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Saving Money and Lives: The Human Side of U.S. Food Aid Reform

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Introduction: Keeping Hungry People in the Center of the Food Aid Reform Equation

In recent years, headlines about the need for reforms of U.S. food aid policies have often focused on current programs’ inefficiencies, unnecessary taxpayer costs, and subsidies to narrow special interests, such as the shipping industry. These are clearly important issues, especially at a time when federal budgets are constrained and a new omnibus farm bill, which authorizes food aid programs, is being considered. But in the process of focusing on costs, the human impact of wasteful regulations can get lost in the shuffle.

The purpose of this paper is to harness recent government and university studies of the excess costs associated with aspects of current U.S. food aid regulations to provide estimates of the number of additional hungry people who could have been reached with life-saving assistance as a result of specific food aid policy reforms.

In 2010, the U.S. spent more than $2 billion on food aid, reaching roughly 65 million people in the process. From these numbers alone, it’s not difficult to see that even a small percentage reduction in unnecessary costs associated with procurement and delivery of food aid can have a significant impact on literally millions of people in need. The debate over food aid, therefore, even when centered on costs, has very large, real-world, human consequences. In the final analysis, reform is about both spending hardworking American’s tax dollars more wisely and helping millions of real people whose lives are at risk.

This study focuses on two aspects of current U.S. food aid programs that have long been criticized for their inefficiency and waste: reliance on ‘in-kind’ food aid purchases and shipments from U.S. suppliers; and the sale or ‘monetization’ of U.S. food in developing country markets to finance development projects. Other urgent reforms that would net additional cost and life-saving benefits, including abolishing stringent shipping regulations, are not directly addressed in this paper.

The analysis in this paper utilizes federal data on food aid spending and program reach and two recent reports about unnecessary food aid program costs: 1) a January 2012 report by Cornell University agricultural economists measuring the time and cost differences between food purchased locally and regionally in the region of need (LRP) and the estimated cost of food aid shipments procured from the United States; and 2) a June 2011 U.S. Government Accountability Office (GAO) report on the dollar losses associated with monetization. From the cost-related findings of those reports, this study extrapolates the number of additional people that could have been reached in 2010 if a greater share of U.S. food aid would have been purchased through LRP, rather than from U.S. sources, and if losses associated with monetization had been captured and used to fund food aid projects.