us food aid: what lies ahead? - daniel whitehead 2007

8/7/2019 US Food Aid: What Lies Ahead? - Daniel Whitehead 2007

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U.S. Food Aid:

What Lies Ahead?

Annual Food Aid Repor

www.interagservices.com

2200 Wilson BlvdSuite 102-251

Arlington, VA 22201 U.S.A.

International Agricultural Services

U.S. Food Aid:

What Lies Ahead?

Annual Food Aid Repor


2200 Wilson BlvdSuite 102-251

Arlington, VA 22201 U.S.A.

International Agricultural Services


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Page i

Table of Contents

Preface from IAS .............................................................................................. iii

Foreword............................................................................................................ v

Executive Summary .......................................................................................... 1

Chapter 1: Introduction ..................................................................................... 2

Historical Perspective ........................................................................................................................ 2

Overview of U.S. Food Aid Programs................................................................................................ 4

Chapter 2: Legislative Impacts on the Future of U.S. Food Aid ..................... 7

Debating the 2007 Farm Bill .............................................................................................................. 7

Defining the Bill Emerson Humanitarian Trust ................................................................................... 8

Regulating the Sale of Food Aid Commodities .................................................................................. 8

Chapter 3: Organizational Restructuring and Management Improvement .. 10

Recent Findings from GAO and USDAs OIG ................................................................................. 10USDAs Foreign Agricultural Service ............................................................................................... 11

USDAs Farm Service Agency ........................................................................................................ 11

USAIDs Food for Peace Office ....................................................................................................... 11

Improvements to Information Technology Systems ........................................................................ 12

Strengthening of Coordinating or Consultative Activities ................................................................. 13

Food Assistance Policy Council ...................................................................................................................... 13

Food Aid Consultative Group .......................................................................................................................... 13

International Food Aid Conference .................................................................................................................. 14

Chapter 4: The Outlook for U.S. Food Aid Programming in FY 2008........... 15

Section 416(b) ................................................................................................................................. 15Title I ............................................................................................................................................... 16

Title II .............................................................................................................................................. 17

Title III ............................................................................................................................................. 19

Food for Progress ............................................................................................................................ 19

Food for Education .......................................................................................................................... 22

Program Summary Overview .......................................................................................................... 24

Chapter 5: Country and Regional Implications ............................................. 25

Chapter 6: Changes to the Food Aid Commodity Menu ............................... 28

Bulk Grains ...................................................................................................................................... 28

Oilseeds .......................................................................................................................................... 28Pulses ............................................................................................................................................. 29

Processed Commodities ................................................................................................................. 30

Ethanol and Its Effect on Food Aid Prices ....................................................................................... 31

Appendix AAbout IAS ................................................................................. 33

Appendix BList of Reference Sources ....................................................... 35


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Page ii

AcronymsAcronym Full Name

416(b) Section 416(b)

BEHT Bill Emerson Humanitarian Trust

CCC Commodity Credit Corporation

DACO Deputy Administrator for Commodity Operations

EBES Electronic Bid Entry System

FAR Federal Acquisition Regulations

FARES Food Aid Request Entry System

FAS Foreign Agricultural Service

FBES Freight Bid Entry System

FFE Food for Education

FFP Food for Progress

FSA Farm Service Agency

GAO Government Accountability Office

IAS International Agricultural Services, LLC

IT Information Technology

KCCO Kansas City Commodity Office (FSA)

NGO Non-Governmental Organization

OGC Office of General Council

OIG Office of the Inspector General

OMB Office of Management and Budget

PCIMS Processed Commodities Inventory Management SystemPL 480 Public Law 480

PVO Private Voluntary Organization

UN United Nations

USAID U.S. Agency for International Development

USDA U.S. Department of Agriculture

WFP World Food Programme

WTO World Trade Organization

2007 International Agricultural Services, LLC. All rights reserved.

This report is the exclusive property of International Agricultural Services, LLC. Unauthorized copyingof the content is expressly forbidden. Any use, including reproduction, modification, distribution,transmission, replication, storage, or display of any part of the content of this report, for commercial orother purposes, without prior written permission is strictly prohibited.


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Page iii

Preface from IAS

his report was prepared by International Agricultural Services (IAS) in order toprovide an overview of U.S. international food aid programs for the past few yearsand to gain insight into what lies ahead. It begins with a short history of these

programs since World War II and continues with an analysis of food aid activities in thenew millennium, including an examination of countries, commodities, and organizationsinvolved. There is discussion of the new Farm Bill now being crafted and othercommentary about current programs and the future of food aid funding. In the process ofundertaking this study, IAS created a comprehensive food aid database making use ofthe U.S. Governments procurement data that enables IAS to undertake customizedanalysis and reporting. The questions addressed in this report include: What does thefuture hold for U.S. food aid programs? How has the government performed in itsmission to provide food aid to the needy around the world? Where should food aidgroups focus their limited resources?

In preparing this report, detailed research was carried out including many interviews withrepresentatives of government agencies in charge of food aid programming and delivery,commodity vendors, food aid interest groups, Members of Congress, and cooperatingsponsors.

We are grateful to George Aldaya, former Director of the Farm Service Agencys (FSA)Kansas City Commodity Office (KCCO), and Mary Chambliss, former DeputyAdministrator responsible for Food Aid Programs, Foreign Agricultural Service (FAS),for their invaluable contributions to this report. We also appreciate the contributions ofRobert L. Walker, former head of the U.S. Department of Agriculture (USDA) teamcharged with monitoring the historic $1 billion Russian food assistance program between

1999 and 2001.

We welcome your comments on our report.

Daniel T. Whitehead

International Agricultural ServicesApril 2007

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Page iv

Notes on Terminology

Various terms are used by different agencies to describe organizations that carry out foodaid agreements, and they are often used interchangeably; for example, cooperatingsponsor, non-governmental organization (NGO), inter-governmental organization, privatevoluntary organization (PVO), and humanitarian aid group. These groups may include

non-profits, for-profit organizations, trade groups, and cooperators. While we understandthat there are real differences between these terms, for the purposes of this study we usethe generic term PVO wherever possible to describe each of these groups in order toreflect what we believe to be most common practice and to avoid confusion.

Notes on Food Aid Data Sources

Food aid data sources can pose a problem to anyone undertaking a study such as this one.No centralized repository of food aid data exists in the U.S. Government; each agencysuch as the U.S. Agency for International Development (USAID), FSA, and FAS maintains separate and compartmentalized food aid databases. USAID and FAS

databases focus on data relating to proposals from PVOs and planned programming,while FSA maintains a system for tracking food aid procurements and deliveries. TheFSA database on contracts awarded for the procurement of food aid is maintained bythe KCCO, and it was used for the development of the various charts and tables includedin this report because it appears to be the most complete, relevant, and accurate source ofinformation.

One inconvenience of this approach, however, is that the procurement data is enteredaccording to the date the procurement contracts with commodity vendors and shipperswere awarded and not the fiscal year in which the food aid agreement was awarded.Therefore, reports created using the FSA database may not always match precisely with

information maintained and published by other agencies. Additionally, as the data isbased on USDA procurements, purchases of food by foreign governments under the TitleI loan program are not included. The only Title I data included here is in relation to Foodfor Progress grant programs that have been funded using Title I authority. What is mostimportant is that we have attempted to choose one source of data and to then use that dataexclusively and consistently throughout our report.

For more information contact [email protected].


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Page v

Foreword

s U.S. international food aid programs enter a new century with 50 years ofexperience, there is considerable review and discussion of the future for theseprograms. While they have saved millions of lives in all parts of the world,

almost a billion people, many of them children, continue to face food insecurity. It isestimated that 18,000 children die every day as a consequence of starvation andmalnutrition. The prospects for reducing this number are not good. Facts such as thesecombined with the U.S. Governments budget constraints have led many to reevaluate

these programs, seeking to identify ways to use these resourcesoften $2 billion a yearmore efficiently and effectively. The reward for such improvements will be more livessaved and better livelihoods created or maintained.

The timing of the 2007 Farm Bill and the ongoing negotiations at the World TradeOrganization (WTO) have presented the opportunity for such review and discussion onthe future of the several U.S. food aid programs. While the Administration has included

only one proposal in its 2007 Farm Bill plan, the food aid community is consideringseveral proposals, some of which have already been presented to Congress. In addition,the Government Accountability Office (GAO), at the request of the majority and minorityleadership of the Senate Agriculture Committee, has prepared a major report on theseprograms as currently authorized. The Organization for Economic Cooperation andDevelopment (OECD), UN Food and Agriculture Organization (FAO), and USDA Officeof the Inspector General (OIG) have all conducted recent studies on food aid. ThePartnership to Cut Hunger and Poverty in Africa also has just released a major study,Reconsidering Food Aid. All this information will contribute to the dialogue on the futurefor food aid.

It is hoped that this paper will add constructively to this ongoing dialogue that aims tofind new and better ways to support food security for the most needy among us.

Mary Chambliss

Former Deputy AdministratorExport Credits

USDA Foreign Agricultural Service

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Executive Summary

.S. food aid programs that began more than 50 years ago as an outletfor farm surpluses have evolved over the years into sophisticated andtargeted tools for alleviating the causes of hunger and promoting

economic development. There are now more than seven separate food aidprograms or authorities, although not all of them are currently funded or inoperation.

Management of these programs is shared between USAID and two USDAagencies: FAS and FSA. USAID and FAS handle the strategic programmingaspects of the programs while FSA carries out the procurement and shipmentof the food commodities. Coordination among all three agencies, and otherstakeholders, has been improving dramatically over the past few years, partlyas a response to findings from several government auditors. USDA andUSAID both have undergone significant organizational changes, including

improved information systems.

The current Farm Bill authorizing these food aid programs will expire at theend of FY 2007, prompting a recent flowering of ideas on ways to improvethe efficiency of these programs and increase their effectiveness. Among theideas discussed are expanding the use of cash resources for local purchases offood aid in emergencies and an expansion in the amount of food aid beingused specifically for development programs. While there will likely be roomin the future of U.S. food aid programs for local purchases in cases of extremeemergency, U.S. grown food commodities will continue to be used to meetthe great majority of needs overseas. Domestic support for these programs

depends in part on the benefit they provide to U.S. farmers.

Improvements have also been made recently to the targeting of food needs,resulting in the creation of a list of priority countries for most food aidprograms. The majority of these priority countries are located in Africa.Nevertheless, the needs within this targeted list vary greatly, and more effortshould be made to reach these unmet needs.

The biggest challenge to U.S. food aid programs in the next year will be thehigh prices for food aid commodities and transport. Rising fuel prices haveincreased the cost to transport food aid, while the rush to meet the demand for

corn-based ethanol has pushed up the prices of a whole range of food aidcommodities. These high costs will put even more pressure on food aidagencies to improve the efficiency of their programs as a way to manage costsand improve their effectiveness.

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Chapter 1: Introduction

his paper provides an overview of the U.S. food aid programs that havesaved millions of lives in all parts of the world since their beginning in1954. It discusses recent trends and provides insights as to possible

future changes. Information on trends or changes was gleaned fromdiscussions with agency officials, commodity groups or associations, andcongressional offices. It is hoped that this paper will add to the ongoingdiscussion of how to improve these programs and ensure their ability toalleviate the ongoing problem of food insecurity for many in the developingworld.

Historical Perspective

Although humanitarian food aidhas been a part of U.S. foreign

policy initiatives throughout itshistory, the rapid improvementin U.S. agricultural productionafter World War II was a majorimpetus for the development ofcurrent food aid programs. In the1950s, the Commodity Credit Corporation (CCC), a government-ownedcorporation, held large stocks of agricultural products (primarily grain), andU.S. farmers continued to produce huge surpluses that added to theseinventories. Utilization of these large surpluses to assist foreign countries wasseen as a win-win situation. It provided humanitarian assistance to countries

that were experiencing serious food shortages and at the same time it reducedsurplus CCC inventories without flooding or disrupting U.S. markets. Foodaid also provided an outlet for ongoing surpluses that were being removedfrom the domestic market by government programs.

PL 480 established the basic structure of the U.S. food aid programs. Theoriginal law included three program titles. Over the years there have beensome changes, and the current language includes three program titles, severalnew titles addressing process or administrative aspects of food aid, andanother authorizing a farmer-to-farmer program. Title I continues to addresswhat is termed program food aid and provides U.S. commodities through

long-term, low-interest loans. Title II provides grant project food aid foremergency and non-emergency purposes. The current Title III authorizesgovernment-to-government grant programs to support economicdevelopment.

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For the first 15 yearsafter passage of PL 480,food aid accounted forup to 25% of U.S.agricultural exports.


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The law has been changed regularly with the passage of new farm bills every 5 years, andat present neither Title I nor Title III are funded.

It has been estimated that for the first 15 years after passage of PL 480, food aid exportsaccounted for up to 25% of U.S. agricultural exports, primarily using CCC-owned

inventories. By the mid-1970s, however, CCC stocks had been significantly reduced, andUSDA began to purchase commodities needed for food aid programs from thecommercial market. Since the new millennium, almost 100% of the commodities neededfor food aid have been procured in the commercial market. In addition, food aids shareof the export market has significantly diminished, today representing less than 4% ofagricultural exports.

The Food for Progress (FFP) program was authorized by the Food for Progress Act of1985 and provides for the donation or credit sale of U.S. commodities to developing andemerging democracies to support democracy and the expansion of private enterprise.Commodities may be provided using funds appropriated under Title I of PL 480 or

Section 416(b) (subject to availability of surplus stocks), including CCC purchases.

The most recent food aid authority is the McGovern-Dole Food for Education (FFE)program, which was authorized as part of the 2002 Farm Bill after a successful pilotprogram. This program is currently funded with annual appropriations and provides forthe donation of commodities to support school and maternal/child feeding programs indeveloping countries. The authority provides commodities, transportation, and cash toenable necessary administrative and programmatic support. Special attention is given tothe education of girls.

While currently inactive, Section 416(b) of the Agricultural Act of 1949 authorizes thedonation of commodities owned by the CCC for international food aid programs. The useof this authority has varied greatly over the years; it was reinstated in the early 1980safter being dormant for many years. Its size depends on CCC surplus stocks. Mostrecently in the late 1990s the authority, in combination with CCC charter act authority,was used to provide substantial commodity donations to many countries including thoseof the former Soviet Union. However, with the changes in the farm bill, at present thereare very few, if any, CCC surplus commodities, and this program is expected to remaininactive.

Although far from meeting all the needs of food deficient countries, these programs havebeen significant contributors to international food assistance. According to the WorldFood Programmes 2005 Annual Report, for the period 1996 though 2005 donors

provided 95.9 million Metric Tons (MT) (grain equivalent) for emergency, project, andprogram food aid. U.S. food aid programs alone provided more than 50 million MTs offood aid or approximately 50% of the total.


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Overview of U.S. Food Aid Programs

For 20 years after passage of PL 480international food aid continued to beprimarily a USDA program with a strong

agricultural focus. Authorizations andappropriations came through the U.S.Congress agricultural committees, and theemphasis was on enhancing U.S.agriculture and agricultural trade throughhumanitarian programs that provided U.S. commodities to food deficient countries or topeople suffering from natural or man-made disasters that disrupted food supplies.Although food aid was considered part of agriculture, USAID has always been a veryactive partner, especially in the programming and actual delivery of food aid and food aidprograms to populations in need. USAID shares responsibility with USDA for the PL 480titles, and the two organizations have worked closely in improving various aspects of

food aid.

The 1990 Farm Bill significantly changed this emphasis of food aid programs. The billdesignated improved food security in the developing world as the overriding objective.The legislation included addressing famines and carrying out feeding programs as two ofthe uses of food aid, but also included combating malnutrition, alleviating the causes ofhunger, and promoting economic and community development, greatly broadening themission for food aid programs. Management responsibility was also better defined, withUSDA given responsibility for Title I, FFP, and the 416(b) programs. Later theMcGovern-Dole FFE program was added to USDAs food aid program portfolio. USAIDwas given sole responsibility for Title II programming and for the Title III grant program.

USDA retained responsibility for the procurement of U.S. commodities used in allprograms, compliance with specifications, cargo inspection, and coordination of foodshipments.

Procurements of commodities are carried out by FSA through its KCCO. Awards aremade on the basis of lowest landed cost. This means that freight bids and commoditybids are solicited at the same time with awards made on the basis of which combinationof freight and commodity results in the lowest overall cost to the final destination. FSAawards the commodity contract and allocates the various commodities to ports based onoffers or bids received. Actual award or booking of freight is made by USAID or FAS onbehalf of the implementing organization. The United Nations (UN) World Food

Programme (WFP) books the freight for the donated commodities that it receives.

Table 1 provides an overview of U.S. food aid programs.

The 1990 farm billdesignated improved

food security in thedeveloping world as theoverriding objective.


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Table 1: Overview of U.S. International Food Aid Programs

Program Title I Title II Title III Section 416(b)Food forProgress

Food forEducation

(FFE)

Bill EmersonHumanitarianTrust (BEHT)

Governing Legislation PL 480 PL 480 PL 480 Agricultural Act of1949

Food for ProgressAct of 1985

Farm Security &Rural InvestmentAct of 2002

Farm Security &Rural InvestmentAct of 2002

Funding Source Appropriations Appropriations Appropriations CCC (surpluscommodities)

CCC and Title IAppropriations

Appropriations CCC and PL 480reimbursements

Type of Program(Loan/Grant)

Loan Grant Grant Grant Loans or Grant Grant Commodityreserve

Program Constraints No appropriationsfor FY 2007 andfunds notrequested forFY 2008

Various mandates see narrativeunder programtrends

Noappropriationssince 1999 soprogram isinactive

Availability ofCCC-ownedsurplusagriculturalcommodities;domestic feedingprograms havepriority

Under CCC,$15 million foradministrativecosts and$40 million for non-commodity,primarily freightcosts

Reserve limited to4 million MT

Admin FundsProvided?

Yes Yes Yes No Yes Yes No

Program Focus Sale of U.S.agriculturalproducts withlong-term loans;payback in local

currency or U.S.dollars

Promotion of foodsecurity, economicdevelopment, andemergencyassistance

Support long-term economicdevelopment

Direct feeding andbarter

Private sectordevelopment ofagricultural sectorsin developing andemerging

democracies

Increasing schoolattendance andliteracy rate indevelopingcountries

Commodityreserve for globalfood emergencies

Commodity Source U.S. commerciallyprocured

U.S. commerciallyprocured

U.S.commerciallyprocured

U.S. surpluscommodities,CCC inventory

U.S. commerciallyprocured

U.S.commerciallyprocured

U.S. commodityreserve


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Chapter 2: Legislative Impacts on the Future ofU.S. Food Aid

Debating the 2007 Farm Bill

ll the international food aid programs are authorized in the Farm Bill,which currently expires September 30, 2007. Therefore, some actionwill be necessary to maintain these authorities. While these programs

are a small part of the Farm Bill there is already extensive discussion ofpossible changes, including an Administration proposal discussed below andrecommendations from PVOs and others. Among the subjects being discussedare changes to the BEHT, expansion of cash to support feeding programs, andgreater protection of development food aid, which has been reduced in recentyears to allow greater funds for emergency food aid. In addition, and at therequest of the Senate Agriculture Committee, GAO has prepared a reportfocusing on the costs of current food aid processes and improving efficiency.

In the Presidents 2006 budget,legislative language wasproposed to transfer $300million from PL 480 to a famineaccount, administered byUSAID, to locally purchasenon-U.S. commodities for use inemergency food aid programs.Farmers, agribusiness, and some PVOs that use food aid to financedevelopment projects opposed the proposal, and it was rejected by House and

Senate appropriators. A similar proposal in the FY 2007 budget submissionalso was rejected by the appropriations committees. The Administrationincluded in its FY 2008 budget request authority to use up to 25% of the TitleII funds for such local and regional purchases to meet emergency needs. TheAdministrations 2007 Farm Bill proposal includes the same language. There

is some discussion of a pilot program for this authority to determine ifreactions to disasters can in fact be improved through local or regionalpurchases. Such a pilot could be included in either an appropriation bill or theFarm Bill. While the goal of maximizing the number of people who receivefood aid often necessary to maintain life has support from manyconcerned, there is also apprehension that such authority would significantly

reduce the long-standing political support for these programs.

Concern has also been raised by various supporters of food aid that PL 480Title II is not being used to support development as was primarily intended.Since FY 2003, the sub-minimum mandate (discussed further in Chapter 4)has been waived so emergencies could be dealt with. This has hamperedongoing and proposed development projects that are intended to deal with thecauses of food shortages and other humanitarian issues.

A

U.S. grown food willcontinue to play theprimary role and will bethe first choice inmeeting global needs.

Secretary Johanns


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With the possibility that emergency needs stemming from conflict and natural events willincrease, this concern is growing. The current and likely future U.S. Government budgetconstraints can be expected to add to this debate on how to balance the use of food aidresources to immediately save lives or to support longer term livelihoods for poor people.

Defining the Bill Emerson Humanitarian Trust

Some groups have proposed that the BEHT be looked at as the vehicle for providingemergency food assistance. The BEHT is a U.S. grain reserve held by CCC and isintended for humanitarian use in the event of unanticipated global food emergencies orwhen U.S. markets for food aid commodities are tight. The Secretary of Agricultureadministers the reserve and is authorized to hold up to 4 million MT of agriculturalcommodities. In case of an international emergency, USAID must submit a releaserequest to the Secretary of Agriculture. The legislation governing BEHT is not totallyclear on the conditions that must be met for a release. Questions have arisen as to whetheror not available Title II funds have to be used first and whether or not this should include

funds needed to cover the sub-minimum for development projects. CCC officials indicatethat the current BEHT inventory is less than 1 million MT, although reimbursements orrepayments from PL 480 or other sources have created a cash reserve of approximately$107 million. Authority for the BEHT is up for renewal, and it is expected that Farm Billdiscussions will address the purposes of the trust, conditions for release, andadministration of the trust including the replenishment and reimbursement process andthe definition of an emergency. The position of the Administration, according totestimony by FAS Administrator Yost before the U.S. Senate Committee on Agricultureon March 21, 2007, is that cash rather than a commodity reserve provides the ability torespond quickly to emergency situations and avoids the costs associated with storingcommodities. This position fails to address whether an actual commodity reserve would

be available for release if U.S. markets for food aid commodities were tight.

It is also expected that the various mandates for Title II procurements will be discussedduring 2007 Farm Bill deliberations. In addition, some in Congress are supporting anincrease in the McGovern-Dole FFE program and some in the PVO community areseeking an increase in the FFP program.

Regulating the Sale of Food Aid Commodities

All the active non-emergency food aid authorities (Title II, FFP, and FFE programs)allow for monetization (sale) of some portion of the donated commodity in the recipientcountry. Generated funds are used to cover the implementing organizationsadministrative costs and/or to fund certain aspects of their development projects. MostPVOs, agricultural trade organizations, the Administration, and congressional committeessupport monetization as a needed tool for food aid programs.

Monetization of donated commodities differs significantly from regular export sales.Countries receiving food aid often have developing or non-competitive markets,infrastructure is limited, and there may be significant delays between the sale and exportof the donated commodity, making it difficult to negotiate a sales price that is equivalent


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to the world commercial price. And while the Bellmon Amendment of 1985 requiresPVOs to ensure that local markets or commercial imports are not negatively affected bythe introduction of food aid commodities, these things do occasionally occur. Someinexperienced PVOs have exacerbated this problem by not doing enough to ensure thatthey receive competitive prices for their commodity.

Looking ahead, U.S. food aid programs involving monetized commodities willundoubtedly be more closely scrutinized by USDA and USAID officials and thoseinvolved with monitoring international trade agreements. Implementing organizationswill need to clearly demonstrate that their commodity sales are carried out in a way thatdoes not disrupt local markets and do not represent unfair competition to commercialimports. PVOs can alleviate many of these concerns by subcontracting this task to a well-respected and reputable monetization agent specialized in these large and riskytransactions.


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Chapter 3: Organizational Restructuring andManagement Improvement

Recent Findings from GAO and USDAs OIG

he GAO was directed by the Senate Committee on Agriculture,Nutrition, and Forestry to complete an analysis of U.S. food aidprograms with emphasis on logistical planning, contracting,

transportation, and program monitoring. The final report was issued in April2007 as GAO-07-560. The report cites concerns regarding the food aidfunding and planning process that leads to peaks in demand, transportationcosts, legal restraints, delivery delays, inadequate coordination betweenstakeholders in tracking food deliveries, and inability of USDA and USAIDto adequately monitor performance by PVOs. It is expected that the finalreport will be considered in the 2007 Farm Bill discussions.

The USDA OIG issued an auditreport a year earlier in March2006 titled Foreign AgriculturalService Private Voluntary

Organization Grant Fund

Accountability. In developingthe report, OIG reviewed theFAS controls for monitoringgrant implementation for eight PVOs. Although OIG determined that six ofthe eight PVOs had generally complied with their agreements, it found someweaknesses in FAS monitoring of PVOs compliance with their program

agreements. OIG stated that FAS controls did not provide reasonableassurance that program objectives were met or that funds were spentappropriately. In the case of one PVO, OIG found that mismanagement ofprogram funds resulted in the loss of $2.2 million in food aid funding. Lack ofadequate staffing and the inadequacy of an FAS internal informationtechnology system were contributing factors to deficiencies identified in itsmonitoring controls. FAS is taking steps to implement recommendationscontained in the report to improve FAS monitoring controls and theaccountability of PVOs. PVOs can expect greater oversight of their programsin the future.

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Various challengesimpede the efficiencyand effectiveness ofU.S. food aid.

GAO


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USDAs Foreign Agricultural Service

Until 2006, responsibility for food aid programs in FAS had been spread over threedivisions reporting to the Deputy Administrator, Export Credits. On November 13, 2006,the FAS Administrator announced implementation of a reorganization plan for the

agency. Responsibility for all food aid programs was placed in the Food AssistanceDivision reporting to the Deputy Administrator for Capacity Building and Development.The newly established division has three branches: Food for Development, SchoolFeeding and Humanitarian Assistance, and Transportation and Logistics. It is expectedthat the new structure will provide a more direct focus on FAS food aid programsincluding better monitoring of implementing organizations compliance with their

agreements.

USDAs Farm Service Agency

Within the FSA, the Deputy Administrator for Commodity Operations (DACO) hasresponsibility for procurement-related activities for all food aid programs. DACO alsomanages inventories of CCC-owned commodities and the BEHT. Policy issues andcoordination with the programming offices of USAID and FAS are handled by theCommodity Procurement Policy and Analysis Division in Washington, D.C. The KCCOin Kansas City, Missouri, serves as the operational arm for DACO and performs theissuance of tenders for commodities and freight and awards and contract managementafter award. It also assists with development of commodity specifications. Prior to FY2000, contract activities were carried out under CCC authorities as opposed to completecompliance with the Federal Acquisition Regulations (FAR). Given that commoditydonation activity had almost completely shifted to procurement through commercialsources as opposed to utilization of CCC inventories, the USDA Office of General

Counsel (OGC) advised that KCCO needed to bring its activities into compliance withthe FAR as quickly as possible. In September 2005, KCCO reported that all contractactivities were being carried out in accordance with the FAR. KCCO also completed areorganization in FY 2006 designed to better use staff skill sets and expertise.Procurements for international food assistance had been split between the BulkCommodity Division that purchased bulk commodities and the Export OperationsDivision that purchased processed and bagged commodities and transportation services.Under the reorganization, all procurement activities for international feeding programswere moved to the International Procurement Division.

USAIDs Food for Peace Office

In 1995, USAID began to refocus Title II food aid. In a major new policy statement,Food Aid and Food Security, new geographic and programmatic priorities wereidentified. Major changes in Food for Peace programs included giving more priority tocountries where food insecurity was the greatest; improving household nutrition,especially for children and mothers; and alleviating the causes of hunger by increasingagricultural production. In addition, greater emphasis was placed on monitoring andevaluating the impact of food aid programs, including working with PVOs to improve


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web-based Electronic Bid Entry System (EBES) was recently implemented that enablescommodity vendors to provide offers via the web in response to invitations that are alsoprovided via the web. The Freight Bid Entry System (FBES) was also recentlyimplemented and allows ocean carriers to provide firm fixed bids for the transportation ofcommodities. Once the commodity and freight offers are received, a computer program is

used to identify the combination that provides the lowest landed cost. Awards arenormally made within 24 hours of the opening of the electronic offers. The introductionof these new systems is expected to result in millions of dollars in savings to thegovernment.

In 2004, an interagency study involving FAS, USAID, FSA, and others was authorizedby OMB to identify requirements for a U.S. Government-wide food aid reporting system.A more complete consolidated database such as this would greatly facilitate reviews ofthe effectiveness and impact of the various food aid programs.

Strengthening of Coordinating or Consultative Activities

Food Assistance Policy Council

The Food Assistance Policy Council is chaired by the Secretary of Agriculture or hisdesignee (normally the Under Secretary for Farm and Foreign Agricultural Services) andincludes senior representatives from USDA, USAID, Department of State, and OMB.The council serves as a coordinating body to deal with cross-cutting food aid issues.Issues currently being reviewed by the council are food aid quality, the 2007 Farm Bill,and challenges facing food aid policy in the WTO discussions.

Food Aid Consultative Group

The Food Aid Consultative Group was established to review and address issuesconcerning the effectiveness of USAID regulations and procedures governing foodassistance programs. The group is chaired by the USAID Administrator and includes theUnder Secretary for Farm and Foreign Agricultural Services; the USAID InspectorGeneral; a representative of each PVO and cooperative participating in food aidprograms; representatives from African, Asian, and Latin American indigenous NGOsdetermined appropriate by the USAID Administrator; and representatives fromagricultural producer groups in the United States. The group provides input on changes inTitle 7, Chapter 41, and Subchapter III, which govern USAID food aid programs.


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International Food Aid Conference

In 1999, USDA and USAID held the first formal International Food Aid Conference inKansas City, Missouri. The conference brings together individuals and organizations thathave an interest in food assistance programs. Participants include representatives fromforeign countries, PVOs, commodity and transportation vendors and associations, U.S.Government officials including U.S. politicians, university scientists, and policy andoperations staff from USAID and USDA. The conference has been held annually since1999 in April or May in Kansas City, Missouri. It has grown from less than 300participants in 1999 to more than 700 in 2007. The conference provides updates on policyissues in food assistance and workshops on various operational aspects involved in foodaid programs. It represents an effort by USAID and USDA to provide transparency totheir programs and provides these agencies with an opportunity to gain valuable feedbackfrom various stakeholders involved in food aid.


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Figure 1: Size of 416(b) over Time (MT)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2003 2004 2005 2006 Title I

Title I provides for the sale of U.S. agriculture commodities on concessional credit termsto governments and private entities in developing countries. Repayment for U.S.agricultural commodities sold under this title can be made in either U.S. dollars or inlocal currencies with terms of up to 30 years and a grace period of up to 5 years.Emphasis had been on facilitating sales to developing countries that had the potential tobecome commercial markets, were undertaking measures to improve their food securityand agriculture development, and demonstrated the greatest need for food. The FFP

program can also use Title I funds.

Demand for this program has declined inrecent years as global interest rates havedeclined and as most countries have movedfrom government commodity procurementand private markets have developed. Afunding request for Title I was not includedin the 2007 budget and no funds have beenrequested in the 2008 budget. Because TitleI funds have been a major source of funding for the FFP program, it will be limited to

what can be provided under CCC authority. The current constraint under that authority isa ceiling of $40 million that can be spent on transportation expenses; this dollar ceilingoverrides the tonnage floor of 400,000 tons, which is also in the law. (See Food forProgress narrative for additional information.)

A funding request forTitle I was not includedin either the 2007 or2008 budgets.


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Title II

Title II, which is by far the largest U.S. international food aid program recently fundedat well over a billion dollars a year provides for the donation of U.S. agriculturalcommodities to meet emergency and non-emergency food needs including support for

food security goals. Donations of agricultural commodities to meet emergency needs maybe provided to governments and PVOs and inter-governmental organizations such as theUN World Food Programme. Non-emergency assistance may be provided only throughPVOs.

Development food aid can be used to directly supplement the diet of young children andpregnant and lactating mothers and in food-for-work programs that mobilize poor peoples labor to build local commercial and agriculture infrastructure. Donatedcommodities can also be monetized in recipient countries to support basic health projects,nutrition education, agricultural extension and training, and local capacity building.

Emergency food aid uses donated U.S.commodities to assist vulnerable groupswho, because of natural or man-madedisasters and/or prolonged civil strife,require food assistance to survive theemergency and begin the process ofrecovery. Categories of beneficiariesinclude internally displaced persons,refugees, newly resettled or new returnees, and vulnerable resident populations.

The USAID Food for Peace Office is responsible for programming Title II food aid.Fifteen countries were identified in 2005 as the most food insecure countries based on theweighted average of percentage of children stunted, percentage of population living under$1 per day, and percentage of population undernourished. Afghanistan, The DemocraticRepublic of Congo, and Guinea are expected to be added for FY 2008.

For FY 2008, 18 priority countries have been identified:

Afghanistan

Bangladesh

Burkina Faso

Chad Democratic

Republic of Congo

Ethiopia

Guatemala

Guinea

Haiti

Liberia

Madagascar Malawi

Mauritania

Mozambique

Niger

Sierra Leone

Uganda Zambia

In the last 5 years, theamount of food aidgoing to meetemergencies around theworld has doubled.


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Figure 2: Size of Title II over Time (000 MT)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

FY03 FY04 FY05 FY06

Title III

Title III authorized the USAID Administrator to donate U.S. agricultural commodities toforeign governments. Proceeds from the sale of these commodities within the recipientcountry could be used to support long-term economic development. While it wasmodestly funded in the past, the program has been inactive for a number of years. It is notexpected to become active and may be a candidate for deletion in the 2007 Farm Bill.

Food for ProgressThe FFP program was authorized by theFood for Progress Act of 1985 and providesfor the donation or credit sale of U.S.commodities to developing and emergingdemocracies to support democracy and theexpansion of private enterprise. Theprogram may be carried out using Title Iappropriated funds or through mandatoryCCC authorities. Under its authorities, CCC may procure commodities for the programwith the limitation that CCC expenditures for non-commodity expenses (normally freight

charges) in connection with the procurements may not exceed $40 million and not morethan $15 million may be used for administrative costs. Because the cash authorized bythis legislation is limited to administrative costs, FFP programs often includemonetization. The funds derived from monetization can be used to provide necessaryprogrammatic support to the feeding activities, or in cases of 100% monetization thefunds may be used for economic development activities primarily in the agricultural orrural sectors. No Title I funds were appropriated in FY 2007 and none have beenrequested for FY 2008; therefore, given the limit on administrative funds and the

Without Title I funds tosupplement it in the future,

the Food for Progressprogram will be limited towhat can be providedunder existing CCC

authority.


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prohibition on using this pool of funds for program activities, implementing organizationswill need to look to monetization to provide the cash needed to carry out programactivities. The estimated spending level for FY 2007 is $161 million, and for FY 2008 itis $163 million. In recent years FAS has made an initial announcement of awards, and asthe proposals are finalized and firm costs determined it has been able to make additional

awards later in the fiscal year.

Multi-year agreements up to a maximum of 3 years may be authorized. However,implementation of successive years is subject to a favorable review of the programs

progress and the availability of funding. FAS will also consider proposals involving theshipment and monetization of commodities in one year with activities carried out inmultiple years.

FFP projects focus on private sector development of agricultural sectors such asimproved agricultural techniques and marketing systems, farmer education, expanded useof processing capacity, development and introduction of new foods, and/or developmentof agriculturally related business.

Priority countries for FY 2008 were designated based on the following factors: (1)countries with per capita income below $3,465 based on World Bank statistics; (2)countries with a greater than 20% prevalence of undernourishment based on FAOstatistics; and (3) countries with positive movement toward freedom, including politicalrights and civil liberties.

1

For FY 2008, 31 priority countries have been identified. Changes from the 2007 prioritylist include the removal of the Democratic Republic of Congo and the Philippines and theaddition of the Dominican Republic, Guatemala, Namibia, Haiti, and Papua New Guinea.FY 2008 priority countries are as follows:

Afghanistan Armenia Bangladesh Bolivia Burundi Central African

Republic Djibouti Dominican

Republic

Ethiopia The Gambia

Guatemala Guinea-Bissau Haiti Honduras Kenya Liberia Madagascar Malawi Mali Mongolia

Mozambique

Namibia Nicaragua Niger Papua New

Guinea

Senegal Sierra Leone Sri Lanka Tanzania Yemen

Zambia

1 Derived from the Freedom House rankings


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Proposals for FY 2008 are due no later than June 29, 2007, and FAS plans to makeawards by December 2007 or January 2008. Proposals are evaluated on the basis ofagricultural focus (25%), ability to quantify program impact (15%), proposal quality(30%), commodity management and appropriateness (10%), and organizational capabilityand experience (20%). Estimated impact is considered in the final selection of

competitive proposals.

For FY 2007, 14 proposals (2 using Title I funds) have been approved. It is estimated thatthese proposals will procure commodities totaling only 160,920 MT, the lowest figure inthe last 5 years. During FY 2006 more than 620,000 MT of commodities were procuredfor FFP programs in 28 countries. Similar amounts were provided in FY 2003 andFY 2004. Procurements were also low in FY 2005 when 271,000 MT were procured andshipped to 16 countries. Bulk grains represented more than 50% of the procurementsmade for FFP in FY 2005 and FY 2006 with oilseeds representing approximately 30% ofthe procurements for the same periods.

Figure 3 illustrates the size of the FFP program for FY 2003 through FY 2007.

2

Figure 3: Size of FFP over Time (000 MT)

0

100

200

300

400

500

600

700

FY03 FY04 FY05 FY06 FY07

2 Figures for FY 2007 are planned.


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Food for Education

The McGovern-Dole FFE program was authorized by the 2002 Farm Bill following asuccessful pilot program. The FFE program helps support education, child development,and food security for some of the worlds poorest children. Emphasis is on improving

school attendance and increasing the literacy rate, especially for females. PVOs andforeign governments may participate in this program. Direct cash grants can beprovided

3; however, proposals must also include donated commodities because the

intention of the authorizing legislation is to provide nutritional food in food insecurecountries along with improved education. Donated U.S. commodities may occasionallybe monetized in the recipient country to generate proceeds to support school feeding andnutrition projects. Multi-year and consortium agreements may be authorized.

Priority countries for FY 2008 have been established based on the following criteria: (1)per capita income below $3,465 based on World Bank statistics, (2) greater than 20%prevalence of undernourishment based on FAO statistics, and (3) adult literacy rates

below 75%. Priority countries must also be a net food importing country, demonstrategovernment support for education, and be free of civil conflict that could impedeimplementation of the program.

For FY 2008, 29 priority countries have been identified. Changes from the FY 2007priority list include the removal of Laos, Guinea-Bissau, and the Sudan and the additionof Guatemala, Haiti, and Papua New Guinea:

Afghanistan

Angola

Bangladesh

Burundi Cambodia Cameroon Central African

Republic

Chad Democratic Republic

of Congo

Ethiopia

Guatemala

Guinea

Haiti

Kenya Liberia Madagascar

Malawi

Mali

Mozambique

Niger

Pakistan

Papua New Guinea

Rwanda

Senegal Sierra Leone Tanzania

Togo

Yemen

Zambia

FY 2008 proposals are due no later than July 31, 2007, and FAS plans to approveproposals in December 2007 or January 2008. Evaluation of proposals is based on thefollowing: (1) need for the program (12%); (2) graduation/sustainability (15%); (3)proposal quality, which includes implementation, costs, and situational analysis (38%);

3 FFE cash grants can be used for many activities beyond just project administration and some have suggested to Congressthat the FFE model should be looked at for Title II.


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(4) appropriateness of the commodities to be used and the overall monetization plan

(15%); and (5) experience and organizational capacity factors (20%).

Eleven proposals were approved for FY 2007, and it is estimated that commoditiestotaling more than 88,000 metric tons will be procured. This included funding for fivemulti-year projects that had been approved in previous fiscal years. During FY 2006more than 130,000 MT were procured and shipped to 16 countries in support of thisprogram. This was down from the 181,000 MT procured in FY 2004. In the first year ofthe program (FY 2004), bulk grains represented 35% of the commodities procured;however, in FY 2006 procurements shifted to processed commodities (33%) and oilseeds(35%) with bulk grains accounting for only 20% of the total procured under the program.The shift to processed commodities was likely a result of implementing organizationsusing cash grants with less reliance on monetization of bulk grains to generate neededprogram funds.

Authorized funding for the program has been approximately $100 million annually forFY 2003 through FY 2007, and the Presidents FY 2008 budget request includes

$105 million for this program. FY 2008 funds totaling $41 million have already beencommitted to multi-year projects approved in previous fiscal years, leaving $64 millionfor new projects. Reviews of the program have been very positive and all indications arethat it will continue at least at the same level as in previous years. The 2007 Farm Billdiscussions are not expected to propose any significant changes in the program, althoughsome in Congress are proposing to increase it and to fund it through the CCC.

Figure 4 illustrates the size of the FFE program for FY 2004 through FY 2006.

Figure 4: Size of FFE over Time (000 MT)

0

20

40

60

80

100

120

140

160

FY04 FY05 FY06

100

180

200


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Program Summary Overview

The variety of food aid authorities provides the necessary flexibility for dealing withchanging world events. As trends change, so too does the mix of food aid programs onoffer. Figures 5 and 6 illustrate the change in relative size among food aid programs

between FY 2003 and FY 2006. In FY 2003, 416(b) was a relatively small but significantfood aid tool, but due to economic subsidy changes in the United States, by FY 2006 itsshare had been reduced to nothing. The two figures also illustrate the enduringimportance of Title II.

Figure 5: Relative Sizes of Programs in FY 2003

Figure 6: Relative Sizes of Programs in FY 2006

416(b) FFP Title II

416(b) FFE FFP Title II

2%

20%

78%

5%

0%

23%

72%


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Chapter 5: Country and Regional Implications

n looking at country trends and attempting to identify reasons for thesetrends it is necessary to look at what has happened in the food aid arenafor the past 7 to 10 years. Africa has always been a heavy recipient of

food aid, especially under the Title II program. According to USDA andUSAID officials, however, prior to FY 2000 India was also a large recipient,receiving more than 30% of the total Title II funds. One PVO carried out achild development program in concert with the Indian government for most ofthe 1990s. It is estimated that atits high point, the program wasoperating at more than 20,000locations throughout India.There were also large directfeeding and food distributionprograms operating in the

country. These programs wereheavy users of corn-soy blend and packaged vegetable oil. In 2001 an agencyof the Indian government raised concerns about the fact that vegetable oil wasmanufactured from GMO soybeans. Some shipments were stopped at the portof entry and other shipments had to be rerouted. Although U.S. agenciesprovided significant evidence that the vegetable oil did not represent a healthhazard, it became obvious that the Indian governmental agency was notwilling to accept this conclusion. At about the same time, India donatedsignificant amounts of wheat in response to a food crisis in the region,demonstrating that although there were populations within India that neededfood assistance, the country as a whole had become a net exporter of food and

should be able to find the resources to assist its own population. Therefore,some Title II resources that had been programmed for India were shifted toother parts of the world including Iraq and Afghanistan in 2002 and 2003.Commodity donations were also used to deal with severe food crises in NorthKorea and in Africa through donations to the WFP.

When the Soviet Union collapsed the FFP program was used to assistcountries that had once been a part of it. With the fall of communism, theinfrastructure broke down in many of these countries and stipends for retiredworkers were either reduced or ended. In response to the crisis, increasedfunds were provided for Title I and the FFP programs, and USDA took the

leadership role for U.S. food aid to this region. In addition, surpluscommodities were provided through the 416(b) program.

I

Africa has receivedmore than 50% of allfood aid procured overthe last 4 years.


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Figure 8: Largest Recipients of Food Aid, FY 2003 to FY 2006

0%

0% 5% 10% 15% 20%

Ethiopia

Sudan

Southern Africa Region

Uganda

Afghanistan

Pre-Positioned

Bangladesh

Eritrea

Kenya

Haiti

Recent analysis conducted by IAS revealed that large regional volumes of food aid canmask inequalities within those regions. The study revealed that more than a dozenpriority countries have in fact been significantly underserved by U.S. food aid during thelast few years, including many places in Africa, when shipments are compared to the sizeof the population in dire need. Efforts should be made by PVOs and the U.S. Governmentin the coming years to specifically target these neglected countries.


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Periodically, issues have been raised regarding the use of GMO soybeans in theproduction of vegetable oil, as in the case of India discussed above; however, in mostcases USDA and USAID, with the assistance of the American Soybean Association, havebeen able to deal with these concerns, and it is expected that vegetable oil will continueas a significant component of food aid. Figure 10 illustrates the percentage of total

oilseeds by type for FY 2003 through FY 2006.

Figure 10: Percentage of Total Oilseeds by Type, FY 2003 to FY 2006

0% 20% 40% 60% 80% 100%

Vegetable Oil

Soybean Meal

Soybeans

Soy Protein

30% 50% 70% 90%10%

FY 2003

FY 2004

FY 2005

FY 2006

Pulses

Pulses (beans, lentils, and peas) have also represented approximately 6% of the annualprocurement commodities for food aid over the past 4 years. Significant quantities areprocured for Latin America, but they are also used in feeding programs in Africa. Pulsesare normally bagged in the United States so they are counted as part of the value addedmandate for Title II. From available data, it does not appear that significant quantities aremonetized. Figure 11 illustrates the percentage of total pulses by type for FY 2003through FY 2006.


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Figure 11: Percentage of Total Pulses by Type, FY 2003 to FY 2006

0% 20% 40% 60% 80% 100%30% 50% 70% 90%10%

Peas

Beans

Lentils

FY 2003

FY 2004

FY 2005

FY 2006

Processed Commodities

The procurement of processed commodities has fallen by more than 40% since 2003.This likely reflects the growing importance of emergency food aid shipments, which tendto be shipped in bulk. Corn-soy blend, fortified cornmeal, corn-soy milk, and wheat-soyblend are products that are manufactured primarily for the food aid market. Theseproducts were developed in response to a need for highly nutritional products that couldbe used in emergency situations and in feeding programs for vulnerable populations infood deficient countries. Because processed products are more or less specializedproducts there are a limited number of vendors, making it difficult for the industry torespond to spikes that may occur in times of emergency.

Flour has also represented a significant portion of the commodities purchased for foodaid although the tonnage has declined dramatically from the 265,000 MT procured in2003. In talking to industry representatives, it appears that in the past U.S. flour was ahighly viable commodity for monetization programs. However, during the past 10 years,flour mills have been built in even the poorest developing countries. As a result,monetizing wheat provides a more suitable alternative to flour for implementingorganizations. Figure 12 illustrates the percentage of total food aid by commodity type,including processed, for FY 2003 through FY 2006.


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Figure 12: Percentage of Total Food Aid by Commodity Type, FY 2003 to FY 2006

0 500,000 1,000,000 1,500,000 2,000,000 2,500,000

Bulk Grains

Oilseeds

Pulses

Processed

FY 2003

FY 2004

FY 2005

FY 2006

Ethanol and Its Effect on Food Aid Prices

Significant amounts of corn and corn products are used in food aid programs. Bulk cornrepresented 9% of the bulk grains used for food aid in 2006, and Corn-soy blend and cornmeal products represented more than 37% of the total processed commodities procured inFY 2003 through FY 2006. Corn ethanolproduction has dramatically increasedover the past few years driven by the risein fuel prices. Corn futures have been up,

reflecting the increased demand for corn.However, American farmers have reactedin their traditional manner and haveincreased plantings to more than 90million acres while the predictions hadbeen that plantings would be 88.5 million acres. It is difficult to predict what the long-term effect will be on food aid programs. Some have predicted that there will be a shift tocorn production from soy beans, cotton, and pulses and in some areas from rice andwheat. Others have indicated that the demand for corn for ethanol may be a temporarysituation as other, less expensive products are used to produce ethanol. In the short term,however, increased prices for corn will have a direct effect on corn and corn products

used in food aid programs and could have an indirect effect on the prices of othercommodities.

Although there has been increased emphasis on nutrition in feeding programs,implementing organizations should attempt to obtain a commodity mix that will meet therecipients needs but which will also be as economical as possible. This generally meansa heavy emphasis on whole grain products with complements of vegetable oil and pulses

Ethanol-fueled expectations

of higher corn prices

contributed to recordcorn plantings in the

United States last year.


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to provide a more balanced diet. In every case, where monetization is planned PVOs mustlook at market opportunities for commodities as well as the expected return.

The United States continues to be the largest provider of food aid in the world, currentlyproviding more than one-half of all global food assistance. Although there have been

significant changes in the emphasis of the food aid programs, commodities used, andregions served, donation of U.S. commodities has remained a mainstay of the programs.This has maintained broad political support from a variety of interest groups. Commoditygroups generally support the programs because they provide a market for their membersproducts. Rural politicians support the programs in part because they are looked on assupporting their farmer constituents. More liberal politicians tend to support the programsbecause of the humanitarian aspects, while faith-based organizations and other non-profits may support the programs because they enable them to serve the neediest of thepoor. Efforts should continue to be directed at maintaining this broad support as changesin the program are advocated or considered.

The programs also face many challenges. It is undoubtedly due to the dedication of thelimited agency staff involved and of the implementing organizations that these programshave run as efficiently and effectively as they have. However, given the GAO and OIGaudits it is obvious that the U.S. agencies involved must improve their internal processesincluding their information technology systems in order to avoid further criticism fromthese oversight organizations.


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Appendix AAbout IAS

Helping You Manage the Business of Food Aid

IAS provides a number of solutions to PVOs that can add value to their mission and

impact the lives of those who depend on them. We specialize in performing criticalstrategic and logistical tasks so that PVOs can stay focused on their work.

Customized Research and Analysis

We leverage the experience of our network of food aid professionals to provide insightinto the business of food aid: where PVOs should focus their limited resources, whichproposals should receive the most consideration, and which commodities would be mostappropriate. Food aid donors often change priorities and administrative requirementsfrom year to year, so to stay ahead of the trends PVOs need a global perspective. Ourconsultants have spent their careers in food aid and put their knowledge to work for ourclients.

Proposal Development

Our annual food aid report is a key resource for our clients, and our comprehensive foodaid database enables IAS to undertake customized reporting and strategic analysis ofspecific countries and programs. We provide research and content for proposaldevelopment efforts, and our knowledgeable experts will critically review proposals toassist our clients in meeting donors highest evaluation standards.

Monetization

Over the last decade monetization has become a key source of funding for PVOs, anddonors pay close attention to sales plans during the proposal evaluation phase. IAS is atrusted monetization agent that specializes in generating the maximum amount ofprogram funds from a grant of food aid commodities. Our clients regularly receive apremium for their commodities. We can do this consistently because of our globalnetwork of contacts with commodity processors, buyers, and officials.

Logistics

Our network of contacts allows us to quickly react to issues such as phytosanitary barriersthat can delay shipment and ultimately your program. IAS coordinates with forwarderson behalf of our clients to ensure that freight tenders are in order. Where sales have been

negotiated, we monitor the delivery of export documents to the bank to guarantee fullpayment on the letter of credit.


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Program Management

Our professionals can be engaged to perform essential program administrative tasks suchas project backstopping and reporting to donors. We believe strongly in making certainthat key decision-makers are aware of our clients successes. IAS resources may beengaged as necessary, allowing PVOs to focus on their core competencies and minimizeoverhead expenses.

Monitoring and Evaluation

Monitoring is an ongoing requirement of every project, and our professionals havemanaged some of the largest food aid monitoring efforts. But monitoring is only the firststep in a full evaluation of the impact and effectiveness of food aid. As food aid donorsfocus more attention on this area in the future, the most successful PVOs will be thosethat can demonstrate results. IAS works with our clients to develop appropriateperformance indicators from the start and ensures that they meet their targets.

Finally, our goal is to ensure that our clients are compliant with all appropriate donorregulations, because this is the single most important criterion for winning follow-onwork. We do this by professionally and transparently managing all aspects of themonetization of commodities.


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Appendix BList of Reference Sources

U.S. Food Aid Programmes, 19542004: A Background Paper for the OECD DACWorking Party on Aid Effectiveness. Riley, Barry (2004)

Testimony by FAS Administrator Yost to the U.S. Senate Committee on Agriculture,March 21, 2007

Transcript of Remarks by Secretary of Agriculture Mike Johanns to the InternationalFood Aid Conference, Kansas City, Missouri, April 18, 2007

Foreign Assistance, U.S. Agencies Face Challenges to Improving the Efficiency andEffectiveness of Food Aid, Testimony regarding draft GAO report by Thomas Melito,Director, GAO, International Affairs and Trade, March 21, 2007

Congressional Research Service, Previewing a 2007 Farm Bill, CRS Report for Congress,

January 3, 2007, Joe Richardson, Domestic Social Policy Division, CRS

USDA 2007 Farm Bill Proposals

Foreign Agricultural Service, Private Volunteer Organization Grant Fund Accountability,Report No. 07016-1At, March 2006, USDA, Office of Inspector General, SoutheastRegion

Office of Food for Peace, Bureau for Democracy, Conflict, and Humanitarian Assistance,Strategic Plan for 2006-2010, May 2005, www.usaid.gov

Reconsidering Food Aid: The Dialogue Continues. Emmy B. Simmons, Final Report,

February 2007

Report to Congress on Food Aid Monetization, August 10, 2001, Foreign AgriculturalService, USDA

Agency for International Trade Information and Cooperation, Food Aid and the DohaNegotiations on Agriculture, November 2005, www.acici.org

USAID, Celebrating Food for Peace, 1954-2004: Bringing Hope to the Hungry. (2004)

U.S. Government (1985). Food Security Act of 1985, Title XI, Food for Progress Act

U.S. Government (1990). Public law 101-624, Subtitle A, Agricultural TradeDevelopment and Assistance Act of 1954, November 1990

USDA, FAS (2004) Global Food for Education Report.www.fas.usda.gov/excredits/gffei.html

USAID, Food for Peace (2005) PL 480 Title II, Program Policies and Proposal InterimGuidelines, March 14, 2005, www.usaid.gov


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us food aid: what lies ahead? - daniel whitehead 2007

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