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 Assist-
ance Act of 1954 to authorize the use of agricultural
commodities to promote market development.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SEC. 101. SHORT TITLE.
This Act may be cited as the ‘‘Food for Trade Act
of 1994’’.
SEC. 102. ESTABLISHMENT OF PROGRAM.
Title I of the Agricultural Trade Development and
Assistance Act of 1954 (7 U.S.C. 1701 et seq.) is amended
by adding at the end the following new section:
HR 5234 IH
‘‘SEC. 106. FOOD FOR TRADE PROGRAM.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN
GENERAL.–The Secretary shall carry
out a pilot program under this title to establish per-
manent, self-sustaining organizations in eligible re-
cipient countries to promote and provide financing
for broad-based economic development activities in
the countries.
‘‘(2) COOPERATION.—The Secretary shall carry
out this section by entering into contracts with non-
profit organizations or entities (referred to in this
section as ‘‘facilitators’’) to facilitate the establish-
ment and operation of approved pilot projects in eli-
gible recipient countries utilizing agricultural com-
modities provided under this section.
‘‘(b) ELIGIBLE PROJECTS.—
‘‘(1) IN GENERAL.—An organization or other
entity may participate in this program by submitting
a complete proposal for the operation of a project in
an eligible recipient country, according to guidelines
developed by the Secretary.
‘‘(2) PROJECT FUNDING.—Upon approval of a
project proposed under this section, the Secretary
shall make available agricultural commodities under
this title to the facilitator on a grant basis for the
purpose of funding and carrying out the project. The
HR 5234 IH
Secretary shall cover the costs of transporting the
commodities to the recipient country under para-
graph (4).
‘‘(3) DURATION
OF
ASSISTANCE.—Assistance
may be provided under this section in annual install-
ments for up to 5 years per individual approved
project, or such longer period of time as deemed ap-
propriate by the Secretary.
‘‘(4) MONETIZATION.—The facilitator shall
transport the agricultural commodities received
under this section for sale in the recipient country.
After deduction of any associated expenses, the pro-
ceeds generated from the sale shall be used to estab-
lish a permanent, self-sustaining investment fund in
the recipient country according to guidelines estab-
lished under subsection (h).
‘‘(5) ROLE OF THE FACILITATOR.—A facilitator
participating in this program shall—
‘‘(A) be responsible for the storage, trans-
port, and monetization of agricultural commod-
ities in eligible recipient countries pursuant to
guidelines established by the Secretary under
subsection (h);
‘‘(B) establish and manage an investment
fund in the recipient country using the proceeds
HR 5234 IH
from the monetization of the agricultural com-
modities, until such time as the facilitator
transfers control of the project to the joint com-
mission under subsection (g);
‘‘(C) establish and operate an advisory
board to advise in the management of the in-
vestment fund; and
‘‘(D) coordinate the eventual transfer of
the advisory board and the investment fund to
the joint commission in the participating recipi-
ent country.
‘‘(6) EXPENSE
PROJECTIONS.—Each project
proposal submitted under this section shall contain
a projection of the estimated expenses necessary to
carry out the project, including the monetization of
the agricultural commodities and the establishment
and operation of the investment fund.
‘‘(c) INVESTMENT FUND.—
‘‘(1) ESTABLISHMENT.—The facilitator shall
establish a permanent, self-sustaining investment
fund in the participating recipient country from the
proceeds of the sales of the agricultural commodities
provided under this section.
‘‘(2) USE OF FUND.—Monies in the investment
fund shall be invested and managed in a manner
HR 5234 IH
that provides the best possible return for the fund,
without posing an undue risk to the principal bal-
ance used to establish the fund.
‘‘(3) 
RESTRICTION
ON
INVESTMENT
OF
FUNDS.—Monies from the fund may be invested in
any appropriate investments as determined by the
Secretary pursuant to regulation.
‘‘(4) INVESTMENT
PROCEEDS.—Profits gen-
erated by the investments shall be made available to
the joint commission to carry out development activi-
ties under subsection (f). The facilitator shall be re-
imbursed for any administrative costs associated
with the operation of the investment fund.
‘‘(d) ADVISORY BOARDS.—
‘‘(1) ESTABLISHMENT.—The facilitator shall
operate an advisory board (referred to in this section
as the ‘‘board’’) in each participating recipient coun-
try to advise the facilitator on the management of
the investment fund and other investment issues.
‘‘(2) MEMBERSHIP.—The members of the board
shall be selected by the facilitator from the local and
international business and investment community.
Members of the board shall serve without pay.
‘‘(3) TRANSFER OF AUTHORITY.—After control
of the project is transferred to the joint commission
HR 5234 IH
under subsection (g), the advisory board shall pro-
vide advice to the joint commission on investment
fund issues.
‘‘(e) JOINT COMMISSION.—
‘‘(1) ESTABLISHMENT.—The Government of
the United States shall enter into an agreement with
the government of each recipient country that par-
ticipates in this program, along with the facilitator
organization that oversees the project in that coun-
try, for the establishment in the country of a Food
for Trade Joint Commission (referred to in this sec-
tion as the ‘‘joint commission’’).
‘‘(2) MEMBERSHIP.—The joint commission
shall be composed of representatives of—
‘‘(A) the participating recipient country;
‘‘(B) local nongovernmental entities;
‘‘(C) international nongovernmental enti-
ties; and
‘‘(D) the United States diplomatic mission
in the recipient country, which may include a
representative of the Foreign Agricultural
Service.
‘‘(3) BOARD OF DIRECTORS.—The joint com-
mission shall elect a board of directors that provides
equal representation for each of the 4 entities speci-
HR 5234 IH
fied in paragraph (2). The directors shall serve with-
out pay.
‘‘(4) SECRETARIAT.—The joint commission may
hire administrative personnel to handle the day-to-
day activities of the joint commission.
‘‘(5) DUTIES.—The joint commission shall be
responsible for—
‘‘(A) the selection and approval of recipi-
ents for loans and grants for eligible activities
under this section;
‘‘(B) the dispersal of funds to approved ap-
plicants from investment fund profits;
‘‘(C) monitoring of activities funded under
this section; and
‘‘(D) overall operation and maintenance of
the program including the investment fund,
upon the final transfer of control under sub-
section (g).
‘‘(f) ELIGIBLE ACTIVITIES.—The joint commission
may make available funds from the profits generated by
the investment fund for developmental activities including:
‘‘(1) CREDIT.—Loans may be made under this
section to—
‘‘(A) local private co-operative banks,
‘‘(B) credit unions,
HR 5234 IH
‘‘(C) non-profit venture capital investment
organizations,
‘‘(D) eligible organizations for the purpose
of providing micro-credit, and
‘‘(E) approved local entrepreneurs.
‘‘(2) TECHNICAL ASSISTANCE.—Grants may be
awarded under this section to—
‘‘(A) cover in-country costs for farmer-to-
farmer program implementors, or
‘‘(B) eligible organizations working in agri-
business development.
‘‘(3) RESEARCH, EDUCATION AND EXTENSION
ENDOWMENTS.—Research grants, scholarships and
sabbaticals may be awarded under this section to in-
dividuals working in local agricultural research and
education institutions.
‘‘(4) HUMANITARIAN
AND
INFRASTRUCTURE
DEVELOPMENT GRANTS.—Grants may be provided
under this section to finance—
‘‘(A) infrastructure development projects,
and
‘‘(B) humanitarian efforts.
All grants made under this paragraph shall be from
the repayment proceeds for loans under paragraph
(1).
HR 5234 IH
‘‘(g) TRANSFER OF PROJECT CONTROL.—After a pe-
riod of 5 years of operation of the project in a recipient
country, or such other period of time deemed appropriate
by the Secretary, the responsibility for the management
and oversight of the investment fund shall be transferred,
according to terms established by the Secretary, to the
joint commission. Upon the transfer of authority under
this subsection, the authority and responsibility of the
facilitator with respect to the project shall be terminated.
‘‘(h) GUIDELINES.—The Secretary shall develop
guidelines and procedures for the establishment and oper-
ation of the program under this section and shall provide
for the following:
‘‘(1) Application procedures for proposals for
projects under this section.
‘‘(2) Criteria for the selection of recipient coun-
tries, including—
‘‘(A) demonstrated interest in privatizing a
significant percentage of the agricultural sector;
‘‘(B) demonstrated interest in privatizing
land ownership;
‘‘(C) legal and judicial structures that
allow for private banking;
‘‘(D) tax laws that do not overly inhibit
small business development;
HR 5234 IH
‘‘(E) limited or no restriction on foreign
investment;
‘‘(F) demonstrated interest in freeing
wages and prices from government control;
‘‘(G) economic situation that allows the es-
tablishment of profitable tax-exempt founda-
tions and non-prohibitive use of these profits
for development purposes;
‘‘(H) judicial infrastructure that allows for
legal enforcement of contracts.
‘‘(3) Procedures for the monetization of agricul-
tural commodities provided under this section.
‘‘(4) Establishment and operation of investment
fund, including any restrictions on investments
deemed necessary by the Secretary.
‘‘(5) Procedures for the eventual transfer of
operational control, including oversight of the invest-
ment fund and advisory board of the program to the
joint commission.
‘‘(6) Procedures for evaluation of the program.
‘‘(7) Procedures for the termination of the
project and dissolution of the investment fund in the
event the Secretary determines that the project is
being mismanaged or otherwise should not be con-
tinued.