International Food Aid and Food Assistance and the Next Farm...
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Transcript of International Food Aid and Food Assistance and the Next Farm...
International Food Aid and Food Assistance and the
Next Farm Bill
ErinC.LentzStephanieMercier
ChristopherB.Barre5
PresentedattheAmericanEnterpriseIns;tuteWashington,DCOctober19,2017
Role of US International Food Aid and Food Assistance
• Foodaidisoneresponse,butincreasinglyscarceresource• USGfoodaidfell76%from1960sthrough2010sinrealterms• EsBmated815millionundernourishedindividuals…andgrowing• Recordnumberofemergenciesandrefugee/IDPpopulaBon
• USistheworld’slargestdonorsoUSpolicyiskey• Morethan40%ofallfoodaidinrecentyearsisfromUS
• Inthepasttwodecades,asemergencieshavebecomemorecommon,USGhasshiQedfocusforfoodaid:• TowardhumanitarianemergenciesandchildnutriBon–abandoningsurplusdisposalandtradepromoBon• Yet,programinefficiencieslimitthereachofUSfoodaid
• RecentFarmBillsandotherlegislaBonhaverelaxedseveralkeystatutoryrestricBonstoimproveint’lfoodassistance• Increaseduseofcash,vouchersandlocal/regionalprocurement• Increasedcomplementarycash• ReducedopenmarketmoneBzaBon• Reducedcargopreference
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Human consequences of restrictions are great
• Annualhumancostofdisastersis~42millionlifeyears,mostlyinlow-andmiddle-incomecountries…andgrowing
• Nikulkovetal.(2016PLOSONE)esBmatethateliminaBngthecargopreferencesandrequirementstoprocurefoodintheUScouldreducechildmortalityinnorthernKenyaby16%duringseveredroughtepisodes
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US Food Aid and the Farm Bill
ThreestatutoryrestricBonsconBnuetowastetaxpayermoneyandcomeatgreathumancost:
1. Cargopreferencerulesthatinflateshippingcostsanddelaydeliveries
2. Limitedaccesstocash-basedfoodassistanceprograms
3. ProcurementrequirementsthatrequirecommodiBesbepurchasedintheUS
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Cargo Preference Rule: Overview
• 50%ofUSGfoodaidmustbecarriedbyUS-flaggedvesselstotheiroverseasdesBnaBons• Goal:ensureUS-flaggedvessels’ownersstayinbusinesssothattheseshipsandtheirtrainedcrewsareavailabletocarryUSmilitarycargointheeventofbroad-basedmilitaryengagementoverseas• FoodaidcargopreferencerequirementhasbeenineffecBveandiscostly
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U.S.foodaidbeingunloadedfromU.S.-flaggedship
Cargo Preference Rule: Evidence
• USflaggedshipsareolder,smaller,andslowerthanforeigncompeBtors• Today,US-flaggedshipscarry1%ofUSforeigntrade• Vesselscontrolledby3foreignshippinglinesaccountedfor45%ofallfoodaidcarriedbyUSflaggedvesselsduring2012-2015
• Bojleneckisnotthenumberofships,butisthenumberoftrainedUSmarinersavailablefordeployments(MercierandSmithandGAO,both2015)• RecentesBmatesofcostofcargopreferenceisbetween$40and$50million/year(MercierandSmith2015)under50%requirement• CosthasbeenborneenBrelybyfoodaidprogramssince2015whenMARADreimbursementrequirementsended
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Cargo Preference Rule: Recommendations
1)Endcargopreferencetoallowscarcefoodaidresourcestogofurther• Bulkofprofitsgotovesselowners,nottoworkers• Foodaidcargopreferenceonlyaccountsforabout15percentofsuchshipments—remainderismilitaryequipmentandcommercialproductsfundedthroughEx-ImBank,OPIC
2)DevelopalternaBvemeanstoensureavailabilityoftrainedmarinerssoastosupportdeploymentofmerchantmarinersinthecaseofanextendedoverseasmilitaryengagement• NaBonalGuardandReservemodel,includingprotecBonoftheircivilianposiBonswhileperformingmilitaryservice
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Limited cash-based programming: Overview
• CashisneededforadministraBve,distribuBonandstoragecosts• SecBon202(e)providescashfornon-commodityresources• MoneBzaBon–thesaleofUSfoodaidinrecipientorneighboringmarkets–alsoprovidescash• 1996FarmBillseta15%minimumforthevolumeofnon-emergencyfoodaidthatmustbemoneBzed
• 2014FarmBill:raisedshareofTitleIIresources-from13%to20%-thatcanbeusedascashfornon-commoditycostsunderSecBon202(e),whichcancoverdevelopmentacBviBespreviouslyfundedthroughmoneBzaBon
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Limited cash-based programming: Evidence
• MoneBzaBontendstobewasteful• ReturnonmoneBzaBontendstobe70-75cents/dollar• USDAFoodforProgress:58cents/dollar(GAO2011)• Upto$70millionlostannuallyduetomoneBzaBon(GAO2011)
• MoneBzaBoncandestabilizecommoditypricesinlocalmarketsinrecipientcountries(Gargetal.2013)
• Following2014FarmBillexpansionof202(e),therehasbeenasharp(90%)reducBoninmoneBzaBonforTitleIIprojects
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Limited cash-based programming: Recommendations
1) ReduceoreliminatethestatutoryminimumonmoneBzaBon
2) MaintainorexpandcurrentshareoffundsfromSecBon202(e)• Thiswasperhapsthemostimpacoulfoodaidreformof2014FarmBill
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Relax domestic procurement requirements: Overview
• Eversince2004IndianOceantsunami,substanBalevidencethatcash,vouchers,andlocallyandregionallyprocured(LRP)foodarecheaper,fasterandpreferredbyrecipientsthanUS-sourcedfoodaid• 2002FarmBill:introducedpreposiBoningoffoodaid• 2008FarmBill:fundeda$60millionLRPpilotproject• FundswereauthorizedforLRPunderthe2014FarmBill,butnofundswereappropriatedin2014–2016soprogramdoesn’toperate
• Complementaryprograms:• EmergencyFoodSecurityProgram,fundedthroughInternaBonalDisasterAssistanceandOverseasConBngencyOperaBonsAccounts,hasgrownfrom$244millioninFY2010to$1BillioninFY2015(Schnepf2016)• In2008BillEmersonHumanitarianTrustmovedtoholdingcashratherthancommodiBes,providingmoreflexibleresponseforunanBcipatedcrises
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Relax domestic procurement requirements: Evidence
• TherightresourcecansaveBmeandmoney• ResourcemustbeappropriateforlocalsituaBonandobjecBvesoftheprogram• Cashandvoucherstendtobecheapestandfastest• Transoceanicfoodaidisslowest,especiallyifdelayedbyCPconstraint• PreposiBoningisfasterthantransoceanicfoodaid,butmorecostly—esBmatedat$56/ton• LRPisfasterthantransoceanicfoodaid,andoQencheaper.Butnotalways(e.g.,vegetableoiltoLaBnAmerica).
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Relax domestic procurement requirements: Recommendations
1)Reducethe100%USsourcingrequirement• “Untying”USfoodaidwouldbethesinglemosteffecBvereform• CanadianfoodassistancedollarsareunBedandgotwiceasfarasUSfoodassistancedollars(LentzandBarrej2014)b/cUSspendsmoreonshippingandhandlingthanonfood• CouldreachanaddiBonal4to10millionpeopleatnoaddiBonalcost(ElliotandMcKijerick2013)
2)Allow21stcenturyfoodassistanceinstruments(cash,vouchersandLRP)withinTitleII• Keepprinciple:needflexibilitytomeetspecificneedsinagivenhumanitarianresponsecontext(conflict,infrastructure,inflaBon,nutriBonalneedsanddietarypreferences,etc.)
3)DirectlyappropriatefundsforLRPandexpanditssize
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Conclusions • USinternaBonalfoodaidandfoodassistanceprogramsareanimportantsymbolofAmericans’commitmenttohelpthoseinneed.ButUSprogramscandobejeratsamecost.• RemovingthestatutoryrestricBonswillallowtheUSGtoemploycurrentbestpracBces,stopthewasteofUStaxpayerdollars,andreachmorepeople,savinglivesandlivelihoods.• The$350-400mn/yrnowwastedcosts~3mnchildlifeyears.• Asmanyas40,000avoidablechilddeathsfor~400marinerjobsaffected.
• Seriesofmythsperpetuatethewasteintheseprograms:• Cargopreferencerequirementsadvancemilitaryreadinessandsupportemploymentfortrainedmarinerswhomightneedtobedeployed• FoodaidpurchaseshelpAmericanfarmers• Purchasingfoodaidabroadcompromisesfoodqualityandsafety• CashbasedprogramsaremorevulnerabletotheQanddiversion
• Carefulresearchfindsthesemythsunfounded.• Wemustupdatethedebateandpromotebestuseofascarceresourcethatsaveslives.
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