**Testimony of Cary Wickstrom**

**Immediate Past President of the Colorado Wheat Administrative
Committee**

**on behalf of**

**U.S. Wheat Associates' Food Aid Working Group**

**before**

**the House Committee on Agriculture's**

**Subcommittee on** **Specialty Crops, Rural Development and Foreign
Agriculture**

**May 10, 2007**

Mr. Chairman and members of the Committee, my name is Cary Wickstrom. I
am a fourth generation wheat farmer from Northeastern Colorado. I am
currently immediate past president of the Colorado Wheat Administrative
Committee and serve on the U.S. Wheat Associates (USW) Board of
Directors. During this time I have been a member of the USW Food Aid
Working Group which includes representatives from USW and the National
Association of Wheat Growers (NAWG).

The philosophy of the USW Food Aid Working Group is simple: Keep the
Food in Food Aid. The Food Aid Working Group and the foreign offices of
USW work closely with the Private Voluntary Organizations both in the
United States and around the world to insure that wheat is used
appropriately and efficiently. Through education, training and technical
assistance we try to insure that the wheat that leaves the borders of
our nation will be accepted by the local millers and the indigenous
populations of the countries in need.

The United States is the most generous nation in the world when it comes
to food aid. As noted by Agriculture Secretary Mike Johanns during his
speech at the International Food Aid Conference in April, we give half
of the world's food aid, followed by ten percent given by the European
Union, the second largest contributor. Of the food aid that the United
States provides, wheat is by far the largest commodity supplied. It
makes up from 40-50 percent on average of all food aid tonnage and went
to 30 different countries last year. Sixty-two percent of that wheat in
the 2005/06 marketing year is of the hard red winter and hard white
winter classes. These are the two classes of wheat that I produce.

**Funding**

The wheat industry encourages reauthorization of Title I of PL 480
funding as an additional tool to fund Food for Progress (FFP). We
recommend no less than 1,200,000 metric tons (MT) under Title II
programs, which would require roughly \$600 million to provide
commodities and support funds. Specifically for FFP programs the wheat
industry supports a minimum level of 500,000 MT and a freight expense
cap (currently \$40 million) high enough to allow this. The freight cap
should not limit approval of FFP projects. We also support the expansion
of McGovern-Dole and the full replenishment of the Bill Emerson
Humanitarian Trust (emergency food aid).

**Wheat Donations Save and Improve Lives**

With a global presence, the U.S. wheat industry is intimately familiar
with the impact that the agricultural community has on improving the
quality of life for so many people in difficult conditions worldwide.
The wheat industry has a strong commitment to food aid and humanitarian
assistance. In Ghana for example, wheat donations provided funding for
local NGOs to reduce food and livelihood insecurity in 10 vulnerable
farm districts in Ghana with a goal of reaching some 130,000 households
in 250 farmer communities in the next two years. Involvement by the U.S.
wheat industry through USDA food aid programs contributed to improving
the quality of life in rural communities including construction of
schools and day care centers, on-site school feeding for over 40,000
undernourished children, and over 60,000 girls enrolled in primary
schools. Studies indicate the direct link between alleviation of poverty
and food insecurity through formal and information education of girls
and women. Development programs like these are critical to the goal of
reducing chronic hunger and addressing the underlying causes of hunger
and poverty, the focus of PL 480 Title II programs.

### Efficiency and Logistics

The inefficiency and logistical problems of providing food aid have
recently come under fire. It is important to point out in this
discussion that bulk grain logistics and handling are simply different
from bagged and processed products. The U.S. system for storing and
handling bulk grain is exceptionally efficient; it is not uncommon to
tender for and deliver to the end destination within 45 days. This
system allows the buyer to take advantage of current world prices, not
incur storage costs in another country and ensures they receive the
appropriate wheat for the end-use in need.

### Cargo Preference

The Food Aid Working Group suggests it is time to revisit cargo
preference laws. In a time when resources are strained, transportation
costs should not exceed food costs. We understand the sensitivity of
this issue, but feel it is time to evaluate international competition
for freight and seek the opportunity to use as much of our U.S. dollars
to feed the more than 850 million individuals in need of food as we can.

Attached to my written testimony is the Food Aid Principles for the 2007
Farm Bill supported by the Agricultural Food Aid Coalition. Also
attached is the Food Aid Policy Statement approved by USW and the NAWG
along with supplemental material on Cargo Preference.

Mr. Chairman, we know that U.S. growers produce the safest food in the
world and believe the bounty of U.S. agriculture should continue to be
the fundamental resource for food security, development and humanitarian
relief in developing countries. We look forward to working with you on
this important issue as you begin to write the 2007 Farm Bill. Thank you
again for the opportunity to be here today. I am ready to answer any
questions you may have.

**Food Aid Principles for the 2007 Farm Bill**

(Rev. Draft 5/4/07**[)]{.underline}**

**1. Support Current Programs/Structure**

We support current structures of US food aid allowing the bounty of US
Agriculture to be the fundamental resource for food security,
development and humanitarian relief in developing countries. On that
basis, we support the reauthorization of PL 480 Titles I and II, the
McGovern-Dole International Food for Education and Child Nutrition
Program, and Food For Progress.

**2. Continue In-Kind Food Aid & Oppose LRP (Local/Regional Purchase)**

US Food Aid programs are a source of pride to American taxpayers,
farmers, food processors and agribusinesses. We support continuation of
U.S. in-kind food aid and oppose the diversion of funds from US food aid
program(s) for the purchase of products from other countries. Without
the win-win nature of using US food products as the base for the
programs, the constituency will be lost and both appropriations in the
US agriculture budget and authorizations will be jeopardized.

-   WFP already uses significant amounts of LRP when it is justified and
    (based on their analysis) would not cause price inflation in local
    economies. Cash contributions from countries less able to share
    their in-kind bounty should be and are, used in emergencies or
    development situations when delays in arrival of in-kind food would
    result in humanitarian crises.

-   The European Union, during their Common Agricultural Policy reform
    process converted their 'in-kind' food aid to cash contributions
    with two distinctly negative consequences. Their overall
    contributions to food aid went down (lack of constituency) and the
    timeliness of their cash contributions suffered. One WFP source was
    quoted as saying "it takes longer to get cash from some of the
    donors than it takes to get in-kind products in place."

-   US food products, identified as "GIFT OF THE PEOPLE OF THE UNITED
    STATES" are one of the most visible manifestations of the good will
    of the US to developing countries. It is not possible for such an
    identification to be made with hurriedly purchased local food.

-   The procurement process for LRP, including insufficient methods to
    assure food quality and safety, will potentially give local and
    regional producers an opportunity to supply products under less
    rigorous standards than currently required by US suppliers to food
    aid programs.

-   We support increased efficiencies to cut down on time and costs of
    responding to emergencies, including the pre-positioning or advance
    purchase of US commodities and processed products.

**3. Reauthorize Title I**

We support reauthorizing Title I of PL 480 both in its original
concessional sales role and as an additional funding tool for Food For
Progress. Demand for Title I concessional sales and FFP assistance
continues through annual requests from eligible foreign countries and
other applicants. Title I concessional sales should be reauthorized and
offered to countries that can afford its terms. Without reauthorization,
annual proposals from participating and interested countries could not
be submitted, considered, or funded under Title I's concessional sales
or its FFP authority, as they are allowed to do under current law. In
addition, without Title I, the total amount of funding available for FFP
would be diminished, leaving the CCC as the program's only funding
source. More details about Food for Progress are discussed below.

**4. Development Programs in Title II**

We support a prioritization for multi-year development programs that
contribute to long-term food security in developing countries and
protection against disruptions of those programs due to diversion of
development funds to emergencies.

-   The original Congressional intent was that Title II be primarily
    used for efforts to combat chronic hunger and its effects. This was
    indicated in the requirement that 75% of the budget be used for such
    purposes denominated in minimum tonnages. This requirement is now
    "waived" annually, as 75% of the budget is now used for emergencies.
    We suggest that language be added so that USAID's authority to waive
    the statutory mandate be limited to no more than 675,000 MT of the
    non-emergency minimum tonnage yearly.

-   Using development program funds as the 'first resort' for response
    to emergencies causes disruptions to planned or existing projects
    that have already been approved and deemed necessary to combat
    chronic needs in priority countries.

-   Many of the criticisms of in-kind food aid: arrival timing, market
    disruptions, inefficiencies, and product bunching can be traced to
    the affects of diverting funds from development to emergency and/or
    the delay in decision-making on funding for development programs in
    anticipation of possible emergency needs.

**5. McGovern-Dole International Food for Education and Child Nutrition
Program**

We support universal school lunch and child nutrition as a fundamental
goal. We support the expansion of the successful McGovern-Dole Program
based on the very beneficial impact it has had and can continue to have
on school attendance, competition with schools that oppose US interests
and the positive impacts on learning when children are provided adequate
food and nutrition. This program enjoys widespread and deep
congressional support and with US leadership, it can be expanded
dramatically.

-   USDA has demonstrated an ability to administer this program
    admirably and its authority should be made permanent.

-   We support full funding for the McGovern-Dole program.

**6. Food For Progress**

If funding were available, we would support an increase in the minimum
level of FFP to 500,000 metric tons (up from the current 400,000) and a
freight expense cap (currently \$40 million) that is high enough to
allow the minimum to be met. The demand for programs to support economic
and agriculture reform far exceeds our current capacity to fund good
projects; 122 proposals for FFP were submitted for FY 2007, but only 9
were approved. The freight cap should not arbitrarily prevent approval
of projects that can have dramatic positive impact.

**7. Bill Emerson Humanitarian Trust**

We support the more predictable use and full replenishment of the BEHT
to make its use a timely, viable response to emergencies. Because the
small amount of partial replenishment that is currently allowed comes
from the succeeding year's budget, the Administration is reluctant to
use this tool as a first response to emergencies.

-   An automatic reimbursement/replenishment up to the amount used in
    emergency situations should be in place, without diminishing
    subsequent year's budgets for other needed food aid programming.

**8. Monetization**

We recognize the need for cooperating sponsors who administer and
distribute food aid programs to have both food and cash to implement
their programs. We support appropriate monetization where it is shown to
not cause disruption to local and international markets.

**9. Reauthorize the Food Aid Consultative Group (FACG)**

We support continuing the FACG. We are concerned, however, that the FACG
today serves more as a resource for reporting food aid information than
for providing interactive input between food aid system stakeholders to
the implementing agencies of the US government. We support clarifying
language to restore and strengthen its role in providing interactive
input between stakeholders and to clarify its membership to include all
food aid system stakeholders**.**

**10. HIV/AIDS and Nutrition**

We encourage the appropriate integration of US food aid programs with
PEPFAR initiatives.

**11. Increased [Efficiency and]{.underline} Effectiveness in Food Aid
Programs**

As noted in the GAO report on food aid, we encourage initiatives to
reduce the lag time between needs assessments and product delivery in US
food aid emergency procurements. We also recommend the lifting of
arbitrary limits on storage expenses for the prepositioning of products
for emergency response. The agriculture community has been and remains
committed to actively addressing issues to increase US food aid
effectiveness.

American Soybean Association

Global Food and Nutrition, Inc.

International Food Additives Council

National Association of Wheat Growers

National Barley Growers Association

National Oilseed Processors Association

North American Millers' Association\
USA Dry Pea and Lentil Council

USA Rice Federation

US Dry Bean Council

US Wheat Associates

**Policy: US Wheat Associates, National Association of Wheat Growers**

## 

## Keep the Food in Food Aid 

♦ **The U.S. wheat industry opposes any attempt in the World Trade
Organization (WTO) or in any other venues to require that food aid be
given as "cash only" instead of allowing donor nations to provide food
directly as emergency and development assistance.**

♦ **The U.S. wheat industry supports funding food aid programs at levels
no less than the amounts needed to provide food donation levels of at
least 6 million metric tons annually, of which 3 million metric tons
should be wheat.**

♦ **Wheat producer organizations continue to support the original intent
that wheat held in the Bill Emerson Humanitarian Trust be used for its
purpose to provide direct food aid and should not be sold back into the
U.S. domestic market. Wheat producers urge the Administration to
promptly replenish commodities released from the Bill Emerson
Humanitarian Trust, in a timely manner**

♦ **U.S. wheat producers believe that current programs administered by
the U.S. Department of Agriculture are effective and should remain under
USDA management.**

♦ **Wheat producers believe that, except in times of emergency, U.S.
food aid programs should be comprised of U.S. produced food.**

♦ **Wheat producer organizations oppose withholding food aid for
political purposes.**

**[Background]{.underline}**

Current international food aid oversight and requirements are sufficient
and continue to work well. The WTO should only require that food aid
programs not distort commercial markets and be consistent with
guidelines of legitimate food aid organizations. Food aid programs
should be monitored by the food aid convention of the United Nations.

The international humanitarian community needs a reliable, steady level
of food aid. In times of crisis, and when food prices rise, a commitment
of minimum tonnages would help protect the most vulnerable recipients
from harm. It would also allow agricultural producers and processors to
plan for the provision of those foodstuffs. A commitment to minimum
tonnages would also combat European arguments that the U.S. uses food as
an export subsidy**.** It would assure food aid availability at adequate
levels.

U.S. Government food aid is distributed by private voluntary
organizations around the world. A broad spectrum of America, including
farming, processing, transportation and distribution industries
participate in the giving and handling of food aid. Food that America
gives to the hungry is home grown and nutritious. To disconnect growing
and handling of food from humanitarian food programs removes the
involvement and interest of thousands of Americans and puts support for
those programs at risk. By using American grown food in food aid,
American hands and American infrastructure are involved throughout the
entire operation, and we can assure and stand by the quality of the food
that is delivered.

While the need for food aid has increased, U.S. donations continue to
decrease. Food aid programs must be funded and allowed to function in
ways that meet humanitarian and development needs.

Regarding Cargo Preference:

A GAO report released April 2007:

-   Pointed out the total annual value of the cost differential between
    U.S.- and Foreign-flag carriers averaged \$134 million from fiscal
    years 2001 to 2005.

See page 30, GAO-07-560 Foreign Assistance Various Challenges Impede the
Efficiency and Effectiveness of U.S. Food Aid

-   "At current U.S. food aid budget levels, every \$10 per metric ton
    reduction in freight rates could feed almost 850,000 more people
    during an average hungry season"

> footnote: "Based on USAID and USDA data, the fiscal year 2006 average
> commodity and transportation cost for 1 metric ton of food aid was
> \$670. If that average cost had reduced by \$10 per metric ton through
> a reduction in ocean transportation freight rates or any other cost
> factor, the fiscal year 2006 food-aid budget could have funded an
> additional 43,900 metric tons-enough to feed almost 850,000 people
> during a peak hungry season, which typically lasts 3 months.

See page 16, GAO-07-560 Foreign Assistance Various Challenges Impede the
Efficiency and Effectiveness of U.S. Food Aid

GAO Report

<http://www.gao.gov/new.items/d07560.pdf>

TRANSCRIPT OF REMARKS BY SECRETARY OF AGRICULTURE MIKE JOHANNS TO THE
USAID INTERNATIONAL FOOD AID CONFERENCE

<http://www.usda.gov/wps/portal?contentidonly=true&contentid=2007/04/0104.xml>