Food Aid Lecture

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US Food Aid Background Trends and Key Policy
Issues on the Cusp of a Farm Bill
Chris Barrett C.H. Dyson School of Applied
Economics Management and Department of
Economics, Cornell University November 19, 2012
Community and International Nutrition Seminar
Series Cornell University
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Background trends

• 1. Increasing emergency-affected populations
• Natural disasters and affected persons have
  increased significantly over the past two
  generations.
• The global number of internally displaced persons
  (IDPs) has grown from 20 to 27 mn/yr, 1989-91 to
  2009-11.

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Background trends

• 2. Globalization of food markets
• Food aid was originally a surplus disposal
  program. Take govt-held surpluses generated by
  farm price support programs and give them away
  beyond the US marketshed.
• But virtually no place lies outside the
  marketshed today. Even in land-locked developing
  countries, commercial food imports have grown gt
  10-fold in the past 20 years!
• This has led to a rapid transition towards
  cash-/market-based food assistance, especially
  since 2004 tsunami.

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Background trends

• 3. We have entered a high food price regime
• For a variety of reasons, food demand growth has
  outpaced supply growth for the past decade. The
  result is historically high (inflation-adjusted)
  food prices for the indefinite future.
• This makes food aid expensive.

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Background trends

• 4. More attention to micronutrient deficiencies
• The Green Revolution and globalizing food markets
  have steadily reduced undernutrition.
• But low micronutrient (mineral/vitamin) intake
  increasingly recognized as equally serious,
  especially for children due to irreversible
  effects
• Hence growing attention to food aid quality (2011
  GAO and Tufts/USAID studies).

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US Food Aid
Much Has Changed In US Food Aid Already For
nearly 60 years, the USG has been the worlds
largest donor of food aid for strategic,
economic and moral purposes. Still 50-60 of
global flows each year. Food aid volumes have
fallen sharply over the past decade-plus, from
the US and globally due to trends described
already. Huge reorientation from
monetized program food aid (Title I) to
emergency and project (Title II) food aid, again
in response to the trends described.
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Key policy issues

• 7. Timeliness (Golden Hour principle)
• Delays are expensive and deadly (2004-5 Niger
  example).
• Most losses from disasters are post-exposure.
  Rapid, appropriate response matters enormously to
  recovery.
• Farm Bill still sharply limits local and regional
  purchases (LRP) in US food aid programs although
  they account for 82 of non-US food aid today.
• Prepositioning the best feasible Title II option
  now. But 25-40 more expensive than regular
  shipments (GAO 07).
• Big gains from LRP USDA LRPP and USAID EFSP
  projects delivered 62 (14 weeks) faster, on
  average, than shipments from US.
• Hard earmark on non-emergency funds ties FFPs
  hands big risks of 4th quarter emergency
  response interruptions.

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Key policy issues

• 7. Cost-effectiveness
• Increasing need with decreasing resources. Need
  to do more with less.
• Need to reduce unnecessary (non-commodity) costs
  transport is huge (especially with cargo
  preference rules adds 150mn/year to costs
  but rolled back in July).
• USDA LRPPP/USAID EFSP reduced cost of delivered
  grains by gt50 on average.
• Monetization just 58-76 cost recovery hugely
  wasteful (GAO). The rest of the world abandoned
  monetization years ago and OMB recommended ending
  it back in 2002. Yet non-emergency Title II
  monetization has grown from 28 in 1996 to 74 in
  2010. Better options exist community development
  funds (Foreign Ops), 202e, Title I buybacks.

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Key policy issues

• 7. Food Aid Quality
• Need to address more varied nutritional needs
  than simply filling a dietary energy supply
  shortfall.
• Especially important in light of the First 1000
  Days Initiative
• Need to match commodity choices to assessed needs
  to achieve cost-effective delivery of needed
  nutrients (what is cheap in /MT terms not always
  cheap in /nutrient terms)
• Increased attention to food aid quality LRP has
  proved equal to shipments from US in food quality
  w/much greater capacity to resolve quality
  problems at delivery than with shipments from the
  US.

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Key policy issues

• 7. Flexibility
• With greater food market access and superior
  timeliness and cost-effectiveness of commercial
  channels, cash/vouchers often preferred to food.
• Need response analysis (i) to identify
  appropriate form/ source of assistance, (ii) to
  ensure assistance doesnt disrupt markets on
  which the poor and devt most depend.
• But need options LRP just 2 of US food aid vs.
  82 for ROW. Mainstream LRP not make it a
  separate program.
• Slow/awkward movement toward budget integration
  already achieved in Canada, EU and other key
  donor countries, moving food aid into
  international development budgets and out of farm
  policy and agriculture budgets.

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Farm Bill 2012

• 7. Senate
• Senate passed a bipartisan Farm Bill capping
  monetization, making LRP permanent and slightly
  reducing the hard earmark for non-emergency
  food aid.
• Far from ideal, but progress nonetheless
• House
• No Farm Bill vote yet. Ag Committee passed a bill
  that drops LRP, reinforces monetization and the
  hard earmark.
• If no Farm Bill?
• USAID authority for new programming expires Dec.
  31. At that point gt50 of the worlds food aid
  flows cease!

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Conclusion
US food aid still essential to global emergency
response. The Farm Bill offers a chance to
further adapt US policy to all that has changed
in the world of food aid. But the current House
version is a step backwards and perhaps no bill
at all. Key policy issues for the 2012 Farm
Bill - timeliness - cost-effectiveness -
food aid quality - flexibility Implications -pe
rmanent, mainstreamed LRP -
reduced/constrained monetization - relaxed
Title II non-emergency hard earmark
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Thank you for your time and interest!