30 



programs have been effective vehicles for moving U.S. agricultural 

 commodities into the export market. 



Some distorted and unwarranted criticism has been directed to- 

 ward these programs. However, they have generally been effective 

 and positive in furthering trade. 



They facilitate commercial transactions on a competitive basis, 

 are well understood and received by foreign banks and buyers, and 

 can be handled with minimal expense and risk to the U.S. Govern- 

 ment and the exporting and banking communities. There is, how- 

 ever, a growing concern about a shift in focus from an emphasis on 

 promoting U.S. agricultural exports toward a greater emphasis on 

 avoiding risk in the world marketplace and promoting private sec- 

 tor development in foreign countries. 



Reduced usage of the programs available under the CCC's GSM 

 program is an example. 



More specific requirements have been imposed on the CCC rel- 

 ative to creditworthiness, and in recent years management seems 

 to have been directed toward a conservative position with little in- 

 clination to make adjustments or modifications to improve the 

 usage and the movement of commodities. 



We believe a better balance can be achieved between market de- 

 velopment, trade enhancement and foreign policy issues on the one 

 hand and creditworthiness issues on the other hand. We would en- 

 courage the development of a partnership between commercial 

 lenders, exporters and the USDA in establishing creditworthiness 

 guidelines for prospective buyers in importing countries, given con- 

 sideration for utilizing expertise in lenders in this area. There is 

 an effort underway within the CCC to evaluate existing programs 

 and the need for new programs and approaches to support agricul- 

 tural export transactions. 



They should be encouraged and supported whenever possible to 

 provide more flexibility and better linkage of guarantee programs 

 to commercial transactions. A reevaluation of the real potential for 

 ultimate loss in public sector versus private sector programs seems 

 to be needed, along with the reaffirmation of the purpose and objec- 

 tive of the GSM and other CCC programs, which should primarily 

 be conducted to support U.S. exports and maintain and expand ex- 

 port markets. 



Mr. Chairman, I would be remiss if I did not take this oppor- 

 tunity to thank you for your support of H.R. 4379, the Farm Credit 

 System Agricultural Export and Risk Management Act. That legis- 

 lation, which has been endorsed by a broad array of agricultural 

 groups, will assure access to financing of exports and international 

 business operations for U.S. agricultural interests at a time when 

 global markets are the key to- the success of the rural economy. 



Mr. Chairman, I appreciate the opportunity to appear here today, 

 and would be pleased to try to respond to any questions. 



[The prepared statement of Mr. Bovee appears at the conclusion 

 of the hearing.] 



Mr. Penny. Thank you for your testimony. Next, Ms. Patrick. 



