May 7, 2014

Commentary - Saving Lives Through Efficient Food Aid Delivery

By Senator Richard G. Lugar (RET.)
This was originally posted on the Luger Center blog

Early this year our government made real progress in improving the way we provide food aid to chronically hungry people and those in crises.  Unfortunately, recent actions by the House of Representatives threaten to undermine important reforms that would make food aid programs more effective and efficient.  If the House action stands, the result will be more hungry people in the world, less efficiency in U.S. food assistance programs, and reduced benefit to U.S. diplomacy from these programs. 

First the good news.

In February Congress enacted and President Obama signed into law a new, five-year Farm Bill.  The law primarily addressed domestic farm and commodity issues, but it also contained important reforms to a program known as P.L. 480 or Food for Peace.  For decades this program has provided emergency food rations to populations confronted with chronic food shortages – often the result of natural or man-made disasters.

The Food for Peace program was conceived as a means to send U.S. food commodities to those in need.  Yet the program was not built entirely on altruism. It was designed to please U.S. agricultural interests by serving as an outlet for excess commodities.  And it was intended to please U.S. shipping interests by requiring a percentage of these commodities to be shipped on U.S.-flagged vessels.  Further, through a program called monetization, after the commodity is shipped from a U.S. port on a U.S.-flagged ship and sold in a local, overseas market, the proceeds can be used by an NGO that had procured the commodity for development projects in that country.  These practices – monetization and cargo preference – were concessions to political conditions.  The problem is that they have been shown by the Government Accountability Office (GAO) to add considerable unnecessary costs, while also slowing down response time to crises.

In this year’s Farm Bill, Congress retained PL-480’s basic structure, but also paved the way for key changes that enhance the efficiency of our food aid.  First, monetization will be significantly reduced under the new provisions. Many aid organizations had supported this program, but over the years more and more of them had come to see it as a complex, expensive, and out-dated method for funding development. This is good news for American taxpayers and people around the world threatened with hunger, as it will reduce inefficiencies in U.S. food aid.

Next, with the March release of the Obama Administration’s budget request for fiscal year 2015, the U.S. Agency for International Development (USAID) has sought to build on the reforms of the Farm Bill. Of note is a proposal to grant the Agency additional flexibility to provide up to 25 percent of Title II’s resources for local and regional procurement of commodities, food vouchers, or cash transfers. With such flexibility, hungry people may receive food more quickly during a food emergency rather than the lengthy four to six months that U.S. commodities often take to reach these populations.

Regrettably, this forward progress has taken a turn. As part of a bill to reauthorize Coast Guard programs, the House of Representatives approved a little-noticed provision that would increase the current Cargo Preference requirement from 50 percent to 75 percent.  This means that USAID and the U.S. Department of Agriculture (USDA) will have to pay higher costs and have fewer options for delivering emergency food assistance to starving people.

This is especially consequential given that the Budget Act of 2013 eliminated a reimbursement to USAID and USDA that in prior years had offset the increase in shipping costs associated with the Cargo Preference requirement. The full shipping costs will fall on USAID and USDA.

This combined effect of the increase in the percent of U.S. food commodities required to be shipped on U.S.-flagged vessels and the elimination of the reimbursement for the extra cost of transporting the commodities on these ships – means that four million fewer people in food crisis will be reached every year going forward, even if funding for PL-480 remains steady. 

Shipping advocates trying to protect the 75 percent requirement in the bill will say it is needed to preserve the capability of a U.S. commercial fleet in the event that it might be called upon in a wartime situation.  But the Department of Defense has not called on the fleet for wartime or national emergency assistance. Further, with food commodities making up only about six percent of the cargo carried on these ships, raising the Cargo Preference requirement on food would have a minor impact on the financial bottom line of U.S. flagged ships, especially compared with the benefits of addressing hunger among 4 million people. There are other Federal programs that support the U.S. merchant mariners.  If shipping subsidies are necessary, other means could be found besides requiring that 75% of food aid be shipped on U.S. flag vessels.  The provision risks an uncounted number of lives and reduces U.S. leadership in the critical moral imperative of ensuring that populations in desperate need are fed. 

About

The Global Food and Agriculture Program aims to inform the development of US policy on global agricultural development and food security by raising awareness and providing resources, information, and policy analysis to the US Administration, Congress, and interested experts and organizations.

The Global Food and Agriculture Program is housed within the Chicago Council on Global Affairs, an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. The Council on Global Affairs convenes leading global voices and conducts independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

Support for the Global Food and Agriculture Program is generously provided by the Bill & Melinda Gates Foundation.

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