While it may test the average imagination to hear that a farmer grows soft-drink concentrate out on the north 40, collective minds at the Agriculture Department are agile enough to deem soft-drink syrup base a farm product.
As a result, USDA's Foreign Agricultural Service is extending a $6 million line of credit to Iraq to buy enough concentrate to produce 38 million cases of soda pop.
The concentrate is deemed a farm product because it is sweetened with either sugar or high fructose syrup distilled from corn and flavored with real fruit. And as a farm product it's eligible for a credit program known as the GSM-102, which has guaranteed more than $8 billion worth of agricultural sales over the past two years.
By making Iraq eligible for the soft-drink line of credit, USDA will assure that the syrup maker that comes in with the best offer -- probably PepsiCo Inc. -- doesn't lose money on the deal should Iraqi consumers not leap at the chance to join the Pepsi generation.
Melvin E. Sims, general sales manager for the FAS, acknowledged that his imagination was tested when he first heard the proposal, but said he came around quickly. "I wondered what kind of farmers produce this concentrate," he said, "but it's sugar and fruit juices, and both are farm products."
But what if it turns out the Iraqis want a dietetic drink with no farm-grown sweetener, flavored with an artificial, factory-produced essence? Is it still a farm product?
George J. Pope, FAS' assistant sales manager who went to Iraq to learn more about the credit proposal, conceded there could be a problem, but said he does not expect it to happen. "We've tried to be careful -- the concentrate has to contain natural ingredients, grown and/or processed in the United States," he said.
The idea came from Iraq, Sims and Pope said. The country asked permission to transfer part of a $20 million line of credit for U.S. sugar to soft-drink concentrate.
"They explained that this is a Moslem country, where many people drink soft drinks or fruit juices, because in some places the water is not good," Pope said. "Details are not settled, but we think it will be Pepsi concentrate because they have a joint venture planned out there."
Pope said he didn't think a line of credit for soft-drink syrup was all that curious. "GSM-102 covers a wide range of agricultural products, from A to Z. From alfalfa pellets to zucchini seeds," he said. "The program allows commerce to go forward."