WASHINGTON — “Since 1954, U.S. international food aid programs have helped feed over three billion people and promote food security in over 150 countries,” said Sen. Bob Corker (R-Tenn.), during a hearing for the Senate Committee on Foreign Relations on food aid reform.
On April 15, 2015, the Committee held a hearing to discuss how Congress could improve the way the U.S. procures and delivers food aid to make the process more cost-effective, efficient and responsive to modern-day concerns.
For that reason, the Committee had two panels with invited speakers. In the first panel, Dina Esposito, the director of USAID’s Office of the Food for Peace Program, talked about the logistics of food aid. In the second panel, David Ray from CARE USA, Vincent Smith from the American Enterprise Institute and Stephanie Mercier discussed the ramifications of food reform.
During the hearing, the speakers answered questions from Sen. Corker, Sen. Ben Cardin (R-Md.), Sen. Chris Coons (D-Del.), Sen. Cory Gardner (R-Colo.), Sen. Perdue (R-Ga.) and Sen. Jeanne Shaheen (D-Mass.).
The Need for Food Aid Reform
Constantly, the Committee stressed that food aid was both a humanitarian effort and essential component of national security policy. As Sen. Cardin explained, though food aid is “not as visible” a national security concern as a nuclear Iran, food aid has still helped combat the sense of desperation and hopelessness extremists exploit to find supporters.
For the Committee, the main example demonstrating food aid’s importance was the Syrian humanitarian crisis. Food aid had not only helped feed Syrian refugees, but helped host countries such as Jordan and Turkey (who are U.S. allies) deal with the influx of refugees without becoming destabilized by strained resources.
Though the Food for Peace Program must address both humanitarian and national security concerns, it has been expected to meet those two aims with a budget of $1.6 billion—an amount that, if allocated to the Department of Defense, would only cover 10 out of 2443[i]F-35 fighter jets the U.S. government is currently attempting to develop and purchase.
With that thought in mind, the Committee, particularly Sen. Corker, deemed it necessary to eliminate the inefficiencies preventing the U.S. from getting the “maximum impact” necessary to “addres[s]poverty and suffering from [U.S.] food aid dollars.” To fix these inefficiencies, the Committee determined that the U.S. government must increase Food for Peace’s flexibility in policy implementation.
As Esposito made clear in her testimony, this did not mean marginalizing U.S. business interests. Rather, the reforms necessary to improving policy implementation meant diversifying Food for Peace’s options for procuring and delivering food aid so it could “use the right tool at the right time.”
Esposito had to make this point clear because, despite the inefficiencies in the current food aid system, there were still business interests who benefited from the status quo. The primary business interests were the maritime industry and, to a much lesser degree, agriculture.
Current law requires that 100 percent of food aid come from U.S. producers and that there be a “cargo preference” mandating that 50 percent of that food aid be shipped on U.S. vessels.
Because of these requirements, one would assume the agriculture industry would yield tremendous profits from providing food aid. However, while U.S. companies do profit from supplying processed food and other goods normally scarce in recipient countries, food aid only comprises 0.86 percent of U.S. agricultural exports. For that reason, Mercier claimed most of the agriculture industry did not see an amendment calling for some food aid reform in the 2013 Federal Agriculture Reform and Risk Management Act as one of their “higher priorities” and so were not strongly opposed to the bill.
The real beneficiaries of current food aid policy are the maritime industries shipping those exports. Current policy mandates that a significant portion of food aid be monetized. That is to say, a portion of food aid must be actual products bought in the U.S. that can be later sold in the markets of recipient countries. Because some of the food aid are items that must be transported, the maritime industry would naturally stand to gain from delivering food aid to recipient countries.
Though U.S. shipping companies could reap the benefits of the status quo, the Committee and speakers agreed that the companies would do so at the expense of food aid and food aid recipients. Referring to a 2011 Government Office of Accountability report, Esposito estimated monetization has cost the U.S. 24 cents for every dollar spent on food aid. The same report claims the U.S. had spent $235 million of money meant for monetized food aid just on freight costs between 2008 and 2010.
Rebutting Arguments against Food Aid Reform
In light of these facts, Esposito and Sen. Corker examined the arguments of defenders of the current food aid policy.
The first argument was that food produced in the U.S. was somehow safer than food procured in the markets of recipient countries.
Though Sen. Corker did not explicitly refer to USA Maritime, the argument he repeated was reminiscent of an argument made in “Myth v. Facts: Food Aid ‘Reform,’” a document against food aid reform written by USA Maritime, a coalition of maritime unions. In the document, USA Maritime claims that changes in food requirements would mean having “lower-quality products of questionable quality…seriously damaging the brand and quality reputation of US-produced commodities.”
In response to that argument, Esposito replied that Food for Peace and its partners “rigorously” followed health standards and that there had not been any reported incidents of unsafe food aid.
The second argument was that changes to current food aid policy would inevitably lead to corrupt governments controlling food aid. According to Esposito, the argument was false because Food for Peace supplies food aid directly to people in need, not through governments.
While rebutting the second argument, Esposito also took the time to discuss the issue of accountability more generally. Food for Peace’s other forms of food aid (e.g. vouchers and debit cards) are handled by the same implementing partners who carry out delivering in-kind food aid. These partners register recipients and report the information gathered to USAID.
Esposito noted that in addition to these partners, Food for Peace utilizes a “series of new technologies…to mitigate the risk of the unintended use” of food aid. Those technologies had allowed Food for Peace to keep track of financial transactions. An example Esposito used was the debit card program in Jordan and Turkey that would use barcode data to ascertain what recipients had bought at local grocery stores and would not pay vendors until Food for Peace was sure funds were used properly.
“So, generally speaking, that criticism is a hoax?” replied Sen. Corker upon hearing Esposito’s rebuttal. “I’m sure there are examples—minor examples—but generally speaking [food aid misuse is not the norm].”[ii]
Thinking about Esposito’s testimony, Sen. Corker then added, “So we’re the only major developed country that still provides the bulk of its food aid through domestic commodities…? I think that speaks for itself.”
In response, Esposito noted that the current requirements for in-kind food aid could complicate food aid projects with other nations. As Esposito explained, if collaborating nations were forced to address different “modalities” of food aid, these modalities would simply introduce logistical obstacles when it comes to coordinating food aid deliveries. Later in the hearing, Mercier elaborated on Esposito’s point by noting that most of the aid from other donor countries was cash-based as opposed to the mix of cash and goods the U.S. and, to a lesser extent, Canada use.
Concerned about the logistics of food aid reform, Sen. Cardin brought up another argument in favor of current food aid requirements: that not using U.S. ships would adversely affect the military’s “sealift capabilities” to transport necessary cargo. Sen. Cardin was concerned that food aid reform would result in the Department of Defense incurring more costs to maintain the military’s sealift capabilities and defend food aid delivery vessels.
Though she never specifically identified the document, Esposito claimed the Department of Defense had released a statement claiming that food aid reform would not significantly affect the military’s sealift capabilities.[iii]
In fact, in 2013, Frank Kendall, the then-Under Secretary of Defense, sent a letter to Rep. Ed Royce (R-Calif.) and Rep. Eliot Engel (D-NY) from the House Committee on Foreign Affairs, stating, “Department [of Defense]supports the President’s proposed reform of the food aid programs and has assessed that it will not impact U.S. maritime readiness and national security.”
During the second panel, Smith corroborated Esposito’s testimony and the letter’s comment of food aid reform’s impact on military readiness. He cited a 2010 report from Cornell University that claimed 84 out of the 142 vessels qualifying for agricultural cargo preferences “[did]not meet the military readiness criteria.” Using the same 142 vessels, the report found that 100 of those vessels “were not considered militarily useful under [Marine Security Program] standards due to their vessel type, age, or both.”
Furthermore, though he supported the use of cargo preferences in general, Smith dismissed the cargo preferences used in food aid as an example of “corporate welfare.” He claimed that cargo preferences forced the U.S. government to incur higher operating costs for food aid delivery ships that “would almost surely not be competitive with other carriers in almost any other market.” According to Smith, the maritime industry, in essence, would simply “like someone else to pay those costs rather than use [its]ships.”
Anticipating the argument that cargo preferences would lead to substantial job creation, Smith sharply criticized the numbers the maritime industry had provided. Upon hearing that the U.S. government would receive $8.60[iv]for every dollar it would use to support cargo preferences, Smith called the number a “product of a lively imagination.” Countering the numbers with his own, he noted the U.S government had wasted $45 million [v]hiring at most 450 sailors to work on “old and slow ships.”
Arguments for Food Aid Reform
Aside from addressing the arguments used to defend current food aid policy, the Committee and speakers also spoke of the benefits of food aid reform, focusing on cost-effectiveness and the speed of food aid delivery.
These two advantages were vital because the inefficiency of the current food aid system has not only prevented Food for Peace from maximizing the effects of its budget, but has also significantly reduced the amount of food aid that could reach those in need.
According to Esposito, the costs for procuring and delivering food has increased threefold from the early 2000s: from $400/ton to approximately $1,200/ton. While the cost of food aid has been increasing—and in the case of corn, almost doubling (from $2.20/bushel in 2002 to $3.80/bushel today)—the budget has not, in Smith’s words, “changed measurably at all.”
In his opening statement, Sen. Corker claimed food aid reform would save the U.S. government $440 million and allow food aid to reach “12 million people about two to three months faster in some cases.”[vi]The information about delivery time was particularly important to Sen. Corker because he viewed food aid reform as a “matter of life and death” for the people who need food aid and especially for those unable to be helped because of current food aid policy.
Agreeing with Sen. Corker, Sen. Cardin said, “We could help eight to twelve million more people with the same amount of resources if we reformed the system.” He then praised Sen. Corker and Sen. Coons for sponsoring the Food for Peace Reform Act and considered the bill an example of “U.S. leadership” in the fight against global poverty.
In her written testimony, Esposito cited a 2009 report from the Government Accountability Office claiming that “buying food in Africa and Asia was 34 percent and 20 percent less expensive, than shipping food aid from the United States.”[vii] The same report also found that “locally and regionally purchased food [could]reach those in need as much as 11-14 weeks sooner.”
Emphasizing the importance of efficiency, Sen. Coons asked how food aid reform would affect the efficiency of food aid in the long term. In response, Mercier said that food aid reform would strike a “balance” that would still utilize U.S. goods, but only in cases when using them would be more cost-effective. In essence, Mercier argued that food aid reform would bring a level of moderation necessary for sustaining food aid in spite of possible decreases or lack of increases to USAID’s budget.
In light of the testimony offered during the hearing, Sen. Perdue attempted to discern if there was a causal link between efficient food aid and international development. Answering Sen. Perdue’s queries, Mercier called food aid the “starting point” for international development: the U.S. would use food aid to first address emergency situations and then would attempt to help recipient countries gradually transition to self-sufficiency. The key to this transition would be building recipient countries’ resilience first through food aid and then through the development of reliable infrastructure.
With a similar thought in mind, Sen. Cardin said there would be a “tremendous benefit in local sourcing in a host country.” He did not see combating global hunger simply as an end in and of itself, but also as a vital step in the process of creating in recipient countries “the type of economy that [would]be able to sustain itself and provide [for]the needs of [their]own people.”
Sen. Cardin’s words echoed Rep. Royce’s comments in a March House hearing about recipient countries “graduat[ing]” from foreign assistance. Both congressmen believed that by making foreign aid more efficient, recipient countries would gradually increase their economic capabilities, become less reliant on aid and eventually be able to become donor countries themselves.
Sen. Cardin then added that food aid reform would allow the U.S. to “deal with other goals of development assistance[:]…creating the structures within countries to make sure that they deal with corruption and deal with gender [in]equity.” According to Sen. Cardin, food aid reform would free up the time and money that could be devoted to other important goals and would do so without significantly straining USAID’s budget.
Ray also saw food aid reform as a way to build the “local capacity” necessary for recipient countries to help themselves. Using the Kore Lavi voucher program in Haiti, Ray sketched out a process in which cash-based food aid could make farmers and consumers in recipient countries more active and significant participants in their local economies. So far, according to Ray, Kore Lavi has partnered with 387 vendors and helped 125,000 “chronically hungry individuals.”
Furthermore, Ray testified that Kore Lavi “[was]in the process of being transitioned over to the Haitian government.” This means that Kore Lavi, though initially a foreign aid project, could eventually become a self-sustaining national project for Haiti. Thus, according to Ray, “untied, flexible food aid funding” could lead to a “brighter future” by empowering aid recipients all while “ensur[ing]taxpayer dollars are stretched as far as possible.”
Noting the paradox in the claims he would advance, Smith argued that sustainable food aid resulting from food aid reform could actually benefit U.S. farmers. He claimed it was not always necessary to buy U.S. goods to support U.S. farmers because what was most important was the price of goods. According to Smith, food aid reform would “increase global use and demand” for key commodities and subsequently increase their price. However, he admitted the increase in prices and demand would be “in very modest amounts relative to the global production of [the commodities].”
Despite the potential advantages of food aid reform, Sen. Shaheen noted there were still “vested interests” against food aid reform and asked the speakers to identify them. Smith replied that in addition to the maritime industry, “some NGOs” were also against food aim reform. In his comments about monetization, Ray explained some NGOs opposed reform because those NGOs benefited from monetization.
Put more bluntly, as Smith did, those NGOs were afraid they could not “compete for the cash” necessary to sustain their operations. For Smith, such a rationale was “the worst possible reason” for opposing food aid reform.
Even though some NGOs would object to food aid reform, Ray claimed that there was “substantial support” among NGOs for food aid reform. He indicated that 28 NGOs had actually signed a statement in support for the Food for Peace Reform Act.[viii]
To conclude the hearing, Sen. Corker thanked the speakers and indirectly called upon the public to take action on food reform:
“I don’t think [people]have any idea now that there are paid lobbyists up here [in Washington, D.C.]that are causing people around the world to starve. And I just have greater faith in the American people—greater faith that if…individuals actually knew what was happening [with what the lobbyists were doing], they would be ashamed, and they would cause it to stop.”
– Dean Delasalas
Sources: U.S. Senate, USAID 1, USA Maritime, Business Insider, GAO, USAID 2, USAID 3, The Borgen Project, SSRN, U.S. House of Representatives 1, Interaction, U.S. House of Representatives 2, CGDEV
Photo: William Lambers Dot Com