The Obama administration has proposed the first major change in three decades to the way the United States supplies food aid to impoverished nations, significantly scaling back the program that buys commodities from U.S. farmers and ships them to the needy overseas.
Under a proposal in the White House budget released Wednesday, nearly half of $1.4 billion in requested funds for the aid could instead be spent to purchase local bulk food in countries in need or to distribute individual vouchers for local purchases.
Reducing the government’s requirement to purchase U.S. food, most of which by law must be shipped on U.S.-flag vessels, will save enough money to feed an additional 4 million children, according to Rajiv Shah, administrator of the U.S. Agency for International Development (USAID).
“We’ve made a strong commitment to provide more flexibility,” Shah said. “Local purchase of food allows for a response time nearly 14 weeks faster” than shipping from this country, he said. “We know it can be 30 percent cheaper for certain types of commodities.”
Although the United States is the biggest provider of food assistance in the world, it is the only donor nation that continues to require national purchases and shipment. Government and academic studies in recent years have described the U.S. system as both wasteful and inefficient.
Major U.S. non-government partners in food distribution praised the proposed change. CARE, one of the biggest aid organizations, called it “long overdue” and pledged to help work for congressional passage.
Attempts by previous administrations to change the program were opposed by farm-state lawmakers and the agricultural and maritime lobbies, which argued that it provided economic benefits and jobs at home. In a February letter to President Obama, 21 senators from both parties said the existing program, called Food for Peace, was “important to American farmers and shippers and developing nations around the world.”
In response to those complaints, the new proposal stops well short of doing away with Food for Peace and guarantees that 55 percent of food assistance funds will still be used to purchase and transport U.S. commodities.
“We recognize that any transition has to be done in a careful, thoughtful manner,” Shah said in an interview. But over the long term, he argued, spending money to build and modernize agricultural systems in current food-recipient countries “is ultimately what creates tens of thousands more jobs here in our country.”
Taiwan and South Korea, he said, were once “huge recipients” of U.S. food aid but “today are major American agricultural trading partners because we helped them” develop their own agriculture.
U.S. agriculture will continue to play a role, Shah said, in providing high-nutrition foods such as enriched peanut butter and biscuits that require less shipping capacity.
U.S. commodity food aid, begun by the Eisenhower administration, has long been a badge of national pride. The current system, called “monetization,” was adopted in 1985. Food bought by the government from U.S. farmers is shipped overseas and sold into the local market, and the money generated is used to fund development programs.
The Government Accountability Office, in reports in 2007 and 2011, called monetization “an inherently inefficient use of food aid” and suggested that it adversely affected local markets in countries struggling to develop their own economies.
U.S. commodities, the GAO determined, frequently flooded local markets beyond what they could absorb and drove local producers out of competition. The 2011 report found that over a three-year period, monetization cost the United States an additional $219 million that could be used for development.
Under current law, 50 to 75 percent of all U.S. food aid must be shipped aboard U.S.-flag vessels. The skyrocketing cost of shipment, which Shah said had tripled over the past several years, meant that smaller amounts of food must be shipped to remain within the program’s budget.
Rather than change the existing law, the new administration plan calls for a redistribution of the bulk of the Food for Peace program into different USAID accounts that are free from the current restrictions. To ease the pain for the maritime industry, a new $25 million account will be established “to retain militarily-useful U.S.-flag vessels as well as to provide incentives to facilitate the retention of mariners in the workforce,” a USAID fact sheet said.