February 22, 2013

US Food Aid Reform is Long Overdue

There are rumors that U.S. food aid programs could see major changes in the next budget, including converting some of the Food for Peace program into straight cash grants instead of in-kind food assistance.  Two independent task forces convened by The Chicago Council on Global Affairs have recommended changes in this direction for several years. The task forces found that a move to a cash-based food aid system that serves the same number of people food aid does now would actually make US food aid more effective and efficient, advancing the US reputation as the world’s largest donor of food aid to help hungry people.

The 2012 US Agriculture & Food Policy Panel and 2009 Global Agricultural Development Leaders Group issued the following recommendations:

Increase funding for local purchase of food aid

US food aid would be more efficient and cost effective if the US transitioned to a more cash-based food aid system except in certain emergency situations in which a food donation is required.  A cash-based food aid system is a speedier and more cost-efficient way to reach beneficiaries in developing countries than shipping U.S.-grown food to low-income countries. Cash can also be distributed rapidly even to remote locations.  Local and regional purchases of food aid reduce delivery time by an average of 13.8 weeks, or by more than half the current delivery method, while stimulating agricultural development.  The transaction costs of a cash-based system are also lower than shipping food aid.  According to the FAO, approximately one-third of the total funds allocated for emergency food aid is spent on transportation costs.  Moreover, a cash-based system will allow local and regional purchases of food and stimulate local markets without artificially lowering prices.

The United States is the only aid donor that still gives food in-kind rather than cash. Donation of U.S.-purchased food aid should continue only when local supplies are inadequate or nutritionally dense foods are not readily available.  These instances could include donations to refugee camps in famine areas or aid following natural disasters.

Scale down the monetization of food aid

Both task forces also recommended that the United States should scale down the practice of monetization.  The loss to taxpayers is huge considering the overhead costs, and the practice contradicts efforts to eliminate wasteful government spending.  The 2011 GAO report on reducing duplication in government programs and saving tax dollars found that the process of using cash to procure, ship, and sell commodities costs $219 million out of total budget of $722 million over a three-year period.  Almost 30 percent of the funds appropriated for development projects did not reach intended recipients due to the monetization process.   The GAO report concludes that monetization “cannot be as efficient as a standard development program which provides cash grants directly to implementing partners.”  Additionally, the sale of U.S. goods can drive down local market prices and discourage local food production.  Groups recommended that the US government transfer funds directly to nongovernmental organizations to conduct their development programs overseas.

About the task forces

The 2012 US Agriculture and Food Policy Panel was a bi-partisan task force led by Catherine Bertini, former executive director, UN World Food Program; August Schumacher Jr., former undersecretary of Agriculture for Farm and Foreign Agricultural Services, US Department of Agriculture; and Robert L. Thompson, professor emeritus of Agricultural Policy, University of Illinois at Urbana-Champaign.   The panel’s final statement, released in June 2012, included recommendations for how to modernize US food and farm policy to meet the production, nutrition, and environmental challenges of the future.

The 2009 Global Agricultural Development Leaders Group was a bi-partisan task force led by Catherine Bertini and Dan Glickman, former secretary, US Department of Agriculture.  The group released recommendations in February 2009 laying out the opportunities and benefits of greater US investment in agricultural development in Africa and South Asia as a means to alleviate global poverty and hunger and increase global food production.

More information:

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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