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United States General Accounting Office:

GAO: Testimony:

Before the Subcommittee on Oversight of Government Management, 

Restructuring and the District of Columbia, Committee on Governmental 

Affairs, U.S. Senate:

For Release on Delivery Expected at 2:00 p.m. EST, Tuesdsay, June 4, 

2002: 

Food Aid: Experience of U.S. Programs Suggests Opportunities for 

Improvement:

Statement of Loren Yager, Director, International Affairs and Trade:

GAO-02-801T:

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the management and operation 

of U.S. food aid programs. The United States is by far the largest 

provider of food aid in the world, [Footnote 1] and U.S. food aid 

programs account for a considerable portion of U.S. development 

assistance. Between 1979 and 2003, the United States spent nearly $50 

billion (2002 dollars) on food aid, and U.S. food aid represented about 

19 percent of U.S. official development assistance in 2000. 

Notwithstanding these sizable donations by the United States, as well 

as donations by other countries, the need for food aid in the 

developing world far exceeds available supply. The United Nations Food 

and Agriculture Organization estimates 777 million people are 

chronically undernourished in the developing world. [Footnote 2] 

According to its data, there has been limited progress in meeting the 

1996 World Food Summit goal of halving the number of hungry people in 

developing countries by the year 2015.

To contribute to a better understanding of food aid and how to maximize 

its effectiveness, I will address the following key issues: (1) the 

structure of U.S. food aid, (2) policies and events contributing to the 

fluctuations in U.S. food aid, and (3) how well U.S. food aid 

objectives are being met.

My observations are based on recent interviews with and documents from 

U.S. Department of Agriculture (USDA), U.S. Agency for International 

Development (USAID), U.S. Department of State, and Office of Management 

and Budget officials, and from GAOs series of reports on food aid over 

the last decade. (See app. I for related GAO products.):

Summary:

U.S. food aid is provided through six programs administered by two 

different agencies. These programs use a variety of methods for 

providing resources to the programs, and also have different ways of 

delivering the aid to the recipient nations. The largest program is 

P.L. 480 Title II, which is managed by USAID. This program uses 

regular, annual appropriations to purchase commodities, and donates 

these commodities to recipient nations principally through private 

voluntary organizations (PVO) and the World Food Program.

The large fluctuations in U.S. food aid since 1990 are the result of 

three key factors: U.S. food aid policies, U.S. agricultural surpluses, 

and international events. Continuing previous food aid policies, the 

current administration is reducing the use of food aid to promote U.S. 

agricultural exports through sales at low interest rates with long 

repayment periods. It also intends to significantly reduce the role of 

surplus agricultural commodities in its food aid programs. The 

availability of surplus commodities at various times during the last 

decade has enabled the United States to sharply increase shipments. 

International events can also impact U.S. food aid. For example, with 

the Asian financial crisis, U.S. commercial agricultural exports did 

not increase as expected, resulting in large surpluses that the 

government purchased and made available as food aid. These surpluses 

became a principal inducement for the United States to provide large 

quantities of food aid to Russia in 1999 and 2000.

The success of food aid programs in meeting their objectives is 

hampered by the competing objectives of the programs and by management 

weaknesses. The food aid objectives include humanitarian goals of 

feeding hungry people, economic development goals for the recipient 

nations such as strengthening private enterprise, and a new goal of 

reducing conflict. Certain programs also have foreign policy goals. In 

one case, the United States continued to provide emergency food aid to 

North Korea for humanitarian purposes even though the North Korean 

government prevented the World Food Program (WFP) from effectively 

monitoring whether the food aid reached the intended recipients. In 

that situation, the United States weighed foreign policy considerations 

against the assurance that food aid was achieving its humanitarian 

purposes. [Footnote 3] At the same time, management weaknesses impede 

efforts to assess the results of food aid programs. For example, the 

USDAs implementation of the Global Food for Education pilot program 

did not build on lessons learned from previous experience, which 

prevented USDA from focusing on those populations most likely to 

benefit from the program. As a result, our reviews and those of the 

administration find many opportunities to improve the management of 

food aid.

U.S. Food Aid Is Delivered:

Through Multiple Programs:

In the last decade, the United States has principally employed five 

programs to deliver food aid: P.L. 480 Titles I, II, and III; Food for 

Progress; and Section 416(b). [Footnote 4] The May 2002 Farm Bill 

[Footnote 5] authorized creation of a sixth - the McGovern-Dole 

International Food for Education and Child Nutrition Program. Table 1 

provides a summary of the overall structure of the principal food aid 

programs. (App. II provides additional information on the programs.):

Table 1. Structure of U.S. Food Aid Programs [A]:

Program; Managing agency; P.L. 480 Title I; USDA; P.L. 480 Title II; 

USAID; P.L. 480 Title III; USAID; Food for Progress; USDA; Food for 

Education & Child Nutrition[B]; President shall designate one or more 

federal agencies; Section 416(b): USDA.

Program; Program structure; P.L. 480 Title I; Concessional sales of 

agricultural commodities.; P.L. 480 Title II; Donation of commodities 

to meet emergency and non-emergency needs. Commodities may be sold 

in country for development purposes.; P.L. 480 Title III; Donation 

of commodities to least developed country governments.; Food for 

Progress; Sale on credit terms or donation of commodities to 

developing countries and/or emerging democracies.; Food for Education 

& Child Nutrition[B]; Donation of commodities and provision of 

financial and technical assistance in foreign countries.; Section 

416(b): Donations of CCC[C] surplus commodities to carry out 

purposes of P.L. 480 Title II and Title III and Food for Progress 

programs.

Program; Intermediaries; P.L. 480 Title I; Governments, private 

entities.; P.L. 480 Title II; Governments, public or private entities, 

PVOs, cooperatives, intergovernmental organizations (such as the World 

Food Program).; P.L. 480 Title III; Governments.; Food for Progress; 

Governments, agricultural trade organizations, intergovernmental 

organizations, PVOs, cooperatives.; Food for Education & Child 

Nutrition[B]; Governments, private entities, intergovernmental 

organizations.; Section 416(b): See intermediaries for P.L. 480 

Title II and Title III and Food for Progress programs.

Program; Total budget allocation, 1992-2001 (billions of 2002 dollars); 

P.L. 480 Title I; $4.38; P.L. 480 Title II; $9.62; P.L. 480 Title III; 

$1.34; Food for Progress; $1.33; Food for Education & Child 
Nutrition[B]; 

NA; Section 416(b): $2.41.

Note: NA means not applicable.

[A] We do not include the Bill Emerson Humanitarian Trust. Information 

on this trust is provided in appendix. II.

[B] This program was authorized by the May 2002 Farm Bill.

[C] Commodity Credit Corporation:

Source: GAO analysis of authorizing legislation for the various 

programs and agency program documentation.

[End of table]

USAID and USDA have historically shared program management 

responsibilities. USAID is responsible for managing P.L. 480 Titles II 

and III programs. USDA currently has responsibility for P.L. 480 Title 

I, Food for Progress, and the Section 416(b) program. When 416(b) 

surplus commodities are used for P.L. 480 Title II and P.L. 480 Title 

III type programs, this creates considerable duplication since USDA 

becomes the managing agency rather than USAID. Regarding the new food 

for education program, the President shall designate one or more 

federal agencies to manage it.

The programs use different methods for securing commodities. For 

example, P.L. 480 Titles I, II, and III and Food for Progress are 

funded by annual and supplemental appropriations. Section 416(b), 

however, is funded by U.S. surplus commodities when surpluses exist and 

a decision is made to donate some of those surpluses overseas. USDA, as 

manager of the Section 416(b) program, can use the donations to carry 

out the purposes of P.L. 480 Title II, Title III, and Food for 

Progress. For example, when USDA uses 416(b) commodities for a Title II 

program, it does not provide the commodities to USAID but rather 

implements the Title II-type program itself.

U.S. food aid programs also use different methods for providing aid to 

recipient nations. Under P.L. 480 Title I, the United States sells the 

commodities to the recipients under concessional terms. Financing is at 

low interest rates, with payments made over periods of up to 30 years, 

with maximum grace periods on payments of principal of up to 5 years. 

The Title II program is based on the donation of commodities for 

emergency or developmental purposes. In the latter case, the 

commodities can be sold in the country to raise funds for other 

developmental activities. Under the Food for Progress program, U.S. 

commodities can be either donated or sold on credit terms.

USDA and USAID frequently rely on other entities, including private 

voluntary organizations and international organizations, such as the 

World Food Program, to deliver the food aid and, if called for in 

agreements with USDA or USAID, to use the food in implementing 

development programs.

Policy, Surpluses, and International:

Events Drive U.S. Food Aid:

The large fluctuations in U.S. food aid spending since 1990 can be 

attributed to three key factors: the governments food aid policies, 

agricultural surpluses, and international events. As figure 1 

indicates, total food aid has generally decreased since the early 

1990s, with average spending of $2.36 billion from 1990-1994, $1.63 

billion from 1995-1999, and $1.65 billion from 2000-2003 (2002 

dollars). The general trend toward reduced food aid occurred as the 

U.S. government reduced Title I and III programs and more recently the 

416(b) program. This policy shift was driven to some extent by concerns 

over the absence of evidence supporting the success of Title I and 

Title III. It was also fueled by criticisms that the Title I and III 

programs created disincentives for agricultural and economic reform in 

recipient countries. The current administration also plans to 

dramatically cut back on the use of surplus commodities for food aid 

and to partially offset the reduction by a $300 million increase in the 

Title II appropriation. [Footnote 6] As a result, the Title II program 

dominates the funding for food aid programs in 2003.

Figure 1: U.S. Food Aid Exports, 1990-2003:

[See PDF for image]

Source: GAO analysis of USDA data.

[End of Figure]

The level of U.S. surpluses has also contributed to the changing levels 

of food aid over the past decade. For example, a high level of stocks 

in the early 1990s contributed to high levels of food aid shipments 

during this period. In contrast, stocks reached a 20-year low in 1996 

as U.S. commercial exports hit record levels, and food aid levels at 

this time dropped sharply. As figure 2 indicates, the volume of food 

aid shipments fluctuates even more than the dollar volume, as lower 

commodity prices during periods of surplus allow more to be purchased 

with the same budgetary resources.

Figure 2: Food Aid Tonnage and Expenditures, 1992- 2001 A:

[See PDF for image]

Source: GAO analysis of USDA data.

[End of Figure]

International events also affected food aid shipments during this 

period. For example, the Asian financial crisis of the late 1990s 

reduced U.S. prospects for exports to that region and increased the 

availability of U.S. stocks. The spread of the financial crisis to 

Russia, combined with a poor Russian harvest in 1999, created the 

demand for food aid in that country. These two conditions led the 

United States to a make donation to Russia that was one of the largest 

single food aid transfers in U.S. history.

Success of Food Aid Programs is Hampered by:

Multiple Objectives and Management Weaknesses:

The success of food aid programs in achieving their objectives is 

limited by the challenges of meeting multiple objectives and the 

weaknesses in program management.

Competing Objectives Complicate:

Program Implementation:

U.S. food aid programs contain a range of objectives, including 

humanitarian and developmental goals for the recipient nations and 

trade objectives for the United States. In addition, recent legislation 

has added the prevention of conflict as an objective of the P.L. 480 

food aid programs. Table 2 provides a list of the programs and their 

associated objectives.

Table 2. Objectives of U.S. Food Aid Programs:

Program; Humanitarian objectives; P.L. 480 Title I[A]; Combat world 

hunger and malnutrition and their causes.; P.L. 480 Title II[A]; 

Address famine or other urgent relief requirements, especially in 

children and mothers.; P.L. 480 Title III[A]; Combat world hunger and 

malnutrition and their causes.;Food for Progress;  Food for Progress; 

[Empty]; Food for Education & Child Nutrition; Carry out maternal, 

infant, and child nutrition and preschool and school programs to 

improve food security and reduce hunger.; Section 416(b): See 

objectives for P.L. 480 Title II, P.L. 480 Title III, and Food for 

Progress.

Program; Development objectives; P.L. 480 Title I[A]; Promote broad-

based sustainable development, including agricultural development.; 

P.L. 480 Title II[A]; Promote economic and community development; 

promote sound environmental policies.; P.L. 480 Title III[A]; Use 

revenue generated by sale of donated commodities for economic 

development.; Food for Progress; Support efforts to expand free 

enterprise elements in agricultural economies.; Food for Progress; 

Carry out preschool and school programs to improve literacy and 

primary education, especially for girls.; Section 416(b): See 

objectives for P.L. 480 Title II, P.L. 480 Title III, and Food for 

Progress.

Program; Private enterprise and democracy; P.L. 480 Title I[A]; 

Foster and encourage development of private enterprise and democracy.; 

P.L. 480 Title II[A]; Foster and encourage development of private 

enterprise and democracy.; P.L. 480 Title III[A]; Foster and encourage 

development of private enterprise and democracy.; Food for Progress; 

Expand free enterprise elements in the agricultural economy.; Food for 

Progress; [Empty]; Section 416(b): See objectives for P.L. 480 Title 

III and Food for Progress.

Program; Market development objectives; P.L. 480 Title I[A]; Develop 

and expand export markets for U.S. agricultural commodities.; P.L. 480 

Title II[A]; Develop and expand export markets for U.S. agricultural 

commodities.; P.L. 480 Title III[A]; Develop and expand export markets 

for U.S. agricultural commodities.; Food for Progress; Strengthen 

private enterprises.; Food for Progress; [Empty]; Section 416(b): See 

objectives for P.L. 480 Title II.

Program; International trade objective; P.L. 480 Title I[A]; Expand 

international trade.; P.L. 480 Title II[A]; Expand international 
trade.; 

P.L. 480 Title III[A]; Expand international trade.; Food for Progress; 

[Empty]; Food for Progress; [Empty]; Section 416(b): See objective for 

P.L. 480 Title III.

Program; Conflict objective[B]; P.L. 480 Title I[A]; Prevent conflict.; 

P.L. 480 Title II[A]; Prevent conflict.; P.L. 480 Title III[A]; Prevent 

conflict.; Food for Progress; [Empty]; Food for Progress; [Empty]; 

Section 416(b): [Empty].

[A] According to the Trade Development and Assistance Act of 1954, as 

amended, the United States is to use its abundant agricultural 

productivity to promote U.S. foreign policy by enhancing food security 

in the developing world.

[B] This objective was established in the May 2002 Farm Bill.

Source: GAO analysis of authorizing legislation for the various 

programs and agency program documentation.

[End of table]

The multiple objectives of food aid programs as well as the foreign 

policy goals of particular programs can complicate effective program 

management. While certain goals can be complementary and not impede 

program effectiveness, in other situations, goals and objectives can 

conflict or make it more difficult to determine the primary goals and 

achieve them. Some examples of problems GAO has identified stemming 

from multiple or conflicting objectives include the following:

* P.L. 480 loans to Honduras were backed by the State Department and 

USAID to support foreign policy and economic development objectives. 

However, USDA raised concerns about these sales displacing U.S. 

commercial sales in those countries. [Footnote 7]

* Between 1996 and 1999, the United States provided emergency food aid 
to 

North Korea, valued at $365 million, that was intended primarily for 

children, women, and the elderly at schools, hospitals, and other 

institutions. State, USAID, and others reported that North Korea 

prevented effective monitoring of food aid donations, but the food aid 

continued in part because State believed the donations might improve 

bilateral relations. [Footnote 8]

* Title I assistance to Pakistan was reinstated in fiscal year 1993 
after 

a 2- year suspension because of U.S. concerns over the countrys 

nuclear armament capabilities. While the on-again off-again nature of 

Title I assistance in response to foreign policy considerations is 

contrary to sustaining important components of a successful market 

development strategy (i.e., demonstrate a long-term commitment and be a 

consistent supplier), the over-arching goal of the 1990 act [Footnote 

9]--to promote the U.S. foreign policy objective--was being fulfilled. 

[Footnote 10]:

* One of the goals of P.L. 480 Title I assistance is to develop and 

expand export markets for U.S. commodities. However, we found that 

achieving this goal is hindered in part by requiring that the Title I 

cargo be carried on U.S. flag ships (referred to as Cargo Preference), 

which in some instances reduced the funds available to purchase 

commodities and in other cases led to changes away from the most 

desired commodity. [Footnote 11]:

Management Weaknesses Impede Monitoring and Accountability Efforts:

GAO has found a lack of management attention to issues such as 

monitoring and accountability in the implementation of food aid 

programs. Some examples of our findings are as follows:

* In a general review of the P.L. 480 Title I Program, we found that 
USDA 

had not evaluated the programs performance against its objectives. Our 

analysis concluded that while Title I assistance could be making a 

meaningful, short-term contribution to the food supply in some 

recipient countries, its importance in helping develop long-term U.S. 

agricultural markets had not been demonstrated. [Footnote 12] 

* USDAs implementation of the Global Food for Education pilot program 

did not incorporate many of the lessons learned from successful school 

feeding programs in the design of its program. As a result, program 

managers did not require interested applicants to provide information 

that would enable program administrators to select programs with the 

greatest chance of success. [Footnote 13]:

* USDAs lack of internal controls in providing food assistance to 
Russia 

in 1999 limited the agencys ability to effectively manage the 

distribution process, identify discrepancies, and minimize the 

potential for fraud and abuse. [Footnote 14] USDA stated that it has 

not conducted a comprehensive evaluation of food aid programs that it 

manages.

* In a 1993 GAO review of the P.L. 480 Title II and Title III programs, 

we found that USAID had not systematically collected relevant data or 

developed appropriate methodologies to assess the impact of its 

programs on food security in recipient countries nor ensured 

accountability for its food aid. [Footnote 15] Since that report, 

USAID has placed a significantly greater emphasis on the evaluation of 

its food aid programs, particularly P.L. 480 Title II. [Footnote 16]:

* GAOs 1999 review of U.S. food aid to North Korea found weaknesses in 

USAIDs oversight over the food aid delivered through the World Food 

Program and private voluntary organizations. Notwithstanding the 

constraints presented by the North Korean government, we concluded that 

USAID could have done more to encourage the World Food Program to 

provide timely reporting on food aid distributions in North Korea. 

[Footnote 17]:

Observations on the Presidents Management Review of Food Aid:

In 2001 the Presidents management review identified U.S. food aid 

programs as 1 of 14 of the governments areas most in need of reform. A 

number of the problems it identified are consistent with the findings 

mentioned in my testimony. For example, the management review commented 

on the fact that six different programs are administered by two 

government agencies with similar bureaucracies. In addition, the review 

observes that humanitarian purposes were often eroded by other uses 

having little to do with food aid. Finally, the report cited the lack 

of management oversight in stating that food aid programs are affected 

by waste and questionable spending.

Prior GAO studies have noted the importance of similar issues and have 

suggested a number of actions.

* With regard to overlapping efforts of the two agencies, we noted in 
our 

report on GFEI that USDA did not have the expertise to implement the 

program, and that Congress should ensure that the administering agency 

has the expertise and staff resources to effectively administer GFEI.

* With regard to the challenges created by competing objectives in food 

aid programs, we recommended better performance measurement and 

evaluation, which may help to illustrate the difficulties and tradeoffs 

associated with multiple objectives.

* With regard to the potential for fraud and abuse, we have frequently 

emphasized the importance of monitoring and accountability of food aid 

programs to ensure that the intended recipients receive the food.

We believe that increased attention to these issues by the Congress and 

the administration will continue the improvement in food aid management 

and help meet the immediate needs of hungry people as well as enhance 

food security over the longer term.

Mr. Chairman and members of the Committee, this concludes my prepared 

statement. I will be pleased to answer any questions you may have.

Contacts and Acknowledgments:

For future contacts regarding this testimony, please call Loren Yager 

or Phillip Thomas at (202) 512-4128. Individuals making key 

contributions to this testimony included Wayne Ferris, Bruce Kutnick, 

and Janey Cohen.

(320119):

APPENDIX I: RELATED GAO PRODUCTS ON FOOD AID:

Foreign Assistance: Global Food for Education Initiative Faces 

Challenges for Successful Implementation. GAO-02-328. Washington, 

D.C.: February 28, 2002.

Foreign Assistance: U.S. Food Aid Program to Russia Had Weak Internal 

Controls . GAO/NSIAD/AIMD-00-329. Washington, D.C.: September 29, 2000.

Foreign Assistance: U.S. Bilateral Food Assistance to North Korea Had 

Mixed Results. GAO/NSIAD-00-175. Washington, D.C.: June 15, 2000.

Foreign Assistance: Donation of U.S. Planting Seed to Russia in 1999 

Had Weaknesses. GAO/NSIAD-00-91. Washington, D.C.: March 9, 2000.

Foreign Assistance: North Korean Restricts Food Aid Monitoring. GAO/

NSIAD-00-35. Washington, D.C.: October 8, 1999.

Food Aid: Competing Goals and Requirements Hinder Title I Program 

Results , GAO/GGD- 95-68. Washington, D.C.: June 26, 1995.

Foreign AID: Actions Taken to Improve Food Aid Management. GAO/NSIAD-

95-74. Washington, D.C.: March 23, 1995.

Cargo Preference Requirements: Objectives Not Significantly Advanced 

When Used in U.S. Food Aid Programs, GAO/GGD-94-215 Washington, D.C.: 

September 29, 1994.

Food Aid: Management Improvements Are Needed to Achieve Program 

Objectives. GAO/NSIAD-93-168. Washington, D.C.: July 23, 1993.

[End of Section]

Appendix II: Summary of Food Aid Programs:

This appendix provides a brief description of the various U.S. food aid 

programs.

P.L. 480 Title I--Concessional:

Sales of Commodities:

Title I, which is administered by USDA, has been characterized by the 

government as a concessional sales program to promote exports of 

agricultural commodities from the United States and to foster broad-

based sustainable development in recipient countries. Repayments for 

agricultural commodities may be made either in U.S. dollars or in local 

currencies on concessional credit terms. The program provides export 

financing over payment periods of up to 30 years, low interest rates, 

and maximum grace periods on payments of principal of up to 5 years. 

Private entities such as the World Bank and agricultural trade 

organizations, as well as developing country governments, are 

authorized to participate in the program.

The programs market development focus is geared primarily toward 

developing countries experiencing a shortage of foreign exchange 

earnings and difficulty meeting all of their food needs through 

commercial channels. The factors that determine priorities for country 

allocations include food needs, potential for becoming a commercial 

U.S. market, and the undertaking of economic development to improve 

food security and agricultural development. The allocations take into 

account changing economic and foreign policy situations, market 

development opportunities, existence of adequate storage facilities, 

and possible disincentives to local agricultural production.

Title I agreements also stipulate development activities the recipient 

country will undertake. Local currencies received under Title I sales 

agreements may be used for activities in the recipient country such as 

developing new markets for U.S. agricultural commodities on a mutually 

beneficial basis, paying U.S. obligations, and supporting agricultural 

development or research. However, according to USDA, the local currency 

provisions have not been implemented for budgetary reasons.

P.L. 480 Title II--Donation:

of Commodities for Emergency:

and Development Food Needs:

Title II programs, administered by USAID, have two main functions: food 

aid to vulnerable groups in emergency situations and long-term 

development for non-emergency aid. Emergency food aid is designed to 

meet critical food needs of targeted vulnerable groups, such as 

refugees, internally displaced families, or those who lose their land 

or livelihoods because of natural or complex humanitarian emergencies. 

USAID relies on the World Food Program (WFP) and U.S. PVOs to 

distribute most of the aid, with most food going to women and children.

Commodities can be monetized (i.e., sold for cash) to generate local 

currency for development activities or used as humanitarian assistance 

in needy countries for direct feeding of individuals unable to take 

advantage of development activities--orphans, the elderly, patients in 

hospices and hospitals, and HIV/AIDS victims/families.

P.L. 480 Title III--Food:

Donations Through Government-:

to-Government Agreements:

The P.L. 480 Title III program, administered by USAID, seeks to enhance 

food security in the least developed countries by supporting economic 

development. Under Title III the U.S. government donates agricultural 

commodities to the recipient country and arranges for and pays the 

costs of purchasing, processing, and transporting the commodities to 

the port or point of entry in the recipient country. The donated 

commodities are sold on the domestic market, and revenue generated from 

the sale in the recipient countries is used to support programs of 

economic development.

Food for Progress--Food Donations:

for Developing Countries and:

Emerging Democracies Moving to:

Free Enterprise in Agriculture:

The Food for Progress (FFP) program, authorized under the Food for 

Progress Act of 1985, as amended, allows the Commodity Credit 

Corporation (CCC) to finance the sale and export of agricultural 

commodities on credit terms, or on a grant basis, to support developing 

countries and countries that are emerging democracies that have made 

commitments to introduce or expand free enterprise elements into their 

agricultural economies. Commodities may be provided under the authority 

of P.L. 480 or Section 416(b). Under certain conditions, CCC may also 

purchase commodities for use in Food for Progress programs if the 

commodities are currently not held by CCC in stocks. For commodities 

furnished on a grant basis, the CCC may pay, in addition to acquisition 

costs and ocean transportation, such related commodity and delivery 

charges. Food for Progress agreements can be signed with governments or 

with PVOs, nonprofit agriculture organizations, cooperatives, 

intergovernmental organizations, or other private entities.

Section 416(b)--Donations:

of Surplus Commodities to:

Developing and Friendly Countries:

The Agricultural Act of 1949, as amended, authorizes the donation of 

surplus food and feed grain acquired by the CCC for carrying out 

assistance programs in developing countries and friendly countries 

under P.L. 480 Titles II and III and under the Food for Progress Act. 

However, the act also authorizes USDA to manage all of the Section 

416(b) food aid. As a result, in recent years, USDA has managed P.L. 

480 Title II and Title III type programs, when surplus commodities are 

involved, even though USAID manages such programs when they are 

financed by regular appropriations. [Footnote 18]:

McGovern-Dole International:

Food for Education and:

Child Nutrition Program:

The May 2002 Farm Bill authorizes the President to establish a 

permanent program to continue a food for education and preschool 

nutrition pilot program that was established by USDA in 2000 using 

Section 416(b) surplus commodities. The new program goes beyond the 

pilot by authorizing maternal and infant nutrition programs for 

pregnant women, nursing mothers, and infants. The law directs the 

President to use $100 million of CCC funds for the new program for 

fiscal year 2003. It authorizes appropriating such sums as are 

necessary to carry out the program for fiscal years 2004 through 2007.

The law authorizes the President to designate one or more federal 

agencies to implement the program and ensure that it is consistent with 

U.S. foreign policy and development assistance objectives. Private 

voluntary organizations, cooperatives, intergovernmental 

organizations, governments of developing countries and their agencies, 

and other organizations can be used to carry out the program.

Bill Emerson Humanitarian Trust:

The Emerson Trust [Footnote 19] is a food security commodity trust, 

consisting of up to 4 million metric tons of grains. It exists to meet 

emergency humanitarian food needs in developing countries. Authorized 

commodities for the trust include wheat, corn, grain sorghum, and rice. 

In any fiscal year, the Secretary of Agriculture is authorized to 

release up to 500,000 metric tons of wheat or the equivalent value of 

eligible commodities other than wheat, and up to 500,000 metric tons of 

any eligible commodities that could have been released in prior fiscal 

years, but were not. At this point, the reserve holds 2.5 million tons 

of wheat.

FOOTNOTES

[1] During 1999 and 2000, the United States provided nearly two-thirds 

of world food aid, according to USDA.

[2] Estimate for the period 1997-99.

[3] See U.S. General Accounting Office, Foreign Assistance: North Korea 

Restricts Food Aid Monitoring, GAO/NSIAD-00-35 (Washington, D.C.: Oct. 

8, 1999).

[4] U.S. international food assistance flows from programs authorized 

by three major laws: P.L. 480 (the Agricultural Trade Development and 

Assistance Act of 1954, as amended, 7 USC  1701 et seq.); the Food for 

Progress Act of 1985, as amended, 7 USC  1736o; and Section 416(b) of 

the Agricultural Act of 1949, as amended, 7 USC  1431.

[5] Farm Security and Rural Investment Act of 2002 (PL 107-171).

[6] The administration intends to use the Bill Emerson Humanitarian 

Trust (see app. II) for cases where there is an increased need for 

emergency food aid. Large-scale use of the 416(b) surplus disposal food 

aid program would occur only as a last resort.

[7] U.S. General Accounting Office, Food Aid: Competing Goals and 

Requirements Hinder Title I Program Results, GAO/GGD-95-68 (Washington, 

D.C.: June 26, 1995).

[8] GAO/NSIAD-00-35.

[9] Food, Agriculture, Conservation and Trade Act (PL 101-624).

[10] GAO/GGD-95-68.

[11] GAO/GGD-94-215.

[12] GAO/GGD-95-68.

[13] U.S. General Accounting Office, Foreign Assistance: Global 

Food for Education Initiative Faces Challenges for Successful 

Implementation, GAO-02-328 (Washington, D.C.: Feb. 28, 2002).

[14] U.S. General Accounting Office, Foreign Assistance: U.S. Food 

Aid Program to Russia Had Weak Internal Controls, GAO/NSIAD/AIMD-00-329 

(Washington, D.C.: September 29, 2000).

[15] U.S. General Accounting Office, Food Aid: Management 

Improvements Are Needed to Achieve Program Objectives, GAO/NSIAD-93-168 

(Washington, D.C.: July 23, 1993).

[16] USAID has conducted or commissioned several major studies on 

the effectiveness of its Title II programs. These studies cite a 

considerable number of positive accomplishments, but also identify 

program weaknesses affecting the quality of individual programs as well 

as USAIDs overall ability to monitor and evaluate its programs.

[17] GAO/NSIAD-00-35.

[18] Under an interagency agreement, USDA used USAID to administer 

its overseas Section 416(b) activities until 1992.

[19] The trust was formerly 

known as the Food Security Wheat Reserve and the Food Security 

Commodity Reserve (7USC  1736f-1).