Food Aid programs have had a consistent presence in agricultural policy since 1949. The legacy they have created extends into today. Not only does the Food Aid programs provide essential nutrition to millions of people across the globe, they also provide key aid for a variety of programs designed to improve the quality of life for many. It may surprise many to know that these programs are located in the Farm Bill. They are also jointly funded through the Senate Armed Services Committee.
The Food Aid programs have become an important export market for U.S. wheat producers. Exploring the various Food Aid programs gives one a glimpse into the expansive nature of the programs, their importance, and in many cases some heart warming stories. Our ability to donate in-kind food, cash transfers, or the monetization of commodities provides us with many different avenues to provide aid. Recently I did a presentation for my church on the Food Aid programs. I broke down the following:
What are the different programs?
How do we provide aid?
Where do we send aid?
What commodities do we send – and what does it mean for wheat?
Where are the success stories?
What are the different Food Aid programs?
USAID has numerous programs they can utilize to provide aid for the world’s hungry. The Farm Bill authorizes the partial funding for these programs while the Senate Armed Service Committee fills in the gaps. The Farm Bill includes the Food For Peace, Food For Progress, Bill Emerson Humanitarian Trust, and the McGovern-Dole International Food and Child Nutrition Program. The origins of the Food Aid program trace back to 1949 but in the intervening years we have changed the programs and modernized them into their current forms.
The Food For Peace program is the oldest as it was established in 1961 by President Kennedy. The Food For Progress program was created in 1985 while the McGovern-Dole International Food and Child Nutrition Program was created in 2002. The Bill Emerson Humanitarian Trust is a rarely used extension of the Food For Peace program. The Bill Emerson Humanitarian Trust allows the government to release food stocks during emergency situations, when time is of the essence.
The McGovern-Dole International Food and Child Nutrition Program allows us to advance food security, nutrition and education for girls around the world. This program often works in conjunction with the others to provide aid for recipients. The aid includes school meals, teacher training, nutrition programs for pregnant and nursing mothers, and nutrition programs for infants and preschoolers. The program is designed to transfer management to the local governments. Since 2002 we have transferred oversight of various programs to local governments for 2.25 million children worldwide.
Several of the original recipients of the Food Aid program have grown into large export markets for the United States: Japan and South Korea. Our various programs as well as other factors allowed those countries to recover from wars waged on their soil and allowed them to develop into thriving economies. Japan is now the most valuable export market for wheat producers, as well as an infrastructure powerhouse. Many of the elevators throughout Montana are owned by Japanese companies or their subsidiaries. South Korea is also a top market for Montana wheat producers.
The intent of the programs is not necessarily to develop countries into large export centers, but the relationships we build through Food Aid programs do leave lasting impressions. These programs have various goals however they have successfully provided food and food aid for millions as well as helping to establish and expand the agricultural economies of many of the recipients. Over the past decades the programs have evolved from providing the majority of their funding to respond to natural disasters and have shifted towards providing aid for emergencies as a result of conflict and violence. Several decades ago 80% of the aid we sent to global recipients was for natural disasters, today that number is 20%.
How do we provide aid?
These programs allow the U.S. to send aid in various forms:
Local & Regional Purchases
These various programs allow the U.S. the flexibility to choose the best option for each situation. In-kind purchases are utilized when local food is unavailable and local infrastructure has failed. The downside to in-kind purchases is the time in which it takes to get food to its destination. Often in-kind transfers can take 4-6 months to reach their destination. Local & Regional Purchases are used when local food is available and large scale purchases will not negatively impact the prices for those who are able to buy their own food. Local & Regional purchases are able to reach recipients far faster than In-Kind transfers. The voucher program and cash transfers are similar programs that are often used for highly mobile recipients (nomadic tribes and refugees for example), when rapid response is essential, and when recipients are forced to spend all of their income on food. Cash transfers are used if the government is responsible enough to distribute cash to recipients and vouchers are used when the government is not trustworthy.
Monetization is slightly more complex than the other programs, but it is also the program that has some incredible success stories. I will detail a few further down. The monetization program allows the U.S. to accept applications for improvements to local agricultural infrastructure. We accept a proposal, send a commodity (wheat for example) to be sold into the local communities. The proceeds will then be utilized by an organization to improve the infrastructure, provide training for local farmers, or improve the supply chain to increase exports.
Where do we send aid?
We send aid around the globe for recipients impacted by natural disasters and violent conflicts. This can include hurricanes, El Nino exacerbated drought, refugee crisis, and large scale conflict. Some of the countries who are currently the recipients of aid are: Sudan, South Sudan, Bangledesh, Ethiopia, Yemen and Malawi. We are also sending aid as a result of large scale violence in Syria, Iraq and Yemen.
Much of the aid heads to countries within the two green lines where the highest concentration of the world’s population lives. This band is also not necessarily the best place to produce some of the most important staple commodities, including wheat, corn and soybeans.
What commodities do we send – and what does it mean for wheat?
Our total Food Aid in-kind and monetized donations equal less than one percent of our total commodity exports. They include wheat, corn, soybeans, corn meal, rice, bulger, dry edible beans, sorghum, wheat flour, lentils, dry peas, corn/soy oil blend, and many others. For Montana specifically Food Aid are important export markets for wheat, dry peas and lentils. The wheat industry as a whole accounts for 40% of the total “in-kind” food aid. Food Aid programs send more in-kind and monetized wheat donations than any other commodity.
Currently Ethiopia is the top export market for wheat through the Food Aid program. Hard Red Spring Wheat and Soft White Wheat are in particularly high demand by the Food Aid program. The importance of the program is one of the many reasons U.S. Wheat Associates devotes time to maintaining relationships throughout the US AID programs. They also have a Food Aid Working Group with a liaison from the National Association of Wheat Growers. Last year U.S. Wheat Associates took several of their directors and officers on the U.S. Aid trip to Tanzania. This trip allowed them to see the program work first hand, it also equipped one of their officers to testify in Congress on the importance of the programs.
There are many success stories as a result of the various Food Aid programs. Several of my favorites are Benin, Dominican Republic, and Laos. Oddly enough, none of these utilized wheat for monetization (in the case of Benin and the Dominican Republic) however these case studies highlight the broad impacts of the monetization programs through Food For Progress and Food For Peace.
Benin is a small country in western Africa. They are the #5 producer of cashews in the world, however they were #11 on the world export list. The United States does not have any domestic cashew production however demand has been rising in recent years. Through the Food Aid monetization program the U.S. awarded a $36 million award to monetize rice. The monetization allowed the country to expand their cashew processing capacity by threefold. They also worked with growers and the National Farmers Association to provide training and education on post-harvest handling, farm economics, and other metrics. These programs allowed the country to expand and improve their supply chains and eventually led them to securing a contract with Walmart to export their cashews worldwide.
The Dominican Republic is an important trade partner with the United States and is a member of the Central America – Dominican Republic Free Trade Agreement (CAFTA). CAFTA was signed in 2004 and represented the first free trade agreement the United States had signed with developing economies. The Dominican Republic is a crucial import market for vegetables, avocados, bananas, pineapple, papaya, and cocoa. Despite its importance they had issues meeting sanitary/phyto-sanitary requirements for import. Sanitary/phyto-sanitary requirements are part of any trade agreement and are designed to protect import countries from foreign crop diseases, pests, and to ensure food safety.
Through a monetization program we monetized rice with the funds used to provide crucial education, supply chain and infrastructure updates, and post-harvest handling guides to ensure their products met the necessary sanitary/phyto-sanitary regulations for import into the U.S. The U.S. depends on cocoa imports from the Dominican Republic for our peanut, dairy, and sugar industries. For every $1 of cocoa imports we bring in from the Dominican Republic we generate $4 in export value for the peanut, dairy and sugar industries in exported finished products. It is essential to maintain this valuable import market for our own export markets.
Lastly, Laos highlights the successes through the McGovern-Dole World Food Program. Laos struggles with food insecurity with 44% of children under 5 listed as stunted and 27% are underweight. The program recipients numbered over 800,000 as we provided several different forms of Food Aid. We monetized rice as well as provided local fruits and vegetables for the program. Through the programs USAID also ensured the local governments improved their supply chains to secure rice supplies, increase access to fruits and vegetables, and created the National Policy on Promoting School Lunch. Laos highlights a country that badly wants to provide for and help ensure the food security of their people but simply lack the funds to do so. The aid provided through the McGovern-Dole World Food Program in combination with our other Food Aid programs literally saved the lives of thousands of children.
The Farm Bill contains programs that are well known: nutrition, crop insurance, Title I commodity programs, and conservation. These programs are essential to our own food security, but the smaller programs buried within the Farm Bill are often the most exciting. It is fascinating to read about and experience the impacts of the Food Aid programs. It is fascinating to see the impacts these programs have on our own export markets, the legacy they have left, and the economies they have built.
For the wheat industry, they are critical programs, but for their recipients they are quite literally a matter of life or death. As the 2018 Farm Bill hopefully is finalized in the coming weeks it is exciting to see the Food Aid programs remain a staple part of the Trade Title. They will remain essential programs not only for our global recipients but our own domestic markets and our export markets.