[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW FOOD AID AND
AGRICULTURE TRADE PROGRAMS
OPERATED BY THE U.S. DEPARTMENT
OF AGRICULTURE AND THE U.S. AGENCY
FOR INTERNATIONAL DEVELOPMENT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
SPECIALTY CROPS, RURAL DEVELOPMENT,
AND FOREIGN AGRICULTURE
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MAY 10, 2007
__________
Serial No. 110-21
Printed for the use of the Committee on Agriculture
agriculture.house.gov
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COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, BOB GOODLATTE, Virginia,
Vice Chairman Ranking Minority Member
MIKE McINTYRE, North Carolina TERRY EVERETT, Alabama
BOB ETHERIDGE, North Carolina FRANK D. LUCAS, Oklahoma
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California ROBIN HAYES, North Carolina
DENNIS A. CARDOZA, California TIMOTHY V. JOHNSON, Illinois
DAVID SCOTT, Georgia SAM GRAVES, Missouri
JIM MARSHALL, Georgia JO BONNER, Alabama
STEPHANIE HERSETH SANDLIN, South MIKE ROGERS, Alabama
Dakota STEVE KING, Iowa
HENRY CUELLAR, Texas MARILYN N. MUSGRAVE, Colorado
JIM COSTA, California RANDY NEUGEBAUER, Texas
JOHN T. SALAZAR, Colorado CHARLES W. BOUSTANY, Jr.,
BRAD ELLSWORTH, Indiana Louisiana
NANCY E. BOYDA, Kansas JOHN R. ``RANDY'' KUHL, Jr., New
ZACHARY T. SPACE, Ohio York
TIMOTHY J. WALZ, Minnesota VIRGINIA FOXX, North Carolina
KIRSTEN E. GILLIBRAND, New York K. MICHAEL CONAWAY, Texas
STEVE KAGEN, Wisconsin JEFF FORTENBERRY, Nebraska
EARL POMEROY, North Dakota JEAN SCHMIDT, Ohio
LINCOLN DAVIS, Tennessee ADRIAN SMITH, Nebraska
JOHN BARROW, Georgia KEVIN McCARTHY, California
NICK LAMPSON, Texas TIM WALBERG, Michigan
JOE DONNELLY, Indiana
TIM MAHONEY, Florida
______
Professional Staff
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
William E. O'Conner, Jr., Minority Staff Director
______
Subcommittee on Specialty Crops, Rural Development, and Foreign
Agriculture
MIKE McINTYRE, North Carolina, Chairman
JIM MARSHALL, Georgia MARILYN N. MUSGRAVE, Colorado,
HENRY CUELLAR, Texas Ranking Minority Member
JOHN T. SALAZAR, Colorado TERRY EVERETT, Alabama
JOHN BARROW, Georgia ADRIAN SMITH, Nebraska
EARL POMEROY, North Dakota JEFF FORTENBERRY, Nebraska
ROBIN HAYES, North Carolina
Clark Ogilvie, Subcommittee Staff Director
(ii)
C O N T E N T S
----------
Page
Goodlatte, Bob, a Representative in Congress from Virginia,
prepared statement............................................. 5
McIntyre, Mike, a Representative in Congress from North Carolina,
opening statement.............................................. 1
Prepared statement........................................... 1
Musgrave, Marilyn N., a Representative in Congress from Colorado,
opening statement.............................................. 2
Prepared statement........................................... 3
Witnesses
McGovern, Hon. James P., a Representative in Congress from
Massachusetts.................................................. 5
Prepared statement........................................... 7
Emerson, Hon. Jo Ann, a Representative in Congress from Missouri. 17
Prepared statement........................................... 18
Yost, Michael W., Administrator, Foreign Agricultural Service,
U.S. Department of Agriculture, Washington, D.C................ 20
Prepared statement........................................... 22
Hammink, William, Director, Office of Food for Peace, U.S. Agency
for International Development (USAID), Washington, D.C......... 27
Prepared statement........................................... 28
Levinson, Ellen S., Executive Director, Alliance for Food Aid
(AFA); President, Levinson & Associates, Washington, D.C....... 38
Prepared statement........................................... 40
Reilly, Annemarie, Chief of Staff, Catholic Relief Services
(CRS), Baltimore, MD........................................... 55
Prepared statement........................................... 57
Gillcrist, John, Chairman, Bartlett Milling Company; Director,
North American Millers' Association; on behalf of Agricultural
Food Aid Coalition, Kansas City, MO............................ 59
Prepared statement........................................... 61
Wickstrom, Cary L., Wheat Farmer; Member, Board of Directors,
U.S. Wheat Associates (USW); Immediate Past President, Colorado
Wheat Administrative Committee; on behalf of U.S. Wheat
Associates' Food Aid Working Group, Orchard, CO................ 65
Prepared statement........................................... 67
Binversie, Robert, Volunteer, Farmer-to-Farmer Program, Keil, WI. 71
Prepared statement........................................... 73
Sumner, James H., President, USA Poultry & Egg Export Council
(USAPEEC); on behalf of Coalition to Promote U.S. Agricultural
Exports, Stone Mountain, GA.................................... 97
Prepared statement........................................... 99
Ford, Patrick, Director, International Marketing, Ford's Gourmet
Foods; on behalf of Coalition to Promote U.S. Agricultural
Exports, Raleigh, NC........................................... 114
Prepared statement........................................... 116
Material Submitted for the Record
Beckmann, David, President, Bread for the World, prepared
statement...................................................... 118
Kauck, David, Senior Technical Advisor, CARE USA, prepared
statement...................................................... 119
Maritime Food Aid Coalition, prepared statement.................. 127
National Corn Growers Association, prepared statement............ 140
HEARING TO REVIEW FOOD AID AND
AGRICULTURE TRADE PROGRAMS
OPERATED BY THE U.S. DEPARTMENT
OF AGRICULTURE AND THE U.S. AGENCY
FOR INTERNATIONAL DEVELOPMENT
----------
THURSDAY, MAY 10, 2007
House of Representatives,
Subcommittee on Specialty Crops, Rural Development,
and Foreign Agriculture,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 1:08 p.m., in
Room 1300 of the Longworth House Office Building, Hon. Mike
McIntyre [Chairman of the Subcommittee] presiding.
Members present: Representatives McIntyre, Salazar, Barrow,
Musgrave, Smith and Moran.
Staff present: Aleta Botts, Adam Durand, Scott Kuschmider,
Sharon Rusnak, Kristin Sosanie, Mike Dunlap, and Jamie Weyer.
OPENING STATEMENT OF HON. MIKE McINTYRE, A REPRESENTATIVE IN
CONGRESS FROM NORTH CAROLINA
Mr. McIntyre. This hearing of the Subcommittee on Specialty
Crops, Rural Development, and Foreign Agriculture to review
food aid and agriculture trade programs operated by the U.S.
Department of Agriculture and the U.S. Agency for International
Development will come to order. I am Mike McIntyre from the 7th
District of North Carolina, and I am pleased to have you with
us--especially our guests today here in this Subcommittee
meeting.
It is always a special privilege to hear from our
witnesses, and we have several today. This is an opportunity
for us to be able to hear from a special set of witnesses, and
in the interest of time, since I was unduly delayed, I am going
to forego my opening statement to put us right back on schedule
and to honor the time of our friend and colleague, Mr.
McGovern, so that he can be on schedule and we will honor his
time as well as one of our special panelists.
So with that, I will ask the Ranking Member if she has any
comments and then we will proceed.
[The prepared statement of Mr. McIntyre follows:]
Prepared Statement of Hon. Mike McIntyre, a Representative in Congress
From North Carolina
Good afternoon, and welcome to the Subcommittee's hearing on the
food aid and foreign agriculture programs operated by the U.S.
Department of Agriculture and the Agency for International Development.
I am pleased to welcome Mr. Yost, the Administrator of the Foreign
Agricultural Service, and Mr. Hammink, Director of the Office of Food
for Peace at the U.S. Agency for International Development.
The Trade Title of the farm bill authorizes programs that provide
food aid and that help promote U.S. agricultural products in overseas
markets. Many of these programs are up for reauthorization this year,
and this hearing is designed to reexamine these programs as we prepare
to write a new farm bill very soon.
Importance of Food Aid
I am proud to be able to say that the United States is by far the
largest contributor of international food aid, providing over half of
the annual total worldwide. I believe this represents the best
qualities of our nation and our values as we share the fruits of our
harvests with people in need across the globe.
Unfortunately, despite the $70 billion provided by the United
States over the last fifty years, millions of people around the globe
face severe food shortages every year. As the witnesses will point out
today, we are actually seeing an increase in the numbers of people
needing food assistance. Shocks to food systems that might have
resulted in one bad year twenty years ago now seem to set countries
back multiple years and multiple harvests. I hope the witnesses will
address how we can better use the food we provide to reduce the
incidence of these situations.
As we examine these programs in the farm bill, we need to determine
where changes are relevant to ensure that our food aid programs work as
designed. One theme that dominated a recent Government Accountability
Office report was the need for greater interagency coordination and
monitoring to ensure that every dollar spent on food aid is put to good
use. I know the witnesses here today will address the concerns about
food aid, and I hope they will elaborate on how we are using food aid
now to enhance the lives--and really to save the lives--of people
across the globe.
Market Development Programs
In addition to the food aid programs in the farm bill, critical
foreign market development programs are up for reauthorization as well.
These programs provide the help that our agricultural industry and
small businesses need to seek out and expand in overseas markets. Many
agricultural producers and value-added businesses want to sell
overseas, but simply lack the capacity and resources to finance such an
expansion. These programs fill that gap by ensuring that entities, like
the one from North Carolina here today, can break down the barriers
that prevent them from exporting high-quality, home-grown American
product overseas.
As the Inspector General of USDA pointed out in a recent report, we
need greater efforts to address declining global market share for our
agricultural producers. We need to examine ways to improve our strategy
on behalf of these producers who are competing in the global
marketplace. I hope both USDA and the recipients of benefits of these
programs can help us find ways to do just that today.
Conclusion
This hearing provides us an opportunity to take a look at the title
of the farm bill that contains these programs and look for ways to
improve upon the foundation that has been in place for over 50 years,
in the case of our international food aid programs.
I would encourage witnesses to use the 5 minutes provided for their
statements to highlight the most important points in their testimony.
Pursuant to Committee rules, testimony by witnesses along with
questions and answers by Members of the witnesses will be stopped after
5 minutes. Your complete written testimony will be submitted in its
entirety in the record.
Mrs. Musgrave.
OPENING STATEMENT OF HON. MARILYN N. MUSGRAVE, A REPRESENTATIVE
IN CONGRESS FROM COLORADO
Mrs. Musgrave. Thank you, Mr. Chairman. I will be brief. I
just want to thank you for calling this hearing today to review
our food aid and agricultural trade programs that are operated
by the United States Department of Agriculture and the U.S.
Agency for International Development.
I want to thank all of our witnesses that have come to our
Committee today and especially Cary Wickstrom, a fellow
Coloradoan, a wheat grower from my area. I am very glad to have
Cary here.
I am looking forward to hearing from USDA and USAID and
their partners in the battle against hunger in the world. The
United States is the largest contributor of food aid in the
world--providing humanitarian and development assistance
through a variety of programs, and last year in the Sudan alone
the U.S. provided over \2/3\ of all contributions to the World
Food Program. The prominent program, Public Law 480, known as
Food for Peace, which shares the abundance of our United States
food with those in need around the world, along with McGovern-
Dole Food for Education, Food for Progress and related programs
to secure necessary commodities for donation. Food for Peace
provides resources for both emergencies and developmental
programs to reduce chronic hunger.
Among the issues before us today is the Administration's
proposal to use up to 25 percent of Public Law 480 Title II
funds for local or regional purchase and distribution of
emergency food aid. I strongly oppose the purchase of
commodities in foreign markets with their uncertain
availability as a substitute for maintaining a stable pipeline
of commodities vital to meeting the needs for millions of
people worldwide. Regional purchase of commodities has been
attempted as a stopgap measure in dire emergencies but it has
had really limited success. So with very little evidence to
support such a bold divergence from programs with a proven
track record, I am opposed to a move which would put less food
in regions of dire need.
I also look forward to hearing the testimony from the
witnesses pertaining to the Market Access Program and Foreign
Market Development Program. As U.S. producers and exporters
face unfair competition abroad, these programs have lessened
the damage from foreign export subsidies. In addition to
promoting exports of American agricultural goods, market access
and the developmental programs provide assistance to navigate
the very complicated importation requirements of the other
countries. Far from being a simple pay-out, the Market Access
Program requires significant investment from the participating
company through matching funds and a clear plan for success. It
is also estimated that the benefits of these programs last from
3 to 5 years beyond the initial investment and this really
leverages the impact of the programs. When facing significant
export subsides abroad, it is important to give U.S. companies
the tools they need to overcome these barriers. This hearing
today will provide the background for streamlining food aid and
agriculture trade programs needed as we approach this next farm
bill.
Thank you very much, Mr. Chairman.
[The prepared statement of Mrs. Musgrave follows:]
Prepared Statement of Hon. Marilyn N. Musgrave, a Representative in
Congress From Colorado
Thank you, Mr. Chairman, for calling this hearing today to review
food aid and agriculture trade programs operated by the U.S. Department
of Agriculture and the U.S. Agency for International Development. I
would like to thank each of our witnesses for being here today. I also
especially want to thank Cary Wickstrom, a wheat grower and fellow
Coloradoan, for offering his testimony on food aid programs.
I look forward to hearing from USDA, USAID, and their partners in
the battle against hunger in the world.
The United States is the largest contributor of food aid in the
world, providing humanitarian and development assistance through a
variety of programs. Last year, in Sudan alone, the U.S. provided over
\2/3\ of all contributions to the World Food Program.
The prominent program is Pub. L. 480, known as Food for Peace,
which shares the abundance of U.S. food with those in need around the
world. Along with McGovern-Dole Food for Education, Food for Progress,
and related programs to secure necessary commodities for donation, Food
for Peace provides resources for both emergencies and development
programs to reduce chronic hunger.
Among the issues before us today is the Administration's proposal
to use up to 25% of P.L. 480 Title II funds for the local or regional
purchase and distribution of emergency food. I strongly oppose the
purchase of commodities in foreign markets with uncertain availability
as a substitute for maintaining a stable pipeline of commodities vital
to meeting needs for millions of people worldwide.
Regional purchase of commodities has been attempted as a stopgap
measure in dire emergencies, but with limited success. With very little
evidence to support such a bold divergence from programs with a proven
track record, I am opposed to a move which would put less food in
regions of need.
I also look forward to hearing testimony from the witnesses
pertaining to the Market Access Program and Foreign Market Development
Program. As U.S. producers and exporters face unfair competition
abroad, theses programs have lessened the damage from foreign export
subsidies.
In addition to promoting exports of American agricultural goods,
market access and development programs provide assistance to navigate
the complicated importation requirements of other countries. Far from
being a simple pay-out, the market access program requires significant
investment from the participating company through matching funds and a
clear plan for success.
It is also estimated that the benefits of these programs lasts from
3 to 5 years beyond the initial investment, further leveraging the
impact of the programs. When facing significant export subsidies
abroad, it is important to give U.S. companies the tools they need to
overcome those barriers.
This hearing today will provide the background for streamlining
food aid and agriculture trade programs needed as we approach the next
farm bill. Thank you, Mr. Chairman, for holding this hearing today.
Mr. McIntyre. Thank you, Mrs. Musgrave.
As I said earlier, I am going to forego my opening
statement and will submit it for the record, so let me move to
the procedural aspect of this. This hearing does provide us an
opportunity to take a look at the title of the farm bill that
contains the programs that I mentioned briefly earlier and that
Mrs. Musgrave has described as well, and we are very excited
about the witnesses that are here today. We have an extremely
long set of witnesses because of the different panels. I want
to remind the witnesses that will be testifying throughout the
course of the afternoon of the 5 minutes that are provided
under the rules. Please highlight the most important points in
your testimony, and pursuant to Committee rules, testimony by
the witnesses along with questions and answers by Members will
be stopped after 5 minutes. So that everybody will know, the
complete written testimony of any of the witnesses or the
Members will be submitted to the record in their entirety as
requested. We may be joined today as well by former Chairman
Goodlatte and Chairman Peterson, and as they come in, we will
obviously recognize them. If there are any others who would
like to make opening statements who are members of the panel,
we will ask them to do that by entering it into the record.
[The prepared statement of Mr. Goodlatte follows:]
Prepared Statement of Hon. Bob Goodlatte, a Representative in Congress
From Virginia
Thank you, Mr. Chairman, for holding this hearing on food aid and
agriculture trade programs operated by the U.S. Department of
Agriculture and the U.S. Agency for International Development. I look
forward to hearing comments from the agencies and private organizations
involved in facilitation and distribution of foreign food aid.
During a recent trip to Sudan I witnessed firsthand the incredible
need for food aid among those displaced by conflict. Without a steady
supply of food, many of these displaced people would not be able to
survive. Our farmers and ranchers produce the safest, most abundant,
and affordable food supplies in the world, and we proud to be able to
share the bounty of our harvest with those who need it most in the
global community.
I am disappointed that the Administration has brought forth a
proposal which would significantly shift food aid policy away from
providing food for the hungry in favor of sending cash abroad. The
Administration's proposal would essentially pull $300 million out of
taxpayers' pockets and drop it directly into our competitor's markets,
such as the EU. We cannot guarantee the availability of commodities in
foreign markets, but we can guarantee the availability, safety and
reliability of American commodities. I strongly oppose replacing a
consistent, reliable source of food with potentially unreliable sources
in foreign markets.
The U.S. is the world's largest contributor to food aid programs,
supplying roughly 60 percent of total food aid every year. The reality
is that if you want to provide foreign food aid, there must be
Congressional support. The P.L. 480 program enjoys broad support
because it provides hungry people worldwide with safe, nutritious foods
while ensuring that the American people's generosity addresses hunger
directly and without a possible diversion of funds.
Shifting such a large portion of the P.L. 480 budget to cash
jeopardizes Congressional support for food aid. As I have in the past,
I will continue to oppose this proposal.
I look forward to hearing from the industry regarding the Market
Access Program and Foreign Market Development Program. Such initiatives
help small businesses and co-ops position their products in competitive
foreign markets and I look forward to their comments.
Thank you, Mr. Chairman.
As I mentioned earlier, we would like to honor the time of
our fellow colleagues who are coming on our first panel today,
Jim McGovern and Jo Ann Emerson, and they along with the
special guests of our Subcommittee, Jerry Moran and I, all are
from the same class, the class of 1996, so we have got a little
mini reunion here. I am thrilled, Jim and Jo Ann, to have you
here, so the Honorable Jim McGovern, Member of Congress from
Massachusetts, and the Honorable Jo Ann Emerson, Member of
Congress from Missouri, we welcome you both.
Mr. McGovern, you may begin.
STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE IN
CONGRESS FROM MASSACHUSETTS
Mr. McGovern. Thank you, Mr. Chairman, and I am delighted
to be here, and I want to thank the Committee for giving us
this opportunity to talk about the important contributions of
the George McGovern-Robert Dole International Food for
Education and Child Nutrition Program, better known as the
McGovern-Dole Program, and I am especially pleased to be here
with my colleague, Jo Ann Emerson, who has played such an
important role in establishing and promoting this program. Let
me begin, Mr. Chairman, by saying that I believe that the
McGovern-Dole Program with its flexible mix of commodities,
cash and technical aid is one of our most successful food aid
programs.
In April I had the opportunity to visit two McGovern-Dole
projects in Kenya, both administered by the World Food Program.
Working with the Kenyan Government, WFP carries out a school
feeding program that reaches 1.1 million children in 3,800
schools. The McGovern-Dole Program provides about half of the
funding, mainly in the form of commodities for this nationwide
program and directly serves over \1/3\ of these children. On
average, it costs just 9 cents a day to provide these children
with a hot school lunch each day. I first went to the Mukuru
Kayaba Primary School situated in the Mukuru slums in Nairobi
with 1,300 students. These children live under very poor
conditions in shanties with no regular food to eat. About 70
children are HIV/AIDS orphans and at least one parent is lost
every 2 weeks due to the HIV/AIDS pandemic. When school feeding
was introduced, the school population increased rapidly. It
also allowed students to remain in school the whole day. Mrs.
Faith Wachira, the School Head Teacher, reported that providing
a hot lunch significantly reduced truancy. Despite their poor
backgrounds, parents assist in the daily preparation of the
food and provide firewood, salt, water, feeding utensils and
other essentials. I joined the students for their lunch of corn
and soy meal, maize and vegetable oil cooked into a thick
porridge. One student I sat next to, sad to say, was hoarding
some of his food, whether for himself to eat later or for
another family member at home, I don't know.
The next day I visited the Kajiado Girls Primary School run
by the African Inland Church. Located 2 hours outside of
Nairobi, the school began as a rescue center for Maasai girls
who were being forced into early marriage. Current enrollment
consists of 637 girls. In the Maasai community, there exists a
belief that girls don't deserve an education and should remain
at home doing chores. There is also a tradition of arranged
marriages between girls as young as 12 and much older men. At
the Kajiado School, many of the girls actually board at the
school out of fear that if they return home, they will be
forced into marriage and over 100 remain at the school during
holidays because they cannot safely return to their homes. My
guide was Head Teacher, Mr. Nicholas Muniu. He told me how the
McGovern-Dole Program, which began in 2001, significantly
reduced the school's dropout rate. Now the retention rate and
daily attendance are very high. Since the school is a boarding
school, both lunch and dinner are provided. McGovern-Dole also
freed up funds in the school's budget that were used to hire
professional cooks, improve the kitchen facilities, purchase
local produce and reduce or eliminate the modest school fees
for the neediest pupils. I was particularly moved by a girl
named Grace who refused her father's demand that she marry an
older man when she was only 13. In response, her father bought
a sword with which to kill her and actually demanded that she
bring him the weapon to end her life. She fled, and she is now
at the school doing exceptionally well. She is safe, healthy,
well fed, and with an education. She will have a bright future.
At Kajiado, I served split yellow pea soup and a heaping
serving of bulgur wheat for lunch--all provided through the
bounty of America's farmers.
Regrettably, since 2003, funding for McGovern-Dole has
never come close to its initial $300 million budget. Annual
funding is still only \1/3\ of what it was in the pilot phase.
McGovern-Dole presently reaches less than half the number of
children as in the first year, and is operating in half the
original countries. I have seen firsthand how devastating these
cuts have been for some of the poorest and most vulnerable
children in places like Colombia and Ethiopia.
Congresswoman Emerson and I have introduced legislation,
H.R. 1616, which we believe provides a blueprint on how to
restore funding for the McGovern-Dole Program. Currently, the
bill has 111 cosponsors. Restoring the funding would allow USDA
to award multiyear grants of 3 to 5 years in duration,
increasing local confidence in the program and strengthening
the ability of projects to become self-sustaining. New projects
could be initiated and existing projects expanded. Also,
funding could finally be awarded to pre-K and early childhood
education projects, which are authorized in the McGovern-Dole
Program but lack the funds to move forward.
Mr. Chairman, I have traveled to some of the poorest areas
of the world, city slums and remote rural areas. Not once did
anyone ever ask me for a bomb or a missile or a military base.
Instead, mothers and fathers literally beg for help simply to
keep their children alive, fed and in school. Mr. Chairman and
Members of the Committee, I know that you face difficult
choices given the budget constraints that you must work within,
but McGovern-Dole has proven itself as a very effective way to
meet these needs.
Thank you.
[The prepared statement of Mr. McGovern follows:]
Prepared Statement of Hon. James P. McGovern, a Representative in
Congress From Massachusetts
I want to thank Chairman Mike McIntyre, Ranking Member Marilyn
Musgrave and the Members of the Subcommittee for granting me this
opportunity to testify on the important contributions of the George
McGovern-Robert Dole International Food for Education and Child
Nutrition Program (McGovern-Dole). I am especially pleased to be joined
by my distinguished colleague from Missouri, Representative Jo Ann
Emerson, who has played such an important role in helping to establish
and promote this program.
McGovern-Dole is among the newest of U.S. food-related development
programs. It was launched in 2000 by President Bill Clinton as a pilot
program, the Global Food for Education Initiative (GFEI). The purpose
of the program is simple and straightforward: to reduce the incidence
of child hunger among school-age children and to increase their access
to education by providing at least one nutritious meal each day in
schools. The GFEI was administered by the U.S. Department of
Agriculture (USDA) and provided $300 million to 48 school feeding
projects in 38 countries, reaching nearly seven million children. These
projects were carried out in 2001-2002 by U.S. non-governmental
organizations (NGOs), the United Nations World Food Program (WFP), and
one national government, the Dominican Republic.
The pilot program proved so successful and received such high
evaluations that it was established as a permanent program in the Farm
Security and Rural Investment Act of 2002 and named in honor of former
senators George McGovern of South Dakota and Robert Dole of Kansas for
their tireless commitment to end child hunger here at home and around
the world. The McGovern-Dole made a number of improvements over the
GFEI pilot program--expanding the universe of U.S. commodities
available for projects; providing financial and technical assistance
for transportation, storage, and to strengthen nutritional and
educational inputs; emphasizing the enrollment and attendance of girls
and other marginalized children; requiring family and community
engagement in the project; requiring elements of sustainability to be
built into the projects from the beginning; and strengthening USDA's
monitoring and evaluation criteria and capacity for each project. The
projects must target low-income and poverty areas with low school
attendance, especially among girls, and where there is a high incidence
of child hunger and food insecurity. The program continues to be
administered by the office of Foreign Agricultural Services in the
USDA.
Over the past 5 years, the McGovern-Dole Programs have received
stellar evaluations, both from USDA and from non-governmental studies.
On average, enrollment rose by 14 percent in schools served by
McGovern-Dole projects, with enrollment of girls increasing by 17
percent. Teachers and program administrators report a greater ability
of children to concentrate after receiving school meals, a general
improvement in academic performance, and improved test scores. The
McGovern-Dole Program has increased local communities' concern for and
participation in their children's education. In addition, both
households and schools have benefited from training on food
preparation, health--including HIV/AIDS education and prevention--and
hygiene provided through the program.
Rather than report a variety of statistics and results, I encourage
the Members of the Subcommittee who have not yet had a chance to review
the USDA evaluations of the GFEI and the McGovern-Dole Program to ask
USDA to provide you with copies. There you will see the wide variety of
commodities, projects, and best practices employed by the implementing
NGOs and WFP. Each program is tailored to meet the needs of the local
communities, region and country; each receives additional financial and
in-kind support from national governments, other country and
international donors, private sector or individual contributors, and/or
the local communities themselves. Several programs have already
``graduated'' and achieved sustainability, including projects initiated
in Lebanon, Moldova, Vietnam and Kyrgyzstan.
Leaders on both sides of the aisle in Congress agree that the
McGovern-Dole Program is one of the best programs the United States has
to end poverty and hunger in the developing world. I have attached to
my testimony copies of letters and cosponsors of legislation that
verify this broad bipartisan support. Republican Senator Pat Roberts of
Kansas has stated that the McGovern-Dole Program serves U.S. national
security interests. Terrorism breeds where there is hunger and poverty,
ignorance and despair. McGovern-Dole addresses all of these by
providing children not only with food, but the hope and promise that
come with education.
Over the April recess, I traveled to Ethiopia, Kenya and eastern
Chad to look at food aid and food security programs that address child
hunger, HIV/AIDS and nutrition, and meeting emergency humanitarian
crises. In Kenya, I was privileged to visit two McGovern-Dole projects,
both administered by the World Food Program.
WFP, in collaboration with the Kenyan Government's goal to provide
universal education to its children, carries out a school feeding
program that reaches 1.1 million children in 3,800 schools. On average,
it costs about 9 cents a day to provide these children with a hot lunch
each school day made up of pulses, corn and vegetable oil. The U.S.-
funded McGovern-Dole Program provides about half of the funding in the
form of commodities for this nation-wide program, and directly serves
over \1/3\ of these children. The Kenyan Government, other
international donors--like the UK and Japan, the private sector,
individual contributions from the U.S. Friends of WFP, and
contributions from the local beneficiary communities provide the
remaining funding for the overall national program.
The first school I visited is the Mukuru Kayaba Primary School, a
public primary school situated in the Mukuru slums in Nairobi. The
school started in 1985 as a non-formal school, with only one shanty
room, two teachers and 10 pupils. It has grown to the current
population of 1,300 children, including 653 girls and 647 boys, and
became a public school in 1990.
These children live under very poor conditions, in shanties, with
no regular food to eat, given that the majority of their parents are
without jobs. Girls are at great risk in the community. Sometimes they
are abducted on their way home from school, and their security is
always an issue. The school has about 70 children orphaned by HIV/AIDS
who are being taken care of by their relatives or well-wishers. I was
told that the school loses at least 1 parent every 2 weeks due to the
HIV/AIDS pandemic. But I'm pleased to inform the Committee that HIV/
AIDS education and prevention are provided at the school to all the
pupils. Finally, there are frequent fires in the slum community, which
often leaves many pupils homeless.
When school feeding was introduced, the school population increased
rapidly and allowed for the children to remain in school the whole day.
Mrs. Faith Wachira, the formidable woman who is the School Head
Teacher, wanted me to know that there has been a significant reduction
in truancy after the introduction of lunch, given that the majority of
the pupils were formerly from the streets. Despite the poor backgrounds
of the children and the community at large, the parents assist in the
daily preparation of the food and provide firewood, salt, water,
feeding utensils, and other essentials. Mrs. Wachira is rightfully
proud of the progress of her pupils and her staff.
I had the privilege to serve the children their lunch, and to join
them during lunchtime. It's a simple meal of corn and soy meal, maize
and yellow split peas, and vegetable oil--cooked into a thick porridge.
One of the children I sat next to, I'm sad to say, was hoarding some of
his food, whether for himself to eat after school or for another family
member at home, I don't know.
The second school I visited is Kajiado Girls Primary School, run by
the African Inland Church. Located over 2 hours outside Nairobi in
Maasai country, the school originally began as a rescue center for
Maasai girls who were being forced into early marriage. Over the years,
enrollment has increased exponentially from the initial 20 girls to the
current total of 637 girls. The McGovern-Dole Program began in 2001 and
is administered by WFP.
In the Maasai community, there exists a belief that girls don't
deserve an education and should remain at home doing chores. There is
also a tradition of arranged marriages between girls as young as age 12
and much older men. At the Kajiado School, many of the girls actually
board at the school out of fear that if they return home, they will be
forced into marriage. During holidays and when school is not in
session, over 100 of the girls remain at the school because they cannot
safely return to their homes and villages.
My guide at the school was Head Teacher Mr. Nicolas Muniu, who has
been with the school for the past 27 years. He told me that the
McGovern-Dole Program has contributed significantly to a reduction in
the school's drop-out rate. The retention rate and daily attendance are
both very high. Given that the school is also a boarding school to many
of its students, the food provided contributes significantly to the
daily provision of both lunch and dinner. McGovern-Dole has also freed
up funds in the school's budget that were used to hire professional
cooks, improve the kitchen facilities, purchase local produce, and
reduce or eliminate the modest school fees for the neediest pupils.
I was particularly moved by a girl named Grace, who refused her
father's demand that she marry an older man when she was only 13.
In response, her father bought a sword with which to kill her, and
actually demanded she bring him the weapon to end her life. She fled--
and she is now at the school doing exceptionally well. She is the
prefect of her class--or ``head girl,'' and is the leading student in
mathematics. She is safe, healthy, well-fed, and with an education,
will have a bright future. When I talked with this modest, composed
young woman, I genuinely felt like I was seeing the potential of
Kenya's future.
The lunch I helped serve to Grace and several hundred other girls
that afternoon consisted of a split yellow pea soup and a heaping
serving of bulgur wheat. All provided through the bounty of our own
farmers. I tried some myself, and I must admit it was both filling and
very tasty.
When I returned to Washington, I saw a report produced by the
Center for Global Development entitled, ``Inexcusable Absence: Why 60
million girls still aren't in school and what to do about it.'' One of
the success stories it reviewed is the universal education program in
Kenya. And one of the statistics cited said that ``In Kenya, school
feeding programs raised attendance in program schools 30 percent
relative to schools without a free lunch; and test scores were also
higher.'' From my brief visits, I can certainly affirm the likelihood
of these results.
Regrettably, since 2002, funding for the program has never come
close to its initial $300 million budget. The last farm bill
reauthorization provided $100 million for FY 2003, which was to serve
as a funding ``bridge'' for a smooth transition from the GFEI pilot
program to the McGovern-Dole Program. In FY 2004 it received only $50
million; $91 million in FY 2005, an increase due largely to strong
bipartisan efforts in the House and Senate to increase the funds; and
it has been funded at $99 million in FY 2006 and FY 2007. The
President's FY 2008 budget proposal once again requests only $100
million for the program.
Erratic funding levels are a serious concern. Even as the program's
budget increased from 2004, annual funding is still only a third of
what it was in the pilot phase. McGovern-Dole presently reaches less
than half the number of children as in the first year, and is operating
in less than half the original countries.
I have seen first-hand how devastating these cuts have been for
some of the poorest and most vulnerable children in Colombia and
Ethiopia. Each country received substantial GFEI projects in 2001 and
2002, but those programs were eliminated when funding was cut to $50
million in 2004 and have never returned. Luckily, in Colombia, USAID
stepped in and picked up the former GFEI school feeding programs that
were addressing the needs of internally displaced communities. I travel
fairly frequently to Colombia, and I still hear requests from the WFP,
NGOs and local communities for a return of McGovern-Dole funding and
projects. One mother thanked me and the United States for the meals and
schooling provided to her children. She told me that the school meals
program not only allowed her to send her children to school, but kept
her son from being recruited as a child soldier by the para-militaries
and the FARC guerrillas.
Over the April recess, I traveled to Ethiopia to review food aid
and food security programs. Ethiopia also benefited from the GFEI pilot
program, receiving $5.3 million over 3 years and reaching over 300,000
children. Ethiopia is one of the educationally least developed
countries in sub-Saharan Africa. Household food insecurity is a
national problem, with an estimated 90 percent of rural household
affected either by chronic or transitory food shortages. In food
insecure areas of Ethiopia, school children walk an average of 3 to 4
kilometers--or 1 hour--to reach school on an empty stomach each
morning, primarily due to food shortages at home. These nutritional and
hunger problems reduce the learning capacity of school children, weaken
their commitment to school, and hinder their active participation in
educational activities. In April, the WFP coordinator for Ethiopia told
me that he keeps submitting proposals to USDA for McGovern-Dole
Programs, but they are not accepted. The reason is simple: the
McGovern-Dole Program lacks adequate funding.
Congresswoman Emerson and I have introduced legislation, H.R. 1616,
which we believe provides a blueprint for the Committee on how to
restore funding for the McGovern-Dole Program back to its original $300
million level over a 5 year period. Currently, the bill has 111
bipartisan cosponsors. I encourage you to review its provisions as you
move to take up the farm bill reauthorization in the coming weeks.
Restoring such funding would allow for the McGovern-Dole Program to
award multi year grants of 3 to 5 years in duration, which would
greatly increase local confidence in the program and strengthen the
ability of projects to build in self-sustaining elements. Such funding
levels would also allow for existing programs to expand their reach and
for new projects to be funded. And finally, it would allow for funding
to be awarded to projects focused on pre-K and early childhood
education, projects that are authorized under the McGovern-Dole but
which the lack of funds has prevented from moving forward.
I would simply like to conclude by saying that I have traveled to
some of the poorest areas of the world, city slums and remote rural
areas. Not once did anyone ever ask me for a bomb or a missile or a
military base. Instead, mothers and fathers literally beg for help
simply to keep their children alive, fed and in school.
When we provide young children with the health care and nutrition
they need, we invest in the future potential of every child. When we
put a meal in the belly and a book in the hand of a student, new
dreams, aspirations and opportunities are born. When we help a
community sustain its own school feeding program, then they have often
worked out ways to increase overall food production. And when educating
girls becomes valued by a community, then they inevitably marry later,
have fewer, healthier children, and generate greater income for their
own families.
The 9/11 Commission Report recommended significantly greater
investment on the part of the United States in economic, social and
development programs as a critical part of winning the war against
terrorism. Our nation has not taken that recommendation to heart. I
believe the McGovern-Dole represents America's very best values, and I
urge the Committee to continue its support of this program and to
authorize increased funding during consideration of the farm bill
reauthorization.
Thank you, Mr. Chairman.
McIntyre. Thank you very much, Mr. McGovern.Ms. Emerson.
STATEMENT OF HON. JO ANN EMERSON, A MEMBER OF CONGRESS FROM MISSOURI
Ms. Emerson. Thank you, Mr. Chairman. Let me thank all of you for
being here today and for allowing Jim and I to speak to you all.
I first want to commend Congressman McGovern for the incredible
leadership he has shown on the issue of hunger, both here in the
Congress and even in his previous life before coming to the Congress,
and that is very obvious from the trips that he has made and the things
he does each and every day. I am proud to be able to cosponsor this
bill with him and to prevail upon you all to understand that, with more
than 300 million hungry children in the world, providing enough food
aid is really a daunting challenge.
Let me also say just briefly, I want to submit my formal remarks
for the record because I can't do them in 5 minutes.
Mr. McIntyre. Yes, ma'am.
Ms. Emerson. I also want to acknowledge that we have special
mentors in this endeavor with Senator George McGovern and Senator Bob
Dole, who have been just eloquent advocates for ending hunger and they
have provided nudges of conscience all along the way--reminding us in
government of our moral responsibility as a country which is rich in
natural resources and which has an abundant, safe food supply in order
to help people who can't help themselves. They really deserve so much
of the credit for encouraging us and so many of our colleagues.
Since Jim has really outlined everything, let me just say that I
think that the McGovern-Dole food program takes on this whole issue of
hunger in a very unique way--not only putting food in the bellies of
children who need nutrition all over the world, but by virtue of
bringing these children into a classroom setting we are nourishing not
only their bodies but their minds, and this is so critical.
I also want to mention that I had the opportunity to visit one of
these programs this past summer in Nicaragua. Most of these programs,
not all but most, often sustain themselves after the McGovern-Dole
Program ends. It doesn't last forever, but we try to turn the programs
over to private voluntary organizations, NGOs and the like, and/or
local governments even take them over and this is important for
everybody to know. There are too many people and too many needs for our
programs to stay forever and ever. We want to get the program started
and then move it off into the private sector.
These international programs I think, and I reiterate what Jim
says, are so very important to us here at home because not only are we
changing the lives of families in far-off places, we are changing the
minds of the person on the street in countries where America has a less
than stellar reputation in many cases, and I believe--and I know Jim
does too--and I believe all of you believe that education and
humanitarian aid are two of the very best ways we can uproot terrorism
around the world and we shouldn't overlook the power of a bag of food
that says ``gift of the people of the United States of America'' to
accomplish that goal. So I want to thank you all so much for allowing
us to speak to you today and hope that you understood just like we do
how important this program is to feeding or beginning to help the 300
million hungry children around the world.
Thank you.
[The prepared statement of Ms. Emerson follows:]
Prepared Statement of Hon. Jo Ann Emerson, a Representative in Congress
From Missouri
Mr. Chairman and Members of the Committee, I want to thank you for
the opportunity to appear here today and discuss the George McGovern-
Robert Dole International Food for Education and Child Nutrition
Program.
I would like to stress that there is a clear need for the McGovern-
Dole International Food for Education and Child Nutrition Program.
There are 300 million school aged, children around the world who suffer
from hunger. Of these children, an estimated 120 million do not attend
school. Food for Education is just what it sounds like: a unique
program to simultaneously improve nutrition and education by providing
students with a nutritious meal or take home rations. The McGovern-Dole
Program, ably administered by the U.S. Department of Agriculture,
donates agriculture commodities and provides financial and technical
assistance to governments, intergovernmental organizations, and PVOs,
who do a wonderful job identifying and reaching out to those in need.
While schools are an excellent location for reaching hungry
students, they are more than merely a way to ensure school-age children
receive nutritional assistance. By providing assistance through
schools, the McGovern-Dole Program increases enrollment, increases the
students' ability to learn and, ultimately, increases the opportunities
available to our greatest resources--children.
Mr. Chairman, we know hunger affects learning. Hungry students
often do not attend school, they are needed at home to help produce
food or earn money to purchase it. Those hungry individuals who do make
it to school often have trouble concentrating on lessons if they are
hungry. Learning, conversely, has an opposite effect on hunger.
Education allows children to acquire the skills needed to address
hunger at their young stage of life and in the future. School
attendance brings a desire to learn and openness to new ideas. Studies
have also shown that as enrollment increases for girls, stunting in
children under 5 years old decreases. Among the McGovern-Dole Program's
greatest successes has been increasing school enrollment among girls.
If these reasons alone did not make a compelling argument for the
McGovern-Dole Program, it is also widely recognized that such programs
add to our national security. At present there are 12,000 madrassas in
Pakistan. These madrassas provide free food and lodging to students;
however, a few also get involved in militancy and, ultimately,
terrorism. But the question Pervez Musharraf is left with is, ``who
else can provide food for these children?''
This legislation, quite frankly, is a win-win for the American
people, and it is a win-win for children all over the world who
desperately need food assistance and an education. We all know, very
well, that our country is currently engaged in daily battles with
individuals who want to harm Americans. However, we are also engaged in
daily battles for the hearts and minds of the ``man on the street'' in
under-developed countries. In this battle, the McGovern-Dole
International Food for Education and Child Nutrition program holds
great potential.
These are the reasons the McGovern-Dole Program is needed, however,
the support for this program is not just based on need; it is also
based on results. For FY 2006 the McGovern Dole Program has exceeded
USDA goals for the number of children receiving daily meals or take-
home rations. The McGovern-Dole Program was initiated in 2000 as a $300
million pilot program, the Global Food for Education Initiative. From
2001 to 2003 the GFEI fed nearly seven million children through 48
projects in 38 countries. During the 2002 Farm Bill reauthorization
process, the GFEI was established as a permanent program and renamed to
honor Senator George McGovern and Senator Robert Dole.
The renamed program, however, immediately experienced a funding
decline from the $300 million provided for the pilot program. H.R.
1616, legislation introduced by Mr. McGovern and me, which now has 109
other bipartisan cosponsors, would return us to the $300 million mark
in FY 2012.
I would be remiss if I failed to mention the dedication and
commitment of former Senators McGovern and Dole. These distinguished
leaders have been eloquent advocates for ending hunger and have
provided nudges of conscience reminding us in government of our moral
responsibility as a country rich in natural resources and an abundant,
safe food supply to help people who cannot help themselves.
Another of the successes inherent in this program is the
requirement of graduation. When USDA enters into an agreement with an
eligible organization to provide food aid assistance in schools, the
agreement must include provisions to continue the benefits to education
and nutrition after the commodities stop flowing from USDA. By
providing a mandatory funding source Congress could ensure a more
reliable funding stream, sending a message or strong, continuing
support to beneficiaries in need and to partner governments and
organizations that our commitment is real. I believe this, more stable
funding, would also allow USDA to increase the number of multi-year
commitments made.
Mr. Chairman, in closing, the McGovern-Dole International Food for
Education and Child Nutrition Program reflects the humanitarian values
Americans share. It reflects the value Americans place on an
education--regardless of sex or race. The program utilizes American
resources, benefits the American economy, and it makes us safer from
the enemies of the American people who hope their message of intolerant
hatred fuels a self-fulfilling response from our great nation. As this
Committee moves forward with the important work of drafting a farm
bill, I hope you will give every consideration to reauthorizing this
important program and expanding it. Thank you.
Mr. McIntyre. Thank you, and thanks to both of you for the
moral imperative that you have given us not only in the
Subcommittee and full Committee but also as fellow Members of
Congress, and thank you all for being an encouragement and also
for your exhortation. I think both are well received that we do
as just mentioned--look at the educational benefits and the
humanitarian concerns and ultimately look at the ministry of a
bag of food as you so eloquently described.
With that, I am happy to let you all make any other
comment. Both of you finished under 5 minutes, so if there is
anything else you want to add? I know you have other things and
we will let you slip on out if you need to, but is there
anything else either one of you would like to say?
Mr. McGovern. If I could ask unanimous consent to insert my
longer testimony into the record.
Mr. McIntyre. So ordered.
Mr. McGovern. And again, I would like to associate myself
with the remarks of my colleague, Jo Ann Emerson, especially on
the issue, too, of the value in terms of America's prestige
around the world of this program. When I was in Colombia, I had
a young mother come up to me and say, ``Please thank the people
of the United States for this program,'' she said, ``because
without this program, my son, who is 12 years old, would
probably be a member of one of the armed groups, either the
left-wing [Revolutionary Armed Forces of Colombia] (FARC) or
the right-wing paramilitary because those groups go through and
they look for child soldiers.'' This mother said that without
this program she couldn't provide her son a meal on a daily
basis. With this program, she provides her son a meal on a
daily basis in a school setting. She said on top of being fed,
he can maybe become literate and get out of this slum. So, this
is an incredibly powerful tool in terms of showing the best of
the United States, and I also agree with Jo Ann that in terms
of combating terrorism, this is the kind of program that I
think we should be endorsing wholeheartedly. Thank you.
Mr. McIntyre. Yes, ma'am.
Ms. Emerson. Thanks, Mr. Chairman. You know, when I was in
Nicaragua last summer I was in the rural area. I don't know
exactly where, about an hour and a half outside Managua, in
this rural village, if you want to call it a village, because
people's homes were made out of black plastic trash bags the,
kind that we use to take our trash out. There had been a
McGovern-Dole feeding program there that we had transferred
over to a private organization and suddenly you saw children at
a school setting. The Japanese Government actually built the
school where the kids that were--this is how it all started
with the governments. The kids were in school, they had
uniforms that had been donated by some other organization, but
they only still had that one meal every single day, and in this
case it was maize or corn and soy kind of chopped up like it
would be hamburger, and beans and a little tiny piece of
tortilla but yet all of them came together and we had teachers.
It was fascinating to see probably the 5th and 6th graders
teaching the 1st graders and the kindergartners and the high
school kids were teaching the 5th and 6th graders. There were a
few private teachers, but there were incentives provided for
these children to actually get scholarships because you have to
pay for public high school in Nicaragua. It was just amazing
that these people's lives had gone from living in trash bag
houses to then having schools--all of which started with the
McGovern-Dole food feeding program. There was hope in the eyes
of every single person, the parents and the kids, and it was
just remarkable. And so I just say that, and Jim of course, has
been to Africa and Colombia and the like and just to see what
the power of our American commodities can do, it speaks for
itself.
Mr. McIntyre. Very eloquent, very well spoken, and I
believe as I mentioned the moral imperative that you have given
us not only speaks to the heart and speaks to the mind but also
speaks to some of the other issues. Also, I can tell you as a
Member of the Armed Services Committee, I think you are exactly
right about how it removes those seeds that are sown with
regard to potential terrorism and the other things that are the
end result when we don't pay attention early on in a child's
life, so thank you all very much. You all have a good afternoon
and God bless you. We will call our next panel forward. Thank
you again.
We would like to welcome our second panel to the table,
Administrator Michael Yost, Foreign Agriculture Service of the
USDA, and Mr. William Hammink, Director of the Office of Food
for Peace, U.S. Agency for International Development, also here
in Washington. As our witnesses take their seats, Mrs.
Musgrave, would there be any special comment you would like to
make in conclusion of the first panel or with regard to the
beginning of the second panel?
Ms. Musgrave. No, I am ready to go. Thank you, Mr.
Chairman.
Mr. McIntyre. All right. With that then, we will begin. Mr.
Yost, please begin.
STATEMENT OF MICHAEL W. YOST, ADMINISTRATOR,
FOREIGN AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.
Mr. Yost. Mr. Chairman, Members of the Committee, I am
pleased to testify today with my colleague from U.S. Agency for
International Development, William Hammink. I welcome the
opportunity to discuss the trade and food aid programs
administered by the United States Department of Agriculture.
The trade programs administered by the Foreign Agricultural
Service combined with access gained through free trade
agreements have served to expand markets for U.S. agricultural
products. Demand for U.S. food and agricultural products is
higher than ever. Earlier this month USDA raised its export
forecast to a record $78 billion for Fiscal Year 2007. Free
trade agreements have proven to be good for U.S. agriculture.
Under NAFTA, agricultural exports to Canada and Mexico have
risen from $9.5 billion to $22 billion annually. Agricultural
exports to the CAFTA DR countries totaled $2.6 billion in 2006,
an increase of 18 percent from 2005. Last month we concluded
negotiations with South Korea on the most commercially
significant free trade agreement in 15 years. Korea is
projected to import over $3 billion of U.S. agricultural
products during Fiscal Year 2007 and almost \2/3\ of the
current U.S. farm exports to Korea will become duty-free on the
first day that the FTA is implemented.
Today I would like to highlight two trade programs
administered by FAS, the Market Access Program, MAP, and the
Technical Assistance for Specialty Crops Program, TASC. MAP
forms a partnership between USDA and nonprofit U.S.
agricultural trade associations, U.S. agriculture cooperatives,
nonprofit state and regional trade groups and small businesses.
In 2006, MAP was used to find new products for markets for
poultry products in Mexican supermarkets, to expand wheat
markets in Nigeria and to re-launch U.S. beef sales in Japan.
Our farm bill proposal recommends increasing MAP funding from
$200 million to $225 million annually. USDA will allocate this
additional funding to help address the imbalance between farm
bill program crops and non-program commodities.
The TASC program has helped U.S. exporters regain market
access for millions of dollars of products by addressing
sanitary, phytosanitary, and technical barriers. The
Administration's 2007 Farm Bill proposals will increase
mandatory funding for the TASC grant program at the rate of $2
million per year up to a total of $10 million for Fiscal Year
2011 and beyond. In recent years, TASC funding has been used to
gain market access for California nectarines in Japan,
harmonize organic standards with Canada and the European Union,
and create a database of pesticide tolerance levels and
standards for more than 300 specialty crops in more than 70
countries.
To complement the TASC program, the Administration's 2007
Farm Bill proposals will include a new grant program focused on
SPS issues and supported by $2 million in annual mandatory
funding. This additional funding will allow us to better
address phytosanitary and sanitary issues for all agriculture
commodities.
Now I would like to turn to two of our developmental food
aid programs, the Food for Progress and the McGovern-Dole
Program. During Fiscal Year 2006, the Food for Progress program
provided more than 215,000 metric tons of agricultural
commodities valued at $175 million to 19 developing countries
and emerging democracies committed to introducing and expanding
free enterprise in the agricultural sector. Again this year
more than 215,000 tons of commodities will be provided. More
than two million people in Afghanistan, throughout Africa and
Central America will be fed by this program this fiscal year.
The program is more than about feeding. For example, in
Madagascar, proceeds from the wheat sales are providing micro-
finance loans to farmers.
The McGovern-Dole Program, I can't add too much to what
Congressman McGovern and Congresswoman Emerson said. The only
thing I would like to add is that I too visited a food aid
project in Kenya, and if I could sum up the need and the
results of the program in one word, I would just say it is
compelling. We appreciate the strong support this program has
received from Members of Congress.
In conclusion, as Administrator of the USDA's Foreign
Agricultural Service, I am proud of our efforts to improve the
foreign market access for U.S. products, the help we do in
building new markets, improving the competitive position of
U.S. agriculture in the global marketplace, and to provide food
aid and the technical assistance to foreign countries.
This concludes my statement.
[The prepared statement of Mr. Yost follows:]
Statement of Michael W. Yost, Administrator, Foreign Agricultural
Service, U.S. Department of Agriculture, Washington, D.C.
Mr. Chairman, Members of the Subcommittee, I am pleased to appear
before you today. I welcome the opportunity to discuss the trade and
food aid programs administered by the U.S. Department of Agriculture
(USDA).
Introduction
Since the last farm bill was enacted in 2002, the trade programs
administered by the Foreign Agricultural Service (FAS) have served to
open new markets and maintain and expand existing markets for U.S.
agricultural products. These programs complement our efforts to open
and maintain markets through trade negotiations, diplomacy, and
enforcement of trade agreements. To ensure that agricultural interests
are well represented at the negotiating table, FAS works closely with
the Office of the U.S. Trade Representative (USTR) and coordinates the
involvement of USDA regulatory agencies.
During the past year and a half, the United States successfully
concluded trade agreements with Colombia, Panama, and Peru that provide
greater market access for all U.S. agricultural products. Last month,
we concluded negotiations with South Korea on the most commercially
significant free trade agreement in 15 years. Korea is projected to
already import over $3 billion of U.S. agricultural products during
Fiscal Year 2007 and almost \2/3\ of current U.S. farm exports to Korea
will become duty-free on the first day of implementation of the new
FTA.
Together, our trade programs and negotiations have contributed to a
strong farm economy and increasing foreign demand for U.S. food and
agricultural products. Trade continues to be critically important to
the long-term economic health and prosperity of the American food and
agricultural sector. Roughly 20-25 percent of U.S. production is
exported and, with productivity increasing faster than domestic demand,
export markets are important, particularly markets with a burgeoning
middle class such as China, India, Indonesia and Brazil.
The latest USDA export forecast of $78 billion for Fiscal Year 2007
proves this point. This means the agricultural community is on track to
increase exports by an estimated $9.3 billion over last year. That
would be the second largest increase on record and the fourth
consecutive year of record exports. USDA estimates that U.S. world
market share is over 19 percent--almost \1/5\--of world agricultural
trade. This is particularly impressive when you consider that the size
of the world agricultural trade pie has doubled since 1990.
However, if we are to continue these impressive gains, we cannot
rest on our accomplishments. We must continue to expand access to
overseas markets, where 95 percent of the world's consumers live. We
must continue to refine and improve our longstanding programs to ensure
that they operate efficiently and effectively.
The Administration's farm bill proposals were crafted to strengthen
U.S. agriculture's competitive position, while meeting our
international obligations. The farm bill proposals are not only good
farm policy, but good trade policy. They are predictable, equitable,
and designed to withstand challenges from other countries. We
appreciate Congress' serious consideration of the proposals as Congress
writes the 2007 Farm Bill.
Trade Programs
Market Access Program
The Department's largest market development program is the Market
Access Program (MAP), for which funding expires at the end of 2007.
This program uses funds from the Commodity Credit Corporation (CCC) to
create, maintain, and expand long-term export markets for U.S.
agricultural products.
USDA's farm bill proposals recommend increasing MAP funding from
$200 million to $225 million annually. USDA will apportion the
additional funding to help address the imbalance between program crops
and non-program commodities. MAP forms a partnership between USDA and
nonprofit U.S. agricultural trade associations, U.S. agricultural
cooperatives, nonprofit state-regional trade groups, and small U.S.
businesses to share the costs of overseas marketing and promotional
activities such as consumer promotions, market research, trade shows,
and trade servicing.
I would like to share an example of a MAP success story from my
home State of Minnesota. Sunrich, a producer and exporter of soy food
ingredients, has used the MAP program to sharply expand its
international sales. The company has gone from having a single overseas
market to selling in Japan, Korea, Spain, France, Germany, Indonesia,
Australia, New Zealand, and Israel. Exports now generate several
million dollars in sales for Sunrich. The Market Access Program has
helped them do market research, produce targeted promotional materials,
ship samples, and provide technical support to potential buyers
overseas.
Technical Assistance for Specialty Crops
As our exports have grown, some of our trade partners have
increasingly turned to sanitary, phytosanitary, and technical barriers
to protect their domestic industries and deny market access to U.S.
agricultural products rather than basing these policies on science.
USDA has successfully helped U.S. exporters regain market access for
millions of dollars of products from almonds to spinach. To continue to
enhance efforts, the Administration's 2007 Farm Bill proposals would
expand mandatory funding for the Technical Assistance for Specialty
Crops (TASC) grant program, which is currently funded at $2 million per
year, by an additional $2 million annually up to $10 million for Fiscal
Year 2011 and beyond.
TASC projects assist U.S. food and agricultural organizations to
address phytosanitary and technical barriers that prohibit or threaten
the export of U.S. specialty crops. The program has proven to be very
effective in providing support for specialty crop exports. In recent
years, TASC funding has been used to gain market access for California
nectarines in Japan, harmonize organic standards with Canada and the
EU, and create a database of pesticide tolerance levels and standards
for more than 300 specialty crops in more than 70 countries. In 2006,
USDA funded 26 TASC projects.
Grant Program To Address SPS Issues
To complement the successes and popularity of the TASC program, the
Administration's 2007 Farm Bill proposals include a new grant program
focused on sanitary and phytosanitary issues for other non-specialty
crop commodities. This new program would provide $2 million in annual
assistance through mandatory funding. Like the TASC program, this
assistance could provide U.S. exporters with information on compounds
restricted by other countries and improve other countries'
understanding of U.S. safety standards and testing methodologies. It
also would enable us to tap targeted technical expertise on an ad-hoc
basis for non-specialty crop commodities.
Technical Assistance To Resolve Trade Disputes
For small agricultural producers and industries, defending their
products against inappropriate trade restricting measures such as
counterfeit labeling, copyright infringement, unfair administration of
tariff-rate quotas (TRQs) and other barriers to trade is a complex,
lengthy, and time-consuming process. While U.S. industries can pursue
unfair trade practices through U.S. trade laws or initiate a case in
the World Trade Organization (WTO), industries must pay high legal and
analytical costs for extended periods of time-sometimes years. This is
particularly challenging for limited resource agriculture industries.
Conversely, some U.S. agricultural sectors have themselves been
challenged either in the WTO or under other countries' domestic trade
laws. USDA, working closely with USTR, helps industries that have been
challenged. The Administration is requesting that the Secretary of
Agriculture be granted broad discretionary authority to provide limited
resource groups with enhanced monitoring, analytical support, and
technical assistance if he or she deems it would be beneficial to U.S.
agricultural exports.
International Trade Standard Setting Activities
USDA works closely with international standard-setting bodies, such
as the Codex Alimentarius, the International Plant Protection
Convention, and the World Animal Health Organization, to establish and
harmonize multilateral food, plant, and animal health and safety
standards. By assigning U.S. staff to work with these organizations, we
have a say in their decision-making process and ensure that they design
and implement standards for trade in agricultural products that are
science-based and recognize U.S. health and safety standards.
The United Nations Food and Agriculture Organization (FAO) works
with member governments to place their nationals in FAO staff
positions. However, the United States lacks sufficient funding to place
adequate numbers of Americans in these positions. For example, out of
approximately 100 positions in the FAO's associate professional officer
program, European countries fund about 83 positions for their
nationals, while the United States currently only funds one American.
As a result, the EU is in a better position to influence
international organizations' policies and programs than we are. USDA
needs dedicated funding to strengthen U.S. representation in these
organizations. In addition, we are having difficulty hiring seasoned,
director-level staff to represent the United States in these
organizations because we do not have the funds or the authority to pay
salaries and allowances commensurate with those received by
international organization employees. For these reasons, the
Administration's 2007 Farm Bill proposals request long-term mandatory
funding of $15 million over 10 years to enhance our ability to assign
USDA staff support for international trade standard-setting bodies.
Trade Capacity Building
Before developing countries can become reliable customers for U.S.
agricultural products, they must first become politically,
economically, and socially stable. President Bush's National Security
Strategy recognizes that a lack of economic development, particularly
in fragile and strategic countries and regions, results in economic and
political instability which can pose a national security threat to the
United States. A productive and sustainable agricultural sector is a
critical factor in creating stability. Only then can these countries
and regions integrate into the global economy and reduce hunger and
poverty.
USDA works to develop the capacity of local governments in
politically stable, but fragile economies to support market-based
agriculture. We have provided technical assistance and trade capacity
building in markets such as Georgia, Armenia, Kenya, Uganda, and
Pakistan so they can harness the power of trade and create open and
predictable policies and procedures to boost economic growth and reduce
poverty.
In recent years, USDA has worked with the Department of State, the
Department of Defense, the U.S. Agency for International Development,
and the National Security Council to assist in the reconstruction and
stabilization of Afghanistan and Iraq. Revitalization of these two
countries' agricultural sectors is essential to their development and
stability. USDA is conducting trade capacity building and technical
assistance activities in Iraq, including a $7.8 million agricultural
extension project in conjunction with the U.S. Department of State, and
marketing education efforts in partnership with U.S. commodity groups.
The Administration's 2007 Farm Bill proposals provide $2 million
annually in mandatory funding for agriculture trade capacity building
for fragile countries and regions by improving food safety, supporting
agricultural extension projects, agricultural knowledge initiatives,
and building bilateral partnerships.
Food Aid Programs
In addition to this trade capacity building assistance, USDA
administers three food aid programs that support economic development
in countries needing assistance to get on their feet or needing help in
a crisis or emergency--the Food for Progress Program, the McGovern-Dole
International Food for Education and Child Nutrition Program, and the
Public Law 480, Title I (P.L. 480, Title I) Program. These programs
support international assistance and development activities that
alleviate hunger and improve nutrition, education, and agriculture in
some of the world's poorest countries. Through the provision of
agricultural commodities, we are able to feed millions.
Food for Progress Program
During the past 2 decades, the Food for Progress Program has
supplied over 12 million metric tons of commodities to developing
countries and emerging democracies committed to introducing and
expanding free enterprise in the agricultural sector. Commodity
purchases totaling nearly $3 billion over this period for Food for
Progress programming have been handled through the Commodity Credit
Corporation (CCC).
Under this program, during Fiscal Year 2006, the United States
provided more than 215,000 metric tons of CCC-funded commodities valued
at about $77 million. This effort supported 19 developing countries
that were making commitments to introduce or expand free enterprise
elements in their agricultural sectors. Again this year, more than
215,000 metric tons of commodities will be provided. More than two
million people in 11 countries, including Afghanistan and countries
throughout Africa and Central America will be fed by this program this
fiscal year. In Fiscal Year 2008, the President's budget includes an
estimated program level of $163 million for Food for Progress grant
agreements carried out with CCC funds.
McGovern-Dole Program
Another highly successful program is the McGovern-Dole
International Food for Education and Child Nutrition Program, which
helps support education, child development, and food security in low-
income, food-deficit countries that are committed to universal
education.
This year, we will feed nearly 2.5 million women and children in 15
developing countries, including Cambodia, Guatemala, and Malawi, with
the $99 million appropriated funding level. We appreciate the strong
support this program has received from Members of Congress. In Fiscal
Year 2008, we are requesting $100 million for the McGovern-Dole
Program. This amount will be supplemented by an estimated $8 million to
be received from the Maritime Administration for cargo preference
reimbursements.
In the last 5 years, the McGovern-Dole Program has helped feed more
than 10 million children in more than 40 countries. Last year, USDA
awarded Counterpart International (CPI) a grant to provide more than
9,000 tons of commodities for use in Senegal. This McGovern-Dole
project is using vegetable oil, textured soy-protein, and barley to
feed nearly 18,000 primary school children and 1,800 pre-school
children over a 3 year period. The proceeds from the sale of soybean
oil are being used to improve school sanitation, repair schools, and
improve the skills of teachers. The project includes a maternal and
child health component, which provides take-home rations to needy
mothers with young children. It also provides a growth monitoring and
promotion program, along with a health education and assistance
campaign. The leader of one of the villages in which the school feeding
project is being conducted told the visiting U.S. Ambassador to Senegal
that, ``We have already seen immediate results from this program as
students are able to stay in school longer and learn more each day.''
This McGovern-Dole school feeding program provides hot daily meals to
students, permitting them to remain in the classroom and learn for
longer periods.
The multi year dimension of this program is essential to addressing
comprehensively the issue of chronic hunger. Moreover, providing meals
both at school and through take-home rations provides a powerful
incentive for children to remain in school. Government-to-government
partnerships coupled with the important resources provided by the
private voluntary organizations (PVOs) are vital to sustaining these
programs and ensuring success.
P.L. 480, Title I Program
Historically, the P.L. 480, Title I program has been geared
primarily toward countries with a shortage of foreign exchange and
difficulty in meeting their food needs through commercial channels.
Assistance has been provided on a government-to-government basis by
selling U.S. agricultural commodities on credit terms. In recent years,
the demand for food assistance using credit financing has fallen,
mostly because worldwide commercial interest rates have been relatively
low. For example, in 2006 we signed only three government-to-government
credit agreements compared to seven in 2002. As recently as 1993, 22
Title I agreements were signed, but the number has steadily declined
over the past 14 years. We are not requesting any additional funding
for P.L. 480, Title I for 2008. The budget recommends that all P.L. 480
assistance be provided through Title II donations.
Bill Emerson Humanitarian Trust
USDA also manages the Bill Emerson Humanitarian Trust, which serves
as a backstop commodity reserve for the P.L. 480 program. This reserve
is available to provide emergency humanitarian food assistance to
developing countries, allowing the United States to respond to
unanticipated food crises with U.S. commodities. We currently have
915,000 metric tons of wheat in the Trust and $107 million in cash.
Cash in the Trust provides the flexibility we need to purchase
appropriate U.S. commodities based on availability and the specific
need. With commodities in the Trust, we must pay storage costs. Holding
the 915,000 metric tons of wheat in the Trust is costing more than $9
million each year or about $10 per ton. Cash in the Trust also allows
us to respond much more quickly to a food crisis because we can easily
purchase U.S. commodities, whereas substituting what we have in the
Trust for what we need to provide consumes precious time.
Upcoming Issues
This year, several food assistance issues will come to the
forefront in the domestic and international arenas. USDA chairs the
Food Assistance Policy Council, which includes senior representatives
from USAID, the Department of State, and the Office of Management and
Budget. Over the years, this group has made significant progress in
ensuring policy coordination of food assistance programs under the
Agricultural Trade Development and Assistance Act and the Food for
Progress Act. The Council recently identified key issues to receive
attention this year: food aid quality, the Administration's 2007 Farm
Bill proposals, and the challenges facing food aid policy in the WTO.
For more than 40 years, USDA and USAID have provided micro-nutrient
fortified food commodities to vulnerable, food-insecure populations. We
are proud of our record in feeding at-risk recipients of U.S. food aid
around the world. However, in recognition that both the science of
nutrition and the nature of recipient populations have changed over
time, we are examining whether current food aid formulations and
product manufacturing practices address the needs of at-risk recipients
and reflect the best available science.
Toward that end, our initiative includes an in-depth review of the
types and quality of food products used in the administration of U.S.
food aid programs. We seek recommendations of what changes, if any,
should be made to the composition and mix of our commodities. The
project also continues our efforts to review existing contract
specifications used to obtain food aid commodities, and to improve our
post-production commodity sampling and testing regime based upon sound
scientific standards. All three parts of the project were announced
formally in April at the International Food Aid Conference.
USDA and USAID agree on a division of labor for the project. We
have identified funding. Our respective Requests for Information have
been published to identify available, independent expertise. Our goal
is to consult with many stakeholders in food aid, including
nutritionists, scientists, commodity associations, the World Food
Program, and the private voluntary organization (PVO) community, to
make sure all viewpoints are heard. We want to ensure that the food aid
we provide in the next 40 years is of the highest caliber to meet the
nutritional requirements necessary to address chronic hunger.
The Administration's farm bill proposals include a recommendation
that will provide flexibility in providing food aid when rapid response
is critical to saving lives. The proposal would authorize use of up to
25 percent of P.L. 480, Title II, annual funds for the local or
regional purchase of food to assist people threatened by a food
security crisis.
This authority would enable U.S. assistance to be more effective
and more efficient. The authority would be used in those instances
where the rapid use of cash for local or regional procurement is
critical to saving lives in response to an emergency. The intention is
not to change the way the United States meets most food aid needs, but
rather to enhance the variety of tools at our disposal to address food
emergencies. This authority will provide the ability to purchase food
near the scene of a crisis instead of taking the additional time that
it can take to load and ship the aid from the United States. As
Secretary Johanns has said, we do not anticipate opting for local
purchases often--only when we believe that it is essential to deliver
aid in the timeframe that it is needed. As I mentioned, our proposal
would allow us to use no more than 25 percent of total Title II annual
funding. U.S.-grown food will continue to play the primary role and
will be the first choice in meeting global needs. We simply ask for
every available tool to save lives.
As you are aware, food aid is a subject of discussion in the WTO
negotiations. In the negotiations, the United States continues to
strongly defend our ability to use in-kind food aid in emergency and
non-emergency situations. Emergency food aid should not be disciplined
because flexibility must be maintained to respond to people in crisis.
Non-emergency food aid should only be disciplined to ensure that it
does not displace commercial sales. Cash and in-kind food aid should be
treated equally in operational disciplines and transparency provisions.
A variety of programming options must remain available to ensure
that food aid programs can be tailored to local needs and that sales do
not disrupt local markets or displace commercial imports. The
monetization of food aid to generate funds for supporting projects that
result in increased economic activity and thereby directly confront
poverty should continue. As the United States has repeatedly stated in
these negotiations, we seek to help lift poor families out of poverty
by helping governments design projects that are self-sustaining.
Conclusion
As Administrator of USDA's Foreign Agricultural Service, I am proud
of our efforts to improve foreign market access for U.S. products,
build new markets, improve the competitive position of U.S. agriculture
in the global marketplace, and provide food aid and technical
assistance to foreign countries.
I believe the 2007 Farm Bill Trade Title proposals will make U.S.
farm policy more equitable, predictable, and better able to withstand
challenge, while ensuring fairness and providing greater export
opportunities to farmers, ranchers, and other stakeholders.
This concludes my statement. I look forward to answering any
questions you may have. Thank you.
Mr. McIntyre. Thank you very much.
Mr. Hammink.
STATEMENT OF WILLIAM HAMMINK, DIRECTOR, OFFICE OF FOOD FOR
PEACE, U.S. AGENCY FOR INTERNATIONAL
DEVELOPMENT (USAID), WASHINGTON, D.C.
Mr. Hammink. Mr. Chairman, Members of the Subcommittee, I
am very pleased to be here today with you to examine the
performance of U.S. Title II food aid programs that are managed
by USAID. The Title II Food for Peace Program is a 53 year-old
institution that has saved the lives of millions of people
around the world. It is an institution that Americans across
the country recognize and can be extremely proud of. The last 3
years we have averaged almost $1.8 billion including
supplementals, and last year alone procured 2.3 million metric
tons of food. It is a major indication of U.S. humanitarian
assistance.
I would like to focus my remarks on two main areas. One,
the changing world situation is affecting the Title II food aid
context for emergency assistance, and two, how we can improve
the overall efficiency and effectiveness of the Title II food
aid program. The frequency, magnitude and unpredictability of
major food crises are increasing due to growing chronic
vulnerability. Over the last decade we have seen large
population groups such as pastoralists in East Africa, poor
farmers in the Sahel, and HIV/AIDS-affected populations in
southern Africa whose lives and livelihoods are at severe risk.
There is evidence and understanding that food aid alone will
not stop hunger. Today, despite the investments and the
progress made over the past 50 years, globally an estimated 850
million people are still food insecure. Giving food to people
will save lives and address short-term hunger needs, but it
will not by itself save livelihoods or end hunger.
How can we improve our food aid programs within that
context? Food aid programs need to be able to respond quickly
and flexibly with the growing number of emergencies to support
increasingly more vulnerable and desperate populations, and
very importantly, integrated with other resources to more
effectively halt the loss of livelihoods and address the
underlying causes of food insecurity.
Let me discuss a few areas where we are focusing to improve
food aid programs. First, local procurement: The most important
change that the Administration has been seeking in recent
appropriation requests and in the Administration's farm bill
proposal is the authority to use up to 25 percent of the Title
II funds for the local or regional purchase of food to assist
people threatened by a food crisis. Let me assure you that our
U.S.-grown food will continue to play the primary role and will
be the first choice in meeting global needs. If provided this
authority by the Congress, we would plan to use local and
regional purchase judiciously in those situations where fast
delivery of food assistance is critical to saving lives.
Two, pre-positioning emergency food aid: To help reduce the
response time needed, USAID has successfully pre-positioned
processed food aid at U.S. ports and overseas. Pre-positioning
is an important tool and could be expanded although there are
logistical and other limits to pre-positioning food aid.
However, pre-positioning is not in itself a substitute for
local procurement authority.
Third, the Bill Emerson Humanitarian Trust: The Emerson
Trust is the mechanism to respond to major food aid emergencies
and clearly complements Title II. One concern is that the
releases from the Trust have exceeded the statutory limit on
its annual replenishment.
Fourth, prioritization: USAID is strategically focusing our
non-emergency or development food aid resources in the most
food insecure countries. Resources that were historically
spread across 30 countries will be concentrated in about half
that many countries to achieve maximum impact on chronic food
insecurity issues.
Last, integration: Under the U.S. foreign assistance
framework, USAID and the State Department are working to
integrate all foreign assistance resources toward a number of
objectives to set a given country on a sustainable path toward
development. Starting with 2007 Title II funds, these Title II
non-emergency programs will be integrated into country programs
with other funds to achieve maximum impact.
The food aid programs are complex and the problems and
issues that U.S. food aid must address are increasingly
complex. USAID is committed to ensuring that Title II food aid
is managed in the most efficient and effective manner possible
to decrease costs, increase impact and continue the 53 years of
proud experience. We look forward to continued discussions.
Thank you.
[The prepared statement of Mr. Hammink follows:]
Prepared Statement of William Hammink, Director, Office of Food for
Peace, U.S. Agency for International Development (USAID), Washington,
D.C.
Chairman McIntyre, Members of the Subcommittee, I am pleased to
have the opportunity to meet with you today to examine the performance
of U.S. food aid programs with particular reference to the 2007 Farm
Bill discussions. As you know, USAID manages the P.L. 480 Title II
program, which includes emergency and non-emergency food aid. The new
farm bill, which will reauthorize the P.L. 480 Title II program, is
extremely important to ensure the increased efficiency and
effectiveness of U.S. Title II food aid overseas.
James Morris, the prior Executive Director of the United Nations
World Food Programme (WFP), told me shortly before he left office that
the Office of Food for Peace is much more than an office in USAID. He
said that after 52 years of providing U.S. food aid to hundreds of
millions of people around the world, savings millions of lives and
affecting the livelihoods of millions more, Food for Peace is not just
an office but an institution, and one that Americans across the country
recognize and can be extremely proud of.
However, like any 52 year institution or program, we need to
continue to look for ways to improve the efficiency and effectiveness
of how we provide Title II emergency and non-emergency food aid. We
appreciate this opportunity to share some thoughts with you on ways to
do that.
The U.S. plays a global leadership role in food security and as a
humanitarian food aid donor. The U.S. is the largest food aid donor in
the world, and the largest single contributor to the World Food
Programme. However, procuring, shipping, storing, distributing,
monitoring and evaluating approximately 2.5 million metric tons of U.S.
food aid each year worth over $1 billion is highly complex, especially
as we try to minimize costs. Our primary focus is to get food aid
quickly to sudden emergencies to save lives, make better funding
decisions, strengthen beneficiary impact of all of our food aid
programs, improve predictability of non-emergency food aid resources,
expand integration of food aid with other development programs, and
concentrate emergency and non-emergency food aid resources in the most
food-insecure countries.
As a lead-up to the re-authorization of the farm bill, food aid
reform is being analyzed and discussed by academics and think tanks, at
the World Trade Organization, with UN organizations such as FAO and WFP
and with a broad spectrum of Private Voluntary Organizations (PVOs). We
are participating in these discussions and listening closely to all of
these proposals and ideas. Because the farm bill is only taken up
approximately every 5 years, this is an important opportunity to take
what we have learned from experience, analyses, and research; and to
link lessons learned to better inform changes in U.S. food aid
programs.
USAID is also undergoing changes. Under a new Strategic Framework
for U.S. Foreign Assistance, the Department of State and USAID are
developing a fully integrated process for foreign assistance policy,
planning, budgeting and implementation. Under the new Framework, our
goal is to ensure that Title II food aid will, in collaboration with
all foreign assistance funds in each country context, have an immediate
impact--saving lives and protecting livelihoods--while also
contributing to longer term objectives, such as enhancing community and
household resilience to shocks and reducing future emergency food aid
needs.
In reviewing the performance of Title II food aid and considering
the new farm bill, I would like to focus this discussion on two main
areas: (1) the changing world situation and context for the Title II
food aid program; and (2) how we can improve overall efficiency and
effectiveness of Title II food aid programs within that new context.
The Changing World Situation and Context for Food Aid
Food aid does not exist within a vacuum. Rather, it addresses needs
within an international and local economic and political context, and
that context has substantially shifted in recent years. The new farm
bill will provide us with an opportunity to address these changed
conditions with a response that will not just prevent hunger and food
crises as they occurred years ago, but as they exist now. To do that,
food aid must address two major trends:
First, the frequency and magnitude and unpredictability of major
food crises are increasing due to growing chronic vulnerability.
Devastating wars, civil strife and natural disasters have often brought
in their wake food problems. But over the last 5 to ten years, we have
seen a significant increase in the numbers of people who are affected
by these events, who face total destitution, a loss of household assets
and livelihoods, and a chronic exposure to even the most minor of these
shocks.
Take drought, for example. There have been droughts periodically
for thousands of years. And while they have sometimes been deadly, the
communities involved have generally been able to absorb that shock,
restructure their livelihoods, and then begin to grow again.
But now, droughts in Africa appear to be more frequent. Where they
used to come once every ten or twenty years, they have recently begun
appearing several times in a ten year period, and more recently still,
to possibly as little as every 2 or 3 years. With that level of
frequency, a community's full recovery from a drought is difficult at
best. In many cases, herders' animals die and the herder sells still
more animals for food, further shrinking the herd. A farmer who loses
his crop and food supply may sell his hoes and harrows for food, and
then hope to find seed to begin again. Each successive drought may find
many communities increasingly characterized by a deeper and more
widespread poverty, deteriorating landscapes, drying lakes and rivers,
an ever poorer agricultural base, no market to sell to or buy from,
hampered further by poor governance and governmental policies.
Over the last decade, we have seen large population groups--
pastoralists in East Africa, poor farmers in the Sahel, HIV/AIDS-
affected populations in southern Africa--whose lives and livelihoods
are either disappearing, or are at severe risk of destruction.
Continuous and overlapping crises can leave more and more people
defenseless, chronically vulnerable to major food crises that may be
triggered by small changes in rainfall, or food prices, or the rising
cost of fuel.
Often, war or civil strife occurs within these same populations, or
grows out of the conditions they live in. Entire generations in some
countries have grown up in an atmosphere of extreme poverty overlaid by
civil unrest, if not armed conflict. Portions of these conflict-ridden
societies, like in Sudan and Somalia, subsist by receiving significant
amounts of food aid and other humanitarian support to sustain their
poor economies, perpetually disrupted by poverty, insecurity and war.
In Sudan alone, WFP is supporting the food needs of almost two million
internally displaced people (IDPs) in Darfur and another million people
living near the IDP camps in Darfur who are affected by the crisis. To
date, the U.S. has borne a disproportionate share of this food aid
burden, providing about 475,000 metric tons per year for Sudan and
Eastern Chad. Last year the U.S. contributed half of the assessed food
aid needs and over 65 percent of all the food donated to Sudan.
Second, there is evidence and understanding that food aid alone
will not stop hunger. Today, despite the investments and the progress
made over the past 50 years, globally an estimated 850 million people
are still food insecure. While providing food will feed people today,
it will not, by itself, lead to sustainable improvements in the ability
of people to feed themselves. Giving food to people will save lives and
address short term hunger needs, but it will not save livelihoods or
end hunger. In cases of widespread vulnerability, food aid must be used
strategically, such as in a national safety net program, and planned
along with other U.S., other donor and other recipient-country non-food
development resources, to attack the underlying causes of food
insecurity, such as lack of rural credit, markets, infrastructure and
off-farm job opportunities; or environmental degradation, poor
agricultural productivity, and poor governmental policies. The new U.S.
Foreign Assistance Framework for foreign assistance will help. With
respect to Title II non-emergency food aid programs, co-operating
sponsors can monetize some of the food aid commodities that they
receive and use the proceeds to implement activities that support the
broader Title II food aid program.
How Can We Improve Our Food Aid Programs Within That New Context?
Emergency food aid needs are increasing and becoming less
predictable, as conflict and natural disasters afflict and undermine
the survival of a growing number of destitute and chronically food
insecure people, who are often subsistence farmers, or herders and
pastoralists. Because of this, food aid programs need to be adapted to
these new conditions. They need to be able to respond more quickly to
increasingly more vulnerable and desperate populations. They must be
more effectively aimed at halting the loss of livelihoods that is the
consequence of a series of even small shocks. And they must be combined
with other U.S., other donor, and other recipient-country non-food
development resources so that the multiple causes of vulnerability can
be addressed together. Here are some areas where we are considering
improvements to food aid implementation.
Local Procurement: First, the most important change that the
Administration has been seeking in recent appropriation requests and in
the Administration's farm bill proposals, is the authority to use up to
25 percent of the Title II funds for the local or regional purchase and
distribution of food to assist people threatened by a food crisis.
The long lead-time required to order and deliver U.S. food aid--
normally up to 4 months--means that we often need to make decisions
well before needs are known. In some cases, the need is sudden, such as
during a flood or an outbreak of fighting. In other cases, there is an
unanticipated break in the flow of rations to beneficiaries (pipeline
break), or even a short-lived cease fire allowing aid agencies to enter
places previously inaccessible because of security issues where,
typically, we find people that have been cut off from food for some
time.
In the case of drought we are also challenged to get food to people
on time. There have been great advances in the ability to predict and
track rainfall, undertake post-rain harvest assessments, and follow
changing prices, resulting in better early warning. While we can often
predict the impact of poor rains on crops, it is difficult to predict
its impact on the ability of people to purchase enough food to eat. In
the Sahel in 2005, for example, merely below-average rains and a
marginally weak harvest, known well in advance, resulted in an
unexpected major crisis because these conditions were compounded by
unpredictable changes in trade flows among neighboring countries. This
drew food away from regions with very poor populations, causing price
spikes and an urgent need for food aid.
While it is impossible to predict the location and extent of
emergencies that would require local procurement each year, the
Administration might have considered using this authority for the
immediate response to Iraq in 2003, to the Asian tsunami in 2004, in
southern Africa and Niger in 2005, in Lebanon in 2006 and in East
Africa in 2006 and 2007. We anticipate that purchases would occur in
developing countries (in accordance with the OECD Development
Assistance Committee List of Official Development Assistance
recipients).
Let me assure you that our U.S-grown food will continue to play the
primary role and will be the first choice in meeting global needs. If
provided this authority by the Congress, we would plan to use local and
regional purchases judiciously, in those situations where fast delivery
of food assistance is critical to saving lives.
We ask that you seriously consider our proposal and the critical
role this authority could play in saving lives of the most vulnerable
populations. We are willing to work with you to address your concerns
in order to move forward to provide for urgent needs.
Strengthening Assessments: Accurate assessments and well-targeted
use of food aid are critical for responsible food aid. USAID is
therefore giving considerable on-going attention to working with the
WFP and partner PVOs to assist them in strengthening emergency food
needs assessment and response systems and capabilities. Specifically,
USAID is actively involved with other donors in providing guidance to
WFP at the Executive Board on policy and program topics related to
emergencies, providing technical and advisory input to the UN
``Strengthening Emergency Needs Assessment Capacity'' (SENAC) activity,
and providing resources to strengthen the assessment capacities of P.L.
480 Title II partner non-governmental organizations. USAID fully
supports the GAO recommendation to enhance needs assessment
methodologies and donor and host government collaboration; and can use
and is using WFP, SENAC, the USAID Famine Early Warning System
(FEWSNET) and other mechanisms to do so.
Pre-positioning Emergency Food Aid: To help reduce the response
time needed, for many years, USAID has pre-positioned processed food
aid, both at U.S. ports and overseas. These efforts have been very
successful. Pre-positioning processed food in warehouses not far from
major emergency areas allows us to get this food to the beneficiaries
at risk of starvation faster. Over 60% of the processed food sent to
the pre-position sites overseas is redirected at an additional cost to
meet unanticipated emergency needs and never makes it to the pre-
position warehouses. While pre-positioning could usefully be expanded,
the current farm bill has a ceiling on how much can be spent on pre-
positioning. There are also significant logistical and other limits to
pre-positioning food aid. For example, processed foods are the main
commodities that can be successfully stored near emergencies. In
addition, there are severe limits to the availability, cost, and
quality of warehouse space and services near major emergencies, and
problems certifying the condition of food withdrawn from these
warehouses. Consistent with the GAO recommendation, we will examine the
long-term costs and benefits of pre-positioning. But, while we want to
expand pre-positioning, we do not expect to be able to do much more
than we are currently. To be clear, pre-positioning is not a substitute
for local procurement authority, particularly given the logistical
limits to pre-positioning with respect to the amount and types of
commodities that can be stored, as well as speed.
Bill Emerson Humanitarian Trust: The Administration needs to ensure
that it responds appropriately to major food aid emergencies. The
primary means of funding large, unanticipated emergency food aid needs
is the Bill Emerson Humanitarian Trust (BEHT). The BEHT is an important
resource that assists the U.S. to meet major urgent humanitarian food
aid needs. The BEHT complements Title II by providing resources to
address unanticipated emergency food aid needs. However, one concern is
that the releases from the BEHT have exceeded the statutory limit on
its annual replenishment. As a result, the BEHT as a resource is
shrinking.
Prioritization: In 2005, USAID issued a new Food Aid Strategic Plan
for 2006-2010. This plan seeks to make the best use of Title II food
aid resources by allocating resources to the most vulnerable people in
order to help build resiliency and enable them to withstand the next
drought or flood and, therefore, decrease dependency on food aid in the
future.
We are strategically focusing the food aid resources available for
non-emergency programs on the most food insecure countries. Resources
that were historically spread across over 30 countries will be
concentrated in about half as many countries in order to achieve
maximum impact. Through addressing the most pressing food security
needs with focused resources (especially in the countries that continue
to need emergency food aid) we will work to reduce the need for
emergency food aid over time.
To address the underlying causes of food insecurity in these
priority countries, we need to increase integration of Title II and
other funding sources in programming. For example, in Haiti USAID uses
Child Survival and Health funds to train health care workers to monitor
the growth of young children who are receiving food aid under the Title
II program. In Mozambique, Development Assistance funds are used, in
conjunction with Title II funds, to support road rehabilitation and
help farmers get their products to market more quickly and for fair
prices.
Integration: Under the U.S. Foreign Assistance Framework, USAID and
the State Department are working to integrate all foreign assistance
resources toward a number of objectives designed to set a given country
on a sustainable path towards development. We have wrapped funding,
goals, and performance indicators into one system that will be able to
tell you who is spending the money, what it is being spent on, and what
we expect to get from spending it. This information will come together
in an annual Operational Plan submitted to Washington for each country
where foreign assistance funds are provided. For the first time,
starting with FY 2007 funds, Title II non-emergency programs will be
integrated in country programs to achieve maximum impact. By bringing
U.S. foreign assistance resources together in a strategic and
integrated fashion, the U.S. Foreign Assistance Framework allows the
U.S. Government to implement more-effective and multi-sectoral
interventions that address the overlapping themes of poverty and hunger
and the underlying factors that cause them, country by country.
Programs are thus more comprehensive in scope and complementary in
nature, with food aid serving as only one tool of many working together
to address the chronic causes of poverty and hunger in the most food-
insecure countries.
Rationalizing Program Expenses: As we focus on the most food-
insecure countries and integrate food aid programs with other programs
focused on food insecurity objectives, we need to review our own
regulations on non-food resources, such as 202(e) authority, to ask
whether it needs updating. There was a time when the distinction
between two main non-freight authorities--internal transport, storage
and handling (ITSH), on the one hand, and 202(e) administrative
expenses on the other--made sense. After all, that latter category was
viewed as overhead that should be limited to ensure that as much food
aid went to beneficiaries as possible. We are considering whether
consolidating these funding authorities would lead to a more
streamlined, cost-effective operation by having needs, and not funding
categories, determine expenditures.
Another area of food aid resources that deserves a closer look is
monetization. As the Committee knows, in recent years, monetization has
generated a significant amount of debate both globally and in the U.S.
food aid community based on differing views of the impact that
monetization has on local markets and commercial imports. At the same
time, we know that monetization can have development benefits and can
be appropriate for low-income countries that depend on imports to meet
their food needs. While the U.S. Government strongly supports
monetization, many in the food aid community are concerned that
monetization may be lost as a tool in the Doha World Trade Organization
negotiations and continue to press for its use. Others are prepared to
look for alternative means to address the causes of hunger and poverty.
FFP agrees with the GAO recommendation to establish a database on
monetization to record costs and proceeds, in order to inform this
debate and seek improvements.
Monitoring: The GAO has recommended that USAID increase the
monitoring of Title II programs in the countries where the food is
monetized and distributed. We support the recommendation to conduct
more monitoring. USAID currently uses multiple sources of funding to
cover current monitoring costs for Title II programs. Statutory
restrictions in the use of Title II resources limit the current level
of monitoring.
Food Aid Quality: Both USAID and USDA are already at work in
preparing a comprehensive evaluation of food aid specifications and
products. The report will begin with a thorough evaluation of
contracting procedures; the focus will be on the expeditious
enforcement of contract standards in order to gain higher incidence of
contract compliance. Next, the review will evaluate USDA product
specifications with a focus on laboratory testing and manufacturing
standards. The focus of this second stage will be on improving post-
production commodity sampling and testing procedures, with emphasis on
sound scientific standards.
The third and final stage of the initiative will review options on
nutritional quality and cost effectiveness of commodities currently
provided as USDA and USAID food aid. We want to ensure that the food we
provide is of the highest caliber to meet the nutritional requirements
necessary to address today's beneficiaries. We will have consultations
with nutritionists, food technologists, commodity associations, the
World Food Program, the PVO community, and all relevant businesses that
produce, ship, or package food aid. USDA and USAID have already posted
requests for information from potential contractors to support this
third stage.
Partnership: Finally, I would like to comment on our commitment to
increase and improve our consultative partnership with our partners and
to increase public-private partnerships related to food aid and
reducing food insecurity. For example, the Food Assistance Consultative
Group (FACG), mandated in the farm bill, has not been as participative
as USAID and our partners would like to see. We plan to propose changes
to the structure of the FACG in order to improve the consultative
nature of discussions and to focus again on specific issues that should
be solved through a broader consultative process. These changes do not
require any legislation.
Food aid programs are complex, and the problems and issues that
U.S. food aid must address are increasingly complex. The Administration
is committed to ensuring that Title II food aid is managed in the most
efficient and effective manner possible, to decrease costs, increase
impact and continue the 52 years of proud experience in using U.S. food
aid to save lives and protect and improve the livelihoods of vulnerable
populations. We look forward to continued discussions and debates with
Congress on how the farm bill can best allow the United States to
respond to new food aid challenges to reduce global hunger and poverty.
Thank you.
Mr. McIntyre. Thank you very much. Thanks to both of you
gentlemen.
Mr. Yost, I would ask you, what is your response to the
argument that shifting funds out of Public Law 480 for local or
regional purchase would undercut U.S. support for food aid and
could even result in less food aid being provided?
Mr. Yost. Just a couple comments on the 25 percent
proposal. It is up to 25 percent. It doesn't mandate 25
percent. Second, it talks about sourcing the food in the local
area. Just a couple examples I would use: we diverted food aid
to Lebanon this past year and the best we could do was 17 days
and we were very fortunate to have a ship in position that was
loading at the docks in New Orleans. Previously, during the
tsunami effort, the best we could do was 13 days to divert a
shipment, and once again we were fortunate to have food in a
position that we could shift. I think if this argument is
presented properly, as I have presented it to stakeholders,
commodity groups, when they learn this is about up to 25
percent, not buying the food from our competitors but buying
food locally, and it is about saving lives, the issue is better
received.
Mr. McIntyre. And when you say if the argument is presented
properly, who else do you have confidence under your
administration and in your service could present that argument
properly? Who would you designate to do that if you are not
available?
Mr. Yost. I have a number of people in our agency, our
Under Secretary. There are several that would be happy to
interact.
Mr. McIntyre. Could you provide us a list of those people
so we will know who to call upon?
Mr. Yost. Yes.
Mr. McIntyre. All right. If you would do that please within
the next 7 days, if you would submit it to the Committee staff,
that would be great. Thank you.
Mrs. Musgrave.
Mrs. Musgrave. Thank you, Mr. Chairman.
Mr. Yost, could you elaborate please on the successes of
the technical assistance programs that are used in resolving
trade disputes?
Mr. Yost. The Technical Assistance for Specialty Crops
Program is where most of our efforts are focused. We work with
co-operators that are on the ground working on a variety of
problems in a variety of countries around the globe. We have
had success with this program and that is one reason the
Administration's farm bill proposal looks at various ways to
expand that program.
Mrs. Musgrave. Further, with budget constraints that we are
hearing about, can you prioritize the requests of the
Administration? Where should we have additional spending? Could
you help me with that, please?
Mr. Yost. One of the first requests we have is to expand
the MAP program by $25 million per year. Also, we would like to
establish a grant program to hire outside entities and experts
to address sanitary and phytosanitary issues. We are requesting
$2 million per year for that program. We are also requesting a
small amount of money to position American international
standard-setting bodies, and we are looking at expanding the
TASC program over time up to $10 million per year. I think the
thing we have to look at in all these requests is that we are
talking millions of dollars, not billions and not hundreds of
millions of dollars, but there are billions of dollars of trade
at stake. We feel very strongly in our agency by implementing
and funding these programs, we can have a profound effect on
American agriculture.
Mrs. Musgrave. Thank you.
Mr. Hammink, can you identify some of the problems with
food aid transport which raise the cost, make it take a lot
longer, and what can be done to streamline this much-needed
aid, the delivery of this aid?
Mr. Hammink. Thank you. I am sure that you are aware the
GAO just completed a report on U.S. food aid, and a good part
of the report focused on those kinds of efficiency questions.
We met a few days ago with colleagues in USDA and the Maritime
Administration. We will be looking at some of the GAO
recommendations and following through. For example, to see what
the cost might be in terms of having contracts for transport
which would be long-term in nature and not just for each trip.
We will also work with DOD to look at how that could be
applicable to how Title II is shipped. At the same time, GAO
had some recommendations on sharing the risks and we will be
looking at that as well with our colleagues in the Maritime
Administration and USDA as well as of course the industry, the
carriers themselves, and other interested people such as the
PVOs; which would probably take the risk that would be shifted
from the carriers if we did that. We will continue to look at
ways to decrease transport costs as well, and will continue
discussions with the Maritime Administration and with the GAO.
Thank you.
Mrs. Musgrave. I would like to thank the witnesses.
Thank you, Mr. Chairman.
Mr. McIntyre. Thank you.
Mr. Barrow.
Mr. Barrow. Thank you, Mr. Chairman.
Mr. Yost, I hear you talking about how free trade
agreements are working out fine for us. I think about what is
happening in cotton and realize that cotton exports are booming
to China, but also that we are shipping all our jobs over there
for processing the raw material into fabric and then turning
that fabric into finished products. I mean, it is sort of a
mixed signal there. Are you familiar with the Inspector
General's report on the USDA's efforts in expanding foreign
markets?
Mr. Yost. Yes, I am, Congressman.
Mr. Barrow. Do you agree with his assessment that you are
not doing as good a job as you can?
Mr. Yost. No, we do not agree with it.
Mr. Barrow. Why?
Mr. Yost. Last year in 2006, worldwide exports of
agricultural commodities was $350 billion. We had nearly \1/5\.
One country commanded almost \1/5\ of those exports. We had $69
billion of agricultural exports last year. I think we are doing
an outstanding job.
Mr. Barrow. This is the Inspector General's assessment, not
mine. I am just wondering where does that report go off? Where
does it disagree with your assessment that everything is fine?
Mr. Yost. They used a different data set at different times
to come up with their rationale. We have weighed in against it
and argued against their methods. They still came forward with
that assessment. They used a base period from 1984 to 2005. If
you use 1986 to 2006, our share of trade went from 21 to 19.6
percent. So some of it is statistics used, some of it is the
data sets. In this case, we would argue that they didn't use a
standard set of data.
Mr. Barrow. Didn't use years when we were doing better?
Mr. Yost. Pardon me?
Mr. Barrow. They did not use years when we were doing
better? Is that what you are saying?
Mr. Yost. No, they started out with a different data set
than they ended. They used different data to compile their
statistics.
Mr. Barrow. Well, I have to say I am concerned. This is one
area where we have optimal advantages over the rest of the
world and for us to have \1/5\ may sound outstanding in the
abstract, but where I am coming from folks feel like our access
to foreign markets isn't what it ought to be, what access we
are getting as a result of bleeding in our sectors of our
economy, and what I hear you saying is that everything is as
good as it can be.
Mr. Yost. No, I don't want to imply it is as good as it can
be.
Mr. Barrow. All right. How can it be better?
Mr. Yost. Well----
Mr. Barrow. And I want your assessment, not the
Administration's assessment. How do you think things can be
made better?
Mr. Yost. I really am a believer in the proposals that we
are putting forward to attack sanitary and phytosanitary
issues. We literally have an SPS issue of the week at our
agency. These are the trade barriers. We need more resources to
attack these barriers. Some of these are scientific in nature.
Others are political in nature.
Mr. Barrow. Do we need resources to attack them or do we
need to respond in kind because we had a hearing earlier this
week raising some issues about that that suggest that maybe we
are not doing enough to protect ourselves from imports into
this country that don't match our standards. We are not playing
on a level playing field. We hear that in other contexts about
environmental standards and labor standards. It seems to me
that food safety standards are an area where what is good for
the goose is good for the gander.
Mr. Yost. My response would be that, if we are going to do
something, I hope we base it on scientific standards because at
the end of the day we need to gravitate internationally to
scientific standards, not----
Mr. Barrow. I appreciate that and I hear that about things
being based on sound science and I hear folks on both sides of
a political argument making that argument, but sound science is
as sound science does is what I am getting at. I hope that you
all will come up with something more effective than what we
have been experiencing so far because we have a case of the
``slows'' when it comes to sticking up for our exports. Other
folks are quick on the trigger to use just about every device
in the world to limit our access to their markets.
I see my time is running out, so Mr. Chairman, I yield. You
may say whatever you want, Mr. Yost, but I have to stop.
Mr. Yost. I tend to agree with a lot of your comments.
Mr. McIntyre. Thank you very much, and thank you, Mr.
Barrow for those questions, and we look forward to your
responses to those in further detail. I would like to now
acknowledge that Mr. Moran, who is not a Member of the
Subcommittee but we had greeted him earlier to join us and has
been here since the beginning, has stepped out. We will let Mr.
Smith go ahead.
Mr. Smith. Thank you, Mr. Chairman.
A question for Mr. Hammink. The GAO identified limitations
of staff as a barrier to providing effective oversight of food
aid programs. Do you feel the level of oversight provided by
USAID staff is adequate for the extended programs and regions
involved?
Mr. Hammink. Thank you. I would like to discuss a few
points. One is that monitoring is adequate, but it can always
be improved and we do have people monitoring these programs in
all the countries where we have food aid programs. The GAO
report appropriately looks at how many monitors we have in
those countries where we have non-emergency programs. The
people there are funded from different sources and not always
Title II so we would welcome continued discussion. We have told
GAO that we plan to expand our monitoring capabilities--
especially in those countries where we have ongoing multi-year,
non-emergency programs.
Mr. Smith. Thank you. I yield back.
Mr. McIntyre. Thank you, Mr. Smith.
Mr. Salazar.
Mr. Salazar. Thank you, Mr. Chairman.
As many of you know, I am a longtime farmer. I have farmed
all of my life and one of my biggest concerns of course is
government intervention in many of the commodity programs.
Definitely they understand that sometimes government means
well, but sometimes it really messes up the farmer. For
example, I am a strong believer in fair trade, not necessarily
free trade, and many times when it comes to trade programs,
agriculture is used as the whipping boy and many commodities
sometimes get the short end of the stick. But one of the things
I wanted to ask Mr. Yost is, the Secretary of Agriculture has
proposed the authority for the export enhancement program to be
terminated in the next farm bill. Could you elaborate on the
Department's rationale for eliminating this program?
Mr. Yost. One of the reasons for not extending it is the
fact that it hasn't been used for a number of years, and would
not affect U.S. exports. Also, in many cases, particularly now,
it is hard to present a case where we wouldn't have commercial
displacement or trade that would go on normally without any
help or any subsidy from the government.
Mr. Salazar. Okay. One of the issues that we are having,
and I tend to disagree with your rationale or your basis on
saying that the export programs are going well. Last year, for
example, we became net food importers of specialty crops. Could
you address that, or do you agree with that?
Mr. Yost. I don't have the figures off the top of my head.
You could be right. We do have year-round availability of a
number of fruits and vegetables. Trade is a two-way street.
When I go to the grocery store, I see that we have a wide
variety and abundance of various fresh fruits and vegetables
year round; plus there are a number of them that I don't know
what they are. If there wasn't a sign above them, I wouldn't
know their names. We have a very significant immigrant
community in this country now and various retailers are
importing a number of what I would refer to as somewhat exotic
fruits, vegetables and other products to sell to that
community.
Mr. Salazar. Well, especially in the specialty groups, when
it comes to vegetables, and I agree with you that many times
the phytosanitary issues are the ones that become really the
political issues and I understand that for example, with the
Country of Mexico. In Colorado, I chaired the seed export
program for potatoes and we tried to open up that market
forever and ever and it seemed like Canada was able to move
their product, I think it was over 200 metric tons of seed
potatoes from Canada, all the way to Mexico yet the American
Government couldn't, I guess rationalize with the Mexican
Government and create a good program. So I would encourage you
to look at specialty crops and vegetable crops especially
because I think that the phytosanitary issue has become a real
barrier to fair trade.
Mr. Yost. We will do that, Congressman. The SPS issues are
real barriers. We talked with the Mexicans this week about the
potato situation, and pushed for resolution on that issue.
Mr. Salazar. Thank you. I yield back, Mr. Chairman.
Mr. McIntyre. Thank you, Mr. Salazar.
We would like to thank our witnesses and look forward to
your full statements in the record and also to your further
answering the questions in full that you were requested to do
during this hearing, and certainly welcome you any time to come
back to our Subcommittee as we move further into the farm bill.
We appreciate your kindness in being with us and call panel
three to the table. We understand votes will be coming shortly
so we are going to move promptly to panel three. While they are
coming up here, I will go ahead, and in the interest of saving
time, to let you know that I will be stepping out for a meeting
with the Speaker in a few minutes and Mr. Salazar will assume
the gavel. Mr. Barrow will be joining me in that meeting as
well. So he and I will be slipping out, not because of anything
that the witnesses say but because the Speaker has summoned us
to a special meeting concerning this topics this Subcommittee
is concerned about, namely issues involving peanuts.
Ms. Ellen Levinson is Executive Director of the Alliance
for Food Aid in Washington. Ms. Annemarie Reilly, Chief of
Staff at Catholic Relief Services out of Baltimore. Mr. John
Gillcrist is Chairman of Bartlett Milling Company on behalf of
the Agricultural Food Aid Coalition out of Kansas City,
Missouri. Mr. Robert Binversie is a Volunteer in the Farmer-to-
Farmer Program out of Kiel, Wisconsin. I apologize if any of
those names or places were mispronounced. Feel free to correct
my pronunciation if they were not accurate. We have one other
special guest that I will call upon the Ranking Member, Mrs.
Musgrave, to introduce.
Mrs. Musgrave. Thank you, Mr. Chairman. I am especially
proud today to introduce Cary Wickstrom from the beautiful area
of the 4th district around Orchard, Colorado. He is the
Immediate Past President of Colorado Wheat Administrative
Committee, and Cary and his family have a farming operation
there, very progressive and far-thinking. So Cary, it is
especially nice to welcome you today so close to home.
Thank you, Mr. Chairman.
Mr. McIntyre. Thank you, Mrs. Musgrave.
Ms. Levinson, please begin.
STATEMENT OF ELLEN S. LEVINSON, EXECUTIVE DIRECTOR, ALLIANCE
FOR FOOD AID (AFA); PRESIDENT, LEVINSON & ASSOCIATES,
WASHINGTON, D.C.
Ms. Levinson. Thank you, Mr. Chairman, and we are very
grateful for the Committee and its longstanding support for
food aid.
My name is Ellen Levinson. I am testifying today on behalf
of 15 nonprofit organizations that are commonly called PVOs, or
private voluntary organizations, and cooperative organizations,
and the thing that they have in common is that they all conduct
international food aid programs in addition to a variety of
other humanitarian and development activities. They operate in
130 countries, are partners with both USDA and USAID on food
aid programs, and they conduct both emergency and non-emergency
programs. They are a wide range of organizations, World Vision,
United Methodist Committee on Relief, which is very large, they
are both very large, American Red Cross, to some smaller,
lesser known ones like International Relief and Development and
some cooperative organizations which maybe you are less
familiar with. And they all have one thing that they do in
common when they conduct food aid programs, and that is that
they focus their efforts at the community level and
particularly in communities that lack the wherewithal to meet
their basic food aid needs on a regular and sustainable basis.
I want to just take a minute to explain how we do that.
Food aid is used in developing countries that have to rely on
imports to meet their nutritional needs. So, targeting
populations in need is the initial phase of a food aid program
planning. As a first step, a PVO will use nationwide data and
nationwide surveys on things such as infant mortality rates,
poverty levels, prevalence of disease such as HIV/AIDS, and
susceptibility to drought to identify the neediest areas within
the country. Once they have identified that, they meet with
local administrators and community groups and they determine
what types of services are already being provided, which
services are lacking and the types of interventions that would
be most helpful. They use focus groups, rapid surveys and other
methods to narrow down the target population. Then to avoid
stigma when they develop programs, they may not necessarily
just target particular households or people but maybe the whole
community. So it is a community-wide effort. The goal is to
build local partnerships, leadership and local capacities so
that when the program ends, there is something we leave behind.
Market analysis is a very critical part of food aid programs
whether it is for distribution or you are going to sell some of
the commodity and use the proceeds. It is required for all
programs. One of the things you look at is what we call a
disincentive analysis, and that is to make sure that the
commodities chosen will not interfere with local production and
marketing, and that there is adequate storage in the country
for the commodities you are bringing in so they will be able to
be distributed safely and kept properly in the country.
PVOs add value to the programs by strengthening the
management capabilities of local institutions, developing
community leaders, providing a network of contacts and
relationships, and they encourage entrepreneurship and develop
programs with lasting benefits. They are audited, and I want to
be clear that these programs are fully audited by the U.S.
Government and they are responsible from the moment the
commodity leaves ship's tackle at U.S. port to the ultimate
recipient. They provide detailed accounts. If it involves
monetization, it is how they did the bidding, what prices they
got and how it is compared to local market prices. If it is
distribution, they have to show how they manage it, how much
food is distributed to which populations, plus they measure
impact. So there is a whole lot of reporting going on. I
believe USAID and USDA have all this because it is delivered to
them regularly and perhaps one way we could improve
understanding of the programs is to have more of that
information regularly provided to the Committee in reports. I
think some confusion comes just from not having the data
summarized before you.
We have several recommendations for the farm bill, mainly
to improve the effectiveness of programs and predictability,
and also to make sure we do more in the area of developmental
food aid and have emergency backup that is early and quick.
First we recommend, and you can read the testimony for the
details, the Bill Emerson Humanitarian Trust that holds
commodities and funds for emergencies. We would like to make
sure it is more reliable at the early stage of an emergency and
immediately after the Title II funding. Public Law 480 Title II
funding for emergencies is considered to be insufficient. A
better replenishment mechanism is also needed, and that is
rather complicated, so I won't go into that at the moment.
Second, from 2001 to 2006, U.S. developmental food aid fell
by 42 percent. We would like to turn that around. We think it
is counterproductive. Non-emergency food aid programs are
conducted in areas where poverty, unpredictable or unfavorable
climates and remoteness have made it very difficult for people
to improve their lives without help from the outside. Our
programs are giving people a means to improve their lives--
providing stability and a hope for a better future. I have
examples in my testimony. In Kenya, for example, we have an
area in the Tracana, a very arid area where not only was food
aid used for distribution for food for work projects on
agricultural development and irrigation, but also for targeted
households for child survival; children who are malnourished
under the age of 5. We were able to, within 3 years, see
increases in income and they would be tripled in those
households. These are areas that are vulnerable regularly to
droughts but they are now not receiving emergency food aid
while other areas around them are. So we can really overcome
some of these causes. We see similar impacts in Bolivia and all
over the world. In Bolivia, we can show decreased stunting by
30-some percent in children as well as increased household
incomes. These have long-term benefits.
How do we solve the problem of the decreasing developmental
food aid? Well, I understand you have budget issues so the
first thing you can do without a budget impact is to assure
part of the Public Law 480 Title II program is definitely going
to be used for these programs. We recommend 1.2 million metric
tons and that cannot be waived. Second, we believe that the
Food for Progress Program could be increased. Right now we are
not even meeting the minimum tonnage of 400,000 metric tons.
That is for countries that are making economic reforms, and we
are using it to improve agricultural development, critical
programs, so we would love to see that increase. We do realize
that has a budget impact so we understand there may be issues
there.
And finally, I want to say that we believe there are ways
to improve the efficiencies of this program and we are happy to
discuss that with you, but one of the main ways is spreading
out the deliveries throughout the year. Right now, program
approvals, particularly under Public Law 480 Title II, lag.
They aren't approved, and the commodities are not called
forward, early in the fiscal year. If we could have early
approvals of programs, have the commodities able to be ordered
and delivered throughout the year, we wouldn't have what we
call bunching of orders at the end of the fiscal year that the
GAO recently reported. It could contribute to 12 to 14 percent
higher prices. So I think all the way around, and it is better
for us as implementing agencies so we can get the commodity at
the right time for the right purpose. And so I think that is
one recommendation----
[The prepared statement of Ms. Levinson follows:]
Prepared Statement of Ellen S. Levinson, Executive Director, Alliance
for Food Aid (AFA); President, Levinson & Associates, Washington, D.C.
Mr. Chairman, thank you for this opportunity to testify before the
Subcommittee, today, on U.S. food aid programs. My name is Ellen
Levinson and I am testifying today as the Executive Director of the
Alliance for Food Aid (AFA or ``Alliance''). The Alliance is comprised
of 15 private voluntary organizations and cooperatives (jointly called
``PVOs'') that operate humanitarian and development assistance programs
in 130 countries, are partners in USDA and USAID food aid programs, and
conduct both emergency and non-emergency food aid programs.
The members range from some of the largest charitable organizations
in the United States that implement a wide variety of projects all over
the world to smaller organizations that specialize in particular
regions of the world or have expertise in particular types of programs.
What they have in common is that they focus their efforts on
communities that lack the wherewithal to meet their basic food needs on
a regular and sustainable basis. They use participatory methods that
emphasize local initiative, provide technical assistance and training,
and focus on building local capacity, institutions and leaders. Most of
our members also conduct emergency programs, as well, where food aid is
needed to save lives and help people regain their health and strength.
Mr. Chairman, we thank the Congress for its unrelenting support of
food aid over the years. Food aid is our nation's principal program
supporting food security in the developing world. It contributes to
meeting the Millennium Development Goal of cutting hunger in half by
2015 and is critical for saving lives in the face of disaster. Some
improvements and upgrades are needed in administrative programmatic
procedures and greater efficiencies can be built into procurement and
transportation procedures. However, most important for the 2007 Farm
Bill is assuring predictable levels for both chronic and emergency
needs in order to support good program planning and implementation and
to reverse the downward trend in multi year developmental programs.
The Alliance has three core recommendations for the 2007 Farm
Bill--
Assure adequate amounts of food aid are available from the
Bill Emerson Humanitarian Trust and it is available to respond
quickly in the face of food shortages, civil unrest, and other
crises.
Increase resources for multi year programs that improve the
food security, health and welfare of populations that suffer
from chronic hunger by (1) making available at least 1,200,000
MT of food aid each year for Title II non-emergency programs
that promote food security and protect against the erosion of
health and incomes, and (2) lifting the transportation cap on
Food for Progress so 500,000 MT can be provided to developing
countries that are implementing reforms in the agricultural
economies.
Improve administrative procedures through early program
approvals, spreading out procurement throughout the year,
improving product quality oversight, and requiring the
submission of annual reports from administrative agencies that
include information about program targeting and implementation,
including monetization and distribution results.
Role of PVOs in Food Aid
Identifying populations in need is part of the initial program
planning process for PVOs. Alliance members use data from nationwide
and regional surveys provided by recipient countries, the United
Nations, and other recognized sources. Such data may include mortality
rate of children under the age of 5, infant mortality rates, prevalence
of malnutrition among children, percentage of people living under the
poverty line, susceptibility to drought, and prevalence of disease,
such as HIV/AIDS.
Once areas of greatest need are pinpointed, PVOs meet with local
administrators and community groups to determine what types of services
are already being provided, which services are lacking, and the types
of interventions that would be most helpful. They use focus groups,
rapid surveys, and other methods to narrow down the target population
to those with greatest need. To avoid stigma programs often target the
community and not just particular households and individuals. The next
step is working with local partners to design and implement programs.
For your reference, Attachment A summarizes the program planning and
approval process for P.L. 480 Title II non-emergency programs for FY
2007.
PVOs are audited according to U.S. Government requirements and have
well-established mechanisms for monitoring and reporting on the use of
commodities from the point of departure from the U.S. to the ultimate
recipient. In the case of monetization or if funds have been provided
for program support, itemized records of the bidding process, funds
generated and use of such funds are maintained and provided in regular
reports to USAID and USDA. They also keep records to assess the
ultimate impact of the program on the intended beneficiaries. Value is
added to programs by strengthening the management capabilities of local
institutions and building community capacity; providing a network of
contacts and relationships linking people overseas with Americans;
encouraging entrepreneurship and private sector development; and
creating programs that have lasting benefits.
Why Change Is Needed
Food security is negatively affected by a wide range of issues,
including poor agricultural productivity; high unemployment; low and
unpredictable incomes; remoteness of farm communities; susceptibility
to natural disasters, civil unrest and instability; wide discrepancies
between the well-off and the poor; chronic disease; and lack of basic
health, education, water and sanitation services. Thus, rather than
just distributing food to needy people, U.S. food aid has evolved into
a multi-faceted program that addresses the underlying causes of hunger
and poverty. This mixture of food and support for local development is
the program's strength and was reinforced in the 2002 Farm Bill.
However, the Administration was given wide berth to set priorities and
waive requirements, which has taken food aid down a different road than
anticipated in 2002.
Policy changes over the past 5 years have essentially reduced
overall food aid levels (particularly by eliminating Section 416
surplus commodities and Title I appropriations), shrunk development-
oriented programs to 42% their 2001 levels (according to an April 2007
GAO report) , and exposed the lack of contingency planning for food
emergencies. While the 2002 Farm Bill called for increased levels of
P.L. 480 Title II development programs to 1,875,000 metric tons,
instead these programs were reduced and are now about 750,000 metric
tons.
The 2002 Bill also called for upgrades and improvements in
governmental management and information systems, but instead the level
of programming has become less predictable; program priorities and
proposal review processes have become more opaque; the ``consultative''
nature Food Aid Consultative Group process has deteriorated; Title II
procedures are making it more difficult for PVOs to access funding; and
commodity quality control systems have not been renovated to modern
standards.
Meanwhile, the world's efforts to meet the Millennium Development
Goal of cutting hunger in half by 2015 is far from reach--the number of
people suffering from chronic hunger increased from 1996 to 2004 from
under 800 million to 842 million--and international appeals for
emergency food aid are under-funded. While U.S. food aid alone cannot
resolve this sad and complex problem, it is a critical component of an
international food security strategy and is particularly effective in
countries with chronic food deficits and for vulnerable, low-income
populations.
Several food aid statutes set tonnage minimums--to assure that food
is provided in times of high prices. These requirements are important,
but they need to be updated and supported by sufficient appropriations.
Finally, Doha Round international trade negotiators, the Food Aid
Convention and the UN Food and Agriculture Organization all have
particular roles in international food aid policies and procedures.
They are examining the use of food aid by donors and are looking
critically at certain modalities and methodologies, including in-kind
food aid, monetization and non-emergency programs. While U.S. programs
are typically well-focused and food security oriented, this is often
unclear or misrepresented to others. As the largest donor in the world,
Americans should be proud of their food aid program. It is critical
that government agencies collect and make available sufficient
information to show how these programs work and their impact.
With these factors and trends in mind, we offer recommendations to
improve the quality and predictability of food aid, and to assure the
United States has a plan and effective methods to address both chronic
and emergency needs.
P.L. 480 Title II--the Core U.S. Food Aid Program
1. Administrative Upgrades: Adequate Funding at the Start of the Fiscal
Year, Predictable Tonnage Levels, Early Program Approvals, and
Sufficient Reporting
Administered by the U.S. Agency for International Development
(USAID), Title II provides food aid donations for development programs
and emergency needs through ``eligible organizations,'' which are PVOs
and the UN World Food Program. The law sets a minimum commodity level
for the program of 2,500,000 MT, of which 1,875,000 MT is for non-
emergency programs that address chronic hunger.
From FY 1999 through FY 2002, the Section 416 surplus commodity
program provided significant amounts of food aid, and much of it was
for emergencies. This was a source of supplemental funding for the
Title II program. As the attached funding chart shows, availability of
Section 416 surplus commodities was phased out starting in FY 2002.
While Title II funding increased over the same period and enough is
provided to meet the 2,500,000 MT minimum commodity level set by law,
this increase has been insufficient to make up fully for the loss of
Section 416 commodities. Current funding levels are not maintaining
adequate levels for both emergency and non-emergency requirements. This
has resulted in cutbacks in developmental food aid programs,
uncertainty about the levels of food aid each year and increased
reliance on supplemental appropriations to fill gaps in emergencies.
The Government Accountability Office (GAO) noted in a recent report
that cost savings of 12-14 percent may be possible if commodity orders
could be spread out more evenly throughout the program year, rather
than ``bunched'' toward the end of the year. A variety of factors
contribute to the ``bunching'' of commodity orders, including piecemeal
appropriations, unreliable levels and late program approvals. From the
perspective of implementing organizations, these practices have also
created a series of other unfavorable consequences: commodity
distribution and sales overseas cannot be well planned when dates of
delivery are not reliable or when commodities are not made available
throughout the year. This causes concern about the potential for
disrupting commercial markets and having the food arrive at the wrong
time in the program cycle.
While some emergencies, such as sudden natural disasters and
outbreak of civil war, cannot be predicted in advance and can occur any
time during a fiscal year, other emergency needs are ongoing and can be
factored into the regular budget request and appropriations process.
For example, areas such as the Horn of Africa that are prone to
drought, flooding, locusts or other natural disasters are monitored
through a variety of early warning systems. Other emergencies, such as
the ongoing conflict in Sudan, are expected to continue until the
source of the problem is resolved. Because the Administration does not
ask for adequate funding to meet these anticipated emergency needs,
funds have been withheld from the non-emergency programs for several
months as USAID adjusts its budget and waits to see if there will be
supplemental funding.
As a result, there are gaps in food aid deliveries for both
emergency and non-emergency programs, PVOs must cover local costs while
programs are on hold and some programs are, de facto, cut back. Later
in the year, the Administration often receives supplemental
appropriations for the extra emergency needs or uses commodities from
the Bill Emerson Humanitarian Trust. Because the actual amounts needed
are not requested up front as part of the regular budget cycle and the
Administration only uses the Trust as a ``last resort,'' commodity
orders are concentrated in the last months of the fiscal year.
The Alliance has several recommendations for improving the
reliability and timeliness of food aid programs.
Assure that minimum tonnages are taken seriously and
incorporated into USAID's planning and budgeting. Our
recommendation for a 1,200,000 MT ``safe box'' for non-
emergency programs, described under point 2, would help to
achieve this goal.
Require USAID to approve non-emergency programs and
commodity levels 2 months in advance of the beginning of the
fiscal year. This would allow the first commodity orders to be
placed in time for delivery during the first few months of the
fiscal year. Since all agreements are subject to
appropriations, early approval would not override the budget
process. In addition, the Title II account holds extra funds at
the end of each fiscal year that are typically carried over and
these funds can be used to secure the early orders.
While we recognize that the Committee on Agriculture may not
be in the position to effect this change, on-time
appropriations and sufficient appropriations at the beginning
of the fiscal year would allow orderly program planning and
more timely and efficient delivery of commodities throughout
the year, without program disruptions. When adequate sums are
available, more commodities can be pre-positioned off-shore for
more timely deliveries if an emergency arises. The procurement
can be spread out throughout the year, which will allow USDA to
plan its procurement to get the best prices possible for
commodity and inland transport.
As described later in our testimony, clarify that the Trust
should be used rather than curtailing developmental food aid
programs to shift the funds to emergencies.
With these procedures, commodity ordering and delivery would be
more reliable, which agricultural processors are seeking so they can
plan their inventories, which PVOs are seeking so the commodity arrives
when needed, and which saves money because commodity purchases and
shipping can be spread out throughout the year rather than spiking
during the last 3 months of the year.
2. A Safe box for Developmental Food Aid Programs
Establish a safe box for Title II non-emergency programs that
assures 1,200,000 metric tons will be made available each for non-
emergency Title II programs each fiscal year. This amount would not be
subject to waiver.
Section 204(a)(2) of P.L. 480 directs USAID to make available
1,875,000 metric tons of commodities for Title II non-emergency
programs each fiscal year. The law permits USAID to waive this minimum
after the beginning of the fiscal year if there are insufficient
requests for programs or the commodities are needed for emergencies.
This implies that USAID should seek proposals for the full non-
emergency minimum tonnage and only waive the minimum under
extraordinary circumstances. Instead, months in advance of each fiscal
year USAID acknowledges that non-emergency programs will be limited to
about 750,000 MT and does not make the minimum tonnage available.
We therefore recommend only allowing USAID to waive up to 675,000
MT of the non-emergency minimum tonnage level, which would assure that
USAID makes available at least 1,200,000 MT each year for multi year
food for development programs--reestablishing America's commitment to
help those suffering from chronic malnutrition and hunger. This is less
than the minimum tonnage required under law for these programs
(1,875,000 MT), but more than the amount USAID is actually providing
(750,000 MT).
Programs that address the underlying causes of chronic hunger
include mother-child health care, agricultural and rural development,
food as payment for work on community infrastructure projects, meals in
schools and take-home rations to encourage school attendance, and
programs targeting HIV/AIDS-affected communities. Chronic hunger leads
to high infant and child mortality and morbidity, poor physical and
cognitive development, low productivity, high susceptibility to
disease, and premature death.
Reducing these programs has been counterproductive, as
developmental food aid helps improve people's resilience to droughts
and economic downturns. Giving people the means to improve their lives
also provides hope for a better future and helps stabilize vulnerable
areas. Valuable expertise of PVOs to help these communities and to
respond to food crises is being lost as they must stop their food aid
activities, leave their local partners and lose their strategic
networks in these vulnerable areas. Giving people the means to improve
their lives also provides hope for a better future and helps stabilize
vulnerable areas.
We also note with alarm that due to budget constraints, in 2006
USAID established a policy to limit non-emergency food aid to fewer
countries in order to ``focus'' the remaining resources. Under this
policy, non-emergency programs are being phased out in 17 countries and
cutback in others and programs will be allowed in only 15-18 selected
countries. Concentrating food aid resources in areas where there is
high prevalence of food insecurity and vulnerability is appropriate and
was anticipated in the USAID Food for Peace Strategic Plan, 2006-2010.
However, the current policy eliminates too many areas where chronic
hunger is prevalent and was driven by the decision to reduce the budget
for non-emergency programs. Many poor, vulnerable populations will be
excluded from receiving food aid, even though their needs are as
compelling as those populations that will be served. The capacity of
PVOs to serve populations in non-eligible countries will be lost,
making it more difficult to respond effectively at the early signs of
an emerging food crisis, which runs counter to the intent of the
Strategic Plan.
The two examples below are in phase out countries, Bolivia and
Kenya. They show how food aid programs are often conducted in areas
where poverty, unpredictable or unfavorable climate, and remoteness
have made it very difficult for people to improve their lives without
help from the outside. These programs leverage resources and create
benefits beyond the targeted recipients, increasing the impact per
dollar spent.
Bolivia: Adventist Development and Relief Agency International
(ADRA), Food for the Hungry (FH) and several other PVOs are conducting
multi-faceted, 6 year programs in Bolivia using food distribution
(corn-soy blend, lentils, green peas, soy-fortified bulgur, wheat-soy
blend and flour) and proceeds generated from the monetization of flour
to support individual, community and municipal efforts to overcome
development constraints and to enhance household food security.
In the targeted rural areas over 70% of the population live in
poverty and infant mortality rates are 116 per 1,000 births. These
communities must rely on their own agricultural production as they are
remotely located, have poor roads and lack transportation.
The current PVO programs focus on addressing their lack of access
to markets, health care, schools and social services by increasing
production and incomes and improving nutrition among vulnerable groups.
Food aid is distributed (1) for Maternal and Child Health and Nutrition
(pregnant and lactating mothers, infants and children under 5, the most
critical stages for cognitive and physical growth); and (2) in
conjunction with training and technical assistance for improved
agricultural production, diversified crops to improve the diet, and
marketing of agricultural products. Concurrent activities included
increasing access to clean water, improving health and sanitation
practices, natural resource management, building greenhouses, and
improving marketing roads and irrigation systems.
In FH's midterm evaluation (2006, 3 years after the program began,
compared to 2002 baseline data), they found a 35% decrease in chronic
malnutrition in children (height/weight or ``stunting'') and household
incomes had increased by 270% or more. The direct beneficiaries of the
FH program, alone, were 212,292 people and indirectly, 410,000 people
benefited. Because of program efficiencies and FH's ability to raise
more matching funds after the program began, the number of
beneficiaries was 283% greater than originally planned.
Kenya: A World Vision Title II program in Kenya targeted 1,528
pastoralist families in the Turkana region, an arid environment that is
plagued by recurring droughts. Before the program, these families were
dependent on emergency food aid nearly every year.
Some of the commodities provided were distributed as payment for
participation in training and for working on projects that improved
irrigation infrastructure, cultivation techniques and land management.
Other commodities were sold through open tenders and the funds
generated supported the food for work projects. Within 6 years, even
though there had been droughts in between, income increased from a
baseline of $235 per year to $800 per year, families could afford to
send their children to school, and the communities no longer depended
on relief. In fact, the program was turned over to the participants and
they have spread their knowledge to 475 other farmer families.
PVOs were hoping to replicate this successful model in other areas
of Kenya where pastoralists are still dependent on emergency rations
nearly every year. However, USAID is phasing out non-emergency projects
in Kenya as part of a larger effort to limit the scope of developmental
food aid programs. Meanwhile, Kenya remains a recipient of emergency
food aid and pastoralists are particularly at risk.
Reports accompanying appropriations bills for the past 5 years
admonish the Administration to meet the Title II non-emergency minimum
tonnage and to rely on the Bill Emerson Humanitarian Trust for urgent
needs. However, this language has had no perceivable effect. This
follows the general trend indicated in a recent GAO's report--from 2001
to 2006 developmental food aid fell by 42%.
3. Maximize Use of the Section 202(e) Support Funds
Make 10% of the Title II program level available for Section 202(e)
support funds and allow these funds to be used to support complementary
activities associated with food aid programs.
Section 202(e) funds are provided by USAID to Title II eligible
organizations to support (A) the establishment of new programs; and (B)
specific administrative, management, personnel and internal
transportation and distribution costs associated with carrying out
programs in foreign countries. The law provides no less than 5% and no
more than 10% of ``funds made available in each fiscal year'' under
Title II for these purposes. The Alliance proposes the following
changes:
Allow Section 202(e) funds to be used to cover costs for
development-related activities conducted under a Title II
program by an eligible organization. Monetization is often used
for these purposes and Section 202(e) is not sufficient or
intended to replace monetization. However, monetization is not
appropriate in all target countries and in some countries the
ability to monetize varies year-to year based on the market
situation. Thus, flexibility is needed so Section 202(e) funds
may be used for activities that monetization funding often
supports, such as materials, technical assistance and training
for agricultural, materials for mother-child health care, and
food-for-work infrastructure programs.
Allow USAID to provide funds to eligible organizations to
improve methodologies, such as needs assessments for
identifying target populations and monitoring and reporting on
the impact of monetization and other aspects of their programs.
These are activities that will benefit program implementation
overall and are not associated with one particular program.
Provide not less than 10% of total Title II funding for
Section 202(e) purposes. Currently, the law allows between 5%
and 10% of Title II funds for this purpose, but when developing
its 202(e) allocations, USAID does not want to overshoot the
10% maximum. USAID therefore limits 202(e) use to about 7-8% of
the regular appropriations level; as it cannot predict how much
money may be provided later in the year through supplemental
appropriations, carry in funds, or maritime reimbursement. As a
result, about 5-6% of the Title II program level is being
provided for Section 202(e) (approximately $90 million) Setting
a minimum of 10% of total funding provided from all sources
will provide the additional funds needed for meeting costs
associated with program implementation and improving program
methodologies.
Before the early 1990's, when most non-emergency food aid was
provided to Latin America and Asia, there were other ways to obtain
support funds. For example, the Government of India contributed to some
large-scale Title II food for education and early childhood development
programs. In some countries, such as Bolivia and Bangladesh, proceeds
generated from sales of commodities under government-to-government P.L.
480 Title III programs were available.
However, Title III programs were phased out more than a decade ago,
so those funds are no longer available. Now, most Title II food aid is
provided to sub-Saharan Africa, where the infrastructure is poorly
developed. While non-emergency programs can be coordinated with
recipient country developmental or food security plans, the governments
themselves generally do not provide direct financial or logistical
support. Instead, they look to the PVO to fill gaps in areas of poor
coverage. Thus, over the past 10 years PVOs have relied, primarily, on
monetization to generate funds to cover program costs and, secondly, on
Section 202(e) funds.
4. Update Food Quality Systems and Product Formulations
Title II funds should be provided to bring the food aid quality
enhancement project to completion over the next 3-4 years.
Both the quality and formulation of food aid products are crucial
to delivering safe, wholesome products to undernourished populations,
particularly vulnerable groups such as infants and young children,
women of child-bearing age and people living with HIV/AIDS.
Formulations for the value-added products used in Title II have been
static for decades and food aid distribution overseas has sometimes
been disrupted due to quality concerns. Through private funding,
SUSTAIN (a nonprofit that provides technical assistance for food
systems and was referenced in the 2002 Farm Bill), has made progress to
address these issues in a scientific, systematic and impartial manner.
As neither USDA nor USAID has provided funding to support these
reforms, if necessary, we support the use of Title II funds for this
purpose.
Assure Timely Use of the Bill Emerson Humanitarian Trust
To maintain the Trust as a contingency reserve for emergencies
replenish the Trust with $60 million per year until it is full and
assure it is available to respond to emergencies in a timely manner and
without interfering with the provision of Title II non-emergency
programs each year.
Administered by USDA, the funds and commodities in the Bill Emerson
Humanitarian Trust (BEHT or ``Trust'') are needed to supplement P.L.
480 Title II when there are urgent humanitarian food aid needs. The
commodities are provided by the Trust and CCC covers the ocean freight
and delivery costs. The Trust can hold up to 4 million metric tons or
cash equivalent, but currently only holds about 915,000 metric tons of
wheat and $107,000,000 (which is available to buy commodities when
needed). Because a diversity of commodities is needed for emergencies,
it is best for the Trust to be replenished with funds that can be used
to procure the appropriate commodities when needed.
Two mechanisms need to be improved to make the Trust more readily
available for emergencies: the ``trigger'' for releasing commodities
and the level of reimbursement. We urge you to make the needed changes
in the 2007 Farm Bill.
Trigger: Section 302(c)(1)(c) of the Bill Emerson Humanitarian
Trust Act states that a waiver of the Title II non-emergency minimum
tonnage is not a prerequisite for the release of commodities from the
Trust. Nonetheless, the Administration has taken the stance that it
will only use the Trust commodities as a last resort after all other
avenues, including the Title II waiver, are considered. This may
partially be driven by the 500,000 metric ton limitation on BEHT
tonnage that can be provided in any fiscal year, although if the Trust
is not used 1 year the 500,000 metric tons for that year can be added
to future year releases. Another reason may be the term
``unanticipated'' emergencies, which is how the BEHT Act refers to
releases for international humanitarian crises versus ``emergencies,''
which is how the BEHT Act refers to releases in case of short supply of
a commodity. Thus, we have several recommendations for fixing the
language.
First, create safe box for 1,200,000 metric tons (about $600
million total cost) for Title II non-emergency programs that cannot be
waived. This takes away the confusion about whether the waiver is used
before the Trust can be accessed. Second, eliminate the part of the
Trust that refers to ``short supply,'' as it is a vestige of a time
when food aid was considered ``surplus'' and is outdated now that the
Trust can hold funds. Third, change the terminology and allow
commodities or funds to be released when there are emergency food aid
needs. And, forth, allow up to 1,000,000 metric tons to be released in
any fiscal year.
Replenishment: Currently, the Trust may be replenished either
through a direct appropriation or by capturing $20 million of funds
reimbursed to CCC from P.L. 480 as repayment for previous use of the
Trust. The Administration has never requested a direct appropriation,
but Congress provided $67 million for replenishment as part of the FY
2003 Iraq Supplemental Appropriations Act. In addition, USDA has twice
captured $20 million from P.L. 480 reimbursements. Thus, the Trust now
holds $107,000,000. This amount plus the 915,000 MT of wheat held in
storage makes up the total value of the Trust, which is about 1,500,000
metric tons in wheat equivalent prices. To bring the Trust to its full
4 MMT wheat-equivalent level, we urge that the $20 million be raised to
$60 million per year.
Expand Food for Progress
Increase the Food for Progress to 500,000 metric tons for programs
that improve private sector agricultural, food and marketing systems in
developing countries that are implementing market reforms.
The Food for Progress Act directs USDA through the Commodity Credit
Corporation (CCC) to provide a minimum of 400,000 metric tons of
commodities each year to developing countries that are introducing
market reforms and supporting private sector development. These
programs may be implemented by PVOs, the World Food Program and
recipient country governments. The amount actually provided through CCC
falls short of 400,000 metric tons because there is a cap on the amount
of funds that CCC can provide for delivering the commodities and
administering the programs overseas.
USDA has authority to use P.L. 480 Title I funds in addition to the
CCC funds to implement Food for Progress programs. In FY 2006, about 75
percent of Title I funds were used for this purpose. As no funds were
appropriated for Title I in FY 2007, and the Administration seeks no
funding in FY 2008, this means a cut in funding in Food for Progress.
Many poor, developing countries are undergoing economic reform and,
therefore, the demand for Food for Progress programs is great. Forty-
six different PVOs apply for Food for Progress programs. For FY 2007,
100 proposals were submitted by PVOs and 16 by governments, but only 11
new proposals were approved and three other programs were provided
second year funding.
We therefore recommend increasing the minimum to 500,000 metric
tons and assuring that this amount is available for proposals submitted
by PVOs. To accommodate the additional tonnage the amount available for
transporting the commodities would have to be lifted or increased.
Example: International Relief & Development (IRD), Azerbaijan
Commodities: 10,000 MT soybean meal; Total value: 2,125,467 (1
year).
Beneficiaries: 26,899.
IRD targeted Ganja, Goranboy, and Khanlar in western Azerbaijan,
because in these regions there is a high concentration of internally-
displaced persons (IDPs), the level of unemployment is close to 70%,
and the local farmers and IDPs are poor and are not able to support
their basic needs. Soybean meal monetization was chosen because of
shortages of feed grains in the country. IRD trained farmers in crop
and livestock production and market development and distributed small
grants to start-up local businesses. HIV/AIDS awareness was also
conducted in the targeted communities.
Results:
Business development classes were provided for 1,532
farmers, in the town of Ganja and four local regions (Kahnlar,
Geranboy, Samukh and Zakatala). As a result, farmers submitted
business proposals to IRD, and IRD funded 106 of them.
IRD published two leaflets, ``Raising chickens in your
backyard'' and ``Chicks' diseases and their prevention''; five
handbooks on various agricultural topics: ``Recommendations for
sheep keepers,'' ``Recommendations for cattle keepers,''
``Recommendations for beekeepers,'' and ``Recommendations for
chicken keepers.''
The total number of people who benefited from the small
grants was 26,899. The farmers and small entrepreneurs formed
several groups that were eligible for receiving grants.
Recipients included 16 cattle breeding groups, 22 women poultry
groups, 38 sheep breeding groups, two women geese groups, 19
agro-service groups, two harvesting groups, and seven
beekeeping groups. Within a year, monthly income of
beneficiaries at least doubled. Each of the 19 agro-service
groups received approximately $5,090 and in the first year
members provided services in their communities valued at
$46,421.
Monetization's Continued Contribution
Monetization is an important component of food aid programs and we
support its continued use where appropriate, based on market analysis.
Monetization is the sale of commodities in net food-importing,
developing countries and the use of proceeds in projects that improve
local food security. It can have multiple benefits and is appropriate
for low-income countries that must depend on imports to meet their
nutritional needs. Limited liquidity or limited access to credit for
international purchases can make it difficult for traders in these
countries to import adequate amounts of foodstuffs and monetization is
particularly helpful in such cases. In all cases, the proceeds are used
to support food security efforts or the delivery of food in the
recipient country.
Monetization can also be an effective vehicle to increase small-
scale trader participation in the local market and financial systems,
can be used to address structural market inefficiencies, and can help
control urban market price spikes. The commodity can also be integrated
into agricultural processing operations, helping to establish and
expand feed mills, fortified foods, and other locally-important
products. For example, International Relief & Development used bulk
wheat and soy flour provided through Food for Progress to establish
small noodle production plants in Cambodia and the soy-fortified
products were incorporated into school feeding programs. ACDI/VOCA used
soybean meal donated by USDA to help reestablish the feed industry in
Indonesia after the economic crisis. Both of these activities expanded
local enterprise, increased jobs, and had a long-lasting food security
benefit.
Market analysis is an important element of all food aid programs,
but is more extensive for monetization programs. A ``Bellmon
Determination'' is required for both monetization and distribution to
make sure the commodities chosen will not interfere with local
production and marketing and that there is adequate storage for the
commodities provided. Commodities chosen for monetization are not
locally produced, are produced in small amounts or are available only
during certain times of the year. Therefore, the likelihood of creating
local disincentives to production is small. However, some countries in
a region have linked markets, so the analysis must also consider inter-
country trade. For example, there is a Bellmon analysis that covers all
the countries in West Africa.
As the potential disincentive effect of food aid is oft cited, but
little researched, one study worth noting is by Abdulai, Barrett and
Hoddinott [October 2005], which looks at disincentive effects of food
aid provided in Ethiopia, the largest food aid recipient country in
Africa over the 10 year review period. It received food for
distribution and monetization. The study found no disincentive effect
and note on page 1701 of the article: ``In rural Ethiopia, simple test
statistics. suggest that the disincentive effects of food aid on
household behaviors are many, large in magnitude and statistically
significant. However, when we take into account household
characteristics. That can affect behaviors and on which food aid is
commonly targeted--many of these adverse effects vanish. In fact, there
is some suggestion in these data that food aid leads to increases in
labor supply to agriculture, wage work, and own business activities.''
Save the Children and World Vision prepared a review of the PVO
monetization programs under Title II, covering six commodities in 30
countries and 48 programs from 2001-2005. They found that the commodity
choice and quantities avoided competing with local production and
marketing and therefore diminished potential disincentive effects. As
the commodity levels provided were small in comparison to needs and
required imports, the potential for commercial import disruption was
also small.
Example: Africare's P.L. 480 Title II Development Program in Guinea
Africare began implementation of a 5 year Guinea Food Security
Initiative (GnFSI) in the Prefecture of Dinguiraye in the Upper Region
of Guinea in September 2000. This program represents an expansion of a
very successful first phase program (1995-2000). This multi-sector
program is currently operating in 50 of 84 districts of the Prefecture
providing support to a population of 107,750 people.
Africare's program focuses on decreasing post-harvest storage
losses, improving the nutritional status of children under the age of
5, and increasing the capacity of District Development Committees to
understand and address the challenges to food availability, access and
utilization. Dinguiraye is an area that prior to Africare's
intervention, received no outside assistance and limited support from
its own governmental ministries. Chronic malnutrition of under five
children was in excess of 50% and the amount of food available to
households was adequate for less than 4 months per year.
The program's positive impacts due to the introduction of improved
storage techniques include adding a month to post-harvest storage
without damage to commodities, and doubling the months when adequate
food is available in the households.
Working with the Ministry of Health, Africare's nutritional program
reduced chronic malnutrition rates from 50% to 21% and the number of
caretakers of under five children that participate in growth
monitoring, food demonstrations and guided health discussions increased
to more than 90% of the population. The prospective for these
activities to continue under the auspices of the Ministry of Health is
strong, because they are low cost and very popular with the
beneficiaries themselves. More importantly, the target population has
had an active role in improving the methodology by which more
nutritious foods are identified and made available.
The financial resources for the program are generated by
monetization of Title II food commodities (approximately 4,600 MT's of
vegetable oil during FY05 for Africare and two other PVOs). This
innovative program promotes private sector development and broadening
of local markets, both for producers and consumers, independently of
the food security activities funded with the sales proceeds.
Vegetable oil was chosen for monetization because little is
produced in country. The amount imported for monetization was small in
comparison to import needs, which minimizes the likelihood of
interfering with commercial imports. Further, vegetable oil
availability is concentrated in the main city, not the outlying areas.
Africare therefore arranged for the sales to reach the outlying areas
through the sale of small lots to multiple buyers.
Africare worked with the Guinean Government and private sector to
increase the involvement of small-scale distributors to have access to
vegetable oil, which is usually sold at the high end of the local
market. A consequence has been the increased distribution of vegetable
oil throughout the country, outside of the capital and principal urban
markets to key rural areas that had never been served. Cost recovery
was at or above local prices and averaged about 87% of the full cost of
U.S. procurement and shipping. This methodology included private sector
sales techniques (e.g. closed tender bids, bank guarantees reflecting
local interest rates and payment of required taxes by the buyer), and
generated the following benefits:
1. Higher prices received from the buyers compared to if it was
just sold to regular importers, which translates into a larger
amount of sales proceeds to support the development activity.
2. Increased sophistication and understanding of commercial
business practices by the private sector, especially the small-
scale operator who was often unable to participate in these
types of transactions (or even the formal financial system).
3. Increased availability of high quality commodities throughout
the national market.
Example: Joint Aid Management Processing Plants in Africa, USDA
Programs
One Alliance member, Joint Aid Management, is a Christian
humanitarian organization based in South Africa that focuses on
nutrition programs in schools and for the needy, assistance to orphans
and vulnerable children, water and sanitation, skills development and
community training. It established food processing plants to produce
corn soya blend and other blended and fortified foods for use in its
nutrition programs, including sales to the UN World Food Program and
distribution through their own programs. While much of the food it uses
is locally procured, it also participates in USDA food aid programs,
processing donated commodities that are then used for nutrition
programs. This is one of the ways that food aid programs allow the
creative use of monetization to support local processing while also
contributing to targeted food security programs.
Pilot Program for Local/Regional Purchase
We recommend a field-based, pilot program for local purchases for
famine prevention and relief.
In-kind food aid continues to be the most dependable and important
source of food aid. Commodities committed by and sourced directly from
donor countries, which have more than adequate production to meet their
domestic needs, is required to assure that sufficient levels food aid
are available each year. However, there are situations where purchases
closer to the area of need could provide more timely response,
diversity of the food basket, and benefits to local agricultural
development.
Members of the Alliance were under the impression that Title II
gives broad discretion to the Administrator of USAID under section
202(a) to provide commodities under any terms or conditions deemed
necessary for an emergency. Therefore, we assumed local purchase was
already possible, albeit not meant to be used on a regular basis.
However, we understand that USAID interprets this section differently.
The Administration has proposed to provide up to 25% of Title II
funds for local or regional purchase for emergencies. Many of the areas
where food aid is delivered need additional commodities from imports to
meet their needs and there may little room to expand on the local/
regional purchase, considering the large amounts that the UN World Food
Program is already procuring. Therefore, we recommend assuring adequate
U.S. commodities are assured to meet the minimum tonnages under Title
II and to add a field-based pilot program for local purchase.
While PVOs have experience using privately-raised funds and, to a
limited degree, USAID International Disaster and Famine Assistance
account funds for local purchases, information from these programs has
not been systematically collected and therefore is inadequate to use
for developing appropriate methodologies and best practices for future
programs. Thus, as part of the 2007 Farm Bill we recommend a pilot
program for local purchases for famine prevention and relief--
1. Within recipient countries or nearby low-income countries,
2. In cases where the procurement is likely to expedite the
provision of food aid,
3. Where the procurement will support or advance local agricultural
production and marketing, and
4. Conducted by PVO implementing partners that have experience with
food aid programming in the recipient countries and are fully
audited according to U.S. Government regulations.
To assure that accepted practices for food aid programs are
followed and to identify appropriate methodologies and best practices
for future programs, each PVO implementing a pilot program shall:
1. Prior to implementing a local purchase program, conduct an
analysis of the potential impact of the purchase on the
agricultural production, pricing and marketing of the same and
similar commodities in the country and localities where the
purchase will take place and where the food will be delivered;
2. Incorporate food quality and safety assurance measures and
analyze and report on the ability to provide such assurances;
3. Collect sufficient data to analyze the ability to procure,
package and deliver the food aid in a timely manner;
4. Collect sufficient data to determine the full cost of
procurement, delivery and administration; and
5. Monitor, analyze and report on the agricultural production,
marketing and price impact of the local/regional purchases.
McGovern-Dole Food for Education
The McGovern-Dole Program provides incentives for poor families to
send their children to school. Requiring an appropriation of no less
than $100,000,000 each year will give certainty that funds are
available for multi year programs. These types of programs used to be
included in Title II, but with the establishment of McGovern-Dole in
2002, such programs under Title II are being phased out. Increased
funding would allow more multi year programs, improve program impact,
and allow broader use of the authority in the law to support both
educational programs and programs for children under the age of 5,
which is when malnutrition can have its most devastating impact on
child development.
Eliminate Objectives That Link Food Aid to Expansion of Export Markets
Policies and programs for U.S. and other international food aid
should be established and operated based on the food security needs of
recipient countries and vulnerable populations rather than donor
country objectives to expand its export markets. In practice, U.S. food
aid programs do not include objectives to expand U.S. markets and their
success is not measured on this basis, but there are provisions in
current law that state market expansion as an objective. Changes are
needed to correct this problem: (1) Eliminate the statement in the
preamble to P.L. 480 that it is the policy of the United States to use
food aid to ``develop and expand export markets for United States
agricultural commodities.'' (2) In P.L. 480 Title I, eliminate the
priority for countries that ``have the demonstrated potential to become
commercial markets for competitively priced United States agricultural
commodities'' and other references to using Title I for market
development purposes.
Conclusion
In conclusion, Mr. Chairman, we can see the many benefits U.S. food
aid programs are now creating for poor communities, improving incomes,
living conditions and nutrition and sowing the seeds for a promising
future.
Thank you for supporting these life-giving programs. I would be
pleased to answer any questions you may have.
Attachment A
Summary of PVO/Cooperative (``Cooperating Sponsor'') Proposal Planning
Process for P.L. 480 Title II Multi-Year Assistance Programs
(MYAPs) for FY 2007 *
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* These are commonly called ``non-emergency'' or ``development''
programs.
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FY 2007 Title II Proposal Time Line
February 22, 2006--Title II Draft FY 2007 MYAP Guidelines for
Cooperating Sponsors (CSs) were provided for submitting new program
proposals. The Guidelines list eight evaluation criteria that will be
used for grading proposals.
The Guidelines state that activities must fit within the Food for
Peace (FFP) Strategic Plan 2006-2010, which focuses on reducing food
insecurity in vulnerable populations and is available on the USAID/FFP
website. A variety of activities may fall under this overall objective,
such as natural resource management, income security and social
services, community development, agriculture development, employment-
labor-training, food and nutrition, disaster prevention and relief.
Proposals must clearly describe each objective, its rationale and
implementation plan, and the method for tracking and measuring impact.
There is a section in the Guidelines called ``legislative mandates
for type of commodity, programming and program size,'' but no mention
is made of the 1,875,000 metric ton minimum requirement for non-
emergency programs. No information is provided about the amount of
funding available or the tonnage level available for MYAPs. However,
simultaneously, the USAID FFP Office issued a ``priority country plan''
that made clear that there would be little, if any additional commodity
available overall and it the amount available for all non-emergency
programs would be approximately 750,000 MT ($350 million).
The priority country plan was introduced at meetings between the
FFP Office and CSs. USAID informed CSs that for FY 2007, new programs
will only be accepted in 15 ``priority countries,'' while for FY 2006
there were 32 countries. Multi year programs that were underway in the
17 countries not on the priority list would be phased out over the next
2-3 years, requiring changes in many of the already-approved program
plans.
CSs were advised to check with the USAID Missions in each country
and the USAID/Food for Peace Office (FFPO) to find out how much
commodity would be available. However, the amount available was not
clear in any case, as USAID kept adjusting the levels downward over the
next 6 months.
May 1, 2006, a final set of Guidelines was published, which were
similar to the February 22 draft, but specifically reference the
``priority country plan'' for phasing out 17 countries and identifying
the 15 countries where programs will be allowed.
May 15, 2006--Proposals are due. [They were originally due on March
15th, but this was extended to May 15th.]
September 11, 2006--120 days after proposal submission and
according to the law, the deadline for USAID/FFP to send approval or
disapproval letters to CSs. Disapproval letters must include reasons
and what needs to be corrected to be eligible. In the past, the CS and
FFP would discuss the outstanding issues in a disapproval letter and
after clarification, the proposal was often approved. An approval
letter does not guarantee a program agreement will be signed. A
Transfer Authorization (TA) must be signed before a CS can ``call
forward'' (order) commodities and receive funds under the agreement.
CS Program Planning (typically starts 4 months or more before
submission):
1. Decision to write proposal. CS headquarters and country office
staff discuss whether a Title II program would be appropriate
for a particular country. CS staff meets with the FFP
representative at the USAID Mission in the recipient country or
regional office to determine the Mission's views about Title II
programs and whether the USAID Mission received notice from
USAID/FFP that non-emergency (e.g. multi year) food aid will be
made available for that country. A CS will also confer with
other CSs operating in the country.
2. Proposal preparatory work. A team is developed to work on the
proposal, which may in HQ and field staff as well as
consultants. The skill sets include: (a) Ability to conduct a
Bellmon analysis (e.g. to determine which commodities can be
provided as food aid without having a negative impact on the
local market or creating a disincentive to local production and
to assure availability of adequate storage). Bellmons may be
conducted through the USAID mission or in conjunction with
other CSs working in the recipient country. (b) Technical
skills in collecting baseline data, assessing nutritional and
other information indicative of food security status, and
knowledge of program interventions. (c) Country-specific
knowledge and relationships.
3. Needs assessment. Identify the target population and needs
broadly by available nationwide data and more specifically
through a variety of techniques such as informant interviews,
focus groups and weighing children. Collected data are combined
with information and input from the USAID Mission, national and
local governments, community-based groups and others to
determine (a) which areas and populations the project will
target and (b) what information to collect in the baseline
survey (which, if the proposal is approved, is updated at the
project start-up when the detailed implementation plan is
developed.) Baseline survey data may include percentage of
children under age 5 with stunting or underweight (the
primarily measures of poor nutrition), adequacy of household
food supplies, agricultural productivity and sales, and other
indicators of food security. These indicators are also measured
at intervals during the 5 year tenure of the typical program.
Comparisons of baseline data to mid-term or final data are used
to determine whether the program is making the progress
intended, whether adjustments are needed in methodologies and
to measure impact.
4. Develop the core elements of the proposal. Compile all data
collected and begin to determine the following:
a. Activities that will address the constraints to food security,
e.g. the situations and risks that threaten availability of
food (such as the types and amounts of food available in
local markets during different times of the year), access
to food (such as household income levels), and utilization
of food (such as the degree of malnutrition/under-nutrition
among children and women of reproductive age). As 100%
monetization programs are no longer allowed, even if these
types of programs are considered well suited to the needs,
they cannot be proposed. Typically, a mix of monetization
and commodity distribution activities are selected to
achieve identified objectives.
b. Commodity choice and frequency of deliveries is based on the
local context (what are people eating that is also
available from the U.S. or what is needed to supplement
diets), market analysis (what is appropriate to provide
considering local market availability and conditions--
reflected by the Bellmon analysis), and what other
organizations may be distributing or monetizing. In
addition, a nutritional analysis (i.e. number of calories
and other nutrients in the food basket) is conducted based
on the proposed commodities for distribution versus the
nutritional value of the current typical food intake of the
target population.
c. Coordination of monetization with other CSs. Sometimes CSs
conduct monetization jointly and each of their
corresponding proposals will have the same description of
the monetization process. The commodity for monetization is
determined based on the usual marketing requirements (e.g.
patterns of commercial imports of the same or similar
commodities) determined by USDA and the Bellmon
Determination (e.g. identification of commodities that can
be provided that will not interfere with local production
and marketing and for which adequate storage is available)
conducted by CSs and in some cases the USAID Mission.
d. An Initial Environmental Estimate is prepared, which accounts
for potential environmental hazards the project may
encounter and conforms to USAID/FFP Guidelines.
e. The program implementation plan that will be used, including
the evaluation and monitoring methodology and impact
indicators that will be measured.
5. Prepare a rough draft and present it to the USAID Mission for
feedback to ensure that the program continues to be in line
with the USAID Mission objectives.
6. Finalize proposal. This is often done at HQ and includes:
a. Collect letters of support from the USAID Mission, local
government, relevant non-governmental organizations and
other entities that are counterparts in the project and are
important for sustainability or may provide services such
as supervision and/or storage for commodities.
b. Prepare the Annual Estimated Requirements (AER), which
reflects the commodities and tonnage levels for each
activity and schedule of delivery, is the basis for ``call
forwards'' (commodity orders) and must be approved by the
USAID Mission.
c. Complete and submit the proposal in accordance with USAID
Guidelines, which are available on the USAID/Food for Peace
website.
7. Approval and call forwards. The signing of the Transfer
Authorization (TA) by USAID is the official approval of the
program. Then, the CS is permitted to send call forwards for
commodities based on the approved AER through the electronic
Commodity Tracking System, which is monitored by FFP and USDA.
Prior to the 4th of each month, FFP informs a CS whether its
call forward is accepted or denied. If approved, it will be
included in that month's USDA/KCCO commodity purchase. Once the
call forward is approved, typically the freight forwarder for
the CS becomes engaged in monitoring USDA commodity
procurement; tendering for shipping; seeking USAID/
Transportation approval for the freight fixture and whether it
is flagged U.S. or foreign (based on lowest landed cost of the
commodity and freight combined and 75% cargo preference); and
tracking the loading at U.S. port and the vessel's progress
until the commodities are delivered to the destination port.
Specific regulations govern the tendering, awarding and
contracts for ocean freight.
8. The CS's responsibility for the commodity begins when the
commodity crosses ship's tackle as it is being loaded at U.S.
port. The CS has a marine survey conducted at the delivery
port to assess any losses or damages. The survey must be
submitted to USDA and used as the basis for any claims against
the vessel owner. The CS is responsible for receiving and using
the commodity according to the terms of its agreement with
USAID.
9. Monitoring progress against baseline data is required throughout
the tenure of the program and annual reports are submitted to
USAID with information about the levels received and used,
monetization, progress to date and estimated requirements for
the upcoming year. In addition, evaluations are conducted mid-
term and at the end of each program and PVOs are subject to OMB
Circular A-133 audit requirements for non-governmental
organizations.
Attachment B
P.L. 480 Title II: Appropriations Compared to Actual Expenditures in U.S. Dollars and Section 416 Expenditures
[FY 2001-2008] *
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FY08 (Admin.
FY01 FY02 FY03 FY04 FY05 FY06 FY07 (est.) Request)
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Title II Appropriations......................... 835,200,000 945,000,000 a 1,809,575,000 1,185,000,000 a 1,415,000,000 a 1,632,000,000 b 1,675,000,000 1,219,000,000
Title II Actual Program Level c................. 925,900,000 1,039,100,000 1,881,000,000 1,670,100,100 1,668,000,000 1,773,000,000 1,765,000,000 N/A
Sec 416(b) d.................................... 1,103,000,000 773,000,000 213,000,000 173,000,000 147,000,000 20,000,000 0 0
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* Updated: May 7, 2007.
a FY03 Includes supplemental of $369 million; FY05 includes supplemental of $240 million; FY06 includes supplemental of $350 million.
b FY07 Final Continuing Appropriations of $1,215,000,000 and assumes FY07 Supplemental Appropriations of $460,000,000, which was in the bill passed by Congress that was vetoed and is now being
revised.
c Actual levels include appropriations, maritime reimbursement and carry-in funds and represent the amount actually reported as expended by USAID.
d Section 416(b) is funded through the Commodity Credit Corporation and is not subject to FY appropriations. It is shown because until FY03, the commodities were often used for emergencies,
supplementing Title II funding.
Mr. McIntyre. Thank you, ma'am. We have run over a good
bit.
Ms. Levinson. I am sorry, sir.
Mr. McIntyre. That is all right. And we are happy for you
to submit a full statement; plus I am sure there may be some
questions. So feel free to supplement what you said in
answering questions or in your further statement.
Ms. Reilly.
STATEMENT OF ANNEMARIE REILLY, CHIEF OF STAFF, CATHOLIC RELIEF
SERVICES (CRS), BALTIMORE, MD
Ms. Reilly. Good afternoon, Chairman McIntyre, Ranking
Member Musgrave and Members of the Subcommittee. Thank you for
calling this hearing and for providing Catholic Relief Services
with the opportunity to share our recommendations for
strengthening food security aid in the farm bill. We believe
the reforms we propose today will improve our ability to reduce
chronic hunger by making the current system more efficient and
effective.
My name is Annemarie Reilly. I am Chief of Staff for
Catholic Relief Services and with your leave I will summarize
my written statement.
Operating in 98 countries around the world, CRS is the
international development and relief agency of the U.S.
Catholic community. For more than half a century we have worked
in partnership with Food for Peace, expressing the goodwill of
the American people through the food aid programs. The American
people should be proud that the U.S. Government, through Public
Law 480 Title II resources, is the largest food aid donor in
the world. This program assists millions of people living on
the edge to meet their daily food needs. In addition, the
complementary cash support dedicated to strengthening
livelihood systems improves their ability to feed themselves in
the long term. For example, over a 5 year period CRS worked
with a local partner to reverse severe environmental
degradation and improve the livelihoods of 570 poor households
in Legedini, a rural community of eastern Ethiopia. This
assistance enabled one woman, Nuria Umere, to purchase an ox,
seven goats and a cow, send one of her three children to school
and help her husband to meet their household food needs. The
success of this program is a direct result of the effective
combination of food aid to meet immediate needs and cash for
complementary livelihood support.
Catholic Relief Services and other private voluntary
agencies are very supportive of the U.S. Government response to
emergencies but this should not be done at the expense of the
chronically hungry. We are offering some proposals to improve
response to food emergencies while at the same time protecting
resources for programs that address chronic hunger and its
underlying causes. I would like to share with you two
recommendations that CRS has developed in collaboration with
sister PVOs CARE, Mercy Corps and Save the Children.
First, we believe that with some adjustments, the Bill
Emerson Humanitarian Trust could become an invaluable backup in
addressing food emergencies. The current mechanism for
realizing the benefits of the Emerson Trust is cumbersome. We
propose that, with Title II emergency resources when they have
been exhausted in a given fiscal year, additional emergency
funding would automatically come from the Emerson Trust. Of
course, we would need to ensure that the Emerson Trust is then
replenished in a timely fashion. CRS is currently drafting
specific proposed fixes for the Emerson Trust to make this
possible. We also propose that the resources available for
emergencies be increased to 50 percent of Title II.
Second, it is our position that if more cash were available
through Title II, we would have greater efficiency and
effectiveness in our programs to fight world hunger both
chronic and emergency. We recommend that Section 202(e) Title
II cash resources be increased to 25 percent of the overall
Title II budget and that the law be amended to allow greater
flexibility in its use for food aid program support.
CRS has three additional recommendations we would like to
share. First, Title II export shipments are repeatedly bunched
together early in the fiscal year with resulting delays and
increased shipping costs due to demand for vessel space, just
as my colleague, Ms. Levinson, has talked about. We think that
there are ways to address this. Under our proposal, the
Administrator can rely on the availability of Commodity Credit
Corporation funds to contract for commodities and freight to
meet programming needs in the next fiscal year prior to the
actual enactment of an appropriation. CCC would be reimbursed
promptly from the Title II appropriation or continuing
resolution when it comes available. Second, we ask that
Congress appropriate a realistic annual target of $2 billion
for Title II per year. Furthermore, we propose that a minimum
of $600 million, or 50 percent of total Title II resources,
whichever is greater, be dedicated exclusively to developmental
food aid to address chronic hunger. In other words, a safe box.
Sufficient funding up front with simplified programming in the
field eliminates delays and extra storage and transportation
expenses, and would ensure more effective and dependable links
with partners. Third, CRS supports the Administration's request
for flexibility in the use of a portion of the Title II budget
for local or regional purchase of food. We believe local
purchase is an option worthy of Congressional support in
situations where it can bolster local food security or
contribute to faster and more appropriate response to an
emergency. It can be more effective and efficient use of
American resources in the right context.
In conclusion, I want to once again thank you, Chairman
McIntyre, and all the Members of the Subcommittee for holding
this hearing to respond to the needs of the hungry throughout
the world. Our proposed changes to U.S. food security programs
will make a potent program even more powerful in wiping out
chronic hunger. By adopting these recommendations, you will
enable Catholic Relief Services and other organizations that
implement U.S. international food assistance programs to
improve food security programs, alleviate hunger and save
lives. Thank you.
[The prepared statement of Ms. Reilly follows:]
Prepared Statement of Annemarie Reilly, Chief of Staff, Catholic Relief
Services (CRS), Baltimore, MD
Good afternoon Chairman McIntyre, Ranking Member Musgrave, and
Members of the Subcommittee. Thank you for calling this hearing and for
providing Catholic Relief Services the opportunity to share our
insights based on our long experience of delivering and programming
food aid for long-term development and emergencies.
My name is Annemarie Reilly, Chief of Staff for Catholic Relief
Services (CRS). Operating in 98 countries around the world, CRS is the
international development and relief agency of the U.S. Catholic
Conference of Bishops. We represent the 65 million members of the U.S.
Catholic community in a partnership with Food For Peace that has
expressed the goodwill and compassion of the American people for more
than half a century. The reforms we propose will improve our ability to
reduce chronic hunger, unlocking the power of food security aid.
According to the World Food Program, more than 850 million people
on our planet are suffering from chronic hunger. The American people
should be proud that the U.S. Government, through P.L. 480 Title II
resources, is the largest food aid donor in the world. These programs
assist millions of people living on the edge to meet their daily food
needs while also strengthening their livelihood systems to help them to
help themselves over time.
For example, with 5 years investment of Title II food and funds,
CRS worked through a local partner to reverse severe environmental
degradation and improve the livelihoods of 570 poor households in
Legedini, a rural community in eastern Ethiopia. Through support
provided by USAID and CRS, this community has been able to use small-
scale irrigation to grow marketable vegetables. They have also used
this investment to develop small livestock herds and increase sales of
milk, improve water and sanitation management, increase the engagement
of women in microenterprise, and improve the nutritional content of
family meals. Participants in a women's group have begun to save and to
invest their savings in business activities that diversify their
assets. One woman, Nuria Umere, has been able to purchase an ox, a cow
and seven goats, and she is able to send one of her three children to
school and help her husband meet their household food needs. The
success of this program is a direct result of the effective combination
of food aid to meet immediate needs and cash to support complementary
livelihood support activities.
Title II resources are used to set up feeding programs in
desperately poor communities around the world and are often coupled
with agriculture projects, village banking schemes or other livelihoods
enhancement efforts. Social safety net programs feed orphan-headed
households and people who are too old or too sick to function in the
local economy. Title II also provides food for maternal/child programs
that combine food aid with prenatal and postnatal education and
support. This is only a small sample of the variety of programs Title
II supports to fight chronic hunger. Title II programs are extremely
important to the families, communities and even nations that they
serve.
Although these are significant efforts, there remains a huge unmet
need. According to Food For Peace, the U.S. Government feeds only about
50 to 70 million of those 850 million chronically hungry people. We
don't expect the U.S. Government to feed all of the world's hungry. CRS
is working on recommendations for improvements to the Food Aid
Convention, due to be renegotiated, which could ensure that more
resources will be made available worldwide to fight hunger. We also
invest significant private resources and funding from other donors to
support livelihood systems that address chronic food needs. But given
the enormity of the hunger program, more must be done. Yet, more and
more of our Title II resources are being diverted away from programs
that address chronic hunger in order to fund an increasing number of
emergencies around the world.
Catholic Relief Services and other private voluntary agencies are
very supportive of the U.S. Government stepping up to the plate to
address emergencies, but not at the expense of the chronically hungry.
We are offering some proposals to continue this vital work in
responding to food emergencies, while at the same time protecting
resources for programs that address chronic hunger and the underlying
causes of that hunger.
As you are well aware, current law requires that 75% of Title II
food aid resources be devoted to development (non-emergency) programs.
Over the past several years, however, the Administration has
consistently used the emergency provision to waive the 75% rule. The
program percentages have now been reversed as developmental food aid
programs are diminished or eliminated in many countries so that about
75% of commodities are used for emergencies year to year, while only
about 25% remain for development.
I. Recommendations From CRS, CARE, Save the Children, Mercy Corps
We believe that the Bill Emerson Humanitarian Trust (BEHT) has
played an important role in responding to acute hunger. Our first
recommendation is that with some adjustments the Emerson Trust could
become an invaluable tool in addressing food emergencies. Catholic
Relief Services, along with our PVO colleagues CARE, Mercy Corps and
Save the Children, propose that Congress change both the way the Bill
Emerson Humanitarian Trust is used and the way it operates. When Title
II emergency resources have been exhausted in a given fiscal year,
additional emergency funding would automatically come from the Emerson
Trust. We also propose that the resources available for emergencies be
increased to 50% of Title II. Using the Emerson Trust first as an
emergency back-up will also protect non-emergency developmental
programs.
Of course, to make this system work, we need to ensure that the
Emerson Trust is replenished in a timely fashion. Catholic Relief
Services is currently drafting specific proposed fixes for the Emerson
Trust that would make it a more effective component in the food aid
arsenal in our fight against global hunger. The current mechanism for
realizing the benefits of the Emerson Trust is cumbersome, the
underlying authority is vague, long-term availability is uncertain, and
the legal and policy constraints on accessing the Trust may conflict
with long-term economic development goals. The Emerson Trust is in need
of reform and the overall goal of such reform should be to make it a
reliable source of food resources in emergency situations and one that
may be accessed easily to mitigate the detriment to planned non-
emergency development funding under Title II.
CRS is working with others to design three significant changes to
the Bill Emerson Humanitarian Trust: (1) the orderly liquidation of
current stocks in the Emerson Trust, so that it will hold only cash to
acquire commodities as needed; (2) establishing a true Trust by
allowing the cash to be invested in conservative short-term
instruments; and (3) providing limited authority to Commodity Credit
Corporation to replenish the Emerson Trust in a fiscal year.
Second, it is our position that if more cash were available through
Title II, we would have greater flexibility in carrying out our
programs to fight world hunger, both chronic and in emergency settings.
The real causes of global food insecurity and hunger are complex and
cannot be solved over the long term by the provision of food assistance
alone. Responding more appropriately means that additional resources in
the form of cash, both within and outside of Title II, are essential to
support a variety of targeted activities that can more effectively
address the root causes of vulnerabilities and risks that afflict
hungry and food insecure populations. Current Section 202(e) law
permits a small percentage of Title II to be used for program
logistics, management and related costs. However, these allowable uses
do not go far enough to serve as an effective critical cash support
mechanism. Section 202(e) needs to be amended to allow greater
flexibility in the use of the funds to include administrative,
management, technical and program related costs to enhance the
effectiveness of Title II commodities. The percentage of funding in an
expanded Section 202(e) also needs to be increased to no less than 25%
of the Title II program levels.
We could more flexibly use commodities and/or cash in Title II by
using language patterned after the McGovern-Dole Food for Education and
Child Nutrition Program. The McGovern-Dole Food for Education and Child
Nutrition Program addresses the issue of cash resources with simple
language that allows for a mix of commodities and cash for implementers
to use to carry out the program. This has worked well as implementers
are discouraged from monetizing commodities because it is much easier
and more cost effective to use cash.
II. Additional Recommendations From CRS
The third recommendation for fighting chronic hunger is that the
Congress must appropriate adequate funds for Title II. The consistent
under-funding of Title II has required the annual passage of
supplemental appropriations bills to cover some of the shortfall. These
kinds of piecemeal appropriations for food through supplemental
appropriations are disruptive to well-planned developmental programs
and hamper emergency response.
Repeatedly, Title II export shipments are bunched together early in
a fiscal year with the result that delays occur and shipping costs
increase due to the increased demand for vessel space. One of the
reasons for this ``bunching'' of shipments is that availability of
funds for a fiscal year is not often known early enough to allow for
efficient programming commitments and planning of purchases. Under our
proposal, the Administrator can rely on the availability of CCC funds
to contract for commodities and freight to meet programming needs in
the next fiscal year prior to the actual enactment of an appropriation.
Of course, CCC would be reimbursed promptly from the Title II
appropriation or continuing resolution when it becomes available.
Fourth, we ask that Congress appropriate a realistic annual target
of $2 billion per year for Title II. Furthermore, we propose that a
minimum of $600 million or 50% of total Title II resources, whichever
is greater, be dedicated exclusively to developmental food aid to
address chronic hunger--in a word, to put this money for developmental
food aid in a ``safe box.'' The $2 billion figure is consistent with
the U.S. share of annual needs for the last several years. Sufficient
funding up front would simplify programming in the field, eliminate
delays and extra storage and transportation expenses, and ensure more
effective and dependable links with partners who look to the U.S.,
above all others, for life-saving aid. Designated funding would
guarantee that we don't lose the fight against chronic hunger by
diverting almost all food aid to emergency uses.
Fifth, CRS supports the Administration's request for flexibility in
the use of a portion of the Title II budget for local or regional
purchase of food. CRS endorses and undertakes the local purchase of
commodities as a cost-effective tool for some emergency and non-
emergency programs, when analysis of markets indicates it is feasible.
CRS also engages in the use of vouchers to promote beneficiary
acquisition of local food. CRS believes local purchase is an option
worthy of Congressional support in situations where it can bolster
local food security and/or contribute to faster and more appropriate
response to an emergency. It can be a more effective and efficient use
of American resources.
In conclusion, I want to once again thank you Chairman McIntyre and
all Members of the Subcommittee for holding this hearing to respond to
the needs of the hungry throughout the world. Our proposed changes to
U.S. food aid programs are a sincere effort to help make a great
program even greater. By adopting these recommendations CRS, and other
organizations that implement U.S. international food assistance
programs, can better promote food security, alleviate hunger, and save
lives.
Thank you, Mr. Chairman. I would be pleased to respond to any
questions that the Committee may have.
Mr. McIntyre. Thank you very much, and thank you for your
eloquent words in the time prescribed. That worked out well.
Mr. Gillcrist.
STATEMENT OF JOHN GILLCRIST, CHAIRMAN, BARTLETT MILLING
COMPANY; DIRECTOR, NORTH AMERICAN
MILLERS' ASSOCIATION; ON BEHALF OF AGRICULTURAL FOOD AID
COALITION, KANSAS CITY, MO
Mr. Gillcrist. Mr. Chairman and Members of the
Subcommittee, I am here today on behalf of the North American
Millers' Association and a broad coalition of groups
representing American farmers and food processors called the
Agricultural Food Aid Coalition. I am here to express my strong
support for the continuation of our time-tested and effective
U.S.-produced food commodity donation programs. We are reaching
50 to 100 million malnourished people all over the globe every
year.
I have seen these programs in action and they are
remarkable. Our food aid clearly labeled ``gift of the people
of the United States'' is a source of pride for Americans and
is the most visible manifestation of the goodwill of the United
States in the developing world. We also need to recognize that
these programs are an essential part of our national security
structure. The Agricultural Food Aid Coalition has drafted
principles on food aid for Congress to consider when writing
the farm bill. I would like to submit those for the record. In
short, we strongly support the current structures of U.S. food
aid programs. However, we recognize the need to constantly
improve the efficiency and effectiveness of these programs such
as pre-positioning food aid closer to recipient countries. But
we do oppose the Administration's proposal to authorize the use
of cash for regional and local purchases of food aid
commodities. The United States currently provides over 50
percent of the world's food aid, yet there is still a huge
shortfall of aid for the 850 million chronically malnourished
people in the world. Our in-kind donation system is working.
Humanitarian donations of U.S.-grown, processed, fortified and
inspected agricultural products have ensured that safe and
nutrient-rich foodstuffs reach a broad array of people in need.
In fact, in 2007, the Ethiopian Government actually prohibited
the local purchases of cereal grains for humanitarian programs
due to the price instability those purchases created. We must
be certain that the large purchases of scarce food supplies
don't actually harm the people we intend to help. We believe
that in-kind food aid is the most dependable form of food aid,
and the least susceptible to fraud and misuse.
Yes, American farmers, food processors and transportation
companies benefit from current programs. One billion dollars of
processed Title II U.S. food generates $2.7 billion in U.S.
economic activity. If that same $1 billion was donated in cash,
the U.S. would lose $2.7 billion in economic activity, and all
the benefits accrued to that including jobs and the tax
revenues it would generate.
I traveled to Ethiopia and saw how the food produced in
American mills was making a difference in people's lives. We
visited land reclamation projects that are successful in
stemming erosion--growing trees and grass essential to building
their homes and feeding their cattle. We also witnessed water
basins villagers had hand dug to capture water during the rainy
season to be used throughout the year. These catchments
provided clean water for the village, and reduced the time and
energy women and children spent carrying water--in some cases
as much as 12 miles per day. The United States provided food
which enabled the completion of these self-sustaining projects.
Developmental projects like these are critical to addressing
the underlying causes of poverty and chronic hunger which is
the intended focus of Public Law 480 Title II. In fact,
Congress requires that 75 percent of commodities procured for
food aid must be committed to developmental programs. However,
the Administration has waived this Congressional mandate
routinely. We suggest that the Administration only be permitted
to waive a maximum of 675,000 tons annually.
Developmental dollars are being redirected to fund an ever-
increasing number of emergencies. We know emergencies will
occur. The Bill Emerson Humanitarian Trust, now serving as a
last resort, should be used as a more predictable and viable
response for emergencies.
The McGovern-Dole Program fights hunger and promotes
education. A school meal is often the only one these children
get, and is the primary reason that parents send their children
to these schools to begin with. We support full funding of this
program. Public Law 480 Title I has operated very successfully
for more than 50 years and we support its reauthorization.
In closing, rising world hunger and the resulting turmoil
created begs for an expansion of U.S. food aid programs. U.S.
food aid is the best weapon we have in our arsenal to
demonstrate our true intentions, disarm our adversaries and
establish America as the world's undisputed superpower in the
delivery of humanitarian assistance.
Thank you for letting me speak today.
[The prepared statement of Mr. Gillcrist follows:]
Prepared Statement of John Gillcrist, Chairman, Bartlett Milling
Company; Director, North American Millers' Association; on Behalf of
Agricultural Food Aid Coalition, Kansas City, MO
Mr. Chairman and Members of the Subcommittee, my name is John
Gillcrist. I am the Chairman of Bartlett Milling Company, former
Chairman and a current Director of the North American Millers'
Association. Thank you for holding this hearing today on food aid and
trade, two important elements of the 2007 Farm Bill.
I am here today on behalf of both NAMA and a broad coalition of
groups representing American farmers, food processors, and agribusiness
called the Agricultural Food Aid Coalition. NAMA is comprised of 48
wheat, corn and oat milling companies several of whom have been
involved in P.L. 480 since its inception over 50 years ago.
I'm here to express my strong support for the continuation of our
time-tested and effective U.S. produced food commodity donation
programs. They are reaching millions of malnourished people all over
the globe every year. Our great agricultural bounty should continue to
be used as a powerful force for the good of food insecure people
worldwide.
I have seen these programs in action and they are remarkable. In-
kind food donations are a source of pride for American taxpayers,
farmers, food processors and agri-businesses and express our sincere
and long-term commitment to humanitarian assistance. Our food, clearly
labeled ``Gift of the People of the United States,'' is the most
visible manifestation of the good will of the United States in the
developing world. We also need to recognize that these programs are an
essential part of our national security structure.
The Agricultural Food Aid Coalition has drafted principles on food
aid for Congress to consider when writing the farm bill. I would like
to submit those for the record, including the names of the
organizations that support these principles. In short, we strongly
support the current structures of U.S. food aid programs.
However, the members of the Agricultural Food Aid Coalition oppose
the Administration's proposal to authorize the use of up to 25% of P.L.
480 Title II resources for regional and local purchases of food aid
commodities. We believe that diverting such a significant amount of
limited Title II resources for these purposes would be
counterproductive. We must defend our in-kind donations because if the
U.S. does not supply the food, who will? The U.S. currently provides
over 50% of the world's food aid, yet there is still a global shortfall
of food aid for the 850 million people who do not have enough food to
lead healthy, productive lives. EU food donations have dropped
significantly since they converted their food donations to cash. The
World Food Program already purchases significant quantities of local
and regionally produced food in emergencies. We must be certain that
such large purchases of scarce foods don't actually harm the people we
are intending to help. The law of unintended consequences can produce
disastrous results in these largely unmonitored situations.
Our in-kind donation system is working. Currently, humanitarian
donations of U.S. grown, processed, and inspected agricultural products
have insured that safe and uniform foodstuffs reach disaster victims,
refugees, people living with HIV and AIDS, mothers, children and
communities in need. Furthermore, the U.S. Government, private
voluntary organizations and the World Food Program take great care when
they distribute or monetize our food to avoid commercial disruptions.
Purchasing food locally and regionally has the potential to be both
more market distorting and less rigorously regulated than food shipped
from the U.S.
We believe that in-kind food aid is the most dependable form of
food aid and the least susceptible to fraud or misuse. Programs such as
pre-positioning of food commodities and processed products closer to
recipient countries and expedited procurement and shipping procedures
can increase the efficiency of in-kind food aid and cut down on the
time and costs of responding to emergencies.
Yes, American farmers, food processors and transportation companies
benefit from the current programs. Indeed, the farm bill is intended to
strengthen the U.S. farm economy; scarce agricultural budget resources
should benefit U.S. farmers and secure U.S. jobs. One billion dollars
of processed Title II commodities donated generates $2.7 billion in
U.S. economic activity. If that same $1 billion were donated in cash,
the U.S. would lose $2.7 billion in economic activity and all of the
benefits accrued to that, including the tax revenues it would generate.
I traveled to Ethiopia and saw with my own eyes how the food
produced in American mills was making a difference in people's lives.
We visited a WFP land reclamation project near Nazeret. A group of
Ethiopian villagers proudly described their project which consisted of
terracing and planting the hills around their village in a successful
effort to stem erosion, retain top soil, grow trees, attract wild life,
and grow grass essential to building their roofs and feeding their
cattle.
U.S. food aid was key in providing the sustenance that allowed them
to complete this physically challenging project over 3 years. They
thanked us repeatedly for the food we provided. They were immensely
proud of the fact that they no longer relied on or received food aid
due to the success and sustainability of their conservation project.
We also visited a water catchment project south of Addis Ababa.
Villagers had hand dug a large water retention basin to capture water
during the rainy season and to hold it throughout the year. This
development project provided clean water for the village and reduced
the time and energy women and children spent carrying water every day
when they no longer needed to walk 12 miles. U.S. aid provided food
during the construction of this catchment.
Development programs like these are critical to the goal of
reducing chronic hunger and addressing the underlying causes of hunger
and poverty, which is the intended focus of P.L. 480 Title II. In fact,
Congress requires that of the 2.5 million metric tons of commodities
that must be procured for food aid, 75% or 1.875 million metric tons
must be committed to development programs in areas such as child
nutrition, agricultural development, HIV/AIDS and micro-enterprise. In
recent years, however, the P.L. 480 Title II development programs have
not had a stable and secure funding stream because the Administration
is waiving this Congressional mandate routinely instead of using their
waiver authority, as it was intended, on rare occasions. We suggest
that the Administration only be permitted to waive up to 675,000 metric
tons of their development-tonnage requirements so that it can be
assured that 1.2 million metric tons will be used for these critical
programs. The crippling impact of HIV and AIDS in African communities
makes the need for stable sources of funding for multi year programs
that much more imperative.
Development dollars are being redirected to fund an ever-increasing
number of emergencies. Although we cannot predict where these natural
and man-made emergencies will occur, we know that they will occur. The
Bill Emerson Humanitarian Trust, now serving as a last-resort, should
be used as a more predictable and viable response mechanism for
emergencies. To do that a robust mechanism to replenish the Trust must
be in place.
In addition to P.L. 480 Title II and the Bill Emerson Humanitarian
Trust, other U.S. food aid programs play an important role. The
McGovern-Dole International Food for Education and Child Nutrition
Program provides food to school children in the world's poorest
countries and has established a proven track record of fighting hunger
and promoting education. In countries where school feeding programs are
offered, enrollment and attendance rates increase significantly,
especially for girls. It is widely known that school attendance by
girls has long-term benefits for them, their future children and their
communities. A school meal is often the only one these children get,
and the primary reason that parents send their children to school. We
applaud Congress for funding this program and hope full funding will be
available in the future.
P.L. 480 Title I has operated very successfully for more than 50
years. We support reauthorizing Title I, both in its original
concessional sales role and as an additional funding tool for Food for
Progress. Title I's concessional sales assist eligible governments'
hungry and malnourished with humanitarian food aid resources and its
Food for Progress program supports economic and agricultural
development. Demand for Title I concessional sales and Food for
Progress assistance continues through annual requests from eligible
foreign countries and other applicants. Title I concessional sales
should be reauthorized and offered to countries that can afford its
terms.
The Food for Progress program operates under a number of
constraints which Congress could address if funding were available.
Perhaps the greatest funding constraint on Food for Progress currently
is the lack of funds appropriated for the Title I portion of P.L. 480.
We urge Congress to maintain authorization for Title I so that it
continues to be an available food aid resource in the future for
governments who are seeking U.S. food aid commodities and so the Food
for Progress program can be maintained as a viable funding source for
organizations seeking to promote private enterprise in emerging
democracies.
The agriculture community has been and remains committed to working
with the government to actively address issues to increase the
efficiency and effectiveness of U.S. in-kind food aid. One way to
achieve this goal is to improve the current systems that the U.S.
Government uses to procure and transport food aid commodities overseas
as pointed out in the Government Accountability Office's recent report.
It is clear to me that the United States needs to expand foreign
food aid programs to best demonstrate our true intentions and deeply
held humanitarian beliefs to the rest of the world. Thank you for
inviting me to participate in this hearing.
______
Agricultue Food Aid Coalition
Food Aid Principles for the 2007 Farm Bill
Submitted May 10, 2007
1. Support Current Programs/Structure
We support current structures of U.S. food aid allowing the bounty
of U.S. Agriculture to be the fundamental resource for food security,
development and humanitarian relief in developing countries. On that
basis, we support the reauthorization of Public Law 480 Titles I and
II, the McGovern-Dole International Food for Education and Child
Nutrition Program, and Food For Progress.
2. Continue In-Kind Food Aid & Oppose LRP (Local/Regional Purchase)
U.S. Food Aid programs are a source of pride to American taxpayers,
farmers, food processors and agri-businesses. We support continuation
of U.S. in-kind food aid and oppose the diversion of funds from U.S.
food aid program(s) for the purchase of products from other countries.
Without the win-win nature of using U.S. food products as the base for
the programs, the constituency will be lost and both appropriations in
the U.S. agriculture budget and authorizations will be jeopardized.
World Food Program (WFP) already uses significant amounts of
LRP when they consider it justified and (based on their
analysis) would not cause price inflation in local economies.
Cash contributions from countries less able to share their in-
kind bounty should be and are, used in emergencies or
development situations when delays in arrival of in-kind food
would result in humanitarian crises.
The European Union, during their Common Agricultural Policy
reform process converted their `in-kind' food aid to cash
contributions with two distinctly negative consequences. Their
overall contributions to food aid went down (lack of
constituency) and the timeliness of their cash contributions
suffered. One WFP source was quoted as saying ``it takes longer
to get cash from some of the donors than it takes to get in-
kind products in place.''
U.S. food products, identified as ``Gift of the People of
the United States'' are one of the most visible manifestations
of the good will of the U.S. to developing countries. It is not
possible for such an identification to be made with hurriedly
purchased local food.
The procurement process for LRP, including insufficient
methods to assure food quality and safety, will potentially
give local and regional producers an opportunity to supply
products under less rigorous standards than currently required
by U.S. suppliers to food aid programs.
We support increased efficiencies to cut down on time and
costs of responding to emergencies, including the pre-
positioning or advance purchase of U.S. commodities and
processed products.
3. Reauthorize Title I
We support reauthorizing Title I of P.L. 480 both in its original
concessional sales role and as an additional funding tool for Food For
Progress (FFP). Demand for Title I concessional sales and FFP
assistance continues through annual requests from eligible foreign
countries and other applicants. Title I concessional sales should be
reauthorized and offered to countries that can afford its terms.
Without reauthorization, annual proposals from participating and
interested countries could not be submitted, considered, or funded
under Title I's concessional sales or its FFP authority, as they are
allowed to do under current law. In addition, without Title I, the
total amount of funding available for FFP would be diminished, leaving
the Commodity Credit Corporation (CCC) as the program's only funding
source. More details about Food for Progress are discussed below.
4. Development Programs in Title II
We support a prioritization for multi year development programs
that contribute to long-term food security in developing countries and
protection against disruptions of those programs due to diversion of
development funds to emergencies.
The original Congressional intent was that Title II be
primarily used for efforts to combat chronic hunger and its
effects. This was indicated in the requirement that 75% of the
budget be used for such purposes denominated in minimum
tonnages. This requirement is now ``waived'' annually, as 75%
of the budget is now used for emergencies. We suggest that
language be added so that USAID's authority to waive the
statutory mandate be limited to no more than 675,000 MT of the
non-emergency minimum tonnage yearly.
Using development program funds as the `first resort' for
response to emergencies causes disruptions to planned or
existing projects that have already been approved and deemed
necessary to combat chronic needs in priority countries.
Many of the criticisms of in-kind food aid: arrival timing,
market disruptions, inefficiencies, and product bunching can be
traced to the effects of diverting funds from development to
emergency and/or the delay in decision-making on funding for
development programs in anticipation of possible emergency
needs.
5. McGovern-Dole International Food for Education and Child Nutrition
Program
We support universal school lunch and child nutrition as a
fundamental goal. We support the expansion of the successful McGovern-
Dole Program based on the very beneficial impact it has had and can
continue to have on school attendance, competition with schools that
oppose U.S. interests and the positive impacts on learning when
children are provided adequate food and nutrition. The program was able
to fund just 11 out of 90 proposals that were received. This program
enjoys widespread and deep congressional support and with U.S.
leadership, it can be expanded dramatically.
USDA has demonstrated an ability to administer this program
admirably and its authority should be made permanent.
We support full funding for the McGovern-Dole Program.
6. Food For Progress
If funding were available, we would support an increase in the
minimum level of FFP to 500,000 metric tons (up from the current
400,000) and a freight expense cap (currently $40 million) that is high
enough to allow the minimum to be met. The demand for programs to
support economic and agriculture reform far exceeds our current
capacity to fund good projects; 114 proposals for FFP were submitted
for FY 2007, but only 12 were approved. The freight cap should not
arbitrarily prevent approval of projects that can have dramatic
positive impact.
7. Bill Emerson Humanitarian Trust
We support the more predictable use and full replenishment of the
BEHT to make its use a timely, viable response to emergencies. Because
the small amount of partial replenishment that is currently allowed
comes from the succeeding year's budget, the Administration is
reluctant to use this tool as a first response to emergencies.
An automatic reimbursement/replenishment up to the amount
used in emergency situations should be in place, without
diminishing subsequent year's budgets for other needed food aid
programming.
8. Monetization
We recognize the need for cooperating sponsors who administer and
distribute food aid programs to have both food and cash to implement
their programs. We support appropriate monetization where it is shown
to not cause disruption to local and international markets.
9. Reauthorize the Food Aid Consultative Group (FACG)
We support continuing the FACG. We are concerned, however, that the
FACG today serves more as a resource for reporting food aid information
than for providing interactive input between food aid system
stakeholders and the implementing agencies of the U.S. Government. We
support clarifying language to restore and strengthen its role in
providing interactive input among stakeholders and to clarify its
membership to include all food aid system stakeholders.
10. HIV/AIDS and Nutrition
We encourage the appropriate integration of U.S. food aid programs
with PEPFAR initiatives.
11. Increased Efficiency and Effectiveness in Food Aid Programs
As noted in the recent Government Accountability Office report on
food aid, we encourage initiatives to reduce the lag time between needs
assessments and product delivery in U.S. food aid emergency
procurements. We also recommend the lifting of arbitrary limits on
storage expenses for the pre-positioning of products for emergency
response. The agriculture community has been and remains committed to
actively addressing issues to increase U.S. food aid effectiveness.
American Soybean Association;
Global Food and Nutrition, Inc.;
International Food Additives Council;
National Association of Wheat Growers;
National Barley Growers Association;
National Corn Growers Association;
National Farmers Union;
National Oilseed Processors Association;
National Potato Council;
North American Millers' Association;
USA Dry Pea and Lentil Council;
USA Rice Federation;
US Dry Bean Council; and
US Wheat Associates.
Mr. Salazar [presiding]. Thank you, Mr. Gillcrist. I also
would like to take the opportunity to welcome Mr. Wickstrom. As
many of you know, he was my classmate when I was in the
Colorado Ag leadership program and we spent several weeks here
in Washington.
Mr. Wickstrom.
STATEMENT OF CARY L. WICKSTROM, WHEAT FARMER;
MEMBER, BOARD OF DIRECTORS, U.S. WHEAT ASSOCIATES (USW);
IMMEDIATE PAST PRESIDENT, COLORADO WHEAT
ADMINISTRATIVE COMMITTEE; ON BEHALF OF U.S. WHEAT
ASSOCIATES' FOOD AID WORKING GROUP, ORCHARD, CO
Mr. Wickstrom. Thank you, Congressman Salazar, and Ranking
Minority Member Musgrave and Members of the Committee. My name
is Cary Wickstrom. I am a 4th-generation wheat farmer from
northeastern Colorado. I am currently immediate past President
of the Colorado Wheat Administrative Committee. I serve on the
U.S. Wheat Associates' Board of Directors. During this time I
have been a Member of the U.S. Wheat Food Aid Working Group.
That group includes representatives from U.S. Wheat as well as
the National Association of Wheat Growers.
The philosophy of the U.S. Wheat Food Aid Working Group is
very simple: keep the food in food aid. The Food Aid Working
Group and the foreign offices of U.S. Wheat work closely with
private volunteer organizations both in the United States and
around the world to ensure that wheat is used appropriately and
efficiently. Through education, training and technical
assistance, we try to ensure that the wheat that leaves the
borders of our nation will be accepted by local millers and the
indigenous populations of the countries in need.
The United States is the most generous nation in the world
when it comes to food aid. As noted by Agriculture Secretary
Mike Johanns' speech at the International Food Aid Conference
in April, he said we give half of the world's food aid followed
by a distant 10 percent given by the European Union, the second
largest contributor. Of the food aid that the United States
provides, wheat is by far the largest commodity supplied. It
makes up to 40 to 50 percent on average of all food aid tonnage
and it went to 30 countries last year. Sixty-two percent of the
wheat in that 2005-2006 marketing year is hard red winter and
hard white winter classes. These are the two classes of wheat
that I grow on my farm.
Funding: The wheat industry encourages reauthorization of
Title I of Public Law 480 funding as an additional tool to fund
Food for Progress. We recommend no less than 1.2 metric tons
under Title II programs which would require roughly $600
million to provide commodities and support funds. Specifically
for Food for Progress programs, the wheat industry supports a
minimum level of 500,000 metric tons and a freight expense cap,
currently at $4 million, that would be high enough to allow
this. The freight cap should not limit approval of Food for
Progress projects. We also support the expansion of McGovern-
Dole and full replenishment of the Bill Emerson Humanitarian
Trust.
Wheat donations save and improve lives. With a global
presence, the U.S. wheat industry is intimately familiar with
the impact the agriculture community has on improving the
quality of life for so many people in difficult conditions
worldwide. The wheat industry has a strong commitment to food
aid and humanitarian assistance. In Ghana, for example, wheat
donations provided funding for local NGOs to reduce food and
livelihood insecurity in 10 vulnerable farm districts in Ghana
with the goal of reaching some 130,000 households in 250 farmer
communities in the next 2 years. Involvement by the U.S. wheat
industry through the USDA food aid programs contributed to
improving the quality of life in rural communities including
construction of schools and daycare centers, onsite school
feeding for over 40,000 undernourished children and over 60,000
girls enrolled in primary schools. Studies indicate a direct
link between alleviation of poverty and food insecurity through
formal and informal education of girls and women. Developmental
programs like these are critical to the goal of reducing
chronic hunger and addressing the underlying cause of hunger
and poverty--the focus of Public Law 480 Title II programs.
Efficiency and logistics: The efficiency and logistical
problems of providing food aid have recently come under fire.
It is important to point out in this discussion that bulk grain
logistics and handling are simply quite different from bagged
and processed products. The U.S. system for storing and
handling bulk grain is exceptionally efficient. It is not
uncommon to tender for, and deliver to, the end destination
within 45 days. This system allows the buyer to take advantage
of current world prices, not incur storage costs in another
country, and ensure they receive the appropriate wheat for the
end-use need.
Cargo preference: The Food Aid Working Group suggests it is
time to revisit cargo preference laws. At a time when resources
are strained, transportation costs should not exceed food
costs. We understand the sensitivity of this issue, but feel it
is time to evaluate international competition for freight and
seek the opportunity to use as much of our U.S. dollars to feed
the more than 850 million individuals in need of food as we
can.
Attached to my written testimony is the Food Aid Principles
for the 2007 Farm Bill, and that is supported by the
Agricultural Food Aid Coalition. Also attached is the Food Aid
Policy Statement that is approved by U.S. Wheat and the
National Association of Wheat Growers.
Mr. Chairman, we know that U.S. growers produce the safest
food in the world, and believe the bounty of U.S. agriculture
should continue to be a fundamental resource for food security,
development and humanitarian relief in developing countries. We
look forward to working with you again on this important issue
as you begin to write the 2007 Farm Bill.
Once again, I would like to thank you for the opportunity
to be here, and I would like to send my special thanks to
Congresswoman Musgrave from Colorado. She represents 95 percent
of the wheat production in Colorado. Colorado is fortunate to
have such good leadership. We are well represented here today,
obviously. Thank you.
[The prepared statement of Mr. Wickstrom follows:]
Prepared Statement of Cary L. Wickstrom, Wheat Farmer; Member, Board of
Directors, U.S. Wheat Associates (USW); Immediate Past President,
Colorado Wheat Administrative Committee; on Behalf of U.S. Wheat
Associates' Food Aid Working Group, Orchard, CO
Mr. Chairman and Members of the Committee, my name is Cary
Wickstrom. I am a fourth generation wheat farmer from northeastern
Colorado. I am currently immediate past President of the Colorado Wheat
Administrative Committee and serve on the U.S. Wheat Associates (USW)
Board of Directors. During this time I have been a Member of the USW
Food Aid Working Group which includes representatives from USW and the
National Association of Wheat Growers (NAWG).
The philosophy of the USW Food Aid Working Group is simple: Keep
the Food in Food Aid. The Food Aid Working Group and the foreign
offices of USW work closely with the Private Voluntary Organizations
both in the United States and around the world to insure that wheat is
used appropriately and efficiently. Through education, training and
technical assistance we try to insure that the wheat that leaves the
borders of our nation will be accepted by the local millers and the
indigenous populations of the countries in need.
The United States is the most generous nation in the world when it
comes to food aid. As noted by Agriculture Secretary Mike Johanns
during his speech at the International Food Aid Conference in April, we
give half of the world's food aid, followed by ten percent given by the
European Union, the second largest contributor. Of the food aid that
the United States provides, wheat is by far the largest commodity
supplied. It makes up from 40-50 percent on average of all food aid
tonnage and went to 30 different countries last year. Sixty-two percent
of that wheat in the 2005/06 marketing year is of the hard red winter
and hard white winter classes. These are the two classes of wheat that
I produce.
Funding
The wheat industry encourages reauthorization of Title I of P.L.
480 funding as an additional tool to fund Food for Progress (FFP). We
recommend no less than 1,200,000 metric tons (MT) under Title II
programs, which would require roughly $600 million to provide
commodities and support funds. Specifically for FFP programs the wheat
industry supports a minimum level of 500,000 MT and a freight expense
cap (currently $40 million) high enough to allow this. The freight cap
should not limit approval of FFP projects. We also support the
expansion of McGovern-Dole and the full replenishment of the Bill
Emerson Humanitarian Trust (emergency food aid).
Wheat Donations Save and Improve Lives
With a global presence, the U.S. wheat industry is intimately
familiar with the impact that the agricultural community has on
improving the quality of life for so many people in difficult
conditions worldwide. The wheat industry has a strong commitment to
food aid and humanitarian assistance. In Ghana for example, wheat
donations provided funding for local NGOs to reduce food and livelihood
insecurity in 10 vulnerable farm districts in Ghana with a goal of
reaching some 130,000 households in 250 farmer communities in the next
2 years. Involvement by the U.S. wheat industry through USDA food aid
programs contributed to improving the quality of life in rural
communities including construction of schools and day care centers, on-
site school feeding for over 40,000 undernourished children, and over
60,000 girls enrolled in primary schools. Studies indicate the direct
link between alleviation of poverty and food insecurity through formal
and information education of girls and women. Development programs like
these are critical to the goal of reducing chronic hunger and
addressing the underlying causes of hunger and poverty, the focus of
P.L. 480 Title II programs.
Efficiency and Logistics
The inefficiency and logistical problems of providing food aid have
recently come under fire. It is important to point out in this
discussion that bulk grain logistics and handling are simply different
from bagged and processed products. The U.S. system for storing and
handling bulk grain is exceptionally efficient; it is not uncommon to
tender for and deliver to the end destination within 45 days. This
system allows the buyer to take advantage of current world prices, not
incur storage costs in another country and ensures they receive the
appropriate wheat for the end-use in need.
Cargo Preference
The Food Aid Working Group suggests it is time to revisit cargo
preference laws. In a time when resources are strained, transportation
costs should not exceed food costs. We understand the sensitivity of
this issue, but feel it is time to evaluate international competition
for freight and seek the opportunity to use as much of our U.S. dollars
to feed the more than 850 million individuals in need of food as we
can.
Attached to my written testimony is the Food Aid Principles for the
2007 Farm Bill supported by the Agricultural Food Aid Coalition. Also
attached is the Food Aid Policy Statement approved by USW and the NAWG
along with supplemental material on Cargo Preference.
Mr. Chairman, we know that U.S. growers produce the safest food in
the world and believe the bounty of U.S. agriculture should continue to
be the fundamental resource for food security, development and
humanitarian relief in developing countries. We look forward to working
with you on this important issue as you begin to write the 2007 Farm
Bill. Thank you again for the opportunity to be here today. I am ready
to answer any questions you may have.
______
Food Aid Principles for the 2007 Farm Bill
(Rev. Draft 5/4/07)
1. Support Current Programs/Structure
We support current structures of U.S. food aid allowing the bounty
of U.S. Agriculture to be the fundamental resource for food security,
development and humanitarian relief in developing countries. On that
basis, we support the reauthorization of P.L. 480 Titles I and II, the
McGovern-Dole International Food for Education and Child Nutrition
Program, and Food For Progress.
2. Continue In-Kind Food Aid & Oppose LRP (Local/Regional Purchase)
U.S. Food Aid programs are a source of pride to American taxpayers,
farmers, food processors and agri-businesses. We support continuation
of U.S. in-kind food aid and oppose the diversion of funds from U.S.
food aid program(s) for the purchase of products from other countries.
Without the win-win nature of using U.S. food products as the base for
the programs, the constituency will be lost and both appropriations in
the U.S. agriculture budget and authorizations will be jeopardized.
WFP already uses significant amounts of LRP when it is
justified and (based on their analysis) would not cause price
inflation in local economies. Cash contributions from countries
less able to share their in-kind bounty should be and are, used
in emergencies or development situations when delays in arrival
of in-kind food would result in humanitarian crises.
The European Union, during their Common Agricultural Policy
reform process converted their `in-kind' food aid to cash
contributions with two distinctly negative consequences. Their
overall contributions to food aid went down (lack of
constituency) and the timeliness of their cash contributions
suffered. One WFP source was quoted as saying ``it takes longer
to get cash from some of the donors than it takes to get in-
kind products in place.''
U.S. food products, identified as ``GIFT OF THE PEOPLE OF
THE UNITED STATES'' are one of the most visible manifestations
of the good will of the U.S. to developing countries. It is not
possible for such an identification to be made with hurriedly
purchased local food.
The procurement process for LRP, including insufficient
methods to assure food quality and safety, will potentially
give local and regional producers an opportunity to supply
products under less rigorous standards than currently required
by U.S. suppliers to food aid programs.
We support increased efficiencies to cut down on time and
costs of responding to emergencies, including the pre-
positioning or advance purchase of U.S. commodities and
processed products.
3. Reauthorize Title I
We support reauthorizing Title I of P.L. 480 both in its original
concessional sales role and as an additional funding tool for Food For
Progress. Demand for Title I concessional sales and FFP assistance
continues through annual requests from eligible foreign countries and
other applicants. Title I concessional sales should be reauthorized and
offered to countries that can afford its terms. Without
reauthorization, annual proposals from participating and interested
countries could not be submitted, considered, or funded under Title I's
concessional sales or its FFP authority, as they are allowed to do
under current law. In addition, without Title I, the total amount of
funding available for FFP would be diminished, leaving the CCC as the
program's only funding source. More details about Food for Progress are
discussed below.
4. Development Programs in Title II
We support a prioritization for multi year development programs
that contribute to long-term food security in developing countries and
protection against disruptions of those programs due to diversion of
development funds to emergencies.
The original Congressional intent was that Title II be
primarily used for efforts to combat chronic hunger and its
effects. This was indicated in the requirement that 75% of the
budget be used for such purposes denominated in minimum
tonnages. This requirement is now ``waived'' annually, as 75%
of the budget is now used for emergencies. We suggest that
language be added so that USAID's authority to waive the
statutory mandate be limited to no more than 675,000 MT of the
non-emergency minimum tonnage yearly.
Using development program funds as the `first resort' for
response to emergencies causes disruptions to planned or
existing projects that have already been approved and deemed
necessary to combat chronic needs in priority countries.
Many of the criticisms of in-kind food aid: arrival timing,
market disruptions, inefficiencies, and product bunching can be
traced to the affects of diverting funds from development to
emergency and/or the delay in decision-making on funding for
development programs in anticipation of possible emergency
needs.
5. McGovern-Dole International Food for Education and Child Nutrition
Program
We support universal school lunch and child nutrition as a
fundamental goal. We support the expansion of the successful McGovern-
Dole Program based on the very beneficial impact it has had and can
continue to have on school attendance, competition with schools that
oppose U.S. interests and the positive impacts on learning when
children are provided adequate food and nutrition. This program enjoys
widespread and deep congressional support and with U.S. leadership, it
can be expanded dramatically.
USDA has demonstrated an ability to administer this program
admirably and its authority should be made permanent.
We support full funding for the McGovern-Dole Program.
6. Food for Progress
If funding were available, we would support an increase in the
minimum level of FFP to 500,000 metric tons (up from the current
400,000) and a freight expense cap (currently $40 million) that is high
enough to allow the minimum to be met. The demand for programs to
support economic and agriculture reform far exceeds our current
capacity to fund good projects; 122 proposals for FFP were submitted
for FY 2007, but only nine were approved. The freight cap should not
arbitrarily prevent approval of projects that can have dramatic
positive impact.
7. Bill Emerson Humanitarian Trust
We support the more predictable use and full replenishment of the
BEHT to make its use a timely, viable response to emergencies. Because
the small amount of partial replenishment that is currently allowed
comes from the succeeding year's budget, the Administration is
reluctant to use this tool as a first response to emergencies.
An automatic reimbursement/replenishment up to the amount
used in emergency situations should be in place, without
diminishing subsequent year's budgets for other needed food aid
programming.
8. Monetization
We recognize the need for cooperating sponsors who administer and
distribute food aid programs to have both food and cash to implement
their programs. We support appropriate monetization where it is shown
to not cause disruption to local and international markets.
9. Reauthorize the Food Aid Consultative Group (FACG)
We support continuing the FACG. We are concerned, however, that the
FACG today serves more as a resource for reporting food aid information
than for providing interactive input between food aid system
stakeholders to the implementing agencies of the U.S. Government. We
support clarifying language to restore and strengthen its role in
providing interactive input between stakeholders and to clarify its
membership to include all food aid system stakeholders.
10. HIV/AIDS and Nutrition
We encourage the appropriate integration of U.S. food aid programs
with PEPFAR initiatives.
11. Increased Efficiency and Effectiveness in Food Aid Programs
As noted in the GAO report on food aid, we encourage initiatives to
reduce the lag time between needs assessments and product delivery in
U.S. food aid emergency procurements. We also recommend the lifting of
arbitrary limits on storage expenses for the pre-positioning of
products for emergency response. The agriculture community has been and
remains committed to actively addressing issues to increase U.S. food
aid effectiveness.
American Soybean Association;
Global Food and Nutrition, Inc.;
International Food Additives Council;
National Association of Wheat Growers
National Barley Growers Association;
National Oilseed Processors Association;
North American Millers' Association
USA Dry Pea and Lentil Council;
USA Rice Federation;
US Dry Bean Council
US Wheat Associates.
------
Policy: U.S. Wheat Associates, National Association of Wheat Growers
Keep the Food in Food Aid
The U.S. wheat industry opposes any attempt in the World
Trade Organization (WTO) or in any other venues to require that
food aid be given as ``cash only'' instead of allowing donor
nations to provide food directly as emergency and development
assistance.
The U.S. wheat industry supports funding food aid programs
at levels no less than the amounts needed to provide food
donation levels of at least 6 million metric tons annually, of
which 3 million metric tons should be wheat.
Wheat producer organizations continue to support the
original intent that wheat held in the Bill Emerson
Humanitarian Trust be used for its purpose to provide direct
food aid and should not be sold back into the U.S. domestic
market. Wheat producers urge the Administration to promptly
replenish commodities released from the Bill Emerson
Humanitarian Trust, in a timely manner.
U.S. wheat producers believe that current programs
administered by the U.S. Department of Agriculture are
effective and should remain under USDA management.
Wheat producers believe that, except in times of emergency,
U.S. food aid programs should be comprised of U.S. produced
food.
Wheat producer organizations oppose withholding food aid for
political purposes.
Background
Current international food aid oversight and requirements are
sufficient and continue to work well. The WTO should only require that
food aid programs not distort commercial markets and be consistent with
guidelines of legitimate food aid organizations. Food aid programs
should be monitored by the food aid convention of the United Nations.
The international humanitarian community needs a reliable, steady
level of food aid. In times of crisis, and when food prices rise, a
commitment of minimum tonnages would help protect the most vulnerable
recipients from harm. It would also allow agricultural producers and
processors to plan for the provision of those foodstuffs. A commitment
to minimum tonnages would also combat European arguments that the U.S.
uses food as an export subsidy. It would assure food aid availability
at adequate levels.
U.S. Government food aid is distributed by private voluntary
organizations around the world. A broad spectrum of America, including
farming, processing, transportation and distribution industries
participate in the giving and handling of food aid. Food that America
gives to the hungry is home grown and nutritious. To disconnect growing
and handling of food from humanitarian food programs removes the
involvement and interest of thousands of Americans and puts support for
those programs at risk. By using American grown food in food aid,
American hands and American infrastructure are involved throughout the
entire operation, and we can assure and stand by the quality of the
food that is delivered.
While the need for food aid has increased, U.S. donations continue
to decrease. Food aid programs must be funded and allowed to function
in ways that meet humanitarian and development needs.
Regarding Cargo Preference
A GAO report released April 2007:
Pointed out the total annual value of the cost differential
between U.S.- and Foreign-flag carriers averaged $134 million
from fiscal years 2001 to 2005.
See page 30, GAO-07-560, Foreign Assistance Various Challenges Impede
the Efficiency and Effectiveness of U.S. Food Aid.
``At current U.S. food aid budget levels, every $10 per
metric ton reduction in freight rates could feed almost 850,000
more people during an average hungry season'' \1\
---------------------------------------------------------------------------
\1\ Based on USAID and USDA data, the Fiscal Year 2006 average
commodity and transportation cost for 1 metric ton of food aid was
$670. If that average cost had reduced by $10 per metric ton through a
reduction in ocean transportation freight rates or any other cost
factor, the Fiscal Year 2006 food-aid budget could have funded an
additional 43,900 metric tons--enough to feed almost 850,000 people
during a peak hungry season, which typically lasts 3 months.
See page 16, GAO-07-560, Foreign Assistance Various Challenges Impede
the Efficiency and Effectiveness of U.S. Food Aid.
GAO Report
http://www.gao.gov/new.items/d07560.pdf
Transcript of Remarks By Secretary of Agriculture Mike Johanns to
the USAID International Food Aid Conference; http://www.usda.gov/wps/
portal?con
tentidonly=true&contentid=2007/04/0104.xml.
Mr. Salazar. Thank you, Mr. Wickstrom.
Mr. Binversie, please, 5 minute rule.
STATEMENT OF ROBERT BINVERSIE, VOLUNTEER, FARMER-TO-FARMER
PROGRAM, KEIL, WI
Mr. Binversie. Thank you, Mr. Chairman. My name is Bob
Binversie. I am a retired dairy farmer and businessman from
Kiel, Wisconsin. I started out as a dairy farmer taking over a
2nd-generation dairy farm, and after age 28 became allergic to
cows on contact so I had to come up with a different
occupation. Good excuse, too, for never going back. Now, my
wife decided that she wanted to run the farm. She said this is
the place to raise the kids. So, what we did was hire an
employee to help us and I went into harvester sales, which gave
me the background of working with people. In harvester sales,
you being a farmer, you know it is an expensive piece of
equipment. Not only do you have to sell the product, you had to
sell a way of life and how the person was going to pay it back.
From there, I went into another sideline. We built housing
projects for the elderly in Waupaca County, Wisconsin--148
units--acting as general contractor, which again gave me a lot
of background to draw on. And I became a harvester dealer in
Ohio for 5 years, which is some more background to draw on. My
latest venture was starting a bank 10 years ago in my basement
which has now grown into a half a billion dollars in loans
through the State of Wisconsin, mainly to farmers--that was our
niche--and small businesses, starting them out.
My wife has Pick's disease, which is like Alzheimer's
Disease, so last year after about a 7 year stint with this, she
had hit the point that she didn't know if I was going to be
gone a day, a week, or a month, and we had traveled in the
past. We had been to Russia, the eastern part of Europe and all
of the western part of Europe, China, Japan, Brazil. So I had a
real good feel for what is happening in this world. I told my
children I said look--I have five children. They are all very
successful in business. They really didn't need a 72 year-old
man to tell them what to do anymore.
One of the Russians when I was in Russia asked me to come
back and give him some advice on how they should run their
farms, and this was just before the privatization of the farms
took place in Russia. I was going to do it but after my wife
got sick I dropped it. But, I took the challenge last year and
contacted Norman Devorak, who had done a lot of volunteer work
in the past. In fact, there were five volunteers that come
within 20 miles of my home territory right now who are
volunteers of Farmer-to-Farmer.
Now, what is Farmer-to-Farmer? It is an organization that
deals with individual people in individual countries helping to
solve their problems, and also businesspeople in helping to
solve their problems. You know, we can throw food, we can throw
everything at them, but we still have to teach someone how to
get out of their rut.
If you can picture yourself--us right now tomorrow--our
economy goes down the tubes, our farms are worthless, our bank
accounts are worthless, everything is gone. This is exactly
what happened with the privatization of the collective farm
business. Seven years these people, that is what I felt, walked
around in a trance not knowing where they should go and what
they should do. After 7 years, the survivors start coming up. I
was lucky enough to be sent to one of those survivors through
the Farmer-to-Farmer Program. This man was milking 13 cows last
spring when I got there and he was getting 250 pounds of milk
out of these 13 cows. The lady that he had hired is paid $100 a
month for milking these cows. She arrives at 6 in the morning,
and she leaves at 10:30 at night. This year, when I got back, I
suggested to him that he improve his handling, how he
harvested. He had beautiful land. They just have no equipment
and no money. So I said what you have to do is harvest your
crops better and store them better. I personally gave him a
$10,000 loan. I said ``Lonnie, I want you to build a new bunker
silo.'' He had an old contraption of a chopper that, Mr.
Chairman, you being a farmer, you would appreciate this piece.
It was a real relic, but he made it work. I said, ``Now, get
all the equipment and everything you need in order to get this
bunker in place. I am going to send someone else after me to
help you design this bunker.'' He did it. This spring when I
got back, his milk production from the same 13 cows was 500
pounds. The lady that is doing the milking, she said to me,
``Can you help me out? I can't hardly bend my hands anymore
because to get 500 pounds of milk out of a cow takes twice as
many squeezes as 250.''
I am going to help him. I brought him to the United States
2 weeks ago as a guest of mine--him and an interpreter. I
showed him some very inexpensive milking parlors and I am going
to help finance a milking parlor and a free stall barn for this
man. We have bought some secondhand equipment for him, and we
have bought milking equipment for him.
Mr. Salazar. Mr. Binversie, can you conclude your remarks?
Mr. Binversie. Thank you.
[The prepared statement of Mr. Binversie follows:]
Prepared Statement of Robert Binversie, Volunteer, Farmer-to-Farmer
Program, Keil, WI
Thank you Mr. Chairman for inviting me to testify today on an
important subject that has great value to our nation and to many
developing countries around the World.
What Is Farmer-to-Farmer?
The John Ogonowski Farmer-to-Farmer Program provides voluntary
technical assistance to farmers, farm groups and agri-businesses in
developing and transitional countries to promote sustainable
improvements in production, food processing and marketing. The Program
relies on the expertise of volunteers from U.S. farms, land-grant
universities, cooperatives, private agri-businesses and NGOs to respond
to the local needs of host-country farmers and organizations. In
general, these individuals are not overseas development professionals
but rather individuals who have domestic careers, farms and agri-
businesses or are retired persons who want to participate in
development efforts. Typically, volunteers spend approximately 3 weeks
on assignment, living with host families at the level of the local
population.
The current FY04-FY08 extension of the Program will provide over
3,000 U.S. volunteers to 40 core countries. In the 22 years since it
was first authorized by congress as part of the 1985 Farm Bill, Farmer-
to-Farmer has sent more than 11,000 ordinary Americans from all 50
states and the District of Columbia, who have donated professional time
worth an estimated $80 million, to work in over 80 countries. In so
doing, FtF has become one of the longest-running and most highly-
regarded U.S. Government initiatives abroad. Following the terrorist
attacks of September 11, 2001, the Program was renamed in honor of John
Ogonowski, the pilot of American Airlines flight 11 that crashed into
the World Trade Center.\1\
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\1\ U.S. Agency for International Development.
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Funding
The Farmer to Farmer Program is currently authorized as part of the
2002 Farm Bill (Farm Security and Rural Investment Act--FSRIA, P.L.
107-171). This authorization continues through FY 2007. The process is
underway in the 110th Congress to reauthorize the farm bill which will
include consideration for reauthorization of Title III, Agricultural
Trade and Aid which includes P.L. 480 Food for Peace.
P.L. 480, the Agricultural Trade and Development and Assistance Act
of 1954, has three food aid titles. Title I, Trade and Development
Assistance, provides for long-term, low interest loans to developing
and transition countries and private entities for their purchase of
U.S. agricultural commodities. Title II, Emergency and Private
Assistance Programs, provides for the donation of U.S. agricultural
commodities to met emergency and non-emergency food needs. Title III,
Food for Development, provides government-to-government grants to
support long-term growth in the least developed countries. Title I of
P.L. 480 is administered by USDA; Titles II and III are administered by
the Agency for International Development (AID).
The FSRIA provides minimum funding for FtF at 0.5% of the funds
appropriated for P.L. 480 programs. In actuality, under the current
farm bill funds have been $10 million per year under Title II plus a
declining amount of funds from Title I. Funding from Title I reached a
high of $702,000 in 2003 and was $381,000 in 2006. These funds include
a percentage of Title I appropriations plus ``ocean freight
differential'' for the commodities shipped under Title I. In 2006 the
total budget was $10,381,000.
In the 2007 Farm Bill, with Title I zeroed out and Title III
dormant, the funding for Farmer-to-Farmer is potentially at risk of
significant reduction.
Personal Experience
After turning my family farm over to my son in 1993, I had more
free time on my hands. I had served in the army before buying my farm
and then worked as an award-winning salesman for Smith Harvestore.
Later, I also originated a community bank in Wisconsin, while
continuing to work on the farm, so I was not accustomed to having free
time on my hands. One of my colleagues from the community bank
suggested I fill my time by volunteering with farmers from the former
Soviet Union. That colleague had already made several trips to Moldova
and hearing about his experiences motivated me, as well as some of our
other friends and colleagues in Wisconsin, to want to visit the country
and do what we can to help the people.
In April, 2006, I accepted the challenge and traveled to the
Republic of Moldova to work with the Volodeni Dairy Cooperative through
the Farmer-to-Farmer Program, implemented in Moldova, Ukraine and
Belarus by CNFA, Inc. I was the first volunteer to ever work with this
group of 280 dairy farmers but, soon after arriving, my translator, the
cooperative leader, Leonid Platon, and I became a tight knit group,
discussing various available low cost ideas and methods to improve the
coop's milk sales and the health of their herds. I conducted training
sessions with group members, visited numerous dairy farms in the
community and met with the group's milk buyers to determine their
quality and supply demands. During our work, which started at 5 a.m.
and lasted till 11 p.m. every day, I realized that farmers are
basically the same all over the world. We covered all aspects of dairy
cattle housing, sanitation, nutrition, breeding and basic veterinary
care. Although I soon finished my 3 week assignment and headed home, a
bond had been forged and I had also found a new business partner and
friend.
After I left, a variety of things happened. I provided Leonid with
instructions and a $10,000 low interest loan from my own money and he
set about building a modern silage bunker. I also worked with CNFA to
craft subsequent volunteer assignments that would help push and develop
the Volodeni Cooperative. The cooperative and CNFA kept in constant
contact with me and the other volunteers who had worked with the group,
to identify and solve small issues before they became large problems.
When I came back to Moldova for my second assignment in early 2007,
I was amazed. The advice given by Farmer-to-Farmer volunteers had led
to great results: increased milk yields, enlarged herds, improved
cattle housing conditions and higher prices for clean milk. The
cooperative achieved a $10,000 increase in milk sales and a nearly 40%
increase in net profit in just 1 year. In turn, the farmers had created
new jobs and increased payrolls by 31% as well, passing on their
increased prosperity to the wider community.
While the impact on the local economy was gratifying for me and the
other volunteers who worked with Volodeni, I felt we had gained even
more ourselves by being taken into the Moldovan farmers' homes,
families and rural life and by learning about their culture and
traditions. I was eager to return the hospitality and give my Moldovan
friends the opportunity to meet my family and experience our farm life
back in the U.S., so this spring I personally sponsored my friend
Leonid to visit me and several other volunteers in the U.S.. The trip
was an opportunity for Leonid to learn more about American agriculture
and meet the families of the volunteers who had made such an impact on
him and his community. Upon his return to Moldova, Leonid hopes to use
what he has seen and learned in the U.S. to build a modern milking
parlor to serve his village.
I strongly believe in the help we have provided and the exchange
between the two countries offered by the Farmer-to-Farmer Program. In
all, the bridge between Moldova and Wisconsin established by that first
colleague of mine has since drawn in a total of six Wisconsin farmers,
neighbors and friends, including myself. Together, we have performed 13
volunteer assignments, contributed our own money to support the
Moldovan farmers and raised charitable donations from our communities
worth more than $30,000. As I like to say, ``A candle loses nothing by
lighting another candle''.
Benefits of the Farmer-to-Farmer Program
My experience is but one example of the good work being done by
Farmer-to-Farmer volunteers all over the world. Given its modest cost,
the FtF Program generates remarkable impact, both at home and abroad.
Economic Development
The Farmer-to-Farmer Program emphasizes economic impact and has
been very successful in bringing tangible economic benefits to farmers
in the developing world. Approximately one million farm families
(representing about five million people) have been direct beneficiaries
of the FTF Program since its inception.\2\
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\2\ U.S. Agency for International Development.
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Over just the last 3 years, as part of the current FY04-FY08
program, nearly 1,900 volunteer specialists have been fielded in
support of 1,745 host institutions in 39 countries, including farm
producers, agri-businesses, processors, retailers, exporters, input
suppliers, cooperatives, associations, financial institutions,
government agencies, NGOs and other agricultural sector stakeholders.
Almost 80%, of host organizations assessed for impact of economic
growth have reportedly adopted volunteer recommendations in some way
and approximately 2.2 million direct and indirect beneficiaries have
reported measurable improvements. With the support of U.S. volunteers,
they have realized an increase in gross annual sales of $122.4 million
and in total annual income of $17.9 million.\3\ The assistance the
volunteers provide continues long beyond the original assignments, as
well. My relationship with the Volodeni, Moldova dairy farmers is not
unique. Eighty five percent of volunteers continue to have some kind of
contact with the farmers and host organizations in the countries in
which they volunteered.
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\3\ Farmer-to-Farmer Mid-Term Assessment Report, by QED LLC.
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Promoting an Image of the American People
Importantly, the program provides people all over the world the
opportunity to get to know ordinary Americans. Each year, Farmer-to-
Farmer fields approximately 650 U.S. volunteers who provide technical
assistance to agriculture and agribusiness in 40 different countries.
In addition to the technical assistance, the volunteers serve as
citizen diplomats and carry the knowledge and culture of the American
people directly to the public of the countries where they work. Hosts
see volunteers caring and working hard for their development, which
helps dispel many negative stereotypes about Americans that persist
around the world. Moreover, they bring knowledge and understanding of
those countries back with them to the U.S., conducting outreach and
public information activities upon return to the United States and
helping improve the American public's understanding of the world around
them and of the challenges facing developing countries.
International Trade
FtF implementing organizations go beyond simply placing volunteers
on an individual basis. They focus on development of specific market
chains for which overall impact can be evaluated. FtF volunteers build
institutions and transfer technology and management expertise to link
small farmers with markets that capitalize on comparative advantages in
production, processing and marketing. As these developing markets
expand and become more sophisticated, not only are standards of living
increased for FtF hosts, but new trade and investment opportunities are
created for U.S. agri-businesses, making the FtF Program a sensible
long-term investment for American agriculture. Volunteers have even
helped to establish subsidiaries of U.S. companies where they
volunteered, assisted their hosts to procure productivity and quality-
enhancing inputs and equipment from the United States and fostered
lasting partnerships between U.S. educational institutions,
agricultural organizations and private sector companies and their
counterparts in developing countries around the world.
Concluding Remarks
I thank you again for allowing me to share my thoughts and
experiences on the Farmer-to-Farmer Program with you today. I truly
believe that Farmer-to-Farmer represents a superb value for the
taxpayers' money, achieving measurable results, increasing economic
stability and sustainability in the developing world and empowering
private enterprise as the engine of growth in agricultural production,
processing and support services.
In the greater goal of promoting awareness, understanding and
friendship between ordinary Americans and people around the world, we
simply cannot do enough in this day and age. We need more of the
Farmer-to-Farmer Program and other initiatives like it and I would like
to encourage you to at least double the size of the Program in the 2007
Farm Bill and to fully fund it in the years to come.
Now, more than ever, America needs to show the world that our
people care, are willing to give of themselves for the benefit of
others and to work hard, shoulder to shoulder with our friends in
developing countries, to improve their standards of living.
Salazar. Your full statement can be submitted for the record.First
of all, let me just thank all of you for your commitment to ending
world hunger.
Ms. Levinson, the combination of commodities and cash: What do you
think the combination of commodities and cash would be optimum for the
Emerson Trust that was primarily a response to food emergencies around
the world?
Ms. Levinson. Thank you. Well, the Bill Emerson Humanitarian Trust
currently can hold up to 4 million metric tons of commodities or an
equivalent amount in cash, and that is toward--the cash can only be
used for procuring the commodities. When the Trust is drawn down, the
commodities are either released or cash can be used to buy on the
market, and then CCC funds are used to pay for transportation and
delivery. So in our view, the best and most efficient way would be to
have cash in the Trust because at different times you need different
commodities. Right now it holds about 915,000 metric tons of wheat and
about $107 million and it is about \1/3\ full, not at the 4 million
metric ton capacity.
Mr. Salazar. Would that cash be used to buy just U.S. products?
Ms. Levinson. U.S. products, corn. I mean, actually in the past we
have had a swap where we swapped wheat in 2003 for rice, and that was
for Iraq. I think the best way to go rather than to have the swapping
mechanism is to put the cash in there and hold it and have that
available for emergency needs. But, it is not being replenished. That
is one of the problems. Except the current supplemental legislation
that you are voting on does have $40 million in it to help replenish
it.
Mr. Salazar. Thank you.
Ms. Reilly, would you support a pilot project rather than the
Administration's farm bill food aid proposal for local regional
purchase of food for emergencies, and why or why not?
Ms. Reilly. Yes, we believe that local purchase or regional
purchase can be extremely useful in the right context, and when this
proposal was initially presented by the Administration we did advocate
for pilot programs to really test the approach because there are also
circumstances in which it can be a very dangerous approach. It can
distort local markets, and there can be all sorts of other unintended
negative consequences. So we do support a pilot approach. My particular
organization has over 5 years of experience now with local purchase. We
have purchased almost $7 million worth of commodities and we think
there are ways in which it can be done.
Mr. Salazar. Thank you.
The next question is for both Mr. Gillcrist and Mr. Wickstrom. If
the Trust were to be replenished, should replenishment be limited just
to wheat as the statute permits, or should other grains such as corn,
sorghum, and rice also be added and held in the Trust?
Ms. Gillcrist. My personal opinion would be that the greater
flexibility in the program that you allow, the greater the efficiency
we will see in the results of the program.
Mr. Wickstrom. I guess obviously my bias is toward wheat so we
think that that commodity is better utilized around the world probably
than some of the other commodities.
Mr. Salazar. Thank you.
Mr. Binversie, how do you think we can encourage more farmers to
participate in the Farmer-to-Farmer Program?
Mr. Binversie. Actually, just what we are doing--publicizing it a
little more. What we did back home when I had these people there, we
had all the state's press involved and the real thing on Farmer-to-
Farmer is the benefit that is happening not only to Farmer-to-Farmer
individually but as a community. These people when they see us and they
see that we bear the same type of ideals and things that they are
interested in, number 1, we all are interested in our families, and
once they understand that America is also interested in families, then
they have a face on it, it really helps.
Mr. Salazar. Can you also describe what the cost is of this program
to the American taxpayers?
Mr. Binversie. Well, how much would you pay me for my expertise? I
am a volunteer. I do it for nothing. They just send me over, and pay
the plane fare to take us over, and that is basically their cost.
Mr. Salazar. Is there a certain budget? Is there a certain amount
per year that is established for this program?
Mr. Binversie. This I can't tell you. You would have to ask the
people in charge. But as far as the individuals themselves or
volunteers like myself, we pretty much do it out of--we feel it is our
obligation to do it, and out of the goodness of our hearts. Myself, I
just felt I had too much talent at age 72 to sit and look at the four
walls. I had started all these other businesses; why shouldn't I help
people in undeveloped countries also start businesses? And, we start at
the bottom. We don't try to get them to shoot at the Moon.
Mr. Salazar. Thank you.
One quick final question. I remember during the tsunami aid package
that was sent out from this House where there was a big bundle of money
that was initially sent out and given to the victims. I have great
concerns that these countries then turn around and buy food or other
products from other countries when you provide funding instead of
providing food, and I am of the same bias that Mr. Wickstrom is. I
mean, I think we should maybe try to provide food from this country
because it would help the agricultural market. Could you make just a
quick comment, any one of you?
Mr. Binversie. Actually I am very biased in one thing. I do not
believe in grants. Make an appropriation, but make somebody accountable
on the other side. We have had an experience. Mr. Devorak, in the
village just south of the one I had, he started a cooperative-type
thing. Everybody was in charge. It failed. In my situation, I said I
was going to have one person in charge and then have him start--in
other words, let us start a business. Let us run it the way it is
supposed to be run and charge them interest, and that is why I gave
them that personal loan. It made him be accountable, and he thanked me
for it, and so did all the other people that I talked to while I was
over there, and I got as high as the Ministry of Agriculture.
Mr. Salazar. Thank you.
We recognize now under the 5 minute rule Mrs. Musgrave.
Mrs. Musgrave. Thank you, Mr. Chairman. Cary, I saw in your
supplemental information, you were talking about delivery of food aid,
and two of the things that you mentioned might assist in that are pre-
positioning and advanced purchase that would help us be more efficient
in the delivery. Could you elaborate on those, please?
Mr. Wickstrom. Well, some of the experts that are involved in this
tell me that if we would expand our pre-positioning capabilities, we
would be better able to deliver food on a timelier basis, and some of
the logistics problems I think, in my testimony we had talked about
cargo preference and I guess it seemed a little frustrating to me as a
producer, and this might not be the only reason that it seems like we
are spending huge amounts of money on transportation versus what the
foods cost.
Mrs. Musgrave. I know in your verbal testimony you talked about how
the delivery shouldn't cost more than the food aid that we are sending.
You talked about a very impressive delivery time of 45 days, and that
is absolutely amazing. And then you also had some remarks in your
supplemental materials about the E.U. wanting to use cash instead of
commodities to feed people. You were saying it actually would take
longer to get the monetary aid than the actual food aid in place. Could
you speak about that a little more, please?
Mr. Wickstrom. Well, I think we are getting criticized by the
European Union, and I think it is easy for them to put pressure on us
to go to cash only when in fact they are not donating that much food
aid. So I think we have become a target because they realize that it is
easy to complain about the amount of giving that we do, or our
taxpayers in the United States, when in fact they don't give that much
aid. So sure, they are going to be in favor of cash only. I mean, it
would be frustrating to me as a producer to know that some of our tax
dollars were buying wheat from, for instance, the French, to provide
aid to the countries that may or may not have those labels on the bags
that say it is a gift of the people of the United States.
Mrs. Musgrave. A gift from the people of the United States. Thank
you very much.
Thank you, Mr. Chairman.
Mr. Salazar. Thank you.
I now recognize the gentleman from Kansas, Mr. Moran, who has done
an incredible job now serving his people back in Kansas after that
major disaster. Thank you for your service.
Mr. Moran. Mr. Chairman, thank you very much. I am not a Member of
this Subcommittee, and it requires unanimous consent that I am able to
be seated here and asking any questions. Assuming that you will give me
that, I would like to direct a couple of questions to our panelists
today.
Mr. Salazar. Without objection.
Mr. Moran. Thank you. I am apologetic for the portions of the
hearing that I missed. I now am a Co-Chairman of the House Hunger
Caucus, and I am very interested in these international issues as well
as domestic food stamps and nutrition programs in the United States.
Let me just make certain, having not heard all of the testimony of
this panel, are there specific items that there is disagreement among
the five of you? Was there any contention in your testimony, one to the
other? I just want to sort that out.
Mr. Gillcrist. Congressman, probably with respect to cash versus
in-kind.
Mr. Moran. And I assume that is the male side of the table and
female side of the table although I think those are unrelated.
Ms. Reilly. Well, I think there is also some difference of opinion
between the Alliance for Food Aid and CRS and some of our fellow other
PVOs in terms of monetization. We agree that we both would like to see
more cash to provide support for complementary livelihood activities,
but I think we have some disagreement in terms of the role of
monetization.
Mr. Moran. Thank you very much.
I paid particular attention to Mr. Gillcrist's testimony because I
know him well and hold him in high regard. In particular I wanted to
give Mr. Gillcrist a moment to highlight, in his attachment, he talks
about an appropriate integration of U.S. food aid programs in regard to
HIV and nutrition. Mr. Gillcrist, you have visited with me about this
in the past, and I wanted the record to indicate why you think this is
important.
Mr. Gillcrist. Thank you, Congressman. If you look at the
dedication this country has had to helping others, and the history we
have had in doing that, the PEPFAR program particularly was a program
designed to address an increasing and devastating problem of HIV/AIDS
in the world, but in the course of the development of that program it
seems that nutrition was a side issue and not considered in the total
context of a successful program. In other words, retroviral drugs in
the treatment of AIDS are not successful without substantial diets and
substantial nutritional help. So, when we look at a program like
PEPFAR, which is a proposed $15 billion program, and compare that to a
food aid program which is a $1.2 or $3 billion program the likelihood
of success in doing the things that we need to do to address HIV/AIDS
is limited, given the number of people beyond the scope of AIDS that
are in dire need of nutritional assistance to begin with. So to
integrate those two programs and to try to be successful in addressing
both hunger and the HIV/AIDS program, the AIDS initiative has to have a
substantial nutritional component to it.
Mr. Moran. Is my understanding accurate that in the programs that
the United States Government has in attempting to meet the nutrition
needs of people around the world, we have Public Law 480 with Title I
and Title II, the McGovern-Dole International Food for Education and
Children Program, and the Food for Progress? Is that our basic array of
weapons in fighting hunger?
Ms. Levinson. Yes, Mr. Congressman. First of all, the Public Law
480 Title I program of course is a loan program primarily to foreign
governments, but that program has been zeroed out in the budget. A lot
of that money had been used to back up what we call the Food for
Progress Program, which is CCC funded, and the reason I want to bring
that to your attention is that that means that as that has been zero
funded, there is less money for Food for Progress as well, and that
targets countries that are making economic reforms. That is of great
concern to us. We are doing agriculture programs there to improve the
development of the private sector. So that is of great concern. The
Title II program is a donation program primarily through private
voluntary organizations like the groups I represent and Catholic Relief
Service and through the World Food Program primarily, and it is our
largest program, and I think all of us shared the concern. In fact, I
know all of us agreed that the development side of that program is now
anemic and really needs to be bolstered. The kind of programs that Mr.
Gillcrist is referring to for nutrition for HIV/AIDS, targeting food
security in those types of communities, those are what we call
developmental food aid programs and we need more of it. And then, of
course, McGovern-Dole Food for Education is a small program. It is $100
million. It is discretionary spending and it is particularly to
encourage the attendance and enrollment of kids in school.
Mr. Moran. Thank you. My time is expired, but if any of you have
suggestions about the efficient operation of those programs, I would be
interested in hearing that. As we look at the variety of options that
are out there, is there any effort that needs to be made in the
structural change of how we deliver food aid, food services and meet
nutrition needs around the world in addition to your point that, my
guess is that all of you have made, about the need for additional
dollars?
Thank you, Mr. Chairman.
Mr. Salazar. Thank you, Mr. Moran.
I want to thank the panel for their enlightening testimony and we
would invite the 4th panel to the table. We have been called for votes.
This is a 15-minute vote, so if we can have the 4th panel join us at
the table, I would appreciate it.
Thank you. For panel four, we have Mr. James Sumner, President of
the U.S. Poultry & Egg Export Council on behalf of the Coalition to
Promote U.S. Agricultural Exports from Stone Mountain, Georgia. We also
have Mr. Patrick Ford, of Ford's Gourmet Foods from Raleigh, North
Carolina. We would like you to summarize your testimony to a total of 3
minutes if you possibly could and then we would ask the Members of this
Committee to submit questions for the record. Being as that we are
called to vote, we do appreciate that. Thank you.
Mr. Sumner.
STATEMENT OF JAMES H. SUMNER, PRESIDENT, USA
POULTRY & EGG EXPORT COUNCIL (USAPEEC); ON BEHALF OF THE COALITION TO
PROMOTE U.S. AGRICULTURAL
EXPORTS, STONE MOUNTAIN, GA
Mr. Sumner. Thank you, Mr. Chairman, Congresswoman Musgrave, it is
a pleasure to be here. My name is Jim Sumner, and I am President of the
USA Poultry & Egg Export Council, USAPEEC, we go by. We are a trade
association that is dedicated to increasing the exports of U.S. poultry
and egg food products. We have about 200 member companies that account
for more than 95 percent of all U.S. poultry and egg exports. Today I
am testifying on behalf of the Coalition to Promote U.S. Agricultural
Exports of which we are a member.
The Coalition is an ad hoc committee of over 100 organizations
representing farmers, ranchers, fisherman, forest product producers,
cooperatives, small businesses, regional trade organizations and
various state departments of agriculture. We believe that the U.S. must
continue to have in place policies and programs that help maintain the
ability of American agriculture to compete effectively in a global
marketplace still characterized by highly subsidized foreign
competition. Agriculture exports provide jobs for one million
Americans, and make a positive contribution to our overall trade
balance. U.S. agricultural exports are projected to set another record
this year of $78 billion, up $9.3 billion over last year. However,
exports could be significantly higher if it were not for a combination
of factors including high levels of subsidized foreign competition and
crippling trade barriers.
Members of our Coalition strongly support and utilize the Market
Access Program, MAP, and the Foreign Market Development Program, FMD,
which are administered by USDA's Foreign Agricultural Service. Both
programs are administered on a cost-share basis with farmers and other
participants who are required to participate with at least 50 percent
of their own resources. These programs are among the few tools
specifically allowed in unlimited amounts through the WTO rules for
agriculture. By any measure, they have been tremendously successful and
extremely cost-effective in helping maintain and expand U.S.
agricultural exports to protect American jobs and strengthen farm
income.
A recent independent cost-benefit analysis of MAP and FMD, which
was prepared for USDA by Global Insight Incorporated, which is the
world's largest economic analysis and forecasting firm, clearly
illustrates the following benefits of increased funding for market
development and promotion through these two programs. Number 1, the
U.S. share of world agricultural trade since 2001 grew by over one
market share point to 19 percent, which translates into $3.8 billion in
agricultural exports. A second point is that for every additional
dollar spent on market development, $25 in additional exports resulted
within 3 to 7 years. And third, farm cash receipts have increased $2.2
billion during the 2002 Farm Bill due to the additional exports from
market development. This translated into $4 increase in farm income for
every additional $1 increase in government spending on market
development. In fact, we would like to offer a copy of this independent
study for the record if we may do so at a later time.
In contrast, to the roughly $235 million the U.S. spends annually,
the E.U., the Cairns Group and other foreign competitors devoted
approximately $1.2 billion annually on similar market development
activities. A significant portion of that was even spent here in the
United States. The E.U. and other foreign competitors have made it
clear that they intend to continue to be aggressive in their export
efforts. For this reason, we believe that the Administration and
Congress should strengthen funding for MAP and other export programs as
a strong trade component in the new farm bill, and also ensure that
such programs are fully and aggressively utilized.
Perhaps the most important thing I am going to say here is the fact
it should be noted that MAP was originally authorized in the 1985 Farm
Bill at a level of $325 million and the Coalition strongly supports
returning the program to that authorized level of funding from its
current $200 million level. We also urge $50 million annually be
provided for the FMD program for cost-share assistance to help boost
agricultural exports. This is approximately the amount that would be
adjusted from 1986-level funding.
As I mentioned, I represent the poultry industry. We have done a
number of things to utilize these funds. I wanted to give you a few
examples. One such example, in 2005 we organized a donation of two
containers of U.S. chicken leg quarters, which we donated----
Mr. Salazar. Mr. Sumner, could you submit the rest of those
examples for the record? I would appreciate that, just because we are
so limited in time and we have been called to vote and I think there is
only 5 minutes left.
Mr. Sumner. I would be happy to do so.
[The prepared statement of Mr. Sumner follows:]
Prepared Statement of James H. Sumner, President, USA Poultry & Egg
Export Council (USAPEEC); on Behalf of Coalition to Promote U.S.
Agricultural Exports, Stone Mountain, GA
Good morning, Mr. Chairman. My name is James H. Sumner. I am
President of the USA Poultry & Egg Export Council (USAPEEC), which is a
trade association that is dedicated to increasing exports of U.S.
poultry and egg food products. USAPEEC's 200 member companies account
for more than 95% of all U.S. poultry and egg exports. Today, I am
testifying on behalf of the Coalition to Promote U.S. Agricultural
Exports of which we are a member. We commend you, Mr. Chairman, and
Members of the Subcommittee, for holding this hearing to review our
agricultural trade programs and wish to express our appreciation for
this opportunity to share our views.
The Coalition to Promote U.S. Agricultural Exports is an ad hoc
coalition of over 100 organizations, representing farmers and ranchers,
fishermen and forest product producers, cooperatives, small businesses,
regional trade organizations, and the State Departments of Agriculture
(see attached). We believe the U.S. must continue to have in place
policies and programs that help maintain the ability of American
agriculture to compete effectively in a global marketplace still
characterized by highly subsidized foreign competition.
With the 2002 Farm Bill, Congress sought to bolster U.S. trade
expansion efforts by approving an increase in funding for the Market
Access Program (MAP) and the Foreign Market Development (FMD) Program.
This commitment began to reverse the decline in funding for these
important export programs that occurred over the previous decade. For
MAP, funding was increased over the course of the 2002 Farm Bill from
$90 million annually to $200 million annually, and FMD was increased
from approximately $28 million to $34.5 million annually.
Farm income and agriculture's economic well-being depend heavily on
exports, which account for over 25 percent of U.S. producers' cash
receipts, provide jobs for nearly one million Americans, and make a
positive contribution to our nation's overall trade balance. In FY07,
U.S. agriculture exports are projected to be $78 billion, up $9.3
billion over last year and up $25 billion since 2002. However, exports
could be significantly higher if it were not for a combination of
factors, including continued high levels of subsidized foreign
competition and competition crushing trade barriers. Agricultural
imports are also forecast to be a record $70 billion, continuing a 35
year upward trend that has increased at a faster pace recently. If
these projections hold, agriculture's trade surplus is expected to be
$8 billion, up $4.7 billion over last year but still a huge decline
from the roughly $27 billion surplus of FY 96. In FY 99, the U.S.
recorded its first agricultural trade deficit with the EU of $1
billion. In FY07, USDA forecasts that the trade deficit with the EU
will grow to $7.6 billion, the largest agriculture deficit the U.S.
runs with any market.
America's agricultural industry is willing to continue doing its
best to offset the alarming trade deficit confronting our country.
However, the support provided by MAP and FMD (both green box programs)
is essential to this effort.
Both MAP and FMD are administered on a cost-share basis with
farmers and other participants required to contribute up to 50 percent
of their own resources. These programs are among the few tools
specifically allowed in unlimited amounts under World Trade
Organization (WTO) rules to help American agriculture and American
workers remain competitive in a global marketplace still characterized
by highly subsidized foreign competition. The over 70 U.S. agricultural
groups that share in the costs of the MAP and FMD programs fully
recognize the export benefits of market development activities. By any
measure, such programs have been tremendously successful and extremely
cost-effective in helping maintain and expand U.S. agricultural
exports, protect American jobs, and strengthen farm income.
A recent independent cost-benefit analysis of the MAP and FMD
programs prepared for the Department of Agriculture by Global Insight,
Inc.--the world's largest economic analysis and forecasting firm--
illustrates the benefit of these vital market development programs. MAP
and FMD are public-private partnerships that use government funds to
attract, not replace, industry funds. According to Global Insight,
total partnership spending on market development has grown 150% in the
past decade to over $500 million projected for FY07 ($300 million from
industry and $200 million from government). Over this period, industry
contributions (up 222%) have grown twice as fast as government funding
(up 95%) under MAP and FMD. Industry funds are now estimated to
represent 59% of total annual spending, up from 46% in 1996 and less
than 30% in 1991, which strongly represents industry commitment to the
effort.
Another key finding by Global Insight is that \2/3\ of market
development funding through MAP and FMD is directed at technical
assistance and trade servicing, not consumer promotions such as
advertising. This category includes trade policy support, which has
grown rapidly in recent years, as industry groups use program funds to
help address rising levels of SPS barriers that U.S. products face in
global markets. Only 20% of program funds are used in consumer
promotions, largely for high value products supported under MAP.
The Global Insight study clearly illustrates the following
favorable benefits of increased funding for market development and
promotion through MAP and FMD that has occurred under the 2002 Farm
Bill:
Market development increases U.S. competitiveness by boosting the
U.S. share of world agricultural trade.
The study found that the increase in funding for MAP and
FMD authorized in the 2002 Farm Bill--combined with the
increased contributions from industry--increased the U.S.
share of world trade since 2001 by over one market share
point to 19%, which translates into $3.8 billion in
agricultural exports.
Market development increases U.S. agricultural exports.
As mentioned above, Global Insight found that U.S.
agricultural exports are forecast to be $3.8 billion higher
in 2008 than they would have been had market development
not been increased in the 2002 Farm Bill. Furthermore,
export gains will accrue well beyond 2008, reaching $5
billion once the full lagged impacts of market development
are taken into account. For every additional dollar spent
on market development, $25 in additional exports result
within 3&7 years. The study also found that 39% of the
export benefits of market development accrued to U.S.
agricultural products other than those that were being
promoted. Known as the ``halo'' effect, this provides
empirical evidence that the program generates substantial
export benefits not only for industry partners carrying out
the activity (they receive 61% of the total export benefit)
but for other non-recipient agricultural sectors as well
(that receive 39% of the total export benefit).
Market development improves producers' income statement and balance
sheets.
The income statement is improved by the price and output
effect that higher exports have on cash receipts and farm
net cash income. Additional cash receipts have increased
$2.2 billion during the 2002 Farm Bill due to the
additional exports from market development. Higher cash
receipts increased annual farm net cash income by $460
million, representing a $4 increase in farm income for
every additional $1 increase in government spending on
market development.
In recent years, the EU, the Cairns group, and other foreign
competitors devoted approximately $1.2 billion on various market
development activities to promote their exports of agricultural,
forestry, and fishery products. A significant portion of this is
carried out in the United States. Market promotion is permitted under
WTO rules, with no limit on public or producer funding, and is not
expected to be subject to any disciplines in the Doha Round
negotiations. As a result, it is increasingly seen as a centerpiece of
a winning strategy in the future trade battleground. Many competitor
countries have announced ambitious trade goals and are shaping export
strategies to target promising growth markets and bring new companies
into the export arena. European countries are expanding their
promotional activities in Asia, Latin America, and Eastern Europe.
Canada, Australia, New Zealand, and Brazil have also budgeted
significant investments in export promotion expenditures worldwide in
recent years.
As the EU and our other foreign competitors have made clear, they
intend to continue to be aggressive in their export efforts. For this
reason, we believe the Administration and Congress should strengthen
funding for MAP and FMD as part of a strong trade component in the new
farm bill, and also ensure that such programs are fully and
aggressively utilized. It should be noted that MAP was originally
authorized in the 1985 Farm Bill at a level of $325 million, and the
Coalition strongly supports returning the program to that authorized
level of funding from its current level of $200 million per year. We
also urge that no less than $50 million annually be provided for the
Foreign Market Development (FMD) Cooperator Program for cost-share
assistance to help boost U.S. agriculture exports. For FMD, this
proposed increase reflects approximately the 1986 level of funding,
adjusted for inflation.
We appreciate the Administration's recognition of the merit and
value of MAP in the 2007 Farm Bill proposals by increasing funding for
the program to $225 million annually, although we strongly believe a
higher funding level of $325 million annually is needed. Furthermore,
we believe that USDA's Foreign Agricultural Service's (FAS) current
system of funding based upon the competitive merit of applicants'
proposals works well and should not be changed. We do not believe that
targeting funds to specific sectors is necessary.
At this time, I will give several examples of how MAP and FMD,
along with industry initiatives, have helped USAPEEC to improve exports
of U.S. poultry and eggs.
As an approved USDA Cooperator organization, USAPEEC is responsible
for administering funds from both MAP and FMD, which are combined with
industry contributions to fund various market-specific promotional
activities. These activities can be targeted toward consumers, retail,
food service, the HRI trade, or any combination of those market
sectors. In fact, the availability of MAP and FMD funding is an added
incentive for our member companies to contribute to this overall
promotion effort.
USAPEEC utilizes its annual MAP allocation largely for promotional
activities. However, it has become an increasing necessity that the
funds be used in part to address the numerous trade issues that hinder
U.S. exports. The FMD allocation helps to maintain USAPEEC offices in
Russia, China, Mexico and Singapore, and is therefore also used largely
to help overcome developing new restrictions on trade. The staffs of
these offices are the industry's eyes and ears in those key markets.
They work closely with key agriculture officials in the local
government and with the U.S. Government's embassies and Agricultural
Trade Offices, as well as the import trade. They are essentially a
``quick reaction force'' for our industry, and are able to identify
trade issues early. This helps our industry and government to work
together to resolve trade issues involving poultry and eggs quickly and
efficiently.
As an example of cooperation between industry and government under
MAP, USAPEEC organized a donation in 2005 of two containers of U.S.
chicken leg quarters to the Vietnamese poultry industry. The Vietnamese
industry then auctioned the donated product to raise funds for its
campaign against highly pathogenic avian influenza that had devastated
the industry. Fear of this disease had also caused a dramatic drop in
chicken consumption in Vietnam. Auction proceeds also helped to calm
consumers' fears about eating chicken.
How did this help to increase exports? As a result of this donation
and auction, USAPEEC has gained the support of the Vietnam Poultry
Association, which actually helped us promote the importation of safe
poultry from the U.S. so that Vietnamese consumers would not sacrifice
poultry from their normal diets. As a result, U.S. chicken exports to
Vietnam which had dropped to just over $500,000, largely because of AI
fears, climbed back to more than $6 million by the end of 2006. In the
first 2 months of 2007, U.S. chicken exports to Vietnam were nearly
$2.2 million.
Exports of U.S. turkey from major producing states, such as North
Carolina, have become increasingly important. In the Republic of Korea,
USAPEEC has conducted restaurant and deli promotions that have helped
to increase U.S. turkey meat exports to Korea from less than $1 million
in 2004 to $2.8 million in 2006.
In the Middle East, USAPEEC has coordinated activities to increase
consumer awareness in the retail sector of the versatility of U.S.
turkey parts. Exports of turkey to the Middle East have grown
accordingly, from $2.3 million in 2004 to $3.1 million in 2006.
Mexico has been our largest market for U.S. turkey for years. Since
2000, turkey exports have risen from $138 million to more than $216
million, an average of $13 million per year. Mexico is also the fourth-
largest market for U.S. chicken, valued at nearly $200 million in 2006.
USAPEEC has developed a unique partnership with UNA, the Mexican
Association of Poultry Processors, which has helped to keep that market
thriving. Named the NAFTA Egg and Poultry Partnership (NEPP), the
USAPEEC&UNA collaboration has organized several industry-to-industry
meetings funded by MAP, as well as industry-government technical
symposia on export issues affecting U.S. poultry.
Under NEPP, USAPEEC and UNA worked together to establish a special
safeguard arrangement that was approved by both governments to extend
the NAFTA duty for U.S. chicken leg quarters through the end of 2007.
(In the original NAFTA, all poultry import duties were to be eliminated
in 2002). Had that not happened, radical elements of the Mexican
poultry industry, fearing a deluge of leg quarter imports, were poised
to file a dumping action against the U.S. industry, which would have
been extremely costly. NEPP continues to coordinate industry-to-
industry activities to discuss issues of mutual interest and to
formalize industry recommendations to our respective governments. In
fact, our organization has developed similar relationships in Central
America and South America in support of CAFTA and the ANDEAN Free Trade
Agreements.
Also in Mexico, USAPEEC has promoted the use of U.S. processed egg
products (liquid, dried, etc.) among food manufacturers, such as
bakeries, confectioners and mayonnaise makers. Food makers in Mexico,
which has the world's highest per capita consumption of eggs, had
traditionally used locally produced shell eggs to manufacture their
products. Now, however, manufacturers are making the switch to high-
value U.S. processed eggs. Exports of U.S. egg products to Mexico have
grown dramatically, from $7 million in 2004, to $13.1 million in 2005
to $15.8 million in 2006.
On another front, as highly pathogenic avian influenza spread from
Asia into the Middle East and Europe in the fall of 2005, consumption
of poultry plummeted in many countries by as much as 20 to 50%, as
fearful consumers simply stopped eating poultry. In 4 months, the price
of chicken leg quarters--a market benchmark--fell from 48 cents per
pound to less than 10 cents per pound. The estimated cost to the U.S.
industry in lost export income was estimated at $142 million per month.
In early 2006, USAPEEC launched a worldwide initiative aimed at
countering consumer fears. Funded by $1 million in combined MAP and
industry contributions, the campaign carried a simple message:
``Properly handled and cooked poultry is safe to eat.'' The ``Just Cook
It!'' campaign quickly spread around the world, and gained the
endorsement of the World Health Organization's chief expert on avian
influenza, Dr. David Nabarro. USAPEEC's international offices were
instructed to tailor the message to suit local markets, and USAPEEC
shared materials developed for the campaign with poultry organizations
around the globe free of charge. The campaign helped to reassure
consumers worldwide that poultry is safe to eat. Chicken leg quarter
prices have since rebounded to the mid-40 cents range.
These examples represent only a small sample of the activities in
which the organization is engaged throughout the major export markets.
USAPEEC also works to open new markets, and is actively promoting U.S.
products in underutilized markets in Africa, such as Kenya, Tanzania,
Ghana, Nigeria, Angola and others.
In closing, I cannot overemphasize the importance of MAP and FMD to
the success of U.S. poultry and egg exports. Thank you, Mr. Chairman,
for this opportunity to share with the Subcommittee some of our
successes, and I would be pleased to respond to any questions you may
have.
Korea Continues To Purchase U.S. Potatoes Despite Phytosanitary Issues
Korea has been a strong growth market for U.S. fresh chipping
potatoes. Yet after steadily rising in recent years--up 2,665% from 119
MT in MY 01/02 to 3,290 MT in MY 04/05--U.S. exports hit a snag last
year because of Columbia Root Knot Nematode (CRKN) finds. To address
this, the USPB worked closely with Korean manufacturers to help them
continue using U.S. chip-stockpotatoes and with the U.S. industry to
resolve problems. In the U.S., the USPB worked with growers to
implement a more vigorous inspection process to eliminate shipping
potatoes with CRKN. In Korea, snack manufacturers and the USPB worked
to get a processing protocol implemented that would enable U.S.
chipping potatoes to safely enter the market despite CRKN issues. This
safeguard system encouraged the major snack manufacturers to make
commercial contracts again for the next marketing year. Korean
manufacturers that were not able to make changes to their production
facilities began purchasing finished chips in bulk from the U.S. as a
way to supplement their production. Thanks to this collaboration of
efforts, U.S. exports of fresh chipping potatoes fell only 39% to 1,995
MT in MY 05/06, and are poised to resume growth in the coming year.
U.S. Beef Progress Evident Across Japan
February 14, 2007
It has been just a little more than 6 months since Japan removed
the ban on U.S. beef imports. Since then, the U.S. Meat Export
Federation (USMEF) has been using a multi-faceted campaign called ``We
Care'' to help rebuild confidence in U.S. beef among consumers, meat
buyers, retailers and restaurant owners.
And although increases in U.S. beef exports to this region cannot
come fast enough for the U.S. beef industry, USMEF sees encouraging
progress with each passing month.
Just a few weeks ago the second largest beef bowl chain in Japan,
Matsuya, started featuring U.S. beef in yakiniku and karubi meals at
all its 733 locations due to positive customer response. The ``We
Care'' campaign is utilized in each restaurant on posters, banners and
menu cards.
Since the resumption of U.S. beef imports, Costco has been selling
product with successful monthly results. The retailer sells
approximately 35 to 40 metric tons (mt) per month, which is a 50 to 70
percent increase from August 2006 when the warehouse store restarted
U.S. beef sales.
Costco started with four U.S. beef cuts: chuck eye roll, boneless
short rib, chuck short rib and chuck flap tail. Since U.S. beef sales
were successful, Costco added rib eye roll, strip loin and flap meat,
an underutilized cut.
USMEF is working with Grand Hyatt Fukuoka as the hotel plans to put
U.S. beef back on restaurant menus. An American Beef promotion will
kickoff at the hotel March 11.
A cooking school featuring U.S. beef recipes developed by a well-
known cooking personality will be held Feb. 28 at the Better Home
Cooking School in Shibuya. Several newspapers and magazines have
advertised the event.
In 2006, the United States exported 13,736 mt of beef and beef
variety meat to Japan, worth $66.5 million.
______
Retail Chain Sees Results From USMEF Efforts
March 14, 2007
Alsuper, a retail chain with 30 outlets in northeastern Mexico,
reports that the U.S. Meat Export Federation (USMEF) promotions have
helped the chain increase U.S. meat sales by 3 percent compared to 2
years ago. Approximately 80 percent of meat purchases made at the
stores come from the United States.
``USMEF promotions and assistance with developing business
relationships with U.S. meat companies have been very positive,'' said
Ricardo Duran, Alsuper meat purchasing director. Duran said meat sales
currently comprise 9.4 percent of all sales at Alsuper. The company has
set a goal to increase that number to 10 percent by December.
``With 5 new stores opening and continued USMEF promotions and
assistance, we believe we can reach that goal,'' Duran said.
Chad Russell, USMEF regional director for Mexico and the Dominican
Republic, noted Alsuper's experience is an excellent example of how
USMEF marketing efforts help build demand and loyalty for U.S. red meat
in Mexico.
______
National Sunflower Association
Mexican Baker Creates New Bread
Using Foreign Market Development (FMD) funds, grower check-off and
industry dollars the National Sunflower Association (NSA) has
aggressively pursued improved market opportunities in Mexico. NSA has
been aggressively promoting the use of confection sunflower kernel in
bakery products in Mexico for the last 4 years. As a result of this
promotion, the largest Mexican baker is using confection sunflower
kernel in two of its breads. The breads are being distributed
nationwide in all major supermarkets. The baker has imported 350 MT of
confection sunflower kernel valued at $420,000 in the past 6 months of
this marketing year. Sales of the breads are expected to double in the
next year. In the past 4 years, as a result of these activities, the
value of U.S. confection sunflower product exports has averaged over
$5,700,000 per year.
MAP Increases Spanish Imports of U.S. Sunflower Seeds
Spain is currently the largest export market for U.S. confection
sunflower seed. The primary use of sunflower seeds in Spain is for
snacks. Five years ago using Market Access Program (MAP), grower check-
off and industry dollars, and in partnership with key Spanish snack
roasters, the National Sunflower Association (NSA) kicked off a
national point-of-sale (POS) campaign to promote U.S. confection
sunflower seeds. NSA developed and printed POS materials and our
Spanish partners distributed and maintained them. The POS materials
were placed at points of sale in supermarkets, kiosks, and nut shops
throughout Spain. The display materials highlighted the fact that
participating Spanish roasters' products use USA confection sunflower
products that are high quality and fun-to-eat at a low cost. Red,
white, and blue colors and our `Pipas USA' logo were used in all
materials to show USA origin. Since the inception of the campaign,
exports of U.S. confection sunflower seeds have grown from just over
$13,000,000 to $25,350,000 and now account for 52 percent of the total
U.S. confection sunflower seed exports.
Exported sunflower seed and kernel are value-added products with
processing facilities located in rural locations of North Dakota, South
Dakota, Minnesota and Kansas accounting for approximately 3,100 jobs in
these states. The economic impact of the confection sunflower seed
industry was estimated at $693 million per year in a NSA-sponsored
study.
______
California Walnut Commission
Asian Market Diversification
The California Walnut Industry has actively engaged in marketing
programs in Asia since the mid-1990's. Utilizing MAP funds, the
California Walnut Commission (CWC) entered the Japanese and Korean
markets through targeted activities in the trade sector to create
demand for California walnuts as a bakery/pastry/confectionary
ingredient while also generating consumer awareness and purchase of
walnuts and walnut inclusive products. The concentrated efforts in the
bakery sector continue to yield favorable results as over 80% of the
customer base in Japan remains concentrated in this sector while in
Korea it accounts for 35%.
Continued growth in these markets has been demonstrated through
diversification within the marketplace. In Korea, high trade awareness
and success with walnut inclusive products lead the CWC to develop
relationships with manufacturers outside the baking sector. Keen
interest from ice cream manufacturers, confectioneries and beverage
manufacturers lead the CWC to conduct one-on-one meetings introducing
possible applications customized for each company's needs, provided
technical assistance in developing new products using California
walnuts, and invited key product development managers to California to
assure quality and food safety of California walnuts. MAP funds were
utilized to engage in these activities while fostering the
relationships.
As a result, an all-time best selling ice cream bar product was
launched by a leading Korean ice cream manufacturer, Haitai, which
brought a 30 percent market growth by a single item in the launching
year of 2003/04. Thanks to the great success of this item, the same
company launched various products with the same concept and brand name,
i.e. ice cream in cup, cone, soft candy and sweet bar in the marketing
year 2004/05. This actually made a big boom of ``walnut'' in the
confectionery industry, and in the marketing year 2004/05, many other
leading confectioneries and bread manufacturers like Lotte, Orion,
Samlip and Crown were developing new California walnut items. Among
them, two items- brownies and cookies using California walnuts--were
launched by Orion in the beginning of the marketing year 2005/06, and
one steamed bun item with California walnut stuffing was launched by
Samlip. All these new items from the end of marketing year 2003/04 and
marketing year 2004/05 almost doubled the California walnut market in
Korea over the last 2 years, growing from 3.2 million pounds in the
2002/03 crop year to 6.8 million pounds in 2004/05. This accounts for a
value increase of 130% from $6.7 million to $16.1million over the over
the past 2 years, making the dairy/ice cream sector now 20 percent of
the total market in Korea.
The success of the above items has lead manufacturers to export
some of the products developed in addition to sparking interest in
other markets, such as Japan in developing walnut inclusive products,
to achieve the success seen in Korea. In the 2005 marketing year the
first ice cream bar including walnuts launched in September followed by
line extensions planned for later in the year. The CWC looks forward to
the growth that mimics that of Korea, should the launches achieve the
success intended.
The Asian market continues to evolve despite unjustified duties in
both markets--30% in Korea and 10% in Japan. The potential for these
markets to continue to evolve would be even greater if the duties were
lifted. The CWC continues to work with USTR and in-country partners to
remove barriers to trade. Further, MAP funding continues to be of vital
importance to support the industry's efforts to overcome barriers to
trade, as well as develop and evolve markets. Many of the tactics
utilized would not be possible without MAP.
______
American Soybean Association-International Marketing
March 2007
Technical Support to Latin America Livestock Producers
American Soybean Association-International Marketing (ASA&IM)
activities funded by USDA Foreign Agricultural Service (FAS) developed
a program to provide technical support to Latin America livestock and
poultry producers and feed mill operations. This program divided the
work into three sections: farm and feed mill visits, field days and
seminars, and feed formulation and the development of feeding programs.
Poultry, swine, tilapia, dairy, beef farms, as well as feed mills, were
visited in different Latin American countries under this program. The
purpose of these visits was to teach animal producers different new
nutrition and management techniques, and as a result of this servicing,
animal operations will have implemented modern management practices and
will have improved their technical skills and use more soybean
products. Participating farms were used as an example for other
producers, encouraging them to implement the new technology and thereby
impact the consumption of soybean meal. This program was complemented
with the presentation of conferences, congresses, seminars and field
days showing the importance of using high quality soybean meal in
animal diets, as well as different techniques to improve animal
performance. Furthermore, a 24 hour on-line program was offered to
animal producers for the development of feeding programs and diet
formulations to improve the use of U.S. soybean meal in livestock and
poultry diets, as well as animal performance.
The most important effect was the great amount of diets that were
formulated. It was interesting to observe how each day animal producers
are more interested to use well balanced diets, using corn and soybean
meal as the main ingredients. Every day the concept of buying
ingredients on the basis of the cost per unit of nutrient is adopted by
more animal producers. In many places, the concept of buying by price
has changed to buying by quality. Feed mills are adopting laboratory
techniques to evaluate feed ingredient quality and in the case of
soybean meal, analytical technique procedures for determining protein
solubility values, urease activity and total trypsine inhibitors were
discussed with the quality control staff of the more important feed
mills in Latin America.
In relation to animal performance improvement, the recommendations
presented during the seminars and congresses, as well as the effect of
the changes in the feeding programs, have produced good results in the
livestock operations. Higher weight gain and feed conversions were
reported for pigs, broilers and beef cattle. Increments in milk
production and reproductive efficiency in dairy cattle and higher
percent egg production and egg weight in layers were also reported.
Most of the monogastric producers attributed this improvement in
performance to the use of the ``Ideal Protein Concept'', which uses as
a base the digestible amino acid content of the different feed
ingredients. Big differences between the cost of diet and the effect on
performance were found when diets are formulated based on digestible
amino acid content.
______
U.S. Hide, Skin and Leather Association
The biggest export market for U.S. bovine hides is China. Exports
to China have grown from $640 million in 2005 to $875 million in 2006.
There are a number of reasons for this, but one that has been
singled out by some of the U.S. hide exporters is the Foreign Market
Development (FMD) program that U.S. Hide, Skin & Leather Association
(USHSLA) participates in.
Through funding provided by the U.S. Department of Agriculture'
Foreign Agricultural Service (USDA/FAS) and matching dollars put up by
about a dozen member companies of USHSLA, we have participated in two
shows in China over the last couple of years--one in Hong Kong and the
other in Shanghai. Both shows bring in hide buyers from all over the
world but primarily from the industrializing Asian nations. China is
the main importer of hides and remains the most dominant buying
presence at both shows. In 2005 these two shows accounted for $46
million in on-site sales. In 2006 the two shows accounted for an
increased $74.7 million in on-site sales.
Would USHSLA's member companies have accounted for this increase of
$120.7 million if we had not attended the shows? Probably some of this
business may have gotten done, but in addition to an increase in sales
both shows facilitate networking within the global industry which
results in new contacts, new agents signed and additional business
throughout the year.
In fact, according to survey's filled out by participating USHSLA
companies, over $110.9 million in increased business in 2006 was done
as a result of participation in those two shows. That is nearly equal
to the increase in hide trade in China over the last 2 years. In
addition to on-site sales USHSLA member companies reported signing 87
new agents at both shows.
USHSLA and USHSLA members plan to attend these same two shows in
2007. The Hong Kong show brings traders, transportation companies,
tanners and others from around the world and is the largest hide and
leather show in the world. The Shanghai show is more focused on the
growing hide and leather industry in solely China. Both shows are a
vital part of the growing demand for U.S. hides and leather in Asia.
USHSLA's members will continue to attend these shows in the future and
plan on similar successful results within China because of
opportunities allotted to the U.S. hide and leather industry by
participating in the FMD program funded by the USDA/FAS.
______
Southern U.S. Trade Association
Alabama Department of Agriculture Helps India Embrace Southern Cuisine
In January 2006, the Southern U.S. Trade Association (SUSTA)
focused on promoting value-added food products and pecans from the
southern U.S. in India. SUSTA representatives from the Alabama
Department of Agriculture participated in two trade events--the India
International Food and Wine Show (IFOWS) 2006, an event for the retail
industry, and HospitalityWorld 2006, an event for the hospitality,
restaurant and institution industry. These events were followed by
cooking demonstrations and tasting events, a culinary contest with
budding chefs, a press conference, market visits and research assessing
opportunities in India's pet food industry.
At IFOWS 2006, in New Delhi, nearly twenty importers and industry
leaders visited SUSTA's pavilion. The show provided a platform to
establish contact with local importers and introduce them to the
southern U.S. food products. Products from twenty-four companies from
the SUSTA region were featured in the pavilion. The promotion was a
tremendous success. The importers and buyers, several of whom had one-
on-one meetings with SUSTA representatives, expressed interest in the
products and their willingness to import them.
A cooking demonstration and tasting event was carried out by Ms.
Vaishali Sood, SUSTA's brand ambassador chef in India. The event was
well attended with more than fifty people participating. Ms. Sood made
pecan cake and jambalaya, which were an instant success with the
attendees.
A culinary contest with twenty-two budding chefs from Banarsidas
Chandiwala Institute of Hotel Management and Catering Technology was
held in New Delhi. These chefs used products from the southern U.S. to
prepare a full course meal. The objective was to establish a
professional platform where up-and-coming culinary professionals could
display their skills and creative talent in a competitive environment.
HospitalityWorld 2006, in Mumbai, provided a unique opportunity for
strategic cross promotion and professional dialogue with the hotel,
restaurant and institutional food sectors. The response from
institutional buyers was overwhelming. A dialogue was established with
Cremica Group, which showed interest in procuring condiments that could
be further processed and consumed in the local market. While in Mumbai,
SUSTA representatives had a one-on-one meeting with Reliance Industries
Limited promoting southern U.S. products. The company is entering the
Indian retail sector in an unprecedented way.
``Power Pecan--The nutritionally powerful nut'' is the mantra used
in SUSTA promotions to create awareness of pecans in India. SUSTA seeks
to familiarize the Indian consumer with the uses and the versatility of
the pecan, as it is not available in India. The press conference at
Hyderabad sought to promote, create awareness and develop brand
recognition for pecans, the power pecan. Nuts & Spices, a leading
retail outlet in Chennai that exclusively sells dry fruits and spices,
were enthusiastic to include pecans in their product offering during
their meeting with SUSTA representatives.
______
Southern U.S. Trade Association
Georgia Department of Agriculture Organizes Market Access Program
Generic Promotion in Dubai With Projected Sales of Over $8
Million
Eight companies from the southern U.S. traveled to Dubai, United
Arab Emirates in February 2007 to find success at the Gulfood trade
show. The Georgia Department of Agriculture organized the Southern U.S.
Trade Association (SUSTA) booth, along with booths for eight SUSTA
region participants, as a Market Access Program (MAP) Generic
promotion. MAP Generic promotions represent more than one product or
commodity and allow suppliers to participate in trade shows, in-store
promotions and other activities for a reduced cost. The U.S. companies
promoted various food products at the show, including fruit juices,
rice, processed meat products, popcorn and other snack foods.
Importers and buyers visiting the booth were given the opportunity
to meet with U.S. companies, find out more about southern U.S. food
products, and even taste products prepared by a chef in the booth.
Importers and buyers also expressed interest in making additional
contacts with suppliers of nuts, dairy products, honey, confectionery,
spices, oils, fresh vegetables, fresh fruits and sauces.
Five companies participating in the MAP Generic promotion conducted
by SUSTA at Gulfood reported immediate sales totaling $964,000. Others
indicated that they expected orders within the year, projecting sales
to reach approximately $8,370,000 as a result of the show.
______
Southern U.S. Trade Association
The Long Green Road to Success
In support of the notion that it takes years to tackle a foreign
market, the Southern U.S. Trade Association (SUSTA), with the support
of the Southern Nurserymen's Association (SNA), organized the U.S.
pavilion at the Internationale Pflanzen Messe (IPM) in Essen, Germany
for the 12th consecutive year.
IPM, the largest horticulture trade show in the world, includes
about 1,350 exhibitors from 37 countries in 19 halls totaling more than
1 million square meters of exhibit space. The 4-day event attracts
nearly 60,000 visitors from around the world looking for plant
material, technology, and related goods.
Participants from eight different U.S. nursery companies, including
five first-time exhibitors, took advantage of the institutional
knowledge SUSTA has gained over the last 12 years. In this promotion, a
first-time exhibitor has a leg up on the competition because of the
groundwork laid at the past promotions. Many new exhibitors find a
``built-in'' relationship exists with many buyers because of past
exhibits and nursery tours. European buyers return each year to the
U.S. Pavilion because it introduces them to a wide range of new U.S.
products and producers.
In their experience, the exhibitors have found that repeated
participation is one of the keys to success in the European market. For
example, an exhibitor the first year may garner interest and a few
small orders. The second year and third year exhibitor shows a buyer
that the company is committed to the European market and the
relationship is solidified. This relationship brings about larger and
repeated orders.
As in the past, most interest is in young plant material, mostly
large quantities of ``bare-root'' stock of ornamental trees and shrubs.
At the 2006 show, exhibitors reported $380,000 in sales and anticipated
sales. There are also long term results; many past exhibitors have
moved into growing agreements with European nurseries. In this
arrangement, an EU grower either purchases the rights to grow a
licensed plant variety or actually exclusively purchases young plant
material to be grown out in-country. This partnership allows a U.S.
supplier to gain a larger margin of profit than marketing the product
themselves, due to many issues with trying to sell and ship
``finished'' nursery products to Europe.
Exhibitors and participants also point out that gaining new
customers and making sales are not the only reason they attend IPM or
go on the nursery tours. Several participants use the time at the show
to seek out trends that can give them an advantage over their
competition or products that can make their business more efficient. As
with most industries, the nursery industry is constantly changing and
evolving. IPM gives SUSTA participants a chance to stay one step ahead
in the market.
Part of the reason this promotion has been consistently successful
is its multi-layered aspect. Nurserymen are given multiple
opportunities to deal with the market each year. For example, this
year's promotion includes: exhibition at the trade show, post-show
nursery tours in a selected country (Italy) and then a follow-up
reverse trade mission to the U.S. the following summer. An exhibitor
has the potential to be introduced to a customer, visit the customer's
business and then have the customer visit his business--all in 1 year!
Another reason of continued success is the cooperation of state,
federal and private organizations. A list of this year's cooperators
reads like a who's who: the Southern Nursery Association, North
Carolina Association of Nurserymen, Ohio Florist's Association,
Tennessee Department of Agriculture, North Carolina Department of
Agriculture, Rome FAS office, Berlin FAS office. In the past we have
had participation from APHIS, and a multiple selection of grower
organizations.
______
Peanut Farmers Regain Lost Market Share
Peanuts are a vital crop for farmers in Alabama, Georgia, and North
Carolina. Market Access Program (MAP) funds have been used successfully
to increase exports of peanut butter made in Georgia and other states
to Mexico. Peanut butter exports increased 64% from 2005 to 2006 with
an increase in value from about $3.5 to $5 million dollars in 1 year.
MAP funds have also been used to promote raw peanut exports with
exports increasing 14% from 2005 to 2006, regaining lost market share.
The Market Access Program is also assisting a small peanut processing
company in North Carolina to get a foothold in the export market by
providing market information and advertising support for its products
in Canada and the UK.
______
U.S. Dairy Export Council Success Story
Arkansas, Colorado, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky,
Minnesota, Mississippi, Nebraska, Ohio, Pennsylvania, South
Carolina and South Dakota
New Commodity Cheese Imports to Japan
------------------------------------------------------------------------
------------------------------------------------------------------------
Impacted States........................ A company that benefited from
this program has members in
the following states:
Arkansas, Colorado, Georgia,
Idaho, Indiana, Iowa, Kansas,
Kentucky, Minnesota,
Mississippi, Nebraska, Ohio,
Pennsylvania, S. Carolina and
S. Dakota, among others.
Background............................. U.S. suppliers of cheddar have
had difficulty penetrating the
Japanese market due to
competitive pricing from New
Zealand and Australia.
Goal................................... Increase awareness and market
share of U.S. commodity
cheese.
Strategy............................... Educate Japanese traders and
importers about the
Cooperatives Working Together
program which offers price
parity with international
competition and allows product
trial.
Tactics................................ Continuous trade visits.
Results................................ During the first half of 2006,
a major Japanese company
imported 300 metric ton of
cheddar from a U.S. supplier
through the CWT program. These
transactions amounted to
approximately $840,000. The
company has committed to
import an additional 200
metric tons of cheddar from
the same U.S. supplier by the
end of the year.
------------------------------------------------------------------------
______
U.S. Dairy Export Council Success Story
Sports Nutrition Mission Spurs WPC&80 Exports to Brazil
------------------------------------------------------------------------
------------------------------------------------------------------------
Background............................. A Brazilian bar manufacturer
attended a USDEC-sponsored
sports nutrition mission and
seminar that was conducted at
Cal Poly University. USDEC
promoted the mission and
seminar to U.S. dairy
suppliers as an opportunity to
learn how to incorporate whey
proteins such as texturized
whey into protein and energy
bars.
Goal................................... Increase U.S. market share for
WPC&80.
Strategy............................... Introduce the Brazilian food
supplement industry to U.S.
suppliers and help
manufacturers understand how
best to incorporate whey
proteins in sports nutrition
and energy bars. Assist USDEC
members with documentation
issues and other regulatory
information.
Tactics................................ --Act as a liaison between the
Brazilian food supplement
industry and U.S. suppliers
through trade servicing
activities.
--Support USDEC members in
South America markets.
Results................................ With knowledge obtained through
the mission, the Brazilian
company was able to re-launch
a better tasting sports
nutrition bar that contained
whey proteins. The Brazilian
manufacturer also will soon
launch a new beverage using
WPI from the United States.
The company purchased 20 tons
of instant WPC&80, with an
approximate value of $5.5/kg.
It expects to import about 240
tons in 2006 from the United
States, at an approximate
value of about $1,320,000.
------------------------------------------------------------------------
______
USA Poultry & Egg Export Council--Russia
------------------------------------------------------------------------
------------------------------------------------------------------------
Constraint: Russia uses veterinary requirements as technical barriers
for U.S. poultry..
Description: The Russian Veterinary Service (RVS) uses differences in
U.S. and Russian standards and risk assessment as technical barriers to
limit imports of U.S. poultry..
Activities:
Technical Regulations for U.S.-Russian
Poultry Meat Technical Consulting Center
Comparative Testing of Poultry Database of
Products official RVS documents
HACCP manuals reprinting and mailing (CANCELLED, FUNDS
TRANSFERRED FOR AI).
----------------------------------------------------------------------------------------------------------------
Performance measures Benchmark Goal Current
----------------------------------------------------------------------------------------------------------------
1. Number of HACCP manuals 1,600.0 2,500.0 1,600
distributed in Russia.
2. Number of new Russian standards Chicken products: terms Develop draft of Analysis conducted, RPU
based on the U.S. System. and definitions. technical regulations. draft blocked.
3. Number of translated official 24 50 41 (1,700+ pages)
documents on poultry meat safety.
----------------------------------------------------------------------------------------------------------------
1. USAPEEC started collecting information about development of new technical regulations for poultry. A draft TR
initiated by the Russian Poultry Union was translated into English and presented for analysis to U.S. poultry
industry specialist, processors, traders and importers.
2. The U.S.-Russia Technical Consulting Center translated 41 official Russian and U.S. technical documents
(total of 1,700 pages) regulating poultry production and safety control; sets of docs were copied on CDs,
printed as books and distributed in Russia and U.S. USAPEEC helped organize the U.S.-Russian Meat Safety
Conference ``A Safe Meat Supply--From Farm to Table'' in May. USAPEEC conducted comparative tests of official
U.S. and Russian analytical methods for salmonella detection in poultry.
3. Together with the National Association for Consumer's Rights, USAPEEC continued comparative testing of
poultry products from foreign and domestic producers. The testing proved adequate quality of the U.S. poultry
product compared to other producers, especially Russian ones.
4. A veterinary information agency was contracted to obtain new official documents from the VPSS.
5. 27 articles based on HACCP manuals and U.S. professional print and on-line publications were placed in
Russian professional veterinary periodical publications.
______
Wine Institute
U.S. Wines Continue To Gain Market Share in the United Kingdom
The United Kingdom is the largest, most competitive market for
imported wine in the world. It is also the number one destination for
U.S. wines and those from most producing countries.
In 2006, U.S. wines continued to increase market share in the UK
according to retail sales monitored by AC Nielsen. Because wines
shipped to the UK trade may be bottled in Italy or France or shipped
in-bottle from Belgium or The Netherlands, export shipment statistics
to a particular country are a poor indication of sales growth in the
UK.
During 2006, U.S. wines achieved an off-premise market share of
16.0% by volume (+8.3%) and 16.2% (+8.0%) share by value. This places
U.S. wines third in market share behind Australia (22.3% share) and
France (16.4% share). Considering current growth rates, U.S. wines
should overtake France for second place in the UK during 2007.
In the on-premise market, U.S. wines grew 18% in value and 15% in
volume, although market share is considerably less as European wines
still dominate this sector.
Mr. Salazar. Thank you very much for your testimony.
Mr. Ford.
STATEMENT OF PATRICK FORD, DIRECTOR, INTERNATIONAL MARKETING,
FORD'S GOURMET FOODS; ON BEHALF OF
COALITION TO PROMOTE U.S. AGRICULTURAL EXPORTS,
RALEIGH, NC
Mr. Ford. Good afternoon. My name is Patrick Ford. I am the
International Marketing Director of Ford's Gourmet Foods. I am
honored to have been selected among my peers to speak on behalf
of the Market Access Program and the Foreign Market Development
Program and how they increase export potential for U.S.
companies.
Although our company's growth in recent years into an
internationally recognized gourmet food company is testimony to
the success of the MAP and FMD programs, it is important to
understand the many ways in which these programs have been able
to significantly increase our foreign trade in a relatively
short period of time. I thank you for that opportunity.
My family has been in the food business for many years. My
great-grandfather, Andrew J. Ford, and his sons, Connie Mac, my
grandfather, and Carl had a small farm outside of Raleigh,
North Carolina, back in the early 1940s. With a small crop
surplus to sell 1 year, they founded Ford's Produce Company. My
parents, Len and Sandy Ford, took over the family business from
my grandfather who retired in 1985. My mother began a new
division, Ford's Gourmet Foods, a specialty foods company,
shortly thereafter, and today our company employs around 80
people.
In 1992, we introduced Bone Suckin' Sauce--an all-natural
western North Carolina style barbecue sauce. It is my
grandmother's recipe. My uncle modified it. My mom named it.
And it changed everything about our business. When I rejoined
the family business after college in 1997, we shipped a few
small orders to the U.K., Hong Kong and Canada. There was no
brand awareness in the overseas markets, no product support and
no real marketing plan to speak of. The international buyers
that we did business with found us at the New York and San
Francisco trade shows. We had no knowledge of the regulations
and basically did not know how to get into the game. We were
dependent on people in other countries to tell us what to do.
I knew there must be market demand in other parts of the
world and with the help of the Foreign Agricultural Service,
the North Carolina Department of Agriculture, Southern U.S.
Trade Association and MAP funds, we researched countries,
trends, market conditions and potential customers. Our first
international trade show was a Specialty and Fine Food Fair in
London in 2003. It proved to be a huge success but it came with
a hefty price tag. We knew that we would not be able to afford
to attend international trade shows on an ongoing basis without
help. We became a member of SUSTA shortly thereafter, and were
made aware of the MAP funds.
Since then we have relied heavily on MAP to help us with
many items including correct labeling for all of our products.
Foreign labeling is not just about language translation. For
example, in England each port has different requirements and
different ways of listing ingredients on each label and they do
not accept the U.S. nutritional panel. In Canada, Montreal has
different guidelines than the rest of the entire country. The
details of the labels alone can take months to work out and are
extremely costly for a small business to produce. Funding from
MAP programs has also helped with market research, information
on qualified buyers, trade show support, shipping costs,
advertising and product support. Most small businesses do not
have the resources, time or money to fully investigate all the
export requirements. It simply will not get done.
Breaking into a foreign market doesn't happen overnight. It
takes years of building familiarity, having a presence at trade
shows, sending samples, advertising, in-store samplings and
building relationships with buyers to make a product successful
on foreign soil. Add to this the fact that our foreign
competitors are constantly increasing their investment into the
market and I hope you can see why without significant increases
in the MAP and FMD program funding, it will be impossible for
U.S. products to keep up. While these same competitors are
focusing export dollars on the U.S., jobs on U.S. soil are at
stake.
I know that increasing the MAP funding to $325 million
means a major investment in the future of exports in our
country. I represent the small business. We get up early, we
stay late, and we don't take days off. We do this to be able to
seize opportunities. This is not only an opportunity but a
partnership between the U.S. Government and all small
businesses. The goals of this partnership are to benefit the
small business by developing opportunities abroad and to
benefit our country by protecting and creating jobs, and to
begin to correct the trade deficit by protecting small
businesses across the country.
In closing, please do vote to increase the MAP program
budget to $325 million. I cannot stress enough the importance
of the MAP and FMD to the success of U.S. small business
exports. Thank you.
[The prepared statement of Mr. Ford follows:]
Prepared Statement of Patrick Ford, Director, International Marketing,
Ford's Gourmet Foods; on Behalf of Coalition to Promote U.S.
Agricultural Exports, Raleigh, NC
Good afternoon. My name is Patrick Ford; I am the International
Marketing Director of Ford's Gourmet Foods. I am honored to have been
selected among my peers to speak on behalf of the Market Access Program
and Foreign Market Development Program, and how they increase export
potential for U.S. companies. Although our company's growth in recent
years into an internationally recognized gourmet food company ought to
be testimony enough to the success of the MAP and FMD programs, it is
important to understand the many ways in which these programs have been
able to significantly increase our foreign trade in a relatively short
time. I thank you for that opportunity.
I hope you will consider my testimony to be justification for a
significant increase in funding of these programs so that other small
U.S. companies may take advantage of the vast export market available,
and gain assistance in conquering the many roadblocks that commonly
interfere with or prevent altogether the possibility of export.
About Ford's Gourmet Foods
My family has been in the food business for many years. My great-
grandfather, Andrew J. Ford and his sons Connie Mac (my grandfather)
and Carl had a small farm outside of Raleigh, NC back in the early
1940s. With a small crop surplus to sell 1 year, they founded Ford's
Produce Company. My parents, Lynn and Sandi Ford took over the business
from my grandfather who retired in 1985. My mother began a new
division, Ford's Gourmet Foods, a specialty foods company.
In 1992, we introduced Bone Suckin' Sauce, an all-natural, Western
North Carolina style barbeque sauce. It is my grandmother's recipe that
my uncle modified and my mom named, and it changed everything about our
business.
When I re-joined the family business after college in 1997, we
shipped a few small orders to the United Kingdom, Hong Kong, and
Canada. There was no brand awareness in the overseas markets, no
product support, and no real marketing plan to speak of. The
international buyers that we did business with found us at the San
Francisco and New York food shows. We had no knowledge of the
regulations and we basically did not know how to get into the game. We
were dependent on the people in other countries to tell us what to do.
I knew there must be market demand in other parts of the world.
With the help of the Foreign Agricultural Service, North Carolina
Department of Agriculture, Southern U.S. Trade Association and MAP
Funds, we researched countries, trends, market conditions, and
potential customers. Our first international trade show was the
Specialty and Fine Food Fair in London in 2003. It proved to be a huge
success, but it came with a hefty price tag. We knew that we would not
be able to afford to attend international trade shows on an ongoing
basis without help.
We became a member of SUSTA and were made aware of MAP Funds
shortly after that show.
Since then we have relied on MAP to help us with many items
including correct labeling for all our products. Foreign labeling is
not just about language translation. For example in England, each port
has different customs requirements, different ways of listing the
ingredients on each label, and they do not accept the U.S. nutritional
panel. In Canada, Montreal has different labeling guidelines than the
rest of the country. The details of the labels alone can take months to
work out, and be extremely costly for a small business to produce.
Funding from MAP programs has also helped with market research,
information on qualified buyers, trade show support, shipping costs,
advertising, and product support. Most small businesses do not have the
resources, time or money to fully investigate all the different export
requirements. It simply will not get done.
MAP branded funds level the playing field for small businesses
looking to expand into the international market place. They have
provided the advice and guidance to enter into the market. Since 2004
our sales in the UK have increased 300%, and we now have a presence in
over 30 countries.
Breaking into a foreign market doesn't happen overnight. It takes
years of building familiarity by having a presence at trade shows,
sending samples, advertising, in-store sampling, and building
relationships with buyers to make a product successful on foreign soil.
Add to this the fact that our foreign competitors are constantly
increasing their investment in market promotions, and I hope you can
see why without significant increases in MAP and FMD program funding,
it will be impossible for the U.S. products to keep up. And while these
same competitors are focusing their export dollars on the U.S., jobs on
U.S. soil are at stake.
Conclusion
I know that increasing MAP funding means a major investment in the
future of exports for our country. I represent the small business. We
get up early, stay late, and don't take days off. We do this to be able
to seize opportunities. This is not only an opportunity, but a
partnership between the U.S. Government and all small businesses. The
goals of this partnership are to benefit the small businesses by
developing opportunities abroad, and to benefit our country by
protecting and creating jobs, and to begin to correct the trade deficit
by protecting small businesses across the country.
In closing, please vote to increase the MAP program budget to $325
million. I cannot stress enough the importance of MAP and FMD to the
success of U.S. small business exports. Thank you, Mr. Chairman, for
this opportunity to share with you and the Subcommittee some of our
successes, and I would be pleased to respond to any questions you may
have.
Mr. Salazar. Thank you, Mr. Ford.
We want to thank all of you who testified today for
enlightening the Committee on these critical issues. Speaking
on behalf of the Members of the Committee, we very much
appreciate that.
Under the rules of the Committee, the record for today's
hearing will remain open for 10 days to receive additional
material and supplementary written responses from witnesses to
any question posed by a member of this panel. This hearing of
the Subcommittee for Specialty Crops, Rural Development, and
Foreign Agriculture is adjourned.
[Whereupon, at 2:58 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared Statement of David Beckmann, President, Bread for the World
I appreciate the opportunity to submit written testimony on a
subject very close to my own heart and a prime policy interest of Bread
for the World.
Founded in 1974, Bread for the World is a Christian, nonpartisan
organization supported by 45 denominations and more than 2,500 churches
that works to bring about public policy changes that address the root
causes of hunger and poverty in the United States and overseas. Bread
for the World's 58,000 members lobby Congress and the Administration to
this end, and mobilize a quarter of a million constituent contacts with
Members of the U.S. Congress every year. Bread for the World helps
concerned people learn about policy issues that are important to poor
and hungry people, and then helps them turn this knowledge into
positive political action.
The dimensions of global hunger are well known: More than 850
million people--half of them children--live in a state of chronic
hunger and food insecurity; 25,000 die daily due to hunger and related
ailments. We are seeing the Millennium Development Goal of halving
global hunger and poverty by 2015 slipping from our grasp. For such
demeaning hunger and poverty to persist when we have the technological
and economic means of ending it is a moral affront to American values.
Food aid has been an important tool in combating global hunger, and
has saved many lives, and the U.S. can rightly feel proud of its role
as the world's most generous donor of food aid. Its efforts have saved
millions of lives. However, the food aid program has also been burdened
with ancillary objectives that undermine its effectiveness and
efficiency in meeting the needs of hungry people around the world.
Bread for the World has as its fundamental mission seeking justice
for hungry people. And while we appreciate the political argument for
maintaining a broad coalition of U.S. support for food aid, we are
convinced by our own polling results that ending global hunger is a
topic that resonates with the U.S. public. Americans understand that
this is fundamentally an issue of social justice, and that meeting the
real needs of hungry and malnourished people should be the overriding
objective of a U.S. food aid program.
The food aid environment has changed significantly from when Food
for Peace was initiated over 50 years ago, and changes in the food aid
program are overdue. One need is to simplify and clarify the multiple
and sometimes conflicting objectives and statutory requirements, which
cannot all be met. Specific legislative objectives set for U.S. food
aid include, in addition to combating world hunger and malnutrition,
``promoting broad-based, equitable and sustainable development,''
``developing and expanding export markets for U.S. agricultural
commodities,'' ``fostering and encouraging the development of private
enterprise and democratic participation,'' and ``preventing conflict.''
On top of these are added operational requirements, including minimum
tonnage (generally met), sub-minimum tonnage for non-emergency programs
(not met since 1995), and value added (generally not met). It is time
to clarify the mandate of food aid, giving unambiguous priority to
combating hunger and malnutrition.
Bread for the World favors a transition to demand-driven food aid,
based more on the needs and opportunities and less on supply and
availability. Food aid is no longer a surplus disposal program, and the
volumes involved are too small to affect commodity prices in any but
exceptional cases. In fact, food aid tends be pro-cyclical, so that
food aid volume tends to decrease in times of high prices--such as the
present--when the food needs tend to be the greatest. This is exactly
counter to the stated objective of meeting the nutritional needs of the
world's hungriest people.
Bread for the World believes that the farm bill should ensure
ongoing and consistent U.S. assistance to people in need of emergency
food and nutrition support around the world. This means increasing the
authorized funding levels for emergency food aid--especially in light
of recent agricultural commodity price increases.
We also need to recognize that commodity food aid is not always the
most appropriate response to food insecurity, whether chronic or
emergency. One life-affecting consideration is that of timeliness,
ensuring the quickest response to emergencies or windows of
opportunity. Other considerations include market impact--whether the
commodity food aid serves as an incentive or disincentive to local or
regional production and commerce--and commodity composition--i.e.,
whether the needs are best served by commodities or products available
from the U.S. In order to facilitate the most effective and efficient
responses to food insecurity, Bread for the World strongly supports
providing the Office of Food for Peace with the flexibility to procure
food locally or in the region. We think the Administration's request in
the farm bill principles for authority to use up to 25 percent of Title
II appropriations for local or regional purchase is a step in the right
direction, and urge the Committee's support. Local and regional
procurement is not going to be appropriate in every case and needs to
be carefully applied, but there is already sufficient information and
experience on the part of the World Food Program, the NGO community and
other donors to clearly demonstrate the circumstances under which this
instrument can be effectively applied.
Along the same lines, we support loosening the restrictions that
mandate the processing (``value added'') of food aid and U.S. flag
shipping. While these reflect legitimate interests, our main focus
should be on meeting needs and saving lives, and employing the most
appropriate and efficient means to that end. Surely, other means can be
found for ensuring the viability of the U.S. merchant marine than by
imposing onerous and costly restrictions on the shipment of food to
meet the urgent nutritional needs of hungry people around the world.
The Bill Emerson Humanitarian Trust (BEHT) is another useful weapon
in combating global hunger. We support changes that would render the
BEHT more efficient and reliable in addressing food crises. These
include making use of the BEHT easier and more transparent by
clarifying the ``trigger'' for its utilization relative to Title II;
increasing efficiency by directing it to hold reserves in the form of
cash or options instead of commodities, thus reducing costs and
increasing flexibility and responsiveness; and instituting provisions
for regular replenishment.
The new farm bill could also open opportunities for poor countries
to become more food self-reliant by reducing protectionist forms of
assistance to U.S. farmers. Funding within the farm bill could be
shifted from trade-distorting commodity payments to programs that would
be much more helpful for rural America, especially for farm and rural
families of modest means, and to nutrition assistance for hungry people
in rural and urban America. These reforms, together with reduced
protectionism in Europe and Japan, would remove significant obstacles
to agriculture and food security for many of the world's poorest
people.
Finally, we would like to encourage Members of this Committee to
consider the problem of world hunger from the broadest perspective,
recognizing that getting beyond chronic food insecurity requires
developing recipient country capacity to produce and trade. Emergency
commodity food aid is at one end of a spectrum of responses, and needs
to be recognized as a temporary fix at best. The U.S. Government, along
with other donors, needs to put more resources into effectively
addressing long-term food security. International aid for agricultural
development has plummeted over the past 20 years, from 11 percent to
just 3 percent of ODA. Increased crop yields in developing countries--
something achievable with current technologies--would have a profound
and lasting impact on global hunger.
Growth in the developing world would also be good for U.S.
agriculture. A 2006 study, commissioned by Bread for the World
Institute and conducted by the International Food Policy Research
Institute, showed that a 7 percent GDP growth rate in the developing
world would generate nearly $26 billion in additional U.S. agricultural
exports between 2006 and 2020.
We have the obligation and the opportunity to end hunger. We need
to take advantage of every means for doing so. The changes to the food
aid portion of the farm bill noted above will, I am confident, move the
U.S. closer, in concert with the NGO community, the WFP and other
donors, toward meeting this urgent objective.
In closing, I would like to call attention to our policy paper on
food aid, ``Feeding a Hungry World,'' issued in April 2006, a copy of
which is submitted with this testimony. We would be happy to provide
further information on any of the above points.
Thank you.
______
Prepared Statement of David Kauck, Senior Technical Advisor, CARE USA
Mr. Chairman and Members of the Subcommittee, thank you for this
opportunity to present CARE's perspectives on the performance of United
States international food assistance programs. Ensuring that our
nation's food assistance programs achieve success at reducing hunger
around the world is a critical challenge for all of us. CARE shares
your commitment to combat hunger by providing effective and accountable
programming wherever it is needed. CARE would like to express its great
appreciation for all the support that both the Subcommittee and the
Committee have given to programs using food aid.
CARE has been a cooperating partner of the Food for Peace program
since it was established in 1954. Over the past 53 years, CARE has
programmed more than 18.5 million tons of food from Food for Peace
(valued at over $7.4 billion) to reach more than 200 million people.
CARE operates food assistance programs today in twenty-two countries in
Africa, Latin America, and Asia.\1\ In the half-century or so that U.S.
food aid programs have existed in their current form, our work together
has helped to save countless lives, and protect and improve the health
and well-being of millions of people living on the edge of disaster.
CARE is proud to be a part of this great effort.
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\1\&In FY08, CARE will program Title II non-emergency resources in
about 12 countries. This reduction is primarily due to the Office of
Food for Peace's decision to focus its non-emergency resources in 15
countries. CARE was consulted by the Office of Food for Peace before
this decision was made. CARE supports FFP's efforts to concentrate its
non-emergency programs in those countries that are the most food
insecure.
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CARE's approach to food assistance has evolved over the years. We
began by focusing on the provision of food and other assistance to
people facing the threat of famine. We still use food in this way, but
we have learned that food resources alone, although valuable, are not
enough to address hunger. To improve people's lives, we developed multi
year programs that combine food assistance with other resources. These
programs target the neediest people, often before a humanitarian
emergency is apparent. They are designed to address the underlying
causes of hunger and to strengthen poor peoples' capacity to cope with
misfortune.
When it uses food aid, CARE's central focus is on helping poor
people overcome hunger. Our objectives are always to save lives and
protect livelihoods--while minimizing any unintended harmful
consequences that might result from the use of food resources. CARE
strives to use food only when and where it is appropriate.\2\ Well-
managed food aid continues to be an important component of a global
strategy to reduce hunger.
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\2\&CARE&USA, ``White Paper on Food Aid Policy'', 2006.
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While acknowledging the important contribution of U.S. food
assistance programs, we also accept the challenges that we still face,
and they are daunting. There are currently approximately 820 million
undernourished people in the developing world.\3\ Many of these people
are now so poor that they lack the means to rebuild their lives
following natural disasters or other humanitarian emergencies. These
problems are particularly acute in sub-Saharan Africa, where, for at
least the last 3 decades, hunger has steadily worsened, becoming more
widespread and persistent over time. The growing numbers of highly
vulnerable people who have fallen into extreme and intractable poverty
helps to explain the increased frequency and severity of humanitarian
emergencies, and the exploding demand for emergency food aid. In parts
of the Horn of Africa, the Sahel, and southern Africa, events that
would not have triggered major humanitarian emergencies twenty-five
years ago do so now.
---------------------------------------------------------------------------
\3\&Food and Agricultural Organization of the United Nations, ``The
State of Food Insecurity in the World: Eradicating World Hunger--Taking
Stock Ten Years After the World Food Summit'', (Rome: FAO Information
Division, 2006) .
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While humanitarian crises have increased, the funding needed to
adequately support food assistance demands worldwide has declined by
nearly half in real terms since 1980.\4\ We recognize that these
resource constraints will not be easy to resolve in the current budget
environment. This is why everything possible must be done to improve
the efficiency and effectiveness of food aid practices so that we can
achieve the greatest impact possible with the resources that we have.
One important way to achieve this is to improve the timeliness and
targeting of food aid. Food aid is especially valuable when it arrives
on time and reaches the people who need it most. If it is late or
poorly targeted, essential food aid can be wasted. Worse yet, untimely
deliveries and poorly targeted food aid can have unintended, and
sometimes harmful, economic consequences.
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\4\&Christopher B. Barrett, ``The United States International Food
Assistance Programs: Issues and Options for the 2007 Farm Bill'',
February, 2007.
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With these concerns in mind, CARE recommends several specific
changes to current policies affecting U.S. food assistance programming.
Local Purchase
CARE endorses increasing procurement flexibility in the Title II
program so that food may be routinely purchased locally or regionally
in developing countries. Under the right circumstances, having a local
purchase option can reduce delays and improve program efficiency and
effectiveness, and therefore save lives.
Although local purchase can be a useful tool under the right
conditions, this approach must be undertaken carefully. If not managed
properly, local purchase can trigger price spikes that are harmful to
poor people who must purchase food in order to meet their basic needs.
This is why we feel that a carefully monitored program would be a
useful way to introduce this innovation.
Better Strategies Are Needed To Provide Cash Resources for Food
Security Programs
In addition to direct distribution of food, there is a need for a
reasonable level of cash assistance for complementary activities
intended to reduce hunger. Experience has shown that cash-supported
activities are often critical to the success of food programs. Although
current law provides authority for limited cash assistance, CARE
recommends that Congress increase the total amount of cash assistance
provided within the Title II program and consider new strategies on how
best to make those resources available.
Currently, the Title II program provides three conduits for
distributing in-country cash support: (1) Section 202(e) funds,
provided primarily for administrative and operational costs; (2)
funding for Internal Transport, Storage and Handling for logistics-
related support; and (3) proceeds from the sale of monetized
commodities made available for costs associated with enhancing the
effectiveness of Title II programs. The practice of purchasing
commodities here in the United States, shipping those resources
overseas, and then selling them to generate funds for food security
programs is far less efficient than the logical alternative--simply
providing cash to fund food security programs.
As a step towards improving the efficiency and effectiveness of
non-emergency food aid programs, we recommend: (a) increasing Section
202(e) funding levels to at least 25% of the overall Title II
appropriation; and (b) expanding Section 202(e) flexibility to permit
the use of funds to enhance the effectiveness of program efforts. Not
only would this substantially improve the cost-effectiveness of non-
emergency programs, it would also eliminate a source of unnecessary
controversy that hangs over U.S. food assistance. Economic research
supports the view that open market sales of imported food aid may in
some cases create market distortions that are harmful to local farmers,
traders and economies. It also shows that monetized food tends to
displace commercial imports, both from the U.S. and from other
countries. For this reason, monetization became an especially
contentious issue during recent WTO negotiations.
Mr. Chairman, for the reasons just described CARE has made an
internal decision to phase out of monetization. This transition should
be completed by the end of Fiscal Year 2009. In the future, CARE will
confine its use of food aid to emergency and safety net programs that
involve targeted distribution to the chronically hungry.
The Bill Emerson Humanitarian Trust
The Bill Emerson Humanitarian Trust was intended to function as a
reserve of food and food-associated assistance funding that can be
drawn upon quickly to address unanticipated, rapid onset humanitarian
crises. Unfortunately, at present the Trust is difficult to access and
is usually deployed as a last resort, rather than a first response. Two
changes would help the Trust function as it was originally intended.
First, to make the Trust more accessible, the conditions for releasing
food and funds should be clarified in law. Second, we recommend
modifying current law to ensure replenishment of resources as part of
the normal, annual appropriations process. CARE is eager to work with
the Committee to strengthen the statutory provisions affecting the Bill
Emerson Humanitarian Trust in order to make this vital assistance tool
as effective as possible.
Addressing the Underlying Causes of Food Insecurity and Hunger
Chronic hunger is often the result of multiple, deeply rooted
causes. In the long term, achieving a lasting reduction in the
incidence of chronic hunger will require: improvements in agricultural
productivity; greater access to information, capital, basic education,
health services, and technical training for the poor; and changes in
the status of women and girls. This ambitious list obviously goes well
beyond the mandates set forth in the farm bill. Indeed, it is beyond
the means of any single donor government. But this crucial, broader
objective is not impossible, and it is fully consistent with the values
of the American people to help others help themselves.
Addressing the underlying causes of hunger will require setting
common goals and promoting coordinated action across programs and
agencies, as well as with national governments, implementing partners
and other donors. Within the U.S. Government, there are several such
initiatives underway. One example that CARE has direct experience with
is Ethiopia's Productive Safety Net Program. Under this program,
multiple donors, including the United States, engage in coordinated
planning and action. All are working toward a common goal to reduce
levels of food insecurity in a country where conditions for its poor
have not improved, in spite of extraordinary levels of food aid since
the 1980s. While food aid plays an important role, the program does not
rely on food aid alone. Program objectives include building
infrastructure, expanding markets, diversifying and expanding the
assets of poor households, and increasing the Government of Ethiopia's
capacity to provide sustainable safety nets for chronically vulnerable
citizens. We ask the Chairman and Committee members to consider this
example as an encouraging model for coordinated action.
In closing, we must push ourselves to make food aid a more
effective tool for reducing poverty and hunger.
CARE welcomes this opportunity to communicate our perspectives on
U.S. food assistance policy at this important moment in the Committee's
work. The intolerable crisis of 820 million hungry people worldwide
represents a moral and ethical challenge to us all. But with your help,
Mr. Chairman, I am convinced that we have both the will and the means
to make a difference. CARE looks forward to working with the
Subcommittee and the Committee in the months ahead to further
strengthen the U.S. response to the problem of international hunger.
Mr. Chairman and Members of the Committee, thank you again for the
opportunity to present our views. I would be pleased to answer your
questions or provide additional information.
______
White Paper on Food Aid Policy--CARE&USA
June 6, 2006
CARE International Vision: We seek a world of hope, tolerance and
social justice, where poverty has been overcome and people live in
dignity and security. CARE International will be a global force and a
partner of choice within a worldwide movement dedicated to ending
poverty. We will be know everywhere for our unshakeable commitment to
the dignity of people.
Introduction
Food aid has indisputably assisted and, in many cases, saved the
lives of millions of people in the half-century or so that it has
existed in its current form. CARE has long been associated with food
distribution programs and can be justifiably proud of some of the
accomplishments achieved through food aid programming in assisting
poor, vulnerable, and crisis-affected people throughout the world. CARE
believes that, if it is well managed, food aid continues to be an
important component of a global strategy to reduce vulnerability and
food insecurity. At the same time however, it is clear that many of the
practices of procurement, distribution and management of food aid--as
well as the politics of allocating resources for food aid--are not
always compatible with the CARE International Vision and Mission
Statement, adopted by the organization in 2001.
This paper is part of an ongoing effort to ensure that CARE&USA's
policies for use of food resources are aligned with the organization's
vision, mission and programming principles. In reviewing our policies,
the CARE has sought to develop an understanding of the challenges and
trends associated with food aid; to identify key policy options and
their potential risks and implications; and to outline strategic
directions that will position CARE to use food resources even more
effectively. This paper briefly summarizes our analyses, options and
directions.
Rationale for CARE's Food Policy Review
Recent analysis has shown that under some circumstances food aid
can harm local production and markets, undermining long-term food
security. Studies have also shown that food aid is often not the most
efficient use of resources for alleviating poverty. These findings
oblige CARE to review our food aid policies and management practices in
order to ensure that our strategies and practices are consistent with
our goals and values.
Food aid has recently become the focus of important policy debates
in the U.S. and abroad:
Many features of the current system of food aid management
have been challenged in the current round of trade negotiations
at the World Trade Organization (WTO).
In Washington, budget constraints in a time of increased
demand for emergency food aid have resulted in inadequate
funding, particularly for non-emergency food aid.
The authorizing legislation for U.S. food aid--the farm
bill--is soon to be renegotiated in Washington. The legislative
process will provide another arena for debate about food aid.
These factors have important implications for how CARE approaches
humanitarian response and other programs using food resources. They may
also have important operational and budgetary consequences for some of
our country offices.
In short, the rules of the game are changing with regard to food
aid. CARE's Food Policy Review is part of its effort to actively engage
in the food policy debate in order to encourage the evolution of food
aid management towards being a more flexible and appropriate resource,
while also being aware of the possible consequences of changes in food
aid on our policies, programming, and budgets.
Principles for Food Aid Management
CARE adheres to its own six Programming Principles in all of its
operations,\1\ but specifically two principles guide our use of food
resources:
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\1\&CARE's Programming Principles are: Promote empowerment; Work
with partners; Ensure accountability and promote responsibility;
Address discrimination; Promote non-violent resolution of conflicts;
and Seek sustainable results.
1. When it uses food aid, CARE's central focus is on helping poor
and vulnerable people overcome food insecurity and
vulnerability. Our objectives are to save lives, protect
livelihoods, reduce vulnerability, and address underlying
causes of poverty-while monitoring for and minimizing any
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potential harm from using the resource.
2. CARE is committed to maximizing efficiency and impact, and
minimizing unintended harmful consequences. CARE will use food
aid only when and where it is appropriate. In CARE's view,
appropriate roles for food aid include emergency response
programs, safety net (asset protecting) programs, and a more
limited role in asset building programs. CARE takes
responsibility for managing food aid appropriately and will:
Improve its understanding of local markets and patterns of
vulnerability, so that it can make appropriate food aid
management decisions.
Target the right kind of assistance to the right people at
the right time and in the right place.
Ensure that when food is used, appropriate non-food
complimentary requirements are also met.
Ensure the flexibility to choose between food and other
resources depending on local conditions. CARE will actively
advocate for this flexibility with donors.
Follow appropriate, internationally-accepted guidelines
and codes of conduct, including the SPHERE Guidelines and
the NGO Code of Conduct on Food Aid and Food Security.
Specific Policy Decisions
In its food aid review, CARE USA has focused on four major policy
areas that affect the overall effectiveness of the food aid system and
have potential implications for CARE programs. These are: local and
regional purchases of food; monetization; U.S. Department of
Agriculture (USDA) programs; and international trade, agricultural
subsidies and food aid. After careful analysis, the following decisions
have been made:
1. Local/Regional Purchase
CARE supports making funding available to purchase food locally or
regionally in developing countries. The two main justifications for
local and regional purchases of food supplies are (i) to reduce costs,
delays and market distortions brought about by ``tying'' food aid to
domestic procurement programs in the donor country and (ii) to increase
procurement flexibility while providing economic opportunities for
small farmers in countries where purchases are made.
CARE recognizes that local purchase is a complex undertaking. A
greater understanding of local markets and potential risks and
unintended consequences is necessary before engaging in local purchase
on a significant scale. CARE will support efforts to increase the
provisions for local purchase in donors' budgets. Some donors
(especially the European Commission (EC) and Canada) have already moved
towards more local/regional procurement.
Our reasoning:
1. Currently, most food aid (including virtually all U.S. food aid)
must be sourced from the donor country (i.e. in WTO language,
it is ``tied aid''). This means that:
Food aid deliveries can be slow and expensive. The average
time for delivery of Title II emergency food aid from call
forward to arrival in-country is 5 months.
Food aid is nominally tied to the export and surplus
disposal objectives of the exporting country.
Imported food aid can cause commercial displacement,
causing harm to traders and local farmers.
The cost of tied food aid has been shown to be
significantly higher--in many cases 30&50% higher--than
alternative, non-tied sources of food aid.\2\
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\2\&OECD (2005) ``The Development Effectiveness of Food Aid: Does
Tying Matter?'' Paris: OECD.
2. The local purchase option will increase procurement flexibility.
In countries (or regions) where food supplies are adequate and
where markets function properly, shifting from imported food
aid to local purchase has the potential to significantly reduce
delays and delivery costs. It can also provide important
economic opportunities for small farmers in countries where
food purchases are made. However, certain caveats need to
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betaken into consideration:
Most humanitarian organizations have only recently begun
to experiment with local purchase. Experiences to date are
still being assessed, and no broad consensus has yet
emerged about when to resort to local/regional purchase and
how to best manage it.
It is clear that local purchase is a complex undertaking.
It brings significant operational challenges and risks, as
does the use of imported food aid.
The appropriateness of local purchase will depend on
various factors, including highly variable local market
conditions.
If not managed properly, local purchase can cause harm. Of
particular concern is the possibility that local purchase,
in places where markets do not function effectively, will
trigger price spikes for basic food stuffs. Surging prices
can be very harmful to poor people who must purchase food
in order to meet their basic needs. New analytical
procedures are required to predict and monitor the impact
of local and regional purchases.
2. Monetization
By September 30, 2009, CARE will transition out of monetization--
that is, the sale of food aid to generate cash for humanitarian
programs. The only exceptions will be where it can be clearly
demonstrated that monetization can be used to address the underlying
causes of chronic food insecurity and vulnerabilities with reasonable
management costs and without causing harm to markets or local
production. CARE will use monetization only when it is sure that the
food which is monetized reaches vulnerable populations and has
effective targeting of poor people with limited purchasing power. This
will result in minimum or no displacement of domestic production.
CARE's transition away from monetization will take into
consideration the project cycle in our country offices, replacement of
lost revenue by alternative sources, and any other adjustments needed
in our country offices and headquarters. It also means that all country
offices submitting Multi-Year Activity Plans (MYAPs) for USAID/Food for
Peace in the current fiscal year will need to ensure that their
programs do not have a monetization component after September 30, 2009.
CARE recognizes that the elimination of monetization will probably
lead to a reduced stream of cash resources for some country offices.
CARE will seek ways to replace some monetization proceeds, in part, by
advocating for the conversion of monetization funds to cash accounts
and for the allocation of additional resources to address underlying
causes of food insecurity.
CARE will advocate the adoption of a principled approach by the
U.S. Government and Private Voluntary Organizations (PVOs) that
addresses the potential harm to markets and local production as well as
the high management costs associated with monetization.
Our reasoning:
For many years, monetization has been a useful source of funding
for programming to protect and enhance the livelihoods of poor people.
However, there are three major problems with monetization:
1. Experience has shown that monetization requires intensive
management and is fraught with risks. Procurement, shipping,
commodity management, and commercial transactions are
management intensive and costly. Experience has shown that
these transactions are also fraught with legal and financial
risks.
2. Monetization is economically inefficient. Purchasing food in the
U.S., shipping it overseas, and then selling it to generate
funds for food security programs is far less cost-effective
than the logical alternative--simply providing cash to fund
food security programs.
3. When monetization involves open-market sale of commodities to
generate cash, which is almost always the case, it inevitably
causes commercial displacement. It can therefore be harmful to
traders and local farmers, and can undermine the development of
local markets, which is detrimental to longer-term food
security objectives.
3. U.S. Department of Agriculture (USDA Programs)
Most of the food resources programmed by CARE come from the P.L.
480 Title II (USAID/ Office of Food for Peace). Occasionally, CARE has
utilized other resources, managed by the USDA, including food resources
from Title I and Section 416b, whose stated objective is to support
U.S. farmers, and Food for Progress, whose stated purpose is to promote
free enterprise and competition in agricultural economies.
CARE takes the position that food aid should not be used to enable
a donor to establish an unfair commercial advantage and must not create
disincentives to local production and markets. CARE believes two USDA
programs, Title I (concessional sales) and Section 416(b) (surplus
disposal) are inconsistent with its position and therefore will phase
out of participation in these programs. Regarding a third program, Food
for Progress, CARE's stance is more complex. In many contexts, the goal
of Food for Progress Programs is compatible with CARE's focus on
addressing the underlying causes of poverty. However, in recent years
past, some of the food aid provided under Food for Progress has come
from Title I or Section 416(b), and much of it has been monetized. CARE
will not accept Food for Progress Resources that originate from those
resources; nor will CARE monetize from this (or any other) program.
In practice, these policies are likely to mean that CARE will
receive little support from Food for Progress.
Our reasoning:
1. The USDA food programs under Title I and Section 416b: Title I
programs involve concessional (subsidized) sales of food for
the stated purpose of promoting export market development for
U.S. goods. Section 416(b) programs involve disposal of surplus
production.
Evidence shows that these programs actually have no
measurable effect either as strategies to promote the
development of export markets or as price support
mechanisms.
However, tying food aid to domestic agricultural
priorities makes it difficult to maximize the cost-
effectiveness and minimize the unintended harmful
consequences of food aid.
2. Food for Progress: While the goal of this is broadly compatible
with CARE's focus on the underlying causes of poverty:
Some of the resources programmed under Food for Progress
come from Title I and Section 416(b).
Much of the food aid programmed under Food for Progress is
monetized.
4. International Trade, Agricultural Subsidies and Food Aid
Generally, CARE supports free and fair trade as far as it does not
increase food insecurity and vulnerability of poor and marginalized
populations. By focusing on the impact of that trade liberalization,
CARE believes that it can make an important contribution in this area
to the trade debate. Of particular interest is the possibility that the
proposed reduction of agricultural subsidies and trade barriers may be
linked to reform of the food aid system, a development that could lead
to the elimination of safety nets at a time of rising commodity prices,
thus causing the erosion of poor people's purchasing power and access
to food.
CARE will enhance its capacity to understand how the poor are
likely to be affected by trade liberalization. In order to do this, it
will build on and improve CO capacity to document and analyze patterns
of vulnerability and to assess the impact of changes in trade policy.
It will also work in partnership with research organizations that have
expertise in economic analysis and vulnerability assessment. Finally,
it will carry out a series of case studies in a small number of
countries to document the effects of trade liberalization on poor
people.
Our reasoning:
Current debates about food aid are, to some degree, linked to a
much larger discussion about international trade and agricultural
subsidies. In the Doha Round negotiations of the WTO, European
negotiators have demanded stringent restrictions against tied food aid,
in-kind food aid, and non-emergency food aid (including monetization)
in exchange for substantial reductions in European agricultural
subsidies. In short, achieving dramatic reductions in agricultural
subsidies may in the end be offset by dramatic changes in the way food
aid is currently organized and managed.
The potential impacts of these policy changes are complex. A
significant reduction of agricultural subsidies in developed nations is
expected to cause international agricultural commodity prices to rise.
Broadly speaking, this trend will lead to uneven development, producing
economic opportunities for some and harmful consequences for others.
The rise of commodity prices is expected to create economic
opportunities for households, firms and countries that produce and sell
agricultural commodities. At the same time, households and countries
that must purchase food in order to meet basic needs will have to cope
with rising commodity prices. This can be expected to erode purchasing
power and deepen patterns of poverty amongst the urban poor. In rural
areas, the impact will be mixed. Rising commodity prices can be
expected to provide benefits for small farmers and traders. However,
many poor households whose food production is insufficient to meet
basic needs may find that a higher percentage their income must go for
food purchases.
Some have argued that reforming the food aid system in exchange for
the reduction of agricultural subsidies is a good deal for poor
farmers. Others have pointed out that eliminating subsidies will cause
hardship for poor people who purchase food, and that linking the reform
of the food aid system to economic liberalization would have the effect
of eliminating safety nets precisely at the moment when they are most
needed.