U.S. Department of Agriculture: Foreign Agriculture Service Could Benefit
from Better Strategic Planning (Chapter Report, 09/28/95,
GAO/GGD-95-225).
Pursuant to a congressional request, GAO reviewed the Foreign
Agriculture Service (FAS) to determine if FAS uses its resources in the
most effective manner to accomplish its mission.
GAO found that: (1) FAS long-term agricultural trade strategy (LATS) and
country marketing plans lack the specificity and measurable goals that
are necessary to establish priorities and allocate resources efficiently
and effectively; (2) FAS decisions concerning its overseas offices and
its overall workforce could be done on a more systematic basis and thus
enhance the probability of meeting FAS priority objectives; (3) FAS lack
of strategic planning has hindered its ability to consider other options
that may produce more favorable outcomes in meeting its strategic
objectives; (4) FAS foreign service officers devote a considerable
portion of their time to commodity reporting without the benefit of
clear strategic priorities to guide their efforts; and (5) FAS should
pursue potential opportunities to reduce and eliminate reporting that
does not efficiently contribute to its strategic priorities.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-95-225
TITLE: U.S. Department of Agriculture: Foreign Agriculture Service
Could Benefit from Better Strategic Planning
DATE: 09/28/95
SUBJECT: Strategic planning
Agricultural assistance
International trade
Commodity marketing
Exporting
Foreign trade policies
Agency missions
International trade regulation
Human resources utilization
General management reviews
IDENTIFIER: USDA Dairy Export Incentive Program
USDA GSM-102 Program
USDA GSM-103 Program
USDA Export Enhancement Program
USDA Sunflowerseed Oil Assistance Program
USDA Cottonseed Oil Assistance Program
USDA Foreign Market Development Program
USDA Market Promotion Program
National Performance Review
USDA Long-Term Agricultural Trade Strategy
CCC Export Credit Guarantee Program
GMR
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Subcommittee on Risk
Management and Specialty Crops, Committee on Agriculture, House of
Representatives
September 1995
U.S. DEPARTMENT OF AGRICULTURE -
FOREIGN AGRICULTURAL SERVICE COULD
BENEFIT FROM BETTER STRATEGIC
PLANNING
GAO/GGD-95-225
Foreign Agriculture Service
(280049)
Abbreviations
=============================================================== ABBREV
ASCS - Agricultural Stabilization and Conservation Service
ATO - agricultural trade office
FAS - Foreign Agricultural Service
GATT - General Agreement on Tariffs and Trade
GSM - General Sales Manager
LATS - Long-term Agricultural Trade Strategy
P.L. - public law
U.N. - United Nations
USDA - U.S. Department of Agriculture
USTR - Office of the U.S. Trade Representative
Letter
=============================================================== LETTER
B-260181
September 28, 1995
The Honorable Charlie Rose
Ranking Minority Member
Subcommittee on Risk Management
and Specialty Crops
Committee on Agriculture
House of Representatives
Dear Mr. Rose:
As you requested, this report provides information on the U.S.
Department of Agriculture's (USDA) Foreign Agricultural Service
(FAS). We conducted a review of FAS to evaluate its use of staff
resources in accomplishing its mission. The report discusses overall
strategic planning, including USDA's long-term agricultural trade
strategy; coverage of FAS overseas locations and use of its foreign
service officers; and FAS reporting on agricultural commodities
worldwide.
We are sending copies of the report to the Secretary of Agriculture
and other interested parties. We will also make copies available to
others upon request.
Please contact me on (202) 275-4812 if you have any questions
concerning this report. The major contributors to this report are
listed in appendix II.
Sincerely yours,
Allan I. Mendelowitz, Managing Director
International Trade, Finance,
and Competitiveness
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
International agricultural trade has become highly competitive, and
the United States increasingly has been confronted with competitors
that are using dynamic and sophisticated marketing practices. The
Foreign Agricultural Service (FAS), which is within the U.S.
Department of Agriculture (USDA), oversees a variety of activities
and export promotion programs aimed at increasing U.S. exports of
agricultural commodities. FAS' mission statement calls for it to
expand foreign markets for U.S. commodities by gathering and
reporting information about agricultural commodities in foreign
countries (commodity reporting), working to gain access to foreign
markets (trade policy), and working to promote increased foreign
consumption of U.S. agricultural commodities (market development).
As requested, GAO reviewed FAS to determine if it used its resources
in the most effective manner to accomplish its mission.
Consequently, GAO reviewed FAS' (1) strategic planning, specifically
whether USDA's long-term agricultural trade strategy (LATS)
contributed to effective FAS strategic planning; (2) foreign service,
particularly whether its operations were planned and managed to use
its available resources effectively; and (3) commodity reporting,
specifically the extent to which FAS' commodity reporting was an
effective use of FAS resources.
BACKGROUND
---------------------------------------------------------- Chapter 0:2
FAS operates a number of export assistance programs. They are (1)
"concessional" programs in which recipient countries receive
agricultural commodities; (2) commercial programs in which USDA
provides credit guarantees to facilitate U.S. agricultural exports
or provides subsidy payments that allow U.S. commodities to compete
in world markets against the subsidized exports of other countries;
and (3) foreign market development programs that are designed to
encourage commercial exports through federal subsidies for
advertising, trade servicing, and technical assistance. These
programs support exports of both bulk commodities (such as wheat or
corn) and high-value products (such as fresh fruit and vegetables and
processed foods). In fiscal year 1994, FAS made direct outlays in
its export assistance programs exceeding $3.16 billion, as well as
export credit guarantees valued at about $3.22 billion.
In fiscal year 1995, FAS had an operating budget of about $118
million to carry out its functions and manage various agricultural
export promotion programs. As of January 1995, FAS had over 900
employees located at its headquarters in Washington, D.C., and at
about 75 overseas offices throughout the world. After passage of the
Foreign Service Act of 1980 (P.L. 96-465, Oct. 17, 1980), FAS began
to convert certain employees to foreign service officers. As of
January 1995, foreign service officers held about 200 of the more
than 900 FAS positions. In addition to its employees, FAS has hired
about 150 people located at overseas offices on a contract basis to
perform certain services.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
Both the relevant literature and GAO's past work show that effective
strategic planning is essential for effective mission outcomes.
Among other characteristics, good strategic planning helps an agency
to establish overall direction and objectives and to set priorities
that are sufficiently specific to differentiate among the many
different strategies an agency would like to fund within its budget
constraints. Good strategic planning also helps an agency establish
measures for gauging progress toward and accountability for meeting
its objectives. The key components of FAS' planning for its
mission--LATS and country marketing plans, which are mandated by
Congress--lacked the specificity and measurable goals that would be
necessary to establish priorities and allocate resources efficiently
and effectively.
Better strategic planning would also provide FAS management with more
options to consider in making the difficult choices all agencies must
make in seeking to achieve mission objectives within budget
constraints and ensuring that they have the appropriate workforce
capacities. In particular, GAO found that FAS decisions concerning
its locations of overseas offices and its overall workforce could be
done on a more systematic basis and thus enhance the probability of
best meeting priority objectives. While FAS has generated annual
savings by closing some overseas offices, GAO noted examples in which
decisions appeared to be based on local circumstances, such as to
avoid increased rent in a given location. FAS' lack of strategic
planning has hindered its ability to consider various other options
based on a systematic perspective that might have produced even more
favorable outcomes toward meeting FAS' strategic objectives.
Similarly, FAS' existing policy of having its foreign service
officers spend only 50 percent of their time overseas was not part of
a strategic planning consideration and raises cost and workforce
capacity issues.
Better strategic planning could also help FAS determine the priority
tasks of its overseas staff. GAO found that FAS' foreign service
officers devote a considerable portion of their time to commodity
reporting without the benefit of clear strategic priorities to guide
their efforts. This has resulted in a situation where FAS may not be
achieving the highest and best use of its specialized overseas staff
because that staff may be engaged in producing some reports that may
not benefit FAS' overall goal of promoting U.S. agricultural
exports. GAO believes that, as FAS revises its strategic planning,
it should pursue potential opportunities to reduce and eliminate
reporting that does not efficiently contribute to its strategic
priorities.
FAS recognizes that its strategic planning has weaknesses and has
begun a new LATS study to identify ways to improve such planning.
The information and recommendations in this report should help FAS in
its efforts.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
STRATEGIC PLANNING WAS
INADEQUATE
---------------------------------------------------------- Chapter 0:5
In the Food, Agriculture, Conservation, and Trade Act of 1990 (P.L.
101-624, Nov. 28, 1990), Congress recognized the importance of
strategic planning by requiring USDA to devise a LATS. Congress
intended LATS to guide the Secretary of Agriculture in carrying out
federal programs designed to promote the export of U.S. agricultural
commodities. USDA was also required to designate priority growth
markets and develop country marketing plans that were to set forth
strategies for bolstering these priority growth markets.
USDA's LATS, released in January 1993, did little to set meaningful
priorities or measurable goals for its programs and resources. For
example, the strategy called for "the fullest possible use of all
export assistance programs" without identifying which programs or
activities were critical or most important. During a congressional
hearing in June 1994,\1 an FAS representative testified that stronger
FAS efforts at strategic planning were key to taking full advantage
of the positive factors that currently exist for expanding U.S.
agricultural trade. He acknowledged that LATS lacked priorities and
said that LATS needed additional work to become a useful management
tool. FAS is currently involved in a major effort to improve its
strategic planning. As of August 1995, FAS planned to have a final
strategic plan completed in March 1996, which would include a revised
LATS as a component.
USDA's country marketing plans, established for bolstering priority
growth markets, were a compilation of short discussions concerning
the likely demand for U.S. exports of various commodities within
certain countries. However, the compilation of country plans was not
specific enough in what needed to be done to increase U.S. exports.
For example, the country marketing plans generally contained neither
specific or measurable objectives nor other elements that are
integral to identify and achieve objectives. These elements could
include proposed actions to accomplish objectives, identification of
the staff or organization that would work to accomplish the
objectives, particulars on how U.S. government agricultural export
programs would be used in meeting the objectives, information on the
budgetary impact of such initiatives, and performance measures to be
used to evaluate progress in meeting the objectives.
--------------------
\1 Hearing on the Long-term Agricultural Trade Strategy and Export
Policies, before the Subcommittee on Foreign Agriculture and Hunger,
House Committee on Agriculture, June 23, 1994.
BETTER STRATEGIC PLANNING COULD
ENHANCE DECISIONS ON OVERSEAS
LOCATIONS AND IN MANAGING
FOREIGN SERVICE OFFICER
ROTATIONS
---------------------------------------------------------- Chapter 0:6
After determining its mission and its strategic priorities to achieve
that mission, an agency should expand its strategic planning to
address its most appropriate organizational structure, including
geographic locations, and workforce capacity for accomplishing the
mission priorities. FAS' lack of an adequate strategic plan has
hindered its ability to consider various options from a systemic
perspective when making decisions on the location of its overseas
posts and agricultural trade offices.\2 In planning these locations,
FAS uses very broad criteria that could support such an office in
almost any location. Decisions on making changes in FAS posts were
driven by ad hoc budget considerations and local circumstances, not
based on a strategic plan with established mission priorities.
During fiscal year 1994, FAS closed agricultural trade offices in
Caracas, Venezuela and London, England. A more systematic approach
might have identified even greater cost savings opportunities.
FAS' use of foreign service personnel raises costs and may not use
their skills as effectively as possible, which raises workforce
capacity issues. Regarding the duration of overseas assignments for
foreign service officers, the 1980 Foreign Service Act provided only
general guidance to foreign service agencies. FAS policy,
established in October 1983, calls for each foreign service officer
to serve about 50 percent of his or her career overseas. Foreign
service officers at other major agencies with a foreign service, such
as the Agency for International Development, the Department of State,
and the Department of Commerce, spend between 66 and 75 percent of
their careers abroad, according to agency representatives. FAS'
50-percent rotation policy means that, at any point in time, about
one-half of FAS' foreign service officers should be assigned to
headquarters. However, FAS had only 14 headquarters positions
specifically designated for foreign service officers. Therefore,
most of the foreign service officers in headquarters were occupying
civil service positions. Because, as a group, the foreign service
officers had a relatively higher grade structure than FAS' civil
service employees, the foreign service officers tended to hold a
relatively larger number of FAS' higher-level and management
positions.\3
The large number of foreign service officers serving at any time at
headquarters created management concerns and increased FAS' costs. A
1993 FAS reorganization proposal cited various concerns with
assigning foreign service officers to positions in Washington. In
interviews GAO conducted with foreign service officers and members of
one headquarters division, FAS representatives expressed concerns
about several issues. These issues included (1) the lack of
continuity created by having foreign service officers manage FAS
programs for limited time frames and (2) the poor professional
relations that often existed between foreign service officers and
civil service employees. Furthermore, foreign service officers cost
more than civil service employees performing similar jobs at
headquarters. If FAS were to adopt a policy similar to the practices
of other agencies whose officials said that their foreign service
officers serve between 66 and 75 percent of their careers abroad, FAS
could maintain its current level of foreign representation at a lower
cost because a smaller overall officer corps would be needed. This
would lower the cost of headquarters operations because fewer foreign
service officers would be used in civil service positions. Foreign
service positions are generally higher cost than comparable civil
service positions largely because of retirement benefits and the high
cost of travel and other cost associated with overseas rotations.
--------------------
\2 Most countries had a FAS post located at the U.S. embassy. The
post was responsible for commodity reporting, trade policy matters,
and market development activities. Some countries had, in addition
to a post, one or more agricultural trade offices located outside the
embassy solely to promote U.S. agricultural products.
\3 In May 1993, FAS had 99 of its 203 foreign service officers
serving in headquarters positions. The 85 foreign service officers
serving in civil service positions at headquarters represented only
13 percent of the civil service positions, but they were largely
assigned high-level positions. Foreign service officers held 23 of
60 civil service positions at grades 15 and above (or about 38
percent).
SOME COMMODITY REPORTING MAY
NOT BE NEEDED TO MEET STRATEGIC
OBJECTIVES
---------------------------------------------------------- Chapter 0:7
Once an agency has determined its mission, its strategic priorities
for achieving its mission, the most appropriate organizational
approach, and the workforce capacity that it needs, the agency should
ensure that it makes the highest and best use of its workforce. GAO
found indications that FAS operations may not always meet this
criterion, specifically relating to commodity reporting completed by
FAS' overseas workforce.
In March 1994, FAS completed a review of its commodity reporting
system. The review resulted in FAS' eliminating some reports,
reducing others, and providing additional reports for many high-value
products. However, GAO believes FAS' review did not go far enough in
assessing the need for such an extensive reporting system or in
determining how best to meet the information needs of U.S.
exporters. Part of the issue is that FAS gathered input for
reviewing the value of existing reports largely from FAS' own foreign
service officers and analysts; it did not systematically solicit the
views of exporters and others in U.S. agriculture to learn what they
wanted or needed in terms of information.
GAO reviewed in depth the commodity reporting done on five
commodities--honey, dairy products, cotton, coffee, and grain and
feed. While some commodity reporting often did serve many functions,
GAO interviewed exporters and USDA analysts and found that some of
the reporting was put to little use. Those interviewed cited
examples of commodity reports containing great amounts of detail that
they did not use. They also told GAO that they primarily relied on
other sources of information, especially for market information.
For example, FAS required scheduled dairy reports in 1992 from 37
countries. These countries were chosen mostly because they were
significant producers of dairy products. GAO's review found that the
dairy reports got little use in supporting USDA export programs. In
one case, the major foreign program involving dairy products is the
Dairy Export Incentive Program, which provides export subsidies to
U.S. dairy producers. Instead of relying on its own dairy reports,
however, FAS used United Nations (U.N.) trade data to help administer
the program because U.N. data provided more comprehensive and
uniform world coverage. Moreover, industry representatives said FAS
dairy reports and circulars were helpful as background information,
but the representatives were able to provide few specific examples of
their use. The representatives also said that they did not rely on
FAS dairy reports to identify export opportunities.
Significant changes have occurred in the world in the past 30 years
that affect commodity reporting. In particular, numerous sources
other than FAS now exist that provide information on world
agriculture. Thus, FAS appears to be devoting some of its scarce
resources to duplicating information available elsewhere. As
previously mentioned, FAS used U.N. trade data to administer its
Dairy Export Incentive Program. In another example, FAS spent
considerable resources reporting from the countries of the European
Union. Those in private industry whom GAO interviewed said that it
is easy to get reliable data from West European governments and that
some of FAS' reporting from the region may be duplicative. FAS may
be able to more efficiently use its resources by reducing and
eliminating reporting that does not contribute to its primary mission
of increasing exports.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:8
To more effectively and efficiently use FAS resources to help
increase U.S. agricultural exports, GAO recommends that the
Secretary of Agriculture direct the Administrator of the Foreign
Agricultural Service to:
Ensure that the strategic plan under development as well as the
revised LATS and country marketing plans better reflect the
criteria discussed in this report, including differentiation
among priorities and appropriate measures for gauging progress
and ensuring accountability.
Devise and implement a strategy to better ensure that decisions on
locations of overseas offices involve consideration of options
derived from a systemic as well as a local circumstance
perspective. An element of such a strategy would be an
assessment of the cost effectiveness of the locations of
overseas offices.
Reevaluate FAS workforce capacity needs for both the foreign
service cadre and other workforce components. An essential part
of this reevaluation would be a reassessment of the 50- percent
rotation policy with a view toward increasing the amount of time
that foreign service officers serve overseas.
Ensure that its commodity reporting system contributes to FAS'
strategic priorities. In doing so, the Administrator should
ensure that commodity reports meet the needs of external and
internal users and do not unnecessarily duplicate information
available from other sources.
AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:9
FAS provided written comments on a draft of this report. The
comments are discussed at the end of chapters 2, 3, and 4.
FAS acknowledged that its strategic planning processes need
improvement and that it was working to develop a strategic planning
process that facilitates resource allocation decisions while meeting
other requirements, such as performance measurement and the budget
process. FAS stated it plans to use this GAO report to guide its
efforts to complete a strategic plan by March 1996. Although FAS
agreed that its planning process could be improved, it disagreed that
recent decisions to close certain offices were driven by ad hoc
budget considerations and local circumstances. Rather, it said those
decisions were made using a "post-ranking analysis" and other
factors. Nonetheless, FAS agreed that, once a new strategic planning
process is in place, decisions on office locations would benefit from
a clearer focus on mission priorities and resource allocation.
FAS also agreed that workforce capacity issues need to be reexamined
and noted that an agency task force is currently examining how FAS
operates its dual-personnel system, including its foreign service
rotation policy. In doing so, however, FAS stated that it believes
U.S. agriculture has benefited from having foreign service officers
work a substantial portion of their careeer in Washington, D.C., to
gain the expertise needed to succeed in the field. GAO believes
that, as a part of its study of these issues, FAS should carefuly
consider both the higher costs and inefficiences that occur when
foreign service officers spend large amounts of time in Washington
and the benefits of gaining Washington experience.
FAS agreed that excessive commodity reporting and duplicating the
efforts of others should be avoided. FAS said that it plans to
question the extent of commodity reporting as it develops its
strategic planning process and will consider the results of GAO's
analysis in that effort. However, FAS expressed the belief that GAO
judged the value of commodity reporting solely on the basis of
comments by external subscribers to FAS circulars. FAS emphasized
that internal USDA organizations are also customers of these reports.
GAO noted that its analysis included a wide range of users of
commodity reports, both within USDA and in the farm industry.
INTRODUCTION
============================================================ Chapter 1
Within the U.S. Department of Agriculture (USDA), the Foreign
Agricultural Service (FAS) oversees a variety of activities and
export promotion programs aimed at increasing U.S. exports of
agricultural commodities. The FAS mission statement calls for FAS to
expand foreign markets for U.S. commodities by (1) gathering data on
foreign markets (commodity reporting), (2) attempting to gain access
to foreign markets (trade policy), and (3) working to promote
increased foreign consumption of U.S. agricultural commodities
(market development).
FAS attempts to advance the efforts of the agricultural community to
sell U.S. food and agricultural products overseas. From an
employment perspective, FAS estimated that 1 million jobs are
associated with U.S. agricultural exports each year. Strong export
performance contributes to the health of U.S. agriculture and the
health of the U.S. economy overall.
BACKGROUND
---------------------------------------------------------- Chapter 1:1
Created in 1953, FAS is headed by an administrator and has five
organizational units, called "program areas," each headed by a deputy
administrator. These program areas report to associate
administrators or to the General Sales Manager (GSM). In general,
these program areas perform work according to FAS functions, such as
trade policy (International Trade Policy); work in foreign locations
(Foreign Agricultural Affairs); commodity analysis, reporting, and
promotion (Commodity and Marketing Programs); export programs (Export
Credits); and international training and development programs
(International Cooperation and Development).
For fiscal year 1995, FAS has a budget of about $118 million to carry
out its functions and manage various agricultural export promotion
programs. In fiscal year 1994, FAS made direct outlays in its
programs exceeding $3.16 billion, as well as export credit guarantees
valued at about $3.22 billion. These programs supported exports of
both bulk commodities (such as wheat or corn) or high-value products
(such as fresh fruit and vegetables and processed foods).
As of January 1995, FAS had over 900 employees located at its
headquarters in Washington, D.C., and at about 75 overseas offices
covering more than 130 countries throughout the world. After passage
of the Foreign Service Act of 1980 (P.L. 96-465, Oct. 17, 1980),
FAS began to convert certain employees to foreign service officers.
As of January 1995, foreign service officers held about 200 of the
over 900 FAS positions. In addition to its employees, FAS has hired
about 150 people located at overseas offices on a contract basis to
perform certain services.
FAS' EXPORT ASSISTANCE PROGRAMS
---------------------------------------------------------- Chapter 1:2
FAS operates a number of export assistance programs, which are either
concessional programs, commercial programs, or export promotion
programs. In FAS' concessional programs, recipient countries receive
agricultural-related foreign aid. For example, title I of Public Law
480\1 is a food aid and market development program aimed at
developing a presence in such markets and supporting their economic
growth. Under title I, U.S. agricultural commodities are sold to
developing countries on long-term credit at below-market interest
rates. The current goal of the program is to promote the foreign
policy of the United States by enhancing the food security of
developing countries.
FAS' commercial programs are those in which the terms of the
agricultural commodity sales fall within the prevailing world market
prices--the GSM export credit guarantee programs (GSM-102 and
GSM-103)\2 and the Export Enhancement Program. The GSM export credit
guarantee programs are designed to increase the willingness of U.S.
banks to extend credit for U.S. agricultural exports. Under these
two programs, financial institutions in the United States provide
financing for individual commodity sales to foreign buyers. If the
foreign buyer fails to make its repayments as scheduled, then the
U.S. government, through the Commodity Credit Corporation,\3 will
repay the financing institution. In this way, USDA attempts to
reduce the risks for U.S. banks and exporters involved in selling
U.S. agricultural products overseas.
Under the Export Enhancement Program, USDA pays cash to U.S.
exporters as bonuses, allowing them to sell certain U.S.
agricultural products in targeted countries at prices that are
competitive with those offered by other countries that provide
subsidies. Three other export subsidy programs are aimed at allowing
U.S. commodities to compete in world markets against the subsidized
exports of other countries--the Sunflowerseed Oil Assistance Program,
the Cottonseed Oil Assistance Program, and the Dairy Export Incentive
Program.
FAS' export promotion programs--the Foreign Market Development
Program (or Cooperator Program) and the Market Promotion Program--
are designed to encourage commercial exports through payments for
advertising, trade servicing, and technical assistance. The costs
for these programs are shared between USDA and producer-funded
nonprofit agricultural trade associations or private companies. The
Market Promotion Program helps to finance overseas promotional
activities that develop, maintain, or expand U.S. agricultural
exports. USDA partially reimburses program participants (trade
organizations or private firms) that conduct approved development
activities for eligible products in specified foreign markets.
--------------------
\1 The Food for Peace Act, formally known as the Agricultural Trade
Development and Assistance Act of 1954, established the legal
framework for U.S. food aid.
\2 The GSM-102 program guarantees repayment of short-term financing
(6 months to 3 years) extended to eligible countries that purchase
U.S. farm products. The GSM-103 program guarantees repayment of
intermediate-term financing (3 to 7 years) extended to eligible
countries that purchase U.S. farm products.
\3 The Corporation was created within USDA to stabilize, support, and
protect farm income and prices. Among other things, the Corporation
is responsible for supporting agricultural prices through loans,
purchases, payments, and other operations. Its charter also
authorizes the sale of agricultural commodities to other government
agencies and to foreign governments, as well as food donations to
domestic, foreign, or international relief agencies.
OBJECTIVES, SCOPE, AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:3
We reviewed FAS to determine how well its strategic plan guided the
use of its resources to accomplish its mission. The purposes of our
review concerned FAS' (1) strategic planning, specifically whether
USDA's long-term agricultural trade strategy (LATS) contributed to
effective FAS strategic planning; (2) foreign service, particularly
whether its operations were planned and managed to efficiently use
its available resources; and (3) commodity reporting, specifically
the extent to which FAS' commodity reporting is an effective use of
FAS resources.
To assess whether LATS has contributed to the effective strategic
planning of FAS, we reviewed the LATS document and FAS' country
marketing plans in light of relevant literature and our past work on
related issues at other federal departments and agencies. Congress
had required USDA to prepare, before October 1991, a LATS to promote
U.S. exports. USDA was also required to designate priority growth
markets and devise country marketing plans to propose strategies for
bolstering U.S. exports to these markets. We reviewed USDA records
and held discussions with FAS representatives at its headquarters in
Washington, D.C.
To determine whether FAS planned and managed its foreign service
resources efficiently, we reviewed the (1) location of overseas
offices and (2) rotation of foreign service employees between
headquarters and foreign assignments. We reviewed FAS policies on
these issues, examined FAS documents, and held discussions with FAS
representatives. We analyzed data on the duration and location of
overseas tours for FAS foreign service officers from November 1981
(the date of FAS conversion to a foreign service agency) to June 30,
1993. In addition, we held discussions about management of foreign
service personnel with representatives of the other major agencies
that have a foreign service system, including the Department of
State, the Department of Commerce's U.S. and Foreign Commercial
Service, the U.S. Information Agency, the Agency for International
Development, and USDA's Animal and Plant Health Inspection Service.
To determine whether FAS' commodity reporting is an effective use of
resources, we reviewed in depth the commodity reporting done on five
commodities--honey, dairy products, cotton, coffee, and grain and
feed. The five commodities were chosen to include a major commodity
(grain and feed) and a minor commodity (honey), as well as an
export-oriented commodity (cotton) and an import-oriented commodity
(coffee). The commodities represent a subjective cross section of
the commodities reported on by FAS foreign service officers. We
spoke with a wide range of users, within both USDA and the U.S. farm
industry, of the commodity reports and of the commodity circulars FAS
produced from the reports. We also spoke with FAS foreign service
officers, examined FAS' review of its commodity reporting system, and
analyzed the revised schedule for commodity reporting resulting from
its review.
We did our work in accordance with generally accepted government
auditing standards from September 1993 to June 1995. We obtained
written comments on a draft of this report from the Acting
Administrator of FAS. The comments are discussed at the end of
chapters 2, 3, and 4, and the full text of the comments can be found
in appendix I.
INADEQUATE STRATEGIC PLANNING
============================================================ Chapter 2
Our management and program reviews of departments and large agencies
across government have shown that many of these organizations lacked
consensus on their mission and the results that they expect to
achieve. Even when missions seemed relatively clear, the agencies
had not established a systematic process to identify and address
critical issues, including the allocation of resources, to meet their
mission and achieve their desired results. Reliable performance
measures had not been developed and used to gauge progress, improve
performance, and establish accountability.
We found a similar situation at FAS. Although FAS' mission to
promote the export of U.S. agricultural commodities seems clear, the
components of FAS' planning for its mission--LATS and country
marketing plans--lacked the specificity and measurable goals that
would be necessary to establish priorities and allocate resources
efficiently and effectively to promote the export of U.S.
agricultural commodities. FAS is currently involved in a major
effort to improve its strategic planning, which is expected to be
completed in March 1996.
STRATEGIC MARKETING IS
ESSENTIAL TO COMPETE
EFFECTIVELY IN WORLD MARKETS
---------------------------------------------------------- Chapter 2:1
Markets are emerging in East Asia, Eastern Europe, and elsewhere that
show potential for becoming major consumers of U.S. agricultural
products. And high-value products, such as fresh fruit and
vegetables and processed foods, are becoming an increasingly
important component of trade. At the same time, international
agricultural trade has become highly competitive, and the United
States has been increasingly confronted with competitors that are
using aggressive and sophisticated marketing practices. New and
wider opportunities for increasing U.S. exports through greater
market access have also become available due to the multilateral
trade agreement of the General Agreement on Tariffs and Trade
(GATT).\1
FAS' role in strategic marketing includes devising a LATS that
identifies priority markets and growth potential. LATS should focus
on products that are likely to satisfy consumer needs in those
markets. Strategic marketing should help ensure that products are
priced competitively, distributed efficiently, and promoted
effectively. And strategic marketing should continually innovate to
help U.S. agriculture adapt to changing markets and stay ahead of
the competition.\2
--------------------
\1 GATT, created in 1947, is the primary multilateral agreement
governing international trade and was founded on the belief that more
liberalized trade would help the economies of all nations grow.
\2 See U.S. Department of Agriculture: Strategic Marketing Needed
to Lead Agribusiness in International Trade (GAO/RCED-91-22, Jan.
22, 1991).
LONG-TERM AGRICULTURAL TRADE
STRATEGY WAS NOT A USEFUL
MANAGEMENT TOOL
---------------------------------------------------------- Chapter 2:2
Congress required USDA to develop LATS as a long-term plan to expand
foreign markets for U.S. agricultural commodities. LATS was to
designate priority growth markets and to devise country marketing
plans to propose strategies for these growth markets. USDA submitted
LATS to Congress in January 1993, which was about 15 months after the
October 1991 deadline. At the same time, the country marketing plans
were made available to Congress. LATS and the country marketing
plans did not set priorities among 177 country/commodity "priority"
markets or set measurable objectives to guide agricultural programs
and their resources.\3
Required under the Food, Agriculture, Conservation, and Trade Act of
1990 (P.L. 101-624, Nov. 28, 1990), LATS was intended to guide the
Secretary of Agriculture in carrying out federal programs designed to
promote the export of U.S. agricultural commodities. The specific
goals cited in the act were to ensure the (1) growth in exports of
U.S. agricultural commodities, (2) efficient coordinated use of
federal programs for promoting the export of U.S. agricultural
commodities, (3) provision of food assistance and an improvement in
the commercial potential of markets for U.S. agricultural
commodities in developing countries, and (4) maintenance of
traditional markets for U.S. agricultural commodities.
FAS worked with other USDA agencies to prepare a fall 1991 draft of
LATS. Due to political events in the former Soviet Union and Eastern
Europe, however, some of the initial detailed analyses covering
potential export markets became outdated and were revised. In
January 1992, LATS was cleared by 15 USDA agencies, but did not
receive its Department-level clearance because it was not viewed as
constituting a true strategy and was deemed as inflexible from the
perspective of export program management. During 1992, FAS updated
the LATS data and worked to improve its strategy. USDA then
submitted LATS to Congress in January 1993.
In the LATS introduction, USDA stressed that LATS was a guide for
USDA's efforts to promote agricultural trade; LATS was not intended
to be a form of "managed trade" to direct export strategies for the
private sector. LATS specifically stated that no illusions exist
that LATS or government can ensure a successful agricultural export
sector--success depends on individual farmers, business people, and
workers. LATS further stated that the proper coordination of
domestic programs, export programs, and trade policy efforts should
provide the maximum return to support the private sector in its
activities to promote exports of agricultural commodities.
LATS included narrative on (1) trends in U.S. agricultural market
share, including a historical narrative on total agriculture trade,
bulk commodities, intermediate commodities, consumer-oriented
products, and forest products; (2) growth in and pattern of world
trade, as well as prospects for agricultural sales to developed and
developing countries; and (3) USDA strategies for supporting
agricultural exports.
The USDA strategies for supporting agricultural exports included a
discussion of U.S. trade policy, domestic programs, and export
programs. Concerning trade policy, LATS suggested that trade
liberalization on a multilateral basis would offer the best prospects
for expanding U.S. exports, but the full benefits of trade
negotiations under the Uruguay Round of the GATT are not likely to be
felt until 1997. This date is beyond the period covered by LATS.
Regarding domestic programs, LATS stated that, among other things,
domestic farm programs must enhance U.S. agricultural exports and
not inhibit or limit exports by reducing production, increasing
prices, or limiting the volume of exports. Other items in LATS
included (1) building U.S. exporter skills, which is an educational
effort aimed at current and potential U.S. exporters; (2)
emphasizing development of new products and enhancement of the
quality of existing commodities and products; (3) increasing importer
education so that potential buyers better understand how FAS programs
operate; and (4) building markets for U.S. products in developing
countries.
The relevant literature and our past work on related issues at other
federal departments and agencies indicate that a good strategic
planning process should help the agency to identify and resolve key
issues. More specifically, a good planning process should enhance an
agency's ability to address fundamental questions, including the
following:
Where is the agency going? (Direction)
How will it get there? (Strategies)
What is its blueprint for action? (Budget)
How will it know it is achieving its direction? (Accountability)
Thus, effective strategic planning includes a number of elements.
These elements include establishing specific objectives; setting
priorities among the objectives; identifying strategies for
accomplishing the objectives; determining the most appropriate
organizational structure, geographic location, and workforce
capacities for accomplishing the objectives; and developing
performance measures suitable for gauging progress and ensuring
accountability.
The LATS document completed in January 1993 does not meet several of
these criteria and, as a result, does not provide sufficient
specificity in terms of direction, priorities, performance measures,
and accountability. LATS, and specifically the strategies for
supporting U.S. exports, represented a discussion on the status of
U.S. agriculture trade and general approaches to increased
exporting--not a plan for increasing U.S. agricultural exports
through the use of USDA's programs and resources. Most importantly,
concerning USDA export programs, LATS called for "the fullest
possible use of all export assistance programs" without identifying
which programs or activities were critical or most significant. In
our opinion, LATS could be a more useful management tool for
effectively allocating FAS resources and meeting program objectives.
--------------------
\3 See U.S. Department of Agriculture: Improvements Needed in
Foreign Agricultural Service Management (GAO/T-GGD-94-56, Nov. 10,
1993).
COUNTRY MARKETING PLANS DID NOT
DIFFERENTIATE AMONG A LARGE
NUMBER OF PRIORITIES
---------------------------------------------------------- Chapter 2:3
USDA was also required to designate priority growth markets and
devise country marketing plans to propose strategies for bolstering
U.S. exports to these growth markets. The country marketing plans,
also completed in January 1993, did not set priorities among 177
country/commodity "priority" markets or set specific resource goals
to guide their programs designed to promote the export of U.S.
agricultural commodities.
The country marketing plans were a compilation of short discussions
concerning the likely demand for U.S. exports of various commodities
(or commodity groups, such as dairy products) within certain
countries. The document included the 15 countries considered to be
the top markets for bulk commodities, as well as the 15 countries
considered to be the top markets for consumer-oriented products. A
number of priority commodities were listed for each country within
the two groups, ranging from a low of 1 commodity to a high of 12
commodities. In total, the document included 177 priorities.
In general, the compilation of country plans did not meet the
criteria presented above in that it was not specific enough about
what needed to be done to increase U.S. exports and did not
differentiate among numerous priorities. The compilation of country
plans listed the countries and commodities alphabetically, without
setting priorities for the 177 entries. Most importantly, the
country marketing plans generally contained neither specific or
measurable objectives nor other elements that are integral to
identifying and achieving measurable objectives.
The document's discussion of the priority commodities or commodity
groups was often very short (in many cases only one paragraph),
covered the current situation with the respective commodity within
the country, and set forth only a general plan or strategy. For
example, the strategy for promoting U.S. fruit juice in one country
was that "the marketing strategy should focus on increasing consumer
awareness of U.S. products."
Moreover, for many of the 177 priority country/commodity markets, we
found that the document's language in the discussion of the
commodities suggested that the potential for U.S. exports and the
strategy for increasing exports had not been established. For
example, the narrative for promoting U.S. fruit and vegetable juice
for one country said that "there could be a niche market for quality
citrus juices that U.S. exporters might be able to penetrate.
Market research on this possibility should commence and if the
results are positive, promotional support should follow." In other
cases, the discussion of the specific commodity or commodity group
ended without any language at all about a possible action to take or
strategy to use.
The following is an example of a typical discussion contained in a
country marketing plan. The example covers coarse grains, which was
one of four priority commodities for country A.\4 Country A
represented 1 of 15 countries considered to be top markets for bulk
commodities:
"Population and income growth will stimulate demand for
derivative products, such as poultry, and lead to government
relaxation of import restrictions. [Country A] is a net
exporter and will continue to be over the near term.
Nevertheless, the outlook is that [the country] will eventually
become a large net importer.
"Price is the main factor influencing exports in this market, so
U.S. exports must meet the price levels of the competition.
Since [the country] is still a net exporter of coarse grains,
the short-term strategy is to maintain a presence in the market
through trade servicing and technical services."
This example illustrates the lack of specificity in country plans on
what was required to increase exports. The example contains neither
specific or measurable objectives nor other elements that are
integral to identify and achieve objectives. In addition, the
country marketing plan did not provide a carefully developed strategy
for bolstering U.S. exports into this priority market and for using
USDA programs and resources.
--------------------
\4 FAS decided not to release the country marketing plans since FAS
believes it would give U.S. competitors an unique insight into where
the U.S. government planned to deploy its resources and what tactics
it would utilize. As a result, we have substituted "country A" for
the actual name of the country.
FAS' VIEWS ON THE USE OF LATS
AND COUNTRY MARKETING PLANS
---------------------------------------------------------- Chapter 2:4
Because LATS and the country marketing plans had a limited
distribution, we asked an FAS representative how the documents were
being used to meet the mandate of the legislation and guide the
day-to-day conduct of FAS work. He told us that FAS used the country
marketing plans to help evaluate various applications for funding
promotional activities under the market promotion program. He said
FAS also used the country marketing plans during the application
process to encourage or discourage the use of program funds in
certain markets. However, we found that the country plans were not
being employed as part of a broader effort to develop a long-term
plan that would help U.S. exporters focus on the most promising
markets. Using the country marketing plans in administering one FAS
program does not equate to using LATS to more effectively achieve the
agency's overall goals and objectives.
The FAS representative also said that devising LATS and the country
plans became a very difficult and sensitive task because one
consequence of these plans could be the promotion of one commodity to
the detriment of another commodity. For example, he said that
promoting certain feed grains could have a negative impact on the
beef/poultry industry. Countries could use imported feed grains to
help expand their domestic beef or poultry industries at the expense
of beef or poultry imports from the United States. The result of
LATS could involve major changes in funding for various participants
in USDA programs, thus adversely affecting certain segments of the
nation's farm sector.
During a congressional hearing in June 1994,\5 an FAS representative
testified that stronger FAS efforts at strategic planning were key to
taking full advantage of the positive factors that currently exist
for expanding U.S. agricultural trade. He acknowledged that LATS
lacked priorities and that it needed additional work to become a
useful management tool.
FAS is currently involved in a major effort to improve its strategic
planning as well as to meet the requirements of LATS, the Trade
Policy Coordinating Committee (an organization of government agencies
aimed at developing and implementing a governmentwide strategic plan
for export promotion programs), the Government Performance and
Results Act, and the National Performance Review. The latter two
requirements involve the development of performance standards to
measure progress on specific programs. FAS plans to identify the
common elements of these processes and combine them into a single,
unified budgetary strategic planning process. Two common elements
are expected to be the (1) use of performance measures to assist
resource allocation decisions and (2) identification of the overseas
locations to use the resources. As of August 1995, FAS planned to
have a final strategic plan in March 1996, which would include a
revised LATS as a component.
--------------------
\5 Hearing on the Long-term Agricultural Trade Strategy and Export
Policies, before the Subcommittee on Foreign Agriculture and Hunger,
House Committee on Agriculture, June 23, 1994.
CONCLUSIONS
---------------------------------------------------------- Chapter 2:5
Strategic planning is essential for FAS to meet its mission of
increasing U.S. agricultural exports as well as to effectively
manage its resources and various programs and activities. Effective
strategic planning includes a number of elements, such as proposed
actions to accomplish objectives, identification of the staff or
organization that would work to accomplish the objectives,
particulars on how U.S. government agricultural export programs
would be used in meeting the objectives, information on the budgetary
impact of such initiatives, and performance measures to be used to
evaluate progress in meeting the objectives. FAS recognizes that the
current LATS has shortcomings in several of these areas and has begun
a review to identify potential improvements. A revised plan would be
a more useful tool for guiding and allocating resources among FAS
export promotion programs and activities.
RECOMMENDATION
---------------------------------------------------------- Chapter 2:6
We recommend that the Secretary of Agriculture direct the
Administrator of the Foreign Agricultural Service to ensure that the
strategic plan under development as well as the revised LATS and
country marketing plans better reflect the criteria discussed in this
report, including differentiation among priorities and appropriate
measures for gauging progress and ensuring accountability.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 2:7
FAS concurred with our conclusions that LATS did not provide the
basis for effective strategic planning. FAS said that LATS (1)
lacked the specificity to guide the allocation of program and
activity resources to achieve those objectives and (2) did not
establish measures for gauging progress or accountability for meeting
the objectives. FAS indicated that it is committed to pursuing an
effective strategic planning process and is developing a process to
integrate statutory and administration initiatives related to
strategic planning, called the "Unified Budgetary Strategic Planning
Process." The process takes the requirements of the administration's
initiative, "the National Performance Review," along with statutory
requirements of the Trade Promotion Coordinating Committee, the
Government Performance and Results Act, and LATS and unites them with
the annual budget process. FAS says, in so doing, it plans to ensure
that the performance measures and planning demands of each of the
components are met uniformly in the most efficient manner possible.
While FAS agreed that LATS was inadequate to guide agency planning
and the need exists for an improved LATS process, FAS does not
believe that past agency decisions associated with overseas office
locations, foreign service personnel policy, and commodity reporting
have been adversely effected by the lack of adequate strategic
planning.
As discussed in this report, we believe that improvements to the
strategic planning process at FAS are necessary, and can provide a
systematic basis for FAS' decisions relating to the location of
overseas offices, workforce capacity issues, and commodity reporting.
We support FAS' current efforts to develop a comprehensive and
integrated strategic planning process.
FAS believes that its strategic planning process will address many of
the issues raised by both us and FAS senior staff concerning the
agency's overseas office selection process, foreign service rotation
policy, and commodity reporting requirements. FAS plans to use our
recommendations to guide its efforts to complete a strategic plan by
March 1996.
WEAKNESSES IN PLANNING OVERSEAS
OPERATIONS
============================================================ Chapter 3
After determining its mission and strategic priorities for achieving
that mission, an agency should expand its strategic planning to
address the most appropriate organization structure, including
geographic locations, and workforce capacity for accomplishing the
mission priorities. This positions the agency to apply its resources
from a systematic perspective.
FAS' lack of an adequate strategic plan has hindered its ability to
consider various options from a systematic perspective when making
decisions on the location of its overseas offices and the workforces
that staff those offices. Decisions on establishing or closing
offices have been driven primarily by ad hoc budget considerations
and local considerations, not based on a strategic plan with
established mission priorities. As a result, these decisions may not
have produced the best overall systematic outcome. FAS' policies on
the rotation of its foreign service officers raise workforce capacity
issues.
DECISIONS ON OVERSEAS OFFICE
LOCATIONS WERE NOT BASED ON A
LONG-TERM MARKETING STRATEGY
---------------------------------------------------------- Chapter 3:1
An effective strategic planning approach to FAS overseas operations
would define the need for each overseas office with regard to FAS'
mission of increasing U.S. agricultural exports as well as the
genuine needs of the users of FAS overseas services, primarily U.S.
agricultural exporters. FAS representatives have recognized that
budget concerns existed in its management of overseas locations. Yet
the criteria for establishing and closing overseas offices have
remained broad, and decisions have been driven primarily by ad hoc
budgetary considerations, not by an overall long-term strategic plan
or marketing strategy that established mission priorities.
FAS HAS VERY GENERAL
CRITERIA FOR OVERSEAS ATO
LOCATIONS
-------------------------------------------------------- Chapter 3:1.1
FAS has criteria for locating its overseas offices and agricultural
trade offices (ATO),\1 but they are so general that FAS could use
them to justify locating an overseas office in almost any country
worldwide. The criteria, which FAS representatives summarized,
specify that positive advantages should exist to U.S. agricultural
interests in maintaining a U.S. agricultural officer in the locality
for long-range or temporary promotion of U.S. agricultural policy
and exports. The criteria also stipulate that a need should exist
for agricultural reporting in the chosen locality in accordance with
long-range U.S. agricultural interests. The criteria include
various operational considerations as well, specifying the necessity
of support by the U.S. Ambassador, the availability of funding, the
handling of security issues, the availability of housing or office
space, and the need to support other USDA agency personnel and
programs.
FAS representatives said that, in reallocating resources among
overseas offices, FAS makes substantial use of trade and economic
data and also considers a variety of other factors. These factors
include (1) major political changes, such as the breakup of the
Soviet Union; (2) marketing trends that may not have appeared in the
trade and economic data; (3) emergencies created by terrorism and
natural disasters; (4) political changes that might affect various
FAS export programs; and (5) living conditions at an overseas office,
such as the health risk of contracting a fatal strain of malaria at
an overseas office in Africa.
The responsibility for deciding where offices should be located falls
on the FAS Administrator, based on recommendations from the Executive
Advisory Group, which is comprised of FAS associate and assistant
administrators. According to an FAS representative, the Executive
Advisory Group functions somewhat like a private corporation's board
of directors. The minutes of the group's meetings disclose changes
in office locations when they occur, but do not document the
rationale for the changes.
We first identified issues relating to the criteria for the locations
of overseas offices in a January 1992 report covering ATOs.\2 We
found that USDA had established specific criteria and a methodology
for selection of the sites for the first several ATOs it set up.
However, we found no indication that the criteria and the methodology
had been used in selecting later sites. Also, we said that
documentation of office location decisions was no longer available in
most cases. As a result, USDA could not readily demonstrate that
existing or proposed ATOs at the time were in the best locations for
maximizing market development opportunities for U.S. agricultural
products. USDA representatives said that certain factors, such as
the critical mass of market activity, the potential for market
development, and the need to facilitate a U.S. trade presence, were
considered when selecting a site. As we reported, these factors were
so broad that FAS could have used them to justify placing an ATO in
almost any country.
--------------------
\1 The number and type of FAS offices have varied within each
country. Most countries had an FAS post located at the U.S.
embassy, which was responsible for commodity reporting, trade policy
matters, and market development work. Some countries had both an FAS
post located within the U.S. embassy and one or more ATOs located
outside of embassy grounds solely to promote U.S. agricultural
products. Some overseas offices covered multiple countries.
\2 See International Trade: Agricultural Trade Offices' Role in
Promoting U.S. Exports Is Unclear (GAO/NSIAD-92-65, Jan. 16, 1992).
DECISIONS ON OVERSEAS
LOCATIONS HAVE BEEN BASED ON
SITUATIONAL VERSUS SYSTEMIC
CONSIDERATIONS
-------------------------------------------------------- Chapter 3:1.2
FAS representatives told us that for several years FAS has been
working with severely limited resources and that costs have increased
substantially in its overseas operations. They said that the U.S.
agricultural industry would like more coverage overseas, but FAS does
not have the resources for greater activities. FAS is constantly
having to reallocate resources to meet new needs and, in a few
instances, has opened new locations or added staff to existing
locations. FAS representatives also told us that decisions on office
locations were the result of difficult choices among many competing
needs and that the Executive Advisory Group strived to maximize the
return from its severely limited resources.
FAS has completed two post-ranking exercises for categorizing
workload and responsibilities at post locations. The exercises,
completed in April 1992 and September 1993, were intended to provide
a quantitative tool for allocating staff resources and reducing
overseas administrative costs. In the post-ranking exercise
completed in September 1993, overseas posts in which FAS had a
presence were assessed on eight factors, mainly involving trade and
demographic data, commodity reporting requirements, USDA spending on
various programs, and trade policy matters. The ranking showed which
overseas offices had greater or lesser workloads and responsibilities
relative to other offices. The report contained no conclusions or
recommendations. Furthermore, FAS representatives told us that FAS
made little use of its post-ranking exercise in deciding on changes
in post locations and staffing.
FAS has made many reductions in the locations and staffing of its
overseas offices and ATOs over the past 2 years. For example, during
fiscal year 1994, FAS closed ATOs in Caracas, Venezuela and London,
England. In those cases, the marketing activities were transferred
to the FAS overseas office located at the U.S. embassy. FAS
representatives also said that FAS has considered closing other ATO
locations. In Russia, FAS moved from commercial office space to
space within the U.S. embassy to save office space rental costs.
During fiscal year 1993, FAS closed a number of overseas offices
including Panama City, Panama; Berlin, Germany; and Bern,
Switzerland. FAS representatives told us that, although other
factors were considered, changes in ATO and FAS office locations
primarily were driven by overall budget constraints.
For example, FAS closed the London ATO in August 1994, even though
London was considered to be an important office. In a September 1993
post-ranking exercise, London had been ranked the eighth most
important market out of 48 markets reviewed for the projected level
of workload and responsibilities. The review included marketing (the
ATO responsibility), as well as commodity reporting, trade policy,
and other office activities. A FAS representative told us that high
operating costs had been the basis for the decision to close the
office and that the market development activities would be managed
through the FAS office located at the embassy. FAS estimated the
savings at about $928,000 per year.
In another example, FAS closed the Caracas ATO in December 1993. In
the September 1993 post-ranking exercise, Venezuela had been ranked
the 18th market out of 48 markets reviewed in terms of the projected
level of workload and responsibilities. A FAS representative told us
that major cost increases in leasing the office space, as well as
limited trade assisted through the office, had prompted the decision
to close the office. He said that the landlord of the ATO office
space had planned to nearly double the rent. Similarly, FAS decided
that the market development activities would be managed through the
FAS office located at the embassy. FAS estimated the savings at
about $324,000 per year.
We commend FAS for making difficult decisions to close specific
offices and for the cost savings they have produced in this regard.
However, we also noted examples of decisions that were driven by
local circumstances, such as rent being raised in a given location.
For example, while FAS generated $324,000 in annual savings by
closing the Caracas office, partially to avoid increased rent, other
options might have produced even more favorable outcomes had the
decision been viewed from a systemic perspective. Had this been
done, other options considered might have included (1) keeping the
Caracas office open while closing some other location having a lower
mission-related priority and (2) closing the Caracas office while
opening a new location, or building up an existing location, having a
higher mission-related priority.
Thus, while FAS was able to generate situational cost savings, it did
not have an overall strategy that specified the locations of overseas
offices to meet the priorities of the organization. Accordingly,
decisions on office locations were not based on a long-term plan or
marketing strategy for increasing U.S. exports. Neither did FAS
have a plan for reallocating resources as shifts occurred in world
markets. In January 1993, FAS completed LATS, but it did not include
any strategies for locating overseas offices. A more effective
strategic planning approach would be to assess the need for each
overseas office and ATO according to FAS' priorities for increasing
U.S. agricultural exports, as well as the genuine needs of those who
use FAS overseas services. These users are mainly U.S. agricultural
exporters.
FAS POLICIES ON THE ROTATION OF
ITS FOREIGN SERVICE OFFICERS
RAISES WORKFORCE CAPACITY
ISSUES
---------------------------------------------------------- Chapter 3:2
After Congress passed the Foreign Service Act of 1980, which allowed
FAS to adopt the foreign service system, FAS began to convert its
foreign agricultural attach� positions to foreign service officers.
Before passage of the Foreign Service Act, employees had been civil
service employees, including those who had occasionally served
overseas. According to FAS representatives, the conversion to
foreign service positions was needed because, among other embassy
staff and with foreign government personnel, FAS agricultural
attach�s lacked the status associated with being foreign service
officers. This circumstance inhibited their ability to carry out the
FAS mission, FAS representatives said.
FAS policy calls for each foreign service officer to spend about 50
percent of his or her career overseas. As a group, foreign service
officers have exceeded the 50-percent rotation policy, yet many
foreign service officers individually have not met this overseas
service goal. The 50-percent policy requires FAS to designate a
large number of high-level civil service positions at headquarters
for foreign service officers while they are not on assignment at an
overseas office. The use of foreign service officers in civil
service positions raises FAS costs and makes inefficient use of
specialized foreign service officer skills.
THE EXTENT OF OVERSEAS
SERVICE VARIED FOR FOREIGN
SERVICE OFFICERS
-------------------------------------------------------- Chapter 3:2.1
The Foreign Service Act provides only general guidance to foreign
service agencies regarding assignments for foreign service officers.
The act states that foreign service officers may not serve more than
8 years consecutively within the United States unless an extension is
approved because of special circumstances. The act further
stipulates that foreign service officers should be assigned to the
United States at least once every 15 years. However, the act does
not state what percentage of a foreign service officer's career
should be spent overseas.
FAS policy, established in October 1983, states that its foreign
service officers are to serve approximately one-half of their careers
in the United States and one-half of their careers overseas. FAS'
foreign affairs manual says that tours of duty at overseas posts will
generally be for periods of 3 or 4 years. During periods when
conditions at a particular post are especially difficult or
hazardous, assignments may be for 2 years. Transfers between posts
would normally not be made when they would keep a foreign service
officer at an overseas office longer than 6 years. Tours of duty at
headquarters would normally be for 4 years, with a minimum set at 2
years and a maximum set at 8 years. Foreign service officers may be
reassigned from one position to another position at headquarters on
the basis of FAS' needs and consideration of foreign service
officers' preferences. We could find no documentation of the
rationale for the 50-percent rotation criterion.
We developed summary statistics on the length of headquarters and
overseas tours for 203 foreign service officers\3 because FAS did not
have detailed data summarizing the amount of time that its foreign
service officers had spent overseas. Between November 1981 and June
1993, the 203 foreign service officers, in total, had spent about 57
percent\4 of their tenure as foreign service officers at overseas
locations. However, the data showed that 80 of the 203 foreign
service officers, or about 39 percent, had not individually met the
50-percent policy. Although we recognize that these officers may
well meet the 50-percent policy by the time they leave service, as
shown in table 3.1, a wide variation existed in the percentage of
time spent at overseas offices for the 203 foreign service officers.
Table 3.1
Percentage of Time Spent Overseas for
FAS Foreign Service Officers, November
1981-June 1993
Cumulative number
of foreign service Cumulative
Time spent overseas officers percentage
------------------------------ ------------------ ------------------
Under 20 percent 17 8%
Under 40 percent 49 24
Under 50 percent 80 39
Under 60 percent 120 59
Under 80 percent 179 88
======================================================================
Total 203 100%
----------------------------------------------------------------------
Source: GAO analysis of FAS data.
We found cases in which foreign service officers had spent lengthy
consecutive periods at headquarters, including 11 foreign service
officers who had served 7 or more consecutive years at headquarters.
For example, one foreign service officer had spent only 24 months, or
about 17 percent of his tenure, at an overseas office between
November 1981 (FAS conversion to foreign service) and June 1993.
Since June 1993, this foreign service officer has remained at
headquarters as a division director within the Commodity and
Marketing Programs area. FAS representatives told us that the
foreign service officer has done an excellent job at his headquarters
assignment. The FAS representatives also told us that the foreign
service officer preferred not to go to an overseas office again in
his career and that he had not yet reached the legal limit of 8
consecutive years at headquarters.
According to FAS representatives, foreign service officers'
preferences have played a very important role in the assignment
process. FAS representatives said that the circumstances surrounding
assignments have varied for each officer. Some foreign service
officers have preferred to complete one overseas tour and return to
headquarters, while others have preferred to serve two or more
overseas tours before returning. Economic and other reasons were
factors in these decisions. On the other hand, some foreign service
officers have preferred to remain at headquarters for extended
periods because of factors such as spouses' careers, children's
schooling, and other family matters.
Although FAS' 50-percent policy for overseas duty does fit within the
parameters of the Foreign Service Act, the FAS rotation policy is
shorter than the average time spent overseas reported by other
foreign service agencies. We held discussions with representatives
of the major agencies with a foreign service, including the
Department of State, the Department of Commerce's U.S. and Foreign
Commercial Service, the U.S. Information Agency, the Agency for
International Development, and USDA's Animal and Plant Health
Inspection Service. In general, these representatives told us that
their foreign service officers spend two-thirds to three-fourths of
their careers overseas. For example, representatives of the U.S.
and Foreign Commercial Service told us that about 75 percent of a
foreign service officer's career is spent abroad. The Service begins
to review a foreign service officer's status for a U.S. tour after
about 12 years at various overseas offices. These foreign service
officers generally serve tours at three different locations before
beginning a tour in the United States.
--------------------
\3 We analyzed data for the 203 foreign service officers who were on
FAS personnel rolls as of April 1993. For each foreign service
officer, the data covered the period between the date of conversion
to foreign service and June 30, 1993. Seventy of the 203 became
foreign service officers in November 1981 as part of an initial
conversion of FAS civil service staff to foreign service officers,
and nearly all had served overseas before the conversion. The
remaining staff became foreign service officers incrementally during
the 12-year period.
\4 We performed three additional analyses that showed similar
results. In these analyses, (1) the current assignments were
excluded from the comparison (for a total time abroad of 57.5
percent), (2) the assignments at the time of conversion to a foreign
service officer were excluded from the comparison (for a total time
abroad of 58.4 percent), and (3) both the current assignments and the
assignments at conversion were excluded from the comparison (for a
total time abroad of 59.3 percent).
FAS' 50-PERCENT ROTATION
POLICY ADDS TO DIFFICULTIES
IN MANAGING ITS WORKFORCE
-------------------------------------------------------- Chapter 3:2.2
The 50-percent rotation policy means that, at any point in time,
about one-half of FAS' 203 foreign service officers are assigned to
headquarters positions. However, FAS has only a limited number of
positions at headquarters designated for foreign service officers.
Thus, most of the foreign service officers serving in headquarters
assignments are occupying civil service positions. This fact
increases FAS difficulties in managing its workforce. Issues
relating to the management of the dual-personnel system were reviewed
by an FAS committee--the Committee on Civil Service and Foreign
Service Personnel Management Issues. In its April 1989 report, the
committee concluded that perceptions of unfair treatment existed
within FAS. The report stated that the perceptions of unfair
treatment of civil service employees resulted in part from the
dual-personnel system.
An August 1993 internal FAS reorganization proposal recognized that
concerns existed about assigning meaningful and appropriate work to
returning foreign service officers. The proposal was expected, among
other things, to make more efficient use of staff resources and
reduce concerns connected with foreign service rotations to civil
service positions. The proposal, by the FAS deputy assistant
administrator for management, called for FAS to establish an
organizational entity, staffed heavily with foreign service officers,
with more representation and in-depth knowledge of various geographic
regions and countries. Some of the concerns cited in the proposal
included the following:
(1) FAS was not able to provide interesting and challenging jobs for
many returning foreign service officers.
(2) Foreign service officers made little use of the knowledge and
skills acquired at overseas offices, and they had little opportunity
to pass on to others what was learned at overseas offices.
(3) Foreign service officers had perceptions that they were limited
in what they could accomplish and what they could do to enhance their
careers in the civil service positions.
However, FAS representatives told us that they believed such an
organization would have made it too difficult to manage FAS programs.
Consequently, the proposal has not been adopted by FAS management.
Because, as a group, the foreign service officers have a relatively
higher grade structure than FAS' civil service employees, they hold a
significant number of FAS' high-level positions. In April 1993, FAS
had 99 of its 203 foreign service officers serving in headquarters
positions, of whom 85 officers were in jobs designated as civil
service (or "general schedule") positions. The 85 positions that
foreign service officers held represented only 13 percent of the
total civil service positions at headquarters. However, foreign
service officers held 54 of 150 civil service positions at grades 14
and above (36 percent). Also, included in these totals, foreign
service officers held 23 of 60 positions at grades 15 and above (38
percent).
The civil service assignments for foreign service officers, in
general, often lasted for only a short period. Our analysis of the
data on the 203 foreign service officers' tours showed that, while a
foreign service officer may spend several years at headquarters, he
or she had spent only about 20 months, on average, in any 1 position.
The median duration of a headquarters tour was 17 months for the 203
foreign service officers.
FAS management told us that they believed that the rotations to civil
service positions at headquarters do not represent a major adjustment
for foreign service officers. The representatives said that foreign
service officers know the FAS programs well and that work done in
headquarters' assignments is often related to their overseas work.
Further, representatives believed that the rotations provide foreign
service officers with experiences needed at overseas offices in a
wide range of programs and issues.
Nevertheless, in interviews conducted with foreign service officers
and members of one headquarters division, FAS representatives
expressed concerns to us about several issues. These issues included
(1) the lack of continuity created by having foreign service officers
manage FAS programs for limited time frames, (2) the poor
professional relations that often existed between foreign service
officers and civil service employees, and (3) the lack of appropriate
assignments for some foreign service officers returning from overseas
duty.
Six of 10 representatives of the Horticultural and Tropical Products
Division (within the Commodity and Marketing Programs area) commented
that rotations of foreign service officers at headquarters have often
been too frequent and have affected continuity in managing FAS
programs and activities. According to one representative, time is
needed to learn an FAS position (including knowledge of specific
markets and the paperwork of the position), as well as to be able to
supervise personnel for the particular area. He further said that
because the foreign service officers on headquarters' assignments
knew that they would soon be rotated to another assignment, they may
have had little incentive to make FAS programs work well, improve
operations, or correct long-term problems.
We also interviewed 11 senior foreign service officers who either had
served as the head of an overseas office or had been an agricultural
trade officer at an overseas office. Many commented that the
dual-personnel system (foreign service and civil service) had caused
professional relations issues between foreign service officers and
civil service employees. In addition, some civil service staff
viewed the foreign service officers as a favored group that has had
the benefits of living abroad and occupying the bulk of management
positions at the agency. Several foreign service officers mentioned
that the rotations of foreign service officers to civil service
positions could adversely affect advancement opportunities for career
civil service employees, which could engender resentment from civil
service staff.
FAS' 50-PERCENT ROTATION
POLICY INCREASES ITS
WORKFORCE COSTS
-------------------------------------------------------- Chapter 3:2.3
Foreign service officers cost more than equivalently graded civil
service employees. The government incurs higher employee costs with
its use of the foreign service personnel system, primarily in the
form of increased retirement benefits and the travel and other costs
associated with overseas rotations. The pay scales for foreign
service officers are only slightly higher than comparable civil
service employees. The foreign service officers' higher benefits are
given in return for the hardships endured by government employees who
are stationed at overseas posts for much of their careers and subject
to frequent changes of station.
Therefore, when foreign service officers are used to fill civil
service positions, FAS' workforce costs are higher than they
otherwise would be. In addition, as previously discussed, because of
the 50-percent rotation policy, about one-half of FAS' approximately
200 foreign service officers are occupying civil service positions in
Washington, D.C. If FAS were to adopt a policy similar to the
practices of agencies whose officials said that their foreign service
officers serve between 66 and 75 percent of their careers abroad, FAS
could maintain its current level of foreign representation at a lower
cost. For example, with a 75-percent rotation policy, 100 foreign
service officers could be stationed abroad with a foreign service
corps of only 133 officers, or 67 foreign service officers fewer than
currently exist. The net savings would be the cost difference
between the foreign service officers and those civil service
employees that would otherwise perform the duties at headquarters, as
well as the reduced costs resulting from fewer relocations.
CONCLUSIONS
---------------------------------------------------------- Chapter 3:3
FAS strategic planning could be more useful as a management tool if
it provided management with a more systemic perspective for
identifying options when making decisions on geographic location and
workforce capacity issues. While we commend FAS for making difficult
decisions and generating cost savings through office closures, these
decisions primarily were reached based on budget considerations and
local considerations, not on an overall long-term strategic plan or
marketing strategy with established mission priorities.
This concept also has implications for FAS' workforce. In April
1993, FAS had 203 foreign service officers whose assignments were
governed in part by a 50-percent rotation policy. FAS has not
revisited the rationale for that policy since it was established in
the early 1980s. Other agencies having similar positions told us
that their foreign service officers spend two-thirds to three-fourths
of their careers overseas. Because foreign service officers cost
more and because of the implications of having significant numbers of
both foreign service officers and other civil service employees at
headquarters, FAS should reevaluate its workforce capacity needs in
light of its mission priorities; its geographic locations; and the
number, knowledge, skill, and ability mix that it needs in both its
foreign service officer cadre and the other components of its
workforce.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:4
To more effectively and efficiently use resources to help increase
U.S. agricultural exports, we recommend that the Secretary of
Agriculture direct the FAS Administrator to:
Devise and implement a strategy to better ensure that decisions on
locations of overseas offices involve consideration of options
derived from a systemic as well as a local circumstance
perspective. An element of such a strategy would be an
assessment of the cost effectiveness of the locations of
overseas offices.
Reevaluate FAS workforce capacity needs for both the foreign
service cadre and other workforce components. An essential part
of this reevaluation would be a reassessment of the 50-percent
rotation policy with a view toward increasing the amount of time
that foreign service officers serve overseas.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 3:5
FAS agreed with our conclusion that decisions on the selection of
overseas office locations should be strategy driven and should
involve both systemic as well as local circumstance perspectives.
FAS also stated that, once its strategic planning process is
completed, decisions on office locations will benefit from the
clearer focus that such a process offers for mission priorities and
resource allocations. FAS disagreed with our characterization that
FAS' current process is driven by ad hoc budget and local
circumstance considerations. FAS stated that they used a "post-
ranking analysis" model to rank overseas offices on trade, program,
and workload factors, as well as qualitative factors. FAS contended
that its approach has justified its resource allocation decisions on
overseas offices. FAS reiterated that the decisions to close the
London and Caracas offices were due to budgetary constraints. FAS
chose to close two high-cost ATO sites in cities where their
marketing functions could be shifted to the agricultural affairs
office in the U.S. embassy. FAS indicated that the alternative was
to close a larger number of low-cost sites to accomplish the same
cost savings. We did not state that the decisions to close the
London and Caracas offices were necessarily unsound. Our concern was
that FAS did not make these closure decisions based on a
comprehensive strategic plan or model that indicated which offices
could be closed with the least detrimental impact on current and
potential U.S. agricultural exports. Moreover, as discussed in the
report, FAS representatives told us during the review that FAS made
little use of its post-ranking exercise in deciding on changes in
post location and staffing.
FAS reported that an agency task force is currently examining the
foreign service rotation policy and said that this workforce capacity
issue we raised is one of the most pressing managerial issues facing
the agency. Additionally, FAS commented that foreign service
officers are required to gain expertise in USDA export programs,
agricultural trade policy, and market and intelligence gathering.
FAS believes that U.S. agriculture has benefited from having foreign
service officers work a substantial portion of their career in
Washington to gain the expertise needed to succeed in the field. FAS
said that the task force will have to translate all of the cost and
human resource factors while offering all of its employees fair and
satisfying career opportunities. We agree that workforce capacity is
one of the pressing managerial issues facing FAS and are pleased that
FAS is examining its foreign service rotation policy. In doing so,
FAS should carefully consider the higher costs and inefficiencies
that occur when foreign service officers spend large amounts of time
in Washington.
SOME COMMODITY REPORTING MAY NOT
BE NEEDED TO MEET STRATEGIC
OBJECTIVES
============================================================ Chapter 4
Once an agency has determined its mission, its strategic priorities
for achieving its mission, the most appropriate organizational
approach, and the workforce capacity that it needs, it should ensure
that it makes the highest and best use of its workforce. We found
indications that FAS operations may not always meet this criterion,
specifically relating to commodity reporting completed by FAS'
overseas workforce.
FAS foreign service officers and foreign nationals\1 posted overseas
devote a considerable portion of their time to acquiring and
reporting information about agricultural commodities in foreign
countries. This commodity reporting is intended to support USDA
programs and trade policy goals and to provide the U.S. farm
industry with information about competition with and demand for U.S.
agricultural products. While FAS has conducted a lengthy review of
its commodity reporting system, it did not systematically consult
with users of FAS' reports outside of USDA on the extent to which the
information generated by the reports was needed and used. Although
FAS has eliminated or reduced some reports, our limited survey of
potential users found that some of the remaining commodity reports
had been put to little use by exporters and FAS, and that some
reports unnecessarily duplicated information provided by other
sources. The in-depth commodity reporting may have diverted overseas
resources from other functions, such as trade policy and market
development, which may be more beneficial to the promotion of U.S.
agricultural exports.
--------------------
\1 Although this chapter refers to commodity reporting done by
foreign service officers, reporting at FAS posts is also done by
non-U.S. foreign service nationals and contract employees.
OVERVIEW OF COMMODITY REPORTING
---------------------------------------------------------- Chapter 4:1
FAS requires its overseas offices to submit reports on agricultural
commodities on a scheduled basis. In 1993, 49 overseas offices
submitted 1,619 scheduled commodity reports\2 covering 100 countries,
according to the FAS Reports Office. These reports were divided into
22 different commodities or commodity groupings. Each post was
responsible for reporting on a different mix of commodities.
Information for the commodity reports is collected from producers,
traders, government officials, and other contacts in the country, as
well as from on-site visits to agricultural regions. When commodity
reports are received at FAS headquarters, they are distributed to
relevant FAS divisions. These divisions analyze the information and
use it to prepare commodity circulars and other publications.
Subscribers to these circulars include agricultural producers,
exporters, importers, traders/brokers, universities, government
agencies, and others with an interest in world agricultural markets.
For some commodities, only a single annual report is required, while
other commodities also require semiannual, quarterly, or monthly
reports from some posts. Annual commodity reports typically contain
tables providing trade, production, and supply and demand data for
the reporting country. Accompanying the data is a narrative section
in which the foreign service officer provides reasons for changes in
the data, as well as information on such things as production policy
within the country, trade restrictions, and market opportunities.
The commodity circulars' content varies. In general, the bulk of the
circulars consist of data tables showing such things as stocks of a
commodity, production, supply, and consumption of and trade in
various commodities. In most of the circulars that we reviewed,
narrative analysis of the data was very limited. FAS representatives
said that the data help U.S. farmers and traders in their export
activities by informing them of changes in world demand for U.S.
agricultural products and forecasting the export potential for
specific commodities.
Commodity reports and circulars represent only one of FAS' avenues
for conveying information. Other avenues include AgExporter
magazine, trade leads, buyer alerts, and an FAS "Home Page" on the
Internet, which allows any interested party worldwide to access
certain FAS documents and reports. Trade leads inform U.S.
exporters of specific export sales opportunities, while buyer alerts
inform foreign importers about the availability of U.S. products.
In addition, FAS foreign service officers frequently communicate
directly with U.S. agricultural exporters by telephone, by mail, or
in person.
--------------------
\2 The overseas posts prepared an additional 1,395 "alert reports,"
which typically provided brief updates on such things as changes in
the production of a commodity, new market opportunities, or changes
in trade policy. Our work focused on the scheduled commodity reports
because they accounted for most of the time spent on reporting.
FAS' COMMODITY REPORTING HAS
NOT BEEN SUFFICIENTLY BASED ON
U.S. EXPORTERS' NEED FOR
INFORMATION
---------------------------------------------------------- Chapter 4:2
In March 1994, FAS completed a review of its commodity reporting
system. The review resulted in changes to both the content and
quantity of its reports. However, we believe the review did not go
far enough in assessing the need for such an extensive reporting
system by not systematically obtaining input from exporters on their
information requirements. We believe exporters should have been
surveyed because their activity relates most directly to FAS' primary
mission of increasing exports.
THE REVISED REPORTING
SCHEDULE
-------------------------------------------------------- Chapter 4:2.1
In March 1994, the FAS Reports Committee\3 completed a 4-year review
of FAS' commodity reporting system. The review culminated in a new
reporting schedule and instructions. As part of the review, FAS
headquarters' staff conducted a workload survey of its posts,
obtained input from foreign service officers, and asked the commodity
divisions to evaluate their information needs. As a result, the new
reporting schedule reduced the breadth of product coverage required
in many commodity reports and eliminated some commodity reports
altogether. The new schedule also introduced "truncated reporting"
for many annual reports.\4 At the same time, the schedule added new
reporting for many high-value products (such as fresh fruit and
vegetables and processed foods). As a result of the new reporting
schedule and truncated reporting, the FAS Reports Office estimated
that about 9 posts would face increased reporting responsibilities,
while the reporting responsibilities of the remaining 40 posts would
stay the same or be reduced.
As a general rule, the Reports Committee used a "90-percent coverage"
criterion for determining how many posts should report on a given
commodity. Typically, reports would be required from countries that
represented the top 90 percent of world production of or trade in a
commodity. Exceptions were made to include additional countries if
they were judged to be significant for other reasons, such as
countries deemed to be emerging export markets or recipients of U.S.
food aid. FAS representatives said that the 90-percent coverage rule
provided FAS analysts and the U.S. agricultural community with
enough data to make informed decisions, but acknowledged that
determining the exact percentage was ultimately a subjective
judgment. Previously, FAS had generally collected market data
representing about 95 percent of world production or trade.
We believe that FAS may be wasting part of its reporting resources by
seeking to capture 90 percent of the world market across all
commodities, large and small. Data are sometimes gathered from a
country to reach the 90-percent world coverage level even though that
country may not be particularly relevant to U.S. interests. By
determining the need for reports based largely on reaching a specific
quota, FAS has not maximized the opportunity to assess fundamentally
the need for and value of many of its reports and to adjust its
reporting based on this assessment.
In testimony to Congress, FAS officials have repeatedly said that the
primary mission of their reporting service is to expand U.S.
agricultural exports. Yet, the FAS reporting system remains more
oriented toward describing agricultural production than toward
promoting export markets. FAS has made some progress in adding to
its reporting schedule more high-value products and more
market-oriented reporting. But it has not fundamentally assessed how
its agricultural reporting system should change in light of the
evolving and increasingly competitive world export market.
Effective strategic planning depends on identifying and serving an
organization's customers. With respect to its commodity reporting
system, FAS has long regarded its primary customers as those
government analysts and policymakers who use the data to help manage
USDA programs and policies. The needs of external
customers--agricultural exporters and others in private
industry--have received less attention. FAS' extensive review of its
reporting system gathered input largely from FAS' own foreign service
officers and analysts; however, it did not systematically solicit the
views of exporters and others in U.S. agriculture to learn what they
want or need in terms of information. As a result, changes in the
reporting system were geared more to the desires of FAS data analysts
than to the needs of the U.S. agricultural community.
--------------------
\3 The Reports Committee oversees the reporting function at FAS. The
committee consists of the Reports Officer and a deputy assistant
administrator from each of five FAS divisions. FAS requires that the
committee evaluate and justify reporting requirements every 5 years.
\4 Truncated reports consist of basic supply and demand data plus
about three to seven pages of narrative highlighting major changes.
Full reports, by contrast, can run up to 20 pages or more.
SOME COMMODITY REPORTING WAS
PUT TO LITTLE USE
---------------------------------------------------------- Chapter 4:3
We reviewed in depth the 1992 reporting for five commodities--honey,
dairy products, cotton, coffee, and grain and feed. The five
commodities represent a subjective cross section of the commodities
on which FAS foreign service officers reported. They include major
commodities (grain and feed) and minor commodities (honey), as well
as export-oriented commodities (cotton) and import-oriented
commodities (coffee). We spoke with a wide range of users, both
within USDA and in the farm industry, about the commodity reports and
the circulars FAS produces from the reports.
We found that FAS' commodity reporting is intended to serve several
objectives, only some of which are linked to export expansion. FAS
reporting serves goals ranging from helping set U.S. farm policies
to the following: managing USDA programs, maintaining price
stability on commodity markets, informing U.S. producers about
foreign competition in the domestic market, and notifying U.S.
exporters about market opportunities abroad.
While some FAS reporting did serve these objectives, we also found
that some of the reporting was not widely used, suggesting that
reporting could be reduced further and still meet the main
information needs of USDA and private industry. We found many
examples in which commodity reports contained great amounts of detail
that were unused by USDA analysts, private traders, or others.
Moreover, many U.S. agricultural producers and traders told us they
relied primarily on other sources of information, especially for
market data. They said that FAS data were frequently outdated by the
time of publication and were often not easily accessible by
electronic means. However, FAS has recently begun to make selected
reports and documents available electronically to any party worldwide
through its "Home Page" on the Internet.
HONEY
-------------------------------------------------------- Chapter 4:3.1
Honey is a relatively minor commodity; the United States imported
about $49 million worth of honey in 1992 and exported only about $7
million worth. We found that the commodity reports and the World
Honey Situation circular were not significant in helping USDA
administer various programs or helping honey producers increase U.S.
exports.\5 The commodity reports and circular also played a limited
role in assisting U.S. producers in monitoring foreign competition
in the U.S. domestic market.
In 1992, there were scheduled annual reports on honey for nine
countries--Argentina, Australia, Brazil, Canada, China, Germany,
Japan, Mexico, and the former Soviet Union. As a result of the
commodity reporting review, the reports from Australia, Brazil, and
Japan were eliminated as of 1993 because, according to FAS
representatives, these countries did not rank high enough in world
honey utilization. Over 98 percent of U.S. honey imports were
represented by the reporting countries in 1992, but less than 33
percent of the small U.S. honey export market was captured by the
reports.
The commodity reports and circular on honey did not play a
significant role in supporting FAS programs. For example, over the
past several years, the National Honey Board has received nearly $1.5
million under USDA's Market Promotion Program. FAS prepared
commodity reports on only two of seven countries that the National
Honey Board was targeting for promotions under the program, and the
board's 1993 funding proposal showed very little reliance on
information provided in the reports. The marketing specialist who
coordinates the Market Promotion Program for honey told us that the
commodity reports and circular provided some helpful background data.
But she added that she did not rely on the reports in evaluating
funding proposals or in performing her other marketing work.
The commodity reports and circular for honey were used to some extent
by USDA's Agricultural Stabilization and Conservation Service (ASCS)
in administering the honey price support program. Under this
program, loans are made to beekeepers based on a guaranteed loan
price. ASCS reviewed FAS honey reports because foreign production
and trade can affect U.S. honey prices. ASCS also got information
about world honey trade from other sources, including the Department
of Commerce and contacts in the honey industry. According to an ASCS
representative, the data received from the FAS honey reports were
helpful, but not essential.
Despite the emphasis within FAS on increasing U.S. exports, the
commodity reports and circular played little direct role in
increasing honey exports. FAS did not report on certain primary
export markets, such as the Middle East, which received over
one-third of all U.S. honey exports in 1992. Moreover,
representatives of the honey industry and U.S. honey producers told
us that FAS export market information is of limited value to them,
partly because U.S. honey exports are small and partly because they
have their own sources of market information.
An FAS representative and some honey industry representatives told us
that overseas information is important for monitoring foreign
competition in the U.S. domestic market. Changes in overseas
production affect both U.S. honey prices and the amount of
competition U.S. honey producers can expect from foreign imports.
Thus, the U.S. honey industry uses information about the overseas
situation in making production decisions and doing long-range
strategic planning. Two representatives of the honey industry said
that FAS data, published in a circular 4 months after the data were
reported, were often outdated on arrival. Producers told us that
they relied largely on other sources for overseas information. The
FAS commodity reports and circular were used mostly to supplement
those other information sources.
--------------------
\5 In 1993, FAS eliminated the World Honey Situation circular and
incorporated the data into a circular that covers a variety of
horticultural products.
DAIRY PRODUCTS
-------------------------------------------------------- Chapter 4:3.2
FAS dairy reports cover several products, including milk, cheese,
butter, and dry milk. The United States imported $877 million in
dairy products in 1992 and exported $802 million. FAS required
scheduled dairy reports in 1992 from 37 countries (reduced in 1994 to
34 countries), which were chosen mostly because they were significant
producers of dairy products. Some of the countries were,
nonetheless, relatively small producers that did little dairy trade
with the United States. The dairy reports were quite detailed,
commonly running 20 pages or longer, but we found few examples where
such detailed information was needed.
Our review found that the dairy reports were used relatively little
in supporting USDA programs. USDA's major foreign agricultural
export program involving dairy products is the Dairy Export Incentive
Program. This program provides subsidies to U.S. dairy exporters to
make their products more competitive on the world market. Dairy
trade data are required to administer the program, but, as of 1993,
FAS used United Nations (U.N.) trade data for this purpose, not the
dairy reports written by foreign service officers. The dairy
products analyst at FAS said that the U.N. data were used since they
provided more comprehensive and uniform world coverage.
USDA also operates a domestic program that supports dairy prices.
ASCS, the agency that administers the program, used the dairy reports
to monitor the world dairy situation, since the world dairy trade may
affect U.S. dairy prices and the amount of the U.S. dairy surplus.
ASCS used the dairy reports to track major trends but did not appear
to require most of the detailed information many of the reports
provided. An ASCS representative said that in addition to the FAS
reports, he had other sources of information that provided overseas
price and supply information from major markets.
The FAS dairy reports were of limited importance to the U.S. dairy
industry representatives to whom we spoke. Because of strict U.S.
import quotas on many dairy products, world production and trade
affect U.S. producers less for dairy than for most other
commodities. Representatives of the dairy industry said the FAS
dairy reports and circulars were helpful as background information.
However, the representatives provided few specific examples of their
use.
Most of the dairy representatives to whom we spoke also did not rely
on the FAS dairy reporting as a major means for learning about export
opportunities. The content of commodity reports and circulars was
oriented largely toward production rather than market development.
Furthermore, while FAS did dairy reporting from all of the world's
major dairy producers, there was no report from several countries
that were among the largest U.S. dairy export markets. For example,
there was no report from the Philippines, a significant U.S. dairy
market in 1992, or from several other Asian countries with high
market potential.
COTTON
-------------------------------------------------------- Chapter 4:3.3
Cotton is a major U.S. agricultural export; about $2 billion worth
was exported in 1992, representing over one-third of the U.S. cotton
crop. In 1992, FAS required cotton reports from 47 countries,
representing the world's top producers and traders, as well as
countries deemed important for other reasons, such as those receiving
significant U.S. aid. In general, we found that USDA and the cotton
industry representatives to whom we spoke appeared to make
substantial use of FAS cotton reporting, although much of the
detailed narrative in the reports was not essential.
FAS spent about 4 staff years overseas on cotton reporting in 1991,
according to FAS' resource workload survey. The new reporting
schedule slightly reduced cotton reporting by decreasing the number
of cotton reporting posts from 47 to 39 and eliminating certain
interim reports. In addition, 9 of the 39 posts now write only
truncated reports rather than reports containing the full narrative.
Under this reduced reporting schedule, FAS cotton reporting still is
expected to cover countries representing over 90 percent of world
production and U.S. export markets. The cotton reports are used to
produce the monthly World Cotton Situation circular.
The cotton reports played at least some role in supporting several
USDA programs. For example, FAS representatives said the cotton
reports helped in managing title I of Public Law 480, which provides
low-interest, long-term credit to developing countries that purchase
U.S. cotton and other commodities. The reports helped determine the
(1) demand for cotton in a country and (2) amount of credit to be
granted. In another example, ASCS reviewed FAS cotton reports to
help administer the cotton marketing loan program. The program lends
money to cotton producers based on the world price for cotton. ASCS
monitors the overseas situation because this situation affects the
domestic market and price trends, though ASCS uses other sources to
track the daily world cotton price.
FAS cotton reporting is the primary information source for USDA's
official forecasts of supply, use, and prices for cotton. USDA's
World Agricultural Outlook Board issues these forecasts. The board
says that farmers, commodity traders, exporters, and others use the
forecasts, which are published monthly, to make essential production
and trade decisions.
We spoke to several cotton growers, traders, and marketing
cooperatives, as well as officials of groups representing cotton
interests. Industry representatives told us that they used the world
supply and demand data largely to help understand price trends. This
information helped traders decide when to buy and sell so as to get
the best possible price on the world market. U.S. traders and
marketers also looked at the production and consumption data of their
competitors and their export markets to gauge what the demand for
U.S. cotton would be on the world market.
The industry representatives generally said they made substantial use
of the numerical data to facilitate trade and execute business
decisions, but the narrative "market development" information in the
reports and circulars was much less useful. Two industry users said
that the most helpful FAS information came from developing countries,
where accurate information was otherwise hard to get. They said the
FAS commodity reporting was less necessary for the European Union,\6
where there were other accurate and accessible sources of
information.
Despite their value, the commodity reports on cotton often contained
more detail than appeared necessary to meet the industry's or USDA's
objectives. Several analysts in the cotton industry said a lengthy
report from each country was not needed. Some of those who did
occasionally require detailed information, such as analysts in FAS'
Office of International Trade Policy, said their needs could be met
through alert or special request reports.
--------------------
\6 The European Union is comprised of Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, Sweden, and the United Kingdom. It was
formerly known as the European Community.
COFFEE
-------------------------------------------------------- Chapter 4:3.4
Coffee is a major U.S. agricultural import; the United States
imported about $1.7 billion worth in 1992. Because the United States
exports very little domestically grown coffee, FAS coffee reporting
was not used for market development or to support USDA export
programs. Rather, the reports and circulars were used to assist U.S.
coffee companies and traders and were intended to deter price
volatility by providing unbiased overseas production estimates. Some
U.S. coffee roasters said these goals could still be met with
reduced FAS reporting.
Under the reporting schedule in effect in 1992, FAS foreign service
officers wrote annual or semiannual coffee reports in 20 countries.
These countries represented all of the world's major coffee
producers. The reports were used to produce the semiannual World
Coffee Situation circular. Under its new reporting schedule, FAS
reduced the number of countries preparing coffee reports from 20 to
15 and received coffee reports from State Department employees in
three additional countries. The 15 countries on which FAS now
reports represented over 78 percent of 1993 world production; just 3
of those countries (Brazil, Colombia, and Indonesia) constituted over
50 percent of world production.
The Office of the U.S. Trade Representative (USTR) has used FAS
coffee reporting in its negotiations with the International Coffee
Organization, which established an export quota system. The quota
system was developed using both the International Coffee
Organization's own trade data and trade data that FAS foreign service
officers gathered. The system disintegrated due to disputes among
members in 1989, and the United States dropped out of the
International Coffee Organization in 1993. However, a USTR
representative said the United States may rejoin negotiations with
the organization in the future. The USTR representative said that
the International Coffee Organization collected data on coffee crops
from its member countries, but that the FAS data were usually
considered more reliable and objective.
FAS representatives and some representatives of the coffee industry
said that FAS coffee reporting provides the only truly objective and
unbiased data on the world coffee situation. Disseminating reliable
information on supply and demand, they said, helps keep prices more
stable. FAS representatives pointed out that Congress became
particularly concerned about having accurate overseas information on
coffee during volatile price swings in past years.
Despite this situation, many of those in the coffee industry who read
the reports considered FAS coffee reporting helpful, but not
essential. They said there were other sources of information
available, such as International Coffee Organization statistics,
trade publications, and privately gathered information from coffee
traders. Most agreed that none of these sources was as objective or
comprehensive as FAS data, but some noted that if FAS were to reduce
its coffee reporting, private reporting firms would quickly fill the
gap.
GRAIN AND FEED PRODUCTS
-------------------------------------------------------- Chapter 4:3.5
Grain and feed products represent major U.S. agricultural exports.
FAS grain and feed reports cover several major commodities--including
wheat, corn, and rice--that constituted about 25 percent of total
U.S. agricultural exports, amounting to over $10 billion in 1992.
FAS required a scheduled grain and feed report from 73 countries in
1992, representing the world's top traders and producers, with each
post reporting on a different mix of commodities. We found that USDA
and private industry used FAS grain and feed reporting extensively.
Grain and feed reporting was substantially reduced under FAS' recent
reporting review, but most users of the information did not expect
the reductions to be a significant concern.
The grain and feed reports played at least some role in managing a
variety of USDA programs. Representatives from the Grain and Feed
Division told us that they used the data to help determine potential
markets for the Export Enhancement Program. Through this program
USDA provides "bonuses" to U.S. exporters to make U.S. grains more
competitive on the world market. The reports were also used to help
analyze constraints on trade and help make funding decisions for the
Market Promotion Program. In addition, grain and feed reporting
helped determine suitable markets for and administer the activities
of the GSM export credit guarantee programs and the Public Law 480
food aid program. ASCS used the reports to administer domestic loan
programs for several grain commodities, since the overseas markets
affect the domestic market and prices.
The data FAS gathered are the primary source of information for
USDA's official forecasts of supply and use for grain and feed, which
the World Agricultural Outlook Board issues. We spoke to several
grain industry representatives, traders, and analysts who subscribe
to the grain and feed reports or circulars and follow the forecasts
that the board publishes. Nearly all said that they relied
extensively on FAS grain and feed reporting to gauge price trends,
monitor competition, or, to a lesser extent, be alert to export
opportunities.
As a result of FAS' recent reporting review, the Grain and Feed
Division recommended to the Reports Committee that it significantly
reduce the amount of reporting required from posts. The number of
grain and feed products on which most posts must report was reduced
by about one-half. Furthermore, all grain and feed reports were
truncated, requiring only a few pages of narrative accompanying the
data tables. A representative of the division said that its
philosophy was to require only information that it considered
critical; any special needs would be met through requests to the
posts for alert reports. Many users we spoke with in USDA and the
U.S. farm industry said that this reduced grain and feed reporting
would still satisfy their information needs.
SOURCES OF INFORMATION HAVE
EXPANDED
-------------------------------------------------------- Chapter 4:3.6
When FAS first began actively reporting on world agriculture in the
1950s, there were few other sources of information available. Since
then, numerous sources have developed. In addition to foreign
governments, a variety of international organizations, from the U.N.
to the International Coffee Organization, now publish such data. A
wide array of private reporting services and industry journals also
gather intelligence on overseas agriculture.
FAS representatives acknowledged that other sources of data are
available, but they said that FAS data serve as the benchmark and are
the most reliable and unbiased. FAS representatives also said that
foreign governments and outside reporting services often have
interests that can prejudice their data. Many people in the
agricultural industry with whom we spoke agreed that FAS was usually
the most comprehensive and objective source of information.
However, recognizing that other sources are available, FAS has
reduced the depth of reporting for major bulk commodities.
Nevertheless, with the wealth of information available, FAS is no
longer the world's sole repository for information about world
agriculture. Thus, FAS may be devoting its much-needed resources to
duplicating information available elsewhere.
For example, FAS spends considerable resources reporting from the
countries of the European Union. The European Union is both an
important market and a significant competitor. But many in private
industry told us that it is easy to get accurate and comprehensive
information about European agriculture. West European governments
publish agricultural data they consider reliable, and many private
publications report on the European Union's agricultural sector.
Several industry sources told us that it would be more helpful if FAS
were to shift reporting resources away from Europe, where information
is otherwise easily obtained, and toward developing countries, where
market intelligence is harder to come by and where FAS reporting
would thus be more helpful.
UNNEEDED REPORTING MAY DIVERT
OVERSEAS RESOURCES FROM OTHER
IMPORTANT FUNCTIONS
---------------------------------------------------------- Chapter 4:4
Over the past several years, FAS' program responsibilities have
increased significantly without a commensurate increase in FAS staff
levels. FAS has historically been criticized for requiring its
foreign service officers to do too much commodity reporting. Many
foreign service officers have said that time spent on excessive
reporting has adversely affected their ability to carry out trade
policy and market development functions that would be more beneficial
to U.S. agriculture.
FAS conducted a resource workload survey asking each overseas office
how much time it spent in 1991 on each of its scheduled and voluntary
reports. The survey showed that the overseas offices devoted about
36 percent of their work hours to commodity reporting. The survey
also asked if the post was devoting the right amount of time to its
various functions, such as reporting, trade policy, and marketing.
Fifty-one percent of those responding to the survey said they
believed the post spent too much time on reporting. Furthermore, 62
percent felt they were able to devote too little time to marketing
activities.
In written comments accompanying the survey, written feedback
gathered as part of FAS' reporting review, and interviews we
conducted, foreign service officers often expressed frustration with
the level of scheduled commodity reporting required. They generally
said that scheduled reporting requirements were burdensome,
especially in light of growing program responsibilities. More
specifically, some foreign service officers complained of being
required to report on commodities for which their post played an
insignificant role in world trade or as a U.S. export market. They
said that reducing scheduled reports would liberate time for other
important tasks, such as alert reporting, trade policy matters, and
market development.
CONCLUSIONS
---------------------------------------------------------- Chapter 4:5
FAS' foreign service officers are assigned data collection and
reporting duties without the benefit of clear strategic priorities to
guide their efforts. This has resulted in an increasingly burdened
workforce that must produce reports that may or may not benefit FAS'
overall goal of promoting U.S. agricultural exports. We found that
some commodity reporting is clearly essential in carrying out FAS
programs and in servicing U.S. agriculture. However, since FAS does
not yet have the type of strategic plan we call for in chapters 2 and
3, it can not ensure that all of these efforts contribute to meeting
its priority goals. Also, FAS has not sufficiently surveyed
potential external users of its reports and thus does not know the
extent to which its reports are needed or used. Our limited survey
of external and internal users showed that some of FAS' current
reports have had only limited use by FAS and external users. After
FAS has established a strategic plan as we recommend in chapters 2
and 3, FAS should ensure that it is making the highest and best use
of its overseas workforce by pursuing potential opportunities to
reduce and eliminate reporting that does not efficiently contribute
to its priorities as established in that plan.
RECOMMENDATION
---------------------------------------------------------- Chapter 4:6
We recommend that the Secretary of Agriculture direct the
Administrator of the Foreign Agricultural Service to ensure that its
commodity reporting system contributes to FAS' strategic priorities.
In doing so, the Administrator should ensure that commodity reports
meet the needs of external and internal users and do not
unnecessarily duplicate information available from other sources.
AGENCY COMMENTS AND OUR
EVALUATION
---------------------------------------------------------- Chapter 4:7
FAS agreed that excessive commodity reporting and duplicating the
efforts of others should be avoided. In its comments, FAS
erroneously said that we judged the value of commodity reporting on
the basis of comments by external subscribers to FAS circulars,
emphasizing that internal USDA organizations are also customers of
these reports. However, during our review we spoke with a wide range
of users of the commodity reports and the circulars FAS produces from
the reports, both within USDA and in the farm industry. While
reviewing specific commodities, we obtained comments of internal USDA
organizations concerning the value of commodity reporting in
administering USDA programs. Nevertheless, FAS said that it plans to
question the extent of commodity reporting as it develops its
strategic planning process.
We are pleased that FAS is committing to a review of the necessity
and extent of commodity reporting, which may identify unneeded and
excessive reporting and reduce resources applied to reporting. We
are aware of the importance of reporting but believe based on our
review that the entire reporting function, both internal and external
reporting, needs to be thoroughly examined. This should be
accomplished consistent with FAS's principal objective of increasing
exports.
(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
AGRICULTURE'S FOREIGN AGRICULTURAL
SERVICE
============================================================ Chapter 4
(See figure in printed edition.)
See comment 1.
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
The following is GAO's comment on the USDA FAS letter dated August
18, 1995.
GAO COMMENT
---------------------------------------------------------- Chapter 4:8
1.We are pleased that we and FAS are in general agreement on issues
that need to be addressed. While we referred to the issues to be
addressed as problems, we agree that they can be viewed as issues.
We changed the report accordingly.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
-------------------------------------------------------- Appendix II:1
Phillip J. Thomas, Assistant Director
Michael J. Avenick, Assignment Manager
Michael Tovares, Evaluator
Rona Mendelsohn, Evaluator (Communications Analyst)
BOSTON/NEW YORK REGIONAL OFFICE
-------------------------------------------------------- Appendix II:2
Kendall C. Graffam, Evaluator-in-Charge
Jason Bromberg, Evaluator