 1.9 3,523 1.2 6,832 2.6 7,439 1.6 Grain sorghum 7,210 2.4 3,094 1.0 2,923 1.1 6,659 1.4 Wheat flour 3,875 1.3 3,926 1.3 782 .3 50 (note a> Oats (note b) !?A NA 125 (note a> 113 (note a) 222 (note a> Barley (note b) NA NA NA NA 1,744 .6 1,206 .3 Rice (note b) NA NA NA NA 1,942 .7 10,551 2.3 Inedible tallow and grease (note b) NA NA NA NA 1,841 .7 46,788 10.0 $302,.194 $266,873 $468.592 aLess than one tenth of 1 percent. b These commodities were made eligible from free market sources under the barter program on the dates shown: Commodity Month Oats Mar. 1968 Cotton Apr. 1968 Barley July 1968 Rice Jan. 1969 Inedible tallow and grease May 1969 Source : Office of the Assistant Sales Manager, Barter Export Marketing Sewice: USDA 29 APPENDIX IV SUMMARIZATIONOF THE DEPARTMENTOF AGRICULTURE'S SYSTEMWHICH IS TO MINIMIZE THE LIKELIHOOD THAT BARTERTRANSACTIONSDISPLACE COMMERCIALSALES In a publication entitled "The Barter Export Program," USDA noted that it had been necessary to devise a system that would provide reasonable assurance that barter exports would not displace cash sales that would otherwise be made. The system, adopted to channel barter exports to mar- kets where they will accomplish the program's objective, works as follows: An analysis is made of international trade in each agricultural commodity that is eligible for barter ex- port. Taken into account are each potential importing country's external financial position, its history of cash imports from the United States of the commodity under study, its probable import of the commodity from the United States in the near future, and its pattern of exports of the commodity if it is a major producer. The designation is "x" (no barter exports allowed) for certain major U.S. markets where there is little or no likelihood that barter exports would increase total sales. The designation is "A" (barter exports permitted only after case-by-case review) if it appears that U.S. ex- ports can be increased or maintained through barter, but there is a history of substantial cash sales. An "A" designation is automatic if the country is a sub- stantial exporter of the commodity. The designation is "B" (no barter export restrictions) when the country is in a fair to poor external finan- cial position or has not been a substantial cash market for the commodity and can not be expected to become one in the near future. 30 APPENDIX V UNITED STATES DEPARTMENT OF AGRICULTURE EXPORT MARKEBIHG SERVICE WASHINGTON, D. C. 20250 DEC 14 1970 Mr. Oye V. Stovall Director, International Division Attention: Mr. G. F. Stromvall Associate Director U.S. General Accounting Office Dear Mr. Stovall: The Assistant Secretary for International Affairs and Commodity Programs has asked me to respond to your letter of October 29, 1970, forwarding a draft audit report on the barter export program. We have carefully reviewed the draft report, and appreciate its favorable comments on barter export accomplishments over the past year and a half. The draft report reflects a good understanding of the barter program and a thoughtful analysis of its effect on the U.S. balance of payments. We have no major comments or suggestions on it. However, we are enclos- ing for your consideration a list of minor comments on certain statistical and editorial aspects of the report, including program data that has been updated since your audit was performed. [See GAO note.1 Sincerely, Enclosure GAO note: The minor comments are not included in this re- port. GAO considered the comments and made ap- propriate changes. 31 APPENDIX VI PRINCIPAL OFFICIALS HAVING RESPONSIBILITY FOR THE MATTERS DISCUSSED IN THIS REPORT Tenure of office From To SECRETARY OF AGRICULTURE: Clifford M. Hardin Jan. 1969 Present Orville L. Freeman Jan. 1961 Jan. 1969 ADMINISTRATOR, FOREIGN AGRICUL- TURAL SERVICE, USDA (note a): Raymond A. Ioanes A2r. 1962 Present GENERAL SALES MANAGER, EXPORT MARKETING SERVICE, USDA (note a>: Clifford G. Pulvermacher Apr. 1969 Present ASSISTANT SALES MANAGER, BARTER EXPORT MARKETING SERVICE, USDA (note a>: Thomas R. Rawlings Apr. 1961 Present aIn April 1969, responsibility for the barter program was shifted from the Foreign Agricultural Service to the Export Marketing Service. U.S. GAO Wash., D.C. 32
Balance-Of-Payments Benefits Achieved by the Department of Agriculture Through an Increased Agricultural Barter Program
Published by the Government Accountability Office on 1971-02-12.
Below is a raw (and likely hideous) rendition of the original report. (PDF)