Agricultural Trade: Improvements Needed in Management of Targeted Export Assistance Program

Published by the Government Accountability Office on 1990-06-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                    Cyttited States   General   Accotttttittg   Office

GAO                 Report to the Honorable
                    Charles E. Sclwner, House of

June IWO
                    Improvements Needed
                    in Management of
                    Targeted Export
                    Assistance Program

GA0 /NSIAD-W-22.5
National Security and
International Affairs Division


June 27,199O

The Honorable Charles E. Schumer
House of Representatives

Dear Mr. Schumer:

At your request, we have examined the extent to which the Department of Agriculture has
implemented recommendations made in our May 1988 report on the Targeted Export
Assistance Program. We have focused on documentation of major program decisions, the
adequacy of program guidance, oversight of program participants, and efforts to evaluate
the success of individual activities and the program. We have made several recommendations
related to these issues. The Department of Agriculture has concurred with our findings and
recommendations and is currently taking steps to address many of our concerns.

Copies of this report are being sent to the Secretary of Agriculture and other interested
parties. This report was prepared under the direction of Allan I. Mendelowitz, Director,
Trade, Energy, and Finance Issues. Other major contributors are listed in appendix V.

Sincerely yours,

Frank C. Conahan
Assistant Comptroller General
Executive Summary

                   At the request of Representative Charles E. Schumer, GAO conducted a
Purpose            review of the management of the Department of Agriculture’s Targeted
                   Export Assistance Program. This program, funded at $200 million annu-
                   ally for fiscal years 1989 and 1990, was established to make funds or
                   commodities available to counter or offset the adverse effects on U.S.
                   agricultural exports of subsidies, import quotas, or other unfair trade
                   practices of foreign competitors.

                   GAO   examined the management of this program, focusing on (1) docu-
                   mentation of key program decisions such as funding allocations and par-
                   ticipant contributions, (2) oversight of all program participants, (3) the
                   adequacy of the program’s guidelines, and (4) the Foreign Agricultural
                   Service’s efforts to improve its evaluation process.

                   Section 1124 of the Food Security Act of 1985 established the Targeted
Background         Export Assistance Program. Legislation authorizing the program did not
                   specify how it was to be implemented. The Secretary of Agriculture
                   authorized the Foreign Agricultural Service to administer it as a foreign
                   market development program, modeled after Agriculture’s long-standing
                   Cooperator Program. Both programs provide funding to conduct activi-
                   ties that promote U.S. agricultural commodities and products overseas.
                   Many participants are in both programs, and the guidelines and types of
                   activities conducted are similar. A major difference between the two
                   programs is that participation in the Targeted Export Assistance Pro-
                   gram is only available for those commodities that have been adversely
                   affected by foreign unfair trade practices. Program participants include
                   private, nonprofit agricultural trade organizations, state-related organi-
                   zations, and private, profit-making U.S. firms.

                   The Foreign Agricultural Service is not adequately documenting major
Results in Brief   program decisions such as how its funding criteria are applied and
                   ranked for each participant. Guidance to program participants has not
                   been clear, nor have guidelines been consistently enforced. Greater over-
                   sight of participants, particularly those private firms that promote their
                   own brands, is needed to improve program management and ensure
                   accountability. The Foreign Agricultural Service needs to continue its
                   efforts to assist participants with evaluation requirements. It has not
                   yet evaluated the success of the overall program, but has relied mainly
                   on sales as proof of success.

                   Page 2                                      GAO/NSLAD-90-225   AgriculturalTrade
                            Executive   Summary

                            Although the two market development programs are similar, the Foreign
                            Agricultural Service does not adequately coordinate funding decisions or
                            its management of activities under both the Targeted Export Assistance
                            and Cooperator Programs. Combining the two programs could improve
                            program administration and program effectiveness.

                            Recent developments, such as the issuance of proposed regulations for
                            the Targeted Export Assistance Program and a limited reorganization to
                            clarify lines of authority, are some of the actions the Foreign Agricul-
                            tural Service is taking to improve program operations. However, further
                            management improvements are still needed to ensure that all funds are
                            being properly accounted for and to enhance program effectiveness.

Principal Findings

Program Decisions not       Although federal standards call for documentation of key activities, the
                            Foreign Agricultural Service has not adequately documented major pro-
Clearly Documented          gram decisions such as how and why it makes funding allocation deci-
                            sions. GAO reviewed the main source of documentation for such decisions
                            and found that it remains unclear how the Foreign Agricultural Service
                            applies and ranks its criteria. Without adequate documentation, the
                            opportunities or risks for inconsistent, inequitable, and inappropriate
                            funding decisions increases.

More Oversight of Program   There has been some debate on the branded portion of the Targeted
                            Export Assistance Program concerning the equity of providing govern-
Participants                ment funds to private firms to promote their own brand. However, it is
                            generally believed that, depending on the commodity, branded promo-
                            tion can be the most effective way of establishing a market presence.
                            Branded promotion accounts for approximately 35 percent of annual
                            program funding and should be more closely managed to ensure
                            accountability and effectiveness. The Foreign Agricultural Service dele-
                            gates responsibility for administering branded funds to the nonprofit
                            agricultural trade organizations, but exercises minimal oversight over
                            these organizations. Without adequate oversight, there are no assur-
                            ances that the guidelines on allowable promotional expenses, required
                            documentation, and financial procedures are being followed, and that
                            activities are being conducted in the most appropriate way to benefit the
                            industry as a whole.

                             Page 3                                    GAO/NSLAD-90-226   Agricultural   Trade
                       Executive   Summary

Lack of Adequate       Program guidelines require that participants conduct evaluations of
                       their promotional activities. Although the Foreign Agricultural Service
Evaluation Process     has taken steps to improve its ability to evaluate the success of its
                       market development programs, its evaluation guidance to participants
                       remains unclear. The Foreign Agricultural Service needs to continue its
                       efforts to assist participants in understanding and complying with eval-
                       uation requirements. It is not clear how the Foreign Agricultural Service
                       uses participant evaluation results as a factor in making its funding

                       The Foreign Agricultural Service is also required to conduct evaluations
                       of the overall success of the program in various regions. However, it has
                       not yet evaluated the success of the program overall but, instead, cites
                       increased exports as proof that the program has been a success.

                       After publication of GAO’S May 1988 report, Agricultural Trade: Review
                       of Targeted Export Assistance Program, the Foreign Agricultural Ser-
                       vice established a Program Evaluation Office; however, this office had
                       no substantial coordinating or enforcing role and operated more as an
                       adviser to the Commodity Divisions. As part of the Foreign Agricultural
                       Service’s limited reorganization, a new Planning and Evaluation Office
                       was recently established. Officials expect this new office to be more
                       involved in enforcing evaluation requirements and in conducting some
                       limited program evaluations.

Combine Market         The Foreign Agricultural Service does not adequately coordinate
                       funding decisions nor approval of marketing activities for both the
Development Programs   Targeted Export Assistance and Cooperator Programs. It has been reluc-
                       tant to combine the two programs because they are under different
                       funding authorities, and one program requires that participants demon-
                       strate that they have been adversely affected by foreign unfair trade
                       practices. Nevertheless, GAO believes that combining the two programs,
                       with one set of criteria and guidelines, would (1) be a more efficient use
                       of Foreign Agricultural Service resources, (2) streamline program
                       administration, (3) provide more complete and accurate information to
                       management concerning the scope of market development activities
                       worldwide, and (4) result in more effective program decision-making
                       and management.

                            recommends that the Secretary of Agriculture direct the Adminis-
Recommendations        GAO
                       trator of the Foreign Agricultural Service to take the following actions:

                       Page 4                                      GAO/NSIAIMW226   Agricultural   Trade
                  l   Comply with federal standards for internal controls by adequately docu-
                      menting major program decisions, including the funding allocation deci-
                      sion process, to clearly show how funding criteria were applied and
                      ranked and the basis for those decisions.
                  l   Conduct more oversight of those participants who are private firms pro-
                      moting their own brand, to ensure accountability for program funds and
                      compliance with program guidelines.
                  l   Provide more specific evaluation guidance to the participants and con-
                      duct evaluations of the program overall.
                  l   If the Targeted Export Assistance Program is reauthorized, combine the
                      Targeted Export Assistance and Cooperator Programs to facilitate pro-
                      gram administration and to maximize program effectiveness.

                      As requested, GAO did not obtain official agency comments on a draft of
Agency Comments       this report but discussed its contents with appropriate agency officials.
                      Their comments have been incorporated where appropriate.

                      Page 6                                      GAO/IUSIADBO-225   Agricultural   Trade

Executive Summary                                                                                   2

Chapter 1                                                                                          8
Background               TEA Program Operations
                         Previous GAO Report
                         Objectives, Scope, and Methodology                                       14

Chapter 2                                                                                          16
TEA Program              Funding Decisions not Adequately Documented
                         FAS Staff Do Little Market Analyses
Administration Lacks     Contributions Are Still not Formally Required                             20
Sufficient               Personnel Practices Affect TEA Program Management                         21
                         Regulations Are Needed to Establish Clearer and More                      23
Management Control           Consistent Program Guidance
and Accountability       A Combined TEA and Cooperator Program Could Be More                       25
                             Efficient and Effective
                         Conclusions                                                               27
                         Recommendations                                                           27

Chapter 3                                                                                          29
FAS Imposes Minimal      Controversy Over Branded Promotion
                         Reimbursement Rates Vary Among Commodities
Control Over the         No Evaluations Required in the Branded Program                            30
Branded Portion of the   Conclusions                                                               32
                         Recommendations                                                           32
TEA Program
Chapter 4                                                                                          34
FAS Needs to Enhance     FAS Has Historically Had Difficulty Evaluating its Market
                             Development Programs
Its Commitment to        Evaluation Guidance Is Unclear and Inconsistently                         35
Evaluate Market              Applied
                         FAS Efforts to Assist Participants in Meeting Guideline                   37
Development                  Requirements
Activities               Conclusions                                                               40
                         Recommendations                                                           40

                         Page 6                                     GAO/NSLUMW225 Agricultural   Trade

Appendixes   Appendix I: TEA Program Participants, Fiscal Years                          42
             Appendix II: TEA Branded Participants and Amounts                           44
                 Received for Fiscal Year 1989
             Appendix III: Countries Where the Majority of TEA                           55
                 Funds Were Budgeted for Fiscal Year 1989
             Appendix IV: Top 15 Program Participants by Total                           56
                 Amount of TEA Funds Allocated
             Appendix V: Major Contributors to This Report                               57

Figures      Figure 1.1: Fiscal   Year 1990 TEA Worldwide Breakdown                      10
                  by Promotion     Type
             Figure 1.2: Fiscal   Year 1990 TEA Promotional Strategy                     11
             Figure 1.3: Fiscal   Year 1990 TEA Promotional Activities                   11
                  by Region


             CCC        Commodity Credit Corporation
             C&MP       Commodity and Marketing Programs
             EIP        Export Incentive Program
             FAS        Foreign Agricultural Service
             MPD        Marketing Programs Division
             OIG        Office of Inspector General
             TEA        Targeted Export Assistance
             USDA       U.S. Department of Agriculture
             UTP        Unfair Trade Practice

             Page 7                                       GAO/NSIAD9@226   Agricukud   Trade
Chapter 1


             Foreign unfair trade practices adversely affect U.S. agricultural exports
             and place the United States at a competitive disadvantage worldwide.
             To ease the effects of foreign unfair trade practices and to help stem the
             decline in agricultural exports, the Food Security Act of 1985 estab-
             lished several export assistance programs. One of these is the Targeted
             Export Assistance Program (TEA). TEA’S goal is to help increase U.S. agri-
             cultural exports. It authorizes the use of funds or commodities of the
             Commodity Credit Corporation1 (ccc) to counter or offset the adverse
             effects of foreign unfair trade practices (UTP) such as export subsidies
             and import quotas.

             As authorized by Section 1124 of the Food Security Act of 1985, TEA
             gives priority consideration to U.S. agricultural commodities that have
             received a favorable decision under section 301 of the Trade Act of
             1974, as amended,? or that have been adversely affected by retaliatory
             action related to such decisions.

             The legislation authorizing TEA did not specify how the program was to
             be implemented. The U.S. Department of Agriculture’s (USDA) Foreign
             Agricultural Service (FM), which was given authority to administer TEA,
             decided to establish a market development assistance program similar to
             that of its Cooperator Foreign Market Development Program.:’ The Coop-
             erator Program, currently funded at an annual level of approximately
             $33 million, provides long-term market development assistance to U.S.
             agricultural exporters.

             FASchose to implement TEA as a foreign market development program
             because it believed that market development activities were not being
             adequately funded under the Cooperator Program. It also wanted to

             ‘The CCC issues generic commodity certificates that bear a dollar denomination to partially reim-
             burse participants. These certificates may be exchanged for CCC inventory in the form of surplus
             commodities, but are generally exchanged for cash in the open market.

             “Section 301 of the Trade Act of 1974, as amended, expanded the President’s discretionary authority
             to respond to unfair trade practices of foreign governments. The President can respond to any act,
             policy, or practice of a foreign government that he determines to be unjustifiable, unreasonable, dis-
             criminatory, or contrary to an existing trade agreement obligation. The statute also allows the private
             sector to petition the U.S. government to act on its behalf against unfair trade practices.
             “The Agriculture Trade Development and Assistance Act of 1954 (P.L. 480) as amended. and the
             Agriculture and Food Act of 1981 (P.L. 9798), as amended, authorized market development activities
             and the use of federal funds to develop, maintain, or expand foreign markets for I.S agricultural
             commodities. FAS determined that this should be accomplished through private, nonprofit agricul-
             tural organizations, known as cooperators, which should be required to share in the financial expense
             of the market development programs See our March 1987 report, International Trade Kev~rw of
             Effectiveness of FAS Cooperator Market Development Program (GAO/NSIAD-87-89), for details on
             the Cooperator Program.

             Page 8                                                       GAO/NSIAD90-225       Agricultural   Trade
              Chapter 1

              assist high value products and horticultural crops whose commodity
              groups had claimed that they were victimized by unfair trade practices
              that had not been addressed by USDA export programs. (See app. I for a
              list of TEA participants for fiscal years 1986 to 1990.)

              TEA market development activities can be implemented for generic
              and/or branded promotion. Generic activities, conducted by nonprofit or
              state-related organizations, are designed to increase the total market for
              that commodity, with no emphasis on a particular brand. Branded activ-
              ities, conducted by nonprofit organization producer members or private,
              profit-making firms, are aimed at establishing consumer loyalty to a
              particular brand. Generic promotion is used for most bulk commodities
              and may be useful for several nonbulk commodities in newer, largely
              undeveloped markets, and for complementing branded promotions. For
              many of the high value or consumer-ready products, branded adver-
              tising is the principal means of foreign market development. Branded
              promotion is associated with brand identification and consumer loyalty,
              but it also can benefit the commodity in general by increasing overall
              sales. (For a list of branded participants, see app. II.)

              The TEA program provides funding, primarily for consumer-related pro-
TEA Program   motions, for a wide array of commodities and products. Market develop-
Operations    ment activities are conducted throughout the world. This program,
              although similar to the Cooperator Program in types of activities con-
              ducted, provides significantly greater funding. In addition, participants
              in TEA must demonstrate that they have been adversely affected by
              unfair trade practices.

TEA Funding   Section 5 of the Food Security Improvements Act of 1986 set annual
              funding for the TEA Program at a minimum level of $110 million for
              fiscal years 1986 through 1988 and $325 million for 1989 and 1990. Our
              May 1988 report on the TEA Program identified a number of manage-
              ment weaknesses and expressed concern that an increase in the author-
              ized funding level of TEA from $110 million to $325 million for fiscal
              years 1989 and 1990 would exacerbate existing management problems.
              We also believed that the program could not effectively absorb more
              funding. Because of concerns over the budget deficit and ~~4smanage-
              ment problems that GAO and USDA'S Office of Inspector General (NC;)
              identified, the House and Senate Appropriations Committees reduced
              authorized TEA funding to $200 million annually for fiscal years 1989
              and 1990.

              Page 9                                      GAO/NSIAIWO-225   Agricultural   Trade
                                   Chapter 1

                                   Approximately 75 percent of TEA funds go toward consumer promotion4
                                   (See fig. 1.1.) The remainder is used for trade servicing,” technical assis-
                                   tance activities,” and/or trade shows. For fiscal year 1990,66 percent of
                                   budgeted funds were allocated to generic activities, and 34 percent were
                                   allocated to branded activities. (See fig. 1.2.) Approximately 50 percent
                                   of TEA funds for fiscal year 1989 were spent in Asian markets, with pro-
                                   motions in Japan alone accounting for 36 percent of the funds. Euro-
                                   pean countries were the next largest targeted markets, with promotions
                                   in the United Kingdom accounting for about 12 percent of TEA funds.
                                   (See app. III.) For fiscal year 1990, FAS estimates similar breakdowns.
                                   (See fig. 1.3.) In each year of the program, the top 15 commodity organi-
                                   zations, ranked by amount of TEA funds received, accounted for over 64
                                   percent of TEA funds. (See app. IV.)

Figure 1.l: Fiscal Year 1990 TEA
Worldwide Breakdown by Promotion

                                                                                          Trade servicing

                                                                                          Technical assistance

                                                75%   l                            -      Consumer related

                                    Source, FAS

                                    “Consumer promotion is designed to change consumers’ attitudes toward or make them aware of the
                                    advantages of U.S. agricultural products.

                                    “Trade servicing influences foreign traders, importers, wholesalers, and foreign government officials
                                    involved with importing, distributing, and marketing agricultural commodities and products.

                                    “Technical assistance addresses technical problems in selling, moving, processing, marketmg. or using
                                    U.S. agricultural products.

                                    Page 10                                                      GAO/NSIA.MO-225 Agricultural       Trade
                                   Chapter 1

Figure 1.2: Fiscal Year 1990 TEA
Promotional Strategy

                                                                    -    Branded oromotional activities

                                                                    -    Generic promotional activities

                                   Source: FAS

Figure 1.3: Fiscal Year 1990 TEA
Promotional Activities by Region
                                                                         Western Europe


                                                                         Pacific Rim

                                                  A                      Japan

                                   Source: FAS.

TEA Program Modeled                The TEA and Cooperator Programs conduct similar types of market
After Cooperator Program           development activities. However, TEA requires that a participant demon-
                                   strate that it has been adversely affected by an unfair foreign trade

                                   Page 11                                    GAO/NSIALMO-225     Agricultural   Trade
                       chapter 1

                       practice. It also has substantially larger funding and uses generic com-
                       modity certificates issued by the CCC rather than using appropriated
                       funds. The Cooperator Program focuses more on bulk commodities, such
                       as wheat, corn, and rice, while the TEA Program provides assistance pri-
                       marily to organizations representing high value horticultural crops, such
                       as fruits and nuts and processed products.

                       Although the activities of both the Cooperator and TEA Programs are
                       similar, TEA focuses more on consumer promotion. Many of the TEA par-
                       ticipants formerly were participants in the Cooperator Program, and
                       approximately half remain in both programs. Both programs receive
                       contributions from the participants in the form of cash, goods and ser-
                       vices,’ or contributions generated from foreign third parties.”

TEA Program Criteria   FAS  allocates money to TEA participants based on the following 10 cri-
                       teria, as listed in the Federal Register:

                       (1) the commodity or product to be promoted and the degree to which
                       the organization represents U.S. producer interests on a commodity or
                       nationwide basis,

                       (2) the degree to which exports of the commodity or product may ben-
                       efit from promotional activities,

                       (3) the dollar amount of assistance requested,

                       (4) the unfair foreign trade practice and the extent to which it has
                       adversely affected exports of the commodity,

                       (5) the extent to which the applicant organization is willing to con-
                       tribute resources to the joint project, including the source of projected
                       contributions that may be provided,

                       (6) the organization’s prior export development experience and the ade-
                       quacy of its administrative and personnel resources for the purposes of
                       planning and managing the requested program level,

                       7Goodsand services contributions are the TEA participants’ estimate of contributions made by a US.
                       industry member for which the TEA participant made no cash reimbursement.

                       “Third-party contributions consist of cash or goods and services from a foreign government or private
                       organization that has entered into a foreign market development agreement with a US participant to
                       assist in promoting the export of U.S. agricultural commodities.

                       Page 12                                                     GAO/NSIAD90-225      Agricultural   Trade

                           (7) the historical export levels of the commodity or product,

                           (8) the anticipated likelihood of success of the proposed project in terms
                           of increasing US. exports or mitigating the unfair trade practice or its

                           (9) whether or not the commodity or product is in adequate supply, and

                           (10) the extent to which the composition of the commodity or product is
                           of U.S. origin. Products whose origin is less than 50 percent from the
                           United States, computed on a volume or value basis, will not be

                           From TEA'S inception, FAS has encouraged participants to contribute a
                           certain percentage of their resources to the generic portion of the pro-
                           gram. These contributions are not required by legislation or by the TEA
                           guidelines. FM officials state that contributions demonstrate commit-
                           ment on the part of the participants and foster a cooperative relation-
                           ship between FAS and the participants. Nevertheless, FM has not made
                           contributions a formal requirement nor established uniform guidelines
                           for contributions.

                           The branded portion of the program is a matching funds arrangement in
                           which FAS reimburses private firms for a specified percentage of their
                           eligible expenses. Although FAS reimburses all firms representing a par-
                           ticular commodity or product at the same rate, this rate differs across
                           commodities. FAS officials told us this is because commodities that have
                           received a favorable decision under section 301 of the Trade Act of
                            1974, as amended, or have been adversely affected by retaliatory action
                           related to such decisions, are eligible for preferential reimbursement
                           rates. TEA guidelines state that participants in the generic portion of the
                           program must conduct evaluations of their activities. In addition, the
                           guidelines require that FAS conduct evaluations of the overall success of
                           TEA activities. However, FM has not required private firms in the
                           branded program to conduct evaluations of their activities.

TEA Application and        The TEA Program for each fiscal year is announced in a Federal Register
Funding Approval Process   notice that outlines criteria for participation and announces the amount
                           available for allocation. Interested parties then have 45 days to submit
                           their proposals to FAS. This deadline has been extended to 60 days for
                           the fiscal year 1991 cycle. The Commodity Divisions within FAS review
                           the proposals to determine whether the participants are eligible. The

                           Page 13                                      GAO/NSIAMO-225   Agricultural   Trade
                        Chapter 1

                        divisions then compile the funding recommendations into two- to four-
                        page proposal summaries and submit them to the FAS Assistant Adminis-
                        trator for Commodity and Marketing Programs (c&MP). After the Assis-
                        tant Administrator approves or revises the recommended amounts, the
                        summaries are forwarded, through the Administrator of FAS, to the
                        Undersecretary for International Affairs and Commodity Programs for
                        final approval.

                        Once approved for TEA funding, program participants must enter into
                        agreements with the ccc that define their obligations and responsibili-
                        ties under the program. They then submit detailed activity plans and
                        budgets to FAS for approval before beginning activities. These plans con-
                        tain descriptions of the proposed activities, anticipated contributions
                        and their source, and ways to measure the extent to which such activi-
                        ties affect the identified constraints to market expansion. Participant
                        expenditures are partially reimbursed from CCCresources, subject to
                        reviews by the FAS Compliance Review staff and audits by USDA'S Office
                        of Inspector General.

                        In our May 1988 report, Agricultural Trade: Review of Targeted Export
Previous GAO Report     Assistance Program (GAO/NSIAD-SS-183),   we stated that FAS was imple-
                        menting the TEA Program with insufficient accountability and manage-
                        ment controls. We recommended that FAS document its decision-making
                        process for funding allocations as well as the basis for its decisions on
                        the type and amount of participant contributions. While FAS had criteria
                        in place, it was not clear how those criteria were applied or ranked. In
                        addition to other management problems that we identified, FAS had not
                        established clear guidelines on the purpose, scope, and cost of partici-
                        pant evaluations. FM was not adequately using evaluations as an over-
                        sight or management tool. Because of this, evaluations were not
                        influencing subsequent program funding decisions. FAS officials
                        responded to our 1988 report by stating that corrective action would be
                        taken on documentation procedures and in evaluation of the program.

                         Representative Charles E. Schumer asked us to conduct a review of the
Objectives, Scope,and    management of the Department of Agriculture’s Targeted Export Assis-
Methodology              tance Program. We focused our review on (1) documentation of key pro-
                         gram decisions such as funding allocations and participant
                         contributions, (2) oversight of all program participants, (3) the ade-
                         quacy of the program’s guidelines, and (4) the Department’s efforts to

                         Page 14                                    GAO/NSIAD-90-225   Agricultural   Trade
Chapter 1

improve its evaluation process. A later review will examine the effec-
tiveness of F&3-funded market development activities in foreign markets.

To determine the adequacy of Fti program guidance, documentation,
and oversight of program participants, we interviewed FAS officials
responsible for management and oversight of TEA and reviewed docu-
ments and files from FAS' Commodity Divisions and the Marketing Pro-
grams Division to determine the basis for FAS decisions and the adequacy
of FAS documentation for program decisions. We interviewed numerous
TEA participants-private,   nonprofit agricultural organizations, state-
related associations, and private exporting companies-to determine
how they are administering their activities and how closely they coordi-
nate with and report to FAS. We coordinated with USDA'S Office of
Inspector General, which was conducting a similar review, concerning
FM management deficiencies and third-party contributions to the

To determine the success of FAS efforts to improve participant evalua-
tions of their activities and its own steps to evaluate the program, we
attended evaluation workshops sponsored by FAS and conducted by
Management Systems International. We attended a food show sponsored
by the National Association of State Departments of Agriculture, where
we met with several TEA participants to discuss how they manage their
activities and how they gauge the success of their programs. We
attended the annual U.S. Agricultural Export Development Council
Workshop to discuss program management and market development
issues with FAS officials and TEA participants.

Our work was conducted from March 1989 to June 1990 in accordance
with generally accepted government auditing standards.

As requested, we did not obtain official agency comments on a draft of
this report but discussed its contents with appropriate agency officials.
Their comments have been incorporated where appropriate.

Page 15                                     GAO/NSIAMO-225   Agricultural   Trade
TEA Program Administration Lacks Sufficient
Management Control and Accountability

                        We examined the extent to which FAS has implemented recommenda-
                        tions made in our May 1988 report. While some improvement has been
                        made, FAS has not taken sufficient steps to ensure that the program is
                        being managed with adequate internal controls. Funding decisions are
                        still not adequately documented, only limited market analyses are being
                        done by FAS marketing specialists, and contributions from participants,
                        although encouraged, are not yet required. Regulations are needed to
                        establish more consistent program guidance. Personnel practices, such
                        as rotational assignments, lack of technical training, and narrowly
                        targeted recruiting, have adversely affected TEA program management.
                        Administrative efficiency and program effectiveness could be enhanced
                        by combining the TEA and Cooperator Programs into one market devel-
                        opment program.

                        A key finding in our previous report on TEA was that FAS was not ade-
Funding Decisions not   quately documenting the funding allocation decision process to clearly
Adequately              show how funding criteria were applied and ranked and the basis for
Documented              those decisions.

                        After applications are submitted, the Commodity Divisions and the Mar-
                        keting Programs Division review their adherence to criteria and assess
                        the strength of the proposals. Marketing specialists then develop two- to
                        four-page summaries on each proposal. For each proposal, the mar-
                        keting specialists make an initial recommendation on funding levels,
                        based on their knowledge of the organization, the commodity and, if
                        specified, the countries where the activities are planned. The summaries
                        are written after internal division meetings are held, then presented to
                        the Assistant Administrator, C&MP, for review and approval. If the
                        Assistant Administrator changes a recommended funding amount, the
                        TEA summary is amended to incorporate the change and the rationale for
                        it. These summaries are then forwarded, through the Administrator of
                        FAS, to the Undersecretary for International Affairs and Commodity Pro-
                        grams for final approval.

                        Our review of the TEA summaries for fiscal years 1989 and 1990 shows
                        that minimal analysis and documentation exist to support recom-
                        mending such large funding amounts. Without adequate documentation,
                        the opportunities or risks for inconsistent, inequitable, and inappro-
                        priate funding decisions increases.

                        The TEA summaries for fiscal year 1990, although improved from the
                        previous year, remain the only source of documentation for these

                        Page 16                                    GAO/NSIAD-SO-225   Agricultural   Trade
Chapter 2
TEA Program Administration    Lacks
Sufficient Management Control
and Accountability

funding decisions and, as such, do not adequately document how and
why funding decisions are made. For example, there is no mention in
TEA summaries of an applicant’s past performance in both the TEA and
Cooperator Programs; no explicit rationale is presented as to why the
applicant is requesting a certain amount of TEX funds or why FASis
approving a particular funding amount; and limited information is
presented on the probable success in the proposed countries (in large
measure because FAS has not done many in-depth market analyses).

In fiscal year 1990, no changes were made to the individual TEA recom-
mendations of the Assistant Administrator, C∓ however, in previous
years, when funding level changes were made either by the Adminis-
trator or the Undersecretary, the rationale for such changes was not
documented. No record exists of discussions between the Commodity
Divisions and the Assistant Administrator, CAMP. Therefore, it is diffi-
cult to know if factors other than the application criteria are influencing
those changes.

FAS experienced significant changes in top-level management during
1989. The officials responsible for fiscal year 1990 funding level
approvals-the     Assistant Administrator, C∓ the Administrator of
FAS; and the Undersecretary for International Affairs and Commodity
Programs-assumed their positions in early 1989. The Administrator
made no changes to the funding recommendations submitted by the
Assistant Administrator, and the Undersecretary recused himself from
deciding on all funding allocations for fiscal year 1990 because of his
past association with one ‘~XAparticipant. The final funding approval
for fiscal year 1990 was made by the Administrator, Agricultural Stabi-
lization and Conservation Service, who is a member of the Board of the

The Federal Managers’ Financial Integrity Act of 1982 (31 U.S.C.
3512 (b)) requires executive agencies to establish and maintain systems
of internal control that are to be consistent with the Comptroller Gen-
eral’s Standards for Internal Controls in the Federal Government. These
standards call for internal controls to provide reasonable assurance that
the use of resources is consistent with applicable laws, regulations, and
policies; resources are safeguarded against waste, loss, or abuse; and
reliable data are maintained and fairly reported. The standards recog-
nize that the cost of internal control should not exceed the benefits to be
derived and that judgment needs to be exercised in determining the
extent of control needed. The standard on documentation, which all
agencies are required to follow, states that all transactions and other

Page 17                                      GAO/NSIAD90-226   Agricultural   Trade
                            Chapter 2
                            TEA Program Administration    Lacks
                            Sufficient Management Control
                            and Accountabiity

                            significant events are to be clearly documented, and the documentation
                            is to be readily available for examination. Such documentation must be
                            purposeful and useful to managers in controlling their operations, and to
                            auditors or others involved in analyzing operations.

Overreliance on             Several FAS officials have stated that documentation should not be an
                            issue because of the “institutional memory” that exists in FM. However,
Institutional Memory        our review indicates that this knowledge base is lacking. Several of the
                            marketing specialists who work directly with the participants and make
                            day-to-day decisions concerning their programs are either new to that
                            division or new to the TEA Program and have not had significant experi-
                            ence working with the commodity organizations. This lack of familiarity
                            is exacerbated by FAS' lateral reassignment policy for Foreign Service
                            personnel. Such reassignments have recently been encouraged to diver-
                            sify Civil Service staffs experience. Diversified experience has for sev-
                            eral years been considered essential for Foreign Service personnel or
                            career candidates for the Foreign Service, in preparation for overseas
                            assignments. The rotational policy for both the Civil Service and Foreign
                            Service staff provides diverse experience but also heightens the need for
                            documenting key decisions.

                            Because little documentation exists from previous marketing specialists,
                            the new specialists have to rely on the few staff in FAS who have been
                            involved with marketing programs and particular commodity organiza-
                            tions for several years. The Assistant Administrator, CMP, told us that
                            the staff were not resistant to documentation, but that they just did not
                            have the time because of their many administrative and program
                            responsibilities. A few marketing specialists confirmed these time con-
                            straints. By not ensuring that its staff are documenting program deci-
                            sions adequately, however, FAS is preventing the very establishment of
                            what could be considered “institutional memory.”

Problems With Participant   One of the major ways that participants conduct promotional activities
Documentation               is by contracting out for services. TEA guidelines provide general gui-
                            dance on procedures for contracting, but FAS does not closely enforce
                            them. Lack of documentation has also been a problem with some partici-
                            pants. FAS' Compliance Review staff have found many cases, particu-
                            larly where participants contract out for services, where the
                            participants could not provide proper documentation to support claims
                            for such expenses as advertising and other promotional activities. TEA

                            Page 18                                     GAO/NSIAD&226   Agricultural   Trade
                      Chapter 2
                      TEA Program Administration    Lacks
                      SufTicient Management Control
                      and Accountabiity

                      guidelines do not adequately refer to basic elements of Federal Acquisi-
                      tion Regulations, such as bidding procedures, minimum required docu-
                      mentation to justify reasonableness of costs, and principles of contract
                      management. In the past, the Compliance Review staff has found that
                      TEA participants have not exercised sufficient control over contractors.

                      To understand the difficulties that the participants were having con-
                      cerning contracting issues and to avoid further problems, a group of
                      CAMP officials formed a team to outline the problems and propose some
                      possible solutions. In a summary report on their findings in June 1989,
                      the group noted that participants’ problems in this area stem from inad-
                      equate FAS guidelines and the lack of contract management knowledge
                      on the part of FAS and the participants. The group suggested that FAS
                      clarify TEA guidelines but said that the participants should be respon-
                      sible for developing or obtaining additional contracting expertise. FAS
                      officials have told us that they do not want to provide too much detail
                      concerning contracting issues because they are not contract experts.
                      They believe that contract management is the responsibility of the indi-
                      vidual participant.

                      FAS  is relying solely on the Compliance Review Office to catch instances
                      of noncompliance after they occur. FM is not exercising adequate over-
                      sight of its participants during the activity plan year to ensure that con-
                      tracts are being properly managed. Without such program oversight,
                      recipients of FAS market development funds are left on their own to
                      handle bidding procedures and other elements of contract management,
                      including how to determine reasonableness of costs, how to assure per-
                      formance, and what documentation is required. FM has not provided
                      specific guidance to participants or made itself readily available to par-
                      ticipants to answer contracting questions.

                      Commodity Division staff are not aggressively analyzing potential
FAS Staff Do Little   opportunities for their commodities in new markets or new ways of pro-
Market Analyses       moting those products in established markets. We found no evidence of
                      any formal coordination among FAS divisions on cross-commodity
                      and -country analyses. Information sharing that could potentially lead
                      to new opportunities for some commodities or products or alert others to
                      problems experienced in specific countries is only being done on an ad
                      hoc basis.

                      Marketing specialists in the Commodity Divisions have limited time to
                      devote specifically to market analysis. While the marketing staff in the

                      Page 19                                      GAO/NSIAD-W226   Agricultural   Trade
                          Chapter 2
                          =pro(pam         Admidbatlon Lacks
                          Sumdent    Management C4mtrd
                          and Accountability

                          Commodity Divisions has increased, so, too, have the programs and
                          responsibilities. One FAS official noted that much of what is done to
                          administer and evaluate TFA activities could be considered market ana-
                          lysis. For example, when the marketing specialists or the Directors or
                          Deputy Directors of the Commodity Divisions travel to countries where
                          TEA activities are being conducted, they can accumulate information
                          about the market and the success of a commodity in that market. How-
                          ever, in our review, we have not seen sufficient evidence that FAS is
                          accumulating more substantial, documented expertise in market

                          During the course of this review, FAS officials told us that there are no
Contributions Are Still   set criteria for establishing contribution levels because they believe con-
not Fornmlly Required     tribution amounts should be decided on a case-by-case basis. FM believes
                          that contributions demonstrate commitment and an ability to adminis-
                          tratively handle the program. However, FAS has been reluctant to for-
                          mally require contributions. In describing why FAS does not wish to
                          require contributions, one official explained that participants in TEA
                          represent injured parties (because of the existence of a UTP)and there-
                          fore cannot always contribute much. However, at least half of the par-
                          ticipants in TEA have also been in the Cooperator Program, where they
                          have contributed approximately one-third of the market development
                          funds. Although the Cooperator Program involves much lower funding
                          levels, these participants have been making contributions, so the con-
                          cept of shared funding in a market development program is not new. We
                          see no reason why contributions should not be a requirement for

                          FAS, in its proposed regulations currently out for public comment, is
                          establishing a minimum required contribution level. In practice, FAS has
                          been withholding approval, beginning with fiscal year 1989, of partici-
                          pants’ marketing or activity plans, if participants were offering less
                          than a 5-percent contribution. We believe that this requirement should
                          remain in the regulations to ensure adequate commitment on the part of
                          all participants.

                          Although it appears that most organizations are contributing to the pro-
                          gram, FAS does not have adequate data on whether and how much each
                          participant is contributing. Contribution amounts are not well docu-
                          mented and do not meet the test of transparency, that is, FAS does not
                          show the variations in the type and amount of contribution in relation-
                          ship to the nature and extent of the individual FAS funded activities.

                          Page 20                                     GAO/NSIAD-90-225   Agricultural   Trade
                            Chapter 2
                            TEA Program Administration    Lacks
                            Sufficient Management Control
                            and Accountability

                            FAS' justificationfor not adequately documenting the basis for the type
                            and amount of participants’ contributions is that contributions are not
                            legislatively required, and the ability to contribute varies among pro-
                            ducer groups.

Third-Party Contributions   Third-party contributions consist of cash or goods and services from a
                            foreign government or private organization that has entered into a for-
                            eign market development agreement with a U.S. participant to assist in
                            promoting the export of U.S. agricultural commodities. In our 1988
                            report, we recommended that FAS define the importance of third-party
                            contributions in the funding decision process and more closely enforce
                            the guideline that the participants document the method by which third-
                            party contributions are derived. Since then, FM has revised its guide-
                            lines to require participants to document the method for computing non-
                            cash (third-party and goods and services) contributions and to make
                            documentation of such contributions available for audit.

                            USDA’S Office of Inspector General is conducting a follow-up review of its
                            March 1988 audit report on TEA concerning third-party and other contri-
                            butions. OIG officials have told us that their current review focuses on
                            whether third-party contributions are, in fact, being made as reported
                            on the participants’ end-of-year report and whether participants are
                            maintaining adequate documentation to support such contributions. In
                            addition to the verification of third-party contributions, OIG officials
                            advised us that they are assessing the extent to which FAS is monitoring
                            and verifying contributions to the program.

                            Narrowly targeted recruiting and the lack of technical training, coupled
Personnel Practices         with the staff reassignments previously discussed, have adversely
Affect TEA Program          affected TEA Program management.

Recruitment Focus Is        Until recently, FAS hired only those with a master’s degree in agricul-
Being Broadened             tural economics. Consequently, many in FAS have little or no background
                            in export marketing. An FM official told us that the agricultural attaches
                            stationed abroad need an agricultural economics background because
                            they are responsible for preparing economic analyses and statistical

                            Page 21                                     GAO/NSIAIMO-226   Agricultural   Trade
                       Chapter 2
                       TEA Program Administration    Lacks
                       Sufficient Management Control
                       and Accountability

                       reports. We believe that the attaches and FAS headquarters staff man-
                       aging the TEA and Cooperator Programs, however, also need expertise in
                       marketing and business.

                       Until recently, FAShad not seen the need to broaden its outreach and
                       recruit more staff with such expertise. FAS has recently completed a job
                       analysis reviewing the academic backgrounds necessary to fill positions
                       in its headquarters and overseas offices. Based on this review, FAS has
                       decided to expand its recruitment to include people with economics
                       backgrounds other than in agriculture. FASalso plans to do some limited
                       hiring of specialists with marketing backgrounds for the headquarters

More Formal Training   FAS does not provide adequate technical training to its staff. For
                       example, FAScurrently offers no training in marketing or business. It
Needed for Marketing   offers a variety of seminars and field trips over a 24-month period in its
Specialists            Professional Career Development Program, but this program is only
                       geared to entry-level GS-5 through GS-9 economists.

                       An FM Executive Summary, prepared by a task force several years ago,
                       stated that a survey of private sector representatives found that many
                       FAS officers were weak in their ability to identify market development
                       opportunities and in their ability to plan and implement market develop
                       ment activities. A 1987 FXs-sponsored evaluation of the TEA Program in
                       Japan observed that it would be useful if TEAprogram managers had
                       more training and experience in business administration. FAS has
                       recently advised us that it is currently setting up contracts with univer-
                       sities and consultants to provide in-house marketing training to its staff.

                       The FM Assistant Administrator for Management acknowledged that
                       there has been no technical training in FAS. E&sting training has focused
                       on managerial and supervisory training because FAS officials believed
                       this to be a priority. However, FAS has recently begun an orientation pro-
                       gram for new employees and has initiated a reentry program for
                       returning attaches. FAS officials told us they are planning to develop
                       technical training for the marketing specialists.

                        Page 22                                     GAO/NESIAD8&225 Agrkultnral   Trade
                     Chapter 2
                     TEA Program Administration    Lacks
                     Sufficient Management Control
                     and Accountability

                     Several TEA participants have complained that the TEA guidelines are
Regulations Are      always changing, making it difficult to plan and administer their pro-
Neededto Establish   grams. Some FAS marketing specialists acknowledged this fact but indi-
Clearer and More     cated that factors beyond their control, including congressional criticism
                     of the guidelines, necessitated such changes.
Consistent Program
Guidance             The current Assistant Administrator, CAMP, acknowledged that the
                     guidelines have had several changes and said that when a change is
                     made, all TEA participants are notified. He pointed out, however, that
                     often it is not the guidelines themselves that have changed but FAS’
                     interpretation of the guidelines. This highlights a problem that exists in
                     the Commodity Divisions. Within the Divisions, both the managers and
                     the marketing specialists often do not have extensive experience either
                     with the commodity organization or with a marketing program such as
                     TEA. If the guidelines are not sufficiently clear and specific, or if the
                     policy direction coming from the office of the Assistant Administrator is
                     not clear, then it is likely that guideline interpretations will differ. While
                     guideline changes may be necessary because of changing circumstances,
                     FAS needs to ensure that such changes are adequately communicated to
                     the participants.

                     Because the guidelines were unclear and there was no formal mecha-
                     nism for communicating guideline changes to the participants other than
                     occasional memos, GAO recommended in testimony before Congress on
                     November 16, 1989, and February 21, 1990, that FAS establish regula-
                     tions in place of the guidelines. Such a step would improve program
                     administration, and regulations would allow for a 60-day comment
                     period by all participants and other interested parties. This would elimi-
                     nate discretionary changes to the program and would establish standard

                     USDA’S OIG and the Office of Management and Budget also have con-
                     cluded that establishing regulations is necessary to ensure fairness and
                     consistency in the application of program criteria. Although some FAS
                     officials have in the past opposed regulations because they believed
                     such regulations would impede the flexibility needed to manage a
                     market development program, the Administrator of FAS established a
                     task force in January 1990 to write regulations for the TEA Program.
                     Draft regulations, approved by the Office of Management and Budget,
                     were published in the Federal Register in April 1990 and are awaiting
                     public comment before being made final.

                      Page 23                                       GAO/hWAD-90-226 Agricultural   Trade
                        Chapter 2
                        TEA Program Administration    Lacks
                        Suffident  Management Control
                        and Accountability

Inadequate Management   FAS officials often do not have basic management information about
                        their TEA participants. For example, some officials could not tell us
Tracking System         whether and for how long their TEA participants had been in the Cooper-
                        ator Program. Funding and other program decisions under the Cooper-
                        ator and TEA Programs are not coordinated for each participant and,
                        thus, the full scope and capability of a participant’s market develop-
                        ment activities may not be known. Duplication of effort may occur.

                        FAS officials tell us that the TEA Program is a success, but they only cite
                        increased sales as proof. They do not have readily available, basic man-
                        agement data, such as total amount of TEA funding and types of activi-
                        ties for all commodities in a particular country; total amount of TEA
                        funds used for branded promotion; and information on the extent of
                        participants’ adherence to their evaluation requirements. It was also dif-
                        ficult to obtain some of the information we received from FAS. For
                        example, when we requested a list of all branded participants and their
                        allocated amounts, FAS did not have this information readily available.
                        Each marketing specialist in each Commodity Division keeps a hard
                        copy of information on branded participants they are responsible for,
                        and there was no central list available. We had to request such informa-
                        tion more than once from FAS and then had to wait weeks to obtain the
                        data. Appendixes I and II of this report contain data on TEA participants
                        that were directly provided by FAS. Appendixes III and IV are a GAO
                        analysis of FAS data, showing the top countries and participants
                        receiving the most TEA funds.

                        Our review also indicated that FAS currently does not have sufficient
                        management information system capability to develop, coordinate, and
                        track large amounts of program data. Without such capability, FAS
                        cannot effectively aggregate and/or analyze the data from its market
                        development programs. This type of information is important if FAS offi-
                        cials are to effectively manage the program and plan its future direction.
                        FAS has recently acknowledged that its management information system
                        needed to be upgraded and is taking steps to expand the capability of its

Unfair Trade Practice   Legislation authorizing the TEA Program established that it should be
Requirement Restricts   used to counter or offset the adverse impact of foreign unfair trade
                        practices. Priority consideration was to be given to those commodities
Participation           that have received a favorable decision under section 30 1 of the Trade
                        Act of 1974, as amended, or have been adversely affected by retaliatory

                        Page 24                                       GAO/NSIAD90-226 Agricultural   Trade
                          Chapter 2
                          TEA Program Administration    Lacks
                          Sufficient Management Control
                          and Accountability

                          actions related to such decisions. FAS considers this to be a prerequisite
                          for eligibility under the program.

                          FAS expanded the UTP requirement for fiscal years 1989 and 1990 by
                          requiring multicommodity or product groups to show a UTP on every
                          product involved in export promotion. For example, if a company par-
                          ticipating in the branded program wishes to promote several items in its
                          grocery line, such as tomato sauce, salad dressing, and fruit cocktail, it
                          would have to demonstrate the effects of a UTPon each of those items.
                          The Director of the High Value Products Division has said that this
                          requirement has caused numerous companies to be denied funding
                          under the branded program because they could not demonstrate a LJTPor
                          could not estimate the damage for each product.

                          Several participants have suggested that having been adversely affected
                          by a UTP should not be a requirement for participation in a program
                          designed to promote market development and increase exports.

                          Combining the TEA Program with the Cooperator Program would seem to
A Combined TEA and        be a more efficient use of FAS resources. Marketing specialists and other
Cooperator Program        FAS officials presently spend their time dealing with the two programs
Could Be More             separately because they operate under different deadlines. Little coordi-
                          nation exists between the two programs. When TEA funding levels are
Efficient and Effective   being discussed, the extent of Cooperator funding received by the appli-
                          cant or the applicant’s performance in the Cooperator Program is not
                          routinely considered. FAS officials said that its staff are so busy with
                          day-to-day operational and administrative issues that they have little
                          time for such considerations. We believe, however, that because FAS has
                          numerous program responsibilities with limited staff, combining the two
                          programs would be a more efficient use of staff time and could poten-
                          tially provide program managers with more time to address strategic
                          planning and policy issues.

                          FM officials have been reluctant to combine the two programs because
                          of the different funding authorities and the UTPrequirement that is a
                          prerequisite for participation in the TEA Program. In addition they
                          noted that the TEA Program focuses mainly on high value commodities
                          and products, while the Cooperator Program has traditionally been ori-
                          ented toward bulk commodities. They expressed concern that a com-
                          bined program would become dominated by either high value or bulk
                          commodities, to the detriment of the other.

                          Page 26                                       GAO/NSIAD-W226   Agricultural   Trade
                                Chapter 2
                                TEA Program Administration    Lacks
                                Sufficient Management Control
                                and Accountability

                                Nevertheless, we believe that a combined program would facilitate deci-
                                sion-making for program specialists because they would then have one
                                set of criteria for funding allocations, participant contributions, program
                                evaluations, and other aspects of program administration. In addition,
                                the program guidelines, operating procedures, and information require-
                                ments could be the same.

                                Finally, a combined program would also make market development
                                activities more effective. Both programs fund the same types of activi-
                                ties, such as consumer promotion, trade servicing, and technical assis-
                                tance. A combined program could continue to tailor the activity to the
                                commodity or product being promoted. Because approximately half of
                                the TEA participants are also in the Cooperator Program, coordination of
                                activities would prevent duplication of effort and would provide more
                                complete and accurate information to management concerning the scope
                                of market development activities worldwide.

                                Combining the two programs can only be done in the event that the TEA
                                Program is reauthorized. One difficulty in combining the two programs
                                would be that TEX requires the demonstration of a UTP.However, in the
                                current version of the proposed House and Senate Agriculture Commit-
                                tees’ 1990 Farm Bill legislation, TEA would be reauthorized, although
                                under a different name. Also, both versions have removed the UTP
                                requirement as a prerequisite for participation, but would provide pri-
                                ority assistance to those who could demonstrate adverse effects from
                                UTFS.Removal of the UTPas a requirement for participation makes the
                                TEA Program, or its replacement, even more similar to the Cooperator
                                Program and would facilitate combining the two programs.

Policy Issues to Consider       Regardless of whether the two programs are combined or maintained
for Determining Market          separately, we believe that the following issues should be clarified in
                                order for FAS to more effectively use its market development resources:
Development Program
Direction                   l   the percent of total funding that should be allocated to generic and/or
                                branded promotion,
                            l   the combined emphasis to be placed on exports representing high value
                                products and/or bulk commodities,
                            l   the division of funding between new market development and main-
                                taining established markets,
                            l   allowing large, well-established private firms to participate or focusing
                                resources on helping small, and/or new-to-market firms obtain a foot-
                                hold in the market, and

                                Page 26                                      GAO/NSLAKNO-226   Agricultnral   Trade
                          Chapter 2
                          TEA Program Administration    Lacke
                          Sufficient Management Control
                          and Accountability

                  l       the establishment of criteria for the amount of time that participants
                          could remain in the programs before they would be expected to maintain
                          their market presence on their own.

                          While improvements have been made in program administration over
Conclusions               the life of the TEA Program, further action is needed. FAS continues to
                          make important program decisions, such as funding allocations and
                          amount and type of contributions from each participant, with minimal

                          Because the TEA Program involves substantial funding to the private
                          sector, FAS should ensure accountability by providing a rationale for its
                          decisions. FAS also needs to communicate clearly to program participants
                          the responsibilities of receiving government funding. These responsibili-
                          ties include adequate documentation and adherence to program guide-
                          lines. The long-term and often “intuitive” nature of market development
                          does not override the need for documenting program decisions and
                          transactions. Accurate and sufficient documentation is a requirement
                          for proper internal controls.

                          Although FAS is now basing its funding allocation decisions on more
                          information than before, it does not appear to be developing the type of
                          information that could lead to more effective use of TEA funds. Such
                          information should come from in-depth marketing analyses, coordina-
                          tion of activities under the TEA and Cooperator Programs, evaluation
                          results from previous activities, and a sharing of information among all
                          Commodity Divisions.

                          Although FAS has believed for some time that contributions demonstrate
                          commitment and administrative ability, it had been reluctant to for-
                          mally require such contributions. However, FAS recently established, as a
                          matter of policy, that promotional activities will not be approved unless
                          participants contribute at least 5 percent of the TEA resources approved,
                          and it has incorporated such a requirement in the proposed regulations.

                          We recommend that the Secretary of Agriculture direct the Adminis-
Recommendations           trator of FAS to do the following:

                      l   Comply with federal standards for internal controls by adequately docu-
                          menting major program decisions, including the funding allocation deci-
                          sion process, to clearly show how funding criteria were applied and

                           Page 27                                    GAO,NXAD9O-226   Agricultural   Trade
    Chapter 2
    =pro(gam        Mmhhtration  Lncka
    Suflldent Management Control
    and Acumntability

  ranked and the basis for those decisions,and the rationale for deter-
  mining the type and amount of contributions from each participant.
l Better ensure that TEAfunds are allocated for those commodities and
  markets with the greatest potential for successfulmarket development
  by performing in-depth market analyses,improving the coordination
  between the TEAand Cooperator Programs, and enhancing the informa-
  tion sharing among FM ccmunodity Divisions.
. Require that participants in the generic portion of the program con-
  tribute a minimum of 6 percent of the TEAresourcesapproved, as pro-
  posed in FM' draft regulations.
. Develop formal technical training programs for program specialists in
  such areas as marketing and business.
. Develop a managementinformation system that will provide easy access
  for program managersto basic summary data on participants and pro-
  gram operations for market development programs.
l Combine the TEAand Cooperator Programs, if the TEAProgram is
  reauthorized, to facilitate program administration and to maximize pro-
  gram effectiveness.

    Page 28                                GAO/NSIADW226   Agricdtnral   Trade
-~~~ ~   ~

FM Imposes Minimal Control Over the Branded
Portion of the TEA Program

                    FM  does not adequately monitor the administration of the branded pro-
                    gram’ to ensure proper accountability of the resources made available.
                    Although there are guidelines on how Cooperator and regional groups
                    should administer the branded funds, FAS appears to pay little attention
                    to assuring that these guidelines are followed. For example, F.&S has dele-
                    gated responsibility for administration of the branded program to the
                    Cooperators and regional groups, with the exception of the three Export
                    Incentive Programs (EIP), for which no cooperator groups exist. FAS’
                    oversight of these organizations does not appear to be adequate to pro-
                    vide sufficient information on branded activities. In addition, FAS does
                    not require those in the branded program to conduct evaluations of their
                    activities, as it does for those in the generic program.

                    FM officials have noted that because the prir7ate firms are contributing
                    matching funds, it is in their best interest to manage their program suc-
                    cessfully. We believe, however, that FM should retain more oversight
                    over this program because of the substantial amounts of government
                    funds involved. For fiscal year 1990, approximately 35 percent of the
                    TEA funds, or $68 million, was spent on branded activities.

                    An official from the Marketing Programs Division questioned why such
                    oversight was needed, stating that FAS cannot exclude anyone from par-
                    ticipating in the program. FAS criteria for the branded program are broad
                    and allow both large and small or new-to-market firms to participate as
                    long as they can demonstrate having suffered from a UTP. Nevertheless,
                    if wide participation in the program is an FM goal, this should not pre-
                    clude FM from exerting sufficient oversight over the participants to
                    ensure that guidelines are met and that activities conducted are the
                    most appropriate for benefiting the industry as a whole.

                    Firms and organizations representing different commodities in the
                    branded program are reimbursed at different rates, and it is not clear,
                    both from internal FAS documents and from conversations with FM offi-
                    cials, why such variations exist.

                    There is debate within FM and Congress on whether branded promotion
Controversy Over    is more effective than generic promotion in developing new markets and
Branded Promotion   whether branded promotion should be funded with government market

                    ‘There are two ways that private firms can participate in the branded portion of the TEA Program:
                    (1) through the Export Incentive Program (EIP), where FAS directly enters into agrwmcxnts with
                    private firms; and (2) through branded promotion programs administered by nonprofit .qmrultural
                    organizations or state regional groups.

                    Page 29                                                    GAO/NSIAD-90-225     Agricultural   Trade
                      Chapter 3
                      FAS Imposes Minimal Control Over the
                      Branded Portion of the TEA Program

                      development funds. One official noted that there is concern over the use
                      of taxpayer funds to assist certain companies in promoting their own
                      brands. Several of these profit-making companies that participate in TEA
                      are large, multiproduct corporations. Some FAS officials and program
                      participants have expressed concern that TEA funds are being used to
                      help fund foreign market development activities by certain large, well-
                      established corporations.

                      Generally, marketing specialists and TEX participants believe that,
                      depending on the commodity, branded activities can be the most effec-
                      tive way of establishing a market presence. Some products, such as
                      wine, are known by their brand names. Some believe that by estab-
                      lishing a niche for a particular brand, one company may open up the
                      market for other brands. Others say that branded advertising benefits
                      the whole industry because as exports increase, the domestic supply is
                      decreased, and prices go up.

                      Many government and private sector marketing experts agree that
                      branded advertising is more effective for high value products. Because
                      of congressional interest in increasing exports of high value and value-
                      added commodities and products, FAS should decide how much funding
                      should be dedicated to branded activities, and it should establish a
                      better system for tracking such activities.

                          reimburses private firms participating in the branded program for a
Reimbursement Rates   FAS
                      specified percentage of eligible promotional expenses. FAS officials have
Vary Among            told us that reimbursement rates are the same within a commodity but
Commodities           vary among commodities. For example, some commodities are reim-
                      bursed at a 50-percent rate and others at a 67-percent or 75-percent
                      rate. Several FAS officials have told us they do not know the reason for
                      the varying rates. A July 1988 internal FAS memo acknowledges that
                      inconsistencies exist in the reimbursement rates that could lead others
                      to accuse FAS of being either arbitrary or unfair. FAS has recently pro-
                      posed that all reimbursements be limited to 50 percent.

                      Unlike commodity organizations participating in the generic program,
No Evaluations        private firms and organizations in the branded program are not required
Required in the       to conduct evaluations of their activities. FAS officials believe that
Branded Program       because these firms are contributing up to 50 percent of their own
                      funds, their self-interest will ensure successful promotions, and FAS has
                      no plans to require such evaluations. While we agree that, on the one

                      Page 30                                     GAO/NSIAD!W225   Agricultural   Trade
Chapter 3
FAS Imposes Minimal Control Over the
Branded Portion of the TEA Program

hand, private, profit-making firms spending up to 50 percent of their
own funds to perform market development activities would have normal
business incentives to conduct effective activities, on the other hand,
these firms’ promotional expenses are being reimbursed 50 percent or
more with government funds. Nevertheless, these firms have virtually
no evaluation requirements other than to submit end-of-year sales data.
Even though a firm may be motivated by business incentives, it never-
theless is paying only 50 percent or less out of its own pocket, while the
government is picking up the rest of the cost of promotion. Therefore, it
is possible that a firm would consider conducting a promotional activity
even if the value of such activity were only worth the 50 percent that
the firm is contributing.

Our review also indicated that there have been no evaluations of the
branded program to demonstrate that promotional activities taking
place with TEA funds are in addition to what would have taken place in
the absence of the TEA Program. For example, if a firm were going to
spend $1 million for promotional activities in a particular country, with
or without TEA, then the TEA grant becomes a subsidy to the firm
without any public benefit in the form of additional promotions and
increased exports.

A senior official in MPD told us that some of the nonprofit cooperator
groups administering the branded program hire independent third par-
ties to evaluate the impact of the branded program in a given market. In
this case, the firm conducting the evaluation would assess the activities
of all the private firms operating in a given market and provide a report
to the cooperator that would then be forwarded to FAS. However, this
official noted that although such evaluations are recommended on occa-
sion by the Commodity Divisions, in general, sales data reports are all
that are required from the nonprofit cooperator groups administering
the branded program.

FAS management believes that such data are sufficient to ensure addi-
tionality (that is, total sales of a commodity or product go up, instead of
the different firms representing that commodity or product taking
market shares from each other). FAS also believes that it is not prudent
to allow TEA funds to be used by individual private firms to evaluate the
relative success of their brand as compared to other U.S. brands in the

However, in reviewing the list of branded participants and their allo-
cated amounts for fiscal year 1989 (see app. II), it is apparent that there

Page 31                                      GAO/NSIAlMO-225   Agricultural   Trade
                  Chapter 3
                  FAS Imposes Minimal Control Over the
                  Branded Portion of the TEA Program

                  is a wide range of funding, from a low of $700 to a high of $9.2 million,
                  that is provided to individual private firms and organizations repre-
                  senting different commodities and products. Unless FAS and the non-
                  profit cooperator organizations evaluate the activities of individual
                  participants and of the branded program overall, there are no assur-
                  ances that funds provided are effective in establishing a market pres-
                  ence for U.S. commodities and products and that activities conducted by
                  individual firms and organizations are the most appropriate to benefit
                  the industry as a whole.

                  We believe that, at a minimum, FAS should require all nonprofit Cooper-
Conclusions       ator groups that are administering the activities of the private firms in
                  the branded program to conduct evaluations of the overall success of
                  their branded activities. This information, in addition to sales data, is
                  important to ensure that private firms in the branded program are held
                  accountable for TEA funds received and to provide FAS with more infor-
                  mation in order to make future program decisions that affect all com-
                  modities and products.

                  Branded promotions account for approximately 35 percent of the annual
                  TEA Program and should be more closely managed by FAS to ensure
                  accountability and effectiveness. FAS     officials’ “hands-off” approach in
                  managing the branded program may          facilitate the administration of
                  activities by others, but it represents    an abdication of their stewardship
                  and fiduciary responsibilities, which     limits FAS’ influence and control
                  over individual participants.

                  FAS officials have not been able to explain the reasons for the variations
                  in the reimbursement rates among commodities. However, in its pro-
                  posed regulations, FAS has recently established a 50-percent reimburse-
                  ment rate for all participants in the branded program.

                  Cooperator groups administering the branded program are only required
                  to submit end-of-year sales data reports to FAS for all private firms that
                  are their responsibility. FM believes that this is all that should be
                  required because the firms are contributing up to 50 percent of their
                  own funds and, thus, will be likely to conduct effective activities in their
                  own best interest.

                  We recommend that the Secretary of Agriculture direct the Adminis-
Recommendations   trator of FAS to do the following:

                  Page 32                                         GAO/NSIAD9@225   AgriculturalTrade
    Chapter 3
    FAS Imposes Minimal Control Over the
    Branded Portion of the TEA Program

l   Conduct more oversight of participants in the branded program to
    ensure accountability for TEA funds and compliance with TEA guidelines.
l   Establish a 50-percent reimbursement rate for all commodities in the
    branded program, as proposed in FAS’ draft regulations.
l   Require nonprofit cooperator groups administering the branded pro-
    gram to evaluate the success of ail branded activities for which they are

    Page 33                                     GAO/NSJAlMO-225   AgriculturaTrade
Chapter 4

FAS Needsto Enhance Its Commitment to
Evaluate Market Development Activities

                        The need for FAS to effectively evaluate market development activities
                        was strongly emphasized in our prior TEA report. We recommended that
                        FAS develop guidelines on evaluation criteria, scope, purpose, and cost.
                        FAS revised its guidelines effective October 1988. We subsequently
                        found, however, that these guidelines lack specificity, which is causing
                        confusion among participants.

                        In our prior report we recommended that evaluations, whether interim
                        or final, be submitted along with the applications for the next fiscal
                        year’s funding and that FAS develop a tracking system for documenting
                        the progress and results of TEA evaluations. This review has indicated
                        that evaluation results are still not being fully considered in funding
                        allocation decisions, and that evaluations are still not being adequately
                        tracked and monitored. These shortcomings handicap FM officials’
                        ability to manage the program effectively or to assess overall program

                        FAS has attempted for years to develop an effective and workable evalu-
FAS Has Historically    ation methodology. We have acknowledged the difficulties in estab-
Had Difficulty          lishing such a methodology but have continued to stress the importance
Evaluating its Market   of evaluating both individual activities and the overall program.
Development             In past reports, we noted that FAS did not seem fully committed to using
Programs                evaluations as a management tool. Instead, it relied on and continues to
                        rely heavily on the professional judgment and expertise of its marketing
                        specialists, and participants, to determine which activities are suc-
                        cessful. In the past, both FAS and TEAparticipants seemed to view evalu-
                        ations more as a means of satisfying outside critics than as a tool for
                        developing more effective market development strategies.

                        In the past year, FM has taken several steps to improve evaluations of
                        participants’ activities. It is attempting to educate both TEA participants
                        and its marketing specialists on the importance of evaluations to the
                        success of TEA activities. To this end, it has conducted several work-
                        shops for the participants and training sessions for the marketing spe-
                        cialists, discussing the purpose of evaluations and how to conduct them.
                        FM has also cosponsored a symposium on methods for evaluating
                        generic market development activities. Although more actions are
                        needed to establish an adequate system for evaluating the overall pro-
                        gram and for ensuring adequate evaluations of participants’ activities,
                        FAS officials have recently been moving toward addressing our concerns.

                        Page 34                                      GAO/NSIAIMO-225   AgriculturalTrade
                         Chapter 4
                         FAS Needs to Enhance Its Commitment to
                         Evaluate Market Development  Activities

                         The TEA guidelines state that three types of evaluations will be con-
Evaluation Guidance      ducted: (1) status reviews; (2) activity evaluations; and (3) program
Is Unclear and           evaluations. The participant is responsible for the first two, and the
Inconsistently Applied   Commodity Divisions are responsible for the third. FAS describes the
                         evaluation requirements for each participant in its activity plan
                         approval letter.

                         Several TEA participants have complained that the guidelines are still
                         not clear on a number of issues, including evaluation. FM officials have
                         told us that this is because FAS has tried to allow flexibility in how the
                         participants evaluate their programs. The result, however, has been that
                         some participants are confused about what is expected of them. One FAS
                         official noted that in the past year, FAS has been trying to educate par-
                         ticipants to view evaluations as a means to improve future activities and
                         not simply to satisfy FM or outside critics.

Status Reviews           Status reviews are intended to ensure that there is ongoing communica-
                         tion between the division and the participant on the progress of the
                         activity. The guidelines stipulate that all activities are to be included in
                         at least one of these reviews per year, and that all such reviews are to
                         be documented. Most Commodity Division officials and marketing spe-
                         cialists to whom we spoke said that participants provide several status
                         reviews per year, many of them quarterly. However, in many cases,
                         these updates are not written but are merely oral conversations between
                         the participant and the marketing specialist. While the marketing spe-
                         cialists may in such cases be well informed, verbal contact does not
                         comply with FAS’ guidelines and does not establish a comprehensive
                         track record for that participant. One marketing specialist told us that
                         he does not document conversations with the participants concerning
                         the success of their program because he does not believe such documen-
                         tation is required and, furthermore, he does not have the time to provide
                         it. Those status reviews that are documented are often the only type of
                         evaluation available on current year activities for the next fiscal year’s
                          funding allocation process.

Activity Evaluations     For the activity evaluations, participants are required to address in
                         their activity plan the manner in which each activity will be evaluated.
                         This statement should include goals and benchmarks against which the
                         success of the activity will be measured. FAS allows participants to pro-
                         pose exemption of certain activities from formal evaluation if they can

                          Page 35                                     GAO/NSIAD90-225   Agricultural   Trade
                         Chapter 4
                         FAS Needs to Enhance Its Commitment to
                         Evaluate Market Development  Activities

                         justify that such evaluation would be impractical or unnecessary. Par-
                         ticipants may also choose whether to evaluate the activity themselves
                          or to hire an outside evaluator. This decision, however, is subject to
                          approval from FAS.

                         Fiscal year 1989 was the first full year in which the new evaluation
                         guidelines applied. Activity evaluations are required within 3 months
                         after completion of an activity.

Program Evaluations      FAS is responsible for conducting program evaluations that could cover
                         one participant’s entire program within a country or region or several
                         similar programs within a country or region. However, several FAS offi-
                         cials told us that FAS’ ideas about program evaluations were still
                         evolving. To date, only five program evaluations have been completed
                         (one on the Alaska Seafood Marketing Institute; two on the California
                         Cling Peach Advisory Board; one on the almond EIP program; and one
                         conducted jointly on the Meat Export Federation and the USA Poultry
                         and Egg Council).

                         The evaluation office has assisted the Commodity Divisions in defining
                         research methodology for future program evaluations. The responsi-
                         bility, however, for initiating and conducting program evaluations rests
                         with the Commodity Divisions.

Unclear How Evaluation   In the TEA summaries for fiscal year 1989, evaluation results were
                         rarely discussed. For fiscal year 1990 allocations, most of the TEA sum-
Results Affect Funding   maries provided information on evaluation results. In some cases, the
                         results discussed were from evaluations conducted on fiscal year 1987
                         and 1988 activities, since results would not have been available for
                         fiscal year 1989 activities. While such results were, for the most part,
                         addressed in the fiscal year 1990 summaries, no clear link was made
                         between the evaluation results and the amount of funding provided. For
                         example, it was not always clear from the summaries why some organi-
                         zations with poor evaluation results received additional funding, while
                         others with favorable results had their funding levels reduced.

                         In some cases where evaluation results showed significant problems,
                         funding for the next year was significantly increased, with no indication
                         that adequate steps were being taken to prevent such weaknesses from
                         recurring. While poor evaluation results should not necessarily lead to a

                         Page 36                                     GAO/NSIAIMO-225 AgriculturalTrade
                        Chapter 4
                        FAS Needs to Enhance Ita Commitment to
                        Evaluate Market Development  Activities

                        reduction in program funds, FAS needs to clearly document how and why
                        the evaluation results affect subsequent funding decisions.

                        To assist the participants in understanding and meeting the require-
FAS Efforts to Assist   ments of the new evaluation guidelines, FAS contracted with a consulting
Participants in         firm to provide four evaluation seminars across the country. The goal
Meeting Guideline       was to help participants improve their performance in both planning
                        and conducting evaluations. In preparing for the seminars, the con-
Requirements            tractor reviewed over 50 activity plans and several evaluations. The
                        consulting firm also met with FXS officials and several participants.

                        Most participants we spoke with at the seminars said that although they
                        believed that the contractor did a good job explaining evaluation objec-
                        tives and techniques, the TEAguidelines were still unclear.

                        The contractor submitted a final report to FAS listing several recommen-
                        dations. One was that FAS should develop a simplified activity and evalu-
                        ation plan review process. The firm also recommended that FAS develop
                        and implement a system for collecting, tracking, and documenting pro-
                        gress and results of TEA evaluations. In addition, it suggested that the
                        TEA guidelines on evaluations be rewritten after better procedures are in

                        FAS asked the contractor to provide two additional workshops for par-
                        ticipants in fiscal year 1990, to follow up on progress made since the
                        previous workshops. These workshops focused on ways to effectively
                        use evaluation findings, conclusions, and recommendations in devel-
                        oping future marketing plans. In addition, FAS conducted a l-day
                        training seminar for new Cooperator and TEA organization staff on the
                        administrative aspects of developing a good marketing plan.

                        FAS has also been collaborating with specialists in the private sector and
                        academia to develop more effective methodologies for evaluating the
                        success of market development activities. FAS recently cosponsored a
                        symposium on evaluating the effects of generic market development
                        activities in which papers were presented on how to isolate the effects
                        of market development activities from other influencing variables.
                        Market development specialists and analysts from both the private
                        sector and the federal government also made presentations. The
                        emphasis of this symposium was on using the available, increasing
                        expertise to develop evaluations that would improve the management of
                        the programs. There was a frank exchange of ideas between market

                        Page 37                                     GAO/NSIAIHO-225   Agricultural   Trade
                            Chapter 4
                            FAS Needs to Enhance Its Commitment to
                            Evaluate Market Development  Activities

                            development practitioners and academic analysts concerning a common-
                            sense approach to evaluating. The symposium also provided an opportu-
                            nity for skeptics to become better informed on the benefits of effectively
                            evaluating market development programs. By lending its support to
                            such efforts, F&S is emphasizing to the agricultural industry and
                            academia the importance of evaluation to ensuring effective activities.

Activity Plans Must Now     Several FAS officials have told us that, as one example of FAS' commit-
                            ment to evaluation of market development activities, approval of fiscal
Include Evaluation          years 1989 and 1990 activity plans were delayed if the participants did
Planning                    not address in their activity plan how they will measure the effective-
                            ness of their activities. Approval of the 1990 plans were also held up if
                            either the required evaluations for fiscal year 1989 had not been sub-
                            mitted or the evaluation had not been suitably conducted. FAS officials
                            say that they have been telling the participants that planning and evalu-
                            ation go hand in hand, and that evaluation should be seen as a manage-
                            ment tool.

                            FAS officials have told us that they are trying to convince participants
                            that evaluations should not be tied to export sales. They acknowledge
                            that many factors other than market development may cause exports to
                            increase. However, several participants we spoke with said that they
                            believe that FAS continues to rely too heavily on sales data, despite
                            recent FAS efforts to educate participants about the benefits of evalu-
                            ating their activities. These participants did not appear to believe that
                            FAS would fully accept measures of success other than increased sales.
                            Such measures of success could include increased product awareness,
                            improved quality of the commodity or product at point of sale, and an
                            increased willingness of importers and distributors to market the com-
                            modity or product and also contribute to its success.

Program Evaluation Office   FAS established a Program Evaluation Office within the Marketing Pro-
                            grams Division in August 1988. This Office consisted of only two profes-
                            sionals for over a year, but has subsequently been fully staffed with six
                            professionals. The official in charge described the Office’s role as that of
                            a consultant that gives advice when requested by the Commodity

                            The Program Evaluation Office has focused on educating both partici-
                            pants and FAS staff on effective ways to evaluate their activities. This
                            office has not conducted any overall evaluations of the TEA Program nor

                            Page 38                                      GAO/NSIAD-W-225   Agricultural   Trade
                           Chapter 4
                           FAS Needs to Enhance Its Commitment to
                           Evaluate Market Development  Activities

                           has it conducted cross-commodity analyses to identify specific trends or
                           areas for improvement. The official in charge of this office noted that at
                           the time the office was established, the former Assistant Administrator,
                           C&MP, intended for it to serve only in an advisory capacity, while
                           keeping the responsibility for evaluation with the marketing specialists
                           in the Commodity Divisions.

                           From its inception, the Program Evaluation Office did not have a system
                           to adequately track and document the progress of TEA evaluations and
                           ensure that all participants were complying with the evaluation guide-
                           lines. However, because FAS did not formally require evaluations prior to
                           fiscal year 1989, and because such evaluations are submitted 90 days
                           after the end of the activity, FAS had not received a significant number
                           of evaluations prior to January 1990. Since that time, the Evaluation
                           Office has refined its tracking system to account for all evaluations

                           Although this office has helped marketing specialists interpret the eval-
                           uation guidelines, it has had no substantial coordinating or enforcing
                           role nor has it been involved in making long-range plans for TEA Pro-
                           gram direction. Moreover, this office has not been coordinating and ana-
                           lyzing all participant evaluations, assessing the effectiveness of the
                           overall TEA Program, or making policy recommendations to the Assistant
                           Administrator, C&MP, on how to improve the program.

FAS Reorganization Will    FXS conducted a limited reorganization   effective April 6, 1990. The
                           Administrator of F&S requested this reorganization to establish clearer
Establish a New Planning   lines of authority and to improve overall management. Under the reor-
and Evaluation Off ice     ganization, a new Planning and Evaluation Staff for CAMP was estab-
                           lished, replacing the current evaluation office. In addition, the former
                           Marketing Programs Division was replaced by a Marketing Operations
                           Staff which, in addition to its operational responsibilities, will incorpo-
                           rate many of the responsibilities of the former evaluation office, such as
                           educating the marketing specialists concerning evaluation requirements,
                           tracking all evaluations, providing training, and serving as a liaison with
                           the Commodity Divisions.

                           The new Planning and Evaluation Staff is expected to conduct some pro-
                           gram evaluations; make long-range plans based on evaluation results;
                           and do cross-commodity and other types of analyses. As currently
                           organized, this office does not have a clear mandate to evaluate the suc-
                           cess of the overall program. Moreover, the new Planning and Evaluation

                           Page 39                                     GAO/NSIAIMO-225   Agricultural   Trade
                      chapter 4
                      FAS Needs to Enhan*   Ita Commitment to
                      Evaluate Market Development   Activities

                      Staff was not given specific responsibility for making policy and
                      programmatic recommendations through the Assistant Administrator,
                      CAMP, to the Administrator, FAS. Establishing such mandates and respon-
                      sibilities can demonstrate to program participants that evaluations are a
                      serious and integral part of FAS management of the TEA Program.

                      FAS has established evaluation guidelines; however, they are not specific
Conclusions           enough to prevent confusion among some participants. Its tracking,
                      enforcement, and use of evaluations has been inadequate, and it is
                      unclear how evaluation results affect subsequent funding decisions.

                      We recommend that the Secretary of Agriculture direct the Adminis-
Recommendations       trator of FAS to take the following actions:

                  l   Provide more specific guidance to participants concerning evaluation
                      requirements in order to prevent confusion and to facilitate compliance.
                  l   Clearly document how evaluation results affect funding allocation
                  l   Conduct cross-commodity analyses and evaluations of the program
                      overall to assist the Assistant Administrator, C&MP, in making policy
                      decisions concerning program direction and administration.

                      Page 40                                     GAO/NSIAD90-225   Agricultural   Trade
Page 41   GAO/NSIAMO-225   Agricultural   Trade
Appendix I

TEA Program Participants, Fiscal Years

Dollars in thousandsa
Nonprofit applicant organizations                               1988         1987         1988            1989              1990
Alaska Seafood Marketing Institute                                 $b       $1.500       $1,950          $6,000            $4,500
American     Plywood Association                                1,950        1,980        1,200           7,700             6,500
                                                                    b                         b               b                 b
American     Seed Trade Assocration                                            350
                                                                    b            b            b
American     Sheep Industry Association                                                                     100               148
American     Soybean Association                                8,500            b        9,800          11,450            11,500
California   Avocado Commrssion                                     b         420           450             650                 b

California   Cling Peach Advisory Board                         2,500        5,600        5,700           4,700             3,500
California   Kiwifruit Commissron                                   b          500          500           1,000               900
California   Pistachio Commisston                                 200          200            b             500               750
California   Prune Board                                        4,000        4,500        5,500           5,800             7,500
California   Rarsin Advisory Board                              6,300        9,800        9,800          10,700            12,500
                                                                        b        b            b                b
California   Strawberrv Advisorv Board                                                                                        500
California   Table Grape Commission                              350           450          750           1,850             2.300
                                                                        b        b            b                b
California   Tree Fruit Agreement                                                                                             500
California Walnut Commission                                    9,000        7,000        6,500           7,300             8,000
                                                                        b        b                                                  b
Catfish Farmers of America                                                                   50             150
                                                                        b        b            b
Cherrv Marketina Institute, Inc.                                                                            500               400
Chocolate Manufacturers Association of America                  2,500            b        2,500           3,000               900
                                                                        b        b            b
Concord Grape Association                                                                                 1,500               700
Cotton Council International                                    7,000        6,800        1,450          15,000            15,400
Eastern United States Agricultural and Food Export Council,
  Inc. (EUSAFEC)                                                1,100        1,000        1,100           2.100             2,950
Export Incentive Program (Almonds)                                900        4,180        6,500          11,800             9,000
Export Incentive Program (Crtrus)                               8,500       10,500       10,500          11,200             8,800
                                                                        b                                      b                    b
Export Incentive Proaram (Mink)                                              1,500          700
Export Incentive Program (Processed Corn)                               b        b        1,500           1,250             1,250
Florida Department of Citrus                                    4,600        7,000        7,000           5,400             9,900
                                                                        b        b            b                b
Hop Growers of Amenca                                                                                                          50
                                                                        b        b            b                b
Kentuckv Distillers’ Association                                                                                            2.000
Leather Industries of America                                           b    1,500        1,500           1,800                  b
Mid-America International Agricultural Trade Council (MIATCO)     800        1,200        1,100           1,900             2,700
                                                                        b            b            b
National Association of Animal Breeders                                                                     400               402
National Association of State Departments of Agriculture
  (NASDA)                                                         500            b                b         100               750
                                                                        b            b                                              b
National Council of Farmer Cooperatives                                                     350             300
                                                                                     b                                              b
National Dry Bean Council                                               b
                                                                                            800           1,000
                                                                        b            b            b
National Forest Products Association                                                                      6,150             7,400
                                                                        b                         b                                 b
National Hay Association                                                       300                             b

National Honey Board                                                    b            b            b
                                                                                                            500             1.000

                                                 Page 42                                 GAO/NSIAW@225       Agricukural    Trade
                                                 Appendix I
                                                 TEA Program    Participants,     Fiscal Years

Nonprofit applicant organizations                                                1986            1987           1988                1989                1990
                                                                                                     b               b                   b                   b
National Pasta Association                                                      2,100
National Peanut Council                                                         4,500            4,500          1,500              7,400                 4,500
National Potato Promotron Board                                                 2,000            2,550          2,400              4,700              -__4.800
National Sunflower Assocratron                                                       t.          3,000               b             2,400                 4,000
Northwest Horticultural Councrl-Northwest Cherry Growers                             b             120            450                800                 1,000
Northwest Hortrcultural Council-Oregon-Washington-California
  Pear Bureau                                                                     300             400             500                800                  900
Northwest Hortrcultural Council-Washington State Apple
  Commission                                                                    1,400            1,500          2,000              2,850                3,800
Rice Councrl for Market Development                                             3,500            3,500          4,500              5,700                8,500
Southern United States Trade Association (SUSTA)                                  800              800          1,100              1.900                2,700
                                                                                     b               b               b                   b
Texas Produce Export Association                                                                                                                           150
Tobacco Associates, Inc.                                                             b             900            400               2,750               5,000
USA Dry Pea and Lentil Council                                                  2,500            2,500          3,000               1,000                    b

USA Poultry and Egg Export Council                                               6,000           6,500          4,250               8,000                6,000
U.S. Feed Grams Council                                                         11,100           2,800          2,400               4,200             ~__6,000
US. Meat Extort Federation                                                       7.000           7,000          4.500              17,000                9.000
US. Mink Export Development Council                                                   b               D              b
                                                                                                                                    2,500                1.500
                                                                                                                                       ~-~---             __
U.S. Wheat Associates, Inc.                                                      3,100           3,100           1,200              4,900                5,200
Western United States Agricultural Trade Association
  (WUSATA)                                                                       2,200           1,950          1,600               4,300             5,250
Wine Institute                                                                   4,800           2,600          3,000               7,000             9,000
Total                                                                     $110,000           $110,000       $110,000            $200,000          $200,000
                                                 aAllocatrons include fundrng for generrc and branded promotronal activrtres.
                                                 bNo allocations that year
                                                 Source: FAS.

                                                  Page 43                                                      GAO/NSIAD9f%22S         Agricultural     Trade
Appendix II

TEA Branded Participants and Amounts
Receivedfor F’iscalYear 1989

              California Prune Board
              Sunsweet Growers                                               $3.272.000
              Mayfair Packtng                                                   480,000
              Marrani Packing                                              -    400,000
              Dole Dried Fruit                                                  300.000
              Valley View Packing                                               156,000
              Tagus Ranch Packing                                                   115,000
              Del Monte Corp.                                                     14,000
              Subtotal                                                       $4,737,000

              California Raisin Advisorv Board
              Sun Maid                                                          $2X80:750
              Dole                                                               1,620,375
              Champion                                                              782,750
              West Coast                                                            400,000
              Caruthers                                                              56.250
              Manani                                                                 40,000
              Del Ray                                                             25,000
              Tagus Ranch Packrng                                                  7,500
              Subtotal                                                       $5.612.625

              California Walnut Commission
              Diamond Walnut                                                     $435,000
              Subtotal                                                           $435,000

              Chocolate Manufacturers Association
              M & M Mars                                                         $783,100
              Hershey                                                              289,294
              Nestle                                                       --      287,148
              Brown and Valley                                                     112,000
                                                                             - - .____
              Whrtmans                                                               52,500
              Myerson                                                                48,208
              Goelitz                                                                32,750
              Minkowitz                                                     -        14,000
              AR Marketing                                                         12,500
              Goldenberg                                                    ~~~ -__10,000
              Louretta’s                                                           10,000
              Harbour Sweets                                                          5,000
              Subtotal                                                       $1,656,500

              Page 44                               GAO/NSIAD9@225   Agricultural     Trade
Appendix II
TEA Branded Participants   and Amounta
Received for Fiscal Year 1989

Concord Grape Association -
Welch’s                                                                $468.145
Smuckers                                                             -___118,800
Subtotal                                                              $586,945

International Amencan Supermarkets                                    $100,000
J.P Sullivan                                                           100,000
WBANA                                                                   75,000
Coombs Maple Products                                                   50,000
Liu & Shea Co. International                                       -soooo
Motts                                                                   50,000
Export Trade of America                                                 50,000
Newman’s Own                                                            50,000
F. J. Prost Marketing                                                    30,000
Interfrost                                                              30,000
Boston Beer                                                              25.000
Maple Grove                                                              25,000
Wine Markets America                                                     25,000
Jos. Cernigi Winery                                                      20,000
Main Coast Seafood                                                       20.000
Chitnam International                                                    20 000
Syracuse Export/Import Co.                                               15,000
United Apple Sales, Inc.                                                 15.000
LP Farms                                                                 15,000
Rhode Island Fruit Growers                                               12.000
Wagner Vineyard                                                          10,000
Miquels of Stowe Away                                                     8.000
Vermont Apple Marketing Board                                             5 000
Vermont County Seasoning                                                  5 000
Subtotal                                                              $805.000

EXDOI-~Incentive Proaram
Sunkist Growers                                                       $9.234.667
Blue Diamond Growers                                                   7,587,ooo
Dole Fresh Fruit Company                                               2,187 496
The Pillsbury Company                                                  1.139500
Seauora Enteronses                                                       335 000
Hansa-Pacific Associates                                       -     .-~~300~--
Dole Nut Company                                                         188,940
Sun World                                                                123,280
Riverbend lnternatronal                                                    99.830

Page 45                                  GAO/NSIAD-90-225   Agricultural   Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

Pandol Brothers                                                          95,000
Golden West Nuts                                                         58,000
Norpac Food Sales                                                        58,000
Cal Almond                                                               50.000
Dimare Companv                                                           43,550
Hughson Nut Marketing                                                    33,969
Monarch International                                                    30,000
Tri Citrus Company                                                       20,100
Del Monte Foods                                                          12.500
Friday Cannino                                                           10,000
Nicolaysen Farms                                                          9,000
Subtotal                                                        $21,615,832

Florida Department of Citrus
DNE Sales International                                              $137,103
Seald-Sweet Growers, Inc.                                              93.128
IMG Enterprise, Inc.                                                   48,807
Dole Citrus                                                            26,232
Baron Trading Corporation                                              23,625
James N. Rubinstein                                                    15.078
Pan American Trade Development                                         13,102
Citrus Company Sales, Inc.                                             11,550
Ocean Spray Cranberries, Inc.                                          10,205
Plenty, Inc.                                                       -___ 7,225
The Ziealer Corp., Justin Intern Corp.                                  3,919
Rushton & Company, Inc.                                                  1,838
Subtotal                                                             $391,812

Ralston Purina                                                       $200,000
Weaver Popcorn                                                   -     100,000
Conaara                                                                100.000
Pillsbury                                                               90,000
Pet, Inc.                                                               80,000
Kraft Co.                                                               80 000
Delicious Foods                                                         80,000
Borden                                                                  80,000
Golden Valley                                                   -~ ~___ 74,000
Tone Bros.                                                              73,000
Beatreme                                                                50,000
Wyandot                                                         ~~ ~__- 50,000
Purity Foods                                                            48,000

Page 46                                  GAO/NSIAtMW225   Agricultural    Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

Honee Bear                                                                  45,000
General Mills                                                               45,000
Amencan Acy-Tee                                                             40.000
Morrison Farms                                                              40,000
Strum & Sons                                                                30,000
ADM Foods                                                                   26,000
Mercantile Foods                                                             25.250
American Meat Protein                                                        25.000
Sonne Labs                                                                   23,000
Hsu’s Ginseng                                                                20,000
Beatrice                                                                     18,000
Troy Hrqro                                                                   15.000
Oliver Wane                                                                  15,000
Petrofskv                                                                    1451-u-l

Stokely, USA                                                                 11,500
Parco                                                                          I~- -
Cherry Central                                                           5.000
Subtotal                                                            $1.514.500

National Association of Animal Breeders
World Wide Sires, Inc.                                                      $41,000
American Breeders Service                                                    26,000
Federated Genetics                                                           11.000
Sire Power                                                                    8,000
Select Sires                                                                  7,000
21 st Century Genetics                                                        4,000
Tri State Breeders                                                            3,000
Cow Creek Ranch                                                               1.000
Subtotal                                                               $101,000

National Peanut Council
CP/C Best                                                                  $302,000
Nabisco                                                                     116,250
Eagle                                                                    82,500
Algood                                                                   50.000
CPC                                                                      35,000
Hunt-Wesson                                                              25,000
Subtotal                                                               $610,750

Page 47                                   GAO/NSIAMtO-226   Agricultural      Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

National Potato Promotion Board
Monarch Food                                                 -____-  $50 000
Lamb-Weston                                                           37,500
Ore Ida                                                               37,500
Slmplat                                                               37,500
Carnation                                                  __--__     30,000
Sun-Glo                                                           ____ 7,500
Subtotal                                                           $200.000

Rice Council for Market Develooment
Comet American Marketinq                                              $470,000
Riceland                                                               230,000
American Rice, Inc.                                                    217,450
RGA                                                                    200,000
Amsnack                                                                 50.000
California Garden Products                                              50,000
Uncle Ben                                                               25,000
Subtotal                                                           $1,242,450

Bruce Foods                                                           $270,000
Crvstal Vallev Catfish                                                 206,000
Capital Petfoods                                                       200,000
Mcilhenny                                                              200,000
Viking Line Promotion                                                   175,000
Crvstal International                                                   125.000
Richland Beveraqe                                                       100,000
Chickasha Cotton Oil                                                    100,000
Autrns Cajun Cookery                                                     60,000
K-Pauls                                                                  60,000
So Good South                                                            50,000
Kleins Seafood                                                           50,000
Manchester Farms                                                         40.500
Edwards Baking                                                           40,000
Tropical Blossom                                                         35,000
Panola Pepper                                                            30,000
Florida Euro                                                             25,000
Southern Gold Honey                                                       18,000
BASCO                                                                     15,000
The Old City Brewing                                                      10,000
Soft Crawfish                                                              5,000

Page 48                                  GAO/NSIAJMO-225   Agricultural   Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

Natural Fruit Flavor                                                        5.000
Helens Trop Exotics                                                         3,000
FAIRCO                                                                      2.125
Subtotal                                                           $1,824.625

USA Poultry and EQQ Export Council
Tyson’s Foods                                                       $4,390.667
Rockingham Poultry Marketing Corp.                                   1,210000
National Food Corporatron                                              430,000
McDonald’s Corporation                                                 210,000
Rocco Turkeys                                                          200,000
Concord Farms                                                          160.000
Norbest, Inc.                                                          160,000
Decoster Eaa Farms                                                     150.000
Nissho lwai American Coop.                                                 140,000
Servac International, Ltd.                                             100,000
B. Terfloth & Cie, Inc.                                                 80,000
Bil-Mar Foods                                                           60,000
Gold-Kist, Inc.                                                         30,000
Empire Kosher Poultry, Inc.                                             20 000
American Poultry International                                          10,000
Ergill, Inc. (Office Center)                                            10,000
Subtotal                                                           $7,360,667

U.S. Meat Export Federation
Manning Beef                                                              $200,450
Bellinger Associatron                                                      183,750
Consolidated Beef                                                          124 105
Colontal                                                                   114875
Brinco                                                         ~            96150
Goodmark                                                                    95 000
Monfort                                                                     90 000
Beatrice                                                                    87 327
Vienna Beef                                                                 84.100
John Morrell                                                                58.250
Washington Beef                                                             55.775
Hormel                                                                      52.160
Excel                                                                       :37.500
Shenson                                                                     ‘32 250
Mountain Meadows                                                            24 500
Gerber                                                                      24 400
Oscar Meyer                                                                 22 325

Page 49                                  GAO/NSLALMO-225   Agricultural      Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1999

Taurus                                                                  21,275
Carl Buddig                                                             14,500
DPM                                                                     13,450
Superior Foods                                                          12,500
Wilson Foods                                                            11,950
Gurrentz                                                                11,550
Packerland                                                               9,075
VMI                                                                      6,400
Southfield                                                               6,075
C. Angus Beef                                                            2,700
Skylark                                                                  1,250
Hyplains                                                                 700
Subtotal                                                          $1,494,342

U.S. Mink Export Development Council
American Legend Cooperatives,    Inc.                              $1,37O,OOO
Hudson’s Bay Fur Sales, Inc.                                          880,OGil
Subtotal                                                          $2,250,000

Wine Institute
Gallo                                                              $2,15O,KKl
Heublein                                                              510,ooo
Vininers                                                              480.000
Seagrams                                                              310,000
Glen Ellen                                                             185,000
Giumarra                                                               140,000
Mondavi                                                                120,000
Bronco                                                                 115,250
Wente                                                                   75,000
Guild                                                                   60,000
Wine World                                                              50,000
Mirasscu                                                                35,000
Buena Vista                                                             26,000
Grand Cru                                                               26,000
Clos Du Bois                                                            25,000
Wine Group                                                              25,000
Jekel                                                                   25,000
Concannon                                                               20,000
Geyser Park                                                             20,000
Guglielmo                                                               20,000
Seghesro                                                                20,000

Page 50                                  GAO/NSI,AIHO-225 Agrkmltural    Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

Sutter Home
Domaine Chadon
Korbel                                                                     15,000
Martin!                                                                    15.000
Morris, J.W.
Pine Ridge                                                                 15,000
Cakebread Cellars                                                          14000

Chalone                                                                    10,000
Clos Du Val                                                                10.000
St. Francis                                                                10,000
Schramsberg                                                                 9,700
Simi                                                                        8.700
Iron Horse
DeLoach                                                                     8,000
Dry Creek                                                                   8,000
Clos Peaase                                                                 7 500
Hill, William
Lohr, J.
Adler Fels                                                                  6 000
Havwood                                                                     6000
Newton                                                                      6 000
Sonoma-Cutrer                                                               5500
Caporale                                                                    5000
Caymus                                                                      5000
Chat. St. Jean                                                               5.000
Freemark Abbey                                                                5,000
Gunlach-Bundschu                                                              5,000
Hacienda                                                                      5,000
Hidden Cellars                                                             - .5 000

Page 51                                  GAO/NSIAD-90-225   Agricultural    Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

Jordon                                                                    5,000
Kendal-Jackson                                                            5,000
Kenwood                                                                   5,000
Klein                                                                     5,000
Laurel Glen                                                               5,000
Lyeth                                                                     5,000
McDowell Valley                                                           5,000
Viansa                                                                    5,000
Ravmond                                                                   5,000
Rutherford Hill                                                           5,000
Sequoia Grove                                                             5,000
Shafer                                                                    5,000
Staa’s Lear,
St. Supery
Swanson                                                                   5,000
Valley of the Moon                                                        5,000
Wheeler, William                                                          5,000
Woltner Estates
Leeward                                                                   4,000
Bargetto                                                                  4,000
Chalk Hill                                                                4,000
Lambert Bridge                                                            3,000
 Merryvale                                                                3,000
 Parsons Creek                                                            3,000
 San Antonio
Tribaut Devavry                                                           3,000
 Stemmler, Robert                                                         3,000
 Sanford                                                                  2,500

Subtotal                                                           $5,006,900

Page 52                                  GAO/NSL4IMO-226   Agricultural   Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

Campbell Soup                                                         $180,000
Kal Kan Foods                                                          180,000
Welch’s                                                                180.000
Ralston Purina                                                         180,000
EJ Gallo                                                               180,000
Tree Top, Inc.                                                         180,000
JR. Simplot                                                            142,500
Continental Mil                                                        125.000
Genuardi Farm                                                          125,000
Intec, Inc.                                                             116,500
Norpac                                                                  100.000
Mavfair Corp.                                                           100,000
Stahmann Farms                                                          100,000
J&B Assoc.                                                              100,000
Ruce Food                                                               100,000
Montana Natural                                                          8o.ooo
Almond Roco
Idaho Pacific
Hoody Corp.                                                              50,ooo
NM Wineries                                                              No00
Roman Meal                                                               5o.ooo
American Pecan
Or Trading Post
Staton Hills                                                             5woo
Lindsay Intl.                                                            40,000
Amer. Fine Food                                                          4o.oQo
Hoaue Cellars
Celes Season                                                             30,000
 Nal Fine Food                                                           woo0
Aaripac                                                                  30.000
Cascadian Farm
 Dir Mkt Group                                                           30,000
 WA Fish Grower                                                          3o.ooo
 AM World Trade                                                          25,000
 Bluewater Farm                                                          25.000
 Traditional Med
 Boyd’s Coffee                                                            25,000
 Fleming Food                                                             23,000
 L&A Juice                                                                22500

Page 53                                  GAWNSuI16)0-225   Agrkuhd        Trade
Appendix II
TEA Branded Participants   and Amounts
Received for Fiscal Year 1989

WE Family Food                                                               ~-~                  20,000
Inter-Trade SUD                                                                                   20,000
Granny Goose                                                                                      20,000
Amer Wine Trad                                                                                    20,000
Stein Produce
Sangen, Inc.                                                                                      20,000
Pac-Rim Meat                                                                                      20.000
Burlev Fresh PA                                                                                   20,000
Stimson Lane                                                                                      20,000
Zontontan/Sons                                                                                    19,500
Poopers Supplv                                                                                    15,000
West Coast Groc.                                                                                  14,000
Or Freeze Dry                                                                                     10,000
CA Wine                                                                                           10,000
Food Prod Intl.                                                                                   10,000
Rose Creek Vine                                                                                   10,000
Glorybee Nat.                                                                                     10,000
CA Cherry                                                                                         10,000
Perseus Gourmet                                                                                   10,000
Arbor Crest                                                                                       10,000
SOURCES UNLTD.                                                                                    10,000
Ward’s Cheese                                                                                     10,000
WA Asparagus                                                                                       7,500
Palisade Pride                                                                                     7,000
Or Cherrv Grow                                                                                     4,000
Umpaua Unltd.                                                                                      3,000
Hoodsport Winer                                                                                    1,000
Subtotal                                                                                  $3,460,500
Total                                                                                    $60,906,448
Note: The subtotals for each Cooperator represent only fundlng for branded promotlon   They do not
include funding recewed for generic promotion.

Source: GAO analysis of FAS data

 Page 64                                                     GAO/NSIALM%225        Agricultural    Trade
*&~tries Where the Majority of TEA Funds
Were Budgeted for F’iscalYear 1989

                                                                                           Percent of fiscal year
                                                                      Total fiscal year         1989 TEA funds
              Country                                                     1989 budget                   budgeted
              Japan                                                         $46,054,336                          36.26
              United Kingdom                                                 15,323,894                          12.07
              West Germany                                                   10,752,555                           8.47
              Australia                                                       9,353,132                           7.37
              Taiwan                                                          6,792,813                           5.35
              South Korea                                                     5,475,166                           4.31
              Hong Kong                                                       3,951,733                           3.11
              France                                                          3,892,645                           3.07
              Algeria                                                         3,238,350                           2.55
              Italy                                                           2,428,791                           1.91
              Spain                                                           2,312,265                           1.82
              Egypt                                                           2,246,840                           1 77
              Morocco                                                          1,540,024                           1 21
              Netherlands                                                      1,406,655                           1.11
              Portugal                                                         1,191,350                          0.93
              Singapore                                                        1,026,917                          0.81
              TOW                                                         $118,014,385                           92.07
              aThis represents approximately 65 percent of the total fiscal year 1989 budgeted TEA funds. (37 other
              countries also received TEA funds of less than $1 mullion each.)
              Source: GAO analysis of FAS data.

              Page 55                                                       GAO/NSIALMO-225       Agricultural   Trade
Appendix IV                                                                                                                                     L

Top 15 Program Participants by Total Amount
of TEA Funds Allocated

Dollars In thousandsa                   -
                                                                                                                   Total fiscal
                                            Fiscal year       Percent of       Fiscal 1ys’s”o’ Percent of          year 1986 -       Percent of
Nonprofit applicant organizations                  1989           fundsb                           fundsb                  1990          fundsc
Export lncentwe Program (Citrus)                $11,200               5.60           $8,800               4.40         $49,500                  6 78
California Raisin Adwsorv Board                  10,700               5.35           12,500               6.25          49,100                  6 73
Cotton Council International                     15,000               7 50           15,400               7.70          45,650                  6 25
U S. Meat Export Federation                      17,000               8.!50           9.000               4.50          44,500                  6 10
American Soybean Assocration                     11,450               5 73           11,500               5.75          41,250                  5.65
Callfornla Walnut Commissron                      7,300               3.65             8,000              4.00          37,800                  5.18
Florida Department of Citrus                      5,400               2 70             9,900              4.95          33,900                  4.64
Export Incentive Program (Almonds)               11,800               5.90             9,000              4.50          32,380                  4 44
USA Poultry and Egg Export Councrl                8,000               4 00             6,000              3.00          30,750                  4.21
California Prune Board                            5,800               2.90             7,500              3.75          27,300                  3.74
U.S Feed Grains Council                            4,200              2.10             6,000              3.00           26,500              3 63
Wine lnstltute                                     7,000              3.50             9,000              4.50           26,400              3.62
Race Council for Market Development                5,700              2.85             8,500              4.25           25,700              3.52
National Peanut Council                            7,400              3.70             4,500              2.25           22,400              3.07
California Clina Peach Advlsorv Board              4,700              2.35             3,500              1.75           22,000              3.01
                                                                     66.33                               64.55                              70.57
                                        aAllocatrons rnclude funding for both genenc and branded activities

                                        bPercentage of TEA funds allocated are based on an annual allocation level of $200 mtlllon for fiscal
                                        years 1989 and 1990
                                        CPercentage of TEA funds allocated are based on a total allocated amount for fiscal years 1986 through
                                        1990 of $730 millron
                                        Source. GAO analysrs of FAS data

                                        Page 56                                                        GAO/NSIAD90-225        A@icuitural Tradt
Appendix V

Major Contributors to This Report

                           Phillip J. Thomas - Assistant Director
Nationa1  Security and     J&n   J &&&o&y      - Adviser
International Affairs                ‘*
                           Janet Pletrovito - Project Manager
Division,    Washington,   Zina Greene - Evaluator


(493509)                   Page 57                                  GAO/NSIAD9O-226   Agricultural   Trade

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