Two weeks ago the Obama Administration proposed far-reaching reforms to the U.S. government's food aid program managed by the U.S. Agency for International Development, commonly known as the Food for Peace Program, under which food aid is provided through non-governmental organizations and the World Food Program of the United Nations for the poor and hungry in developing countries and in disasters, particularly famines and wars. Under the reforms, USAID would be allowed to buy up to 45 percent of its food aid abroad in the first year of the reforms from local markets in the region where the recipients live.
President Eisenhower created the Food for Peace program in 1954 to send massive amounts of surplus U.S. food to the developing world and to countries still recovering from World War II. The program has been politically popular among farmers in the mid-west, shipping countries, dock workers unions and food processing plants, as well as with representatives in Congress and international humanitarian agencies which use the food in their programs.
The program is the oldest, most popular domestically and one of the best-known U.S. government foreign aid programs; the bags of U.S. food are famous around the world and make a powerful photo op, particularly during very visible disasters, symbolizing the generosity of the American people. Millions of people suffering in famines have been saved by the Food for Peace program. So why has the Obama administration proposed these changes?
The proposed reforms are not new, but came out of painful experiences in Afghanistan. The U.S. military intervention in Afghanistan to defeat the Taliban and al-Qaida improved security enough that USAID began distributing better quality, drought resistant wheat seed to Afghan farmers to improve wheat crop yields. After five years of civil war and drought, famine conditions were beginning to appear in some areas of the country and the seed program was designed to produce more food locally.
The program was more successful than USAID had expected, because it was accompanied by the best rains in years; Afghan farmers produced the largest wheat crop in the country's history and prices collapsed to 20 percent of their normal level. For some farmers, harvesting the wheat was more expensive than what they could fetch on the local markets, and so they didn't bother doing so. The next year, many farmers converted their wheat fields to poppy fields to produce heroin, because the price of wheat was so low.
At the same time, USAID was importing several hundred thousand tons of food aid in the form of wheat for Afghan refugees and displaced people. Had USAID purchased its food aid locally from this surplus instead of importing it from the U.S., we could have stabilized Afghan wheat prices and avoided the incentive for farmers to convert their wheat fields to poppy production. Thus, unintentionally, the rigidities of our food aid program indirectly encouraged heroin production in war-torn Afghanistan.
This Afghan experience led the Bush Administration to design its own food aid reforms, under which 25 percent of the food aid budget could be purchased locally. This Bush program was the precursor to the Obama reforms. President George W. Bush repeatedly attempted to push these reforms through Congress, beginning a decade ago. An unholy coalition of NGOs and special interest groups – shippers, farmers, food processing plants and unions – killed the reforms year after year, claiming that buying food abroad would endanger political support for the Food for Peace appropriation in Congress.
NGOs originally opposed the reforms a decade ago, because some of the food aid is auctioned off in the country – called monetization – to which it is sent and the local currency generated is used by the aid groups to run development programs to reduce poverty. Critics argue that this distorts local markets by depressing food prices, a practice which disincentivizes poor farmers from growing more food. They also argue that the current system is very inefficient because 25 percent of the food aid sold locally is wasted in unrecoverable shipping and transport costs.
Instead, the Obama Administration reform proposes to abolish monetization and convert some of the existing food aid appropriations to cash grants to non-governmental organizations, saving $75 million a year in shipping costs and providing the same amount of usable resources to the aid groups. Most NGOs that deliver the bulk of the U.S. government's food aid now support the reforms, because they understand the program needs it.
That leaves the shipping companies, dock workers unions, farm lobby and a handful of NGOs still threatened by the reforms to try to kill them in Congress. The fight in Congress pits the agriculture committees, which have stonewalled the reforms for a decade, against the international affairs committees which have supported them. The reforms would cut the agriculture committees out of the appropriation process and move jurisdiction to those committees that support the changes.
The food aid program has evolved over sixty years; U.S. food aid no longer comes out of surplus food from U.S. government subsidies. It is purchased on the open markets in the mid-west. This USAID food aid program last year cost $1.4 billion, of which 25 percent is spent on the cost of shipping and overland transportation. U.S.-purchased food aid must be shipped by law on American ships, a process generally 20 percent to 30 percent more expensive than internationally competitive shipping rates.
More importantly, shipping food aid takes time – generally it takes 12 to 14 weeks to ship food aid from the U.S. half way across the globe. People in a crisis sometimes die waiting for food aid to be delivered. About 82 percent of U.S. food aid in recent years has gone to sub-Saharan Africa; 78 percent of all food aid goes to disaster relief operations worldwide to feed displaced people in civil wars and famines such as those in South Sudan, Darfur and Afghanistan, and natural disasters such as the Haitian earthquake.
Food programs face logistical risks. A lot can happen in a 7,000-mile supply chain between U.S. farms and recipients in a refugee camp halfway around the world. U.S. food aid warehouses in Texas barely escaped destruction during Hurricane Katrina in 2005. One food aid shipment to North Korea sank in a storm off the coast of China. Pirates captured another food aid ship off the coast of Somalia.
The Obama reforms are not a partisan issue, since they are a newer version of the Bush administration proposal described earlier. The devil, however, is always in the details of any legislation and there are details of the Obama reforms which Congressional supporters should reconsider. Hillary Clinton, after she became Secretary of State in 2009, stripped the USAID Administrator of control over the agency's budget and centralized it in the State Department, which means USAID no longer has control over its own spending. State often uses aid money for short term diplomatic purposes, not for humanitarian or development programs.
Under the Obama reforms, the entire food aid budget, which had been protected up until now from diversion for diplomatic purposes, will be fair game in budget shell games. Congress should approve the reforms, but only if they provide permanent statutory protection to ensure that the humanitarian food aid budget is used for food for the poor, not for diplomatic purposes.