United States Fails to recognize downfalls of 2014 Farm Bill
In the attached article Erin Lentz and Christopher Barrett analyze the United States' government's (USG) policy on international food assistance, as it pertains to various organizations, mainly Food for Peace through the Unites States Agency for International Development (USAID) . USAID has long since taken a keen interest in the instability of many African nations, as they struggle to balance the needs of their people, and civil unrest, poverty, or natural disasters. However, it has recently come to light how "behind the times" the United States is in its food assistance programs. Food being sent to 44 different countries faces a variety of regulations and stipulations that essentially hinder any possible economic growth in the countries receiving assistance. Currently, most of those funds (around $2.2 on average) must be used to make food aid purchases in the United States and then those purchases are shipped from the United States to recipient countries on U.S.-registered ships at a
relatively high cost. To be exact, in "Fiscal Year (FY) 2006, shipping on U.S.-flagged vessels cost 46% more than shipping the aid at
competitive freight costs . In fact, more recently in FY 2012, American taxpayers spent more Food for Peace aid funds on transport and handling (45%) than on food (40%)." (Lentz)
As the 2008 Farm Bill stands, the allocated funds not only do not support local and regional farms in countries where an increase in economy would be exponentially more beneficial than a donation, but also secure a significantly decreased food supply than it would if USAID were to have a greater flexibility with allocations. However, the recent adoption of the 2014 Farm Bill has relaxed some of the restrictions on the use of those funds in providing food aid. As a result, "USAID now has more flexibility to give operational agencies cash for programming that complements food deliveries (for example, maternal and child health center staffing)." (Lentz) The revised farm bill also increases fund allocations from 13 percent to 20 percent, which is around a $100 million increase. This funding increase does little to reduce the increase in shipping and purchasing costs of American grain and transportation. The USAID has estimated that, if 25% of emergency resources were to be untied as in President Obama’s FY2015 budget request, those funds could be used to reach up to 2 million more people per year. Fully untying resources could result in an additional 4 to 10 million more people being reached.
Unfortunately, the lack of reform is tied to key special interest groups affected by food assistance reform i.e., cargo shipping companies. The U.S. Department of Defense, USAID, and independent economic researchers estimate that ending cargo preferences in the 2014 Farm Bill would only affect six to 11 vessels, none of which are used by the military or have significant demand. "The number of workers affected would likely measure in the low hundreds, split between mariner and shore-based support positions. These potential job losses should be compared against 4-10 million acutely malnourished people who would receive food aid at the extensive margin with the resulting cost savings. In other words, roughly 10,000 additional hungry people are not being fed for each domestic shipping job protected. Those are stark trade offs." (Lentz)
If you would like to view to full document, simply click the attached document below.
relatively high cost. To be exact, in "Fiscal Year (FY) 2006, shipping on U.S.-flagged vessels cost 46% more than shipping the aid at
competitive freight costs . In fact, more recently in FY 2012, American taxpayers spent more Food for Peace aid funds on transport and handling (45%) than on food (40%)." (Lentz)
As the 2008 Farm Bill stands, the allocated funds not only do not support local and regional farms in countries where an increase in economy would be exponentially more beneficial than a donation, but also secure a significantly decreased food supply than it would if USAID were to have a greater flexibility with allocations. However, the recent adoption of the 2014 Farm Bill has relaxed some of the restrictions on the use of those funds in providing food aid. As a result, "USAID now has more flexibility to give operational agencies cash for programming that complements food deliveries (for example, maternal and child health center staffing)." (Lentz) The revised farm bill also increases fund allocations from 13 percent to 20 percent, which is around a $100 million increase. This funding increase does little to reduce the increase in shipping and purchasing costs of American grain and transportation. The USAID has estimated that, if 25% of emergency resources were to be untied as in President Obama’s FY2015 budget request, those funds could be used to reach up to 2 million more people per year. Fully untying resources could result in an additional 4 to 10 million more people being reached.
Unfortunately, the lack of reform is tied to key special interest groups affected by food assistance reform i.e., cargo shipping companies. The U.S. Department of Defense, USAID, and independent economic researchers estimate that ending cargo preferences in the 2014 Farm Bill would only affect six to 11 vessels, none of which are used by the military or have significant demand. "The number of workers affected would likely measure in the low hundreds, split between mariner and shore-based support positions. These potential job losses should be compared against 4-10 million acutely malnourished people who would receive food aid at the extensive margin with the resulting cost savings. In other words, roughly 10,000 additional hungry people are not being fed for each domestic shipping job protected. Those are stark trade offs." (Lentz)
If you would like to view to full document, simply click the attached document below.
| The Negligible Welfare Effects of the International Food Aid Provisions in the 2014 Farm Bill |
