WASHINGTON — With a nudge from a U.S. attache, the Serbian government changed its rules last year to allow the first shipment of that great American snack that most everyone has come to love: popcorn.
For U.S. officials, it marked a clear win in the increasingly competitive global trade wars. They say it’s a perfect example of how federal efforts to promote popcorn around the world are paying off. But amid rising exports and tight federal budgets, opponents say it’s a waste of money. They contend that the industry is healthy overseas and at home, with each American consuming an average of 52 quarts of popcorn each year.
This year the Chicago-based Popcorn Board, created by an act of Congress in 1996, expects to spend nearly a half-million dollars on international promotion. It will target trade shows, school classrooms and primary household food buyers, typically women ages 18-54 with children at home.
The issue is part of the talks as Congress tries to write a new farm bill that would determine how much taxpayers will pay for agriculture commodities. And while popcorn is a small-ticket item compared with wheat, rice, sugar and other mega-crops, opponents say it’s wrong to subsidize the advertising costs of any private business operating outside the United States.
With the United States already more than $16 trillion in debt, “it just seems ludicrous, especially when popcorn producers are able to sell popcorn abroad on their own,” said Richard McKenzie, a retired professor of economics and management at the University of California in Irvine who wrote a book on the rising cost of popcorn in 2008. “Maybe the expenditures on foreign advertisements have improved their exports, but to me it’s more of our industrial policy – picking and choosing the winners.”
U.S. popcorn exports topped 232 million pounds last year, with a total value of $78 million. That continues a modest increase over the past few years, according to the Agricultural Marketing Resource Center at Iowa State University.
Mexico is the top U.S. market, accounting for a third of all exported popcorn. That’s followed by China, Japan, South Korea, the United Kingdom and Russia, said Gary Brester, a professor in the department of agricultural economics and economics at Montana State University in Bozeman who’s studied the industry. By contrast, he said, the U.S. imported only 1.5 million pounds of popcorn last year, most of it from Argentina.
In an attempt to boost popcorn sales, the U.S. Department of Agriculture this year gave the Popcorn Board more than $250,000 for promotion. Taxpayers have been paying to push popcorn sales since 1999, three years after Congress passed the Popcorn Promotion, Research and Consumer Information Act.
Deirdre Flynn, the executive director of the Popcorn Board, said the board’s 2012 budget called for spending $480,000 on international promotion and another $338,000 on promotion within the country. She said the activities included a public relations program to promote popcorn as a healthy snack in Mexico, the Caribbean, southeast Asia and Costa Rica.
In addition to using federal money, the Popcorn Board raises money by charging assessments to the largest popcorn producers, those who make more than 4 million pounds per year. That’s expected to raise $550,000 this year.
Flynn said the Serbian case provided a good example of how the U.S. could reach new consumers. The U.S. Foreign Agricultural Service intervened after the Serbian government blocked popcorn at its borders, fearing it contained too much of a deadly substance called mycotoxin. The Serbs relented after U.S. officials noted that Serbian standards weren’t in line with either international or European Union standards.
Flynn declined to comment on the criticism of her program: “The Popcorn Board stays out of Washington. The Popcorn Board promotes U.S. popcorn.”
The public money for international promotion comes from the Agriculture Department’s market access program, which has been used to promote U.S. products such as apples, asparagus, peaches and catfish.
Brester said it was difficult to quantify whether spending on promotion provided an equal benefit to taxpayers. He said farmers benefited more from gaining access to new markets under free-trade agreements.
“Whenever you have these targeted programs, these are very sticky issues,” he said. But he added: “Certainly the data show that we’ve done pretty well with exports, and maybe that’s a function of what this board has been doing.”
In a report issued in June, Oklahoma Republican Sen. Tom Coburn said Congress had spent more than $2 billion on the market access program, boosting the fortunes of profitable agriculture companies and trade associations. He complained that some of the money had been used to promote pet food and pet shampoo and to pay for wine tastings for foreign journalists.
Arizona Republican Sen. John McCain, another critic, said that month on the Senate floor that subsidies to the popcorn industry could total $91 million over the next 10 years, and he argued that federal crop-insurance programs shouldn’t protect popcorn. Noting that the price of popcorn had risen 40 percent in recent years, thanks to Congress’ backing of ethanol and new free-trade agreements with Colombia and South Korea, he said: “There isn’t a kernel of evidence that they need this support from taxpayers.”
Nebraska Republican Sen. Mike Johanns offered a quick defense in a conference call, saying farmers had to put their money on the line to buy the crop insurance: “The farmer’s got to write a check or you don’t get the benefit of anything.”
Popcorn farmers have pleaded their case with Congress, as well. At a field hearing of the House Agriculture Committee in Dodge City, Kan., in April, Zachary Hunnicutt, a fifth-generation farmer who grows popcorn in Nebraska, said farmers shouldn’t bear a disproportionate share of any upcoming budget cuts.
The popcorn industry is concentrated in the Midwest, with Nebraska the top-producing state, followed by Indiana, Illinois and Ohio. With fewer than a thousand popcorn farms in the U.S., popcorn now accounts for only 1 percent of all corn production in the nation, McKenzie said.
“It’s a classic public choice, where you have the benefits concentrated on a very small part of the population and the impact of the padding of the pockets getting spread out over the general population,” said McKenzie, who wrote a book called “Why Popcorn Costs So Much at the Movies, and Other Pricing Puzzles.” “If Congress can’t thwart these types of minor, inconsequential government programs that are really benefiting the non-poor, it’s just very hard to see how they’re going to do anything about Medicare, Medicaid and some other things.”
He said few Americans even realized that popcorn was subsidized. And he offered a prediction on the presidential race: “You will not see either candidate this fall making popcorn a major issue on the campaign trail.”