. . . And Thank You for Your Support : Millions in taxes each year go to promote U.S. agribusiness abroad. Critics call it pure pork. Defenders say the money helps Americans compete against subsidized producers in Japan, Europe and elsewhere.

By JOHN M. BRODER and DWIGHT MORRIS

June 25, 1995 12 AM PT

TIMES STAFF WRITERS

WASHINGTON —

No other government program may generate such universal scorn as an obscure Agriculture Department office that pays highly profitable agribusiness concerns millions of dollars a year to promote Sunsweet prunes in Taiwan, low-shelf Gallo wines in Europe, Chicken McNuggets in Singapore, Kentucky whiskey in Scotland and bull semen in South America.

But as Congress prepares to chop away at billions of dollars in spending for health care, space exploration and school lunches, the USDA’s Market Promotion Program is gliding through the budget process unscathed, enjoying bipartisan congressional and White House support despite years of controversy over its worth.

In fact, during the debate this spring over $16 billion in cuts from the current federal budget, Congress voted to increase the program’s funding by almost 30%, from $85 million to $110 million.

The MPP’s defenders say that’s a piddling sum for a program that helps American farmers compete against heavily subsidized producers in Japan, Europe and elsewhere.

Its opponents, ranging from the Heritage Foundation on the right to Ralph Nader on the left, vilify the program as pure pork (almost literally--the U.S. Meat Export Federation got $7.2 million in 1994) and an example of corporate welfare at its worst.

The General Accounting Office, the investigative arm of Congress, calls the program poorly run and of questionable value; the Congressional Budget Office perennially lists it among the prime candidates for extinction.

And year after year, the Market Promotion Program survives, championed most actively by California lawmakers, who gave birth to the program a decade ago and who receive campaign contributions from the California fruit, nut and wine producers that are among the program’s prime beneficiaries.

The MPP, originally designed as a response to the unfair trade practices of other governments, has grown over the years into a program that provides a lucrative bounty for producers of everything from soup (Campbell Soup Co., $515,651 in 1994) to nuts (the California Pistachio Commission, $1.15 million).

Early critics derided the program as “walking-around money for Californians,” because it was sponsored by then-Sen. Pete Wilson (now California governor) and then-Rep. Leon E. Panetta (now White House chief of staff) to help the state’s producers get a place at an agricultural aid trough long dominated by the big corn, wheat and soybean farmers of the Midwest and Great Plains.

As the program grew, it took in growers, processors and shippers in all 50 states and virtually every congressional district--which helps explain its ability to survive in difficult fiscal times. Its tenacity also bears testimony to how difficult it will be to bring the $1.5-trillion federal budget into balance, despite new bipartisan zeal to do so.

Programs that serve powerful constituencies and enjoy well-financed corporate support--from subsidies for crops to tax breaks for oil and gas drilling--are among the most entrenched parts of the federal budget, having resisted repeated efforts to repeal them. These benefits amount to an estimated $50 billion a year, or about a tenth of the discretionary portion of the budget.

Farm programs have proved particularly resistant to budget surgery, combining as they do the romantic appeal of the family farmer, the political clout of a major industry and their importance to the economies of many states and communities. Add to that the bogymen of subsidy-happy Japanese and Europeans--whose government backing is often cited as a reason to keep U.S. farm programs--and the durability of costly undertakings such as the MPP becomes understandable.

“Everything about this program is wrong. We should junk this disastrous program and save the taxpayer some money,” said Sen. Richard H. Bryan (D-Nev.), a longtime MPP foe who represents one of the least agriculture-dependent states in the union. “The amount of our national debt does not give us the luxury to fund this fatally flawed program that has no proven benefit for American agriculture.”

In the end, the way this collision of forces affects the range of federal subsidies will help determine whether the overall budget-balancing campaign is successful this time around--and also whether the pain inflicted is judged to have been borne fairly across society.

Gus Schumacher, head of the USDA’s Foreign Agricultural Service, which oversees the MPP, defends the program. He notes that the European Union spends more each year to promote overseas sales of French, German and Italian wines than the U.S. government spends on all of its agricultural advertising.

Schumacher describes the subsidy as an inexpensive weapon in the international competition in high-value agricultural products, which is the fastest-growing sector in global trade.

“This is not the time to get weak-kneed about American agricultural exports,” Schumacher said. “It’s time to stand up to our competitors. What are we supposed to do, unilaterally disarm?”

Schumacher acknowledged that corporate giants such as E & J Gallo Winery Inc., Sunkist Growers Inc. and Dole Food Co.--all California-based--and Pillsbury Co., Tyson Foods Inc. and others have received millions of dollars from the government over the years to supplement their own very large advertising budgets. But, he said, critics forget that the grapes, prunes, tangerines, flour and chickens marketed by big agribusiness are grown by thousands of small farmers across the country.

William K. Quarles, Sunkist’s vice president for corporate relations, defended the MPP as an appropriate response to foreign competitors, who spend far more than the United States on agricultural promotion. Sunkist uses the program to increase its advertising in countries--particularly those in Asia--it has already targeted as fruitful markets, not to pry open new countries, he said.

“The federal program acts as a multiplier to what we would be doing,” Quarles said. “In all the countries we’re in, we would be doing some advertising, but with federal monies we increase that advertising and create additional demand.”

He also said Sunkist is required to match the federal funds on a dollar-for-dollar basis and that its exports create jobs in California for thousands of packers, pickers, truckers and longshoremen.

The participating corporations have made sure they have a receptive audience for their side of the story. Since 1984, Springdale, Ark.-based Tyson has contributed more than $988,000 to political campaigns through its political action committee and through direct contributions by its executives. Executives of Modesto-based E & J Gallo poured more than $750,000 into federal campaigns over the same period.

Over the past decade, the 10 largest Market Promotion Program recipients have also made political contributions totaling $166,000 to Rep. Vic Fazio (D-West Sacramento) and $105,000 to Rep. Robert T. Matsui (D-Sacramento), both key supporters of the program.

The General Accounting Office and other critics say the big food companies can afford to promote their own products and that the government has no business spending the public’s money to reimburse them.

Bryan noted that McDonald’s Corp.--which received $1.6 million in MPP funds from 1986 to 1994--had a $1.224-billion net profit in 1994 while spending $694.8 million on advertising worldwide.

Similarly, ConAgra Inc.--which sells the Chung King, Wesson, Butterball, Swift, Armour, Banquet and Swiss Miss brands, among others--received $826,000 in MPP funds from 1986 to ‘94, a pittance compared to its advertising budget last year of $200 million.

“How in God’s world do we justify spending taxpayer dollars to supplement this program?” Bryan asked. “This is a company that is large, it is successful, and they can effectively handle their own advertising and promotion budget.”

Similar fulminations come from Nader’s Center for Study of Responsive Law, the libertarian Cato Institute, the Heritage Foundation, Citizens Against Government Waste, the Progressive Policy Institute--even the Marin Institute for the Prevention of Alcohol and Other Drug Problems, which objects to the program because it underwrites overseas advertising for beer, wine and whiskey.

But a ConAgra spokeswoman said the company participates in the promotion program because it allows a testing of the waters in markets that it otherwise could not afford to enter.

“We have never lobbied on behalf of this program, but we do believe it serves an important purpose,” said Lynn Phares, ConAgra’s vice president for public relations. “It opens expanding markets for products that would not have the money spent on them. If more hot dogs are sold in Korea, that benefits not just the company that is the conduit [ConAgra], but the corn growers and hog producers that create the product.”

For its part, the nonpartisan GAO has tired of issuing reports detailing the program’s flaws.

“It’s such an easy target,” sighed Allan I. Mendelowitz, director of international trade issues for the GAO.

Several years ago, the GAO discovered, the MPP financed a $3-million advertising campaign in Japan for the California Raisin Board, featuring the animated dancing raisins that were such a hit in the United States.

It bombed.

The campaign’s theme song, “I Heard It Through the Grapevine,” couldn’t be translated into Japanese, so it ran in English and was therefore incomprehensible to most viewers, according to the GAO. The shriveled dancing figures disturbed Japanese children, who thought they were potatoes or chunks of chocolate. The characters’ four-fingered hands reminded television viewers of members of criminal syndicates, whose little fingers are cut off as an initiation rite.

If all that wasn’t enough, the Raisin Board couldn’t even get its product onto store shelves during the promotion period.

The board’s goal was to sell 900 tons of raisins in Japan during the campaign; exports during the period reached a little more than half that. And the U.S. government spent $2 in promotion costs for every dollar’s worth of raisins that reached Japanese store shelves.

The California Prune Board has a mixed record in using federal money to try to open new markets for its fruit. The California prune has made substantial inroads in Britain, even though the dried fruit still has what the board delicately describes as an “image problem” in that country arising from “the laxative stigma and the forced consumption of poor-quality prunes during childhood.”

Rich Peterson, Prune Board executive director, said advertising efforts on the California prune’s behalf over the past decade have helped increase sales by 45% in Britain, 75% in Italy and 108% in Germany--all against stiff competition from heavily subsidized French prunes.

“That wouldn’t have been possible without MPP funding,” Peterson said. “The prune industry on its own would not have had resources to launch the campaigns we’ve been able to mount.”

The board spends roughly $1 million a year in MPP funds to produce generic promotions for California prunes, and private firms such as Sunsweet Growers Inc. of Yuba City, Calif., spend millions more. Advertising focuses on prunes as a healthful snack, Peterson said, rather than on their gastrointestinal benefits.

“We don’t do dancing prunes,” Peterson said. “There’s no cutesy stuff for the prune.”

It’s a different story in Asia. Prunes have been well-received by the health-conscious Japanese, but the Taiwanese have rejected them as an inferior version of the popular, though expensive, Chinese black date. The Clinton Administration has consistently supported the MPP, proposing to spend $100 million a year on it for the next five years. Officials argue that as the new General Agreement on Tariffs and Trade requires governments to cut direct subsidies to farmers, it is crucial to maintain strong marketing efforts that are legal under the trade pact. But critics insist that the money should be spent on more productive programs rather than on subsidizing the advertising of rich marketing cooperatives such as Sunsweet, Sunkist and Sun-Maid.

“I do not believe any member of this body should be able to keep a straight face and support some of the measures we are voting for when we cannot kill a program like MPP that is a pure subsidy for some of the biggest corporations in America and abroad,” Sen. Dale Bumpers (D-Ark.) said in a fruitless effort to kill the program earlier this year.

Times researcher Gary Feld contributed to this report.

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Top Corporate Recipients of Market Promotion Program Funds (1986-94)

Sunkist Growers Inc.: $76,375,430 Blue Diamond Growers Inc.: $37,338,245 Sunsweet Growers Inc.: $22,846,268 E & J Gallo Winery Inc.: $23,828,761 Dole Food Co.: $17,577,516 Sun-Maid Growers of Calif.: $12,886,362 Tyson Foods Inc.: $11,689,788 Pillsbury Co.: $11,054,785

Sources: General Accounting Office, U.S. Department of Agriculture

Political Contributions by Food and Wine Producers (1984-94)

TYSON FOODS INC.

Political action committee donations: $565,540

Executive donations: $422,986

Total: $988,526

E & J GALLO WINERY INC.

Political action committee donations: 0

Executive donations: $750,960

Total: $750,960

SUNKIST GROWERS INC.

Political action committee donations: $454,365