Issues Effecting U.S. Agricultural Competitiveness in World Markets

GAO discussed issues affecting U.S. agriculture. GAO noted that: (1) to increase foreign demand for U.S. agricultural products, the United States must lower commodity price-support levels, expand export credit programs, rely more on export subsidies, lower the dollar's value, and reduce production costs; (2) some critics believe that U.S. competitors will increase export subsidies or lower export prices to protect their markets against decreased U.S. price-support levels; (3) critics are still uncertain about whether relying on countertrade arrangements, using long-term bilateral sales agreements, emphasizing the export of processed products, improving market development and promotion efforts, or improving the quality of U.S. grain shipments will help U.S. agricultural exports; (4) proposed legislation would toughen U.S. grain standards to improve the quality of grain shipments; and (5) the Department of Agriculture (USDA) needs to better respond to changes in the world food economy to improve U.S. competitiveness. GAO believes that USDA should: (1) take into account macroeconomic and international variables; (2) design policies with maximum flexibility to adjust to changing environments; and (3) be prepared to accept with substantial world market instability. GAO: (1) is addressing world production trends; (2) plans to identify factors that impact foreign demand for agricultural products, determine how U.S. exporters target demand, and evaluate mechanisms that ensure successful sales; (3) is determinming why agricultural imports are increasing and how imports impact the agricultural industry and the economy; and (4) plans to continue work on U.S. grain quality standards.