In addition to use of foreign currencies by the Foreign Agricultural Service for foreign market development projects under section 104(a), the Agricultura! Research Service carries on a program of utilization, forestry, and marketing research abroad under this section.

Following is an explanation of the legislative authority, the objective to be accomplished, the types of projects, the amounts of foreign currencies obligated for market development projects, and the plan of work and accomplishments under each of the different commodities.

1. Legislative authority

Title I of Public Law 480 authorizes the President to enter into agreements with friendly nations providing for the sale of surplus commodities for foreign currencies. The President is authorized to use, in agreement with the country concerned, foreign currencies accruing from sales for various purposes.

Section 101(a) provides the legislative authority for export market development in other countries on a mutually benefiting basis. Public Law 86-341 provides that not less than the equivalent of 5 percent of total sales proceeds and loan repayments from sales agreements made after September 21, 1959, shall be made available in advance for activities under section 104(a). The Department's 1961 Appropriation Act authorizes the FAS special foreign currency appropriation to be used to purchase such foreign currencies as are determined by the Department to be needed and can be used most effectively to carry out market development activities overseas, and that such currencies which come under title I of Public Law 480 are to be set aside for sale to the Department before being made available to other U.S. agencies for their uses.

2. Objective

The objective of market development projects conducted with foreign currencies is to maintain and expand existing foreign markets or to develop entirely new foreign markets for U.S. agricultural commodities. To the extent practicable, the Foreign Agricultural Service enters into agreements with trade groups, both U.S. and foreign, for the operation of these projects. However, this will be done only if the trade group will make a significant financial contribution. If a trade group is unable or unwilling to undertake a needed project, it may be carried out directly by the Foreign Agricultural Service. In cooperative projects the Department furnishes foreign currencies and overall guidance, including assistance by the Agricultural Attaché Service abroad. The cooperator carries out the work, either directly or in cooperation with foreign groups. In all projects, however, U.S. trade and agricultural groups cooperate directly or indirectly, to the maximum extent possible.

3. Types of projects

A wide variety of market development projects is underway or planned with emphasis on the following:

(a) Market surveys.-This type of project is used to determine potential demand for specific agricultural commodities and how this demand may be developed and supplied.

(b) Nutrition education.-This activity is designed to improve the health and welfare of people abroad and at the same time expand the market for agricultural commodities that can be supplied by the United States.

(c) Two-way visits.-Visits of foreigners to the United States and visits of U.S. citizens to foreign countries improve trade relations. The exchange of ideas and information in this manner is expected to result in greater consumption of U.S. agricultural commodities.

(d) Promotion and advertising.-U.S. promotional, advertising, and sales techniques are being used abroad with appropriate variations to meet local conditions.

(e) Demonstrations.-This market development technique is used to demonstrate types, varieties, grades, and classes of U.S. agricultural commodities available for export.

(f) Trade fairs and exhibits.—Market development projects are also conducted through participation in international trade and food fairs. The United States participates in two kinds of fairs: One is the diversified fair of a largely industrial type; the other is the food fair, which is devoted exclusively to food items. Exhibits are planned by this Department where the greatest number of potential buyers of agricultural products are expected to congregate.

(g) Comprehensive economic studies. While cooperator projects including trade fairs have been emphasized, a new type of activity has been undertaken which has increased activities in the non-cooperator area. Comprehensive economic studies for selected countries are being contracted for by the Foreign Agricultural Service to guide long-range market development efforts abroad. 4. Accomplishments under market development

Following are explanations of the commodities involved, international trade fairs, and other projects and activities carried out under market development projects for which funds were provided in the fiscal year 1961.

(a) Cotton promotion.-Cotton market development project agreements in cooperation with the Cotton Council International have been approved for 20 countries. The first of these programs began in France, Japan, and Germany early in 1956. Beginning with 1957, programs were initiated in most of the other Western European countries. Since that time additional programs have been started in the Scandinavian countries, Greece, India, the Philippines, Portugal, and in Mexico and Colombia. The cotton textile industries in each cooperating country are sharing the cost of the program on an equal basis from their own resources, and these foreign cooperating industries represent well over three-fourths of the export market for U.S. cotton.

The Cotton Council International has responsibility for the development, planning and direction of the programs. This function is carried out through a project agreement for supervision and program development covering 33 countries. Funds available under the agreement provide for paying administrative costs in foreign countries, including office expenses, employment of foreign national personnel, travel expenses, personnel training costs, printing and distributing materials, as well as the production of motion pictures and visual aids. Costs of supervisory personnel, technical program specialists, administrative overhead, program materials, and other expenses payable in dollars are contributed by the Cotton Council International.

A distinction is made in the type of program conducted in cotton consuming and exporting countries. In the importing countries the objective is to expand consumption of cotton products to build a larger market in which U.S. cotton may be sold. In the case of exporting countries the purpose is to aid and encourage the cotton industries to conduct market research for use in developing and carrying out their own domestic production programs, and to ultimately join with other cotton exporting nations in an international program to expand cotton consumption.

The projects in all of the importing countries provide for an intensive effort to promote greater cotton consumption through a program of market research, sales promotion and publicity. Market research provides information on trends in demand for textile products, distribution and sales practices, consumer preferences, competition with products made from other fibers; it forms the basis for effective sales promotion and public relations efforts to expand cotton textile consumption. The sales promotion program is conducted in cooperation with cotton products manufacturers, wholesale distributors, fashion designers, and retail stores to adopt and use a wide variety of activities such as Cotton Week, white sales, individual advertising, fashion shows, and special product sales campaigns involving women's and children's apparel, men's wear, work clothes, household textiles, etc. Sales training programs are provided for retail store personnel.

The public relations and informational programs are designed to provide a steady flow of materials to the public on the value and use of cotton textile products through newspapers, magazines, radio and television, high fashion events, motion pictures, and visual materials. The cooperating industry organizations through the provision of periodic press sheets to newspapers, picture mat services, feature article materials, radio scripts, motion pictures, and special events have been very successful in telling the public the advantages of cotton products.

The maintenance and expansion of cotton consumption requires continuing effort to achieve lasting results. Outstanding progress has been made. In the first 12 countries where programs have been operating for several years, the trend in per capita consumption is upward. The tremendous volume of sales effort and publicity has greatly improved cotton's competitive position with manmade fiber products and has made the consuming public in those countries cotton conscious. While the economic recession in Europe in 1958 resulted in some declines in per capita cotton consumption, consumption was maintained well above 1955. In 1959, consumption recovered and the outlook is good. The

level of retail sales, general consumer interests and the experience of retail stores all attest to the fact that the cotton promotion programs are making a good impact on maintaining and expanding cotton consumption in the important export markets for U.S. cotton.

(b) Dairy and poultry promotion.-Projects for the promotion of either poultry or dairy products or both are underway or planned in 38 countries. Poultry and poultry products: Poultry promotion is carried out through the use of techniques aimed mainly at the consumer as follows: market research on utilization and consumer preference; event promotions such as Easter, Poultry Day or Poultry Month; use demonstrations and consumer education; sales training at wholesale and retail levels; and participation in trade fairs. The actual sale of cooked poultry parts at trade fairs has been proven to be an effective means of establishing and stimulating expanded consumer demand. In addition, advertising is carried out in newspaper, trade journals and through promotional leaflets.

In addition to improved trade relations and trade contacts, specific project results have been achieved. Poultry promotion has assisted in increasing U.S. exports to West Germany, the Netherlands and Switzerland. U.S. poultry exports to West Germany increased from 4.5 million pounds in 1956 to over 34.4 million pounds for the first 6 months of 1960. Comparative poultry exports for the Netherlands and Switzerland increased from 0.1 and 2.9 million pounds to 4.3 and 6.8 million pounds, respectively.

Dairy products: Projects to increase milk consumption usually center around recombining operations, including trade fair demonstrations. Techniques used are aimed at consumers and include: sample distribution of recombined milk and dairy products utilizing U.S. nonfat dry milk and anhydrous milk fat; nutritional education; and advertising through press, radio, posters, brochures. and leaflets. A project is also underway to find new ways of utilizing milk products in combination with local foodstuffs which are in abundant and inexpensive supply.

Dairy displays, including sample U.S. dairy products, have been included at trade fairs in Europe, Asia, the Far East, and Latin America attended by more than 10 million people.

Dairy cattle: In cooperation with the Purebred Dairy Cattle Association, the American Guernsey Cattle Club, the Brown Swiss Cattle Breeders' Association, and the Holstein-Friesian Association of America, promotion has been carried out by supplying U.S. specialists to other countries to judge dairy cattle exhibited in shows, explain U.S. breed characteristics and advantages, assist in applying herd improvement methods, and to establish sales contacts.

With increased emphasis on dairy cattle promotion in Latin America, U.S. exports to this area are growing; they showed an increase of over 10 percent in calendar year 1959 compared to 1958.

(c) Fats and oils promotion.-Promotional activities for soybeans and soybean products have been undertaken or planned in 40 countries to date in cooperation with the American Soybean Association and the Soybean Council of America. Two general types of project activities are carried out-marketing assistance, and intensive promotional campaigns.

Marketing assistance facilitates U.S. exports through assistance to foreign importers, processors, and wholesale and retail trade on technical and marketing problems. Such assistance includes information and training on quality deter mination, quality control, storing, trading, processing, and similar aids. Exchanges of trade personnel have also helped in this area.

While marketing assistance is provided to all areas, intensive promotional activities are limited to principal markets. Emphasis has been placed upon increasing both industrial and consumer uses through the following techniques: consumer education, particularly nutritional; advertising campaigns; product samples and introduction; and advertising through press, magazines, radio, tele vision, and visual aids. Educational film has been prepared as a project activity for use as a promotional aid.

U.S. exports of soybeans and soybean products showed a spectacular rise in recent years, having more than doubled since 1955. This sharp increase in exports can be attributed to several factors, including extensive and intensive market development activities. U.S. soybean oil exports have met with increased consumer acceptance abroad due to a considerable degree to the technical assistance provided by U.S. industry and Government programs. With improvement in the standard of living of many Asian and other countries, further po

tential for increase in U.S. exports of soybean and vegetable oils will exist and which should respond to promotion.

(d) Fruit promotion.-FAS is cooperating with many segments of the fruit industry in market development activities and projects. Projects have been undertaken or scheduled in 15 countries to date.

These industry groups have included the California Prune Advisory Board, the California Raisin Advisory Board, the Florida Citrus Commission, the Northwest Horticultural Council, the California Grape and Tree Fruit League, the Industry Committee on Citrus Additives, and other institutions and groups representing the fruit exporting industries.

Market surveys and promotional advertising have been undertaken in Europe, especially in West Germany, by principal U.S. fruit exporting industries in cooperation with the Department of Agriculture. In addition, since European food health regulations exert a significant influence on U.S. fruit exports, projects dealing with such problems as residues of food additives and pesticides on imported fruit have been undertaken in the European market.

As an aid to assist U.S. exporters, the Department and the fruit trade have prepared and distributed promotional material abroad. Most recently, over 15,000 copies of a leaflet printed in seven languages describing types, quality, and uses of U.S. fruit juice were distributed to foreign bottlers and juice distributors. Activities carried out have assisted in maintaining the U.S. position in the European fruit markets, our most important export market, accounting for exports of over $90 million per year.

As economic conditions improve in Western Europe and as quantitative restrictions to trade are removed, opportunities to sell U.S. fruit and fruit products in these markets will increase. U.S. fruit exporters have shown increasing interest in market development programs both to expand existing markets and to develop new markets in Western European countries.

(e) Grain and feed promotion.—Projects have been undertaken in over 44 countries to promote the consumption of U.S. wheat and wheat products, feed grains, seeds, rice, and dry beans and peas and to expand existing and new markets for these commodities.

Wheat and wheat products: Market development activities for wheat and wheat products have been and are being carried out in cooperation with (1) Great Plains Wheat Market Development Association, Inc., (2) Western Wheat Associates, U.S.A., Inc., and (3) the Millers' National Federation. These cooperators have established several foreign offices and staffed them with competent technicians and supervisory personnel to implement and supervise projects. These offices service the grain trade, millers, bakers, and other users and purchasers of wheat and flour products. Examples of specific projects include exchanges of trade and industry personnel; activities such as: (1) bakers training; (2) preparation, translation, printing and distribution of promotional material including films; (3) educational and demonstrational programs; (4) assistance with school lunch programs; (5) advertising; and (6) exhibits at fairs designed to stimulate and increase the consumption of wheat products. Foreign buyers have been assisted in formulating specifications for wheat which supplement the Official U.S. Grain Standards and Grades and increase the assurance that the characteristics of the deliveries will meet with the purchasers technological requirements.

Notwithstanding the facts that five new nations have joined the list of exporters under the International Wheat Agreement, that the U.S.S.R. has exported wheat at prices below those quoted by IWA member nations, that domestic production has increased in many countries, U.S. exports increased from 443 million bushels in 1959 to about 511 million bushels in 1960. Further increases are expected.

Market development is a definite factor in that expansion. For example, work with the Italian pasta industry is now resulting in the purchase of sizable quantities of U.S. Hard Red Winter wheat. Work with Japanese millers has increased the demand by that country for Hard Red Winter wheat for breadmaking. Efforts in Guatemala have resulted in that country purchasing nearly all its requirements from the United States. As a result of the visit of United Kingdom millers to the United States, significant strides have been made toward regaining our position as a supplier of quality wheat in that market. Feed grains: It took considerable time and a great deal of effort by farm, industry, and Government leaders to promote the formulation of an industrywide organization which could take leadership in market development for feed grains.

Until recently, projects were carried out in cooperation with the Grain Sorghum Producers Association of Amarillo, Tex. Efforts to date have been devoted largely to Western Europe, although studies of market potentials have also been made in Latin America.

An industrywide organization, incorporating the Grain Sorghum Producers Association, has now been formed. This organization, known as the U.S. Feed Grains Council, includes all phases of the feed grain industry from producer to exporter and is geared for a vastly expanded market development program for U.S. feed grains, which at the present time holds the No. 2 spot behind wheat in the area of troublesome surplus agricultural commodities.

Examples of achievements to date include a tremendous increase in the consumption of feed grains in Italy and Greece brought about largely through feeding demonstrations, exchanges of technicians and information, and other assistance with the expansion of their livestock and poultry industries. Greece is now importing sizable quantities of feed grains from the United States and Italy has recently liberalized, to some extent, its trade policy to the benefit of U.S. exports of feed grains.

A sponsored visit to the United States of a team of grain merchandisers, feed manufacturers, and poultry producers from the United Kingdom has been effective in expanding our market there for corn and grain sorghums.

Japan has embarked on an extensive program to expand its livestock and poultry industries and has requested technical assistance with this mutually beneficial program. Preliminary to a more extensive program in Japan, 40 breeding hogs were shipped to Japan accompanied by 2 technicians to instruct the Japanese on balanced feeding practices. A team representing the Japanese Government and industry has visited the United States. A U.S. team has made a return visit and is now in process of developing a comprehensive feed promotion program.

Rice: Foreign marketing studies relating to rice have been undertaken in cooperation with the U.S. Rice Export Development Association. A global sample collection of rice varieties and qualities moving in international trade has been conducted in order to relate the market demand for particular types with the kinds of rice available from the United States.

A promotional project is now being initiated in Western Europe, in an effort to restore per capita consumption to prewar levels. Specific activities include demonstrations on the economy and versatility of rice in mass feeding establishments such as factories and schools; exhibits and demonstrations at trade fairs and other appropriate gatherings and a program of direct consumer advertising. The recent trend in exports of U.S. rice to the United Kingdom offers strong encouragement in this type of activity.

Dry beans and peas: While not in a surplus position this year, these commodities present surplus problems from time to time. Some increase in domestic production also appears likely in some areas where farmers are shifting from wheat. Overseas promotion in the past has been limited to (1) surveys and studies to keep abreast of market demands and consumer trends; (2) exhibitions at trade fairs; and (3) efforts to resolve problems of international trade. Past programs have helped to keep exports up and thus avoid surplus stockpiling. Future activities will be similar to those previonsly undertaken. Any sizable consumer-type promotion is contingent upon the outcome of research now underway which would enable these commodities, particularly beans, to be marketed as a convenience food.

Seeds: Exports of U.S. grass and legume seeds increased 20 percent in fiscal 1960 over 1959 and represented a commodity with an export value of approximately $10.5 million. Market development work to date has been carried ont with the Pacific Seed Export Market Institute and the Oregon Seed Council. It is expected that these two cooperators will shortly integrate their market development activities with the American Seed Trade Association and that a somewhat broader program will be implemented.

Activities carried out up to the present time have included exchanges of technicians, studies to determine solutions to problems relating to the utilization of various varieties of seeds grown specifically for export, and furnishing of samples for experimental seed trials. As a result of a German seed team visit to the United States, the Germans recognized the high quality of alfalfa grown in California, and California growers are now producing German varieties of alfalfa specifically for the German market.

(f) Livestock and meat promotion.-Promotional activities have been undertaken or are planned in 29 countries to date for tallow, lard, breeding livestock, and hides and skins.