[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
[[Page 37543]]
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