New AEI research suggests that all three US international food aid programs face rules that limit their efficiency in meeting their primary objective: providing aid to hungry children and adults in extremely poor countries that face severe food crises. Below are the key findings:
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Food aid waste
Since the 1980s, the management of US emergency food aid programs by USDA and USAID has been hamstrung by three requirements that prevent them from using efficient markets effectively to minimize the costs and maximize the benefits of those programs. The mandates redirect more than $250 million a year from the US foreign aid budget to maritime companies that own and operate US-flagged vessels—more than 40 percent of which effectively belong to foreign corporations, the maritime unions, and some NGOs engaged in providing food aid programs.
The Three Wasteful Food Aid Mandates
- Cargo Preference for Food Aid (CPFA), which requires at least 50 percent of all food aid to be sourced and shipped on US-flagged vessels.
- The requirement that more than 90 percent of all food aid to be sourced in the United States instead of from regions much closer to the areas of need.
- Monetization, the process by which some NGOs obtain income for their operations expenses and other budget items by shipping food from the US to the poor countries where they are working and selling it in local markets.
The Costs
Data on food aid freight rates since January 2012 show that freight rates for shipments of food aid on US-flagged ships averaged $50–60 per metric ton higher than shipments on more competitive and cost effective foreign-flagged ships. The total costs of CPFA, which prohibits competitive bidding on half of all food aid shipments, almost surely exceeded $200 million over the entire period.
Little or No Benefit
The main political rationale for preserving CPFA has been the need to maintain a viable oceangoing fleet staffed by trained mariners for military preparedness. Food aid shipments accounted for less than 5 percent of the total shipping capacity of the most militarily useful vessels between 2011 and 2013. Terminating CPFA would have no substantial effect on the availability of vessels required in extreme military circumstances, or of non-military personnel to serve on those vessels.
Effects on Humanitarian Aid
Terminating CPFA would enable the current US food aid budget to serve 1–3 million more desperately hungry people each year, with very substantial benefits for the US in terms of its global relations with developing countries. If mandating monetization and requiring that almost all food aid be sourced in the United States were also ended, then the annual savings in wasteful spending would be $250–400 million, enabling the US to help 4–10 million more people in dire need every year.
For more, please read the new AEI report by Stephanie Mercier and Vincent H. Smith,
“Military readiness and food aid cargo preference: Many costs and few benefits.”
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