How does the US Farm Bill affect food security in Sub-Saharan Africa?

30 May 2014

Abstract: Given the expected food insecurity in low-income countries in the future, the reforms to food aid currently being pursued in the United States (US) have important direct implications for food insecure countries and may influence global agricultural trade negotiations. 

The US 2014 Agriculture Act (Farm Bill), which revises the enabling framework for US food aid until 2018 (fiscal year) has left many questions unanswered. A great effort by the administration, sponsoring members of Congress, and many civil society organisations over three years has actually resulted in modest substantive changes.

Since 2006, successive US administrations have been attempting to free up the use of some funds appropriated for food aid and emergency humanitarian response in two ways:

  • some untying of humanitarian assistance to allow unrestricted procurement of whatever combination of foodstuffs is deemed most appropriate and can be delivered in a timely way;
  • using food aid funds where appropriate for other forms of food assistance – such as cash, tokens, as well as seeds, inputs, and tools for crisis-affected farmers, as recognised, for example, in the 2012 Food Assistance Convention.

In 2013 President Obama’s administration proposed:

  • allowing more than 50 per cent of funds to be available for local and regional procurement (LRP) when appropriate;
  • gradually phasing out monetisation, thereby limiting the ability of non-governmental organisations (NGOs) to  sell imported food on the local market to generate local currencies, and to provide compensation funds for NGO projects that would lose out;
  • making food aid part of foreign assistance rather than part of the US Department of Agriculture (USDA) budget.

These reform proposals are similar to steps taken by most donors in the Organisation for Economic Co-operation and Development (OECD) in untying almost all their food aid funding during the long, drawn-out Doha Development Round. In the end, it was a close call: the process and the way some domestic interests (notably, maritime businesses and unions, a minority of NGOs committed to monetisation, and a possible lack of enthusiasm on the part of the USDA) frustrated the proposals to reform food aid is well described by Jennifer Clapp in “Turning the tied?”

Most commentators agree that there are some detailed improvements, but no dramatic changes.  A consortium of US-based NGOs emphasises four positive aspects of the reform. First, LRP, introduced in the 2008 pilot project, has been regularised at the same level as the pilot, USD 80 million a year, equivalent to about 4 per cent of budgeted food aid appropriations in recent years.

Second, the proportion of funds under the US Agency for International Development (USAID) Title II Emergency and Development Food Assistance Programs that can be used for associated, and now more widely defined as non-food costs has increased from 13 per cent to 20 per cent, thereby reducing the need for monetisation. 

Third, there is provision for more transparency, including a requirement that when monetisation generates less than 70 per cent of the cost of acquiring, processing, and shipping, the food can be sold on the local market. Finally, the reform will fund more prepositioning of food for emergency responses.

However, in a trade context, monetisation and the instruments that the US deployed to provide highly concessional trade credits as emergency and development assistance when stocks are high and global markets weaken, remain in the enabling legislation (PL 480 Title I and Section 416 of the 1949 Agricultural Act ).

The actual effect of the reform, therefore, will depend largely on actual appropriations agreed by Congress and how the resources are deployed by the USAID, the USDA, and their partners and the uncertain conjuncture of markets and policy.  The outcome can be positive, as in 1992-93, or highly unfavourable, especially when global prices hike with low stocks intensifying food insecurity, particularly in low-income countries such as those in sub-Saharan Africa.

The battle for reform continues

The US administration’s proposition for 2015 that up to 25 per cent of emergency aid under Title II (equivalent to 12-13 per cent of total recent year appropriations) could be used for interventions, such as local or regional procurement of food, food vouchers, or cash transfers has received NGO support.

In contrast, the House appropriations sub-committee has left out of the 2015 agriculture budget bill all the funding for LRP.  The ">2014 budget approved by the House is also effectively proposing to transfer to the USAID budget  a possible USD 50 million of  extra costs incurred by the ‘minimum tonnage requirement’ that at least 50 per cent of the gross tonnage of US food aid be shipped on registered US-flag vessels by ending  reimbursements from the United States Maritime Administration. There is even a proposal to increase the minimum tonnage requirement from 50 per cent to 75 per cent in the Coast Guard and Maritime Transportation Act of 2014 currently before Congress. This could make emergency responses more inflexible, especially within a broadly constant budgetary envelope, thereby reducing the real value of the transfer to recipient countries and people. 

The outcome of the debate on these proposals will be a test of the impetus for reform.  Experience suggests that dramatic changes that pinch domestic interests are unlikely in a mid-term election year. If this is the case, recent practice offers the most likely picture of what to expect in the near term.

Business as usual: Possible implications for SSA

The scale, uses and sourcing of food aid in the 2011 report to Congress on US food assistance  provides a snapshot of what the extrapolation of recent developments might imply for food security in SSA. 

Final appropriations for all US food aid programmes were about USD 2 billion, broadly similar to the levels of the past decade. USAID also provided some USD 1.8 million of financial aid as humanitarian assistance.  The relative growth in such financial aid for humanitarian assistance and decline in food aid, which currently stands at about half of average annual levels in the 1990s, not only from the US but also other OECD donors, increases the flexibility of international responses to disasters and the ability to manage protracted humanitarian crises. This is why the importance of food aid, a declining and uncertain resource, should not be overstated. 

In 2011, SSA received some 3.0 million tonnes of food aid, including in-country local purchases; the US contributed 1.48 million tonnes. The sourcing of food aid highlights the sharply contrasting tying and untying practices of different donors: while 93 per cent of US assistance was directly transferred or shipped from the US, other donors provided only 20 per cent of 1,562 million tonnes as tied aid (half of that Japanese rice); 39 per cent was local purchases, and 53 per cent represented triangular transactions, acquired in third countries.  In 2011, 70 per cent of food aid was provided as emergency aid, 27 per cent as projected development aid with food security and nutritional improvement as declared objectives, and just 3 per cent was bilateral programme aid.

From a food security perspective, emergency food aid as categorised by the World Food Programme (WFP) can be broadly seen as intended to address acute food insecurity associated with humanitarian crises and natural disasters, causing vulnerability predominantly in SSA.  Again, there are widely divergent donor practices in sourcing: while the US provided approximately half of international emergency assistance to SSA largely as tied aid (94 per cent), other donors sourced only 6 per cent of their assistance directly, 39 per cent as local purchases, and 56 per cent from third countries.

The US contributed to emergency operations in 23 countries in 2011, with 51 per cent directed to 3 large-scale protracted humanitarian crises in 5 countries: Chad, Ethiopia, Kenya, Somalia, and Sudan. Other donors channel most of their humanitarian assistance through the World Food Programme (WFP), which is then responsible for ensuring timely and complementary assistance, combining local and international procurement with shipments from the US.  Some donors are also increasingly providing humanitarian assistance as cash, inputs, and tokens through the WFP and other NGOs.   The global and regional significance of US humanitarian assistance in saving lives and mitigating crises is widely acknowledged and implicitly recognised in the “safe box” for emergency aid in the Doha Development Round draft Agreement on Agriculture.

The US administration is acknowledging through its repeated proposals for more flexibility that tied aid with additional shipping and processing restrictions is on balance less likely to allow effective responses in times of disaster or humanitarian crises. However, recipient countries, relief agencies, and other donors, compelled by humanitarian moral imperatives, must deliver emergency assistance around the domestically created inflexibilities in the US food aid industry.

The US provides a greater share of its food assistance as projected development aid compared with other donors: 37 per cent as against 15 per cent in 2011 for SSA. Roughly 53 per cent of US development aid was also monetised, covering non-food costs direct distribution of food aid and local currency funding of social projects. At the micro level some USAID partners accomplish good things with project food aid, but tied aid and monetisation, as the OECD and the US Government Accountability Office (GAO) have found, are very cost-ineffective ways of transferring resources to promote food security.

Conclusion

To continue the reform effort is a must for the US administration and civil society; external peer group pressure may encourage those who want change to keep trying. Lack of progress could be a continuing source of friction in both aid and trade negotiations.

There is, however, a major issue of regional food security in SSA, as highlighted by the global price spike in wheat, rice, and maize in 2007-08, when food insecure countries had to adjust because they largely paid more to import less. 

Recent predictions of an emerging El Nino event in late 2014 point to another risk of intense regional food crisis similar to that in Southern Africa precipitated by the 1991-92 drought, though it is difficult to quantify with climate change.   This risk carries a more consequential weight than in 1992, because that crisis was contained by a combination of commercial imports, partially internationally financed and large-scale food aid, especially from the US. Markets during that time were weak, and surplus commodities were rapidly committed as aid. The likely levels of appropriations for food aid and the many accompanying restrictions could limit an early and adequate response should disaster strike.  This makes the moment a serious one for internationally coordinated contingency planning!

Author: Edward Clay Senior Research Associate, Overseas Development Institute (ODI) and the lead author of the OECD 2006 study, "The development effectiveness of food aid: does tying matter?"

See also Trade Policy Options for Enhancing Food Aid Effectiveness, ICTSD, May 2012

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