Does Food Aid Need to be Reformed?
By Ellen Levinson
Executive Director, Alliance for Global Food Security
For nearly six decades, the Food for Peace Act has provided U.S.
commodities to meet shortfalls in developing countries, thereby assuring
that the U.S. Government responds decisively when a food crisis occurs
and is positioned to lead worldwide efforts to combat chronic hunger.
Since 2009, International Disaster Assistance (IDA) funds have also been
available to meet food needs. They are used to buy commodities
overseas and to provide food vouchers and cash to people in need.
As part of fiscal year 2014 budget proposal, President Obama
recommends “Food Aid Reforms” aiming to end funding for the Food for
Peace (P.L. 480) Title II program and, instead, redirecting most of the
funds to general development assistance and International Disaster
Assistance (IDA) accounts. The Administration’s budget proposes to
transfer from Title II funds: $1.1 billion dollars to International
Disaster Assistance; $250 million to Development Assistance; and $75
million to a new Emergency Food Assistance Contingency Fund. The
rationale is to allow the U.S. Agency for International Development
(USAID) the flexibility to channel those funds towards a wider range of
procurement options; that developmental and emergency food aid programs
can work just as well without the structure of the FFP Act; and the
proposed changes would save money and reach more people.
The analysis here explores some basic questions about the efficacy of
these proposed reforms. Are the reforms necessary for USAID to be
more responsive to emergency needs and to serve more people? Can
the continuance of successful developmental food aid programs be assured
with this move? Are there other ways to provide the
flexibility and cost effectiveness that USAID seeks without voiding the
Food for Peace Act and the reliability it provides?
USAID asserts that the proposed changes will enable the U.S.
Government to reach four million additional beneficiaries employing the
same amount of resources available through Title II programming.
Careful analysis of the data, however, does not substantiate this claim.
Not only are the suggested reforms essentially more expensive than
existing Food for Peace (FFP) programs, but they also threaten the
current pool of sufficient resources guaranteed under Title II programs
and cardinal to food crisis response.
For example, based on USAID data, in FY 2012 overseas procurement
using IDA funds for local and regional food purchases was 78% more
expensive per metric ton than that through P.L. 480 Title II food aid
programs. Moreover, the president’s proposal does not factor in
procurement costs of fortified foods primarily available in the U.S.,
given USAID’s plans to increasingly rely on nutritious food. Clearly,
the reforms will not generate the anticipated “cost savings,”and are
therefore unlikely to reach an additional four million people.
Most importantly, the proposed reforms offer no guarantee that the
funds will be available for food aid alone. Once resources are
transferred, they may be used for programs not necessarily related to
food assistance.A vast variety of Americans support the Act: farmers,
labor unions, food processors, port authorities, rail and shipping
firms, faith-based and development organizations. Furthermore, the
budget request for IDA resources reflects only a $530 million increase
rather than the proposed $1.1 billion increase resulting from addition
of the P.L. 480 funds. It may be important to remember that long term
Title II emergency food aid is bound to be more costly per beneficiary
in comparison to local-regional programs. Besides, local procurement of
food aid is challenged by low productivity, insufficient and substandard
food processing, poor storage, and, in some cases, exposure to toxins.
Given these facts, the availability and reliability of U.S. food
assistance is likely to significantly decrease. Yet, there is
merit in flexibility to buy from local producers where feasible and to
use development assistance funds to finance the capacity-building
activities associated with Title II food aid programs.
There are ways to deliver USAID’s desired flexibility without eroding
the structure, transparency and assurance of the Food for Peace Act.
First,
keep the current approach of using both the P.L. 480 Title II program
and IDA accounts. This enables the U.S. government to contain costs
while providing a steady pipeline of appropriate commodities to support
emergency and developmental food aid programs. The Title II
procurement process includes an early warning system, regularized
tenders to buy U.S. commodities through competitive bidding, and an
internet-based system for monitoring orders and deliveries. For
flexibility and quick response, U.S. commodities particularly useful for
emergencies, such as fortified cereals and nut butters, are
prepositioned in seven warehouses overseas. In the early phase of a
crisis, those commodities, as well as IDA-funded cash transfers, food
vouchers, or local-regional procurement are used. U.S. commodities
destined for overseas warehouses can be the first food assistance to
arrive. Therefore, increasing the prepositioning of U.S. commodities
that are particularly useful for emergencies should be encouraged.
Second, maintain the current spending levels for the FFP Title II
program, and adjust IDA funding to ensure that adequate amounts are
available for cash transfers, food vouchers, and local-regional
procurement of emergency food aid. The President’s reform proposal
allocates $637 million for IDA programs, $262 million more than the FY
2012 level of $375 million.
Third, for areas where hunger is a chronic problem, assure P.L. 480
Title II programs conducted by private voluntary organizations and
cooperatives continue to receive at least $400 million per fiscal year.
The funds are catered towards capacity building for community-based
programs. Local capacity building is attributed to reducing future need
for emergency aid.
Fourth, improve value received per dollar spent when commodities are
monetized. This can be achieved by selecting a commodity that both
meets the food shortfall in the recipient country and engenders benefits
that cannot be derived from direct cash funding. These benefits can be
increasing economic activity or addressing credit (hard currency or
small volume) constraints that limit food procurement in the
international market.
Finally, assure that USAID and the U.S. Department of Agriculture
have funding to build the capacity of small farmers and processors in
food-insecure areas to improve the quality, safety, and quantity of food
supplies, laying the groundwork for countries and regions to meet their
own food needs.
Sources
http://www.usaid.gov/foodaidreform
http://www.usaid.gov/what-we-do/agriculture-and-food-security/food-assistance/quick-facts/fiscal-year-2012-food-peace
http://www.aflatoxinpartnership.org/en/Research_and_Information.aspx
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