Summary: Pursuant to a congressional request, GAO reviewed whether the U.S. Department of Agriculture's (USDA) conflict-of-interest regulation for the Cooperator Foreign Market Development Program, and the restructuring of the Purebred Dairy Cattle Association's International Marketing Development Council (IMDC) effectively addressed conflict-of-interest situations for individual exporters.
GAO found that: (1) the association established IMDC to serve as the dairy livestock cooperator in the Cooperator Foreign Market Development Program, to develop international markets for U.S. dairy genetics; (2) the USDA Foreign Agricultural Service (FAS) enacted regulations to prevent conflicts of interest by dairy livestock breeder organizations operating private for-profit export subsidiaries while participating in government-funded market development activities; (3) the regulations prohibited cooperators from exporting the agricultural commodities they promoted with project funds and using program activities to promote private interests or conduct private business; (4) the regulations established sanctions for violations, but applied only to the cooperators and not their members; (5) since IMDC relied on a staff of its members to carry out its foreign market development activities, the potential for IMDC members to promote their interests while acting as cooperator staff existed; (6) FAS did not apply the export prohibition to individual cooperator members, since the loss of their export activities could result in decreased program funding, loss of expertise in developing market development programs, and the loss of skilled staff able to demonstrate the uses of U.S. products overseas; and (7) the IMDC manual did not state what would happen if members failed to comply with FAS directives while conducting overseas market development activities.
