Why the U.S. Food Aid System Needs Reform
AP Photo/Niranjan Shrestha
Why the U.S. Food Aid System Needs Reform
AP Photo/Niranjan Shrestha
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A little-noticed hearing before the Senate Foreign Relations Committee in mid-April had the potential to save millions of lives. The hearing concerned reforms to emergency food aid programs. Discussion focused on the proposed Food for Peace Reform Act of 2015. The act is identical to a 2014 bill that had garnered considerable Congressional support but ran into opposition by private shipping companies. This year's legislation is also bipartisan, with Senator Bob Corker (R-Tennessee), Senator Christopher Coons (D-Delaware), and Senator Jeanne Sheehan (D-New Hampshire) as cosponsors.
Importantly, the reforms included in the new bill would end the requirement that the United States be the source of almost all food aid, and that 50 percent of all food aid be carried on ships that sail under the U.S. flag. The bill would also terminate an inefficient and wasteful practice known as monetization that provides funds to NGOs for projects dedicated to increasing food security in very poor countries.
The United States will spend $1.36 billion on the Food for Peace program this year, and every year until 2018, under the terms of the 2014 Farm Bill. The program, first authorized in 1956, provides emergency food aid and funds projects to improve food security in very poor countries such as Mali and Bangladesh; war-ravaged countries such as Syria; and in countries such as Nepal that have suffered the deep, sudden impact of a major natural disaster.
The Food for Peace program takes up a tiny share of total federal government spending: less than 0.04 percent of the federal government's approximately $3.5 trillion annual budget. Nevertheless, in principle and in practice, every dollar allocated to emergency food aid should be used as effectively and efficiently as possible to ensure that the program helps as many people as possible. Currently, this is simply not the case.

A Straightforward Case for Reform
Most estimates indicate that the reforms included in the proposed Food for Peace Reform Act would enable the current program, using the same amount of money, to provide emergency relief annually to at least 4 million more children and adults than it currently reaches - and perhaps as many as an additional 10 million to 12 million people in dire need of help. This would be accomplished through reforms that would allow the United States Agency for International Development (USAID) to use transportation, grain, and other food commodity markets much more efficiently.
Mandating that all food aid be produced in the United States, and further requiring that the aid be carried on American ships, increases the cost of sending 1 ton of food destined for emergency relief by about 65 percent. The difference amounts to more than $400 million a year - not a stellar illustration of how to use markets efficiently. One important provision of the Food for Peace Reform Act would be to permit USAID to purchase food from regional and local markets much closer to the location of the disaster and the people in need of help.
The savings in both purchasing and transportation costs would be substantial. Forcing almost all food aid to come from the United States increases the time it takes the aid to reach the disaster area by almost seven weeks, with very serious consequences for morbidity and long-term health, especially for children.
Monetization is the practice of shipping food aid purchased in the United States to a developing country, where it is sold commercially in local markets by a U.S. Non-Governmental Organization. The money obtained from those sales is then used to fund the NGO's food aid projects, in that country or in a nearby country. The typical NGO ends up with less than $70 for every $100 spent on buying the food in the United States, shipping it to the targeted country, and marketing it.
The process is extremely wasteful. Indeed, some NGOs, such as CARE and Bread for the World, have refused to use the program. These organizations maintain that in the face of so many needs, such waste is appallingly unethical. Fifteen percent of the current funding for Food for Peace programs (around $260 million) currently goes to monetization. Ending the monetization practice would save about $100 million a year - funds that could be used to provide substantially more resources for food security programs.