Food Aid Effectiveness Awaits Action on Farm Bill

Congress last week released a draft farm bill that includes some promising fixes to the notoriously inefficient U.S. food aid system. I have written before about the USG’s poorly managed food aid programs, largely based on work from the Government Accountability Office, aid organizations and a number of academics. In light of last week’s draft, I am pleased to announce that we may finally be getting some traction on this issue amongst policymakers on the Hill.First, a little background.  P.L. 480, or Food for Peace, is the largest program funded annually at about $1.5 billion on average.  Although it is not well understood outside of budget wonk circles, U.S. food aid is part of the international affairs budget but is authorized and appropriated by the agriculture committees.  (The House committees have some shared jurisdiction with the foreign affairs committees.)  This structure goes back to a time when the United States used international food aid programs to distribute an abundance of surplus crops.The Farm Bill largely authorizes domestic farm-related programs ranging from crop subsidies to food stamps to trade promotion activities.  Congress re-authorizes farm programs about every four to five years. It should come as no surprise that it is a difficult bill to pass in any political environment; it is even more difficult in the hyper-partisanship of an election year.On Friday, the Senate Agriculture Committee released the “chairman’s mark”, or the starting point for the Committee’s deliberations on the bill.  The Committee will mark-up the bill this Wednesday.  Kudos are definitely in order for a draft bill that advances ideas around improving food aid effectiveness.  The draft includes the reauthorization of local and regional purchase (LRP) to buy food closer to emergencies, thus avoiding higher costs and delays that have become a hallmark of U.S. food aid.  The previous farm bill had included a pilot program at about $15 million a year to test the feasibility of LRP (even though USAID already has authority to do a large amount of LRP).  Advocates would prefer an amount larger than the $40 million in the draft, but this is movement in the right direction.The bill also tackles the practice of monetization whereby food aid commodities are sold in developing country markets by implementing partners in order to fund their development activities as well as their food aid distribution costs.  The GAO found that $219 million in food aid resources were lost between 2008 and 2010 as a result of low-cost-recovery rates (58% for USDA and 76% for USAID).  The draft bill requires that monetization be used only where there is a 70% cost recovery.  While this doesn’t end the practice, at least it starts to set some parameters and expectations for better efficiencies.These reforms don’t go as far as I would like.  I would prefer the nature of the food emergency to determine whether U.S. commodities or LRP is used rather than some formula that makes more sense for Washington politics than for global hunger. Increasing incentives for agricultural innovation (see here) or using cash transfer programs (see here) could be extremely efficient and effective new ways to fight hunger. And eliminating both cargo preference and monetization (see here) would allow every food dollar to go about 30 percent further and produce estimated savings of roughly $260 to $400 million annually.It is still a long road to passage, and reforms often take time.  I commend the Committee for taking a serious look at improving food aid efficiencies and hope that this marks the start of a productive process of policy reform.