[Federal Register Volume 62, Number 134 (Monday, July 14, 1997)]
[Notices]
[Pages 37539-37543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18383]


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DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service


Foreign Market Development Cooperator Program--FY 1998 Program 
Announcement

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Notice.

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SUMMARY: This notice announces the availability of funds for the Fiscal 
Year 1998 Foreign Market Development Cooperator (Cooperator) Program.

DATES: All applications must be received by 5:00 p.m. Eastern Daylight 
Savings Time, August 13, 1997.

ADDRESSES: U.S. Department of Agriculture, Foreign Agricultural 
Service, Marketing Operations Staff, STOP 1042, 1400 Independence Ave., 
S.W., Washington, D.C. 20250-1042.

FOR FURTHER INFORMATION CONTACT:
The Marketing Operations Staff at (202) 720-4327.

SUPPLEMENTARY INFORMATION:

Introduction

    The Foreign Agricultural Service (FAS) announces that applications 
are being accepted for participation in the Fiscal Year 1998 Cooperator 
Program. The Program is intended to create, expand and maintain foreign 
markets for United States agricultural commodities and products. The 
Foreign Agricultural Service (FAS) administers the Cooperator Program 
and provides cost share assistance to eligible trade organizations to 
carry out approved market development activities. Financial assistance 
under this program will be made available on a competitive

[[Page 37540]]

basis and applications will be reviewed against the evaluation criteria 
contained in this announcement.
    On May 16, 1997, FAS published a notice in the Federal Register 
requesting comments on the proposed method and criteria for evaluating 
proposals and allocating funds among applicants. FAS received 10 
letters from various U.S. trade association in response to the notice. 
Following is a summary of the comments and FAS' responses to these 
comments. General comments relating to the value of a competitive 
process and non-substantive comments have been omitted.
    Comment: We question how Past Demand Expansion Performance will be 
used in the criteria. Our understanding of this criteria is that a U.S. 
commodity that accounted for 100% of the world market for that 
commodity would receive a higher weighting in the funding formula than 
a commodity that accounted for only 40%. This seems to make little 
sense. A very high existing market share would suggest relatively less 
need for aggressive market development since competition does not exist 
or has been largely eliminated. At the other extreme, a low market 
share may suggest that the U.S. cannot be competitive and may warrant 
limited or no market development efforts. The midrange of market 
shares, 25%-75%, most likely would occur for those commodity markets 
which are extremely competitive (but where the U.S. is having some 
success) and would benefit most from market development investments.
    Comment: In calculating past export performance and past demand 
expansion performance, Cooperators will be awarded for activities 
carried out in targeted markets that are steady, reliable customers 
(where market development may not be as critical) rather than in 
markets that are just beginning to develop for U.S. suppliers or in 
markets that are declining and market development is being used to try 
to keep the market viable. Program funds should be available to help 
Cooperators leverage their market development activities in targeted 
markets that may not be at their peak.
    Comment: In the discussion of past export performance, reference is 
made to the ``share of the value of exports.'' How is this calculated?
    Comment: In the discussion of the contribution level criteria, 
reference is made to ``share of contributions.'' What does this mean?
    Comment: Throughout the description of the allocation criteria, 
reference is made to ``shares'' instead of actual values. We found this 
confusing and request that FAS take another look at the proposed 
methodology for making the calculations for each of the criteria.
    Response: From the above comments it appears that there is some 
confusion and perhaps, in some cases, misunderstanding of how and why 
some of the allocation criteria will be calculated and used in the 
allocation process. The following should help to clarify these issues. 
First, the general philosophy behind selecting and using these criteria 
is to balance export performance and market potential with the limited 
amount of program resources that are available. It is our expectation 
that in using these objective criteria--combined with the other factors 
identified under the Review Process section of this notice--that this 
overall objective will be met. Second, the criteria and the manner in 
which they will be used as designed to ensure that the appropriate 
level of resources are allocated for both market maintenance and market 
potential, or growth objectives. Third, will regard to the meaning of 
the word ``share'' as used in several of the allocation criteria, this 
term refers to a percent, not market share. Using the past export 
performance criterion as an example, ``share'' refers to the 
applicant's percent of the total export value of products promoted by 
all applicants under the program compared to the applicant's percent of 
total available Cooperator Program resources.
    Comment: Why did FAS decide to ask for six years of data for 
calculating the allocation criteria? By asking for so many years, FAS 
is complicating the process of developing proposals and encouraging 
applicants to spend time on data generation and presentation that could 
more profitably be used by developing that part of the proposal that 
explains the link between activities and the applicant's marketing 
strategy.
    Response: The Cooperator Program is a long-term market development 
program designed to address long-term foreign import constraints such 
as infra-structural market impediments and limited processing 
capabilities. Given these types of constraints, it typically takes 
several years before any returns on investment are realized. For this 
reason, FAS believes it is necessary to analyze data spanning a longer 
time period in order to obtain an accurate assessment of a long-term 
strategic marketing plan. Also, by using data spanning several years, 
we are able to mitigate the impact of year-to-year fluctuations in 
trade caused by factors external to the program, e.g., changes in price 
and production levels.
    Comment: In the discussion of past demand expansion performance, 
reference is made to the ``total value of world imports.'' Why did FAS 
decide to base this calculation on import rather than export 
statistics.
    Response: FAS chose to use imports rather than exports for this 
factor because a primary objective of the Cooperator Program is to 
increase worldwide demand for U.S. agricultural commodities.
    Comment: Please explain the choice of the year 2003 as the basis 
for the future demand expansion goals criterion.
    Response: The calculations for contribution levels, past export 
performance, past demand expansion performance and future demand 
expansion goals are based on 6 years of data, to the extent such data 
is available. The first year for which data will be available for the 
future demand expansion goals criterion will be 1998, followed by 6 
years of projections to the year 2003.
    Comment: Since the weight factor will almost always be less than 
1.00, the implication of this formula is that FMD applicants will 
always receive something less than the commodity division recommends. 
This gives the commodity division incentive to inflate its funding 
recommendation.
    Response: While the sum of all the factor weights is 1.00, the 
position, or scoring, of one applicant relative to all other applicants 
is more important. The ability of the commodity divisions to inflate 
the recommendations is constrained by the amount of available funds. 
The ability to `game' this process is quite limited because allocations 
are ultimately based on contribution levels and performance.
    Comment: We believe that the weighting factors for two of the 
proposed allocation criteria should be revised. We believe that the 
overall formula is weighted too heavily toward an applicant's 
contribution level. The 40 percent weighting, we believe, would have a 
tendency to reward larger well-financed participants and unfairly limit 
or punish the small-to-medium sized applicants. Conversely, we feel 
that the proposed weighting percentage given for past export 
performance (20 percent) is too low. To better reflect the efforts of 
an applicant, we recommend that the percentage weighting for these two 
criteria be reversed or at least equalized. We feel that our members 
should be rewarded for the volume and value of their exports which make 
a sizable contribution to the positive agricultural trade balance.

[[Page 37541]]

    Response: FAS assigned a 40 percent weight to the contribution 
criterion because we believe that the contribution level reflects an 
industry's commitment to its international marketing efforts. The 
formula does not necessarily disadvantage smaller applicants with fewer 
resources to contribute to the program because each applicant's 
contribution level is compared to its Cooperator marketing plan budget, 
i.e. a ratio is established. FAS also places importance on export 
performance and demand expansion when evaluating applications as 
reflected in four of the five allocation criteria. Collectively, this 
criteria account for 60 percent of the allocation formula.
    Comment: The wording of the last sentence in the draft notice is 
unclear to us. Reference is made to a ``total weight factor,'' but we 
can find no earlier reference to this factor in the text of the notice.
    Response: The total weight factor is simply the sum of the 
percentage weight factors of the four allocation criteria which will be 
used for each applicant this year.
    Comment: Under the proposed weighting described in section (b) past 
export performance, we are concerned about how the foreign overhead 
provided for co-location within a U.S. agricultural trade office will 
be calculated. In a number of cases, the FMD cooperator has not had a 
choice in whether or not to co-locate within an ATO in a target market, 
and does not have direct control over the level of expenditure used to 
support that ATO.
    Response: FAS will calculate the dollar value of space provided for 
co-location within a U.S. agricultural trade office. This value will be 
based on the square footage occupied by the applicant in the office and 
the actual rent cost paid by FAS. Since the value represents a level of 
resources being provided by the U.S. Government, it should be included 
in the allocation formula.
    Comment: In calculating proposed contribution levels, past export 
performance, and past demand expansion performance, the collection of 
targeted markets over the six year time period should remain unchanged 
in order to obtain accurate data. Under our limited budget, for 
example, targeted markets move in and out of each year's marketing plan 
based on expected or forecast export activity and availability of 
program funds.
    Response: The accuracy of the data collected will not be impacted 
by changes in the targeted markets. For any given year that Cooperator 
funds are spent in a market, the applicant will be required to provide 
six years of data. Again, FAS believes it is necessary to analyze data 
spanning a longer time period in order to obtain an accurate assessment 
of a long-term strategic marketing plan.
    Comment: Our organization seems to qualify for all usual and 
customary factors used by FAS when reviewing proposed projects, e.g, 
U.S.-based staff, contributions, etc. However, the calculations--6 year 
averages--for contributions, past export performance, past demand 
expansion performance, future demand expansion goals and accuracy of 
past demand expansion projections seem to be intertwined with existing 
MAP provisions and performance. Our organization has no MAP history. 
Does this therefore disqualify our organization from FMD consideration?
    Response: An applicant need not have previously participated in the 
MAP or Cooperator Program to receive consideration for funding. For 
those applicants that have no MAP history, calculations for the 
allocation criteria will be based on Cooperator Program data, as 
available.
    Comment: We believe that in developing a method to evaluate the 
relative merits of different proposals for the purpose of determining 
appropriate funding levels, an exemption or different method of 
evaluation should be given to small cooperators. Time and resources 
available to applicants to prepare ``meritorious proposals'' will be a 
significant factor. Special consideration should be given to 
cooperators whose proposed marketing plan budgets fall within a ``de 
minimis'' range or less than 0.5%, 1%, or 2% of all Cooperator 
marketing plan budgets.
    Response: FAS does not intend to exempt or apply a different method 
of evaluation to any applicant as this would undermine the competitive 
nature of the allocation process. FAS has also considered the time and 
resources needed to prepare an application for the Cooperator Program 
and we do not believe this competitive process will impose any 
additional burden on applicants.
    Comment: We request that any proposed program regulation 
acknowledge that due to the diverse makeup of the applicants in terms 
of membership that the allocation of FMD funding take into 
consideration the nature of the industry. That is, any calculation of 
an industry's ability to develop contributions, and the wherewithal to 
collect industry contributions, should be counterbalanced by that 
industry's contribution to the economy, in particular, the export 
economy.
    Response: FAS recognizes that not all applicants have the same 
ability to generate industry funding and contributions to the program. 
FAS also recognizes that an industry's contribution to the economy as a 
whole is very important. However, for this allocation process, it would 
be too difficult and too time consuming to identify, quantify, and 
verify the appropriate variables for measuring the benefits to the 
economy.

Background

    Under the Cooperator Program, FAS enters into Market Development 
Project Agreements with nonprofit U.S. trade organizations or 
associations of State Departments of Agriculture. FAS enters into 
agreements with those nonprofit U.S. trade organizations that have the 
broadest possible producer representation of the commodity being 
promoted and gives priority to those organizations that are nationwide 
in membership and scope. Program participants may not, during the term 
of their agreement with FAS, make export sales of the agricultural 
commodity being promoted or charge fees for facilitating an export sale 
if promotional activities designed to result in that specific sale are 
supported by Cooperator Program funds.
    Market Development Project Agreements involve the promotion of 
agricultural commodities on a generic basis and, therefore, do not 
involve activities targeted directly toward individual consumers. 
Approved activities contribute to the maintenance or growth of demand 
for the agricultural commodities and generally address long-term 
foreign import constraints by focusing on matters such as:

--Reducing infra-structural or historical market impediments;
--Improving processing capabilities;
--Modifying codes and standards; and
--Identifying new markets or new applications or uses for the 
agricultural commodity or product in the foreign market.

Authority

    The Cooperator Program is authorized by Title VII of the 
Agricultural Trade Act of 1978, 7 U.S.C. 5721, et seq. Program 
regulations appear at 7 CFR part 1550.

Application Process

    To be considered, an applicant must submit to FAS information 
related to the allocation criteria considered by FAS as described in 
this notice. All applications must be submitted in

[[Page 37542]]

triplicate from (an original and two copies). Handbooks are available 
to assist applicants in developing an application and marketing plan. 
To receive a handbook, contact the Marketing Operations Staff at (202) 
720-4327 or visit the FAS home page at http://www.fas.usda.gov.

Review Process

    FAS allocates funds in a manner that effectively supports the 
strategic decision-making initiatives of the Government Performance and 
Results Act (GPRA) of 1993. In deciding whether a proposed project will 
contribute to the effective creation, expansion or maintenance of 
foreign markets, FAS seeks to identify a clear, long-term agricultural 
trade strategy by market or product and a program effectiveness time 
line against which results can be measured at specific intervals using 
quantifiable product or country goals. These performance indictors are 
part of FAS' resource allocation strategy to fund applicants which can 
demonstrate performance based on a long-term strategic plan, consistent 
with the strategic objectives of the United States Department of 
Agriculture's Long-term Agricultural Trade Strategy, and address the 
performance measurement objectives of the GPRA.
    FAS considers a number of factors when reviewing proposed projects. 
These factors include:

--The ability of the organization to provide an experienced U.S.-based 
staff with technical and international trade expertise to ensure 
adequate development, supervision and execution of the proposed 
project;
--The organization's willingness to contribute resources including cash 
and goods and services of the U.S. industry and foreign third parties;

    The conditions or constraints affecting the level of U.S. exports 
and market share for the agricultural commodities and products;

--The degree to which the proposed project is likely to contribute to 
the creation, expansion, or maintenance of foreign markets; and
--The degree to which the strategic plan is coordinated with other 
private or U.S. government-funded market development projects.

(1) Phase I--Sufficiency Committee Review

    Applications received by the closing date will be reviewed by FAS 
to determine the eligibility of the applicants and the completeness of 
the applications.

(2) Phase 2--FAS Divisional Review

    Applications which meet the application procedures will then be 
further evaluated by the applicable FAS Commodity Division. The 
Divisions will recommend funding levels for each applicant based on a 
review of the applications and marketing plans against the factors 
described above. The purpose of this review is to identify meritorious 
proposals and to suggest an appropriate funding level for each 
application based upon these factors.

(3) Phase 3--Competitive Review

    Meritorious applications will then be passed on to the office of 
the Deputy Administrator, Commodity and Marketing Programs, for the 
purpose of allocating available funds among the applicants. 
Applications which pass the Divisional Review will compete for funds on 
the basis of the following evaluation criteria (the number in 
parentheses represents a percentage weight factor). Data used in the 
calculation for contribution levels, past export performance and past 
demand expansion performance will cover not more than a 6 year period, 
to the extent such data is available.

Allocation Criteria

    Meritorious proposals will compete for funds on the basis of the 
following allocation criteria (the numbers in parentheses represent a 
percentage weight factor). Data used in the calculations for 
contribution levels, past expert performance and past demand expansion 
performance will cover not more than a 6-year period, to the extent 
such data is available.

(a) Contribution Level (40)

     The applicant's 6-year average share of all contributions 
(contributions may include cash and goods and services provided by U.S. 
entities in support of foreign market development activities) compared 
to
     The applicant's 6-year average share of all Cooperator 
marketing plan budgets.

(b) Past Export Performance (20)

     The 6-year average share of the value of exports promoted 
by the applicant across Cooperator Program targeted markets compared to
     The applicant's 6-year average share of all Cooperator 
marketing plan budgets plus a 6-year average share of Market Access 
Program (MAP) program ceiling levels and a 6-year average share of 
foreign overhead provided for co-location within a U.S. agricultural 
trade office in those targeted markets.

(c) Past Demand Expansion Performance (20)

     The 6-year average share of the total value of world 
imports of the commodities promoted by the applicant across Cooperator 
Program targeted markets compared to
     The applicant's 6-year average share of all Cooperator 
marketing plan budgets plus a 6-year average share of MAP program 
ceiling levels and a 6-year average share of foreign overhead provided 
for co-location within a U.S. agricultural trade office in those 
targeted markets.

(d) Future Demand Expansion Goals (20)

    (The criterion will receive a weight of 10 beginning with the year 
2000 program.)
     The total dollar value of the applicant's projected 
increase in world imports of the commodities being promoted by the 
applicant for the year 2003 across all Cooperator Program targeted 
markets compared to
     The applicant's requested funding level.

(e) Accuracy of Past Demand Expansion Projections

    (Since the information is not currently available, this criterion 
will be used beginning with the year 2000 program and will receive a 
weight of 10).
     The actual dollar value share of world imports of the 
commodities being promoted by the applicant for the year 1998 across 
all Cooperator Program targeted markets compared to
     The applicant's past projected share of world imports of 
the commodities being promoted by the applicant for the year 1998, as 
specified in the 1998 Cooperator Program application.
    The Commodity Divisions' recommended program levels for each 
applicant are converted to a percent of the total Cooperator Program 
funds available and multiplied by the total weight factor to determine 
the amount of funds allocated to each applicant.

Closing Date for Applications

    Applications must be received by 5:00 p.m. Eastern Daylight Savings 
Time August 13, 1997, at the following address:

Hand Delivery (including Federal Express, DHL, etc.): U.S. Department 
of Agriculture, Foreign Agricultural Service, Marketing Operations 
Staff, Room 4932-S, 14th and Independence Ave., S.W., Washington, D.C. 
20250-1042.
U.S. Postal Delivery: Marketing Operations Staff, STOP 1042, 1400

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Independence Ave., S.W., Washington, D.C. 20250-1042.

    Dated: July 7, 1997.
August Schumacher, Jr.,
Administrator, Foreign Agricultural Service.
[FR Doc. 97-18383 Filed 7-11-97; 8:45 am]
BILLING CODE 3410-10-M