41 



This runaway audit demand has stifled both program creativity 

 and our ability to respond to changing markets. I am not advocat- 

 ing that auditing be ehminated; that would be irresponsible to the 

 U.S. taxpayer. But the fiscal responsibility must be balanced with 

 the excellent record of the program and the need to increase effi- 

 ciency. 



We need FAS to have strong internal controls that everyone un- 

 derstands and implements judiciously. Just that simple change 

 could free up staff time and resources to increase overseas pro- 

 gramming. 



One of the most effective tools that FAS has for increasing U.S. 

 agricultural exports is the GSM program. But the world economy 

 has changed during the past decade and the GSM program is no 

 longer able to meet all of those challenges. This is especially true 

 in Russia and the Republics of the former Soviet Union. In order 

 to keep a U.S. presence in these markets, we need credit programs 

 that take into account the increased risk and uncertainty. 



One action that FAS could immediately take is to return to 100- 

 percent principal guarantees, rather than the current 98 percent, 

 if this is to remain a viable commercial program. If it is decided 

 to take Russia and the former Republics out of the commercial 

 GSM programs, then we need to look at a credit program such as 

 direct loans, using the CCC borrowing authority. 



The creditworthiness criteria also needs to be revisited. We un- 

 derstand the need for a review process to determine reasonable lev- 

 els of credits, but this must be balanced against market develop- 

 ment potential and policy objectives. 



I also want to note the increasing attention given to value-added 

 products. In our rush toward change, we should not throw the baby 

 out with the bath water. Bulk commodities make up over 65 per- 

 cent of total exports. With increased competition, we are fighting 

 harder than ever to maintain market share, even in those markets 

 that have been our long-term customers. We must not abandon 

 bulk markets just because value-added markets are currently in 

 the spotlight. 



It is clear that the existing FAS export promotion programs are 

 working. In fact, it is their success that is the focus of other Gov- 

 ernment agencies and industrial groups. The "National Export 

 Strategy" issued by the Trade Promotion Coordinating Committee 

 appears to be an effort to erode agriculture's share of export expan- 

 sion funds. Funding earmarked by Congress for agricultural export 

 promotion should remain under the control of the Department of 

 Agriculture. 



In closing, I would like to reiterate that the philosophy that insti- 

 tuted the cooperation between the public and private sector has 

 been lost and replaced with audits and adversarial relationships. 

 The use of nonprofit organizations like the council, which brings to- 

 gether the diverse interests of com, sorghum, and barley growers 

 with agribusiness, is a sound practice that maximizes both pro- 

 ducer and Government funding. It is a model that deserves the at- 

 tention of the industrial sector in developing trade. 



While we strongly support the review and restructuring of FAS 

 programs, it is evident that FAS cannot meet its mission of contrib- 

 uting to the profitability of U.S. agriculture without the necessary 



