I

103D CONGRESS

2D SESSION H. R. 5234

To amend the Agricultural, Trade, Development, and Assistance Act of 1954

to authorize the use of agricultural commodities to promote market

development.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 6, 1994

Mr. PENNY introduced the following bill; which was referred jointly to the

Committees on Agriculture and Foreign Affairs

A BILL

To amend the Agricultural, Trade, Development, and Assistance Act of 1954 to authorize the use of agricultural

commodities to promote market development.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SEC. 101. SHORT TITLE.

4 This Act may be cited as the ‘‘Food for Trade Act

5 of 1994’’.

6 SEC. 102. ESTABLISHMENT OF PROGRAM.

7 Title I of the Agricultural Trade Development and

8 Assistance Act of 1954 (7 U.S.C. 1701 et seq.) is amended

9 by adding at the end the following new section:
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1 ‘‘SEC. 106. FOOD FOR TRADE PROGRAM.

2 ‘‘(a) ESTABLISHMENT.—

3 ‘‘(1) IN GENERAL.–The Secretary shall carry

4 out a pilot program under this title to establish per5 manent, self-sustaining organizations in eligible re6 cipient countries to promote and provide financing

7 for broad-based economic development activities in

8 the countries.

9 ‘‘(2) COOPERATION.—The Secretary shall carry

10 out this section by entering into contracts with non11 profit organizations or entities (referred to in this

12 section as ‘‘facilitators’’) to facilitate the establish13 ment and operation of approved pilot projects in eli14 gible recipient countries utilizing agricultural com15 modities provided under this section.

16 ‘‘(b) ELIGIBLE PROJECTS.—

17 ‘‘(1) IN GENERAL.—An organization or other

18 entity may participate in this program by submitting

19 a complete proposal for the operation of a project in

20 an eligible recipient country, according to guidelines

21 developed by the Secretary.

22 ‘‘(2) PROJECT FUNDING.—Upon approval of a

23 project proposed under this section, the Secretary

24 shall make available agricultural commodities under

25 this title to the facilitator on a grant basis for the

26 purpose of funding and carrying out the project. The
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1 Secretary shall cover the costs of transporting the

2 commodities to the recipient country under para3 graph (4).

4 ‘‘(3) DURATION OF ASSISTANCE.—Assistance

5 may be provided under this section in annual install6 ments for up to 5 years per individual approved

7 project, or such longer period of time as deemed ap8 propriate by the Secretary.

9 ‘‘(4) MONETIZATION.—The facilitator shall

10 transport the agricultural commodities received

11 under this section for sale in the recipient country.

12 After deduction of any associated expenses, the pro13 ceeds generated from the sale shall be used to estab14 lish a permanent, self-sustaining investment fund in

15 the recipient country according to guidelines estab16 lished under subsection (h).

17 ‘‘(5) ROLE OF THE FACILITATOR.—A facilitator

18 participating in this program shall—

19 ‘‘(A) be responsible for the storage, trans20 port, and monetization of agricultural commod21 ities in eligible recipient countries pursuant to

22 guidelines established by the Secretary under

23 subsection (h);

24 ‘‘(B) establish and manage an investment

25 fund in the recipient country using the proceeds
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1 from the monetization of the agricultural com2 modities, until such time as the facilitator

3 transfers control of the project to the joint com4 mission under subsection (g);

5 ‘‘(C) establish and operate an advisory

6 board to advise in the management of the in7 vestment fund; and

8 ‘‘(D) coordinate the eventual transfer of

9 the advisory board and the investment fund to

10 the joint commission in the participating recipi11 ent country.

12 ‘‘(6) EXPENSE PROJECTIONS.—Each project

13 proposal submitted under this section shall contain

14 a projection of the estimated expenses necessary to

15 carry out the project, including the monetization of

16 the agricultural commodities and the establishment

17 and operation of the investment fund.

18 ‘‘(c) INVESTMENT FUND.—

19 ‘‘(1) ESTABLISHMENT.—The facilitator shall

20 establish a permanent, self-sustaining investment

21 fund in the participating recipient country from the

22 proceeds of the sales of the agricultural commodities

23 provided under this section.

24 ‘‘(2) USE OF FUND.—Monies in the investment

25 fund shall be invested and managed in a manner
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1 that provides the best possible return for the fund,

2 without posing an undue risk to the principal bal3 ance used to establish the fund.

4 ‘‘(3) RESTRICTION ON INVESTMENT OF

5 FUNDS.—Monies from the fund may be invested in

6 any appropriate investments as determined by the

7 Secretary pursuant to regulation.

8 ‘‘(4) INVESTMENT PROCEEDS.—Profits gen9 erated by the investments shall be made available to

10 the joint commission to carry out development activi11 ties under subsection (f). The facilitator shall be re12 imbursed for any administrative costs associated

13 with the operation of the investment fund.

14 ‘‘(d) ADVISORY BOARDS.—

15 ‘‘(1) ESTABLISHMENT.—The facilitator shall

16 operate an advisory board (referred to in this section

17 as the ‘‘board’’) in each participating recipient coun18 try to advise the facilitator on the management of

19 the investment fund and other investment issues.

20 ‘‘(2) MEMBERSHIP.—The members of the board

21 shall be selected by the facilitator from the local and

22 international business and investment community.

23 Members of the board shall serve without pay.

24 ‘‘(3) TRANSFER OF AUTHORITY.—After control

25 of the project is transferred to the joint commission
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1 under subsection (g), the advisory board shall pro2 vide advice to the joint commission on investment

3 fund issues.

4 ‘‘(e) JOINT COMMISSION.—

5 ‘‘(1) ESTABLISHMENT.—The Government of

6 the United States shall enter into an agreement with

7 the government of each recipient country that par8 ticipates in this program, along with the facilitator

9 organization that oversees the project in that coun10 try, for the establishment in the country of a Food

11 for Trade Joint Commission (referred to in this sec12 tion as the ‘‘joint commission’’).

13 ‘‘(2) MEMBERSHIP.—The joint commission

14 shall be composed of representatives of—

15 ‘‘(A) the participating recipient country;

16 ‘‘(B) local nongovernmental entities;

17 ‘‘(C) international nongovernmental enti18 ties; and

19 ‘‘(D) the United States diplomatic mission

20 in the recipient country, which may include a

21 representative of the Foreign Agricultural

22 Service.

23 ‘‘(3) BOARD OF DIRECTORS.—The joint com24 mission shall elect a board of directors that provides

25 equal representation for each of the 4 entities speci-
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1 fied in paragraph (2). The directors shall serve with2 out pay.

3 ‘‘(4) SECRETARIAT.—The joint commission may

4 hire administrative personnel to handle the day-to5 day activities of the joint commission.

6 ‘‘(5) DUTIES.—The joint commission shall be

7 responsible for—

8 ‘‘(A) the selection and approval of recipi9 ents for loans and grants for eligible activities

10 under this section;

11 ‘‘(B) the dispersal of funds to approved ap12 plicants from investment fund profits;

13 ‘‘(C) monitoring of activities funded under

14 this section; and

15 ‘‘(D) overall operation and maintenance of

16 the program including the investment fund,

17 upon the final transfer of control under sub18 section (g).

19 ‘‘(f) ELIGIBLE ACTIVITIES.—The joint commission

20 may make available funds from the profits generated by

21 the investment fund for developmental activities including:

22 ‘‘(1) CREDIT.—Loans may be made under this

23 section to—

24 ‘‘(A) local private co-operative banks,

25 ‘‘(B) credit unions,
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1 ‘‘(C) non-profit venture capital investment

2 organizations,

3 ‘‘(D) eligible organizations for the purpose

4 of providing micro-credit, and

5 ‘‘(E) approved local entrepreneurs.

6 ‘‘(2) TECHNICAL ASSISTANCE.—Grants may be

7 awarded under this section to—

8 ‘‘(A) cover in-country costs for farmer-to9 farmer program implementors, or

10 ‘‘(B) eligible organizations working in agri11 business development.

12 ‘‘(3) RESEARCH, EDUCATION AND EXTENSION

13 ENDOWMENTS.—Research grants, scholarships and

14 sabbaticals may be awarded under this section to in15 dividuals working in local agricultural research and

16 education institutions.

17 ‘‘(4) HUMANITARIAN AND INFRASTRUCTURE

18 DEVELOPMENT GRANTS.—Grants may be provided

19 under this section to finance—

20 ‘‘(A) infrastructure development projects,

21 and

22 ‘‘(B) humanitarian efforts.

23 All grants made under this paragraph shall be from

24 the repayment proceeds for loans under paragraph

25 (1).
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1 ‘‘(g) TRANSFER OF PROJECT CONTROL.—After a pe2 riod of 5 years of operation of the project in a recipient

3 country, or such other period of time deemed appropriate

4 by the Secretary, the responsibility for the management

5 and oversight of the investment fund shall be transferred,

6 according to terms established by the Secretary, to the

7 joint commission. Upon the transfer of authority under

8 this subsection, the authority and responsibility of the

9 facilitator with respect to the project shall be terminated.

10 ‘‘(h) GUIDELINES.—The Secretary shall develop

11 guidelines and procedures for the establishment and oper12 ation of the program under this section and shall provide

13 for the following:

14 ‘‘(1) Application procedures for proposals for

15 projects under this section.

16 ‘‘(2) Criteria for the selection of recipient coun17 tries, including—

18 ‘‘(A) demonstrated interest in privatizing a

19 significant percentage of the agricultural sector;

20 ‘‘(B) demonstrated interest in privatizing

21 land ownership;

22 ‘‘(C) legal and judicial structures that

23 allow for private banking;

24 ‘‘(D) tax laws that do not overly inhibit

25 small business development;
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1 ‘‘(E) limited or no restriction on foreign

2 investment;

3 ‘‘(F) demonstrated interest in freeing

4 wages and prices from government control;

5 ‘‘(G) economic situation that allows the es6 tablishment of profitable tax-exempt founda7 tions and non-prohibitive use of these profits

8 for development purposes;

9 ‘‘(H) judicial infrastructure that allows for

10 legal enforcement of contracts.

11 ‘‘(3) Procedures for the monetization of agricul12 tural commodities provided under this section.

13 ‘‘(4) Establishment and operation of investment

14 fund, including any restrictions on investments

15 deemed necessary by the Secretary.

16 ‘‘(5) Procedures for the eventual transfer of

17 operational control, including oversight of the invest18 ment fund and advisory board of the program to the

19 joint commission.

20 ‘‘(6) Procedures for evaluation of the program.

21 ‘‘(7) Procedures for the termination of the

22 project and dissolution of the investment fund in the

23 event the Secretary determines that the project is

24 being mismanaged or otherwise should not be con25 tinued.
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1 ‘‘(8) Other guidelines deemed appropriate by

2 the Secretary for the operation or oversight of the

3 program.

4 ‘‘(i) REPORT.—The facilitator shall submit an annual

5 progress report to the Secretary on the operation of the

6 project in the recipient country.

7 ‘‘(j) EVALUATION AND AUDIT.—

8 ‘‘(1) EVALUATION OF THE PROGRAM.—Not

9 later than 5 years after the establishment of this

10 program and every 4 years thereafter, the Secretary

11 shall evaluate the effectiveness of the program and

12 shall report the findings to the Committee on Agri13 culture of the House of Representatives and the

14 Committee on Agriculture, Nutrition, and Forestry

15 of the Senate.

16 ‘‘(2) GAO AUDIT.—The Comptroller General of

17 the United States shall conduct periodic audits of

18 the operation of the program.

19 ‘‘(k) DEFINITIONS.—For the purpose of this section:

20 ‘‘(1) FACILITATOR.—The term ‘‘facilitator’’

21 means a nonprofit organization or entity with experi22 ence or demonstrated capability for the storage,

23 transport, and sale of agricultural commodities in

24 recipient countries.
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1 ‘‘(2) ELIGIBLE RECIPIENT COUNTRY.—The

2 term ‘‘eligible recipient country’’ means a country

3 that meets one or more of the criteria specified in

4 subsection (h)(2), as determined by the Secretary.

5 ‘‘(3) ELIGIBLE ORGANIZATION.—The term ‘‘eli6 gible organization’’ means an international private

7 voluntary organization or a local nongovernmental

8 organization.

9 ‘‘(l) PROGRAM FUNDING.—The Secretary shall make

10 available at least 20 percent of the amount of funds made

11 available to carry out this title for the purpose of carrying

12 out this section.’’.

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