Agricultural Marketing: Comparative Analysis of U.S. and Foreign
Promotion and Research Programs (Letter Report, 04/28/95,
GAO/RCED-95-171).

Pursuant to a congressional request, GAO provided information on U.S.
and foreign promotion and research programs to increase domestic and
foreign sales of agricultural products, focusing on: (1) how U.S.
check-off programs are organized; (2) what factors the check-off boards
consider in planning future program activities; and (3) how comparable
marketing organizations in Australia, Germany, New Zealand, and the
United Kingdom carry out their promotion activities.

GAO found that: (1) the six U.S. check-off programs reviewed vary by
board composition, revenues collected, assessment methods, and options
for initiating, continuing, and terminating programs; (2) the check-off
boards differ in their emphasis on developing domestic or foreign
markets, their methods for selling their products, and their reliance on
research to develop new products, enhance production, and address
nutritional concerns; (3) the check-off boards use market research and
program evaluation techniques to plan their future activities while
coordinating with related groups in preparing and carrying out these
plans; (4) the foreign promotion and research programs reviewed differ
from the U.S. check-off programs in their organizational structure,
funding mechanisms, types of activities performed, and emphasis on
export activities; (5) some foreign marketing organizations have
government members on their boards or guiding councils and do not
require legislative action to change their assessment rates; (6) some
foreign programs promote product groups rather than a single industry;
(7) in general, the foreign marketing organizations do not exempt small
producers from assessments and some receive significant funding from
sources other than their industry assessments; (8) these foreign
organizations generally engage in a wider range of promotional
activities, such as buying and selling products and providing training
and inspection services, than their U.S. counterparts and focus more on
exports than domestic sales; and (9) market development programs may
become more important in the future, since the new international trade
regulations do not limit their use and increase competition.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-95-171
     TITLE:  Agricultural Marketing: Comparative Analysis of U.S. and 
             Foreign Promotion and Research Programs
      DATE:  04/28/95
   SUBJECT:  Agricultural products
             Commodity marketing
             Exporting
             Sales promotion
             Foreign governments
             International trade
             Agricultural industry
             Agricultural research
             Domestic assistance
             Comparative analysis
IDENTIFIER:  Australia
             Germany
             New Zealand
             United Kingdom
             USDA Foreign Market Development Program
             USDA Market Promotion Program
             
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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

April 1995

AGRICULTURAL MARKETING -
COMPARATIVE ANALYSIS OF U.S.  AND
FOREIGN PROMOTION AND RESEARCH
PROGRAMS

GAO/RCED-95-171

Agricultural Marketing


Abbreviations
=============================================================== ABBREV

  AMS - Agricultural Marketing Service
  AWRAP - Australian Wool Research and Promotion Organization
  CMA - Central Marketing Organization of German Agricultural
     Industries
  ERS - Economic Research Service
  FAS - Foreign Agricultural Service
  GAO - General Accounting Office
  GATT - General Agreement on Tariffs and Trade
  IWS - International Wool Secretariat
  MPP - Market Promotion Program
  USDA - U.S.  Department of Agriculture
  ZMP - Central Marketing and Price Reporting Office for
     Agricultural, Forestry and Food Products

Letter
=============================================================== LETTER


B-261212

April 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: 

In response to your request, this report presents information on U.S. 
and foreign promotion and research programs.  U.S.  producers,
importers, and others handling a variety of agricultural products pay
millions of dollars annually for promotion and research programs to
increase domestic and foreign sales of these products.  The programs,
authorized by individual federal laws, are known as check-off
programs because of the way they are funded:  A small amount is
deducted from the revenues that producers and/or other members of an
industry receive from the sale of their products.  The programs are
operated by check-off boards, such as the National Dairy Promotion
and Research Board.  The Secretary of Agriculture appoints the board
members from candidates nominated by industry.  Many other countries
also have agricultural marketing organizations that conduct
agricultural promotion and research activities.  As the General
Agreement on Tariffs and Trade (GATT) reduces export subsidies and
domestic price supports and increases access to protected markets,
the check-off programs may become a more important tool for enhancing
agricultural competitiveness in both domestic and foreign markets. 

Specifically, this report provides information on (1) how U.S. 
check-off programs are organized and what kinds of activities they
carry out, (2) what factors the check-off boards consider in planning
future program activities, and (3) how comparable marketing
organizations in Australia, Germany, New Zealand, and the United
Kingdom are organized and carry out their activities. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The six U.S.  check-off programs we reviewed\1 collected over $200
million from their industries during 1994 and varied considerably in
organizational structure and activities conducted.\2

Organizationally, the programs vary by the (1) composition of the
board, (2) amount of revenue collected, (3) specific method of
assessment, and (4) options for initiating, continuing, and/or
terminating a program.  In terms of activities, the boards differ in
the emphasis they place on developing domestic and/or export markets
and the methods of communication they use to sell their products. 
They also vary in their reliance on research to develop new products,
enhance production, and address nutritional concerns. 

These check-off boards use market research and program evaluation
techniques to plan future activities.  They also coordinate with
related groups in preparing and carrying out these plans.  The boards
collect extensive market research information on consumers'
perceptions and consumption patterns to identify and measure existing
and potential market demand for their products.  Once programs are in
place, the boards conduct evaluations to assess their programs'
effectiveness.  Moreover, the boards use a variety of methods--such
as joint planning, cost sharing, and data base sharing--to coordinate
their activities with those of related groups.  Through coordination,
the boards hope to avoid duplication of effort and attain greater
efficiency. 

While the foreign promotion and research programs we reviewed are
each authorized by their national government, these programs differed
from U.S.  check-off programs in their organizational structure,
funding mechanisms, types of activities performed, and emphasis on
export activities.  Specific differences included the following: 

  In contrast to U.S.  check-off programs, which promote the products
     of a single industry, some foreign programs promote related
     products, such as beef, sheep, and pork, while others promote
     unrelated products, such as beef products, dairy products, and
     fruits and vegetables.  Furthermore, unlike U.S.  check-off
     boards, some foreign countries' marketing organizations have
     government representatives on their boards. 

  Like most of the assessment rates for U.S.  check-off programs,
     foreign marketing organizations' assessment rates are generally
     fixed per unit sold.  However, in contrast to U.S.  boards, some
     foreign organizations can revise their maximum assessment rates
     with ministerial approval, and no statutory amendment is
     necessary.  Furthermore, only one foreign marketing organization
     we reviewed assesses imported products, and none allow refunds
     or the use of a referendum to terminate a program.  Generally,
     these organizations do not exempt smaller-volume producers from
     assessments.  In addition, some foreign marketing organizations
     receive significant funding from sources other than mandatory
     industry assessments, including fees for services, revenues from
     the sales of products, and government grants.  Some U.S. 
     board-sponsored export promotion activities that are funded by
     program assessments may also receive government funding. 

  Compared with their U.S.  counterparts, foreign marketing
     organizations generally engage in a wider range of activities,
     including purchasing and marketing products, training, licensing
     exports, and ensuring the quality of marketed products. 

  Many foreign marketing organizations focus more on promoting
     exports than domestic sales.  In contrast, five of the six U.S. 
     programs we reviewed use their assessments largely for domestic
     activities. 


--------------------
\1 These programs are the (1) Cattlemen's Beef Promotion and Research
Board, (2) Cotton Board, (3) National Dairy Promotion and Research
Board, (4) American Egg Board, (5) National Potato Promotion Board,
and (6) United Soybean Board. 

\2 These assessments collected at the national level do not include
assessments that go directly to the state and regional organizations
that carry out promotion and research activities similar to those of
the national check-off boards. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Generic promotion and research programs funded through voluntary
check-off contributions have existed at the local, state, and
regional levels for more than 50 years.  These programs were
developed to expand the market for the agricultural products of a
given industry.  To facilitate better coordination across states,
encourage equitable participation from all those who benefit from
these programs, and create a larger funding base, agricultural
industry groups began to seek federal legislative authority to
establish mandatory national programs.  The first federally
authorized program was enacted in 1954, but the majority were created
during the 1980s and 1990s.\3 Of the 19 programs that have been
authorized, 15 are currently active and 4 are inactive.  Industry
members who would pay the assessments must approve the creation of a
check-off program in a referendum.  Legislation for all check-off
programs also provides industry members with an opportunity to
terminate the program through a referendum. 

The U.S.  Department of Agriculture (USDA), through its Agricultural
Marketing Service (AMS), is responsible for (1) developing
regulations to implement these check-off programs, in consultation
with the affected industry, and (2) ensuring compliance with the
authorizing legislation and the agency's related orders.  AMS reviews
each board's budgets, projects, and contracts to ensure that the
board does not engage in prohibited activities, such as lobbying. 
Boards reimburse AMS for its oversight costs. 

Generally, USDA does not review the effectiveness of the programs. 
However, the legislation authorizing the Dairy Board requires the
Secretary of Agriculture to submit an annual report to the Congress
that includes an independent analysis of the Dairy Board's
effectiveness.  In addition, USDA's Foreign Agricultural Service
requires evaluations of the check-off projects that receive funding
from its Market Promotion Program.\4


--------------------
\3 For an overview of these check-off programs, see our report
entitled Agricultural Marketing:  Federally Authorized Commodity
Research and Promotion Programs (GAO/RCED-94-63, Dec.  29, 1993). 

\4 The Market Promotion Program provides USDA funds to trade
associations to conduct generic promotions or to fund private
companies' brand-name promotions in foreign countries, predominately
for high-value products.  In our report entitled Agricultural Trade: 
Five Countries' Foreign Market Development for High-Value Products
(GAO/GGD-95-12, Dec.  14, 1994), we discussed USDA's efforts to
measure the effectiveness of activities funded by the Market
Promotion Program. 


   CHECK-OFF PROGRAMS'
   ORGANIZATIONAL STRUCTURES AND
   ACTIVITIES VARY CONSIDERABLY
------------------------------------------------------------ Letter :3

The six check-off programs vary organizationally and in the emphasis
given to, and methods used to carry out, promotion and research
activities. 


      CHECK-OFF PROGRAMS DIFFER IN
      THE WAY THEY ARE ORGANIZED
      AND CONDUCT BUSINESS
---------------------------------------------------------- Letter :3.1

The programs we reviewed vary in the composition of their governing
boards, methods used to assess industry members, and ways the
programs are initiated and terminated.  (See app.  I for more
detailed information on each board reviewed.)

The authorizing legislation for each program specifies the
composition of the check-off board.  These boards vary by the groups
represented--that is, producers, importers, and consumer advisers or
public representatives--and by size.  For example, the Beef Board has
101 producers and 6 importers on its board, and the Egg Board has 18
producers and their alternates.  Board membership generally reflects
a geographical mix of the producers assessed and can be changed
administratively in some cases to reflect shifts in production.  Some
boards--Cotton, Egg, and Potato--are authorized to include consumer
advisers or public representatives.  Members of the boards are
appointed for 2- or 3-year terms. 

The authorizing legislation for each program also sets an assessment
level and specifies who in the industry should be assessed.  However,
these legislative provisions vary in the (1) methods used to
calculate the assessment, (2) assessment of imports, (3) refunding of
assessments, (4) process for revising assessment rates, (5)
arrangements for giving credit to producers for contributions made to
qualified state and regional check-off programs, and (6) methods for
terminating the program. 

As table 1 shows, the six check-off boards we reviewed used several
assessment methods. 



                           Table 1
           
            Assessment Methods, Options to Change
             Rates, and Current Rates for the Six
                      Programs Reviewed

Assessment method and options  Agricultural product and
to change rate                 current assessment rate
-----------------------------  -----------------------------
Fixed rate per unit or volume  Beef--$1 per head of cattle
sold.                          sold. Milk--15 cents per
Rate can be changed only by    hundredweight of milk sold.
statutory amendment.

Fixed percentage of market     Soybeans--0.5 percent of net
value. Percentage can be       market value of soybeans
changed only by statutory      sold.
amendment.

Fixed rate plus a percentage   Cotton--$1 per bale plus 0.5
of market value. Percentage    percent of bale value on
is capped at 1 percent. Fixed  sales of cotton.
rate and percentage cap can
be changed only by statutory
amendment. The current
percentage rate can be
changed up to the maximum by
the Secretary on the basis of
the board's recommendation.

Fixed rate per unit sold.      Eggs--10 cents per 30-dozen
Rate is capped at 20 cents,    case of eggs sold.
and this limit can be changed
only by statutory amendment.
The current rate can be
changed up to the maximum by
the Secretary on the basis of
the board's recommendation.
Any proposed increase must be
approved by referendum.

Fixed rate or fixed            Potatoes--2 cents per
percentage of the average      hundredweight.
national market value for
several years. Rate is capped
at 2 cents or 0.5 percent of
the average U.S. sales price
during the immediate past 10
years. These limits can be
changed only by statutory
amendment. The current rate
can be changed up to the
maximum by the Secretary on
the basis of the board's
recommendation.
------------------------------------------------------------
Smaller-volume producers are exempt from assessments for two of the
six programs--egg and potato.  The authorizing legislation for three
of the check-off programs--beef, dairy, and soybean--gives credit to
producers for contributions they make to qualified state or regional
check-off programs.  The Egg and Cotton boards have provided funds to
state and regional groups, although they are not required to do so. 
Finally, three of the six programs we reviewed--beef, cotton, and
potato--assess importers. 

In the past, many check-off programs allowed those who had been
assessed but did not wish to participate in the program to request
refunds of the assessment they had paid.  However, most refund
provisions have been eliminated.  Of the six programs reviewed, only
the soybean program continues to offer refunds of up to a maximum of
10 percent of the assessments collected from producers in each state. 
By statute, USDA must poll soybean producers to see if they want a
referendum held to determine support for the refund policy.  Such a
poll is scheduled for July 1995. 

The check-off programs we reviewed also differ in their requirements
for revising assessment rates.  The programs with fixed rates--beef,
dairy, and soybean--must have their rates revised by statutory
amendment, while the other programs--cotton, eggs, and potatoes--can
have their rates revised administratively within their statutory
ceiling.  For the egg program, any increase must be approved by
referendum. 

All programs have termination provisions that enable producers voting
in a referendum to terminate the program.  The soybean program
provides for periodically polling producers to determine whether they
want to have a referendum on continuing the program.  The dairy
program is unique in that it allows dairy cooperatives to cast bloc
votes for their members.  However, members are given an opportunity
to vote individually if they disagree with their cooperative's
position.  Legislation was introduced in January 1995 in the Senate
that would eliminate the dairy program's bloc voting process because
of concerns about whether it is fair and equitable.  In addition,
this proposed legislation would require that the Dairy Board
periodically determine producers' support for the program.  No action
has been taken to date on this legislation. 


      CHECK-OFF BOARDS PLACE
      DIFFERENT EMPHASIS ON
      PROMOTION, RESEARCH, AND
      INFORMATION ACTIVITIES
---------------------------------------------------------- Letter :3.2

The six boards vary considerably in the emphasis placed on, and
methods used to carry out promotion (domestic and export), research,
and consumer and industry information activities.  (See apps.  II and
III for more information on the use of funds and the activities
conducted by the six check-off boards.)

Five of the six boards spent most of their fiscal year 1994
funds--ranging from about 56 percent for the Egg Board to 75 percent
for the Potato Board--promoting agricultural products, principally in
the domestic market.  The Soybean Board does not promote products in
the domestic retail market.  However, it does provide information to
domestic consumers on the use of soybean products.  The boards relied
on a mix of methods--television and radio advertising, print media,
in-store promotions, and industry newsletters--to communicate their
messages to various audiences.  The boards also targeted their
promotions to certain consumer or industry groups.  The three major
types of intended audiences were consumers, the food service industry
(restaurants and institutions), and manufacturers. 

The boards also use different advertising methods for various target
audiences.  For example, the Beef, Cotton, Dairy, and Egg boards have
devoted a considerable portion of their promotion budgets to
television advertising campaigns intended to influence consumers. 
Additionally, the Egg Board has used radio tie-ins with major
networks to deliver its national campaign message.  Promotional
efforts have included such campaigns as the Egg Board's "I Love Eggs"
and the Beef Board's "Beef.  It's What's For Dinner." In contrast,
the Potato Board's 1993 consumer advertising concentrated on print
advertisements in national magazines. 

The boards also differ in the emphasis they place on developing
foreign markets; funding for export promotion activities ranged from
less than 1 percent for the Egg Board to 29 percent for the Soybean
Board.  In addition, the boards have participated either directly or
through related industry contractor organizations in the Foreign
Agricultural Service's export promotion programs--the Market
Promotion Program and/or the Foreign Market Development Program.\5
These programs provide funds for projects to promote exports through
supermarket promotions, nutritional information, and technical
assistance.  Federal funding for these two programs has decreased
over the past few years from about $237 million authorized in fiscal
year 1992 to about $134 million authorized in fiscal year 1994. 

The percentage of fiscal year 1994 funds spent on research activities
and the types of research also varied among the six boards.  The
percent of check-off funds spent on research varied among the boards,
with the Cotton Board being the highest at about 24 percent. 
Research efforts of the Beef, Dairy, and Egg boards have focused
primarily on nutrition education and product development.  However,
other boards, such as the Cotton and Soybean boards, focus their
research efforts on production enhancement and product development. 
These efforts have included the Soybean Board's production research
on altering the genetic composition of soybeans and product
development research on identifying and developing new uses for
soybeans, such as soy ink and SoyDiesel fuel.  In some cases, the
authorizing legislation for a board prohibits it from conducting
certain types of research.  For example, the Dairy and Beef boards
are prohibited from engaging in production research activities. 

In addition to promotion and research, the six boards spend funds to
provide educational information to consumers and industry.  In 1994,
funds spent in this way ranged from about 1 percent for the Cotton
Board to about 30 percent for the Soybean Board.  Consumer
information involves activities to provide product information to
consumers through groups that influence consumers, such as educators,
dieticians, physicians, and food manufacturers.  These efforts have
included the Egg Board's distribution of educational kits to
kindergarten through sixth grade classroom teachers across the United
States.  These kits contain lessons and activities about food safety,
nutrition, and product characteristics.  Industry information efforts
have included the Beef Board's distribution of information to
commercial meat buyers in the marketing chain to help them in
purchasing trimmed beef while maintaining an acceptable profit
margin. 


--------------------
\5 The Market Promotion Program (authorized in the 1990 farm bill)
and the Foreign Market Development Program (first authorized in 1954)
are jointly funded by USDA, cooperating nonprofit commodity
organizations, and U.S.  companies.  The Market Promotion Program
focuses primarily on high-value products, such as fruits, nuts, and
processed products.  In contrast, the Foreign Market Development
Program focuses primarily on developing markets for grains and
oilseeds. 


   CHECK-OFF BOARDS PLAN
   ACTIVITIES USING MARKET
   RESEARCH, EVALUATION, AND
   COORDINATION
------------------------------------------------------------ Letter :4

In planning future activities, check-off boards rely heavily on
market research and program evaluation.  The boards also work with
related state and regional check-off boards and industry groups to
jointly plan and carry out program activities. 


      MARKET RESEARCH AND
      EVALUATION ARE MAJOR TOOLS
      FOR PROGRAM DEVELOPMENT
---------------------------------------------------------- Letter :4.1

All six boards use the results of market research to evaluate their
activities and set priorities for future undertakings.  This market
research consists of a variety of efforts, including measuring
changes in consumers' attitude and behavior toward a board's
products, assessing consumers' attitudes toward a board's advertising
campaigns, and identifying new uses and markets for a board's
products, including export markets.  The boards also obtain market
research on the views of other groups, such as health and food
service professionals, that may affect demand for the product. 

While only the Dairy Board is legislatively required to evaluate its
program's activities, all the check-off programs we reviewed evaluate
their activities using market research, and some use econometric
studies.\6 These evaluations were for specific projects as well as
the overall program.  Evaluations may occur during a project as well
as upon its completion.  We did not assess the evaluation methods
used by the six check-off boards. 

In addition to other evaluation methods, the Dairy and Beef boards
use independently prepared econometric studies to help them measure
the effectiveness of their domestic programs.  As part of its
statutorily required annual report on the effectiveness of the dairy
program, USDA's Economic Research Service prepares an annual
econometric report on the impact of the board's advertising on the
sales of two major dairy products--fluid milk and cheese.  Similarly,
the Beef Board prepares a biennial econometric report on the impact
of its program on beef prices and calculates the return on each
dollar invested. 

Check-off boards use several methods to evaluate the effectiveness of
their export programs, including feedback from trade shows, consumer
surveys, and promotion reports.  In addition, board-sponsored export
promotion activities that receive federal funding must comply with
the Foreign Agricultural Service's evaluation requirements. 

In 1993, we reported that USDA had evaluated few of the Market
Promotion Program's activities.\7 However, our December 1994 report
noted that USDA now attempts to measure the effectiveness of
activities funded under the Market Promotion Program by selectively
evaluating the results of participants' ongoing activities against
measurable goals provided in the participants' funding proposals. 
USDA has developed a methodology to identify activities that have not
been effective in expanding or maintaining market share.  Our 1994
report also noted that the agency has developed an econometric model
to evaluate the effectiveness of Market Promotion Program
participants' expenditures in increasing U.S.  exports. 


--------------------
\6 An econometric study is a statistical analysis that isolates the
effect of advertising from other factors affecting product sales. 

\7 International Trade:  Effectiveness of Market Promotion Program
Remains Unclear (GAO/GGD-93-103, June 4, 1993). 


      CHECK-OFF BOARDS WORK WITH
      OTHER ORGANIZATIONS TO PLAN
      AND CARRY OUT ACTIVITIES
---------------------------------------------------------- Letter :4.2

All of the check-off boards we reviewed that share assessments with
state and regional groups jointly plan and carry out research and
promotion activities.  These national boards coordinate with the
state and regional boards to ensure that their efforts complement
each other and achieve maximum impact.  In addition, the boards plan
future work with input from manufacturers, universities, and related
trade groups. 

The joint efforts take a variety of forms.  For example, the Beef
Board obtains comments on its preliminary annual plan from state beef
boards, with which it shares assessment revenues, and other
industry-related groups.  As an incentive for state groups to
participate in the Egg Board's "I Love Eggs" national campaign, the
Egg Board agreed to pay a portion of the state industry group's radio
advertising costs for most of 1994. 

Check-off boards share marketing and research-related information
with state and other organizations through monthly newsletters,
annual reports, data bases, and periodic meetings.  This arrangement
helps ensure more efficient use of resources and avoid duplication of
effort.  For example, the Potato Board shares monthly briefing
information and promotional material and holds an annual meeting with
state program managers.  Similarly, the Dairy Board has established a
market research data base that it shares with related industry
groups. 

In addition, the Dairy Board has formed a cooperative effort with a
related industry group, and the Beef Board plans to work with a new
industry group.  In 1994, the Dairy Board and the United Dairy
Industry Association undertook a cooperative effort, Dairy Management
Incorporated, to formalize joint planning and funding between the two
organizations.  A beef industry oversight committee, in which the
Beef Board participates, is recommending that two of the board's
major contractors--the National Cattlemen's Association and the
National Live Stock and Meat Board--be consolidated.  The Beef Board
would remain outside of this new organization but expects to
coordinate and contract with it for many services. 


   AGRICULTURAL MARKETING PROGRAMS
   IN FOUR FOREIGN COUNTRIES ARE
   SIGNIFICANTLY DIFFERENT FROM
   U.S.  CHECK-OFF PROGRAMS
------------------------------------------------------------ Letter :5

National agricultural marketing programs in the four countries we
reviewed--Australia, Germany, New Zealand, and the United
Kingdom--varied significantly from U.S.  check-off programs in their
organizational structure, sources of funding, activities performed,
and emphasis on export promotion activities.  These countries have a
long history of exporting and have developed significant expertise in
marketing.  Different types of marketing organizations have evolved
in these countries--some are managed by a combination of public and
private representatives and draw funds partially from the public
sector.  (See app.  IV for more detailed information on the 19
programs we reviewed in these four countries.)


      FOREIGN MARKETING
      ORGANIZATIONS' STRUCTURE AND
      SOURCES OF FUNDING DIFFER
      FROM THOSE OF U.S. 
      COUNTERPARTS
---------------------------------------------------------- Letter :5.1

Some marketing programs in the four countries we reviewed perform
different functions from U.S.  check-off programs, which promote the
products of a single industry.  Some foreign programs promote many
unrelated agricultural products, and others promote several related
products.  For example, Germany's Central Marketing Organization of
German Agricultural Industries (CMA) promotes most agricultural
products in both domestic and export markets.  The United Kingdom's
Food From Britain also promotes British food and drink products
primarily in export markets.  Other organizations in the four
countries may promote several related agricultural products.  New
Zealand's Meat Producers Board, for example, promotes beef, sheep,
goat, and horsemeat products. 

Unlike U.S.  check-off programs, some foreign countries' marketing
programs either have government members on their boards or are guided
by councils that include government members.  For example, 6 of the
13 organizations whose programs we reviewed in Australia and New
Zealand have voting government representatives on their boards.  In
Germany, while government representatives are not on CMA's board,
they participate in a supervisory board that helps guide CMA's
activities. 

The assessment methods used by the marketing organizations in the
four countries we reviewed also differed from the methods used by the
U.S.  check-off boards.  While the foreign programs' assessment rates
were generally a fixed dollar amount per unit or volume sold, like
the U.S.  programs' assessment rates, the foreign rates can generally
be revised with the approval of the Minister of Agriculture and do
not require statutory amendment.  In addition, while the U.S. 
check-off boards we reviewed assess producers, the United Kingdom's
Meat and Livestock Commission assesses slaughterhouses and exporters
as well as producers.  Unlike some U.S.  check-off boards that assess
imported products, only 1 of the 19 foreign marketing organizations
we reviewed assessed imported products.  Furthermore, smaller-volume
producers are generally not exempted from paying required
assessments, as they sometimes are in the United States; refunds of
assessments are not permitted; and the programs cannot be terminated
through a referendum.  According to officials of the marketing
organizations we reviewed, only national legislation can terminate
their programs. 

Some foreign marketing organizations receive significant funding from
sources other than mandatory industry assessments.  The United
Kingdom's Food From Britain receives about 60 percent of its funds
from the government,\8 and the remainder comes from industry
contributions and user fees.  New Zealand's organizations may receive
partial government funding for some research projects.  In addition,
other foreign organizations received funding from a variety of other
sources, including fees for services, such as grading agricultural
products according to quality specifications; investments in
commercial enterprises; and revenues from the sales of agricultural
products.\9


--------------------
\8 The British government plans to gradually decrease government
support. 

\9 As discussed below, some organizations in Australia and New
Zealand do not receive assessments but instead purchase and market
agricultural products for the industry, primarily in the export
market.  New Zealand's Dairy Board, for example, operates in this
manner. 


      MARKETING ORGANIZATIONS IN
      FOREIGN COUNTRIES DIFFER IN
      ACTIVITIES PERFORMED AND
      EMPHASIS ON EXPORT
      ACTIVITIES
---------------------------------------------------------- Letter :5.2

Like the U.S.  check-off programs, many foreign marketing programs
carry out promotion and research activities.  However, unlike their
U.S.  counterparts, these foreign programs may provide other
services, such as buying and selling products, providing training to
industry, inspecting products, and licensing exporters.  The foreign
programs, like the U.S.  programs, use market research information to
evaluate their marketing activities.  In addition, the United Kingdom
and New Zealand governments are either conducting reviews or planning
to periodically review their marketing programs. 

Many of the marketing organizations in the four countries also
performed other activities.  For example, New Zealand's Dairy,
Kiwifruit, and Apple and Pear boards purchase and market all products
intended for export, and Australia's Wheat Board purchases and
markets wheat and other grains for both the domestic and export
markets. 

In addition, both the United Kingdom's Meat and Livestock Commission
and New Zealand's Meat Producers Board conduct vocational training to
improve the quality and safety of meat.  The New Zealand Meat
Producers Board also licenses exporters of meats covered by their
program.  Germany's CMA grants its Seal of Quality to German food
products that have passed required tests and inspections.  It then
emphasizes the quality of these products in its marketing activities. 

While many organizations in the four countries were active in both
domestic and export markets, all but one of the marketing
organizations we reviewed in Australia and New Zealand emphasized
export promotion.  Both countries have small domestic markets and
depend much more on exporting.  For example, the Australian Wool
Research and Promotion Organization spent about 76 percent of its
funds on export-related activities.  New Zealand marketing
organizations also focus most of their activities around the
development of export markets. 


   OBSERVATIONS
------------------------------------------------------------ Letter :6

While the recent multilateral trade agreement of the Uruguay Round of
GATT would limit the extent to which countries could provide
subsidies to the agricultural sector, it would not limit the extent
to which countries could support market development activities.  As a
result, market development efforts may become a more important tool
for increasing agricultural exports.  Some foreign competitors have a
long history of exporting and have developed significant expertise in
market development activities.  This greater emphasis on exports may
give foreign producers a competitive advantage in the global
marketplace. 

In this context, a more vigorous export focus would seem to be in the
interest of U.S.  promotion and research boards.  On the other hand,
foreign countries now have increased access to some U.S.  markets
that were previously protected from import competition. 
Consequently, U.S.  promotion and research programs for products that
have had import protection may face an increasing need to promote
their products in the domestic market in light of increased foreign
competition.  In either situation, the boards will continue to play
an important role. 


   AGENCY AND INDUSTRY COMMENTS
------------------------------------------------------------ Letter :7

We discussed the facts presented in this report with USDA
officials--including the Deputy Administrator, Commodity and
Marketing Programs, Foreign Agricultural Service, and top-level
officials from Agricultural Marketing Service's Cotton, Dairy, Fruit
and Vegetable, Poultry, and Livestock and Seed divisions.  In
addition, we obtained comments on the facts presented in relevant
sections of this report from representatives of the U.S.  check-off
boards and the foreign marketing organizations we reviewed.  These
officials generally agreed with the information discussed and updated
budget and program information that had changed since we completed
our fieldwork.  We have incorporated this new information into the
report where appropriate. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :8

At the request of the Ranking Minority Member, Subcommittee on Risk
Management and Specialty Crops, House Committee on Agriculture, we
reviewed 6 federally authorized U.S.  check-off programs--beef,
cotton, dairy, egg, potato, and soybean--and 19 comparable programs
in four other countries.  We selected the six U.S.  check-off
programs on the basis of their size, years of operation,
organizational structure, and activities, including domestic and
export promotion.  We selected the four countries because they have
industry-funded agricultural promotion and research marketing
organizations that perform activities similar to those of U.S. 
check-off boards. 

To understand how the U.S.  check-off programs operate, we reviewed
the relevant authorizing legislation; implementing orders, plans, and
regulations; and USDA guidelines.  We also discussed program
operations with USDA officials, including representatives from USDA's
Agricultural Marketing Service, Foreign Agricultural Service, and
Economic Research Service. 

We also met with representatives of the six U.S.  check-off boards
and some of the associations that the boards have contracted with to
carry out program activities.  In addition, we reviewed check-off
boards' annual reports, budgets, marketing plans, program
descriptions, and evaluation reports to gain an understanding of the
programs' size, complexity, and routine activities. 

To obtain information on similar programs in Australia, Germany, New
Zealand, and the United Kingdom, we met with officials of the foreign
marketing organizations and U.S.  agricultural attachï¿½s posted in
these countries.  We also reviewed reports prepared by USDA's Foreign
Agricultural Service attachï¿½s posted in the four countries.  We
discussed the organizations' establishment, structure, funding, and
activities with the officials of the organizations.  We reviewed
relevant documents of the marketing organizations, including annual
reports and other pertinent information.  The information on
Australia, Germany, New Zealand, and the United Kingdom does not
reflect original analysis of these countries' laws and regulations on
our part but rather the views and interpretations of the officials
from the marketing organizations and foreign governments with whom we
spoke.  We did not independently validate the data provided by the
marketing organization officials and others. 

We conducted our review between April 1994 and April 1995 according
to generally accepted government auditing standards. 

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 14 days
from the date of this letter.  At that time, we will send copies to
the Secretary of Agriculture and other interested parties.  We will
also make copies available to others on request. 

Please contact me on (202) 512-5138 if you or your staff have any
questions about this report.  Major contributors to this report are
listed in appendix V. 

Sincerely yours,

John W.  Harman
Director, Food and
 Agriculture Issues


SIX FEDERALLY AUTHORIZED
AGRICULTURAL PROMOTION AND
RESEARCH PROGRAMS
=========================================================== Appendix I

                                      Authorized/                 Assessme
                                      current                     nt
                        Total         assessment                  refunds
Name of                 revenue for   rate and                    currentl  Initial
board                   fiscal year   action          Coverage/   y         referendum and
(year       Compositio  ended in      required to     (estimated  availabl  last
started)    n of board  1994          change rate     number)     e?        referendum
----------  ----------  ------------  --------------  ----------  --------  --------------
Cattlemen'  Authorized  Total:        Authorized/     All cattle  No        Initial
s Beef      :           $44,704,379.  current: $1     producers             referendum:
Promotion   Producers   \a            per head of     (1.1                  Delayed until
and         and                       cattle sold.    million)              22 months
Research    importers,  Sources: 83%                  and                   after program
Board       based on    from          Producers can   importers             started.
(1986)      number of   assessments   receive credit  of cattle
            cattle per  on domestic   for             and beef.             Last
            state or    sales, 15%    contributions                         referendum:
            unit.       from          to qualified                          May 1988,
                        assessments   state groups                          approved by
            As of 3/    on imports,   of up to 50                           79%.\b
            31/95: 101  2% from       cents on each
            domestic    investments,  dollar
            producers   and less      assessed by
            and 6       than 1% from  the national
            importers.  other         board.
                        sources.
                                      Rate can be
                                      changed only
                                      by statutory
                                      amendment.

Cotton      Authorized  Total:        Authorized: $1  Producers   No        Initial
Board       : At least  $59,244,274   per bale of     (35,000)              referendum:
(1966)      one                       cotton sold     and                   Prior to
            representa  Sources: 73%  plus up to 1%   importers             program
            tive from   from          of bale value   of upland             start.
            each        assessments   on sales of     cotton and
            cotton-     on domestic   cotton. As of   cotton                Last
            producing   sales, 23%    3/31/95: $1     products.             referendum:
            state,      from          per bale plus                         July 1991,
            importers,  assessments   0.5% of bale                          approved by
            and up to   on imports,   value.                                60% of those
            15% to be   3% from                                             voting.\ b
            consumer    investments,  Percentage
            advisers.   and 1% from   portion can be
                        other         changed up to
            As of 3/    sources.      the maximum by
            31/95: 20                 the Secretary
            domestic                  on the basis
            producers,                of board's
            4                         recommendation
            importers,                . Rate and
            1 consumer                percentage
            adviser,                  caps can be
            and their                 changed only
            alternates                by statutory
            .                         amendment.

National    Authorized  Total:        Authorized/     Dairy       No        Initial
Dairy       : 36 milk   $78,248,454\  current: 15     farmers               referendum:
Promotion   producers.  a             cents per       (125,000).            Delayed until
and                                   hundredweight                         18 months
Research    As of 3/    Sources: 99%  of milk sold.                         after program
Board       31/95: 36   from                                                start.
(1984)      producers.  assessments   Producers can
                        and 1% from   receive credit                        Last
                        investments.  for                                   referendum:
                                      contributions                         August 1993,
                                      to qualified                          approved by
                                      state and                             71% of those
                                      regional                              voting.\b
                                      groups of up
                                      to 10 cents on
                                      each 15 cents
                                      assessed by
                                      the national
                                      board.

                                      Rate can be
                                      changed only
                                      by statutory
                                      amendment.

American    Authorized  Total:        Authorized: Up  Producers   No        Initial
Egg Board   : Up to 20  $8,387,727    to 20 cents     with more             referendum:
(1976)      members                   per 30-dozen    than                  Prior to
            and their   Sources: 98%  case of eggs    75,000                program
            alternates  from          sold.           laying                start.
            ,           assessments,                  hens
            consisting  2% from       As of 3/31/     (365).                Last
            of egg      investments,  95: 10 cents.                         referendum:
            producers   and less      Rate cap can                          November 1994,
            and         than 1% from  be changed                            rate increase
            consumer    other         only by                               approved.\b
            or public   sources.      statutory
            representa                amendment.
            tives.
                                      Current rate
            As of 3/                  can be changed
            31/95: 18                 by the
            producer                  Secretary up
            members                   to the maximum
            and their                 if recommended
            alternates                by the board.
            .                         Any increases
            Provision                 must be
            for                       approved by
            consumer                  referendum.\c
            representa
            tion was
            not
            approved
            in
            referendum
            .

National    Authorized  Total:        Authorized: Up  Producers   No        Initial
Potato      :           $8,044,777    to 2 cents per  growing               referendum:
Promotion   Producers                 hundredweight   potatoes              Prior to
Board       based on    Sources: 92%  or up to 0.5%   on 5 or               program
(1972)      production  from          of immediate    more acres            start.
            , up to 5   domestic      past 10-year    (6,200),
            importers,  assessments,  U.S. average    and                   Last
            and 1       7% from       price on        importers.            referendum:
            public      assessments   sales.                                August-
            representa  on imports,                                         September
            tive.       and less      Rate and                              1991, approved
                        than 2% from  percentage                            by 81% of
            As of 3/    investments.  caps can be                           those
            31/95: 99                 changed only                          voting.\d
            domestic                  by statutory
            producers,                amendment.
            1 public
            member,                   As of 3/31/
            and 2                     95: 2 cents
            importers.                per
                                      hundredweight.
                                      Current rate
                                      can be changed
                                      by the
                                      Secretary,
                                      upon the
                                      board's
                                      recommendation
                                      , up to the
                                      maximum.\d



United      Authorized  Total:        Authorized/     Producers   Yes, but  Initial
Soybean     :           $24,890,901\  current: 0.5%   (381,000)   limited   referendum:
Board       Producers   a             of net market               to 10%    Delayed until
(1991)      selected                  value of                    of each   32 months
            on          Sources: 98%  soybeans                    state's   after program
            geographic  from          sold.                       assessme  start.
            and         assessments                               nts\e
            production  and 2% from   Producers can                         Initial
            basis.      investments.  receive credit                        referendum
                                      for                                   held February
            As of 3/                  contributions                         1994, approved
            31/95: 60                 to qualified                          by 54%. No
            producers                 state groups                          referendums
            representi                of up 50% of                          held since
            ng 29                     the rate                              then.\f
            states.                   assessed by
                                      the national
                                      board.

                                      Percentage
                                      rate can be
                                      changed only
                                      by statutory
                                      amendment.
------------------------------------------------------------------------------------------
Note:  Data exclude USDA Foreign Market Development Program and
Market Promotion Program funds that went either directly to the
boards or to other industry groups that carry out related export
promotion activities. 

\a Beef, Dairy, and Soybeans:  For the beef, dairy, and soybean
programs, the assessment amounts reported do not include the amounts
collected through the national check-off programs that, in accordance
with their authorizing legislation, go directly to state and regional
promotion programs.  Of the total assessments collected under the
national check-off programs, the following amounts go directly to
state/regional programs annually:  about $36 million for beef, $150
million for dairy, and $24 million for soybean programs. 

\b Beef, Cotton, Dairy, and Eggs:  For the beef, cotton, dairy, and
egg programs, the Secretary of Agriculture is required to hold a
suspension/termination referendum if requested by 10 percent or more
of those subject to the program (beef, dairy), or who voted in the
referendum approving the order (egg), or in the most recent
referendum (cotton). 

\c Eggs:  In fiscal year 1994, the egg program allocated $609,288 of
its assessments to state and regional egg promotion programs. 

\d Potatoes:  For the potato program, the Secretary is required to
hold a suspension/termination referendum if requested by the board or
by 10 percent or more of the potato producers. 

\e Soybeans:  For the soybean program, the Secretary is required to
conduct a poll to determine if the producers want a referendum
conducted on whether to continue refunds. 

\f Soybeans:  For the soybean program, the Secretary is required to
conduct a poll every 5 years to determine if the producers want a
reconfirmation referendum to be conducted; if requested by 10 percent
of those covered under the program, the Secretary is required to hold
a suspension/termination referendum. 

Source:  Information provided by the Beef, Cotton, Dairy, Egg,
Potato, and Soybean boards. 


PRIMARY USES OF FUNDS FOR SIX
FEDERALLY AUTHORIZED AGRICULTURAL
PROMOTION AND RESEARCH PROGRAMS
========================================================== Appendix II



   (See figure in printed
   edition.)

Notes:  Bars do not add to 100%.  Other uses of funds--contributions
to state and regional promotion programs; payments to USDA for
oversight; and administrative and miscellaneous uses--ranged from 4
to 23% of total funds. 

The Egg Board's 22% of funds allocated for research is primarily used
for nutrition education. 

The Soybean Board does not promote soybeans in the domestic retail
market.  But it does conduct domestic consumer and industry
information activities.  For example, it provides information on
soybean products to dieticians and food manufacturers. 

Data exclude USDA's Foreign Market Development Program and Market
Promotion Program funds. 

Source:  GAO's analysis of data provided by the Beef, Cotton, Dairy,
Egg, Potato, and Soybean boards. 


ACTIVITIES OF SIX FEDERALLY
AUTHORIZED AGRICULTURAL PROMOTION
AND RESEARCH PROGRAMS
========================================================= Appendix III

We reviewed the activities of six U.S.  check-off programs:  the (1)
Cattlemen's Beef Promotion and Research Board, (2) Cotton Board, (3)
National Dairy Promotion and Research Board, (4) American Egg Board,
(5) National Potato Promotion Board, and (6) United Soybean Board. 
This appendix provides information on the boards' promotion,
research, and evaluation activities and their joint efforts with
related groups. 


   CATTLEMEN'S BEEF PROMOTION AND
   RESEARCH BOARD
------------------------------------------------------- Appendix III:1

The Cattlemen's Beef Promotion and Research Board, more commonly
known as the Beef Board, is administered by a board of 101 producers
and 6 importers.  These members serve 3-year terms, with no member
serving more than two consecutive terms.  The Secretary appoints
board members from nominations submitted by state cattle associations
and state general farm organizations that meet specific requirements. 
Table III.1 provides an overview of the beef board. 



                         Table III.1
           
                  Overview of the Beef Board

Program aspect                 Examples
-----------------------------  -----------------------------
Products                       Beef and beef products.

Expenditures (% of 1994        Domestic promotion (55%).
funds)\a                       Export promotion (12%).
                               Consumer and industry
                               information (21%).
                               Research (8%).
                               Other (4%).\ b

Restrictions                   No lobbying.
                               Advertising cannot disparage
                               other agricultural products.
                               No production research.
                               Cost limitation of 5% for
                               administration and collection
                               of assessments.
                               Must contract with certain
                               groups.

Promotion activities           TV campaign theme: "Beef.
                               It's What's For Dinner."
                               Print advertisements: "30
                               Meals in 30 Minutes."

Research                       Nutrition.
                               Product technology.

Evaluation                     Market research.
                               Biennial econometric study.
                               Individual project
                               evaluations.
                               Foreign Agricultural Service
                               (FAS) evaluation.

Joint efforts                  Contracts with national
                               industry-governed
                               organizations to manage and
                               conduct programs.
                               Forty-four qualified state
                               beef councils received about
                               46% of the assessments, or
                               $37 million in 1994. The
                               board's $44.7 million revenue
                               is in addition to this
                               amount.
------------------------------------------------------------
\a Does not include USDA market promotion funds. 

\b Includes administrative and miscellaneous costs. 

Promotion Activities.  While the Beef Board's promotion theme and
creative content changed in 1992, the underlying message about beef
remained relatively the same, with emphasis on variety, use, and
health.  In 1993-94, the board directed its consumer advertising
campaign towards moderate to heavy beef users, placing primary
emphasis on the meal purchaser/preparer.  Women 25 to 54 years old
were the major focus of the campaign.  Television has been the
primary medium for the Beef Board's campaign theme, "Beef.  It's
What's For Dinner," which reached an estimated 95 percent of the
target audience.  Complementing the television campaign were print
advertisements featuring "30 Meals in 30 Minutes" that appeared in 18
national lifestyle, food, and women's magazines.  Similarly, in the
food service sector, the board developed marketing partnerships with
some national restaurant chains. 

Board-sponsored consumer information programs are aimed at four
primary audiences:  food journalists, media professionals, health
care professionals, and teachers.  Public relations activities are
not only designed to help sell beef but also to dispel negative
perceptions about beef and the U.S.  cattle industry while educating
consumers. 

However, the largest potential growth area for American beef products
may not be in the United States but in foreign markets.  In fiscal
year 1993, exported beef and beef products, totaling $2.5 billion,
accounted for nearly 10 percent of the wholesale value of all
domestic production.  The Beef Board's foreign marketing efforts are
directed at expanding markets in Japan, Korea, and Mexico.  The board
is also interested in establishing a presence in emerging world
markets, such as China, Latin American nations, and Taiwan. 

In fiscal year 1994, the Beef Board spent about $5.6 million through
its contract with the U.S.  Meat Export Federation (a nonprofit
organization) to promote beef exports.  The Beef Board does not
receive any USDA Market Promotion Program funding.  However, the U.S. 
Meat Export Federation, which promotes beef and other meats in the
export market, received about $7.2 million in Market Promotion
Program funds and $1.9 million in Foreign Market Development Program
funds for fiscal year 1994.  Accordingly, the Beef Board benefits
indirectly from this funding to the extent that the federation uses
these funds to promote beef. 

Research Activities.  According to board officials, research provides
the (1) precise, highly sophisticated information that characterizes
"good" marketing campaigns that achieve the highest levels of success
and (2) factual foundation for supporting beef products as part of a
varied, convenient, and healthful diet.  The board's research
initiates the transfer of research-based information to appropriate
end-users. 

Evaluation Efforts.  The Beef Board uses several methods to evaluate
its programs.  It contracts with a university every other year to
conduct an independent econometric evaluation of its promotion and
research activities.  The latest econometric review, issued in
January 1994, concluded that beef check-off programs have
significantly improved demand for beef.  The study further estimated
that beef producers had received a return of about $5.40 for every
dollar invested since October 1987. 

During the past 2 years, the Beef Board has emphasized the evaluation
of individual projects.  Methods for evaluating these projects have
included assessing each project against pre-established objectives,
conducting interim evaluations for projects lasting longer than one
year, and conducting in-depth evaluations for two to four projects
each year. 

Joint Efforts.  As directed in the authorizing legislation, the Beef
Board carries out all beef promotion and research projects through
nonprofit, producer-governed beef industry organizations.  The Beef
Industry Council of the National Live Stock and Meat Board is the
primary contractor for the Beef Board's domestic promotion and
advertising.  As the federation of 44 state beef councils, the
Council helps coordinate state and national check-off dollars and
programs.  The board coordinates its foreign market development
activities primarily with the U.S.  Meat Export Federation. 

Currently, the Beef Board's main joint effort is participation on a
beef industry oversight committee that is seeking to concentrate the
beef industry's resources (check-off revenue, dues, and other
revenue) on developing and implementing a single, industrywide
long-range plan.  This committee has recommended the consolidation of
the National Cattlemen's Association and the National Live Stock and
Meat Board, two of the Beef Board's major contractors.  The Beef
Board will remain outside this consolidated structure but expects to
coordinate closely with the new organization.  The new organization
expects to include a Center for International Marketing to coordinate
closely with the U.S.  Meat Export Federation in carrying out
international marketing programs for beef. 


   COTTON BOARD
------------------------------------------------------- Appendix III:2

The Cotton Board is administered by 20 producers, 4 importers, and
one consumer adviser who serve 3-year terms.  The Secretary of
Agriculture appoints each Cotton Board member and an alternate from
nominations submitted by producer organizations within each major
cotton-producing state and by importer organizations in the United
States.  The board contracts with Cotton Incorporated, a private,
nonprofit corporation, to develop and execute its marketing and
research programs.  Table III.2 provides an overview of the Cotton
Board. 



                         Table III.2
           
                 Overview of the Cotton Board

Program aspect                 Examples
-----------------------------  -----------------------------
Products                       Upland cotton, including
                               cotton seed and products
                               derived from such cotton and
                               its seed.\a

Expenditures (% of 1994        Domestic promotion (53%).
funds)\b                       Export promotion (8%).
                               Consumer and industry
                               information (1%).
                               Research (24%).
                               State programs (5%).
                               Other (9%).\c

Restrictions                   No lobbying.
                               Advertising cannot disparage
                               other agricultural products.
                               Must contract with a certain
                               group.

Promotion                      The Fabric of Our Lives\TM
activities                     campaign.
                               Joint promotion with a major
                               consumer products company.
                               Recognition for the Seal of
                               Cotton\TM.

Research                       Textile research/
                               implementation.
                               Agricultural research.
                               Fiber quality.
                               Fiber processing.

Evaluation                     Market research.
                               Individual project
                               evaluations.
                               FAS evaluation.

Joint efforts                  AMTEX\TM Partnership (a
                               research consortium).
------------------------------------------------------------
\a Upland cotton, a type of cotton, makes up about 98 percent of the
cotton grown in the United States. 

\b Does not include USDA market promotion funds. 

\c Includes administrative and miscellaneous costs. 

Promotion Activities.  The board's contractor uses the majority of
its promotion funds for national television advertising (e.g., The
Fabric of Our Lives\TM campaign).  The contractor's marketing efforts
also include trade print campaigns, retail promotions, full-scale
publicity events, and collaborations with mills and manufacturers. 
All of these programs focus on building demand for cotton apparel and
home furnishings (except for cotton carpets).  Furthermore,
recognition of the Seal of Cotton\TM increased in 1993, when the
Cotton Board's contractor signed an agreement with the largest
consumer marketing company in the United States. 

International marketing representatives build demand for cotton in
world markets through offices in Japan, Switzerland, Singapore, and
Mexico.  According to the Cotton Board's contractor, with 40 to 45
percent of the U.S.  cotton crop exported annually, the United States
has a strong presence in the world cotton market.  During the 1993-94
season, cotton exports reached 6.9 million bales, with Asia and
Oceania consuming 70 percent of that total.  Latin American
countries, particularly Mexico, are also increasing their demand for
cotton. 

The board's contractor also helps leverage the U.S.  cotton
industry's export sales efforts by contributing $1 million annually
in matching funds to the Cotton Council International.  The Cotton
Council International adds this contribution to its Market Promotion
Program funds to promote U.S.  cotton overseas. 

Research Activities.  According to the Cotton Board's contractor,
research plays a critical role in the demand for the industry's
fiber.  For example, research may help develop new products that
provide new cotton options for the retail market or innovations that
enhance the cost-effectiveness of cotton mills. 

Furthermore, in 1993, the board's contractor entered a new research
initiative--The AMTEX\TM Partnership--to help to bring together
various components of the textile industry and undertake cooperative
research that will increase the competitiveness of the domestic
textile industry.  The partnership is a consortium of fiber, textile,
and apparel research organizations and national laboratories.  The
board's contractor stated that the partnership will ensure that
cotton remains at the leading edge of technological developments. 

Joint Efforts.  The authorizing legislation directs the Cotton Board
to contract with an organization or association whose governing body
consists of cotton producers to develop and carry out promotion and
research activities.  Accordingly, the board contracts with an
independent contractor to carry out all promotion and research
activities.  The Cotton Board's contractor is the only organization
that promotes cotton domestically, and the board provides about 5
percent of the contractor's budget to fund state support programs. 
The contractor coordinates agriculture research with land grant
universities and textile and fiber quality research with textile
universities. 

Evaluation Efforts.  The Cotton Board has not had an outside
evaluation in over 10 years.  However, the board uses several methods
to evaluate the overall effectiveness or success of the program,
primarily steady gains in market share and increased sales volume at
the retail level.  The board's goal is to increase cotton's market
share of retail sales of apparel and home furnishings (except for
cotton carpets) to 60 percent in the next few years.  During the
first 9 months of 1993, retail sales of cotton merchandise rose $3
billion and the market share for the period increased from about 55
percent to 56 percent.  Other evaluation methods include measuring
the recognition and awareness of the Seal of Cotton\TM . 


   NATIONAL DAIRY PROMOTION AND
   RESEARCH BOARD
------------------------------------------------------- Appendix III:3

The National Dairy Promotion and Research Board, also known as the
National Dairy Board, is administered by a board of 36 producers who
serve 3-year terms, with no member serving more than two consecutive
terms.  The Secretary appoints board members from nominations
submitted by producer organizations certified by the Secretary,
general farm organizations representing producers, or other
associations.  Table III.3 provides an overview of the dairy board. 



                         Table III.3
           
                 Overview of the Dairy Board

Program aspect                 Examples
-----------------------------  -----------------------------
Products                       Fluid milk, cheese, butter,
                               and frozen dairy products.

Expenditures (% of 1994        Domestic promotion (68%).
funds)\a                       Export promotion (2%).
                               Consumer and industry
                               information (10%).
                               Research (15%).
                               Other (5%).\b

Restrictions                   No lobbying.
                               Advertising cannot disparage
                               other agricultural products.
                               No production research.
                               Limitation of 5% for
                               administrative costs.

Promotion activities           TV. "Milk. It does a body
                               good."
                               TV. "Cheddar makes everything
                               better."
                               Limited branded advertising.

Research                       Dairy foods.
                               Nutrition.

Evaluation                     Market research.
                               Mandatory annual report to
                               the Congress (econometric
                               study).
                               Individual project
                               evaluations.
                               FAS evaluation.

Joint efforts                  Undertook a cooperative
                               effort with the United Dairy
                               Industry Association in
                               January 1995.
                               Sixty-six state and regional
                               promotion programs receive
                               two-thirds of the assessment,
                               or an estimated $150 million
                               for 1994.

Other                          Bloc voting.
                               Termination referendum.
------------------------------------------------------------
\a Does not include USDA market promotion funds. 

\b Includes administrative and miscellaneous costs. 

Promotion Activities.  The Dairy Board's domestic promotion
activities are primarily targeted at consumers, the food service
industry, and manufacturers.  The board uses a variety of marketing
techniques and advertising themes, depending on the product and the
targeted market.  For example, the board promotes retail consumption
of fluid milk primarily through television advertising, but it uses a
mix of television, print, and radio advertising to promote cheese,
butter, and frozen dairy products.\1 The board contracts with
advertising firms to assist with its market promotion activities. 

The board supports both generic advertising to promote consumption of
the general agricultural product and branded advertising to promote
the particular characteristics of a given brand of an agricultural
product.  In November 1992, the Dairy Board adopted a policy to
encourage the dairy industry to bring new, unique products to the
marketplace more quickly by offering matching funds for branded
advertising.  The new product must establish a new product category
and cannot compete with another established dairy product.  For
example, the Dairy Board provided matching funds to promote Yo-J, a
yogurt-juice blend that competes with juices.  The board matches
every $3 spent by the marketer with $1 of check-off funds.  Total
board expenditures to support branded advertising may not exceed 2
percent of the Dairy Board's annual budget.  Once another brand
enters the product category, the board discontinues support for
branded advertising. 

The Dairy Board established an export promotion program in 1990.  In
1994, the board promoted cheese and frozen dairy products in Japan,
and yogurt, ice cream, and cheese in Mexico.  It carries out these
activities through supermarket and food service promotions, trade
missions, newsletters, participation at trade fairs, trade servicing,
and seminars aimed at the press and food distributors.  Export
promotion in other markets includes promotional and market research
in the Caribbean, the Far East, and South America.  During 1994, the
Dairy Board spent $1.6 million on export promotion activities.  In
addition, according to the board, it received $373,000 from the
Foreign Market Development Program and $65,000 from the Market
Promotion Program during fiscal year 1994. 

Research Activities.  The Dairy Board divides its research into two
broad categories--dairy foods research and nutrition research.  Dairy
foods research is intended to encourage the development of new dairy
products, processes, and packaging technologies.  Much of this
research is conducted at research centers located at 12 universities. 
The centers are funded with equal contributions from the Dairy Board,
the universities, and the local industry.  In addition, the board
funds research at two nutrition and health research institutes--the
Genetics and Nutrition Institute and the Cancer of the Colon
Institute. 

Evaluation Efforts.  The board measures the effectiveness of its
programs in a variety of ways, including market research and an
econometric evaluation, and USDA reports the results annually to the
Congress, as the board's authorizing legislation requires.  For
promotions that run for short periods of time, the board compares
actual to expected sales volume as one measure of the program's
effectiveness.  For continuous advertising and public relations
programs, the board monitors consumption rates and conducts telephone
surveys to measure the change in consumer attitudes and behaviors
over time.  The Dairy Board's July 1994 annual report to the Congress
indicated that for 1993, advertising increased fluid milk and cheese
sales by 3.5 percent and 2.5 percent, respectively. 

Joint Efforts.  The board coordinates its activities with other state
and regional industry groups and also jointly plans and funds
projects.  For example, the United Dairy Industry Association has
been the lead organization for the fluid milk national advertising
campaign, and various state and regional promotion groups also fund
this effort.  In January 1995, the Dairy Board and the association
undertook a cooperative effort, Dairy Management Incorporated, to
formalize the joint planning and funding between the two
organizations.  Other methods of coordinating the Dairy Board's
activities with other industry groups include sharing market research
and other research information. 

Other.  The Dairy Board's authorizing legislation provides for a
termination referendum if requested by 10 percent of those covered
under the program.  As a result of a petition, a nationwide
referendum was conducted in August 1993 to determine whether
producers favored continuing the program.  For the program to
continue, more than 50 percent of the producers participating in the
referendum had to vote in its favor.  About 71 percent of the
qualified votes were cast for continuation.  About 63 percent were
cast by cooperative associations bloc voting for all their members. 

The dairy program is unique in that it allows dairy cooperatives to
cast bloc votes for their members.  However, members are given an
opportunity to vote individually if they disagree with their
cooperative's position.  Legislation was introduced in January 1995
in the Senate that would eliminate the dairy program's bloc voting
process because of concerns about whether it is fair and equitable. 
In addition, this proposed legislation would require that the Dairy
Board periodically determine producers' support for the program.  No
action has been taken to date on this legislation. 


--------------------
\1 Our prior report discusses the national Fluid Milk Processor
Education and Promotion Program (GAO/RCED-95-60R, Dec.  16, 1994). 
While the National Dairy Board operates a check-off program for
producers to promote dairy products, including fluid milk, the fluid
milk processors' program, which started in 1994, provides additional
information to consumers about milk's nutritional value. 


   AMERICAN EGG BOARD
------------------------------------------------------- Appendix III:4

The American Egg Board, known as the Egg Board, is administered by 18
producer members and their alternates who serve 2-year terms; initial
appointments were for 2 and 3 years to allow for staggered terms.  No
member is allowed to serve more than three consecutive terms in the
same position.  The Secretary appoints all members from nominations
submitted by eligible organizations, associations, cooperatives, or
other producers.  Table III.4 provides an overview of the board. 



                         Table III.4
           
                  Overview of the Egg Board

Program aspect                 Examples
-----------------------------  -----------------------------
Products                       Eggs, egg products, spent
                               fowl, and products of spent
                               fowl.\a

Expenditures (% of 1994        Domestic promotion (56%).
funds)\b                       Export promotion (<1%).
                               Consumer and industry
                               information (8%).
                               Research (22%).
                               State programs (7%).
                               Other (about 6%).\c

Restrictions                   No lobbying.
                               Advertising cannot disparage
                               other agricultural products.

Promotion activities           "I Love Eggs" campaign.
                               Advertising tie-in
                               opportunities.

Research                       Nutrition.

Evaluation                     Market research.
                               Individual project
                               evaluations.
                               FAS evaluation.

Joint efforts                  Coordinates with 41 states
                               and various related industry
                               groups.
------------------------------------------------------------
\a Spent fowl are hens that have been used to produce eggs for the
commercial market and have been removed for slaughter. 

\b Does not include USDA market promotion funds. 

\c Includes administrative and miscellaneous costs. 

Promotion Activities.  The Egg Board's current advertising strategy
is principally to link eggs with the positive images consumers have
of the taste of eggs.  The primary target for the Egg Board's recent
consumer advertising campaign, "I Love Eggs," is women with children,
who make most decisions about family breakfasts.  The Egg Board is
concentrating on capturing the "weekend breakfast." The board uses a
variety of marketing techniques and advertising themes, depending on
the targeted audience.  For example, the board promotes retail
consumption of eggs primarily through television and radio
advertisements and promotes eggs to the food service industry
primarily through national food service trade publications and trade
shows. 

Research Activities.  The nutrition portion of the Egg Board's budget
funds nutrition research and nutrition education.  In recent years,
the board has used an increased portion of funds on research to
evaluate the effects of dietary cholesterol on plasma lipids.  Since
1991, the Egg Board has funded $1.5 million in research projects at
various universities on this issue. 

Evaluation Efforts.  The Egg Board conducts market research and
evaluates individual projects.  However, the board has not conducted
an overall program evaluation since 1981.  Board officials, however,
are considering whether to conduct a program evaluation in 1995 that
would include an econometric study. 

Joint Efforts.  The Egg Board coordinates its activities with state
and regional organizations by developing publicity campaigns several
times each year for use by state and regional groups and by holding
two joint annual meetings with state organizations.  In 1994, state
and regional groups received about $609,000 from the Egg Board for
promotional activities.  Additionally, in 1985, the board assembled a
scientific advisory panel of medical and nutrition professionals to
help develop strategies to communicate the importance of eggs in
Americans' diets and to assist the board in deciding which research
projects to fund. 

Other.  In 1994, as a result of a referendum, the Egg Board increased
the exemption level for producer assessments from producers with
30,000 laying hens to producers with 75,000 laying hens and increased
the assessment rate from 5 cents to 10 cents for each 30-dozen case
of commercial eggs.  The rate was increased to provide additional
funds, primarily for advertising and research. 


   NATIONAL POTATO PROMOTION BOARD
------------------------------------------------------- Appendix III:5

The National Potato Promotion Board, known as the Potato Board, is
administered by 99 domestic producers, 2 importers, and 1 public
representative appointed by the Secretary of Agriculture for 3-year
terms.  No member serves more than two consecutive terms.  Although
each state is entitled to nominate at least one member, states with
production exceeding 5 million hundredweight of potatoes are allowed
to nominate additional members.  Producers nominate producer members,
and the board nominates the public member.  Importers may nominate up
to five importer members to serve on the board.  One-third of the
members' terms expire annually.  The board meets annually to review
programs and to determine policy for the upcoming year.  Table III.5
provides an overview of the board. 



                         Table III.5
           
                 Overview of the Potato Board

Program aspect                 Examples
-----------------------------  -----------------------------
Products                       Potatoes and potato products.

Expenditures (% of 1994        Domestic promotion (65%).
funds)\a                       Export promotion (10%).
                               Consumer and industry
                               information (2%).
                               Other (23%).\b

Restrictions                   No lobbying.
                               Advertising cannot disparage
                               other agricultural products.

Promotion activities           Potato shopping cart
                               advertisements.
                               Quick-and-easy potato/
                               chicken recipes in magazines.

Research                       None at this time.

Evaluation                     Market research.
                               Individual project
                               evaluations.
                               FAS evaluation.

Joint efforts                  Partnership with Snack Food
                               Association.
------------------------------------------------------------
\a Does not include USDA market promotion funds. 

\b Includes administrative and miscellaneous costs. 

Promotion Activities.  The Potato Board developed 20-minute potato
recipes because market research showed that potato preparation time
and efficiency were of great importance to meal preparers.  The board
paired these recipes with chicken because chicken consumption is
growing rapidly in popularity.  The board also developed a software
package containing 40 quick-meal ideas. 

In 1993, potato shopping cart advertisements were another major
promotion effort.  Messages about potatoes appeared on shopping carts
in 23 of the largest 25 supermarket chains.  These advertisements
resulted in a sales increase of 9.6 percent.  Additionally, the board
used a "personality" to deliver advertisements to the trade.  These
advertisements were placed in magazines and featured potato industry
people talking about why potatoes were important to them and how the
board worked to increase demand.  The board also provides nutrition
educators with tools to spotlight potatoes, such as the Vegetable
Parade Poster, which includes potatoes in the "5-a-day" food pyramid. 

The board has directed its export efforts to the Pacific Rim and East
Asia, the largest markets for frozen potatoes and french fries. 
However, future efforts will be directed towards Central and South
America and Mexico because the board sees potential in these markets. 
According to board officials, the export promotion program has
increased U.S.  potato exports worldwide.  From 1989 to 1994, potato
exports increased by 120 percent.  The board received $1 million in
1994 from the Market Promotion Program. 

Research Activities.  The Potato Board does not fund production
research. 

Evaluation Efforts.  The board measures the effectiveness of its
programs in a variety of ways, including internal, external, and
Foreign Agricultural Service (FAS) evaluations.  The board contracted
with an outside market research firm to evaluate the effectiveness of
four major print advertisements.  Market research results, such as
potato usage and attitude-tracking studies, print advertising tests,
and national eating trend surveys, provide the basis for internal
evaluations of promotion projects.  The board also measures its
programs by participating in joint promotion evaluation projects. 
For example, in 1993, the Potato Board and a major research
organization evaluated the board's promotion of potato products in
South Korea.  In addition, the board uses independent contractors to
evaluate projects funded by FAS.  The board submits these evaluations
to FAS at the end of the year, and FAS follows up with compliance
audits to ensure that the evaluations are conducted within its
regulations. 

Joint Efforts.  The Potato Board has worked with states and other
groups on market research for fresh potatoes in other countries.  It
also supports joint promotion efforts.  For example, the Potato Board
joined with a major restaurant chain in Japan to promote potatoes,
with the restaurant contributing $4 million and the board $110,000. 
Other coordination efforts include the "Snack Food Month" promotion
conducted by the board and a snack food association to promote potato
chips. 

Other.  The authorizing legislation provides for the Secretary to
conduct a referendum at any time to terminate or suspend the
operation of the program at the request of the board or of 10 percent
or more of the potato producers.  Legislation also allows the board
to establish an operating monetary reserve and to carry over excess
funds to subsequent fiscal years, provided that funds in the reserve
do not exceed approximately 2 fiscal years' expenses.  The reserves
may be used to defray any authorized expenses.  In 1994, reserve
funds totaled about $4.3 million.  Under a procedure prescribed by
the 1990 farm bill, producers and importers have voted to eliminate
refunds of assessments. 


   UNITED SOYBEAN BOARD
------------------------------------------------------- Appendix III:6

The United Soybean Board, commonly known as the Soybean Board, is a
60-member producer board nominated by soybean producers.  The
Secretary of Agriculture appointed the initial board members for 1-,
2-, or 3-year terms from nominations submitted by soybean producers
and eligible organizations.  During each subsequent year, the
Secretary appoints one-third of the board members for 3-year terms. 
No member may serve more than three consecutive 3-year terms.  Table
III.6 provides an overview of the Soybean Board. 



                         Table III.6
           
                Overview of the Soybean Board

Program aspect                 Examples
-----------------------------  -----------------------------
Products                       Soybeans and soybean
                               products.

Expenditures (% of 1994        Domestic promotion (0%).
funds)\a                       Export promotion (29%).
                               Consumer and industry
                               information (30%).
                               Research (18%).
                               Other (22%).\b

Restrictions                   Lobbying allowed in some
                               foreign countries.
                               Advertising cannot disparage
                               other agricultural products.
                               Allowed to contract with
                               certain groups.
                               Limitation of 5% for
                               administrative costs.

Promotion activities (export   Technical assistance to
only)                          foreign feed mills and oil
                               refiners.
                               Consumer promotion of oil
                               through radio and point-of-
                               sale materials.

Research                       Production.
                               Product development and new
                               uses.

Evaluation                     Market research.
                               Individual project
                               evaluations.
                               FAS evaluation.

Joint efforts                  27 state soybean board
                               offices representing 29
                               states received about 50% of
                               the assessments, or $24
                               million in fiscal year 1994.
                               The board's $24.9 million in
                               revenues is in addition to
                               this amount.

Other                          Refunds of assessments.
                               Conducts a producer poll
                               every 5 years to determine
                               the need for a termination
                               referendum.
------------------------------------------------------------
\a Does not include USDA market promotion funds. 

\b Includes administrative and miscellaneous costs. 

Promotion Activities.  The Soybean Board focuses its promotion
activities on soybean meal and soybean oil.  Currently, all of the
board's promotion programs occur in foreign countries because the
Soybean Board's goal is to increase foreign demand for soybeans and
soybean products.  In 1994, between 45 and 50 percent of domestic
soybean production was exported, in contrast with many agricultural
commodities that are primarily consumed domestically.  The Soybean
Board has organized four promotion subcommittees to represent the
four regions where promotion activities occur:  (1) Latin America,
(2) Asia, (3) Western and Northern Europe, and (4) the former Soviet
Union, Central Europe, and North Africa. 

In addition to board expenditures for export promotion, the board's
contractor--the American Soybean Association--received about $1.7
million in Market Promotion Program funds and $6.3 million in Foreign
Market Development Program funds.  These funds are used in foreign
markets for radio advertisements and point-of-sales promotions. 

Consumer information on the use of soybean products is targeted at
key groups, such as dieticians and food manufacturers in both
domestic and foreign markets. 

Research Activities.  The Soybean Board's research activities involve
four primary areas of study.  Production research focuses on such
projects as creating soybean varieties that are drought- and
pest-resistant and developing genetic improvements to boost yields. 
Quality-based research efforts include improving oil production,
protein content, and amino acid balance.  Market-focused research
includes such efforts as decreasing the saturated fat content of soy
oil to better compete in today's health-conscious consumer market and
expanding the utilization of soybeans through new products like
SoyDiesel, Soy Ink, and Environ (building material).  Basic research
focuses on developing new products to compete with petroleum-based
plastics and adhesives. 

Evaluation Efforts.  The Soybean Board uses various methods to
evaluate program effectiveness.  For example, the board sets aside 2
percent of its budget for program evaluations.  While the Soybean
Board selects the program to be evaluated, its contractor, in
consultation with the board, chooses an independent third party to
evaluate specific projects.  Other evaluation methods include reviews
by a technical advisory panel.  For instance, researchers are
required to submit progress reports to the board so that a technical
advisory panel can review them under a 9-month review system.  This
periodic review enables the board to terminate funding for projects
that are not working out so that they are not automatically funded
for another year.  Additionally, for FAS-funded projects, the Soybean
Board's contractor is responsible for complying with FAS evaluation
requirements. 

Joint Efforts.  To enhance coordination, the board's authorizing
legislation requires the board to enter into agreements to ensure
that its authorized activities--promotion, research, consumer
information, or industry information--are each implemented by a
single entity.  Accordingly, the Soybean Board contracts with
national, nonprofit producer-governed organizations, such as the
American Soybean Association, for these four activities.  The Soybean
Board's contractor implements all board plans for these four
activities and coordinates with qualified state soybean boards
through national and regional meetings.  In addition, the board uses
a technical advisory panel, which is composed of researchers,
marketers, and educators, for advice on its future direction. 

Other.  The board's authorizing legislation provides that each
producer shall have the right to demand and receive a refund from the
board of any assessment collected from that producer.  Of the six
boards we reviewed, this is the only board that currently allows
refunds.  Refunds are now limited to 10 percent of the total
assessments collected from producers in each state.  In fiscal year
1994, the board's refunds totaled about $9.9 million.  Full refunds
were allowed until April 1, 1994, after which refunds were limited to
the current level.  The results of a producer poll, scheduled for
July 1995, will determine if the Secretary of Agriculture must hold a
referendum to determine if refunds should continue.  If the poll
indicates that a refund referendum is needed, producers may continue
to receive refunds until the results of the referendum are released. 

Until 1990, all check-off programs were restricted from lobbying
federal, state or foreign governments.  However, the Congress
recognized the need for direct contact with foreign government
officials in certain instances under the soybean program.  Therefore,
the authorizing legislation includes an exemption to the prohibition
on influencing governmental action for "any action designed to market
soybean or soybean products directly to a foreign government or
political subdivision thereof."


INFORMATION ON SELECTED
AGRICULTURAL PROMOTION AND
RESEARCH PROGRAMS IN AUSTRALIA,
GERMANY, NEW ZEALAND, AND THE
UNITED KINGDOM
========================================================== Appendix IV

We reviewed the activities of 19 marketing organizations in four
countries:  (1) Australia, (2) Germany, (3) New Zealand, and (4) the
United Kingdom.  This appendix provides information on the foreign
organizations' board structures and functions, sources of funding,
role of government, types of activities carried out, and emphasis on
export promotion. 


   SELECTED AGRICULTURAL PROMOTION
   AND RESEARCH PROGRAMS IN
   AUSTRALIA
-------------------------------------------------------- Appendix IV:1

Australia is one of the world's major exporters of agricultural
products.  It accounts for over one-half of the world's wool exports,
about one-fourth of the world's beef exports, and nearly one-seventh
of the world's wheat exports.  The country has a large resource base
and a relatively small population.  Therefore, its export
competitiveness has always been important.  In the past, the
Australian government had focused its agricultural assistance on
programs to help minimize the effects of unstable and low world
prices on farm income.  However, over the past decade, it has shifted
away from price-related assistance towards more market-oriented
policies.  The government has gradually reduced its protectionist
measures and recast the role of grower-funded marketing
organizations, which concentrate their efforts on market promotion,
research, and development. 

The six Australian marketing organizations we reviewed differ from
those in the United States in organizational structure, role of
government, sources of funding, types of activities performed, and
emphasis on export promotion.  These organizations were the (1)
Australian Dairy Corporation, (2) Australian Dried Fruits Board, (3)
Australian Horticultural Corporation, (4) Australian Wheat Board, (5)
Australian Wine and Brandy Corporation, and (6) Australian Wool
Research and Promotion Organization/International Wool Secretariat. 
The size and composition of these boards vary, as do their
activities.  Generally, research and development activities are
managed by separate entities within the same industry and are funded
by separate assessments.  Owing to a changing economic environment,
Australia's farmers must take a more global view of their markets and
compete more vigorously in the export arena.  Thus, agricultural
marketing and promotional boards have turned more of their attention
to the export market, concentrating their efforts on expanding
foreign trade. 


      ORGANIZATIONAL STRUCTURE,
      ROLE OF GOVERNMENT, AND
      SOURCES OF FUNDING
------------------------------------------------------ Appendix IV:1.1

All six organizations are managed by boards.  These boards range in
size from 5 to 17 members and consist of grower representatives and
industry and business experts.  Some of the boards have independent
representatives from outside the industry.  In contrast to U.S. 
check-off boards, all but one of the Australian boards have a
government representative, who generally serves as the communications
link between the board and the federal government and provides the
board with expert advise about government policies.  Almost all
representatives are nominated by the industry and officially
appointed by the Minister for Primary Industries and Energy. 
According to board representatives, their programs may only be
terminated by an act of Parliament.\1

Annual revenues in 1993 for the six organizations ranged from $1.3
million to $1.7 billion.\2 Except for the Australian Wheat Board, all
the boards we reviewed receive some direct funding from
assessments.\3 These assessments account for as little as 23 percent
to as much as 80 percent of the boards' annual revenues.  The
industries vote to adjust assessment rates annually, if required, for
the following fiscal year.  The government collects assessments on
producers through handlers and processors.  The government then turns
these funds over to the appropriate board.  For some industries, such
as honey, smaller-volume producers are exempted from paying
assessments.  No provisions exist for refunding the assessments. 
Unlike some U.S.  check-off boards, none of the Australian boards
assess importers of agricultural products.  For four of the programs
we reviewed, other major sources of revenue include government
grants, which range from 13 to 30 percent of the boards' incomes;
interest income; and user fees.\4

In the 1980s, the Australian government restructured its agricultural
board system.  It developed a tripartite system that separates
marketing boards from statutory industry councils and
research/development bodies in each industry.  Now, marketing and
research functions are generally conducted by separate entities
within the same industry and funded by different assessments.  For
example, the Dairy Research and Development Corporation manages
research and development for the dairy industry and receives an
assessment of $0.013 per kilogram of butterfat produced, while the
Australian Dairy Corporation receives $0.0377 per kilogram of milkfat
produced for promotional activities. 

In addition to representation on some boards, government involvement
in board activities ranged from simple oversight to direct economic
support of research and promotional activities.  The government
matches each industry's research and development assessment funds up
to a maximum of 0.5 percent of the industry's gross value of
production.  Boards are required to submit annual reports to
Parliament for approval but do not conduct formal evaluations of
their activities (except for an annual financial audit). 


--------------------
\1 The International Wool Secretariat is a nongovernmental body and
therefore cannot be terminated by Parliament.  Its board includes
representatives from the other member countries:  New Zealand, South
Africa, and Uruguay. 

\2 The average annual exchange rate for 1993 was $1.00 U.S.  =
A$1.4704 and the rate for 1994 was $1.00 U.S.  = A$1.3667. 

\3 Since the Australian Wheat Board is responsible for selling
Australian wheat, 98 percent of its revenues, or $1.7 billion, comes
from grain sales.  About 82 percent of that amount reflects export
sales.  In addition, the Wheat Industry Fund, which is managed by the
Australian Wheat Board, receives a 2-percent assessment on wheat
sales for the board's capital base.  The board uses the capital base
for investments. 

\4 The Australian Dried Fruits Board, Australian Horticultural
Corporation, Australian Wine and Brandy Corporation, and Australian
Wool Research and Promotion Organization. 


      BOARD ACTIVITIES AND FOCUS
      ON THE EXPORT MARKET
------------------------------------------------------ Appendix IV:1.2

Less than 10 years ago, the Australian agricultural economic base was
experiencing a downturn characterized as the worst in decades. 
Because of this economic situation, the Australian government is not
providing as much direct financial assistance to its agricultural
sector as it once did.  The government used to shield its farmers
from the uncertainty of world markets by providing price supports and
other financial assistance.  Now, government assistance typically
takes the form of export market development grants and trade
enhancement programs rather than price supports.  Price supports
still exist in the dairy industry but are funded by a market support
assessment on milk producers. 

Since agricultural industries must focus more on market forces than
ever before, promotional and research activities have assumed a
greater role.  Agricultural producer boards, which are statutory
marketing authorities, participate in these activities.  In addition,
the Australian Dairy Corporation and the Australian Wheat Board can
purchase and sell products.  While all boards engage in typical
marketing activities, such as trade shows, point-of-sale promotions,
and advertising, some practice more nontraditional marketing
techniques.  For example, the Australian Wine and Brandy Corporation
participates in the Australian Government Officials' Scheme, through
which Australian embassies and consulates purchase domestic wine for
official functions, thus increasing the product's exposure. 

Australian marketing organizations also carry out other activities
not generally conducted by U.S.  check-off boards, such as setting
quality standards for the industry and issuing export licenses.  In
addition, they invest in other ventures, which allow them to
diversify their holdings and further expand their export businesses. 
For example, the Australian Dairy Corporation wholly controls
Austdairy, a subsidiary that turned a profit of $1.33 million in
fiscal year 1993-94.  Finally, the Australian Dairy Corporation and
the Australian Wheat Board purchase products and sell them in
domestic and/or export markets.  The Australian Dairy Corporation's
sales are limited to specific export markets--e.g., Japan and the
European Union--and producers are not required to supply their
products to the Australian Dairy Corporation for export to these
markets.  Neither of these organizations receive direct government
income support.  However, both boards get indirect government support
through government guarantees for the borrowed funds they use to
purchase their commodities.\5

Table IV.1 summarizes selected information on the six marketing
programs we reviewed in Australia. 



                                    Table IV.1
                     
                      Selected Information on Promotion and
                          Research Programs in Australia

Marketing
organization
(year                                                         Types of
started/      Organizational  Composition of  Sources of      activities--uses
reorganized)  functions       board           funds\a         of funds
------------  --------------  --------------  --------------  ------------------
Australian    Promotes dairy  Authorized:     Total funding   Export sales cost
Dairy         products in     11. Members: 9  1994:           (58%),
Corporation   both domestic   industry        $310.2          Price supports
(1986)        and export      (includes       million\\b      (35%),
              markets.        chair), 1                       Domestic marketing
                              government,     Assessments     (3%),
              Purchases and   and 1 managing  (41%), export   Export marketing
              sells certain   director        sales (57%),    and promotion
              products in     (permanent      and other       (1%), Investment
              Japan and the   member).        (2%).           (1%), Operations
              European                                        (1%),
              Union.          Except for the  Assessments     Interest (1%).
                              chair, who is   rates (per kg.
              Controls        chosen by the   of milkfat):
              export          Minister, and   Market
              licenses in     the managing    support, $0.33
              order to        director, the   (terminates as
              fulfill trade   members are     of 6/95);
              commitments.    self-           Promotion,
                              nominated and   $0.0377;
                              appointed by    Corporation,
                              the Minister,   $0.007.
                              Department of
                              Primary
                              Industries and
                              Energy.

Australian    Promotes        Authorized: 6.  Total funding   Overseas marketing
Dried Fruits  exports of      Members: 3      1993:           (66%),
Board         sultanas,       packers or      $1.3 million.   Operations (34%).
(1991)        raisins, and    exporters, 1
              currants.       grower, 1       Assessments
                              independent,    (80%),
              Conducts        and 1           government
              market          chairperson     grants (13%),
              research on     (independent).  and interest
              these                           (7%).
              products.       Members are
                              appointed by    Assessment:
                              the Australian  $10.20 per
                              Horticultural   metric tonne
                              Corporation on  on dried fruit
                              the basis of    production,
                              recommendation  collected 44
                              s from an       days after the
                              expert panel.   fruit is sold.


Australian    Promotes and    Authorized: 8.  Total funding   Domestic marketing
Horticultura  coordinates     Members: 6      1994:           (47%),
l             the export of   industry, 1     $6.1 million.   Export marketing
Corporation   horticultural   government                      (5%),
(1987)        products,       representative  Assessments     Operations (27%),
              including       , and 1         (59%), export   Market R&D (8%),
              apples, pears,  managing        charges (8%),   Industry payments
              nashi, citrus,  director        government      (7%), Meetings/
              avocados,       (permanent      grants (30%),   conventions/
              nursery         member).        and other       newsletters (3%),
              products,                       (4%).           Assessment
              honey,          Industry                        collection costs
              macadamia       representative  Assessments:    (3%).
              nuts, and       s are chosen    Rates vary by
              chestnuts in    by a selection  use and volume
              both domestic   committee and   within the
              and export      appointed by    following
              markets.        the Minister,   industries:
                              Department of   apples, pears,
              Works to        Primary         nashi, citrus,
              improve the     Industries and  and avocados\.
              efficiency and  Energy. The
              quality of      government      Nursery, 2.5%
              production and  representative  of wholesale
              marketing of    is chosen       pot sales;
              these           directly by     Macadamia
              products.       the Minister.   nuts, $0.015/
                                              kg.; Honey,
                                              $0.022/kg.;
                                              Chestnuts,
                                              $0.037/kg.

                                              An additional
                                              assessment on
                                              exports is
                                              charged for
                                              all products
                                              except
                                              chestnuts and
                                              nursery.

Australian    Purchases,      Authorized:     Total funding   Direct costs
Wheat Board   promotes, and   11. Members: 1  1993:           (59%), (e.g.,
(1939/        markets wheat,  chairperson, 1  $1.7 billion.   storage, freight),
1989)         grain, and      managing                        Cost of sales
              their products  director, 1     Export sales    (53%),
              in both         government      (82%),          Movement in pool
              domestic and    representative  domestic sales  grain inventories
              export          , and 8         (16%), and      (-27%),
              markets.        industry        other (2%).     Interest (9%),
                              representative                  Operations (7%),
              Participates    s (nominated    The board       Other (-1%)\\.\c
              in related      by a selection  purchases and
              value-added     committee       sells
              activities.     largely         Australian
                              appointed by    wheat.
                              the Grains
                              Council of      Operating
                              Australia).     expenses and
                                              other direct
                              Members,        costs are
                              except the      taken out of
                              managing        the sales, and
                              director, are   the profits
                              appointed by    are returned
                              the Minister    to the farmers
                              and may be      on a pooled
                              farmers or      basis.
                              individuals
                              with expertise  The Wheat
                              in finance,     Industry Fund
                              marketing, or   receives an
                              business        assessment of
                              management.     2% on all
                                              wheat sales
                                              for the
                                              board's
                                              capital base.

Australian    Promotes grape  Authorized: 8.  Total funding   Overseas
Wine and      products in     Members: 1      1994:           marketing\e
Brandy        both domestic   chairman        $3.7 million.   (78%),
Corporation   and export      (ministerial                    Regulatory
(1980)        markets.        selection), 1   Assessments     services (15%),
                              government      (23%), user     Operations (7%).
              Performs        member, and 6   fees (35%),
              market          members with    government
              research on     industry or     grants (24%),
              these           business        Australian
              products.       expertise.      Government
                                              Officials'
              Licenses                        Scheme\d
              exports.                        (18%), and
                                              other (<1%).
              Sets quality
              standards.                      Assessments:
                                              For up to and
                                              including 10
                                              tonnes
                                              processed,
                                              $146.
                                              For over 10
                                              tonnes
                                              processed,
                                              $132 plus a
                                              certain amount
                                              per tonne,
                                              ranging from
                                              $3.07 to
                                              $0.29, based
                                              on the total
                                              product
                                              weight.

Australian    AWRAP promotes  Authorized: 9.  Total funding   Export promotion
Wool          wool in         Members: 1      Dec. 1993-      (76%),
Research and  domestic and    chairman, 1     June 1994:      Research (14%),
Promotion     export          managing        $91.3           Other (10%,
Organization  markets.        director, 1     million.        includes domestic
(AWRAP)                       government                      promotion).
Internationa  AWRAP also      representative  AWRAP
l Wool        identifies      , and 6 others  assessments
Secretariat   research and    with industry   (49%),
(IWS)         development     expertise.      government
(1972/1991,   requirements                    grants (15%),
1993)         and provides    AWRAP board     other member
              funding.        members are     countries'
As of Dec.                    appointed by    contributions
1993, the     IWS promotes    the Minister    (25%), and
operations    the use of      for Primary     other (11%).
of the two    wool and wool   Industries and
organization  products        Energy.         AWRAP
s have been   internationall  However, the    assessments
combined.     y.              managing        are based on
                              director is     the value of
                              appointed by    wool sold to
                              the other       an initial
                              board members.  buyer; 3.5% of
                              The             this value is
                              appointments    used for
                              are based on    promotional
                              advice from an  activities and
                              industry        0.5% for
                              selection       research and
                              committee.      development.
                                              The government
                              The IWS board   matches
                              consists of up  research and
                              to 19 members:  development
                              8 from AWRAP,   expenditures.
                              3 from New
                              Zealand, 3      Fees:
                              from South      Beginning May
                              Africa, 1 from  1, 1995, IWS
                              Uruguay, 1      will charge
                              chief           companies for
                              executive       use of its
                              officer, 1      "woolmark"
                              director of     (trademark).
                              operations,
                              and up to 2
                              additional
                              members
                              appointed by
                              the IWS board.
                              The chairman
                              and managing
                              director of
                              AWRAP are the
                              chairman and
                              chief
                              executive
                              officer,
                              respectively,
                              of IWS.
--------------------------------------------------------------------------------
\a The average annual exchange rate for 1993 was $1.00 U.S.  =
A$1.4704 and the rate for 1994 was $1.00 U.S.  = A$1.3667. 

\b Includes gross value of sales from Austdairy, a wholly owned
subsidiary of the Australian Dairy Corporation. 

\c Does not include $1.2 billion in pool payments to growers. 

\d The Australian Government Officials' Scheme ensures that
Australian wines are available at overseas embassies for functions to
which foreign dignitaries are invited. 

\e Includes the Australian Government Officials' Scheme. 


--------------------
\5 Products delivered to the marketing boards are pooled for sale,
and net revenue is shared among pool participants. 


   SELECTED AGRICULTURAL PROMOTION
   AND RESEARCH PROGRAMS IN
   GERMANY
-------------------------------------------------------- Appendix IV:2

Germany is the world's largest importer and fourth largest exporter
of agricultural products, and its food and beverage industry
represents Germany's fifth most important industry.  Germany's major
high-value agricultural products include milk, cheese, meats, and
processed foods.  More than two-thirds of its agricultural exports
are purchased by other European Union countries.  Because Germany is
a member of the 12-member European Union, all European Union market
ordinances apply to its agricultural products.  These market
ordinances include regulation of price support programs, production
quotas and set-asides, import restrictions, and export assistance
programs for targeted commodities. 

We reviewed the overall organizational structure, funding, and
activities of the Central Marketing Organization of German
Agricultural Industries (CMA) and the German Wine Institute.  These
two German agricultural marketing organizations varied considerably
from U.S.  check-off programs in organizational structure, role of
government, types of activities performed, and the emphasis on export
activities.  Funding of the two marketing organizations was similar
to U.S.  check-off programs in that it came primarily from mandatory
assessments, with neither organization receiving government funding. 

We also obtained information on the government's Sales Promotion
Fund, which collects the assessments that are used to finance both
CMA and another organization--the Central Marketing and Price
Reporting Office for Agricultural, Forestry and Food Products
(ZMP)--which provides agricultural market information for both
domestic and export markets.  ZMP's principal role is to serve as a
central market and price reporting office for market reports on
agricultural, forestry, and food products.  ZMP's annual funding from
the Sales Promotion Fund was an estimated $8.6 million in 1994.\6


--------------------
\6 The average annual exchange rate for 1994 was $1.00 U.S.  = DM
1.6228.  We also used this exchange rate for 1995 dollars. 


      ORGANIZATIONAL STRUCTURE,
      ROLE OF GOVERNMENT, AND
      SOURCES OF FUNDING
------------------------------------------------------ Appendix IV:2.1

Organizationally, CMA is a quasi-governmental agency that conducts
national, generic promotions for virtually all German food and
agricultural products,\7 except for fish, forestry, and wine
products.  CMA is structured as a corporation, with 55 percent of its
shareholders representing farmer organizations and 45 percent
representing food processing or food trade organizations.  The fish,
forestry, and wine industries each has an independent marketing
organization to promote its products. 

CMA is managed by a board composed of 26 industry members elected by
the shareholders, who are in turn indirectly guided by the
government's Sales Promotion Fund Administrative Council.  This
council is composed of both industry and government members, with a
government majority.  The German Wine Institute is guided by the
German Wine Fund, whose administrative council is composed of 44
consumer and industry representatives.  The two funds are established
by federal law. 

These two organizations' expected funding levels for 1995 are an
estimated $92.4 million for CMA and $14.2 million for the German Wine
Institute.  Funding comes primarily from mandatory industry
assessments; neither organization received government funds.  CMA's
assessments are ultimately paid by the farmers in a number of product
sectors and collected by the government's Sales Promotion Fund. 
According to CMA, about 70 percent of the assessment funds are from
the meat and dairy product sectors.  The Sales Promotion Fund
Administrative Council uses the assessment funds to finance the
operations of both CMA and ZMP.  The German Wine Fund collects
mandatory assessments from both producers and wine traders.  Neither
of the organizations assessed imported agricultural products. 

The assessments are collected for most domestic agricultural and food
industry products, with few exemptions for smaller-volume producers
and no provisions for refunds.  Other sources of income include CMA's
user fees, which are collected to reimburse the organization for the
costs associated with issuing quality assurance seals. 

Assessment rates are prescribed by federal law.  CMA's assessment
rates were revised for the first time in 1993, resulting in increased
assessment rates for the majority of the agricultural product
sectors.  The German Wine Institute's assessment rates were revised
in 1994. 


--------------------
\7 These sectors include beef, pork, eggs and poultry, milk, cattle
for breeding, bread, beer, sugar, fruits and vegetables, flowers, and
oil, seeds and tobacco. 


      BOARD ACTIVITIES AND FOCUS
      ON THE EXPORT MARKET
------------------------------------------------------ Appendix IV:2.2

The marketing organizations in Germany engage in a variety of
promotion and marketing activities, including point-of-sale
promotion, media advertising, market research, and trade shows.  The
organizations carry out these activities in both the domestic and
export markets.  In addition, CMA emphasizes food quality with its
CMA Seal of Quality for German food products that have passed
required tests and inspections.  Companies that obtain this quality
seal benefit from CMA's Seal of Quality promotions.  Between 12,000
to 14,000 German food products carry CMA's Seal of Quality. 

In contrast to most of the U.S.  check-off programs we reviewed, the
CMA and the German Wine Institute placed greater emphasis on export
promotion.  In 1995, CMA will spend an estimated $22.2 million, or
about one-fourth of its estimated total funding, on export promotion,
and the German Wine Institute will spend almost $6.2 million, or
close to one-half of its total funding, on export promotion
activities.  CMA's export promotion activities are guided by offices
in eight countries--six in other European Union countries, one in New
York, and one in Tokyo.  The German Wine Institute also has offices
in other European countries, Japan, and the United States. 

Table IV.2 summarizes selected information on the two marketing
programs we reviewed in Germany. 



                                    Table IV.2
                     
                      Selected Information on Promotion and
                           Research Programs in Germany

Marketing                                                             Types of
organization                                                          activities
(year         Organizational  Composition of                          --uses of
started)      functions       board               Sources of funds\a  funds
------------  --------------  ------------------  ------------------  ----------
CMA           Promotes all    Authorized: 26.     Total estimated     Export
(1969)        agricultural    Members are         funding 1995:       activities
              products        elected from the    $92.4 million.      (25%),
              except fish,    53 producer and
              forestry, and   agricultural        Assessments (96%),  Domestic
              wine in both    industries          user fees and       activities
              domestic and    (manufacturers,     other (4%). No      (75%).
              export          wholesalers, and    government funds
              markets\.       retailers)          are provided.
                              associations\.\ b
              Provides                            Assessment rates
              central         Members are         vary by
              marketing       elected at the      agricultural
              support.        shareholder         sector.
                              meeting.
              Conducts food                       Assessments are
              quality tests                       paid by farmers.
              and                                 There is no
              inspections.                        assessment on
              Issues CMA                          imports.
              Seal of
              Quality.

              Trains
              exporters and
              sales
              personnel for
              food shops.

              Conducts
              market
              research in
              domestic and
              export
              markets.

German Wine   Markets and     Authorized: 44 on   Total funding       Export
Institute     promotes        the Administrative  1995: $14.2         activities
(1949)        German wines    Council.\c          million.            (50%),
              in both         Members: 18
              domestic and    representing wine-  Funding is almost   Domestic
              export          estates and their   entirely from       activities
              markets.        cooperatives, 8     assessments from    (50%).
                              regional wine       the German wine
              Conducts        promotion boards,   industry. There is
              market          7 industry          no government
              research in     associations and    funding.
              domestic and    groups, and 11
              export          wine trade and      Assessments: Since
              markets.        consumers.          1994, the rate for
                                                  producers has been
                              The overall         $80.11 per hectare
                              strategy is         of vineyard area.
                              monitored by its    In addition, the
                              supervisory board   assessment rate
                              (7 members).        for all wine
                                                  traders was $0.80
                              Administrative      per hectoliter of
                              Council members     grape must
                              are appointed by    (unfermented
                              the Ministry of     pressed juice) or
                              Food, Agriculture   wine; or per 133
                              and Forestry.       kilograms of
                              Members of the      grapes or grape
                              supervisory board   mash.
                              are elected by the
                              Administrative
                              Council.
--------------------------------------------------------------------------------
\a The average annual exchange rate for 1994 was $1.00 U.S.  = DM
1.6228. 

\b The CMA board receives guidance from the Sales Promotion Fund
Administrative Council, which is composed of government, producer,
agricultural industry, and consumer representatives. 

\c The German Wine Institute is guided by the German Wine Fund
Administrative Council, which is composed of industry and consumer
representatives. 


   SELECTED AGRICULTURAL PROMOTION
   AND RESEARCH PROGRAMS IN NEW
   ZEALAND
-------------------------------------------------------- Appendix IV:3

New Zealand has a large quantity of productive land in comparison
with the size of its population (3 million).  Historically, trade has
been concentrated on outputs from the land.  The most significant
productive use of land has always been agriculture.  New Zealand's
producer marketing boards, which began forming in the 1920s, are
among the oldest and best known government-sponsored institutions. 
Originally they were given broad legislative authority to negotiate
freight rates and insurance charges, stabilize domestic prices
through product acquisition, even out seasonal peaks in produce
shipping, coordinate export promotion, and conduct other activities
to improve grower returns.  In the mid-1980s, as part of a widespread
deregulation of key sectors of its economy, New Zealand abolished
more than 30 agricultural production and export subsidy programs.  As
a result, New Zealand farmers lost nearly 40 percent of their gross
income and had to become more responsive to the market.  This
deregulation also changed the fundamental role of the boards and
caused them to reevaluate their operations and marketing strategies
and to implement new initiatives. 

The seven New Zealand marketing organizations we reviewed were (1)
the New Zealand Apple and Pear Marketing Board, (2) the New Zealand
Dairy Board, (3) the New Zealand Game Industry Board, (4) the New
Zealand Horticulture Export Authority, (5) the New Zealand Kiwifruit
Marketing Board, (6) the New Zealand Meat Producers Board, and (7)
Wools of New Zealand (formerly the New Zealand Wool Board).  The size
and composition of these organizations' boards vary, as do their
activities.  In contrast to U.S.  programs, most New Zealand boards'
promotion activities are focused on increasing exports.  Most boards
also conduct research, some of which is partially funded by the
government.  In addition to promotion and research, these producer
boards have other functions, such as issuing export licenses, setting
quality standards, and for some, purchasing and selling products in
domestic and export markets. 


      ORGANIZATIONAL STRUCTURE,
      ROLE OF GOVERNMENT, AND
      SOURCES OF FUNDING
------------------------------------------------------ Appendix IV:3.1

All the boards we reviewed are legislatively mandated.  The
organizations' boards range in size from 5 to 13 members.  Generally,
board members are elected directly through various affiliated
associations to 3- to 4-year terms.  Other members are either
nominated by the board and/or appointed by the government because of
their proven experience or specialized knowledge. 

The boards receive no grants or concessionary loans from the
government for market promotion activities.  However, through its
Public Good Science Fund, the New Zealand government remains the
dominant supplier of research funds.  Research priorities and
requirements are established by a joint government and private sector
board.  Funding for agreed-upon projects is disbursed on the basis of
bids received.  New Zealand producer boards compete for government
funds for particular research activities.  Long-term basic research
(10 to 15 years) is generally carried out by the government's Crown
Research Institutes,\8 and applied research is generally the
responsibility of the boards. 

New Zealand boards receive their funds in a variety of ways.  Some
receive their funding from mandatory assessments, others receive
income from purchasing and selling products in domestic and foreign
markets, and one charges fees for services.  The boards that assess
members generally collect them from all domestic producers, with no
exemptions for smaller-volume producers or option for refunds.  None
of the boards we reviewed assess imports.  Generally, large farms
provide the majority of board revenue.  For example, about 29,000
farmers pay assessments to New Zealand's Meat Producers Board, but
5,000 to 6,000 farmers account for more than half of the total amount
collected.  The boards that collect assessments can change the rates,
but notification of rate changes must be made in the New Zealand
Gazette (which is similar to the U.S.  Federal Register).  For the
most part, assessment rates have remained fairly consistent over the
past several years. 

Three of the boards we reviewed--the New Zealand Dairy Board, New
Zealand Kiwifruit Marketing Board, and New Zealand Apple and Pear
Marketing Board--have as their primary responsibility the export of
products.  These boards purchase and market all products intended for
export; deduct their expenses from market returns; and distribute the
net returns to contributing farmers, growers, and dairy companies. 
The boards' involvement in domestic promotion varies.  For example,
the New Zealand Kiwifruit Marketing Board promotes kiwifruit with
domestic retailers, and the New Zealand Dairy Board through its
subsidiary companies has limited involvement in the local market in
areas such as marketing coordination with local companies and
providing educational and nutritional information on dairy products. 
In 1993, the Apple and Pear Board Act was amended to allow for
deregulation of the domestic market, and since January 1994, the New
Zealand Apple and Pear Board is no longer the only seller in the
domestic market.  The board will no longer be involved in domestic
promotion activities. 


--------------------
\8 In 1992, the government formed 10 Crown Research Institutes to
take over the major research responsibilities from previous
government agencies.  These institutes do not have any core funding. 
They operate as science contractors and are expected to be viable
businesses and return a dividend to the government. 


      BOARD ACTIVITIES AND FOCUS
      ON THE EXPORT MARKET
------------------------------------------------------ Appendix IV:3.2

Because about 85 percent of New Zealand's agriculture products are
exported, most board activities center around the development of
export markets rather than domestic promotion.  This is in contrast
to U.S.  check-off programs' domestic focus.  In addition, unlike
their U.S.  counterparts, some New Zealand boards also license
exporters, set grading standards, ensure quality control, and
purchase and sell products in both domestic and export markets.  Some
boards, such as the New Zealand Apple and Pear Marketing Board and
the New Zealand Game Industry Board, have developed their own brand
names--ENZA and Cervena, respectively--that are used primarily for
export promotion. 

While most boards' applied research is directed towards market
development, some research is production-oriented.  For example, the
New Zealand Meat Producers Board provides some funds to the Meat
Research Development Council, which in turn helps to fund "monitor
farms." On these farms, the farmers hold "field days" during which
they demonstrate new technologies to other farmers.  According to the
board, the monitor farm program is well recognized and has increased
on-farm productivity. 

The New Zealand government has sought to make the boards more
accountable to producers and has taken several measures to ensure
that the boards operate in the most efficient and effective manner
possible.  These measures include requiring performance and
efficiency audits every 5 years, appointing individuals with
commercial expertise to serve on the boards, and requiring financial
reporting to be in line with current commercial standards. 

Probably the most significant of these measures is the requirement
for a performance and efficiency audit every 5 years.  These audits,
mandated in 1992, are to provide independent assessments of the
boards' overall performance.  At the time of our review, audits of
the New Zealand Dairy Board and the New Zealand Horticulture Export
Authority had been completed, and the New Zealand Apple and Pear
Marketing Board audit was scheduled to begin soon. 

Table IV.3 summarizes selected information on the seven marketing
programs we reviewed in New Zealand. 



                                    Table IV.3
                     
                      Selected Information on Promotion and
                         Research Programs in New Zealand

Marketing
organization                                                          Types of
(date of most                                                         activities
recent            Organizational  Composition of      Sources of      --uses of
reauthorization)  functions       board               funds           funds
----------------  --------------  ------------------  --------------  ----------
New Zealand       Purchases and   Authorized: 7.      Total funding   Direct
Apple and Pear    markets all     Members: 4 are      1993: $320.7    costs
Marketing Board   apple and pear  nominated by the    million.        (25%),
(1948)            fruit intended  farmers                             Distributi
                  for export.     federation;         Sales (99%),    on (49%),
                                  3 are selected on   Other (1%).     Operations
                                  the basis of their                  &
                                  commercial          No              marketing
                                  expertise.          assessments.    (22%),
                                                      Board deducts   Other
                                  All members are     its expenses    (4%).
                                  appointed by the    from profit on
                                  Minister of         sales of
                                  Agriculture.        product and
                                                      distributes
                                                      remainder to
                                                      growers.

New Zealand       Purchases and   Authorized: 13.     Total funding   Sales cost
Dairy Board       markets dairy   Members: 11 are     1994:           (40%),
(1961)            products        elected by the      $3 billion.     Payment to
                  intended for    cooperative dairy                   dairy
                  export.         companies; 2 are    Sales (86%),    companies
                                  appointed by the    Other (14%)     for
                  Operates        Minister of         (nondairy       manufactur
                  research and    Agriculture on the  products).      ing costs
                  development     basis of their                      (27%),
                  centers in      commercial          No              Subsidiary
                  selected        expertise.          assessments.    operating
                  countries,                          Board deducts   costs
                  focusing on                         its expenses    (9%),
                  the                                 from the        Other
                  development of                      profits on      (24%).
                  in-market                           sales of
                  capabilities.                       products and
                                                      distributes
                                                      remainder to
                                                      dairy
                                                      companies.

New Zealand Game  Promotes        Authorized: 8.      Total revenue   Venison
Industry Board    venison and     Members: 4 are      1993: $4.9      marketing
(1985)            velvet          deer farmers        million.        (55%),
                  products for    nominated by the                    Velvet
                  export.         Deer Farmers        Assessments     marketing
                                  Association;        (92%), Other    (10%),
                  Manages         3 represent         (8%).           Research
                  industry        exporters and are                   (9%),
                  research        nominated by the    General         Quality
                  programs.       Deer Industry       assessment      assurance
                                  Association;        rates:          training
                  Provides        1 is nominated by   Venison,        (14%),
                  training for    the board.          $0.13/kg.;      Other
                  quality         All members are     Fallow deer,    (12%).
                  assurance       appointed by the    $0.10/kg.;
                  standards.      Minister of         Velvet, $1.62/
                                  Agriculture.        kg.

New Zealand       Conducts,       Authorized: 5.      Total revenue   Employee
Horticulture      collects, and   Members:            1993:           fees and
Export            disseminates    3 are appointed by  $310,000.       operating
Authority         market          various affiliated                  costs
(1987)            research.       federations         Farmers         (100%).
                                  representing        (83%),
                  Licenses        producer and        Industry
                  exporters.      exporter            (17%).
                                  interests;
                  Promotes        1 is appointed by   No
                  compliance      the government on   assessments.
                  with grade      the basis of        Collects fees
                  standards.      commercial          for services
                                  expertise; and 1    from farmers
                                  chairperson, who    and industry.
                                  cannot be an
                                  officeholder or
                                  member of any of
                                  the nominating
                                  bodies.

New Zealand       Purchases and   Authorized: 8.      Total revenue   Direct
Kiwifruit         markets all     Members: 4 are      1994:           sales
Marketing Board   kiwifruit       elected by the      $326.6          costs
(1977)            intended for    growers; 3 are      million.        (48%),
                  export.         appointed by the                    Distributi
                                  board on the basis  Sales (99%),    on (36%),
                                  of their            Other (1%).     Marketing
                                  commercial                          (7%),
                                  expertise and       No              Other
                                  approved by the     assessments.    (9%).
                                  Minister of         Board deducts
                                  Agriculture;        its expenses
                                  1 is appointed by   from the
                                  the Minister of     profits on
                                  Agriculture and     sales of
                                  represents the      kiwifruit and
                                  government and the  distributes
                                  interests of the    remainder to
                                  consumers.          growers.

New Zealand Meat  Promotes beef,  Authorized: 11.     Total revenue   Export
Producers Board   sheep, goat,    Members: 6 are      1993: $16.9     promotion
(1921)            and horse meat  directly elected    million.        (28%),
                  products for    by meat                             Research
                  export.         producers;          Assessments     (24%),
                                  4 are nominated by  (77%), Other    Personnel
                  Licenses        the board on the    (23%).          costs such
                  exporters.      basis of their                      as staff
                                  commercial                          relocation
                  Sets quality    expertise and       General         and
                  control         appointed by the    assessment      salaries
                  standards.      Minister of         rates per head  (27%),
                                  Agriculture; and 1  at time of      Other,
                  Funds research  represents the      slaughter:      including
                  and             Dairy Board and is  Sheep/lamb/     travel,
                  development     appointed by the    goats,          and
                  for on-farm     Minister on the     $0.25;          property
                  and off-farm    basis of a          cattle, $2.27;  (21%).
                  development,    recommendation of   calves, $0.13.
                  which can       the Dairy Board.
                  provide
                  technology
                  transfer.

                  Informs
                  farmers about
                  markets,
                  market
                  development,
                  and how to
                  meet market
                  demand through
                  scheduled
                  meetings.

Wools of New      Promotes wool   Authorized: 10.     Total revenue   IWS\b
Zealand           and wool        Members: 6 are      1994:           (46%),
(1977)            products in     elected by          $34.5           Promotion
                  both export     farmers; 2 are      million.        &
                  and domestic    nominated and                       research
                  markets.        appointed by the    Assessments     (13%),
                                  government on the   (82%),          Wool
                  Sets value and  basis of their      Other (18%).    sales
                  sells wool      commercial                          administra
                  stock until     expertise; 1 is     Assessment      tion
                  depleted.       nominated by the    rate: 6% on     (11%),
                                  board and           value of wool   Interest
                  Provides        appointed by the    sold to         expense
                  technical       government; and 1   initial buyer.  (13%),
                  assistance to   (the Director                       Other
                  farmers.        General of                          (17%).
                                  Agriculture)
                  Manages a       serves as an ex-
                  research and    officio member.
                  development
                  program as      There is no
                  well as         government
                  provides        representation on
                  technology      the board.
                  transfer for
                  research and
                  development.
--------------------------------------------------------------------------------
\a The average annual exchange rate for 1993 was $1.00 U.S.  =
NZ$1.8495.  For 1994, the average annual exchange rate was $1.00 U.S. 
= NZ$1.6844. 

\b The board pays the International Wool Secretariat a fee for
product development, wool promotion, and other activities. 


   SELECTED AGRICULTURAL, FISHERY,
   AND FOOD PROMOTION AND RESEARCH
   PROGRAMS IN THE UNITED KINGDOM
-------------------------------------------------------- Appendix IV:4

For 40 years after World War II, British farmers were encouraged to
produce as much food as possible in a bid to improve self-sufficiency
in food supplies.  By 1970, the United Kingdom had transformed itself
from a net importer to a net exporter of grain.  Today, the United
Kingdom is the world's ninth largest exporter of high-value
agricultural and food products.  Its major high-value exports include
meat and alcoholic beverages, and more than 60 percent of its
agricultural exports are purchased by the other 11 member countries
of the European Union.  Because the United Kingdom is a member of the
12-member European Union, all European Union market ordinances apply
to its agricultural products.  These market ordinances include
regulation of price support programs, production quotas and
set-asides, import restrictions, and export assistance programs for
targeted commodities. 

The four United Kingdom agricultural marketing organizations we
reviewed varied considerably from U.S.  check-off programs in
organizational structure, role of government and sources of funding,
types of activities performed, and emphasis on export promotion. 
These organizations were (1) Food From Britain, (2) the Home-Grown
Cereals Authority, (3) the Meat and Livestock Commission, and (4) the
Sea Fish Industry Authority. 


      ORGANIZATIONAL STRUCTURE,
      ROLE OF GOVERNMENT, AND
      SOURCES OF FUNDING
------------------------------------------------------ Appendix IV:4.1

Food From Britain is a quasi-government marketing organization that
promotes British food and drink products primarily in export markets. 
The other three marketing organizations promote specific sector
products, such as meat, in both domestic and export markets. 

The four organizations are managed by boards composed of both
industry and independent members appointed by government ministers. 
The organizations' boards range in size from 12 to 21 members, most
of whom are appointed from industry nominations.  However the
government appoints several key board members, such as the chairman
and deputy chairman, who are independent of the industry. 

The four marketing organizations receive funding from assessments,
government grants, and fees for services to government or industry. 
In 1993, annual funding levels ranged from about $9.7 million for
Food From Britain to about $63.5 million for the Meat and Livestock
Commission.\9 In 1993, Food From Britain received about 60 percent of
its funding from the Ministry of Agriculture, Fisheries, and Food. 
However, the government is committed to reducing Food From Britain's
reliance on government funding and to having it rely more on private
industry funding.  The remaining three organizations were funded
partially by assessments but also received funding from other
sources, such as government grants and fees for services, which
accounted for about 15 to 35 percent of their total funding. 

The organizations collect assessments from all domestic producers for
products brought to market, with no exemptions for smaller-volume
producers or provisions for assessment refunds.  The Sea Fish
Industry Authority was the only marketing organization we reviewed
that assessed imported products. 

The three organizations vary in how they set assessment rates. 
Assessment rates for the Sea Fish Industry Authority can be adjusted
from time to time, after consultation with industry, within the
statutory assessment limits.  The rate is imposed by the Sea Fish
Industry Authority's regulations and confirmed by the government. 
The government sets the Meat and Livestock Commission's assessment
limits every 3 to 4 years after consulting with the industry.  The
commission is then free to establish the rates for the year without
government approval.  The Home-Grown Cereals Authority's assessment
rates are reviewed annually and can be adjusted with government
approval.  Only Parliament can terminate the marketing programs. 

The government evaluates these marketing organizations about every 5
years.  For example, the Ministry of Agriculture, Fisheries, and Food
conducted a policy review of the Sea Fish Industry Authority in 1991
to evaluate, in consultation with the industry, the future role of
the authority, the assessment rate, and the basis of industry
funding.  The government report made a number of recommendations
concerning the authority's organizational structure, funding, and
activities. 


--------------------
\9 The average annual exchange rate for 1993 was $1.00 U.S.  = .6658
British Pound Sterling and the rate for 1994 was $1.00 U.S.  = .6529
British Pound Sterling. 


      BOARD ACTIVITIES AND FOCUS
      ON THE EXPORT MARKET
------------------------------------------------------ Appendix IV:4.2

The marketing organizations in the United Kingdom engage in a variety
of research activities and in typical marketing activities, such as
trade shows, point-of-sale promotions, and advertising.  Most of the
organizations spend the majority of their funds on promotional
activities.  Notably, however, the Home-Grown Cereals Authority
spends about 62 percent of its funds on research activities.  In
contrast to U.S.  check-off programs, three of the four organizations
we reviewed performed additional activities, such as vocational
training, quality assurance, and collection and distribution of
information to the government and industry.  For example, the Meat
and Livestock Commission collects and publishes information on
slaughterhouse design and operations, provides industry training for
the retail, wholesale, and catering sectors, and runs meat
classification programs.  Two of the three organizations spend over
30 percent of their funds on activities other than promotion and
research. 

Some organizations emphasize export promotion activities.  For
example, Food From Britain spends almost all of its funds promoting
exports of British food and drink products, primarily to other
European countries and North America.  The Home-Grown Cereals
Authority and the Meat and Livestock Commission spent about 13
percent and 7 percent, respectively, on export promotion during 1993. 

Table IV.4 summarizes selected information on the four marketing
organizations we reviewed in the United Kingdom. 



                                    Table IV.4
                     
                      Selected Information on Promotion and
                     Research Programs in the United Kingdom

                                                                      Types of
Marketing                                                             activities
organization      Organizational  Composition of      Sources of      --uses of
(year started)    functions       board               funds\a         funds
----------------  --------------  ------------------  --------------  ----------
Food From         Promotes        Authorized: No      Total funding   Export
Britain           British food    fewer than 13 and   1993: $9.7      promotion
(1983)            and drink       no more than 21     million.        (100%).
                  products,       industry members
                  primarily in    representing all    Government
                  export          sectors of the      grants (60%),
                  markets.        agrifood            and
                                  industry.           contributions
                                                      from other
                                  Members are         agricultural
                                  appointed by the    marketing
                                  Minister of         organizations
                                  Agriculture,        and user fees
                                  Fisheries and Food  from exporters
                                  and the             (40%).
                                  Secretaries of
                                  State for
                                  Scotland, Wales,
                                  and Northern
                                  Ireland. The
                                  Ministers appoint
                                  one member to be
                                  chairman and
                                  another to be
                                  deputy chairman.

Home-Grown        Promotes        Authorized: up to   Total funding   Domestic
Cereals           British cereal  21 industry and     1993: $12.6     promotion
Authority         products and    independent         million.        (6%),
(1965)            oil seeds.      members consisting                  Export
                                  of not less than 5  Assessments     promotion
                  Conducts        nor more than 9     (85%) and       (13%),
                  research on     cereal growers, an  other sources   Market
                  these           equal number (5 to  (15%).          informatio
                  products.       9) of dealers and                   n (9%),
                                  processors, and up  Assessment      Research
                  Provides        to 3 independent    rates           (62%),
                  services for    members, including  (exclusive of   Other
                  the government  both the Chairman   value-added     (10%).
                  such as         and the Deputy      tax) per tonne
                  reporting of    Chairman.           traded for
                  price                               fiscal year
                  information     Members             1993: cereal
                  and serving as  representing the    growers,
                  an agent of     interests of        $0.451; cereal
                  the             growers, dealers,   dealers (net
                  Intervention    and processors are  of grower
                  Board for       nominated by the    contribution),
                  Agriculture     relevant trade      $0.04;
                  Produce.        organizations. All  processors of
                                  members are         cereals for
                                  appointed by        animal feed,
                                  Ministers.          $0.03; other
                                                      processors,
                                                      $0.09; and
                                                      oilseed
                                                      growers,
                                                      $0.751.

Meat and          Promotes beef,  Authorized: 13      Total funding   Domestic
Livestock         sheep, and      industry and        1993: $63.5     promotion
Commission        pork products   independent         million.        (46%),
(1967)            in both         members (maximum                    Export
                  domestic and    of 15 can be        Assessments     promotion
                  export          appointed)          (65%), fee and  (7%),
                  markets.        consisting of 4     other income    Research
                                  from the producer   (23%),          (5%),
                  Conducts        sector, 4           reimbursement   Services
                  research on     slaughterers,       for government  to
                  cattle, sheep,  wholesalers, and    services        industry
                  and pigs.       manufacturers, 2    (12%).          (23%),
                                  retailers, and 3                    Services
                  Provides        independent         Two assessment  for the
                  support         members, including  rates--a        government
                  services to     the Chairman,       general         , such as
                  the meat        Deputy Chairman,    assessment and  purchasing
                  industry,       and Chairman of     an assessment   meat for
                  including meat  the Consumers       for specific    the
                  quality and     Committee.          species         government
                  classification                      promotion.      's
                  .               Industry members                    Interventi
                                  are nominated by    General         on Board
                  Provides        industry sectors    assessment      (12%),
                  planning,       and appointed by    rates per head  Policy,
                  design, and     Ministers. The      for 1993 were:  legislatio
                  project         three independent   pigs, $0.556;   n,
                  management      members are         cattle, $2.31;  training,
                  services to     appointed directly  sheep, $0.391;  and
                  clients in the  by Ministers.       and calves,     communicat
                  meat industry                       $0.12.          ion (5%).
                  such as meat                        Producers pay
                  plants.                             50% and
                                                      slaughterhouse
                  Meat industry                       s and
                  training                            livestock
                  courses,                            exporters pay
                  including the                       50% of the
                  retail,                             general
                  wholesale, and                      assessment.
                  catering
                  sectors.                            Species
                                                      assessment
                                                      rates per head
                                                      for 1993:
                                                      pigs, $0.511;
                                                      cattle, $2.61;
                                                      and sheep,
                                                      $0.391.

                                                      Producers pay
                                                      100% of the
                                                      species
                                                      assessment.

Sea Fish          Promotes sea    Authorized: Up to   Total funding   Domestic
Industry          fish            12 industry and     1994: $13.4     promotion
Authority         products.       independent         million.        (36%),
(1981)                            members consisting                  Research
                  Conducts        of 8 nominated      Assessments     and
                  research on     from the sea fish   (72%),          developmen
                  sea fish        industry, and 4     government      t (32%),
                  products.       independent         grants and      Other
                                  members, including  fees for        (31%).
                  Trains all      the chairman and    services (8%),
                  sectors of the  the deputy          and other
                  sea fish        chairman, and 2     sources (20%).
                  industry.       other members who
                                  must be             Assessment
                  Provides        independent of any  rates per
                  financial       financial or        tonne on sea
                  assistance in   commercial          fish or sea
                  the form of     interests in the    fish products
                  grants and      sea fish            landed,
                  guarantees to   industry.           imported, or
                  the sea fish                        trans-shipped
                  industry.       Members are         at sea within
                                  appointed by        British
                                  Ministers.          fishery limits
                                                      for 1994 were:
                                                      whole sea fish
                                                      $11.33 and
                                                      fish fillets
                                                      $22.67. First
                                                      purchasers pay
                                                      the
                                                      assessment.
--------------------------------------------------------------------------------
\a The average annual exchange rate for 1993 was $1.00 U.S.  = .6658
British Pound Sterling and the rate for 1994 was $1.00 U.S.  = .6529
British Pound Sterling. 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Juliann M.  Gerkens, Assistant Director
James L.  Dishmon, Jr., Project Leader
Jay L.  Scott, Senior Evaluator
Carol Herrnstadt Shulman, Communications Analyst

ATLANTA REGIONAL OFFICE

Kathy R.  Alexander, Evaluator
Natalie H.  Herzog, Evaluator

FAR EAST OFFICE

Kimberly M.  Gianopoulos, Senior Evaluator
James L.  Morrison, Senior Evaluator

OFFICE OF THE GENERAL COUNSEL

John F.  Mitchell, Senior Attorney

