U.S. Policy on International Food Aid
Kate Kingery
PA 8001: Transforming Public Policy
Professors Crosby and Bryson
February 25, 2008
U.S. Policy on International Food Aid
The United States is the largest contributor to international food aid, providing
nearly half of the world’s supply of food assistance for humanitarian and development
purposes. The U.S. Government Accountability Office (GAO) (2007) estimates that
Congress has approved an average of $2 billion per year since 2002 for food aid
programs that have provided an average of 4 million metric tons of food commodities
annually. Yet to the U.S. food aid system is considered highly inefficient and ineffective.
According to the GAO (2007), rising costs for business transactions and
transportation have resulted in a 52 percent decline in the average tonnage of food
provided around the world between 2001 and 2006. These costs make up an estimated 65
percent of total emergency food aid. There are many factors that contribute to the
inefficiency and ineffectiveness of U.S. international food aid including lack of clear
intent and multiple goals attached to food aid, restriction of food aid donations to
commodities and the related logistical challenges, monetization of food commodities, and
strong financial incentives among multiple players to maintain the current system.
Public Law 480
The U.S. first began providing food assistance to other countries in 1954 when
President Eisenhower signed P.L. 480, the Agricultural Trade Development Assistance
Act (Barrett & Maxwell, 2005). According to the U.S. Agency for International
Development (USAID) (2008), the original intent of the act was to expand export
channels for U.S. agricultural products. President Kennedy later renamed P.L. 480 the
“Food for Peace” program (USAID, 2008) to reflect his rhetoric of promoting good
relations around the world. The 1990 Farm Bill further refined the purpose of food
assistance to reduce global food insecurity (Barrett & Maxell, 2005). Despite food aid
helping hundreds of millions of people over the past 50 years, Barrett & Maxwell (2005)
argue that international aid continues to be driven by donor country interests, and in the
U.S. specifically, to support agricultural products, trade and foreign policy.
The system of U.S. food aid allocation and distribution is one of the most
complex among donor governments. Food aid is funded under four different authorities
and managed by six programs under USAID and the U.S. Department of Agriculture
(USDA) covering a range of objectives including humanitarian, economic, foreign
policy, market development and international trade goals (GAO, 2007). The largest
international food aid program is under Title II of P.L. 480, which is managed by
USAID. Title II has provided an estimated 74 percent of the total in-kind distribution
over the past four years, mostly for emergency assistance, according to the GAO (2007).
In FY2006, Title II funding of $1.7 billion for emergency and development-related
projects (GAO, 2007).
Commodities and Cash Donations
P.L. 480 limits U.S. food assistance to in-kind donation of agricultural
commodities to other governments, multi-lateral agencies and private voluntary
organizations (PVOs). Cash donations are not permitted. However, commodity
distribution is slow, costly and inefficient. The GAO (2007) identified a number of
logistical barriers that contributed to the inefficiency and ineffectiveness of U.S. food aid,
primarily related to timeliness and quality of food reaching recipients. The U.S. maintains
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stockpiles in different parts of the country and the world, and by law is required to
transport all food aid on U.S. flag ships, which is usually more costly. The Cargo
Preference Act, also enacted in 1954, requires that a minimum amount of food aid be
shipped on registered U.S. carriers. In the 1985 Farm Bill, this minimum reached 75
percent of all food aid shipments with a subsidy estimated at more than $6,500 per day
per ship (Barrett & Maxwell, 2005).
The U.S. is the only donor country that continues to provide in-kind food aid
despite considerable debate over the potential benefits of cash assistance, such as more
timely delivery of aid in emergencies, appropriate commodity distribution and potential
positive effects on local markets and economic development. According to the
International Food & Agriculture Trade Policy Council (2007) most donor countries have
shifted the majority of their food aid from commodities to cash. The European Union was
the first major donor to provide cash food aid and many other countries have followed.
There is general agreement among the many players in the food aid arena that
some form of cash assistance is warranted, whether as a pilot program or a regular set
aside under Title II. The Bush Administration proposed allowing up to 25 percent of Title
II funds to be used for emergency cash purchases of food aid. However, this provision
was not adopted by the House or Senate in the 2007 Farm Bill. The agricultural sector
exerts considerable influence in Congress and many political leaders believe the
agricultural lobby will not politically support a move to cash donations.
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Monetization of Food Aid
Congress began allowing the “monetization” of food aid in 1990 as a way to help
cover costs of storage, transportation and distribution of food aid in recipient countries.
By 2001, monetization of non-emergency Title II aid had reached an all-time high at 70
percent of the food donated to PVOs for non-emergency purposes (Barrett & Maxwell,
2005). Agricultural products may be sold in-country after they have been shipped from a
storage site in the U.S. or other parts of the world. This is a highly inefficient practice and
the local sale price of the commodity rarely meets the actual storage, transport and
marketing costs. However, these organizations have come to rely on the monetization of
food aid to supplement budgets for other development activities and to have the
flexibility to provide more appropriate resources within a given country.
The Alliance for Food Aid, a collaboration of fifteen PVOs that are involved with
food and development assistance, promoted a change in the 2007 Farm Bill that would
allow for a pilot program for regional emergency food purchases but continued to support
monetization of food commodities because so many PVOs rely on this practice for
financial support (ITAPC, 2007). Changing the system of monetization is much more
contentious than allowing a portion of Title II funds to be used for cash donations to
purchase food in local or regional markets.
Iron Triangle
A compounding factor in the inefficiency and ineffectiveness of the food aid
system is the primary stakeholders themselves. The major beneficiaries in the current
U.S. food aid programs are agricultural suppliers, maritime shippers and PVOs (Barrett &
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Maxwell, 2005; ITAPC, 2007). These three industries are considered the “iron triangle”
of the food aid arena because of the strong hold they each have in protecting their
interests relative to food aid allocations and distribution. Within the agricultural
industry—from farmers to commodity brokers to food processors—international food aid
has been a lucrative channel for dumping surplus commodities. Ocean transport providers
have benefited at a tremendous rate based on the requirement that three-quarters of all
food aid be transported on U.S. commercial ships. Finally, PVOs have a vested interest in
maintaining the practice of monetization as a mechanism for raising program revenue.
Considering no changes to food aid system were made in the 2007 Farm Bill, there does
not appear to be strong political will among members of Congress to break tradition.
There are stakeholders who do support changes in U.S. food aid programs. In
2007 CARE USA publicly announced it would no longer accept U.S. food aid for
purposes of monetization (CARE, 2006). This was a significant stance that will have a
financial impact on the organization. Other PVOs have expressed support but have yet to
publicly join CARE in changing their policies.
Many players in the international community are interested in seeing a major
change in U.S. policy. The U.N.’s World Food Program (WFP) and Food and
Agricultural Organization (FAO) are global representatives for international food aid and
have a strong interest in U.S. resource allocations and the policy agenda set by the largest
donor country. Most importantly, however, are the recipient countries and individuals in
need of food assistance. Perhaps no other stakeholders are more affected by dysfunctions
in the food aid system.
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References
Barrett, C. & Maxwell, D. (2005). Food Aid After Fifty Years: Recasting its Role.
London; New York: Routeldge.
CARE USA. (2006). White Paper on Food Aid Policy. Atlanta: CARE USA.
Government Accountability Office. (2007). Foreign Assistance: Multiple Challenges
Hinder the Efficiency and Effectiveness of U.S. Food Aid. Statement of Thomas Melito,
Director, International Affairs and Trade. Testimony Before the Subcommittee on
Agriculture, Rural Development, Food and Drug Administration, and related Agencies,
Committee on Appropriations, House of Representatives. Washington, DC: Government
Accountability Office.
International Trade & Agricultural Policy Council. (2007). U.S. Food Aid Policy and the
Farm Bill. Farm Bill Series No. 4. Washington, DC: International Food & Agricultural
Trade Policy Council.
United States Agency for International Development. (2008). The History of America’s
Food Aid. Retrieved February 22, 2008 from
http://www.usaid.gov/our_work/humanitarian_assistance/ffp/50th/history.html.
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