The Foreign Service Journal, May 2003

fiscal year (2003), FAS’s budget is $133 million. That compares with $126 million in 2002, $124 million in 2001, and $113 million in both FY 2000 and 1999. Despite the favorable trend, Terpstra is concerned that her agency may be required over the next few years to pay extra millions to help cover the cost of building more secure embassies. That could be a big blow to a small agency, unless the funds are provided by a special congressional appropriation. One reason FAS may be getting more resources is that agriculture and related products is the one sector in which the United States is running a trade surplus. In 2002, agri- culture showed a surplus of over $12 billion ($53.3 billion in exports minus $41.0 billion in imports). By contrast, the overall U.S. balance of trade was a whopping minus $435 billion last year —by far the highest ever. And when you’re running a trade deficit like that, you appreciate the solace that the agriculture sector provides. Agricultural exports may be a bright side of America’s trade picture, but they’re not nearly as important to the overall economy as they used to be. In the 1950s, agri- culture’s share was about 22 percent of U.S. exports; that’s now down to less than 8 percent. However, exports are far more important to America’s agricultural sector than they used to be. When FAS was founded in 1953, about 10 percent of U.S. farm output was exported. That figure is now 25 percent. The Work of FAS The agency’s core functions still include some central diplomatic tasks, such as reporting on and analyzing host- country conditions. But the reporting function has changed over time, says FSO Allan Mustard. Until recently, “when it came to market analysis, we were it. We had been doing it going back to the 1890s. Today, a lot of agricultural companies are doing it too — we’re not the only ones. But we do bring value added, because we’re unbiased. Even the biggest companies like Cargill and ADM are heavy users of our databases.” Another big change is the fact that a majority of FAS’s reporting is accessible over the Internet: attaché reports, trade statistics and tariff schedules can all be read on www.fas.usda.gov. F AS also hosts U.S. suppliers online, and advertises a range of programs there. For a while, it openly listed foreign firms that were interested in buying agricultural products. But the agency soon learned (sur- prise!) that companies from other countries were using its site to identify potential customers, so it tightened up its procedures; now it will mail or e-mail information to U.S. suppliers only. The analysis of trends in agricultural exports is another important FAS task. For example, you can learn from FAS that, thanks in large part to NAFTA, Canada and Mexico are now, respectively, the number-one and num- ber-three importers of U.S. agricultural products. Japan, which for years was number one, has fallen to number two, due in large part to its prolonged economic slump. Increasingly, however, FAS is focusing on export pro- motion. The agency has always had a broad portfolio, cov- ering not just bulk crops like wheat and cotton, but also lumber and forest products, fisheries, and all kinds of con- sumer foodstuffs. But the strong trend, comments FSO Dan Berman, is that “the growth of agricultural trade is going up the value chain. The emphasis is on finished products.” In other words, let’s not just export wheat; let’s export crackers. Not coincidentally, the new emphasis on finished prod- ucts vastly increases the constituency that FAS can serve. Berman noted, “Farmers are a tiny percentage of the pop- ulation. We work with bagel producers in Brooklyn. Food processing is a ubiquitous industry; it’s 96 percent of your potential market.” Similarly, for wood products, there’s more emphasis on veneer and plywood, rather than raw logs. Dan Berman, FAS’s Director of Agricultural Export Services, observes, “We work closely with the 50 state departments of agriculture. They all have international marketing specialists. We rely on them to bring the com- panies to the table.” Once they are in contact, FAS uses a range of tools to help potential exporters. FAS brings potential buyers (serious customers only) to the U.S. to meet exporters. The section of FAS that is devoted to trade shows care- fully examines all international trade shows with agricul- tural export potential, chooses around 30 each year that seem to have the best marketing opportunities, and sup- F O C U S M A Y 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 27 FAS is unique among foreign affairs agencies in that FSOs can enter only through a lateral transfer within the agency.