GAO faults U.S. food aid sales program
A 27-year-old federal program authorizing the sale of U.S. food aid commodities in developing countries to fund development has largely failed, according to an analysis by a congressional watchdog agency.
The Government Accountability Office found that over a three-year period inefficiency of the monetization process actually reduced funding available to the U.S. government for development projects by $219 million. 'The process of using cash to procure, ship, and sell commodities resulted in $503 million available for development projects out of the $722 million expended,' GAO said.
U.S. food aid programs are overseen by the U.S. Agency for International Development and Department of Agriculture. GAO noted that under the 1985 Food Security Act these agencies are only 'required to achieve reasonable market price, which has not been clearly defined.' USAID's average cost recovery was 76 percent, while USDA's was 58 percent.
GAO further noted that ocean transportation represents about one-third of the cost to procure and ship food aid for monetization, and that the legal requirements to ship 75 percent of the aid on U.S.-flag vessels further increases costs.
'Moreover, the number of participating U.S.-flag vessels has declined by 50 percent since 2002, and according to USAID and USDA, this decline has greatly decreased competition,' GAO said. 'Participation may be limited by rules unique to food aid programs which require formerly foreign-flag vessels to wait three years before they are treated as U.S.-flag vessels.'
In addition, GAO said USAID and USDA cannot ensure that monetization of food aid does not cause adverse market impacts because the agencies 'monetize at high volumes, conduct weak market assessments, and do not conduct post-monetization evaluations. Adverse market impacts may include discouraging food production to local farmers, which could undermine development goals.'
One of the GAO report's top recommendations to improve the aid program's results is for Congress to consider eliminating the three-year wait for foreign-flag vessels to join the U.S.-flag registry and become eligible to transport U.S. food aid.
The GAO also urged USAID and USDA to establish a benchmark for 'reasonable market price' for food aid sales, monitor these sales and improve market assessments, and conduct post-market impact evaluations.
While USAID and USDA generally agreed with GAO's recommendations, the Transportation Department's Maritime Administration argued the U.S.-flag vessel matter for congressional consideration may hurt the U.S. maritime industry.