A new report is claiming that unnecessary regulations imposed by the U.S. Farm Bill are wasting nearly half a billion dollars per year in taxpayer dollars that could be used to save millions of lives.
Released last month by Oxfam and American Jewish World Service (AJWS), the report blames the Farm Bill for perpetuating inefficiencies in American aid . By wasting money that is intended to help the world's hungry, it estimates that Farm Bill rules prevented over 17 million hungry people from receiving assistance and delayed the delivery of aid by up to 14 weeks.
The Farm Bill, whose reauthorization is currently being debated in Congress, is a wide-ranging piece of legislation that dictates American agricultural policy. Still, few realize that the bill also contains rules that directly affect the procurement and distribution of U.S. global food aid.
In 2010, the United States spent over $2 billion on food aid, reaching approximately 65 million people worldwide. But despite being the world’s largest donor of food aid, the United States is the only country in the world that provides assistance in the form of actual food purchased at home and shipped abroad. In what The Financial Times has described as "a subsidy program for rich world farmers," over 99 percent of American assistance is purchased from American farmers and shipped abroad on U.S. carriers.
The problem lies in regulations that require food aid to be purchased in the U.S., shipped on American-flagged container ships and dispersed in a process known as “monetization." Through monetization, the government sells food in impoverished countries, using the proceeds to fund development programs that may or may not be related to hunger relief.
According to the Organization for Economic Cooperation and Development (OECD), this process can take up to five months to deliver food to target countries and costs significantly more than purchasing food locally. Worse still, the convoluted supply chain means that some of the food goes bad or is lost along the way. Overall, the Government Accountability Office has found that American food aid loses about half of its value when it is sent abroad, because we choose to send actual food instead of the cash equivalent.
While there are a number of approaches to improving American food aid, including investing in preventative measures such as food reserves and risk-management tools like micro-insurance for farmers, inefficiency remains one of the biggest challenges facing U.S. assistance. One solution would be for the U.S. to send aid in the form of cash, allowing organizations to purchase their food from local and regional sources. In their report, Oxfam and AJWS argue that local and regional procurement (LRP)—a practice already followed by the rest of the worlds’ donors—and eliminating monetization would save U.S. taxpayers a total of $491 million annually.
It's important to note that most food emergencies are not necessarily related to supply shortages. Instead, poverty and the inability to afford food is the number one cause of chronic hunger, while shocks such as drought make food more expensive, leading to famine. Therefore, emergency food aid should be seen as a last resort, not a long-term solution.
Unfortunately, rather than directing efforts towards preventative investments in agriculture, health, water and sanitation, U.S. aid focuses on relieving crises once they have already reached critical mass. To make matters worse, Congress has recently proposed legislation to cut funding for aid to agriculture. As Samuel Lowenburg of the Nieman Foundation described in an op-ed for the New York Times, "It's like a health insurance system that waits until someone has a full-blown illness before he or she can get treatment."
But even as we continue to under-fund investments in agriculture, our food aid remains inefficient and has the unintended consequence of undermining local agriculture by flooding the market with cheaper, imported food. As a result, food aid pushes down local commodity prices, forcing local farmers to sell at low prices and leaving them with little incentive to produce more food. Ironically, this has had the effect of exacerbating the root causes of hunger, while pursuing inefficient policies to treat its symptoms.
Despite growing calls to reform U.S. food aid policy, past attempts to loosen the rules governing food aid procurement and distribution have fallen flat. In 2005, the Bush Administration pushed lawmakers to allow up to a quarter of aid to be purchased locally, only to see the proposal stall in Congress. As always, it was opposition from agribusiness, the shipping industry and even American NGOs that depend on monetization that stood in the way of reform.
With Congress once again debating reauthorization before the bill expires this September, Americans have another opportunity to stand up to special interests and demand that their tax dollars be spent effectively. Our aid money should be put to use improving and saving lives, not complying with pointless rules designed to subsidize American farmers.
Read the full report, "Saving Money and Lives: The Human Side of U.S. Food Aid Reform" by Oxfam and American Jewish World Service (PDF).