Remarks by Administrator Rajiv Shah at the Center for Strategic and International Studies (CSIS)

Wednesday, April 10, 2013
Subject 
The Future of Food Assistance

[As Prepared]

About a year and a half ago, I saw famine for the first time. At the world’s largest refugee camp, 50 miles from the Somali border, I met mothers who had carried their children for weeks across famine-stricken and terrorist-held lands.

One young Somali mother named Habiba was forced to make the heartbreaking decision – knowing she could not carry both children to safety – to leave one behind on a hundred-kilometer journey.

Across the region, the worst drought in 60 years had thrown 13.3 million people into crisis and brought more than 750,000 people—mostly women and children—to the brink of starvation.

As the suffering mounted, we mobilized a large-scale humanitarian response to save lives as quickly as possible. But too often we couldn’t reach those in greatest need—even as the crisis worsened before our eyes.

Armed groups openly affiliated with al Qaeda blocked our access, attacked our food convoys, and targeted food distribution centers. In the hardest hit areas of southern Somalia where these militants ruled, food aid couldn’t save lives.

But cash transfers could.

Through electronic cash transfers and vouchers, we could extend a lifeline to communities our food aid couldn’t reach. Thanks to this flexibility, we were able to help more than 90,000 families in inaccessible and insecure areas buy readily available food in their communities.

By tracking food prices in about 50 different markets, we saw sky-high prices correlated with the famine fall to reasonable levels as market forces moved food to those at risk. And we knew that children were eating their first real meal in days—maybe weeks.

By looking at the data, you can almost see the precise moment when American ingenuity—enabled by flexibility, innovation, and sciencehelped turn the corner on the crisis.

Without this lifeline of cash, our ability to alleviate suffering from the deadly conditions of famine would have been crippled.

In an increasingly complex world—where extreme ideology, extreme climate, and extreme poverty routinely pushes millions to the edge of survival and threatens our own homeland—we have to be both agile and creative.

Today, there are 18 million hungry people in the Sahel—where tackling vast vulnerability across eight countries demands such flexibility and innovation. And every day, we see the need for life-saving aid grow more pressing in Syria, where the Assad regime’s brutality makes importing large quantities of food aid dangerous and impossible in certain areas.

From Guatemala to the Democratic Republic of the Congo, South Sudan to Yemen, a groundswell of human vulnerability not only presents a moral crisis. It presents a real economic and security imperative.

Yet at a time when global needs are growing, our role as the world’s humanitarian leader is in danger of slipping. Since 1954, we have helped feed a billion people in over 150 countries.

Initially, it was an act with no apparent downside. Our farmers had an outlet for their surplus food. Our ocean carriers filled their vessels with food aid. And vulnerable people halfway around the world received their next meal.

But over the last 60 years, the world has changed. Today, agriculture is the second most productive aspect of the American economy, and we just experienced the strongest four years in history for agricultural trade.

Between now and 2050, demand for food will be so strong that agricultural production will have to grow 60 percent just to keep up.

Rather than surpluses, we talk of shortages. And as a result, the cost of doing business has grown by 200 percent—eroding our humanitarian reach and impact.

As more efficient tools surfaced and best practices evolved, we’ve learned that the current approach to food aid can become—at times—an impediment to its very own mission.

Today we face a choice. A choice between allowing our leadership to recede quietly into history or renewing it with bold and meaningful action. It’s a choice that requires innovation—but it is precisely the same spirit of innovation that has defined American agriculture for generations—giving us seed genetics, tractors with GPS systems, and 200 percent increases in wheat yields.

THE PRESIDENT’S PROPOSAL

Released earlier today, the President’s 2014 budget includes reforms to food aid that will enable us to feed an estimated four million more hungry children every year with the same resources.

Let me be clear: we are not ending food aid. In fact—we’re doing the opposite. The President’s proposal commits to a more rapid, cost-effective, and life-saving food aid program that pairs the continued purchase of American food aid with a diverse set of tools, including local procurement and food vouchers.

As we ask for this increased flexibility, we commit to maintaining our purchase of American food—and increasing our focus on the higher value, more nutritious products that are so critical to improving child nutrition and saving lives.

We commit to supporting our NGO partners, especially faith-based organizations, through a Community Development and Resilience Fund.

We know that shipping volumes have decreased 64 percent during the past decade, and we have included specific support in the proposal for the American flag shipping industry to ease this transition—already well underway.

And through these reforms, we will establish a new fund for contingencies so that we are prepared to respond to unforeseen emergency needs around the world.

THE FACTS

The President’s proposal reflects the growing, bipartisan consensus that the traditional approach to development must be modernized to help us efficiently meet the economic and moral challenges of our time.

The truth is that for years our practice in food assistance has lagged behind our knowledge. In the last decade, more than 30 different studies—from Cornell University to Lancet medical journal to the Government Accountability Office—have revealed the inefficiencies of the current system.

They’ve shown that buying food locally—instead of in the United States costs—much less—as much as 50 percent for cereals and as much as 31 percent for pulses. That’s because the average prices of buying and delivering American food across an ocean has increased from $390 per metric ton in 2001 to $1,180 today.

These costs eat into precious resources designed to feed hungry people—causing more than 16 percent of Title II funds to be spent on ocean shipping.

Buying food locally can also speed the arrival of life-saving aid by as many as 14 weeks. Those 98 days take on an entirely new meaning when you consider that waiting every additional day—every additional hour—can mean the difference between life and death.

Buying food locally is not only faster. It can also be a more effective approach to achieving our ultimate goal of replacing aid with self-sufficiency. In Bangladesh, we worked with Land o’ Lakes to buy cereal bars locally, helping create a commercially viable and nutritious product for the local market, while supporting U.S. jobs at home.

But even rapid food aid means little if it does not address the nutritional needs of vulnerable children.

Over the last several decades, the science of saving lives during a crisis has evolved tremendously. We know that chronic malnutrition accounts for 35 percent of preventable child death. We know that high-quality, high-nutrition foods during the first 1,000 days from pregnancy through age 2 can make all the difference. And we know that ready-to-use foods can lower the risk of disease compared to foods that must be mixed with water.

In 2011, we completed a two-year food aid quality review in partnership with Tufts University that resulted in the most far-reaching improvements to U.S. food aid since 1966.

As a result, we’re developing the next generation of American food commodities to meet the diverse needs of an entire population, from a nursing mother to a malnourished child.

This process was groundbreaking and intensive—involving years of research and development. Today, more than 10 new products are coming on line, demonstrating the central role America’s world-class agricultural and food system can serve in a modern food assistance program.

As the science of saving lives evolved, we have developed a new set of tools, including cash transfers and electronic vouchers, to enhance the generosity of American food aid with greater flexibility, speed, and scope.

In Kilis refugee camp on the Turkey-Syria border, we’re giving debit cards to families so they can shop for their own meals at local stores. These cards have cut administrative costs by half, helped local businesses thrive, and offering families a meaningful measure of dignity.

But although we have these tools, we do not have the flexibility under the current system to use them where we need them.

This year, 155,000 fewer children will receive support in Somalia because we do not have enough flexibility to use cash to address the ongoing emergency in areas where our food aid cannot go. Each one of these children—even if only moderately malnourished—is 3 to 4 times more likely to die than a well-nourished child.

THE COMMITMENTS

That’s what today’s reforms are about—giving us the flexibility of a modern approach so that we can save more lives. But we cannot do it alone. Under the President’s proposal, we remain absolutely committed to our partners who have advanced Food for Peace’s life-saving mission for generations. We remain committed to our agricultural partners in the United States.

Moving to a flexible cash-based approach will not end the contribution of American agricultural to our critical mission. The President’s proposal includes a 55 percent floor for 2014 so the majority of our funds will be used for the purchase and transport of American commodities.

We’re going to keep working with companies like Mana in Fitzgerald, Georgia, Tabatchnick in Somerset, New Jersey, and Edesia in Providence, Rhode Island to make a fortified peanut butter that can help revive severely malnourished children in a matter of weeks.

We’re going to keep working with soy, wheat, pulse, and rice farmers across America whose crops feed hungry children from Pakistan to the Sahel—perhaps in newer, more nutritious formulations.

And we’re going to keep working with groups like Breedlove in Lubbock, Texas, which last year supported more than a dozen small faith-based groups across the world to alleviate hunger among marginalized communities, including the disabled and the elderly.

Because the truth is that there is a deep and abiding sense of community and compassion that connects a small rural town in America to a refugee camp on the border of Syria or Somalia.

I have met farmers from Fort Benton, Montana to agricultural students at Mississippi State who are proud to be part of this strong legacy that has endured for generations. In fact, in Iowa, I joined Bishop Richard Pates on his local radio show, and we discussed at great length ways local communities could get involved in the mission of ending hunger. I described a program called Farmer-to-Farmer that last year has helped more than 780 American farmers share their knowledge and skills with farmers in developing countries. 

Through Feed the Future, we will expand this program and continue to build new partnerships with land grant universities, agricultural companies, and faith based organizations.

We also remain committed to our maritime shipping partners. We know that the U.S. merchant fleet has traditionally benefited from the carriage of American food aid and other government commodities. In spite of this support, however, the fleet has continued to dwindle—now reduced to a handful of ocean-going vessels. In order to lessen the impact of reform on the merchant fleet, $25 million of resources saved by reforming food aid will be shifted to the Department of Transportation’s Maritime Administration. The American merchant marine has delivered food to dangerous regions for decades, ably and safely. But let’s do it only when it makes good sense.

Finally, the President’s proposal maintains our commitments to our community development partners, whose local networks and long-standing community roots serve a vital role in helping advance the journey from dependence to dignity.

In just the last few months alone, we have disbursed $31 million in Community Development funds for five-year awards to 10 organizations working to strengthen the resilience of 1.7 million vulnerable people from Haiti to Mali. Administrated by Food for Peace, these programs are essential to our new emphasis on helping people avoid the need for emergency aid during a crisis.

In Uganda, Mercy Corps, ACDI/VOCA, World Vision, and World Hunger Aid are embarking on programs to help 645,000 people in the drylands of the Karamoja district cope with drought.

In Niger, Catholic Relief Services, Save the Children, and Mercy Corps are beginning new programs to combat malnutrition and improve agricultural yields—helping nearly 840,000 people stay in their homes and hold onto their livelihoods in a crisis.

We are committed to these partnerships because we know they can work.

I have visited communities where a recently completed evaluation showed clear evidence of improved household incomes, diets, and resilience in these programs. In fact, by including a special peanut paste designed to prevent malnutrition in the standard nutrition package, these projects actually reduced stunting by nearly 2 percent a year—three times the rate reported in nationwide health surveys.

MONETIZATION

We’ve largely been talking about reforms to the emergency side of Food for Peace. But 30 percent of the program is focused on these types of longer-term community development activities—helping people transition from dependence on food aid to self-reliance.

But too often, the way we support these programs—through a process called monetization—is inefficient and sometimes counter-productive.

It basically works like this. We provide these groups with food commodities in the countries where they are working. They take and sell these products in local markets. With the funds raised, they invest in agricultural production, health, and nutrition.

In 2011, the Government Accountability Office called this process “inherently inefficient” and found that it resulted in the loss of $219 million over three years. That’s an average of 25 cents on every taxpayer dollar spent on food aid.

Right now in the Democratic Republic of the Congo, we face a return on monetized commodities so low—51 cents on the dollar—that partners will be faced with cutting back programs if cash resources do not make up the difference.

In some cases, evidence has indicated that this practice actually hurts the communities we seek to help. At times, selling American food in local markets can deprive local farmers of the incentives and opportunities to develop their own livelihoods.

Several years ago, Peter Bell and Helene Gayle and the team at CARE made the groundbreaking decision not to monetize commodities on the commercial market anymore—choosing to forgo about $45 million from its budget rather than continue an inexcusably costly and potentially detrimental practice.

In Haiti, we ended monetization after the earthquake destroyed the nation’s only flour mill. Today, we’re seeing rice yields increase by 130 percent and corn by 340 percent—creating the basis of a stronger rural economy.

Increasingly, as we focus on places where local agriculture is underdeveloped, the practice of monetization runs the risk of becoming become less effective. The goal is moving from dependence to self-sufficiency—not the other way around.

DISPELLING THE MYTHS

But let’s be honest: we’ve been here before. Over the last decade, colleagues from both sides of the aisle have fought hard for food aid reform.

Under the leadership of President Bush, former USAID Administrator Andrew Natsios first proposed a series of pilots to demonstrate the effectiveness of local and regional procurement.

In 2008, Senators Lugar and Casey introduced the Global Food Security Act that included a dedicated fund for cash-based emergency assistance and local purchases.

And Representatives McGovern, McCollum, and Emerson and others have put forward legislation supporting modern advances in food assistance. 

But what has stood in our way of comprehensive reform is not our depth of commitment or reservoir of facts—but the persistence of myths, misinformation, and fears. 

I’ve heard the myth that we’re providing less food for the hungry. Just the opposite, we’re feeding million more children up to 14 weeks faster.

I’ve heard the myth that we’re deserting American agriculture. Just the opposite, we celebrate the role American agriculture plays in food security, and we’re modernizing the supply chain to create more effective American foods for undernourished kids.

I’ve heard the myth we are making U.S. Department of Agriculture programs, including McGovern-Dole and Food for Progress less sustainable. Just the opposite, we will continue to coordinate our purchases and shipments to achieve economies of scale.

I’ve heard that our food aid won’t be branded, and we’ll lose one of the most powerful visible images of American generosity. Today, I brought you an example of how we brand a bag of grain that’s procured locally in the DRC, so it’s clear the assistance comes from the American people.

I’ve heard that cash is harder to track than commodities, and it’ll be used to purchase TVs instead of food. Yet time and again, the evidence consistently shows otherwise. Vulnerable households spend the greatest portion of the cash on the food they desperately need—in many cases heading from voucher distribution points straight to market.

And I’ve heard the myth that, without agricultural earmarks, we won’t be able to protect funding for food aid in the years ahead.

It is true that many Americans believe foreign aid represents 25 percent of the national budget and ought to be cut.

That’s why Secretary Kerry gave his first official speech at the university founded by our first Secretary of State; to signal that he's going to fight this myth head-on—right at home.

He pointed out that while cutting foreign aid is a guaranteed applause line, it doesn't guarantee our security and it doesn't guarantee that we advance our values or interests.

In fact, he argued that when you describe what we do with less than one percent—the millions of lives we save or the
girls we help educate—many Americans believe we're actually not spending enough.

There's no guarantee for the future, that's true, but in my last three years as Administrator, I've seen the depth of passion and support Americans have for our work.

From a church in inner city Detroit that looks after an orphanage in Ghana to the nationwide response after the Haiti earthquake, I have seen passionate engagement from Americans of all backgrounds.

And in a time of seemingly uncompromising politics, I’ve seen leaders from both sides of the aisle stand together as champions for this global task.

CONCLUSION

At its foundation, the President’s proposal shares the bedrock principles of effectiveness and efficiency that serve as the clarion call for development today. It echoes the goal of development—not to perpetuate dependency, but to advance human dignity. And it speaks to the challenges of our time.

We know that more than 100,000 children died over the course of 18 months in Somalia. More than 100,000 boys and girls who had lives full of potential. 

Meeting their mothers at the refugee camp in Dadaab, I felt both the excruciating pain of the tragedy and the hope that American leadership could make a difference.

If we can bring efficiency and effectiveness to this work; if we can save more lives without asking for more money; if we can freely and flexibility harness the tools we’ve developed and the knowledge we’ve gained, then we can do just that.

Thank you. 

The Lugar Center Center for Strategic and International Studies Washington, DC

Last updated: September 22, 2014

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