February 26, 2014

UPDATED - 2014 Agriculture Act’s impact on International Food Aid

The 2014 Agriculture Act (farm bill) authorized $1.47 billion for the PL 480 Title II Food for Peace program, a slight increase over FY 2013.  The Act contained reform measures, designed to increase the flexibility and effectiveness of the food aid program.  According to USAID Administrator Rajiv Shah, the Act will allow the agency to reach 600,000 more people with the same resources.

US agencies now have more flexibility to conduct their development and food aid programs.

  • The Act increased funding for cash-based development assistance from 13 percent to 20 percent and set a minimum of $350 million to fund development programs.  This can be used to cover non-commodity expenses including transportation, storage, and distribution.  Consequently, USAID will have almost $100 million additional cash to develop sustainable programs with longer timelines in food-insecure countries.
  • The Act authorized $15 million per year to allow USAID to open additional overseas facilities to pre-position food aid commodities to more quickly respond to emergencies.
  • The Act increased transparency by requiring USAID to report on the costs involved in implementing food assistance programs, especially when the cost recovery rate for monetized food aid fall below 70 percent.

The Act decreased the need to monetize commodities by giving more flexibility.

  • The Act kept the provision of requiring US agencies to use 15 percent of total Title II funds to monetize food aid.  However, the 7 percent increase in cash-based funding will allow USAID to reduce its reliance on monetization and directly fund its development programs in countries like Malawi, Burundi, and Madagascar.  USAID will now be able to fulfill the 15 percent monetization requirement largely through its program in Bangladesh. 

The Act encouraged more local and regional food aid practices.

  • The Act made the local and regional food aid program permanent at the USDA and increased funding to $80 million per year.  The Act also allowed USAID to use a small amount of resources for local and regional purchases, food vouchers, and cash transfers to assist in establishing Food for Peace programs or enhancing current programs.
  • The 2008 farm bill created the Local and Regional Procurement Pilot program and authorized $60 million over four years to expedite food aid to populations affected by natural disasters and crises. The GAO evaluation of that program found that procuring food purchased locally reaches recipients faster (56 days compared to 130 days) and that it is cheaper than providing food purchased and shipped from the U.S.

American Maritime Officers (AMO) issued the statement that the farm bill maintained key provisions that support the maritime industry but warned that the changes may bring some reductions in U.S. food-aid cargoes. Tom Bethel, American Maritime Officers National President said: “The conference report is not what we had hoped for, but it would have been much worse without the efforts of senators and representatives on both sides of the aisle who recognize the crucial roles of the U.S. merchant marine and the importance of the Food for Peace program.”  Additionally, the AMO does not think the recent change to the Maritime Administration (MARAD) reimbursement will have a major impact on U.S. maritime industry but it said, “if the prices of commodities comprising U.S. food-aid shipments decline and transportation becomes a larger percentage of the total program cost, the absence of reimbursement from MARAD could result in less money being available for the program.”  The Bipartisan Budget Act of 2013, passed in December 2013, eliminated the requirement for MARAD to reimburse USDA and USAID the difference when shipping expenses for food aid exceed 20 percent of total program cost.

Additional Resources:

*CORRECTION – the original post appearing on February 26, 2014 highlighted a statement by the Alliance for Global Food Security in the section discussing the response of the maritime industry.  However, the Alliance for Global Food Security is not a maritime industry organization but an alliance of development organizations

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