Lobbyists for competing farm interest groups took opposite sides in a debate at Farm Journal Forum 2013 over a proposal to allow more cash purchases in foreign countries under the food aid program.
In making the proposal, the administration cited studies showing that buying food locally with cash instead of shipping it from the United States could get food to people in critical need three months faster, at a savings of 25-50%. The administration proposed spending up to 45% of its $1.4 billion foreign food aid budget in this fashion. The proposal, it said, would help feed an additional 800,000 undernourished men, women and children.
The House narrowly rejected the proposal in its version of the massive farm bill. The Senate approved a scaled-down version that would allow the federal government to spend up to 20% of the $1.4 billion in annual food aid locally. The two houses hope to reconcile their approaches in conference committee and produce a final bill for a January vote.
Chandler Goule, vice president of government relations for the National Farmers Union, supported a shift to more cash-based foreign aid in the Farm Journal debate. He said that local cash purchases help support farm economies in developing countries, which is key to addressing world hunger.
"You can’t make one program to fit every situation," he said, noting that it’s often more appropriate to ship food from the United States, especially when it’s not available locally. But large U.S. shipments can also set back foreign farm economies.
Mary Kay Thatcher, director of public policy for the American Farm Bureau Federation, said her organization "feels really strongly about continuing to ship the products from here. If the assistance is from the [U.S.], it ought to say that. We are not for moving toward a cash system."
Goule said he was given assurances by USAID officials that even if purchases were made in a foreign country, they would still be delivered in a bag with a USA logo. "We would still get the message out there that we are helping these countries," he said.
Tjada D’Oyen McKennna, deputy coordinator for development for the Obama administration’s Feed the Future initative, strongly supported the measure in her address at the conference.
"We believe that this complements a lot of what we do at Feed the Future to build local and regional markets," she said. Having the flexibility to make cash purchases would help the agency establish local sales and delivery infrastructure. The cash purchases could also be used as leverage to ensure that local farmers meet quality and production standards. "We are very eager to see this go forward," she said.
Before making its proposal, which is widely supported by anti-hunger advocacy groups, the administration ran pilot projects to buy food closer to where it was needed. The Senate bill would expand those pilot programs by providing more money.
Some desire for reform grew out of the U.S. military’s experience in Afghanistan, where USAID distributed better-quality seed that improved wheat yields, so much so that the local market became glutted. The U.S. lacked the flexibility to buy locally produced wheat, prop up prices, and distribute it to people in need.
After this experience, President George W. Bush tried repeatedly to push similar reform through Congress. In several budgets, he proposed allocating 25% of the food aid budget to local purchases.
The shift would mark a major change in U.S. food aid, which was designed 60 years ago to ship U.S. surpluses abroad as a gift from the American people. The idea was to encourage foreign taste for American foods, so that as economic conditions in needy countries improved people would buy more U.S.-produced goods.
For decades, activists have complained that some funding is wasted in shipping costs. The Government Accountability Office (GAO) has reported that one quarter of foreign food aid goes to pay for transportation, logistics and sales support. A desire to spend foreign aid more efficiently is one reason why the administration’s proposal enjoyed some backing by House Republicans, though not enough to get it passed.
The administration’s proposal would also end so-called monetization. Some food aid is auctioned off in the county to which it is sent. The local currency generated is used by development groups to run anti-poverty programs. The administration wants to abolish the process and convert some aid appropriations to cash grants to non-governmental organizations (NGOs).
About 80% of food aid in recent years has gone to sub-Saharan Africa, where it’s used to for disaster-relief operations to feed people affected by civil wars and famines. Food aid is also used to help people in the wake of natural disasters such as the earthquake in Haiti.
Closing Market Commentary -- December 27, 2013
Livestock Analysis (VIP) -- December 26, 2013