International Food Aid Provisions of the 2008 Farm Bill

International Food Aid Provisions
of the 2008 Farm Bill
Charles E. Hanrahan
Senior Specialist in Agricultural Policy
Resources, Science and Industry Division
Summary
Provision of U.S. agricultural commodities for emergency relief and economic
development is the United States’ major response to food security problems in
developing countries. Title III in the omnibus farm bill enacted in June 2008, the Food,
Conservation, and Energy Act of 2008 (P.L. 110-246, H.R. 6124), reauthorizes and
makes a number of changes in U.S. international food aid programs.¹ Farm bill debate
over U.S. food aid programs focused generally on how to make delivery of food aid
more efficient and more effective. While most of the debate focused on P.L. 480 Title
II, the largest food aid program, the farm bill trade title also reauthorizes and modifies
other, smaller U.S. food aid programs. One of the most contentious issues was that of
using appropriated P.L. 480 funds to purchase commodities overseas, rather than U.S.
commodities, to respond to emergency food needs. The Bush Administration had asked
for this authority in its farm bill proposals, but many, though not all, of the private
voluntary organizations and cooperatives that use U.S. commodities for development
projects instead argued for a pilot project for local or regional purchases of commodities.
Introduction
Programs under the Agricultural Trade Development and Assistance Act of 1954,
referred to as P.L. 480, historically have been the main vehicles of U.S. international food
aid. Title II of P.L. 480, administered by the U.S. Agency for International Development
(USAID), is the largest U.S. international food aid program. Title II provides
humanitarian donations of U.S. agricultural commodities to respond to emergency food
needs or to be used in development projects. Funds available to Title II of P.L. 480 from

¹ The conference agreement on the 2008 farm bill was originally approved by the House and the
Senate as H.R. 2419 and vetoed by the President in May 2008. Both chambers overrode the veto,
making the bill law (P.L. 110-234). However, the trade title was inadvertently excluded from the
enrolled bill. To remedy the situation, both chambers re-passed the farm bill conference
agreement (including the trade title) as H.R. 6124. The President vetoed the measure in June

2008 and both chambers again overrode the veto, which made H.R. 6124 law as P.L. 110-246,

and superseded P.L. 110-234.

both regular and supplemental appropriations have averaged $2 billion annually since
enactment of the 2002 farm bill (2002-2007). Over time, however, other, smaller food
aid programs, administered by the U.S. Department of Agriculture (USDA), have been
authorized by Congress — Food for Progress in 1985, the Bill Emerson Humanitarian
Trust in 1998, and the McGovern-Dole International School Feeding and Child Nutrition
Program in 2003. For USDA-administered programs, the annual average funding over
the 2002 farm bill period has been $356 million.² Most of the farm bill food aid debate
focused on P.L. 480 Title II commodity donations.
P.L. 480 Food for Peace
The 2008 farm bill changes the name of the underlying P.L. 480 legislation from
Agricultural Trade Development and Assistance Act to Food for Peace Act and deletes
export market development as one of the objectives of the programs. This modification
of objectives is intended to reflect the approach — de-emphasis of export market
development for U.S. agricultural commodities and more emphasis on promoting food
security — taken in operating the program in recent years. Issues addressed included
policy objectives, funding levels, availability of food aid resources for non-emergency
(development) projects, and using local/regional commodity purchases to respond more
efficiently and effectively to food crises, among others.
P.L. 480 Title II. The 2008 farm bill amends the purposes of the Title II program
to clarify that food deficits to be addressed include those resulting from manmade and
natural disasters. Recognition that food deficits can be manmade brings the U.S.
definition of disaster more in line with the definition used by United Nations agencies
such as the World Food Program. The new farm bill adds promotion of food security and
support of sound environmental practices to the objectives of Title II commodity
donations, and requests that the administrator of USAID brief relevant congressional
committees before responding to disasters that result mostly from poorly devised or
discriminatory governmental policies. The new farm law also includes a Sense of
Congress declaration that in international negotiations the President shall seek
commitments of higher levels of food aid from other donors; ensure that food aid
implementing organizations be eligible to receive food aid resources based on their own
needs assessments; and ensure that options for providing food aid shall not be subject to
limitation, on condition that the provision of the food aid is based on needs assessments,
avoids disincentive effects to local production and marketing, and is provided in a manner
that avoids disincentives to local production and marketing and with minimal potential
to disrupt commercial markets. This declaration reflects a concern in Congress with the
issue of how Doha Round multilateral trade negotiations on food aid could affect U.S.
food aid policy and programs.

² The FY2002-FY2007 average includes commodities provided under Section 416(b) of the
Agricultural Act of 1949, another U.S. food aid program vehicle, which is permanent law and
does not require legislative reauthorization. Section 416(b) depends entirely on the availability
of commodities in Commodity Credit Corporation (CCC) inventories. As CCC inventories have
declined so have Section 416 donations. There have been no Section 416(b) donations since
FY2006.

Title II Funding. The 2008 farm bill extends authorization of P.L. 480 programs
through FY2012 and sets the annual authorization level for Title II at $2.5 billion. This
level of funding would be $500 million more annually than has been provided for Title
II under the 2002 farm bill each fiscal year through a combination of regular and
supplemental appropriations. But as this authorization is discretionary, it will be up to
appropriations bills to set the amount of annual Title II funding. With a view to providing
more cash assistance to organizations — private voluntary organizations (PVOs),
cooperatives, intergovernmental organizations — that implement Title II food aid
programs, the farm bill increases the range of funds available for administrative and
distributional expenses to between 7.5% and 13% of funds available each year to the
program (appropriations, carry-over, and reimbursements) . (The range of available Title
II funds for these purposes under the 2002 farm bill was 5% to 10%). Additionally, the
2008 farm bill provides $4.5 million for FY2009-FY2011 to study and improve food aid
quality (e.g., eliminate spoilage).
Minimum Volume of Commodities. The new farm bill extends the requirement
that the Administrator of USAID make a minimum level of 2.5 million metric tons
(MMT) of commodities available each fiscal year through 2012 for distribution via Title
II. Of that minimum, not less than 1.875 MMT is to be made available for non-
emergency (development) projects. This mandated volume of commodities for
development food aid has rarely been met. The requirement can be waived, and
frequently has been, if the Administrator of USAID determines that such quantities of
commodities cannot be used effectively or in order to meet an emergency food security
crisis.
“Safe Box” for Non-Emergency (Development) Food Aid. In recent years,
more Title II funds have been allocated to emergency relief than to non-emergency
(development) projects. In FY2007, for example, USAID allocated $866.3 million to
emergency food aid and $348.4 million to development food aid. The Administration has
expressed concerns about the adequacy of food aid resources to respond to emergencies,
while food aid organizations indicate concerns about the availability of food aid for use
in development projects.³ The 2008 farm bill provides for a “safe box” for funding of
non-emergency, development assistance projects under Title II. The argument in favor
of the safe box is that it would provide assurances to the implementing organizations
(PVOs, coops, intergovernmental organizations) of a given level of funds with which to
carry out development projects. The Administration’s principal objection to the safe box
is that it will deprive the USAID Administrator of the flexibility needed to respond to
emergency food needs. The new farm bill provides a safe box funding level beginning
at $375 million in FY2009, ending in FY2012 at $450 million. The mandated funding
level can be waived if three criteria are satisfied: (1) the President determines that an
extraordinary food emergency exists; (2) resources from the Bill Emerson Humanitarian
Trust (see below) have been exhausted, and (3) the President has submitted a request for
additional appropriations to Congress equal to the reduction in safe box and Emerson
Trust levels.

³ The Administration’s farm bill food aid proposal is discussed in [http://www.usda.gov/
documents/07finalfbp.pdf]; views of many of the private voluntary organizations that use food
aid for development projects are available at [http://www.allianceforfoodaid.com/].

Pilot Program for Local/Regional Cash Purchase. The 2008 farm bill
includes a scaled-down version of the Administration’s only international food aid
proposal for legislative authority to use up to $300 million of appropriated P.L. 480 Title
II funds for local or regional purchase and distribution of food to assist people threatened
by a food security crisis. The farm bill provides that the pilot project be conducted by the
Secretary of Agriculture with a total of $60 million in mandatory funding (not P.L. 480
appropriations) during FY2009 and FY2012. The pilot project would entail a study of
experiences with local/regional purchase followed by field-based projects that would
purchase food commodities locally or regionally. The field-based projects would be
funded with grants to PVOs, cooperatives, and intergovernmental organizations, such as
the World Food Program. All of the field-based projects would be evaluated by an
independent third party beginning in 2011; the Secretary of Agriculture would submit a
report to Congress on the pilot project four years after the enactment of the bill.
Food Aid Consultative Group. The new farm bill extends to 2012 the authority
for the Food Aid Consultative Group (FACG), which advises the USAID Administrator
on food aid policy and regulations. It requires that a representative of the maritime
transportation sector be included in the Group.
Micronutrient Fortification Programs. The 2008 farm bill reauthorizes the
Micronutrient Fortification Program in which grains and other food aid commodities may
be fortified with such micronutrients as vitamin A, iodine, iron, and folic acid. It adds
new legislative authority to assess and apply technologies and systems to improve food
aid. The farm bill also eliminates limitations on the number of countries in which this
program can be implemented.
Monitoring Non-Emergency (Development) Projects. The farm bill
authorizes the use of up to $22 million annually to be used for the monitoring and
assessment of non-emergency (development) food aid programs. No more than $8
million of these funds may be used for the Famine Early Warning System Network
(FEWS-NET), but only if at least $8 million is provided for FEWS-NET from accounts
appropriated under the Foreign Assistance Act of 1961.⁴ Up to $2.5 million of the funds
can be used to upgrade the information technology systems used to monitor and assess the
effectiveness of food aid programs. This provision is a response to criticism that
monitoring of such programs by USAID has been inadequate due to such factors as
limited staff, competitive priorities, and legal restrictions.⁵ The USAID Administrator can
use these funds to employ contractors as non-emergency food aid monitors.
Shelf-Stable Foods and Prepositioning. The farm bill increases funding
available annually (from Title II funds) from $3 million to $8 million for stockpiling and

⁴ The Famine Early Warning System Network (FEWS-NET) is a USAID-funded project that aims
to strengthen the abilities of African countries and regional organizations to manage risk of food
insecurity through the provision of timely and analytical early warning and vulnerability
information. FEWS-NET collaborates with international, national, and regional partners to
provide timely early warning and vulnerability information on emerging or evolving food security
issues.
⁵ Foreign Assistance: Various Challenges Impede the Efficiency and Effectiveness of U.S. Food
Aid, Government Accountability Office (GAO), at [http://www.gao.gov/new.items/d08680.pdf].

rapid transportation, delivery, and distribution of shelf-stable, prepackaged foods. Shelf-
stable foods are developed under a cost-sharing arrangement that gives preference to
organizations that provide additional funds for developing these products. The new bill
also reauthorizes prepositioning of commodities overseas and increases the funding for
prepositioning to $10 million annually from $2 million annually. USAID maintains that
prepositioning (currently at two sites, New Orleans and Dubai, United Arab Emirates)
enables it to respond more rapidly to emergency food needs. Critics say, however, that
the cost effectiveness of prepositioning has not been evaluated.
Farmer-to-Farmer Program. The 2008 farm bill reauthorizes the Farmer-to-
Farmer program of voluntary technical assistance in agriculture funded with a portion of
P.L. 480 funds. The bill provides an annual floor level of funding for the program of $10
million and extends it through 2012. It also increases the authorization of annual
appropriations for specific regions (sub-Saharan Africa and the Caribbean Basin) from
$10 million to $15 million.
P.L. 480 Title I. This title of P.L. 480 authorizes provision of long-term, low
interest loans to developing countries for the purchase of U.S. agricultural commodities.
The new farm bill makes some changes in the program, which has not received an
appropriation since 2006 to reflect a food security rather than a market development
emphasis of U.S. food aid. Thus the bill strikes references in Title I to recipient countries
becoming commercial markets for U.S. agricultural products and the requirement that
organizations seeking funding under this title prepare and submit agricultural market
development plans. The bill gives Title I of P.L. 480, previously referred to as Trade and
Development Assistance, a new name, Economic Assistance and Food Security.
Food for Progress
The Food for Progress Program (FFP) provides commodities to developing countries
that have made commitments to expand free enterprise in their agricultural economies.
The 2002 farm bill required that a minimum of 400,000 MT be provided under the FFP
program. However, not more than $40 million of Commodity Credit Corporation (CCC)
funds may be used to finance transportation of the commodities. This amount effectively
caps the volume of commodities that can be shipped under the program. (In FY2007, for
example, 342,000 MT were shipped under FFP.) The 2008 farm bill conference
agreement extends the program without change through 2012, with the requirement that
the Secretary of Agriculture establish a project in Malawi under the FFP.
McGovern-Dole Food for Education and
International Child Nutrition
The McGovern-Dole food aid program provides commodities and financial and
technical assistance to carry out preschool and school food for education programs in
developing countries. The program is widely viewed as a model food aid program
because of the flexibility with which it provides program components. By executive order
of the President, the McGovern-Dole program is administered by the Secretary of
Agriculture. The main issues in congressional debate about the future of the program
were the manner and level of funding. Some argued for changing the funding from
discretionary (as in current law) to mandatory and for ramping up funding to $300 million

by 2012. Others proposed maintaining discretionary funding for the program with a
substantial increase. The 2008 farm bill reauthorizes the program through 2012 and
establishes the U.S. Department of Agriculture as the permanent home for the program.
The new law maintains funding for McGovern-Dole on a discretionary basis without an
increase, but does authorize $84 million in mandatory money for the program in FY2009,
to be available until expended.
Bill Emerson Humanitarian Trust
The Bill Emerson Humanitarian Trust (BEHT) is a reserve of commodities and cash
that is used to meet unanticipated food aid needs or to meet food aid commitments when
U.S. domestic supplies are short. The BEHT can hold up to 4 MMT of grains (wheat,
rice, corn, sorghum) in any combination, but the only commodity ever held has been
wheat. USDA has recently sold the remaining wheat in the trust (about 915,000 MT) so
that currently the BEHT holds only cash — about $294 million. The cash would be used,
according to USDA, when USAID determines it is needed for emergency food aid.
The 2008 farm bill reauthorizes the BEHT through FY2012. It removes the 4 million
ton cap on commodities that can be held in the trust, and allows the Secretary to invest
the funds from the trust in low-risk, short-term securities or instruments so as to maximize
its value. The new law replaces the word “replenish” with the word “reimburse”
throughout the language to reinforce the notion that resources of the BEHT may be held
in cash as well as commodities.