panies. Perhaps a device for extending this kind of assistance can be perfected through the formation of a merchant exporter advisory committee to FAS. A pressing reason for some such arrangement lies in the fact that the principal function of a "country director" is to impartially serve all members of his organization rather than to assist individual members in establishing direct trade connections with importer-users, jobbers, or wholesalers. On the other hand, the merchant exporter freely works with tried, trusted, and experienced commission agents in many countries. Thus, the merchant exporter could be an important brokerage link between a cooperator organization member and an overseas buyer. FAS help in the establishment of these kinds of international trade connections could perhaps be far more productive in developing foreign markets for U.S. agricultural products and commodities than the present expensive "country office" and "country director" arrangement.

Results. The FAS agreed that the formation of a Merchant Exporter Advisory Committee would be useful, but also stated that more effort would be extended by the agency to working with export industry groups.

CONGRESSIONAL

COMMITTEES SHOULD CONSIDER AMENDING SECTION 104(a) OF PUBLIC LAW 480 (Recommendation 4):

It is suggested by the committee that appropriate committees of the Congress consider amending section 104(a) of Public Law 480 so as to direct the major effort of the market development program toward the increase of dollar sales of agricultural commodities. However, in any revision of this section, provision should be made to allow for limited periods of time, as determined by the Secretary of Agriculture, for commodity servicing in countries on the way to becoming dollar markets to assure that commodities are received, distributed, stored, processed, packed, consumed, and otherwise managed and handled in a manner to maximize their use for the purposes for which they are provided. Provision should also be made to allow this same kind of commodity servicing for limited periods of time, as determined by the Secretary of Agriculture, to countries which are not dollar markets nor promise to become dollar markets, but which receive U.S. agricultural commodities under provisions of Public Law 480. Results. This recommendation has not been acted upon by the appropriate committees of the Congress.

CONTRIBUTIONS FROM INDUSTRY COOPERATORS (Recommendation 5):

The Foreign Agricultural Service should intensify its efforts to obtain reasonable contributions from industry cooperators. The fact that Public Law 480 does not specifically require cooperator contributions from industry groups as a prerequisite to eligibility

for program participation does not mean that FAS should not emphasize such contributions as important to the development of a more effective cooperative program.

The committee, therefore, recommends that FAS consider the feasibility of imposing more substantial minimum requirements for cooperator contributions, especially as such contributions relate to (a) the quality and experience of staff personnel which the cooperator is contributing to the program, and (b) the amount of U.S. cash dollar contributions made to the program.

It is suggested that FAS devise criteria that would insure that cooperator staff members, especially those in supervisory functions, be appropriately qualified at proper professional levels for the types of work with which they are charged. This has frequently not been the case. Work involving commodity technicians, for example, should be staffed with appropriately qualified technical personnel, while work involving promotional specialists should be staffed with personnel experienced in professional promotional activities.

Further, it is suggested that the criteria with respect to personnel contributions relate to appropriate numbers of staff members as well as to quality and experience. Programs should not be undertaken except as cooperators provide staffs commensurate in size with the magnitude of the work undertaken.

It is also suggested that FAS devise criteria aimed at requiring appropriate minimum levels of cash dollar contributions to the program. Such minimum levels could reflect certain variables which exist within the program for different cooperators. But in all cases the requirements should be set at levels adequate to encourage maximum contributions by cooperating industries in consideration of the benefits they derive.

Results. Although substantial progress has been made in the way of obtaining greater cash contributions from cooperator organizations, no criteria has as yet been established for minimum levels of cash contributions by cooperators. FAS is proceeding with developing guidelines for cooperators with respect to sending qualified personnel abroad. However, cash contributions were 35 percent greater this year than last year as a result of this recommendation, thus saving the Government a like outlay of money.

STRENGTHENING

THE

SERVICE (Recommendation 6):

AGRICULTURAL

ATTACHE

The committee recommends selective strengthening of the Agricultural Attaché Service in order to improve the market development program. This is a very special and dire need if the program is to receive a high degree of success.

Agricultural attachés should be key figures in the market development program. They should work with representatives of U.S. cooperator organizations and USDA commodity marketing specialists to determine the size of potential markets for specific products and the types of campaign likely to give best results. They should give guidance to market development programs in

progress and should be responsible for effective use of Government funds expended. They should submit more frequent evaluations of the programs' effectiveness, especially where the progress of a program is questionable.

These tasks are time consuming. Time devoted by attachés to program administration, particularly assistance to cooperators in developing and carrying out their annual marketing plans, must be taken from time needed for other important work. Attachés need to be afforded the time to take more leadership in cross-commodity promotion, such as promotion by a grocery chain of a wide variety of U.S. agricultural products. There are also oppor-tunities for the attaché to promote commodities in countries where the current market does not appear to justify a cooperator program.

The committee feels that the assignment of assistant attachés, specially trained in market development techniques, to work exclusively on the development and administration of this program in, for example, eight of our major cash markets-Japan, West Germany, United Kingdom, Italy, Belgium, Netherlands, France, and Spain-could make a substantial contribution to the effort to expand agricultural exports. The United States is meeting its most severe competition in these countries which offer some of our best opportunities for market expansion. Over 60 percent of all market development expenditures were made in these countries in fiscal year 1964, and they accounted for nearly the same proportion of total U.S. cash agricultural exports. Results. The FAS agrees and is seeking additional funds to strengthen the attaché system as suggested in the recommendation.

FAS SHOULD PROVIDE POSITIVE GUIDELINES TO ATTACHES (Recommendation 7):

The committee feels that FAS should provide cooperator organizations and agricultural attachés with positive guidelines as to expenditures for entertainment which would be reimbursable from FAS funds. Such guidelines should be scaled so as to take into consideration variations in entertainment costs from country to country. Based upon data received by the committee staff, the committee feels that even in countries where entertainment costs are high, a per person limit of $5 for lunch, $10 for dinner, and $6 for a formal reception would be extremely generous and should be fully justified. The committee holds to the view that the cost of the majority of entertainment functions conducted by cooperator organizations should not reach even these limits. The committee notes that since it initiated its investigation of FAS activities, cooperator expenses for nightclub entertainment will no longer be reimbursable, and that amended FAS regulations also prohibit the expenditure of Government funds for "watchfobs," "tieclasps,' and other such items.

Results. The FAS has established the guidelines recommended. It has also sent instructions to embassy auditors to reject items of expense which may be deemed to be excessively high or of a questionable nature. Should the auditor's action be disputed, the item will be forwarded to FAS headquarters in Washington, D.C., for final judgment.

QUESTIONABLE VALUE OF TRADE FAIR PARTICIPATION (Recommendation 8):

Because of comments by several members of cooperator organizations, as well as by agricultural attachés, questioning whether significant value to market development programs has been obtained from trade fair exhibits, the committee feels that proposed trade fair participation should be carefully evaluated in each instance before FAS funds are approved for such activities. The committee also feels that every proposed symposium, seminar, or conference to be held overseas should be seriously evaluated by FAS as to essentiality to market development purposes. Moreover, the committee feels that the cost and size of each such meeting, when approved by FAS, should be held to the most practical minimum possible.

Results. The FAS has agreed that trade fair participation should be more carefully evaluated, as should be the case with symposiums, seminars, and conferences held overseas. As a result, the number of these being held by, or being participated in by FAS has been greatly reduced. A savings of $191,265 was noted for the year following publication of the committee's report.

CLOSING OF SPECIFIC COUNTRY OFFICES (Recommendation 9): After an examination of the results achieved to date and the potential for future marketing of U.S. agricultural commodities, the committee recommends that country offices of the U.S. Rice Export Development Association (whose responsibilities have been transferred to the Rice Council) in Denmark, Germany, and the Netherlands be closed. The committee also believes that both the country offices and the market development programs maintained by Great Plains Wheat, Inc., in Brazil and Colombia should be abolished.

Results. Most of this recommendation has been agreed to and complied with.

ADEQUATE TECHNICAL KNOWLEDGE OF COUNTRY DIRECTORS (Recommendation 10):

Persons employed by cooperators as country directors should have an adequate technical knowledge of the agricultural commodity which they seek to promote, and no FAS funds should be used to pay the salary of a country director until such person's technical knowledge of the commodity which he seeks to promote has been satisfactorily established.

Results. The FAS has agreed that this should be standard procedure.

PRIOR APPROVAL BY FAS OF THIRD-PARTY AGREEMENTS (Recommendation 11):

The committee endorses the recommendation of the Inspector General of the U.S. Department of Agriculture with respect to needed changes in FAS regulations to require prior approval by FAS of third-party agreements which are being contemplated by cooperators and in which Government funds would be expended. Results. The FAS advised the Committee that it was revising its regulations, but not to the extent recommended by the Inspector General of the Department of Agriculture, because of certain difficulties which could hinder market development.

EXPENDITURE REIMBURSEMENT BY FAS (Recommendation 12):

When any cooperator organization has expenditures which are clearly excessive and/or which have not been made in accordance with AS regulations, FAS should refuse reimbursement for such expenditures.

Results. The FAS advised the committee that it would challenge all such expenditures. If any is not made for reasonable cause, the cooperator would be asked to stand the payment. As a result, such expenditures dropped by $18,259 annually.

TRAVEL EXPENSES (Recommendation 13):

Travel expenses should be held to the absolute minimum consistent with obtaining program objectives. FAS should examine carefully the necessity for each instance of travel by cooperator organizations, particularly those which have a high ratio of travel expenditures, and those which have shown substantial increases in travel costs despite little change in staff levels or offices.

Results. As a result of this recommendation, the FAS tightened its travel restrictions, saving $174,971 annually.

RATE OF REIMBURSEMENT FOR PRIVATE AUTOMOBILES (Recommendation 14):

The committee endorses the recommendation of the Inspector General of the U.S. Department of Agriculture that the rate of reimbursement for the use of private automobiles should be set at a level consistent with operating costs in each country involved, and that the use of personal automobiles should be fully justified before any reimbursement of such costs are allowed. Results. This was done, and the annual savings was computed in the overall savings listed under travel. (See results of Recommendation 13, above.)