US policy makers, lobbyists and development organizations are in throes of debate over the Obama administration’s proposal to reform US food aid. The proposal, incorporated in the President’s 2014 budget, calls for a shift of some $1.4 billion of the food aid budget from Title II of the Food for Peace Act situated in the Farm Bill (and thus part of the US Department of Agriculture budget) to various development and emergency accounts controlled by USAID. It also would allow up to 45% of that shifted budget to be spent on foods purchased locally in developing countries.
For nearly 60 years, US food aid policy required that the aid be sourced from foods grown and packaged in the US. And it required that majority of that aid be transported on US flag ships. There was nothing particularly surprising about this policy: food aid originally served as a mechanism to dispose of surplus food. This was the case not just in the US, but also in a number of other donor countries that found themselves awash in excess food production in the 1950s and 60s.
As I outline in my recent book on the politics of food aid, food surpluses didn’t last, and a number of donors – the European Commission, Canada and Australia – untied their food aid at various points in the past 15 years. Untied food assistance allows the donor to provide funds to either purchase food closer to the source of hunger, a practice known as local and regional purchase, or to provide cash or vouchers to those in need so that they can purchase their own food on local markets.
A growing body of research, including by the US Government Accountability Office, highlights numerous benefits to untied food assistance. Untied food aid is some 30-50% less expensive than shipping food half way around the world. And it can reach recipients within a month or two instead of the 4-6 months typical of tied food aid. Locally purchased food is also much more likely to be culturally appropriate. And importantly, untied food assistance is far less likely to distort food markets. Rather than having to compete with a flood of free or cheap food from abroad, farmers in recipient countries benefit directly from the sale of their crops.
The US is by far the world’s largest donor, providing around half of the world’s food aid. Because its food aid has remained largely tied to US-sourced food, the practices of the US – rife with gross inefficiencies and the source of market distortions – have enormous implications for recipient countries.
Intense lobbying by those that benefit from tied food aid – the shipping industry, the grain industry, and certain development NGOs – has helped to keep US food aid firmly tied all these years. These groups have made the case that tied aid helps the US economy by providing jobs, and that it provides more aid than would be the case if it were untied (because donors might lose interest in providing it). These arguments are looking increasingly flimsy, especially in the face of the evidence on just how problematic tied food aid is in practice. Indeed, a number of development organizations now back a policy of untying.
This isn’t the first time a US President has sought to untie US food aid. George W. Bush included untying in his budgets every year in the period 2006-2009. But each time, Congress rejected the proposal, and removed it from the budget request. In the height of the food crisis in 2008, the US Congress did allow some untied food aid through International Development Assistance budget line, and endorsed a small pilot for local and regional purchases. But overall Congress has favored a continuation of tied food aid.
Why have some donor countries been able to untie their food aid while the US has had a much harder time of it? I make the case in my book that good ideas alone are not enough to shift food aid policy. Interests and institutions mediate how those ideas are received.
A unique set of circumstances enabled a policy shift in each of the donors that untied their food aid. But some clear patterns are evident. In each case the voice of private corporate interests had become weakened in relation to the economic interests of the state to save costs by making aid programs more efficient. And in each case the responsibility for food aid policy was shifted from ministries of agriculture to ministries of development aid. In short, the relative weight of public and private interests shifted, allowing for an institutional change that then insulated food aid policymaking from the lobbyists that benefited from tied aid.
This institutional change is what the US is currently attempting – to move food aid policymaking out of the clutches of the agricultural policymaking setting of the Farm Bill, and into the development policymaking arena of the US Agency for International Development. Without this institutional shift, it is unlikely that US food aid could be untied.
Several factors are working in the President’s favor this time around. It appears to be an ideal moment for the US to attempt this important policy change. Both parties in Congress appreciate the need for budget cuts and the economic interests of government may well trump the private interests that benefit from tied aid. Moreover, the 2008-12 Farm Bill has expired, and new farm legislation will be negotiated later this year. This opens a unique opportunity to shift the food aid budget to a new location.
Taking an incremental approach of only partially untying food aid to start with is also wise. The proposal calls for only a portion of the food aid budget to be moved from the Farm Bill to the USAID, and even then will only allow up to 45% of food aid provided via USAID to be untied. This follows Canada’s approach to untying that started with a 50% untied policy in 2005 which in turn opened the door for 100% untying in 2008 that met with little resistance.
And it helps that USAID has highlighted that even this incremental step will save some $125-185 million per year, while reaching 2-4 million additional people. In other words, it has made the case that the savings are not at the expense of those who need the aid most, marking it harder for opponents to argue that the policy is misguided.
Finally, the proposal also includes side payments to those who are disaffected by the policy, which should reduce their resistance. $25 million of the efficiency savings will be transferred to the Maritime Administration of the Department of Transportation, and additional cost savings will be transferred to the development NGOs that implement the food aid programs.
Congress may still reject the proposal to implement these significant reforms to US food aid. If it does reject it, the move will simply reinforce the fact that political interests and institutional structures drive policy decisions as much as the ideas on which they are based.