[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                     HEARING TO REVIEW FOOD AID AND
                       AGRICULTURE TRADE PROGRAMS
                    OPERATED BY THE U.S. DEPARTMENT
                   OF AGRICULTURE AND THE U.S. AGENCY
                     FOR INTERNATIONAL DEVELOPMENT

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                  SPECIALTY CROPS, RURAL DEVELOPMENT,
                        AND FOREIGN AGRICULTURE

                                 OF THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 10, 2007

                               __________

                           Serial No. 110-21


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov


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                        COMMITTEE ON AGRICULTURE

                COLLIN C. PETERSON, Minnesota, Chairman

TIM HOLDEN, Pennsylvania,            BOB GOODLATTE, Virginia,
    Vice Chairman                        Ranking Minority Member
MIKE McINTYRE, North Carolina        TERRY EVERETT, Alabama
BOB ETHERIDGE, North Carolina        FRANK D. LUCAS, Oklahoma
LEONARD L. BOSWELL, Iowa             JERRY MORAN, Kansas
JOE BACA, California                 ROBIN HAYES, North Carolina
DENNIS A. CARDOZA, California        TIMOTHY V. JOHNSON, Illinois
DAVID SCOTT, Georgia                 SAM GRAVES, Missouri
JIM MARSHALL, Georgia                JO BONNER, Alabama
STEPHANIE HERSETH SANDLIN, South     MIKE ROGERS, Alabama
Dakota                               STEVE KING, Iowa
HENRY CUELLAR, Texas                 MARILYN N. MUSGRAVE, Colorado
JIM COSTA, California                RANDY NEUGEBAUER, Texas
JOHN T. SALAZAR, Colorado            CHARLES W. BOUSTANY, Jr., 
BRAD ELLSWORTH, Indiana              Louisiana
NANCY E. BOYDA, Kansas               JOHN R. ``RANDY'' KUHL, Jr., New 
ZACHARY T. SPACE, Ohio               York
TIMOTHY J. WALZ, Minnesota           VIRGINIA FOXX, North Carolina
KIRSTEN E. GILLIBRAND, New York      K. MICHAEL CONAWAY, Texas
STEVE KAGEN, Wisconsin               JEFF FORTENBERRY, Nebraska
EARL POMEROY, North Dakota           JEAN SCHMIDT, Ohio
LINCOLN DAVIS, Tennessee             ADRIAN SMITH, Nebraska
JOHN BARROW, Georgia                 KEVIN McCARTHY, California
NICK LAMPSON, Texas                  TIM WALBERG, Michigan
JOE DONNELLY, Indiana
TIM MAHONEY, Florida

                                 ______

                           Professional Staff

                    Robert L. Larew, Chief of Staff

                     Andrew W. Baker, Chief Counsel

                 April Slayton, Communications Director

           William E. O'Conner, Jr., Minority Staff Director

                                 ______

    Subcommittee on Specialty Crops, Rural Development, and Foreign 
                              Agriculture

                MIKE McINTYRE, North Carolina, Chairman

JIM MARSHALL, Georgia                MARILYN N. MUSGRAVE, Colorado, 
HENRY CUELLAR, Texas                 Ranking Minority Member
JOHN T. SALAZAR, Colorado            TERRY EVERETT, Alabama
JOHN BARROW, Georgia                 ADRIAN SMITH, Nebraska
EARL POMEROY, North Dakota           JEFF FORTENBERRY, Nebraska
                                     ROBIN HAYES, North Carolina

               Clark Ogilvie, Subcommittee Staff Director

                                  (ii)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Goodlatte, Bob, a Representative in Congress from Virginia, 
  prepared statement.............................................     5
McIntyre, Mike, a Representative in Congress from North Carolina, 
  opening statement..............................................     1
    Prepared statement...........................................     1
Musgrave, Marilyn N., a Representative in Congress from Colorado, 
  opening statement..............................................     2
    Prepared statement...........................................     3

                               Witnesses

McGovern, Hon. James P., a Representative in Congress from 
  Massachusetts..................................................     5
    Prepared statement...........................................     7
Emerson, Hon. Jo Ann, a Representative in Congress from Missouri.    17
    Prepared statement...........................................    18
Yost, Michael W., Administrator, Foreign Agricultural Service, 
  U.S. Department of Agriculture, Washington, D.C................    20
    Prepared statement...........................................    22
Hammink, William, Director, Office of Food for Peace, U.S. Agency 
  for International Development (USAID), Washington, D.C.........    27
    Prepared statement...........................................    28
Levinson, Ellen S., Executive Director, Alliance for Food Aid 
  (AFA); President, Levinson & Associates, Washington, D.C.......    38
    Prepared statement...........................................    40
Reilly, Annemarie, Chief of Staff, Catholic Relief Services 
  (CRS), Baltimore, MD...........................................    55
    Prepared statement...........................................    57
Gillcrist, John, Chairman, Bartlett Milling Company; Director, 
  North American Millers' Association; on behalf of Agricultural 
  Food Aid Coalition, Kansas City, MO............................    59
    Prepared statement...........................................    61
Wickstrom, Cary L., Wheat Farmer; Member, Board of Directors, 
  U.S. Wheat Associates (USW); Immediate Past President, Colorado 
  Wheat Administrative Committee; on behalf of U.S. Wheat 
  Associates' Food Aid Working Group, Orchard, CO................    65
    Prepared statement...........................................    67
Binversie, Robert, Volunteer, Farmer-to-Farmer Program, Keil, WI.    71
    Prepared statement...........................................    73
Sumner, James H., President, USA Poultry & Egg Export Council 
  (USAPEEC); on behalf of Coalition to Promote U.S. Agricultural 
  Exports, Stone Mountain, GA....................................    97
    Prepared statement...........................................    99
Ford, Patrick, Director, International Marketing, Ford's Gourmet 
  Foods; on behalf of Coalition to Promote U.S. Agricultural 
  Exports, Raleigh, NC...........................................   114
    Prepared statement...........................................   116

                   Material Submitted for the Record

Beckmann, David, President, Bread for the World, prepared 
  statement......................................................   118
Kauck, David, Senior Technical Advisor, CARE USA, prepared 
  statement......................................................   119
Maritime Food Aid Coalition, prepared statement..................   127
National Corn Growers Association, prepared statement............   140


                     HEARING TO REVIEW FOOD AID AND
                       AGRICULTURE TRADE PROGRAMS
                    OPERATED BY THE U.S. DEPARTMENT
                   OF AGRICULTURE AND THE U.S. AGENCY
                     FOR INTERNATIONAL DEVELOPMENT

                              ----------                              


                         THURSDAY, MAY 10, 2007

                  House of Representatives,
Subcommittee on Specialty Crops, Rural Development, 
                           and Foreign Agriculture,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to call, at 1:08 p.m., in 
Room 1300 of the Longworth House Office Building, Hon. Mike 
McIntyre [Chairman of the Subcommittee] presiding.
    Members present: Representatives McIntyre, Salazar, Barrow, 
Musgrave, Smith and Moran.
    Staff present: Aleta Botts, Adam Durand, Scott Kuschmider, 
Sharon Rusnak, Kristin Sosanie, Mike Dunlap, and Jamie Weyer.

 OPENING STATEMENT OF HON. MIKE McINTYRE, A REPRESENTATIVE IN 
                  CONGRESS FROM NORTH CAROLINA

    Mr. McIntyre. This hearing of the Subcommittee on Specialty 
Crops, Rural Development, and Foreign Agriculture to review 
food aid and agriculture trade programs operated by the U.S. 
Department of Agriculture and the U.S. Agency for International 
Development will come to order. I am Mike McIntyre from the 7th 
District of North Carolina, and I am pleased to have you with 
us--especially our guests today here in this Subcommittee 
meeting.
    It is always a special privilege to hear from our 
witnesses, and we have several today. This is an opportunity 
for us to be able to hear from a special set of witnesses, and 
in the interest of time, since I was unduly delayed, I am going 
to forego my opening statement to put us right back on schedule 
and to honor the time of our friend and colleague, Mr. 
McGovern, so that he can be on schedule and we will honor his 
time as well as one of our special panelists.
    So with that, I will ask the Ranking Member if she has any 
comments and then we will proceed.
    [The prepared statement of Mr. McIntyre follows:]

Prepared Statement of Hon. Mike McIntyre, a Representative in Congress 
                          From North Carolina

    Good afternoon, and welcome to the Subcommittee's hearing on the 
food aid and foreign agriculture programs operated by the U.S. 
Department of Agriculture and the Agency for International Development. 
I am pleased to welcome Mr. Yost, the Administrator of the Foreign 
Agricultural Service, and Mr. Hammink, Director of the Office of Food 
for Peace at the U.S. Agency for International Development.
    The Trade Title of the farm bill authorizes programs that provide 
food aid and that help promote U.S. agricultural products in overseas 
markets. Many of these programs are up for reauthorization this year, 
and this hearing is designed to reexamine these programs as we prepare 
to write a new farm bill very soon.
Importance of Food Aid
    I am proud to be able to say that the United States is by far the 
largest contributor of international food aid, providing over half of 
the annual total worldwide. I believe this represents the best 
qualities of our nation and our values as we share the fruits of our 
harvests with people in need across the globe.
    Unfortunately, despite the $70 billion provided by the United 
States over the last fifty years, millions of people around the globe 
face severe food shortages every year. As the witnesses will point out 
today, we are actually seeing an increase in the numbers of people 
needing food assistance. Shocks to food systems that might have 
resulted in one bad year twenty years ago now seem to set countries 
back multiple years and multiple harvests. I hope the witnesses will 
address how we can better use the food we provide to reduce the 
incidence of these situations.
    As we examine these programs in the farm bill, we need to determine 
where changes are relevant to ensure that our food aid programs work as 
designed. One theme that dominated a recent Government Accountability 
Office report was the need for greater interagency coordination and 
monitoring to ensure that every dollar spent on food aid is put to good 
use. I know the witnesses here today will address the concerns about 
food aid, and I hope they will elaborate on how we are using food aid 
now to enhance the lives--and really to save the lives--of people 
across the globe.
Market Development Programs
    In addition to the food aid programs in the farm bill, critical 
foreign market development programs are up for reauthorization as well. 
These programs provide the help that our agricultural industry and 
small businesses need to seek out and expand in overseas markets. Many 
agricultural producers and value-added businesses want to sell 
overseas, but simply lack the capacity and resources to finance such an 
expansion. These programs fill that gap by ensuring that entities, like 
the one from North Carolina here today, can break down the barriers 
that prevent them from exporting high-quality, home-grown American 
product overseas.
    As the Inspector General of USDA pointed out in a recent report, we 
need greater efforts to address declining global market share for our 
agricultural producers. We need to examine ways to improve our strategy 
on behalf of these producers who are competing in the global 
marketplace. I hope both USDA and the recipients of benefits of these 
programs can help us find ways to do just that today.
Conclusion
    This hearing provides us an opportunity to take a look at the title 
of the farm bill that contains these programs and look for ways to 
improve upon the foundation that has been in place for over 50 years, 
in the case of our international food aid programs.
    I would encourage witnesses to use the 5 minutes provided for their 
statements to highlight the most important points in their testimony. 
Pursuant to Committee rules, testimony by witnesses along with 
questions and answers by Members of the witnesses will be stopped after 
5 minutes. Your complete written testimony will be submitted in its 
entirety in the record.

    Mrs. Musgrave.

OPENING STATEMENT OF HON. MARILYN N. MUSGRAVE, A REPRESENTATIVE 
                   IN CONGRESS FROM COLORADO

    Mrs. Musgrave. Thank you, Mr. Chairman. I will be brief. I 
just want to thank you for calling this hearing today to review 
our food aid and agricultural trade programs that are operated 
by the United States Department of Agriculture and the U.S. 
Agency for International Development.
    I want to thank all of our witnesses that have come to our 
Committee today and especially Cary Wickstrom, a fellow 
Coloradoan, a wheat grower from my area. I am very glad to have 
Cary here.
    I am looking forward to hearing from USDA and USAID and 
their partners in the battle against hunger in the world. The 
United States is the largest contributor of food aid in the 
world--providing humanitarian and development assistance 
through a variety of programs, and last year in the Sudan alone 
the U.S. provided over \2/3\ of all contributions to the World 
Food Program. The prominent program, Public Law 480, known as 
Food for Peace, which shares the abundance of our United States 
food with those in need around the world, along with McGovern-
Dole Food for Education, Food for Progress and related programs 
to secure necessary commodities for donation. Food for Peace 
provides resources for both emergencies and developmental 
programs to reduce chronic hunger.
    Among the issues before us today is the Administration's 
proposal to use up to 25 percent of Public Law 480 Title II 
funds for local or regional purchase and distribution of 
emergency food aid. I strongly oppose the purchase of 
commodities in foreign markets with their uncertain 
availability as a substitute for maintaining a stable pipeline 
of commodities vital to meeting the needs for millions of 
people worldwide. Regional purchase of commodities has been 
attempted as a stopgap measure in dire emergencies but it has 
had really limited success. So with very little evidence to 
support such a bold divergence from programs with a proven 
track record, I am opposed to a move which would put less food 
in regions of dire need.
    I also look forward to hearing the testimony from the 
witnesses pertaining to the Market Access Program and Foreign 
Market Development Program. As U.S. producers and exporters 
face unfair competition abroad, these programs have lessened 
the damage from foreign export subsidies. In addition to 
promoting exports of American agricultural goods, market access 
and the developmental programs provide assistance to navigate 
the very complicated importation requirements of the other 
countries. Far from being a simple pay-out, the Market Access 
Program requires significant investment from the participating 
company through matching funds and a clear plan for success. It 
is also estimated that the benefits of these programs last from 
3 to 5 years beyond the initial investment and this really 
leverages the impact of the programs. When facing significant 
export subsides abroad, it is important to give U.S. companies 
the tools they need to overcome these barriers. This hearing 
today will provide the background for streamlining food aid and 
agriculture trade programs needed as we approach this next farm 
bill.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mrs. Musgrave follows:]

  Prepared Statement of Hon. Marilyn N. Musgrave, a Representative in 
                         Congress From Colorado

    Thank you, Mr. Chairman, for calling this hearing today to review 
food aid and agriculture trade programs operated by the U.S. Department 
of Agriculture and the U.S. Agency for International Development. I 
would like to thank each of our witnesses for being here today. I also 
especially want to thank Cary Wickstrom, a wheat grower and fellow 
Coloradoan, for offering his testimony on food aid programs.
    I look forward to hearing from USDA, USAID, and their partners in 
the battle against hunger in the world.
    The United States is the largest contributor of food aid in the 
world, providing humanitarian and development assistance through a 
variety of programs. Last year, in Sudan alone, the U.S. provided over 
\2/3\ of all contributions to the World Food Program.
    The prominent program is Pub. L. 480, known as Food for Peace, 
which shares the abundance of U.S. food with those in need around the 
world. Along with McGovern-Dole Food for Education, Food for Progress, 
and related programs to secure necessary commodities for donation, Food 
for Peace provides resources for both emergencies and development 
programs to reduce chronic hunger.
    Among the issues before us today is the Administration's proposal 
to use up to 25% of P.L. 480 Title II funds for the local or regional 
purchase and distribution of emergency food. I strongly oppose the 
purchase of commodities in foreign markets with uncertain availability 
as a substitute for maintaining a stable pipeline of commodities vital 
to meeting needs for millions of people worldwide.
    Regional purchase of commodities has been attempted as a stopgap 
measure in dire emergencies, but with limited success. With very little 
evidence to support such a bold divergence from programs with a proven 
track record, I am opposed to a move which would put less food in 
regions of need.
    I also look forward to hearing testimony from the witnesses 
pertaining to the Market Access Program and Foreign Market Development 
Program. As U.S. producers and exporters face unfair competition 
abroad, theses programs have lessened the damage from foreign export 
subsidies.
    In addition to promoting exports of American agricultural goods, 
market access and development programs provide assistance to navigate 
the complicated importation requirements of other countries. Far from 
being a simple pay-out, the market access program requires significant 
investment from the participating company through matching funds and a 
clear plan for success.
    It is also estimated that the benefits of these programs lasts from 
3 to 5 years beyond the initial investment, further leveraging the 
impact of the programs. When facing significant export subsidies 
abroad, it is important to give U.S. companies the tools they need to 
overcome those barriers.
    This hearing today will provide the background for streamlining 
food aid and agriculture trade programs needed as we approach the next 
farm bill. Thank you, Mr. Chairman, for holding this hearing today.

    Mr. McIntyre. Thank you, Mrs. Musgrave.
    As I said earlier, I am going to forego my opening 
statement and will submit it for the record, so let me move to 
the procedural aspect of this. This hearing does provide us an 
opportunity to take a look at the title of the farm bill that 
contains the programs that I mentioned briefly earlier and that 
Mrs. Musgrave has described as well, and we are very excited 
about the witnesses that are here today. We have an extremely 
long set of witnesses because of the different panels. I want 
to remind the witnesses that will be testifying throughout the 
course of the afternoon of the 5 minutes that are provided 
under the rules. Please highlight the most important points in 
your testimony, and pursuant to Committee rules, testimony by 
the witnesses along with questions and answers by Members will 
be stopped after 5 minutes. So that everybody will know, the 
complete written testimony of any of the witnesses or the 
Members will be submitted to the record in their entirety as 
requested. We may be joined today as well by former Chairman 
Goodlatte and Chairman Peterson, and as they come in, we will 
obviously recognize them. If there are any others who would 
like to make opening statements who are members of the panel, 
we will ask them to do that by entering it into the record.
    [The prepared statement of Mr. Goodlatte follows:]

Prepared Statement of Hon. Bob Goodlatte, a Representative in Congress 
                             From Virginia

    Thank you, Mr. Chairman, for holding this hearing on food aid and 
agriculture trade programs operated by the U.S. Department of 
Agriculture and the U.S. Agency for International Development. I look 
forward to hearing comments from the agencies and private organizations 
involved in facilitation and distribution of foreign food aid.
    During a recent trip to Sudan I witnessed firsthand the incredible 
need for food aid among those displaced by conflict. Without a steady 
supply of food, many of these displaced people would not be able to 
survive. Our farmers and ranchers produce the safest, most abundant, 
and affordable food supplies in the world, and we proud to be able to 
share the bounty of our harvest with those who need it most in the 
global community.
    I am disappointed that the Administration has brought forth a 
proposal which would significantly shift food aid policy away from 
providing food for the hungry in favor of sending cash abroad. The 
Administration's proposal would essentially pull $300 million out of 
taxpayers' pockets and drop it directly into our competitor's markets, 
such as the EU. We cannot guarantee the availability of commodities in 
foreign markets, but we can guarantee the availability, safety and 
reliability of American commodities. I strongly oppose replacing a 
consistent, reliable source of food with potentially unreliable sources 
in foreign markets.
    The U.S. is the world's largest contributor to food aid programs, 
supplying roughly 60 percent of total food aid every year. The reality 
is that if you want to provide foreign food aid, there must be 
Congressional support. The P.L. 480 program enjoys broad support 
because it provides hungry people worldwide with safe, nutritious foods 
while ensuring that the American people's generosity addresses hunger 
directly and without a possible diversion of funds.
    Shifting such a large portion of the P.L. 480 budget to cash 
jeopardizes Congressional support for food aid. As I have in the past, 
I will continue to oppose this proposal.
    I look forward to hearing from the industry regarding the Market 
Access Program and Foreign Market Development Program. Such initiatives 
help small businesses and co-ops position their products in competitive 
foreign markets and I look forward to their comments.
    Thank you, Mr. Chairman.

    As I mentioned earlier, we would like to honor the time of 
our fellow colleagues who are coming on our first panel today, 
Jim McGovern and Jo Ann Emerson, and they along with the 
special guests of our Subcommittee, Jerry Moran and I, all are 
from the same class, the class of 1996, so we have got a little 
mini reunion here. I am thrilled, Jim and Jo Ann, to have you 
here, so the Honorable Jim McGovern, Member of Congress from 
Massachusetts, and the Honorable Jo Ann Emerson, Member of 
Congress from Missouri, we welcome you both.
    Mr. McGovern, you may begin.

   STATEMENT OF HON. JAMES P. McGOVERN, A REPRESENTATIVE IN 
                  CONGRESS FROM MASSACHUSETTS

    Mr. McGovern. Thank you, Mr. Chairman, and I am delighted 
to be here, and I want to thank the Committee for giving us 
this opportunity to talk about the important contributions of 
the George McGovern-Robert Dole International Food for 
Education and Child Nutrition Program, better known as the 
McGovern-Dole Program, and I am especially pleased to be here 
with my colleague, Jo Ann Emerson, who has played such an 
important role in establishing and promoting this program. Let 
me begin, Mr. Chairman, by saying that I believe that the 
McGovern-Dole Program with its flexible mix of commodities, 
cash and technical aid is one of our most successful food aid 
programs.
    In April I had the opportunity to visit two McGovern-Dole 
projects in Kenya, both administered by the World Food Program. 
Working with the Kenyan Government, WFP carries out a school 
feeding program that reaches 1.1 million children in 3,800 
schools. The McGovern-Dole Program provides about half of the 
funding, mainly in the form of commodities for this nationwide 
program and directly serves over \1/3\ of these children. On 
average, it costs just 9 cents a day to provide these children 
with a hot school lunch each day. I first went to the Mukuru 
Kayaba Primary School situated in the Mukuru slums in Nairobi 
with 1,300 students. These children live under very poor 
conditions in shanties with no regular food to eat. About 70 
children are HIV/AIDS orphans and at least one parent is lost 
every 2 weeks due to the HIV/AIDS pandemic. When school feeding 
was introduced, the school population increased rapidly. It 
also allowed students to remain in school the whole day. Mrs. 
Faith Wachira, the School Head Teacher, reported that providing 
a hot lunch significantly reduced truancy. Despite their poor 
backgrounds, parents assist in the daily preparation of the 
food and provide firewood, salt, water, feeding utensils and 
other essentials. I joined the students for their lunch of corn 
and soy meal, maize and vegetable oil cooked into a thick 
porridge. One student I sat next to, sad to say, was hoarding 
some of his food, whether for himself to eat later or for 
another family member at home, I don't know.
    The next day I visited the Kajiado Girls Primary School run 
by the African Inland Church. Located 2 hours outside of 
Nairobi, the school began as a rescue center for Maasai girls 
who were being forced into early marriage. Current enrollment 
consists of 637 girls. In the Maasai community, there exists a 
belief that girls don't deserve an education and should remain 
at home doing chores. There is also a tradition of arranged 
marriages between girls as young as 12 and much older men. At 
the Kajiado School, many of the girls actually board at the 
school out of fear that if they return home, they will be 
forced into marriage and over 100 remain at the school during 
holidays because they cannot safely return to their homes. My 
guide was Head Teacher, Mr. Nicholas Muniu. He told me how the 
McGovern-Dole Program, which began in 2001, significantly 
reduced the school's dropout rate. Now the retention rate and 
daily attendance are very high. Since the school is a boarding 
school, both lunch and dinner are provided. McGovern-Dole also 
freed up funds in the school's budget that were used to hire 
professional cooks, improve the kitchen facilities, purchase 
local produce and reduce or eliminate the modest school fees 
for the neediest pupils. I was particularly moved by a girl 
named Grace who refused her father's demand that she marry an 
older man when she was only 13. In response, her father bought 
a sword with which to kill her and actually demanded that she 
bring him the weapon to end her life. She fled, and she is now 
at the school doing exceptionally well. She is safe, healthy, 
well fed, and with an education. She will have a bright future. 
At Kajiado, I served split yellow pea soup and a heaping 
serving of bulgur wheat for lunch--all provided through the 
bounty of America's farmers.
    Regrettably, since 2003, funding for McGovern-Dole has 
never come close to its initial $300 million budget. Annual 
funding is still only \1/3\ of what it was in the pilot phase. 
McGovern-Dole presently reaches less than half the number of 
children as in the first year, and is operating in half the 
original countries. I have seen firsthand how devastating these 
cuts have been for some of the poorest and most vulnerable 
children in places like Colombia and Ethiopia.
    Congresswoman Emerson and I have introduced legislation, 
H.R. 1616, which we believe provides a blueprint on how to 
restore funding for the McGovern-Dole Program. Currently, the 
bill has 111 cosponsors. Restoring the funding would allow USDA 
to award multiyear grants of 3 to 5 years in duration, 
increasing local confidence in the program and strengthening 
the ability of projects to become self-sustaining. New projects 
could be initiated and existing projects expanded. Also, 
funding could finally be awarded to pre-K and early childhood 
education projects, which are authorized in the McGovern-Dole 
Program but lack the funds to move forward.
    Mr. Chairman, I have traveled to some of the poorest areas 
of the world, city slums and remote rural areas. Not once did 
anyone ever ask me for a bomb or a missile or a military base. 
Instead, mothers and fathers literally beg for help simply to 
keep their children alive, fed and in school. Mr. Chairman and 
Members of the Committee, I know that you face difficult 
choices given the budget constraints that you must work within, 
but McGovern-Dole has proven itself as a very effective way to 
meet these needs.
    Thank you.
    [The prepared statement of Mr. McGovern follows:]

   Prepared Statement of Hon. James P. McGovern, a Representative in 
                      Congress From Massachusetts

    I want to thank Chairman Mike McIntyre, Ranking Member Marilyn 
Musgrave and the Members of the Subcommittee for granting me this 
opportunity to testify on the important contributions of the George 
McGovern-Robert Dole International Food for Education and Child 
Nutrition Program (McGovern-Dole). I am especially pleased to be joined 
by my distinguished colleague from Missouri, Representative Jo Ann 
Emerson, who has played such an important role in helping to establish 
and promote this program.
    McGovern-Dole is among the newest of U.S. food-related development 
programs. It was launched in 2000 by President Bill Clinton as a pilot 
program, the Global Food for Education Initiative (GFEI). The purpose 
of the program is simple and straightforward: to reduce the incidence 
of child hunger among school-age children and to increase their access 
to education by providing at least one nutritious meal each day in 
schools. The GFEI was administered by the U.S. Department of 
Agriculture (USDA) and provided $300 million to 48 school feeding 
projects in 38 countries, reaching nearly seven million children. These 
projects were carried out in 2001-2002 by U.S. non-governmental 
organizations (NGOs), the United Nations World Food Program (WFP), and 
one national government, the Dominican Republic.
    The pilot program proved so successful and received such high 
evaluations that it was established as a permanent program in the Farm 
Security and Rural Investment Act of 2002 and named in honor of former 
senators George McGovern of South Dakota and Robert Dole of Kansas for 
their tireless commitment to end child hunger here at home and around 
the world. The McGovern-Dole made a number of improvements over the 
GFEI pilot program--expanding the universe of U.S. commodities 
available for projects; providing financial and technical assistance 
for transportation, storage, and to strengthen nutritional and 
educational inputs; emphasizing the enrollment and attendance of girls 
and other marginalized children; requiring family and community 
engagement in the project; requiring elements of sustainability to be 
built into the projects from the beginning; and strengthening USDA's 
monitoring and evaluation criteria and capacity for each project. The 
projects must target low-income and poverty areas with low school 
attendance, especially among girls, and where there is a high incidence 
of child hunger and food insecurity. The program continues to be 
administered by the office of Foreign Agricultural Services in the 
USDA.
    Over the past 5 years, the McGovern-Dole Programs have received 
stellar evaluations, both from USDA and from non-governmental studies. 
On average, enrollment rose by 14 percent in schools served by 
McGovern-Dole projects, with enrollment of girls increasing by 17 
percent. Teachers and program administrators report a greater ability 
of children to concentrate after receiving school meals, a general 
improvement in academic performance, and improved test scores. The 
McGovern-Dole Program has increased local communities' concern for and 
participation in their children's education. In addition, both 
households and schools have benefited from training on food 
preparation, health--including HIV/AIDS education and prevention--and 
hygiene provided through the program.
    Rather than report a variety of statistics and results, I encourage 
the Members of the Subcommittee who have not yet had a chance to review 
the USDA evaluations of the GFEI and the McGovern-Dole Program to ask 
USDA to provide you with copies. There you will see the wide variety of 
commodities, projects, and best practices employed by the implementing 
NGOs and WFP. Each program is tailored to meet the needs of the local 
communities, region and country; each receives additional financial and 
in-kind support from national governments, other country and 
international donors, private sector or individual contributors, and/or 
the local communities themselves. Several programs have already 
``graduated'' and achieved sustainability, including projects initiated 
in Lebanon, Moldova, Vietnam and Kyrgyzstan.
    Leaders on both sides of the aisle in Congress agree that the 
McGovern-Dole Program is one of the best programs the United States has 
to end poverty and hunger in the developing world. I have attached to 
my testimony copies of letters and cosponsors of legislation that 
verify this broad bipartisan support. Republican Senator Pat Roberts of 
Kansas has stated that the McGovern-Dole Program serves U.S. national 
security interests. Terrorism breeds where there is hunger and poverty, 
ignorance and despair. McGovern-Dole addresses all of these by 
providing children not only with food, but the hope and promise that 
come with education.
    Over the April recess, I traveled to Ethiopia, Kenya and eastern 
Chad to look at food aid and food security programs that address child 
hunger, HIV/AIDS and nutrition, and meeting emergency humanitarian 
crises. In Kenya, I was privileged to visit two McGovern-Dole projects, 
both administered by the World Food Program.
    WFP, in collaboration with the Kenyan Government's goal to provide 
universal education to its children, carries out a school feeding 
program that reaches 1.1 million children in 3,800 schools. On average, 
it costs about 9 cents a day to provide these children with a hot lunch 
each school day made up of pulses, corn and vegetable oil. The U.S.-
funded McGovern-Dole Program provides about half of the funding in the 
form of commodities for this nation-wide program, and directly serves 
over \1/3\ of these children. The Kenyan Government, other 
international donors--like the UK and Japan, the private sector, 
individual contributions from the U.S. Friends of WFP, and 
contributions from the local beneficiary communities provide the 
remaining funding for the overall national program.
    The first school I visited is the Mukuru Kayaba Primary School, a 
public primary school situated in the Mukuru slums in Nairobi. The 
school started in 1985 as a non-formal school, with only one shanty 
room, two teachers and 10 pupils. It has grown to the current 
population of 1,300 children, including 653 girls and 647 boys, and 
became a public school in 1990.
    These children live under very poor conditions, in shanties, with 
no regular food to eat, given that the majority of their parents are 
without jobs. Girls are at great risk in the community. Sometimes they 
are abducted on their way home from school, and their security is 
always an issue. The school has about 70 children orphaned by HIV/AIDS 
who are being taken care of by their relatives or well-wishers. I was 
told that the school loses at least 1 parent every 2 weeks due to the 
HIV/AIDS pandemic. But I'm pleased to inform the Committee that HIV/
AIDS education and prevention are provided at the school to all the 
pupils. Finally, there are frequent fires in the slum community, which 
often leaves many pupils homeless.
    When school feeding was introduced, the school population increased 
rapidly and allowed for the children to remain in school the whole day. 
Mrs. Faith Wachira, the formidable woman who is the School Head 
Teacher, wanted me to know that there has been a significant reduction 
in truancy after the introduction of lunch, given that the majority of 
the pupils were formerly from the streets. Despite the poor backgrounds 
of the children and the community at large, the parents assist in the 
daily preparation of the food and provide firewood, salt, water, 
feeding utensils, and other essentials. Mrs. Wachira is rightfully 
proud of the progress of her pupils and her staff.
    I had the privilege to serve the children their lunch, and to join 
them during lunchtime. It's a simple meal of corn and soy meal, maize 
and yellow split peas, and vegetable oil--cooked into a thick porridge. 
One of the children I sat next to, I'm sad to say, was hoarding some of 
his food, whether for himself to eat after school or for another family 
member at home, I don't know.
    The second school I visited is Kajiado Girls Primary School, run by 
the African Inland Church. Located over 2 hours outside Nairobi in 
Maasai country, the school originally began as a rescue center for 
Maasai girls who were being forced into early marriage. Over the years, 
enrollment has increased exponentially from the initial 20 girls to the 
current total of 637 girls. The McGovern-Dole Program began in 2001 and 
is administered by WFP.
    In the Maasai community, there exists a belief that girls don't 
deserve an education and should remain at home doing chores. There is 
also a tradition of arranged marriages between girls as young as age 12 
and much older men. At the Kajiado School, many of the girls actually 
board at the school out of fear that if they return home, they will be 
forced into marriage. During holidays and when school is not in 
session, over 100 of the girls remain at the school because they cannot 
safely return to their homes and villages.
    My guide at the school was Head Teacher Mr. Nicolas Muniu, who has 
been with the school for the past 27 years. He told me that the 
McGovern-Dole Program has contributed significantly to a reduction in 
the school's drop-out rate. The retention rate and daily attendance are 
both very high. Given that the school is also a boarding school to many 
of its students, the food provided contributes significantly to the 
daily provision of both lunch and dinner. McGovern-Dole has also freed 
up funds in the school's budget that were used to hire professional 
cooks, improve the kitchen facilities, purchase local produce, and 
reduce or eliminate the modest school fees for the neediest pupils.
    I was particularly moved by a girl named Grace, who refused her 
father's demand that she marry an older man when she was only 13.
    In response, her father bought a sword with which to kill her, and 
actually demanded she bring him the weapon to end her life. She fled--
and she is now at the school doing exceptionally well. She is the 
prefect of her class--or ``head girl,'' and is the leading student in 
mathematics. She is safe, healthy, well-fed, and with an education, 
will have a bright future. When I talked with this modest, composed 
young woman, I genuinely felt like I was seeing the potential of 
Kenya's future.
    The lunch I helped serve to Grace and several hundred other girls 
that afternoon consisted of a split yellow pea soup and a heaping 
serving of bulgur wheat. All provided through the bounty of our own 
farmers. I tried some myself, and I must admit it was both filling and 
very tasty.
    When I returned to Washington, I saw a report produced by the 
Center for Global Development entitled, ``Inexcusable Absence: Why 60 
million girls still aren't in school and what to do about it.'' One of 
the success stories it reviewed is the universal education program in 
Kenya. And one of the statistics cited said that ``In Kenya, school 
feeding programs raised attendance in program schools 30 percent 
relative to schools without a free lunch; and test scores were also 
higher.'' From my brief visits, I can certainly affirm the likelihood 
of these results.
    Regrettably, since 2002, funding for the program has never come 
close to its initial $300 million budget. The last farm bill 
reauthorization provided $100 million for FY 2003, which was to serve 
as a funding ``bridge'' for a smooth transition from the GFEI pilot 
program to the McGovern-Dole Program. In FY 2004 it received only $50 
million; $91 million in FY 2005, an increase due largely to strong 
bipartisan efforts in the House and Senate to increase the funds; and 
it has been funded at $99 million in FY 2006 and FY 2007. The 
President's FY 2008 budget proposal once again requests only $100 
million for the program.
    Erratic funding levels are a serious concern. Even as the program's 
budget increased from 2004, annual funding is still only a third of 
what it was in the pilot phase. McGovern-Dole presently reaches less 
than half the number of children as in the first year, and is operating 
in less than half the original countries.
    I have seen first-hand how devastating these cuts have been for 
some of the poorest and most vulnerable children in Colombia and 
Ethiopia. Each country received substantial GFEI projects in 2001 and 
2002, but those programs were eliminated when funding was cut to $50 
million in 2004 and have never returned. Luckily, in Colombia, USAID 
stepped in and picked up the former GFEI school feeding programs that 
were addressing the needs of internally displaced communities. I travel 
fairly frequently to Colombia, and I still hear requests from the WFP, 
NGOs and local communities for a return of McGovern-Dole funding and 
projects. One mother thanked me and the United States for the meals and 
schooling provided to her children. She told me that the school meals 
program not only allowed her to send her children to school, but kept 
her son from being recruited as a child soldier by the para-militaries 
and the FARC guerrillas.
    Over the April recess, I traveled to Ethiopia to review food aid 
and food security programs. Ethiopia also benefited from the GFEI pilot 
program, receiving $5.3 million over 3 years and reaching over 300,000 
children. Ethiopia is one of the educationally least developed 
countries in sub-Saharan Africa. Household food insecurity is a 
national problem, with an estimated 90 percent of rural household 
affected either by chronic or transitory food shortages. In food 
insecure areas of Ethiopia, school children walk an average of 3 to 4 
kilometers--or 1 hour--to reach school on an empty stomach each 
morning, primarily due to food shortages at home. These nutritional and 
hunger problems reduce the learning capacity of school children, weaken 
their commitment to school, and hinder their active participation in 
educational activities. In April, the WFP coordinator for Ethiopia told 
me that he keeps submitting proposals to USDA for McGovern-Dole 
Programs, but they are not accepted. The reason is simple: the 
McGovern-Dole Program lacks adequate funding.
    Congresswoman Emerson and I have introduced legislation, H.R. 1616, 
which we believe provides a blueprint for the Committee on how to 
restore funding for the McGovern-Dole Program back to its original $300 
million level over a 5 year period. Currently, the bill has 111 
bipartisan cosponsors. I encourage you to review its provisions as you 
move to take up the farm bill reauthorization in the coming weeks.
    Restoring such funding would allow for the McGovern-Dole Program to 
award multi year grants of 3 to 5 years in duration, which would 
greatly increase local confidence in the program and strengthen the 
ability of projects to build in self-sustaining elements. Such funding 
levels would also allow for existing programs to expand their reach and 
for new projects to be funded. And finally, it would allow for funding 
to be awarded to projects focused on pre-K and early childhood 
education, projects that are authorized under the McGovern-Dole but 
which the lack of funds has prevented from moving forward.
    I would simply like to conclude by saying that I have traveled to 
some of the poorest areas of the world, city slums and remote rural 
areas. Not once did anyone ever ask me for a bomb or a missile or a 
military base. Instead, mothers and fathers literally beg for help 
simply to keep their children alive, fed and in school.
    When we provide young children with the health care and nutrition 
they need, we invest in the future potential of every child. When we 
put a meal in the belly and a book in the hand of a student, new 
dreams, aspirations and opportunities are born. When we help a 
community sustain its own school feeding program, then they have often 
worked out ways to increase overall food production. And when educating 
girls becomes valued by a community, then they inevitably marry later, 
have fewer, healthier children, and generate greater income for their 
own families.
    The 9/11 Commission Report recommended significantly greater 
investment on the part of the United States in economic, social and 
development programs as a critical part of winning the war against 
terrorism. Our nation has not taken that recommendation to heart. I 
believe the McGovern-Dole represents America's very best values, and I 
urge the Committee to continue its support of this program and to 
authorize increased funding during consideration of the farm bill 
reauthorization.
    Thank you, Mr. Chairman.

    
    
    McIntyre. Thank you very much, Mr. McGovern.Ms. Emerson.

  STATEMENT OF HON. JO ANN EMERSON, A MEMBER OF CONGRESS FROM MISSOURI

    Ms. Emerson. Thank you, Mr. Chairman. Let me thank all of you for 
being here today and for allowing Jim and I to speak to you all.
    I first want to commend Congressman McGovern for the incredible 
leadership he has shown on the issue of hunger, both here in the 
Congress and even in his previous life before coming to the Congress, 
and that is very obvious from the trips that he has made and the things 
he does each and every day. I am proud to be able to cosponsor this 
bill with him and to prevail upon you all to understand that, with more 
than 300 million hungry children in the world, providing enough food 
aid is really a daunting challenge.
    Let me also say just briefly, I want to submit my formal remarks 
for the record because I can't do them in 5 minutes.
    Mr. McIntyre. Yes, ma'am.
    Ms. Emerson. I also want to acknowledge that we have special 
mentors in this endeavor with Senator George McGovern and Senator Bob 
Dole, who have been just eloquent advocates for ending hunger and they 
have provided nudges of conscience all along the way--reminding us in 
government of our moral responsibility as a country which is rich in 
natural resources and which has an abundant, safe food supply in order 
to help people who can't help themselves. They really deserve so much 
of the credit for encouraging us and so many of our colleagues.
    Since Jim has really outlined everything, let me just say that I 
think that the McGovern-Dole food program takes on this whole issue of 
hunger in a very unique way--not only putting food in the bellies of 
children who need nutrition all over the world, but by virtue of 
bringing these children into a classroom setting we are nourishing not 
only their bodies but their minds, and this is so critical.
    I also want to mention that I had the opportunity to visit one of 
these programs this past summer in Nicaragua. Most of these programs, 
not all but most, often sustain themselves after the McGovern-Dole 
Program ends. It doesn't last forever, but we try to turn the programs 
over to private voluntary organizations, NGOs and the like, and/or 
local governments even take them over and this is important for 
everybody to know. There are too many people and too many needs for our 
programs to stay forever and ever. We want to get the program started 
and then move it off into the private sector.
    These international programs I think, and I reiterate what Jim 
says, are so very important to us here at home because not only are we 
changing the lives of families in far-off places, we are changing the 
minds of the person on the street in countries where America has a less 
than stellar reputation in many cases, and I believe--and I know Jim 
does too--and I believe all of you believe that education and 
humanitarian aid are two of the very best ways we can uproot terrorism 
around the world and we shouldn't overlook the power of a bag of food 
that says ``gift of the people of the United States of America'' to 
accomplish that goal. So I want to thank you all so much for allowing 
us to speak to you today and hope that you understood just like we do 
how important this program is to feeding or beginning to help the 300 
million hungry children around the world.
    Thank you.
    [The prepared statement of Ms. Emerson follows:]

Prepared Statement of Hon. Jo Ann Emerson, a Representative in Congress 
                             From Missouri

    Mr. Chairman and Members of the Committee, I want to thank you for 
the opportunity to appear here today and discuss the George McGovern-
Robert Dole International Food for Education and Child Nutrition 
Program.
    I would like to stress that there is a clear need for the McGovern-
Dole International Food for Education and Child Nutrition Program. 
There are 300 million school aged, children around the world who suffer 
from hunger. Of these children, an estimated 120 million do not attend 
school. Food for Education is just what it sounds like: a unique 
program to simultaneously improve nutrition and education by providing 
students with a nutritious meal or take home rations. The McGovern-Dole 
Program, ably administered by the U.S. Department of Agriculture, 
donates agriculture commodities and provides financial and technical 
assistance to governments, intergovernmental organizations, and PVOs, 
who do a wonderful job identifying and reaching out to those in need.
    While schools are an excellent location for reaching hungry 
students, they are more than merely a way to ensure school-age children 
receive nutritional assistance. By providing assistance through 
schools, the McGovern-Dole Program increases enrollment, increases the 
students' ability to learn and, ultimately, increases the opportunities 
available to our greatest resources--children.
    Mr. Chairman, we know hunger affects learning. Hungry students 
often do not attend school, they are needed at home to help produce 
food or earn money to purchase it. Those hungry individuals who do make 
it to school often have trouble concentrating on lessons if they are 
hungry. Learning, conversely, has an opposite effect on hunger. 
Education allows children to acquire the skills needed to address 
hunger at their young stage of life and in the future. School 
attendance brings a desire to learn and openness to new ideas. Studies 
have also shown that as enrollment increases for girls, stunting in 
children under 5 years old decreases. Among the McGovern-Dole Program's 
greatest successes has been increasing school enrollment among girls.
    If these reasons alone did not make a compelling argument for the 
McGovern-Dole Program, it is also widely recognized that such programs 
add to our national security. At present there are 12,000 madrassas in 
Pakistan. These madrassas provide free food and lodging to students; 
however, a few also get involved in militancy and, ultimately, 
terrorism. But the question Pervez Musharraf is left with is, ``who 
else can provide food for these children?''
    This legislation, quite frankly, is a win-win for the American 
people, and it is a win-win for children all over the world who 
desperately need food assistance and an education. We all know, very 
well, that our country is currently engaged in daily battles with 
individuals who want to harm Americans. However, we are also engaged in 
daily battles for the hearts and minds of the ``man on the street'' in 
under-developed countries. In this battle, the McGovern-Dole 
International Food for Education and Child Nutrition program holds 
great potential.
    These are the reasons the McGovern-Dole Program is needed, however, 
the support for this program is not just based on need; it is also 
based on results. For FY 2006 the McGovern Dole Program has exceeded 
USDA goals for the number of children receiving daily meals or take-
home rations. The McGovern-Dole Program was initiated in 2000 as a $300 
million pilot program, the Global Food for Education Initiative. From 
2001 to 2003 the GFEI fed nearly seven million children through 48 
projects in 38 countries. During the 2002 Farm Bill reauthorization 
process, the GFEI was established as a permanent program and renamed to 
honor Senator George McGovern and Senator Robert Dole.
    The renamed program, however, immediately experienced a funding 
decline from the $300 million provided for the pilot program. H.R. 
1616, legislation introduced by Mr. McGovern and me, which now has 109 
other bipartisan cosponsors, would return us to the $300 million mark 
in FY 2012.
    I would be remiss if I failed to mention the dedication and 
commitment of former Senators McGovern and Dole. These distinguished 
leaders have been eloquent advocates for ending hunger and have 
provided nudges of conscience reminding us in government of our moral 
responsibility as a country rich in natural resources and an abundant, 
safe food supply to help people who cannot help themselves.
    Another of the successes inherent in this program is the 
requirement of graduation. When USDA enters into an agreement with an 
eligible organization to provide food aid assistance in schools, the 
agreement must include provisions to continue the benefits to education 
and nutrition after the commodities stop flowing from USDA. By 
providing a mandatory funding source Congress could ensure a more 
reliable funding stream, sending a message or strong, continuing 
support to beneficiaries in need and to partner governments and 
organizations that our commitment is real. I believe this, more stable 
funding, would also allow USDA to increase the number of multi-year 
commitments made.
    Mr. Chairman, in closing, the McGovern-Dole International Food for 
Education and Child Nutrition Program reflects the humanitarian values 
Americans share. It reflects the value Americans place on an 
education--regardless of sex or race. The program utilizes American 
resources, benefits the American economy, and it makes us safer from 
the enemies of the American people who hope their message of intolerant 
hatred fuels a self-fulfilling response from our great nation. As this 
Committee moves forward with the important work of drafting a farm 
bill, I hope you will give every consideration to reauthorizing this 
important program and expanding it. Thank you.

    Mr. McIntyre. Thank you, and thanks to both of you for the 
moral imperative that you have given us not only in the 
Subcommittee and full Committee but also as fellow Members of 
Congress, and thank you all for being an encouragement and also 
for your exhortation. I think both are well received that we do 
as just mentioned--look at the educational benefits and the 
humanitarian concerns and ultimately look at the ministry of a 
bag of food as you so eloquently described.
    With that, I am happy to let you all make any other 
comment. Both of you finished under 5 minutes, so if there is 
anything else you want to add? I know you have other things and 
we will let you slip on out if you need to, but is there 
anything else either one of you would like to say?
    Mr. McGovern. If I could ask unanimous consent to insert my 
longer testimony into the record.
    Mr. McIntyre. So ordered.
    Mr. McGovern. And again, I would like to associate myself 
with the remarks of my colleague, Jo Ann Emerson, especially on 
the issue, too, of the value in terms of America's prestige 
around the world of this program. When I was in Colombia, I had 
a young mother come up to me and say, ``Please thank the people 
of the United States for this program,'' she said, ``because 
without this program, my son, who is 12 years old, would 
probably be a member of one of the armed groups, either the 
left-wing [Revolutionary Armed Forces of Colombia] (FARC) or 
the right-wing paramilitary because those groups go through and 
they look for child soldiers.'' This mother said that without 
this program she couldn't provide her son a meal on a daily 
basis. With this program, she provides her son a meal on a 
daily basis in a school setting. She said on top of being fed, 
he can maybe become literate and get out of this slum. So, this 
is an incredibly powerful tool in terms of showing the best of 
the United States, and I also agree with Jo Ann that in terms 
of combating terrorism, this is the kind of program that I 
think we should be endorsing wholeheartedly. Thank you.
    Mr. McIntyre. Yes, ma'am.
    Ms. Emerson. Thanks, Mr. Chairman. You know, when I was in 
Nicaragua last summer I was in the rural area. I don't know 
exactly where, about an hour and a half outside Managua, in 
this rural village, if you want to call it a village, because 
people's homes were made out of black plastic trash bags the, 
kind that we use to take our trash out. There had been a 
McGovern-Dole feeding program there that we had transferred 
over to a private organization and suddenly you saw children at 
a school setting. The Japanese Government actually built the 
school where the kids that were--this is how it all started 
with the governments. The kids were in school, they had 
uniforms that had been donated by some other organization, but 
they only still had that one meal every single day, and in this 
case it was maize or corn and soy kind of chopped up like it 
would be hamburger, and beans and a little tiny piece of 
tortilla but yet all of them came together and we had teachers. 
It was fascinating to see probably the 5th and 6th graders 
teaching the 1st graders and the kindergartners and the high 
school kids were teaching the 5th and 6th graders. There were a 
few private teachers, but there were incentives provided for 
these children to actually get scholarships because you have to 
pay for public high school in Nicaragua. It was just amazing 
that these people's lives had gone from living in trash bag 
houses to then having schools--all of which started with the 
McGovern-Dole food feeding program. There was hope in the eyes 
of every single person, the parents and the kids, and it was 
just remarkable. And so I just say that, and Jim of course, has 
been to Africa and Colombia and the like and just to see what 
the power of our American commodities can do, it speaks for 
itself.
    Mr. McIntyre. Very eloquent, very well spoken, and I 
believe as I mentioned the moral imperative that you have given 
us not only speaks to the heart and speaks to the mind but also 
speaks to some of the other issues. Also, I can tell you as a 
Member of the Armed Services Committee, I think you are exactly 
right about how it removes those seeds that are sown with 
regard to potential terrorism and the other things that are the 
end result when we don't pay attention early on in a child's 
life, so thank you all very much. You all have a good afternoon 
and God bless you. We will call our next panel forward. Thank 
you again.
    We would like to welcome our second panel to the table, 
Administrator Michael Yost, Foreign Agriculture Service of the 
USDA, and Mr. William Hammink, Director of the Office of Food 
for Peace, U.S. Agency for International Development, also here 
in Washington. As our witnesses take their seats, Mrs. 
Musgrave, would there be any special comment you would like to 
make in conclusion of the first panel or with regard to the 
beginning of the second panel?
    Ms. Musgrave. No, I am ready to go. Thank you, Mr. 
Chairman.
    Mr. McIntyre. All right. With that then, we will begin. Mr. 
Yost, please begin.

          STATEMENT OF MICHAEL W. YOST, ADMINISTRATOR,
 FOREIGN AGRICULTURAL SERVICE, U.S. DEPARTMENT OF AGRICULTURE, 
                        WASHINGTON, D.C.

    Mr. Yost. Mr. Chairman, Members of the Committee, I am 
pleased to testify today with my colleague from U.S. Agency for 
International Development, William Hammink. I welcome the 
opportunity to discuss the trade and food aid programs 
administered by the United States Department of Agriculture.
    The trade programs administered by the Foreign Agricultural 
Service combined with access gained through free trade 
agreements have served to expand markets for U.S. agricultural 
products. Demand for U.S. food and agricultural products is 
higher than ever. Earlier this month USDA raised its export 
forecast to a record $78 billion for Fiscal Year 2007. Free 
trade agreements have proven to be good for U.S. agriculture. 
Under NAFTA, agricultural exports to Canada and Mexico have 
risen from $9.5 billion to $22 billion annually. Agricultural 
exports to the CAFTA DR countries totaled $2.6 billion in 2006, 
an increase of 18 percent from 2005. Last month we concluded 
negotiations with South Korea on the most commercially 
significant free trade agreement in 15 years. Korea is 
projected to import over $3 billion of U.S. agricultural 
products during Fiscal Year 2007 and almost \2/3\ of the 
current U.S. farm exports to Korea will become duty-free on the 
first day that the FTA is implemented.
    Today I would like to highlight two trade programs 
administered by FAS, the Market Access Program, MAP, and the 
Technical Assistance for Specialty Crops Program, TASC. MAP 
forms a partnership between USDA and nonprofit U.S. 
agricultural trade associations, U.S. agriculture cooperatives, 
nonprofit state and regional trade groups and small businesses. 
In 2006, MAP was used to find new products for markets for 
poultry products in Mexican supermarkets, to expand wheat 
markets in Nigeria and to re-launch U.S. beef sales in Japan. 
Our farm bill proposal recommends increasing MAP funding from 
$200 million to $225 million annually. USDA will allocate this 
additional funding to help address the imbalance between farm 
bill program crops and non-program commodities.
    The TASC program has helped U.S. exporters regain market 
access for millions of dollars of products by addressing 
sanitary, phytosanitary, and technical barriers. The 
Administration's 2007 Farm Bill proposals will increase 
mandatory funding for the TASC grant program at the rate of $2 
million per year up to a total of $10 million for Fiscal Year 
2011 and beyond. In recent years, TASC funding has been used to 
gain market access for California nectarines in Japan, 
harmonize organic standards with Canada and the European Union, 
and create a database of pesticide tolerance levels and 
standards for more than 300 specialty crops in more than 70 
countries.
    To complement the TASC program, the Administration's 2007 
Farm Bill proposals will include a new grant program focused on 
SPS issues and supported by $2 million in annual mandatory 
funding. This additional funding will allow us to better 
address phytosanitary and sanitary issues for all agriculture 
commodities.
    Now I would like to turn to two of our developmental food 
aid programs, the Food for Progress and the McGovern-Dole 
Program. During Fiscal Year 2006, the Food for Progress program 
provided more than 215,000 metric tons of agricultural 
commodities valued at $175 million to 19 developing countries 
and emerging democracies committed to introducing and expanding 
free enterprise in the agricultural sector. Again this year 
more than 215,000 tons of commodities will be provided. More 
than two million people in Afghanistan, throughout Africa and 
Central America will be fed by this program this fiscal year. 
The program is more than about feeding. For example, in 
Madagascar, proceeds from the wheat sales are providing micro-
finance loans to farmers.
    The McGovern-Dole Program, I can't add too much to what 
Congressman McGovern and Congresswoman Emerson said. The only 
thing I would like to add is that I too visited a food aid 
project in Kenya, and if I could sum up the need and the 
results of the program in one word, I would just say it is 
compelling. We appreciate the strong support this program has 
received from Members of Congress.
    In conclusion, as Administrator of the USDA's Foreign 
Agricultural Service, I am proud of our efforts to improve the 
foreign market access for U.S. products, the help we do in 
building new markets, improving the competitive position of 
U.S. agriculture in the global marketplace, and to provide food 
aid and the technical assistance to foreign countries.
    This concludes my statement.
    [The prepared statement of Mr. Yost follows:]

   Statement of Michael W. Yost, Administrator, Foreign Agricultural 
       Service, U.S. Department of Agriculture, Washington, D.C.

    Mr. Chairman, Members of the Subcommittee, I am pleased to appear 
before you today. I welcome the opportunity to discuss the trade and 
food aid programs administered by the U.S. Department of Agriculture 
(USDA).

Introduction
    Since the last farm bill was enacted in 2002, the trade programs 
administered by the Foreign Agricultural Service (FAS) have served to 
open new markets and maintain and expand existing markets for U.S. 
agricultural products. These programs complement our efforts to open 
and maintain markets through trade negotiations, diplomacy, and 
enforcement of trade agreements. To ensure that agricultural interests 
are well represented at the negotiating table, FAS works closely with 
the Office of the U.S. Trade Representative (USTR) and coordinates the 
involvement of USDA regulatory agencies.
    During the past year and a half, the United States successfully 
concluded trade agreements with Colombia, Panama, and Peru that provide 
greater market access for all U.S. agricultural products. Last month, 
we concluded negotiations with South Korea on the most commercially 
significant free trade agreement in 15 years. Korea is projected to 
already import over $3 billion of U.S. agricultural products during 
Fiscal Year 2007 and almost \2/3\ of current U.S. farm exports to Korea 
will become duty-free on the first day of implementation of the new 
FTA.
    Together, our trade programs and negotiations have contributed to a 
strong farm economy and increasing foreign demand for U.S. food and 
agricultural products. Trade continues to be critically important to 
the long-term economic health and prosperity of the American food and 
agricultural sector. Roughly 20-25 percent of U.S. production is 
exported and, with productivity increasing faster than domestic demand, 
export markets are important, particularly markets with a burgeoning 
middle class such as China, India, Indonesia and Brazil.
    The latest USDA export forecast of $78 billion for Fiscal Year 2007 
proves this point. This means the agricultural community is on track to 
increase exports by an estimated $9.3 billion over last year. That 
would be the second largest increase on record and the fourth 
consecutive year of record exports. USDA estimates that U.S. world 
market share is over 19 percent--almost \1/5\--of world agricultural 
trade. This is particularly impressive when you consider that the size 
of the world agricultural trade pie has doubled since 1990.
    However, if we are to continue these impressive gains, we cannot 
rest on our accomplishments. We must continue to expand access to 
overseas markets, where 95 percent of the world's consumers live. We 
must continue to refine and improve our longstanding programs to ensure 
that they operate efficiently and effectively.
    The Administration's farm bill proposals were crafted to strengthen 
U.S. agriculture's competitive position, while meeting our 
international obligations. The farm bill proposals are not only good 
farm policy, but good trade policy. They are predictable, equitable, 
and designed to withstand challenges from other countries. We 
appreciate Congress' serious consideration of the proposals as Congress 
writes the 2007 Farm Bill.

Trade Programs
Market Access Program
    The Department's largest market development program is the Market 
Access Program (MAP), for which funding expires at the end of 2007. 
This program uses funds from the Commodity Credit Corporation (CCC) to 
create, maintain, and expand long-term export markets for U.S. 
agricultural products.
    USDA's farm bill proposals recommend increasing MAP funding from 
$200 million to $225 million annually. USDA will apportion the 
additional funding to help address the imbalance between program crops 
and non-program commodities. MAP forms a partnership between USDA and 
nonprofit U.S. agricultural trade associations, U.S. agricultural 
cooperatives, nonprofit state-regional trade groups, and small U.S. 
businesses to share the costs of overseas marketing and promotional 
activities such as consumer promotions, market research, trade shows, 
and trade servicing.
    I would like to share an example of a MAP success story from my 
home State of Minnesota. Sunrich, a producer and exporter of soy food 
ingredients, has used the MAP program to sharply expand its 
international sales. The company has gone from having a single overseas 
market to selling in Japan, Korea, Spain, France, Germany, Indonesia, 
Australia, New Zealand, and Israel. Exports now generate several 
million dollars in sales for Sunrich. The Market Access Program has 
helped them do market research, produce targeted promotional materials, 
ship samples, and provide technical support to potential buyers 
overseas.

Technical Assistance for Specialty Crops
    As our exports have grown, some of our trade partners have 
increasingly turned to sanitary, phytosanitary, and technical barriers 
to protect their domestic industries and deny market access to U.S. 
agricultural products rather than basing these policies on science. 
USDA has successfully helped U.S. exporters regain market access for 
millions of dollars of products from almonds to spinach. To continue to 
enhance efforts, the Administration's 2007 Farm Bill proposals would 
expand mandatory funding for the Technical Assistance for Specialty 
Crops (TASC) grant program, which is currently funded at $2 million per 
year, by an additional $2 million annually up to $10 million for Fiscal 
Year 2011 and beyond.
    TASC projects assist U.S. food and agricultural organizations to 
address phytosanitary and technical barriers that prohibit or threaten 
the export of U.S. specialty crops. The program has proven to be very 
effective in providing support for specialty crop exports. In recent 
years, TASC funding has been used to gain market access for California 
nectarines in Japan, harmonize organic standards with Canada and the 
EU, and create a database of pesticide tolerance levels and standards 
for more than 300 specialty crops in more than 70 countries. In 2006, 
USDA funded 26 TASC projects.

Grant Program To Address SPS Issues
    To complement the successes and popularity of the TASC program, the 
Administration's 2007 Farm Bill proposals include a new grant program 
focused on sanitary and phytosanitary issues for other non-specialty 
crop commodities. This new program would provide $2 million in annual 
assistance through mandatory funding. Like the TASC program, this 
assistance could provide U.S. exporters with information on compounds 
restricted by other countries and improve other countries' 
understanding of U.S. safety standards and testing methodologies. It 
also would enable us to tap targeted technical expertise on an ad-hoc 
basis for non-specialty crop commodities.

Technical Assistance To Resolve Trade Disputes
    For small agricultural producers and industries, defending their 
products against inappropriate trade restricting measures such as 
counterfeit labeling, copyright infringement, unfair administration of 
tariff-rate quotas (TRQs) and other barriers to trade is a complex, 
lengthy, and time-consuming process. While U.S. industries can pursue 
unfair trade practices through U.S. trade laws or initiate a case in 
the World Trade Organization (WTO), industries must pay high legal and 
analytical costs for extended periods of time-sometimes years. This is 
particularly challenging for limited resource agriculture industries. 
Conversely, some U.S. agricultural sectors have themselves been 
challenged either in the WTO or under other countries' domestic trade 
laws. USDA, working closely with USTR, helps industries that have been 
challenged. The Administration is requesting that the Secretary of 
Agriculture be granted broad discretionary authority to provide limited 
resource groups with enhanced monitoring, analytical support, and 
technical assistance if he or she deems it would be beneficial to U.S. 
agricultural exports.

International Trade Standard Setting Activities
    USDA works closely with international standard-setting bodies, such 
as the Codex Alimentarius, the International Plant Protection 
Convention, and the World Animal Health Organization, to establish and 
harmonize multilateral food, plant, and animal health and safety 
standards. By assigning U.S. staff to work with these organizations, we 
have a say in their decision-making process and ensure that they design 
and implement standards for trade in agricultural products that are 
science-based and recognize U.S. health and safety standards.
    The United Nations Food and Agriculture Organization (FAO) works 
with member governments to place their nationals in FAO staff 
positions. However, the United States lacks sufficient funding to place 
adequate numbers of Americans in these positions. For example, out of 
approximately 100 positions in the FAO's associate professional officer 
program, European countries fund about 83 positions for their 
nationals, while the United States currently only funds one American.
    As a result, the EU is in a better position to influence 
international organizations' policies and programs than we are. USDA 
needs dedicated funding to strengthen U.S. representation in these 
organizations. In addition, we are having difficulty hiring seasoned, 
director-level staff to represent the United States in these 
organizations because we do not have the funds or the authority to pay 
salaries and allowances commensurate with those received by 
international organization employees. For these reasons, the 
Administration's 2007 Farm Bill proposals request long-term mandatory 
funding of $15 million over 10 years to enhance our ability to assign 
USDA staff support for international trade standard-setting bodies.

Trade Capacity Building
    Before developing countries can become reliable customers for U.S. 
agricultural products, they must first become politically, 
economically, and socially stable. President Bush's National Security 
Strategy recognizes that a lack of economic development, particularly 
in fragile and strategic countries and regions, results in economic and 
political instability which can pose a national security threat to the 
United States. A productive and sustainable agricultural sector is a 
critical factor in creating stability. Only then can these countries 
and regions integrate into the global economy and reduce hunger and 
poverty.
    USDA works to develop the capacity of local governments in 
politically stable, but fragile economies to support market-based 
agriculture. We have provided technical assistance and trade capacity 
building in markets such as Georgia, Armenia, Kenya, Uganda, and 
Pakistan so they can harness the power of trade and create open and 
predictable policies and procedures to boost economic growth and reduce 
poverty.
    In recent years, USDA has worked with the Department of State, the 
Department of Defense, the U.S. Agency for International Development, 
and the National Security Council to assist in the reconstruction and 
stabilization of Afghanistan and Iraq. Revitalization of these two 
countries' agricultural sectors is essential to their development and 
stability. USDA is conducting trade capacity building and technical 
assistance activities in Iraq, including a $7.8 million agricultural 
extension project in conjunction with the U.S. Department of State, and 
marketing education efforts in partnership with U.S. commodity groups.
    The Administration's 2007 Farm Bill proposals provide $2 million 
annually in mandatory funding for agriculture trade capacity building 
for fragile countries and regions by improving food safety, supporting 
agricultural extension projects, agricultural knowledge initiatives, 
and building bilateral partnerships.

Food Aid Programs
    In addition to this trade capacity building assistance, USDA 
administers three food aid programs that support economic development 
in countries needing assistance to get on their feet or needing help in 
a crisis or emergency--the Food for Progress Program, the McGovern-Dole 
International Food for Education and Child Nutrition Program, and the 
Public Law 480, Title I (P.L. 480, Title I) Program. These programs 
support international assistance and development activities that 
alleviate hunger and improve nutrition, education, and agriculture in 
some of the world's poorest countries. Through the provision of 
agricultural commodities, we are able to feed millions.

Food for Progress Program
    During the past 2 decades, the Food for Progress Program has 
supplied over 12 million metric tons of commodities to developing 
countries and emerging democracies committed to introducing and 
expanding free enterprise in the agricultural sector. Commodity 
purchases totaling nearly $3 billion over this period for Food for 
Progress programming have been handled through the Commodity Credit 
Corporation (CCC).
    Under this program, during Fiscal Year 2006, the United States 
provided more than 215,000 metric tons of CCC-funded commodities valued 
at about $77 million. This effort supported 19 developing countries 
that were making commitments to introduce or expand free enterprise 
elements in their agricultural sectors. Again this year, more than 
215,000 metric tons of commodities will be provided. More than two 
million people in 11 countries, including Afghanistan and countries 
throughout Africa and Central America will be fed by this program this 
fiscal year. In Fiscal Year 2008, the President's budget includes an 
estimated program level of $163 million for Food for Progress grant 
agreements carried out with CCC funds.

McGovern-Dole Program
    Another highly successful program is the McGovern-Dole 
International Food for Education and Child Nutrition Program, which 
helps support education, child development, and food security in low-
income, food-deficit countries that are committed to universal 
education.
    This year, we will feed nearly 2.5 million women and children in 15 
developing countries, including Cambodia, Guatemala, and Malawi, with 
the $99 million appropriated funding level. We appreciate the strong 
support this program has received from Members of Congress. In Fiscal 
Year 2008, we are requesting $100 million for the McGovern-Dole 
Program. This amount will be supplemented by an estimated $8 million to 
be received from the Maritime Administration for cargo preference 
reimbursements.
    In the last 5 years, the McGovern-Dole Program has helped feed more 
than 10 million children in more than 40 countries. Last year, USDA 
awarded Counterpart International (CPI) a grant to provide more than 
9,000 tons of commodities for use in Senegal. This McGovern-Dole 
project is using vegetable oil, textured soy-protein, and barley to 
feed nearly 18,000 primary school children and 1,800 pre-school 
children over a 3 year period. The proceeds from the sale of soybean 
oil are being used to improve school sanitation, repair schools, and 
improve the skills of teachers. The project includes a maternal and 
child health component, which provides take-home rations to needy 
mothers with young children. It also provides a growth monitoring and 
promotion program, along with a health education and assistance 
campaign. The leader of one of the villages in which the school feeding 
project is being conducted told the visiting U.S. Ambassador to Senegal 
that, ``We have already seen immediate results from this program as 
students are able to stay in school longer and learn more each day.'' 
This McGovern-Dole school feeding program provides hot daily meals to 
students, permitting them to remain in the classroom and learn for 
longer periods.
    The multi year dimension of this program is essential to addressing 
comprehensively the issue of chronic hunger. Moreover, providing meals 
both at school and through take-home rations provides a powerful 
incentive for children to remain in school. Government-to-government 
partnerships coupled with the important resources provided by the 
private voluntary organizations (PVOs) are vital to sustaining these 
programs and ensuring success.

P.L. 480, Title I Program
    Historically, the P.L. 480, Title I program has been geared 
primarily toward countries with a shortage of foreign exchange and 
difficulty in meeting their food needs through commercial channels. 
Assistance has been provided on a government-to-government basis by 
selling U.S. agricultural commodities on credit terms. In recent years, 
the demand for food assistance using credit financing has fallen, 
mostly because worldwide commercial interest rates have been relatively 
low. For example, in 2006 we signed only three government-to-government 
credit agreements compared to seven in 2002. As recently as 1993, 22 
Title I agreements were signed, but the number has steadily declined 
over the past 14 years. We are not requesting any additional funding 
for P.L. 480, Title I for 2008. The budget recommends that all P.L. 480 
assistance be provided through Title II donations.

Bill Emerson Humanitarian Trust
    USDA also manages the Bill Emerson Humanitarian Trust, which serves 
as a backstop commodity reserve for the P.L. 480 program. This reserve 
is available to provide emergency humanitarian food assistance to 
developing countries, allowing the United States to respond to 
unanticipated food crises with U.S. commodities. We currently have 
915,000 metric tons of wheat in the Trust and $107 million in cash. 
Cash in the Trust provides the flexibility we need to purchase 
appropriate U.S. commodities based on availability and the specific 
need. With commodities in the Trust, we must pay storage costs. Holding 
the 915,000 metric tons of wheat in the Trust is costing more than $9 
million each year or about $10 per ton. Cash in the Trust also allows 
us to respond much more quickly to a food crisis because we can easily 
purchase U.S. commodities, whereas substituting what we have in the 
Trust for what we need to provide consumes precious time.

Upcoming Issues
    This year, several food assistance issues will come to the 
forefront in the domestic and international arenas. USDA chairs the 
Food Assistance Policy Council, which includes senior representatives 
from USAID, the Department of State, and the Office of Management and 
Budget. Over the years, this group has made significant progress in 
ensuring policy coordination of food assistance programs under the 
Agricultural Trade Development and Assistance Act and the Food for 
Progress Act. The Council recently identified key issues to receive 
attention this year: food aid quality, the Administration's 2007 Farm 
Bill proposals, and the challenges facing food aid policy in the WTO.
    For more than 40 years, USDA and USAID have provided micro-nutrient 
fortified food commodities to vulnerable, food-insecure populations. We 
are proud of our record in feeding at-risk recipients of U.S. food aid 
around the world. However, in recognition that both the science of 
nutrition and the nature of recipient populations have changed over 
time, we are examining whether current food aid formulations and 
product manufacturing practices address the needs of at-risk recipients 
and reflect the best available science.
    Toward that end, our initiative includes an in-depth review of the 
types and quality of food products used in the administration of U.S. 
food aid programs. We seek recommendations of what changes, if any, 
should be made to the composition and mix of our commodities. The 
project also continues our efforts to review existing contract 
specifications used to obtain food aid commodities, and to improve our 
post-production commodity sampling and testing regime based upon sound 
scientific standards. All three parts of the project were announced 
formally in April at the International Food Aid Conference.
    USDA and USAID agree on a division of labor for the project. We 
have identified funding. Our respective Requests for Information have 
been published to identify available, independent expertise. Our goal 
is to consult with many stakeholders in food aid, including 
nutritionists, scientists, commodity associations, the World Food 
Program, and the private voluntary organization (PVO) community, to 
make sure all viewpoints are heard. We want to ensure that the food aid 
we provide in the next 40 years is of the highest caliber to meet the 
nutritional requirements necessary to address chronic hunger.
    The Administration's farm bill proposals include a recommendation 
that will provide flexibility in providing food aid when rapid response 
is critical to saving lives. The proposal would authorize use of up to 
25 percent of P.L. 480, Title II, annual funds for the local or 
regional purchase of food to assist people threatened by a food 
security crisis.
    This authority would enable U.S. assistance to be more effective 
and more efficient. The authority would be used in those instances 
where the rapid use of cash for local or regional procurement is 
critical to saving lives in response to an emergency. The intention is 
not to change the way the United States meets most food aid needs, but 
rather to enhance the variety of tools at our disposal to address food 
emergencies. This authority will provide the ability to purchase food 
near the scene of a crisis instead of taking the additional time that 
it can take to load and ship the aid from the United States. As 
Secretary Johanns has said, we do not anticipate opting for local 
purchases often--only when we believe that it is essential to deliver 
aid in the timeframe that it is needed. As I mentioned, our proposal 
would allow us to use no more than 25 percent of total Title II annual 
funding. U.S.-grown food will continue to play the primary role and 
will be the first choice in meeting global needs. We simply ask for 
every available tool to save lives.
    As you are aware, food aid is a subject of discussion in the WTO 
negotiations. In the negotiations, the United States continues to 
strongly defend our ability to use in-kind food aid in emergency and 
non-emergency situations. Emergency food aid should not be disciplined 
because flexibility must be maintained to respond to people in crisis. 
Non-emergency food aid should only be disciplined to ensure that it 
does not displace commercial sales. Cash and in-kind food aid should be 
treated equally in operational disciplines and transparency provisions.
    A variety of programming options must remain available to ensure 
that food aid programs can be tailored to local needs and that sales do 
not disrupt local markets or displace commercial imports. The 
monetization of food aid to generate funds for supporting projects that 
result in increased economic activity and thereby directly confront 
poverty should continue. As the United States has repeatedly stated in 
these negotiations, we seek to help lift poor families out of poverty 
by helping governments design projects that are self-sustaining.
Conclusion
    As Administrator of USDA's Foreign Agricultural Service, I am proud 
of our efforts to improve foreign market access for U.S. products, 
build new markets, improve the competitive position of U.S. agriculture 
in the global marketplace, and provide food aid and technical 
assistance to foreign countries.
    I believe the 2007 Farm Bill Trade Title proposals will make U.S. 
farm policy more equitable, predictable, and better able to withstand 
challenge, while ensuring fairness and providing greater export 
opportunities to farmers, ranchers, and other stakeholders.
    This concludes my statement. I look forward to answering any 
questions you may have. Thank you.

    Mr. McIntyre. Thank you very much.
    Mr. Hammink.

  STATEMENT OF WILLIAM HAMMINK, DIRECTOR, OFFICE OF FOOD FOR 
              PEACE, U.S. AGENCY FOR INTERNATIONAL
             DEVELOPMENT (USAID), WASHINGTON, D.C.

    Mr. Hammink. Mr. Chairman, Members of the Subcommittee, I 
am very pleased to be here today with you to examine the 
performance of U.S. Title II food aid programs that are managed 
by USAID. The Title II Food for Peace Program is a 53 year-old 
institution that has saved the lives of millions of people 
around the world. It is an institution that Americans across 
the country recognize and can be extremely proud of. The last 3 
years we have averaged almost $1.8 billion including 
supplementals, and last year alone procured 2.3 million metric 
tons of food. It is a major indication of U.S. humanitarian 
assistance.
    I would like to focus my remarks on two main areas. One, 
the changing world situation is affecting the Title II food aid 
context for emergency assistance, and two, how we can improve 
the overall efficiency and effectiveness of the Title II food 
aid program. The frequency, magnitude and unpredictability of 
major food crises are increasing due to growing chronic 
vulnerability. Over the last decade we have seen large 
population groups such as pastoralists in East Africa, poor 
farmers in the Sahel, and HIV/AIDS-affected populations in 
southern Africa whose lives and livelihoods are at severe risk. 
There is evidence and understanding that food aid alone will 
not stop hunger. Today, despite the investments and the 
progress made over the past 50 years, globally an estimated 850 
million people are still food insecure. Giving food to people 
will save lives and address short-term hunger needs, but it 
will not by itself save livelihoods or end hunger.
    How can we improve our food aid programs within that 
context? Food aid programs need to be able to respond quickly 
and flexibly with the growing number of emergencies to support 
increasingly more vulnerable and desperate populations, and 
very importantly, integrated with other resources to more 
effectively halt the loss of livelihoods and address the 
underlying causes of food insecurity.
    Let me discuss a few areas where we are focusing to improve 
food aid programs. First, local procurement: The most important 
change that the Administration has been seeking in recent 
appropriation requests and in the Administration's farm bill 
proposal is the authority to use up to 25 percent of the Title 
II funds for the local or regional purchase of food to assist 
people threatened by a food crisis. Let me assure you that our 
U.S.-grown food will continue to play the primary role and will 
be the first choice in meeting global needs. If provided this 
authority by the Congress, we would plan to use local and 
regional purchase judiciously in those situations where fast 
delivery of food assistance is critical to saving lives.
    Two, pre-positioning emergency food aid: To help reduce the 
response time needed, USAID has successfully pre-positioned 
processed food aid at U.S. ports and overseas. Pre-positioning 
is an important tool and could be expanded although there are 
logistical and other limits to pre-positioning food aid. 
However, pre-positioning is not in itself a substitute for 
local procurement authority.
    Third, the Bill Emerson Humanitarian Trust: The Emerson 
Trust is the mechanism to respond to major food aid emergencies 
and clearly complements Title II. One concern is that the 
releases from the Trust have exceeded the statutory limit on 
its annual replenishment.
    Fourth, prioritization: USAID is strategically focusing our 
non-emergency or development food aid resources in the most 
food insecure countries. Resources that were historically 
spread across 30 countries will be concentrated in about half 
that many countries to achieve maximum impact on chronic food 
insecurity issues.
    Last, integration: Under the U.S. foreign assistance 
framework, USAID and the State Department are working to 
integrate all foreign assistance resources toward a number of 
objectives to set a given country on a sustainable path toward 
development. Starting with 2007 Title II funds, these Title II 
non-emergency programs will be integrated into country programs 
with other funds to achieve maximum impact.
    The food aid programs are complex and the problems and 
issues that U.S. food aid must address are increasingly 
complex. USAID is committed to ensuring that Title II food aid 
is managed in the most efficient and effective manner possible 
to decrease costs, increase impact and continue the 53 years of 
proud experience. We look forward to continued discussions.
    Thank you.
    [The prepared statement of Mr. Hammink follows:]

  Prepared Statement of William Hammink, Director, Office of Food for 
 Peace, U.S. Agency for International Development (USAID), Washington, 
                                  D.C.

    Chairman McIntyre, Members of the Subcommittee, I am pleased to 
have the opportunity to meet with you today to examine the performance 
of U.S. food aid programs with particular reference to the 2007 Farm 
Bill discussions. As you know, USAID manages the P.L. 480 Title II 
program, which includes emergency and non-emergency food aid. The new 
farm bill, which will reauthorize the P.L. 480 Title II program, is 
extremely important to ensure the increased efficiency and 
effectiveness of U.S. Title II food aid overseas.
    James Morris, the prior Executive Director of the United Nations 
World Food Programme (WFP), told me shortly before he left office that 
the Office of Food for Peace is much more than an office in USAID. He 
said that after 52 years of providing U.S. food aid to hundreds of 
millions of people around the world, savings millions of lives and 
affecting the livelihoods of millions more, Food for Peace is not just 
an office but an institution, and one that Americans across the country 
recognize and can be extremely proud of.
    However, like any 52 year institution or program, we need to 
continue to look for ways to improve the efficiency and effectiveness 
of how we provide Title II emergency and non-emergency food aid. We 
appreciate this opportunity to share some thoughts with you on ways to 
do that.
    The U.S. plays a global leadership role in food security and as a 
humanitarian food aid donor. The U.S. is the largest food aid donor in 
the world, and the largest single contributor to the World Food 
Programme. However, procuring, shipping, storing, distributing, 
monitoring and evaluating approximately 2.5 million metric tons of U.S. 
food aid each year worth over $1 billion is highly complex, especially 
as we try to minimize costs. Our primary focus is to get food aid 
quickly to sudden emergencies to save lives, make better funding 
decisions, strengthen beneficiary impact of all of our food aid 
programs, improve predictability of non-emergency food aid resources, 
expand integration of food aid with other development programs, and 
concentrate emergency and non-emergency food aid resources in the most 
food-insecure countries.
    As a lead-up to the re-authorization of the farm bill, food aid 
reform is being analyzed and discussed by academics and think tanks, at 
the World Trade Organization, with UN organizations such as FAO and WFP 
and with a broad spectrum of Private Voluntary Organizations (PVOs). We 
are participating in these discussions and listening closely to all of 
these proposals and ideas. Because the farm bill is only taken up 
approximately every 5 years, this is an important opportunity to take 
what we have learned from experience, analyses, and research; and to 
link lessons learned to better inform changes in U.S. food aid 
programs.
    USAID is also undergoing changes. Under a new Strategic Framework 
for U.S. Foreign Assistance, the Department of State and USAID are 
developing a fully integrated process for foreign assistance policy, 
planning, budgeting and implementation. Under the new Framework, our 
goal is to ensure that Title II food aid will, in collaboration with 
all foreign assistance funds in each country context, have an immediate 
impact--saving lives and protecting livelihoods--while also 
contributing to longer term objectives, such as enhancing community and 
household resilience to shocks and reducing future emergency food aid 
needs.
    In reviewing the performance of Title II food aid and considering 
the new farm bill, I would like to focus this discussion on two main 
areas: (1) the changing world situation and context for the Title II 
food aid program; and (2) how we can improve overall efficiency and 
effectiveness of Title II food aid programs within that new context.
The Changing World Situation and Context for Food Aid
    Food aid does not exist within a vacuum. Rather, it addresses needs 
within an international and local economic and political context, and 
that context has substantially shifted in recent years. The new farm 
bill will provide us with an opportunity to address these changed 
conditions with a response that will not just prevent hunger and food 
crises as they occurred years ago, but as they exist now. To do that, 
food aid must address two major trends:
    First, the frequency and magnitude and unpredictability of major 
food crises are increasing due to growing chronic vulnerability. 
Devastating wars, civil strife and natural disasters have often brought 
in their wake food problems. But over the last 5 to ten years, we have 
seen a significant increase in the numbers of people who are affected 
by these events, who face total destitution, a loss of household assets 
and livelihoods, and a chronic exposure to even the most minor of these 
shocks.
    Take drought, for example. There have been droughts periodically 
for thousands of years. And while they have sometimes been deadly, the 
communities involved have generally been able to absorb that shock, 
restructure their livelihoods, and then begin to grow again.
    But now, droughts in Africa appear to be more frequent. Where they 
used to come once every ten or twenty years, they have recently begun 
appearing several times in a ten year period, and more recently still, 
to possibly as little as every 2 or 3 years. With that level of 
frequency, a community's full recovery from a drought is difficult at 
best. In many cases, herders' animals die and the herder sells still 
more animals for food, further shrinking the herd. A farmer who loses 
his crop and food supply may sell his hoes and harrows for food, and 
then hope to find seed to begin again. Each successive drought may find 
many communities increasingly characterized by a deeper and more 
widespread poverty, deteriorating landscapes, drying lakes and rivers, 
an ever poorer agricultural base, no market to sell to or buy from, 
hampered further by poor governance and governmental policies.
    Over the last decade, we have seen large population groups--
pastoralists in East Africa, poor farmers in the Sahel, HIV/AIDS-
affected populations in southern Africa--whose lives and livelihoods 
are either disappearing, or are at severe risk of destruction. 
Continuous and overlapping crises can leave more and more people 
defenseless, chronically vulnerable to major food crises that may be 
triggered by small changes in rainfall, or food prices, or the rising 
cost of fuel.
    Often, war or civil strife occurs within these same populations, or 
grows out of the conditions they live in. Entire generations in some 
countries have grown up in an atmosphere of extreme poverty overlaid by 
civil unrest, if not armed conflict. Portions of these conflict-ridden 
societies, like in Sudan and Somalia, subsist by receiving significant 
amounts of food aid and other humanitarian support to sustain their 
poor economies, perpetually disrupted by poverty, insecurity and war. 
In Sudan alone, WFP is supporting the food needs of almost two million 
internally displaced people (IDPs) in Darfur and another million people 
living near the IDP camps in Darfur who are affected by the crisis. To 
date, the U.S. has borne a disproportionate share of this food aid 
burden, providing about 475,000 metric tons per year for Sudan and 
Eastern Chad. Last year the U.S. contributed half of the assessed food 
aid needs and over 65 percent of all the food donated to Sudan.
    Second, there is evidence and understanding that food aid alone 
will not stop hunger. Today, despite the investments and the progress 
made over the past 50 years, globally an estimated 850 million people 
are still food insecure. While providing food will feed people today, 
it will not, by itself, lead to sustainable improvements in the ability 
of people to feed themselves. Giving food to people will save lives and 
address short term hunger needs, but it will not save livelihoods or 
end hunger. In cases of widespread vulnerability, food aid must be used 
strategically, such as in a national safety net program, and planned 
along with other U.S., other donor and other recipient-country non-food 
development resources, to attack the underlying causes of food 
insecurity, such as lack of rural credit, markets, infrastructure and 
off-farm job opportunities; or environmental degradation, poor 
agricultural productivity, and poor governmental policies. The new U.S. 
Foreign Assistance Framework for foreign assistance will help. With 
respect to Title II non-emergency food aid programs, co-operating 
sponsors can monetize some of the food aid commodities that they 
receive and use the proceeds to implement activities that support the 
broader Title II food aid program.

How Can We Improve Our Food Aid Programs Within That New Context?
    Emergency food aid needs are increasing and becoming less 
predictable, as conflict and natural disasters afflict and undermine 
the survival of a growing number of destitute and chronically food 
insecure people, who are often subsistence farmers, or herders and 
pastoralists. Because of this, food aid programs need to be adapted to 
these new conditions. They need to be able to respond more quickly to 
increasingly more vulnerable and desperate populations. They must be 
more effectively aimed at halting the loss of livelihoods that is the 
consequence of a series of even small shocks. And they must be combined 
with other U.S., other donor, and other recipient-country non-food 
development resources so that the multiple causes of vulnerability can 
be addressed together. Here are some areas where we are considering 
improvements to food aid implementation.
    Local Procurement: First, the most important change that the 
Administration has been seeking in recent appropriation requests and in 
the Administration's farm bill proposals, is the authority to use up to 
25 percent of the Title II funds for the local or regional purchase and 
distribution of food to assist people threatened by a food crisis.
    The long lead-time required to order and deliver U.S. food aid--
normally up to 4 months--means that we often need to make decisions 
well before needs are known. In some cases, the need is sudden, such as 
during a flood or an outbreak of fighting. In other cases, there is an 
unanticipated break in the flow of rations to beneficiaries (pipeline 
break), or even a short-lived cease fire allowing aid agencies to enter 
places previously inaccessible because of security issues where, 
typically, we find people that have been cut off from food for some 
time.
    In the case of drought we are also challenged to get food to people 
on time. There have been great advances in the ability to predict and 
track rainfall, undertake post-rain harvest assessments, and follow 
changing prices, resulting in better early warning. While we can often 
predict the impact of poor rains on crops, it is difficult to predict 
its impact on the ability of people to purchase enough food to eat. In 
the Sahel in 2005, for example, merely below-average rains and a 
marginally weak harvest, known well in advance, resulted in an 
unexpected major crisis because these conditions were compounded by 
unpredictable changes in trade flows among neighboring countries. This 
drew food away from regions with very poor populations, causing price 
spikes and an urgent need for food aid.
    While it is impossible to predict the location and extent of 
emergencies that would require local procurement each year, the 
Administration might have considered using this authority for the 
immediate response to Iraq in 2003, to the Asian tsunami in 2004, in 
southern Africa and Niger in 2005, in Lebanon in 2006 and in East 
Africa in 2006 and 2007. We anticipate that purchases would occur in 
developing countries (in accordance with the OECD Development 
Assistance Committee List of Official Development Assistance 
recipients).
    Let me assure you that our U.S-grown food will continue to play the 
primary role and will be the first choice in meeting global needs. If 
provided this authority by the Congress, we would plan to use local and 
regional purchases judiciously, in those situations where fast delivery 
of food assistance is critical to saving lives.
    We ask that you seriously consider our proposal and the critical 
role this authority could play in saving lives of the most vulnerable 
populations. We are willing to work with you to address your concerns 
in order to move forward to provide for urgent needs.
    Strengthening Assessments: Accurate assessments and well-targeted 
use of food aid are critical for responsible food aid. USAID is 
therefore giving considerable on-going attention to working with the 
WFP and partner PVOs to assist them in strengthening emergency food 
needs assessment and response systems and capabilities. Specifically, 
USAID is actively involved with other donors in providing guidance to 
WFP at the Executive Board on policy and program topics related to 
emergencies, providing technical and advisory input to the UN 
``Strengthening Emergency Needs Assessment Capacity'' (SENAC) activity, 
and providing resources to strengthen the assessment capacities of P.L. 
480 Title II partner non-governmental organizations. USAID fully 
supports the GAO recommendation to enhance needs assessment 
methodologies and donor and host government collaboration; and can use 
and is using WFP, SENAC, the USAID Famine Early Warning System 
(FEWSNET) and other mechanisms to do so.
    Pre-positioning Emergency Food Aid: To help reduce the response 
time needed, for many years, USAID has pre-positioned processed food 
aid, both at U.S. ports and overseas. These efforts have been very 
successful. Pre-positioning processed food in warehouses not far from 
major emergency areas allows us to get this food to the beneficiaries 
at risk of starvation faster. Over 60% of the processed food sent to 
the pre-position sites overseas is redirected at an additional cost to 
meet unanticipated emergency needs and never makes it to the pre-
position warehouses. While pre-positioning could usefully be expanded, 
the current farm bill has a ceiling on how much can be spent on pre-
positioning. There are also significant logistical and other limits to 
pre-positioning food aid. For example, processed foods are the main 
commodities that can be successfully stored near emergencies. In 
addition, there are severe limits to the availability, cost, and 
quality of warehouse space and services near major emergencies, and 
problems certifying the condition of food withdrawn from these 
warehouses. Consistent with the GAO recommendation, we will examine the 
long-term costs and benefits of pre-positioning. But, while we want to 
expand pre-positioning, we do not expect to be able to do much more 
than we are currently. To be clear, pre-positioning is not a substitute 
for local procurement authority, particularly given the logistical 
limits to pre-positioning with respect to the amount and types of 
commodities that can be stored, as well as speed.
    Bill Emerson Humanitarian Trust: The Administration needs to ensure 
that it responds appropriately to major food aid emergencies. The 
primary means of funding large, unanticipated emergency food aid needs 
is the Bill Emerson Humanitarian Trust (BEHT). The BEHT is an important 
resource that assists the U.S. to meet major urgent humanitarian food 
aid needs. The BEHT complements Title II by providing resources to 
address unanticipated emergency food aid needs. However, one concern is 
that the releases from the BEHT have exceeded the statutory limit on 
its annual replenishment. As a result, the BEHT as a resource is 
shrinking.
    Prioritization: In 2005, USAID issued a new Food Aid Strategic Plan 
for 2006-2010. This plan seeks to make the best use of Title II food 
aid resources by allocating resources to the most vulnerable people in 
order to help build resiliency and enable them to withstand the next 
drought or flood and, therefore, decrease dependency on food aid in the 
future.
    We are strategically focusing the food aid resources available for 
non-emergency programs on the most food insecure countries. Resources 
that were historically spread across over 30 countries will be 
concentrated in about half as many countries in order to achieve 
maximum impact. Through addressing the most pressing food security 
needs with focused resources (especially in the countries that continue 
to need emergency food aid) we will work to reduce the need for 
emergency food aid over time.
    To address the underlying causes of food insecurity in these 
priority countries, we need to increase integration of Title II and 
other funding sources in programming. For example, in Haiti USAID uses 
Child Survival and Health funds to train health care workers to monitor 
the growth of young children who are receiving food aid under the Title 
II program. In Mozambique, Development Assistance funds are used, in 
conjunction with Title II funds, to support road rehabilitation and 
help farmers get their products to market more quickly and for fair 
prices.
    Integration: Under the U.S. Foreign Assistance Framework, USAID and 
the State Department are working to integrate all foreign assistance 
resources toward a number of objectives designed to set a given country 
on a sustainable path towards development. We have wrapped funding, 
goals, and performance indicators into one system that will be able to 
tell you who is spending the money, what it is being spent on, and what 
we expect to get from spending it. This information will come together 
in an annual Operational Plan submitted to Washington for each country 
where foreign assistance funds are provided. For the first time, 
starting with FY 2007 funds, Title II non-emergency programs will be 
integrated in country programs to achieve maximum impact. By bringing 
U.S. foreign assistance resources together in a strategic and 
integrated fashion, the U.S. Foreign Assistance Framework allows the 
U.S. Government to implement more-effective and multi-sectoral 
interventions that address the overlapping themes of poverty and hunger 
and the underlying factors that cause them, country by country. 
Programs are thus more comprehensive in scope and complementary in 
nature, with food aid serving as only one tool of many working together 
to address the chronic causes of poverty and hunger in the most food-
insecure countries.
    Rationalizing Program Expenses: As we focus on the most food-
insecure countries and integrate food aid programs with other programs 
focused on food insecurity objectives, we need to review our own 
regulations on non-food resources, such as 202(e) authority, to ask 
whether it needs updating. There was a time when the distinction 
between two main non-freight authorities--internal transport, storage 
and handling (ITSH), on the one hand, and 202(e) administrative 
expenses on the other--made sense. After all, that latter category was 
viewed as overhead that should be limited to ensure that as much food 
aid went to beneficiaries as possible. We are considering whether 
consolidating these funding authorities would lead to a more 
streamlined, cost-effective operation by having needs, and not funding 
categories, determine expenditures.
    Another area of food aid resources that deserves a closer look is 
monetization. As the Committee knows, in recent years, monetization has 
generated a significant amount of debate both globally and in the U.S. 
food aid community based on differing views of the impact that 
monetization has on local markets and commercial imports. At the same 
time, we know that monetization can have development benefits and can 
be appropriate for low-income countries that depend on imports to meet 
their food needs. While the U.S. Government strongly supports 
monetization, many in the food aid community are concerned that 
monetization may be lost as a tool in the Doha World Trade Organization 
negotiations and continue to press for its use. Others are prepared to 
look for alternative means to address the causes of hunger and poverty. 
FFP agrees with the GAO recommendation to establish a database on 
monetization to record costs and proceeds, in order to inform this 
debate and seek improvements.
    Monitoring: The GAO has recommended that USAID increase the 
monitoring of Title II programs in the countries where the food is 
monetized and distributed. We support the recommendation to conduct 
more monitoring. USAID currently uses multiple sources of funding to 
cover current monitoring costs for Title II programs. Statutory 
restrictions in the use of Title II resources limit the current level 
of monitoring.
    Food Aid Quality:  Both USAID and USDA are already at work in 
preparing a comprehensive evaluation of food aid specifications and 
products. The report will begin with a thorough evaluation of 
contracting procedures; the focus will be on the expeditious 
enforcement of contract standards in order to gain higher incidence of 
contract compliance. Next, the review will evaluate USDA product 
specifications with a focus on laboratory testing and manufacturing 
standards. The focus of this second stage will be on improving post-
production commodity sampling and testing procedures, with emphasis on 
sound scientific standards.
    The third and final stage of the initiative will review options on 
nutritional quality and cost effectiveness of commodities currently 
provided as USDA and USAID food aid. We want to ensure that the food we 
provide is of the highest caliber to meet the nutritional requirements 
necessary to address today's beneficiaries. We will have consultations 
with nutritionists, food technologists, commodity associations, the 
World Food Program, the PVO community, and all relevant businesses that 
produce, ship, or package food aid. USDA and USAID have already posted 
requests for information from potential contractors to support this 
third stage.
    Partnership:  Finally, I would like to comment on our commitment to 
increase and improve our consultative partnership with our partners and 
to increase public-private partnerships related to food aid and 
reducing food insecurity. For example, the Food Assistance Consultative 
Group (FACG), mandated in the farm bill, has not been as participative 
as USAID and our partners would like to see. We plan to propose changes 
to the structure of the FACG in order to improve the consultative 
nature of discussions and to focus again on specific issues that should 
be solved through a broader consultative process. These changes do not 
require any legislation.
    Food aid programs are complex, and the problems and issues that 
U.S. food aid must address are increasingly complex. The Administration 
is committed to ensuring that Title II food aid is managed in the most 
efficient and effective manner possible, to decrease costs, increase 
impact and continue the 52 years of proud experience in using U.S. food 
aid to save lives and protect and improve the livelihoods of vulnerable 
populations. We look forward to continued discussions and debates with 
Congress on how the farm bill can best allow the United States to 
respond to new food aid challenges to reduce global hunger and poverty. 
Thank you.

    Mr. McIntyre. Thank you very much. Thanks to both of you 
gentlemen.
    Mr. Yost, I would ask you, what is your response to the 
argument that shifting funds out of Public Law 480 for local or 
regional purchase would undercut U.S. support for food aid and 
could even result in less food aid being provided?
    Mr. Yost. Just a couple comments on the 25 percent 
proposal. It is up to 25 percent. It doesn't mandate 25 
percent. Second, it talks about sourcing the food in the local 
area. Just a couple examples I would use: we diverted food aid 
to Lebanon this past year and the best we could do was 17 days 
and we were very fortunate to have a ship in position that was 
loading at the docks in New Orleans. Previously, during the 
tsunami effort, the best we could do was 13 days to divert a 
shipment, and once again we were fortunate to have food in a 
position that we could shift. I think if this argument is 
presented properly, as I have presented it to stakeholders, 
commodity groups, when they learn this is about up to 25 
percent, not buying the food from our competitors but buying 
food locally, and it is about saving lives, the issue is better 
received.
    Mr. McIntyre. And when you say if the argument is presented 
properly, who else do you have confidence under your 
administration and in your service could present that argument 
properly? Who would you designate to do that if you are not 
available?
    Mr. Yost. I have a number of people in our agency, our 
Under Secretary. There are several that would be happy to 
interact.
    Mr. McIntyre. Could you provide us a list of those people 
so we will know who to call upon?
    Mr. Yost. Yes.
    Mr. McIntyre. All right. If you would do that please within 
the next 7 days, if you would submit it to the Committee staff, 
that would be great. Thank you.
    Mrs. Musgrave.
    Mrs. Musgrave. Thank you, Mr. Chairman.
    Mr. Yost, could you elaborate please on the successes of 
the technical assistance programs that are used in resolving 
trade disputes?
    Mr. Yost. The Technical Assistance for Specialty Crops 
Program is where most of our efforts are focused. We work with 
co-operators that are on the ground working on a variety of 
problems in a variety of countries around the globe. We have 
had success with this program and that is one reason the 
Administration's farm bill proposal looks at various ways to 
expand that program.
    Mrs. Musgrave. Further, with budget constraints that we are 
hearing about, can you prioritize the requests of the 
Administration? Where should we have additional spending? Could 
you help me with that, please?
    Mr. Yost. One of the first requests we have is to expand 
the MAP program by $25 million per year. Also, we would like to 
establish a grant program to hire outside entities and experts 
to address sanitary and phytosanitary issues. We are requesting 
$2 million per year for that program. We are also requesting a 
small amount of money to position American international 
standard-setting bodies, and we are looking at expanding the 
TASC program over time up to $10 million per year. I think the 
thing we have to look at in all these requests is that we are 
talking millions of dollars, not billions and not hundreds of 
millions of dollars, but there are billions of dollars of trade 
at stake. We feel very strongly in our agency by implementing 
and funding these programs, we can have a profound effect on 
American agriculture.
    Mrs. Musgrave. Thank you.
    Mr. Hammink, can you identify some of the problems with 
food aid transport which raise the cost, make it take a lot 
longer, and what can be done to streamline this much-needed 
aid, the delivery of this aid?
    Mr. Hammink. Thank you. I am sure that you are aware the 
GAO just completed a report on U.S. food aid, and a good part 
of the report focused on those kinds of efficiency questions. 
We met a few days ago with colleagues in USDA and the Maritime 
Administration. We will be looking at some of the GAO 
recommendations and following through. For example, to see what 
the cost might be in terms of having contracts for transport 
which would be long-term in nature and not just for each trip. 
We will also work with DOD to look at how that could be 
applicable to how Title II is shipped. At the same time, GAO 
had some recommendations on sharing the risks and we will be 
looking at that as well with our colleagues in the Maritime 
Administration and USDA as well as of course the industry, the 
carriers themselves, and other interested people such as the 
PVOs; which would probably take the risk that would be shifted 
from the carriers if we did that. We will continue to look at 
ways to decrease transport costs as well, and will continue 
discussions with the Maritime Administration and with the GAO. 
Thank you.
    Mrs. Musgrave. I would like to thank the witnesses.
    Thank you, Mr. Chairman.
    Mr. McIntyre. Thank you.
    Mr. Barrow.
    Mr. Barrow. Thank you, Mr. Chairman.
    Mr. Yost, I hear you talking about how free trade 
agreements are working out fine for us. I think about what is 
happening in cotton and realize that cotton exports are booming 
to China, but also that we are shipping all our jobs over there 
for processing the raw material into fabric and then turning 
that fabric into finished products. I mean, it is sort of a 
mixed signal there. Are you familiar with the Inspector 
General's report on the USDA's efforts in expanding foreign 
markets?
    Mr. Yost. Yes, I am, Congressman.
    Mr. Barrow. Do you agree with his assessment that you are 
not doing as good a job as you can?
    Mr. Yost. No, we do not agree with it.
    Mr. Barrow. Why?
    Mr. Yost. Last year in 2006, worldwide exports of 
agricultural commodities was $350 billion. We had nearly \1/5\. 
One country commanded almost \1/5\ of those exports. We had $69 
billion of agricultural exports last year. I think we are doing 
an outstanding job.
    Mr. Barrow. This is the Inspector General's assessment, not 
mine. I am just wondering where does that report go off? Where 
does it disagree with your assessment that everything is fine?
    Mr. Yost. They used a different data set at different times 
to come up with their rationale. We have weighed in against it 
and argued against their methods. They still came forward with 
that assessment. They used a base period from 1984 to 2005. If 
you use 1986 to 2006, our share of trade went from 21 to 19.6 
percent. So some of it is statistics used, some of it is the 
data sets. In this case, we would argue that they didn't use a 
standard set of data.
    Mr. Barrow. Didn't use years when we were doing better?
    Mr. Yost. Pardon me?
    Mr. Barrow. They did not use years when we were doing 
better? Is that what you are saying?
    Mr. Yost. No, they started out with a different data set 
than they ended. They used different data to compile their 
statistics.
    Mr. Barrow. Well, I have to say I am concerned. This is one 
area where we have optimal advantages over the rest of the 
world and for us to have \1/5\ may sound outstanding in the 
abstract, but where I am coming from folks feel like our access 
to foreign markets isn't what it ought to be, what access we 
are getting as a result of bleeding in our sectors of our 
economy, and what I hear you saying is that everything is as 
good as it can be.
    Mr. Yost. No, I don't want to imply it is as good as it can 
be.
    Mr. Barrow. All right. How can it be better?
    Mr. Yost. Well----
    Mr. Barrow. And I want your assessment, not the 
Administration's assessment. How do you think things can be 
made better?
    Mr. Yost. I really am a believer in the proposals that we 
are putting forward to attack sanitary and phytosanitary 
issues. We literally have an SPS issue of the week at our 
agency. These are the trade barriers. We need more resources to 
attack these barriers. Some of these are scientific in nature. 
Others are political in nature.
    Mr. Barrow. Do we need resources to attack them or do we 
need to respond in kind because we had a hearing earlier this 
week raising some issues about that that suggest that maybe we 
are not doing enough to protect ourselves from imports into 
this country that don't match our standards. We are not playing 
on a level playing field. We hear that in other contexts about 
environmental standards and labor standards. It seems to me 
that food safety standards are an area where what is good for 
the goose is good for the gander.
    Mr. Yost. My response would be that, if we are going to do 
something, I hope we base it on scientific standards because at 
the end of the day we need to gravitate internationally to 
scientific standards, not----
    Mr. Barrow. I appreciate that and I hear that about things 
being based on sound science and I hear folks on both sides of 
a political argument making that argument, but sound science is 
as sound science does is what I am getting at. I hope that you 
all will come up with something more effective than what we 
have been experiencing so far because we have a case of the 
``slows'' when it comes to sticking up for our exports. Other 
folks are quick on the trigger to use just about every device 
in the world to limit our access to their markets.
    I see my time is running out, so Mr. Chairman, I yield. You 
may say whatever you want, Mr. Yost, but I have to stop.
    Mr. Yost. I tend to agree with a lot of your comments.
    Mr. McIntyre. Thank you very much, and thank you, Mr. 
Barrow for those questions, and we look forward to your 
responses to those in further detail. I would like to now 
acknowledge that Mr. Moran, who is not a Member of the 
Subcommittee but we had greeted him earlier to join us and has 
been here since the beginning, has stepped out. We will let Mr. 
Smith go ahead.
    Mr. Smith. Thank you, Mr. Chairman.
    A question for Mr. Hammink. The GAO identified limitations 
of staff as a barrier to providing effective oversight of food 
aid programs. Do you feel the level of oversight provided by 
USAID staff is adequate for the extended programs and regions 
involved?
    Mr. Hammink. Thank you. I would like to discuss a few 
points. One is that monitoring is adequate, but it can always 
be improved and we do have people monitoring these programs in 
all the countries where we have food aid programs. The GAO 
report appropriately looks at how many monitors we have in 
those countries where we have non-emergency programs. The 
people there are funded from different sources and not always 
Title II so we would welcome continued discussion. We have told 
GAO that we plan to expand our monitoring capabilities--
especially in those countries where we have ongoing multi-year, 
non-emergency programs.
    Mr. Smith. Thank you. I yield back.
    Mr. McIntyre. Thank you, Mr. Smith.
    Mr. Salazar.
    Mr. Salazar. Thank you, Mr. Chairman.
    As many of you know, I am a longtime farmer. I have farmed 
all of my life and one of my biggest concerns of course is 
government intervention in many of the commodity programs. 
Definitely they understand that sometimes government means 
well, but sometimes it really messes up the farmer. For 
example, I am a strong believer in fair trade, not necessarily 
free trade, and many times when it comes to trade programs, 
agriculture is used as the whipping boy and many commodities 
sometimes get the short end of the stick. But one of the things 
I wanted to ask Mr. Yost is, the Secretary of Agriculture has 
proposed the authority for the export enhancement program to be 
terminated in the next farm bill. Could you elaborate on the 
Department's rationale for eliminating this program?
    Mr. Yost. One of the reasons for not extending it is the 
fact that it hasn't been used for a number of years, and would 
not affect U.S. exports. Also, in many cases, particularly now, 
it is hard to present a case where we wouldn't have commercial 
displacement or trade that would go on normally without any 
help or any subsidy from the government.
    Mr. Salazar. Okay. One of the issues that we are having, 
and I tend to disagree with your rationale or your basis on 
saying that the export programs are going well. Last year, for 
example, we became net food importers of specialty crops. Could 
you address that, or do you agree with that?
    Mr. Yost. I don't have the figures off the top of my head. 
You could be right. We do have year-round availability of a 
number of fruits and vegetables. Trade is a two-way street. 
When I go to the grocery store, I see that we have a wide 
variety and abundance of various fresh fruits and vegetables 
year round; plus there are a number of them that I don't know 
what they are. If there wasn't a sign above them, I wouldn't 
know their names. We have a very significant immigrant 
community in this country now and various retailers are 
importing a number of what I would refer to as somewhat exotic 
fruits, vegetables and other products to sell to that 
community.
    Mr. Salazar. Well, especially in the specialty groups, when 
it comes to vegetables, and I agree with you that many times 
the phytosanitary issues are the ones that become really the 
political issues and I understand that for example, with the 
Country of Mexico. In Colorado, I chaired the seed export 
program for potatoes and we tried to open up that market 
forever and ever and it seemed like Canada was able to move 
their product, I think it was over 200 metric tons of seed 
potatoes from Canada, all the way to Mexico yet the American 
Government couldn't, I guess rationalize with the Mexican 
Government and create a good program. So I would encourage you 
to look at specialty crops and vegetable crops especially 
because I think that the phytosanitary issue has become a real 
barrier to fair trade.
    Mr. Yost. We will do that, Congressman. The SPS issues are 
real barriers. We talked with the Mexicans this week about the 
potato situation, and pushed for resolution on that issue.
    Mr. Salazar. Thank you. I yield back, Mr. Chairman.
    Mr. McIntyre. Thank you, Mr. Salazar.
    We would like to thank our witnesses and look forward to 
your full statements in the record and also to your further 
answering the questions in full that you were requested to do 
during this hearing, and certainly welcome you any time to come 
back to our Subcommittee as we move further into the farm bill.
    We appreciate your kindness in being with us and call panel 
three to the table. We understand votes will be coming shortly 
so we are going to move promptly to panel three. While they are 
coming up here, I will go ahead, and in the interest of saving 
time, to let you know that I will be stepping out for a meeting 
with the Speaker in a few minutes and Mr. Salazar will assume 
the gavel. Mr. Barrow will be joining me in that meeting as 
well. So he and I will be slipping out, not because of anything 
that the witnesses say but because the Speaker has summoned us 
to a special meeting concerning this topics this Subcommittee 
is concerned about, namely issues involving peanuts.
    Ms. Ellen Levinson is Executive Director of the Alliance 
for Food Aid in Washington. Ms. Annemarie Reilly, Chief of 
Staff at Catholic Relief Services out of Baltimore. Mr. John 
Gillcrist is Chairman of Bartlett Milling Company on behalf of 
the Agricultural Food Aid Coalition out of Kansas City, 
Missouri. Mr. Robert Binversie is a Volunteer in the Farmer-to-
Farmer Program out of Kiel, Wisconsin. I apologize if any of 
those names or places were mispronounced. Feel free to correct 
my pronunciation if they were not accurate. We have one other 
special guest that I will call upon the Ranking Member, Mrs. 
Musgrave, to introduce.
    Mrs. Musgrave. Thank you, Mr. Chairman. I am especially 
proud today to introduce Cary Wickstrom from the beautiful area 
of the 4th district around Orchard, Colorado. He is the 
Immediate Past President of Colorado Wheat Administrative 
Committee, and Cary and his family have a farming operation 
there, very progressive and far-thinking. So Cary, it is 
especially nice to welcome you today so close to home.
    Thank you, Mr. Chairman.
    Mr. McIntyre. Thank you, Mrs. Musgrave.
    Ms. Levinson, please begin.

 STATEMENT OF ELLEN S. LEVINSON, EXECUTIVE DIRECTOR, ALLIANCE 
     FOR FOOD AID (AFA); PRESIDENT, LEVINSON & ASSOCIATES, 
                        WASHINGTON, D.C.

    Ms. Levinson. Thank you, Mr. Chairman, and we are very 
grateful for the Committee and its longstanding support for 
food aid.
    My name is Ellen Levinson. I am testifying today on behalf 
of 15 nonprofit organizations that are commonly called PVOs, or 
private voluntary organizations, and cooperative organizations, 
and the thing that they have in common is that they all conduct 
international food aid programs in addition to a variety of 
other humanitarian and development activities. They operate in 
130 countries, are partners with both USDA and USAID on food 
aid programs, and they conduct both emergency and non-emergency 
programs. They are a wide range of organizations, World Vision, 
United Methodist Committee on Relief, which is very large, they 
are both very large, American Red Cross, to some smaller, 
lesser known ones like International Relief and Development and 
some cooperative organizations which maybe you are less 
familiar with. And they all have one thing that they do in 
common when they conduct food aid programs, and that is that 
they focus their efforts at the community level and 
particularly in communities that lack the wherewithal to meet 
their basic food aid needs on a regular and sustainable basis.
    I want to just take a minute to explain how we do that. 
Food aid is used in developing countries that have to rely on 
imports to meet their nutritional needs. So, targeting 
populations in need is the initial phase of a food aid program 
planning. As a first step, a PVO will use nationwide data and 
nationwide surveys on things such as infant mortality rates, 
poverty levels, prevalence of disease such as HIV/AIDS, and 
susceptibility to drought to identify the neediest areas within 
the country. Once they have identified that, they meet with 
local administrators and community groups and they determine 
what types of services are already being provided, which 
services are lacking and the types of interventions that would 
be most helpful. They use focus groups, rapid surveys and other 
methods to narrow down the target population. Then to avoid 
stigma when they develop programs, they may not necessarily 
just target particular households or people but maybe the whole 
community. So it is a community-wide effort. The goal is to 
build local partnerships, leadership and local capacities so 
that when the program ends, there is something we leave behind. 
Market analysis is a very critical part of food aid programs 
whether it is for distribution or you are going to sell some of 
the commodity and use the proceeds. It is required for all 
programs. One of the things you look at is what we call a 
disincentive analysis, and that is to make sure that the 
commodities chosen will not interfere with local production and 
marketing, and that there is adequate storage in the country 
for the commodities you are bringing in so they will be able to 
be distributed safely and kept properly in the country.
    PVOs add value to the programs by strengthening the 
management capabilities of local institutions, developing 
community leaders, providing a network of contacts and 
relationships, and they encourage entrepreneurship and develop 
programs with lasting benefits. They are audited, and I want to 
be clear that these programs are fully audited by the U.S. 
Government and they are responsible from the moment the 
commodity leaves ship's tackle at U.S. port to the ultimate 
recipient. They provide detailed accounts. If it involves 
monetization, it is how they did the bidding, what prices they 
got and how it is compared to local market prices. If it is 
distribution, they have to show how they manage it, how much 
food is distributed to which populations, plus they measure 
impact. So there is a whole lot of reporting going on. I 
believe USAID and USDA have all this because it is delivered to 
them regularly and perhaps one way we could improve 
understanding of the programs is to have more of that 
information regularly provided to the Committee in reports. I 
think some confusion comes just from not having the data 
summarized before you.
    We have several recommendations for the farm bill, mainly 
to improve the effectiveness of programs and predictability, 
and also to make sure we do more in the area of developmental 
food aid and have emergency backup that is early and quick. 
First we recommend, and you can read the testimony for the 
details, the Bill Emerson Humanitarian Trust that holds 
commodities and funds for emergencies. We would like to make 
sure it is more reliable at the early stage of an emergency and 
immediately after the Title II funding. Public Law 480 Title II 
funding for emergencies is considered to be insufficient. A 
better replenishment mechanism is also needed, and that is 
rather complicated, so I won't go into that at the moment.
    Second, from 2001 to 2006, U.S. developmental food aid fell 
by 42 percent. We would like to turn that around. We think it 
is counterproductive. Non-emergency food aid programs are 
conducted in areas where poverty, unpredictable or unfavorable 
climates and remoteness have made it very difficult for people 
to improve their lives without help from the outside. Our 
programs are giving people a means to improve their lives--
providing stability and a hope for a better future. I have 
examples in my testimony. In Kenya, for example, we have an 
area in the Tracana, a very arid area where not only was food 
aid used for distribution for food for work projects on 
agricultural development and irrigation, but also for targeted 
households for child survival; children who are malnourished 
under the age of 5. We were able to, within 3 years, see 
increases in income and they would be tripled in those 
households. These are areas that are vulnerable regularly to 
droughts but they are now not receiving emergency food aid 
while other areas around them are. So we can really overcome 
some of these causes. We see similar impacts in Bolivia and all 
over the world. In Bolivia, we can show decreased stunting by 
30-some percent in children as well as increased household 
incomes. These have long-term benefits.
    How do we solve the problem of the decreasing developmental 
food aid? Well, I understand you have budget issues so the 
first thing you can do without a budget impact is to assure 
part of the Public Law 480 Title II program is definitely going 
to be used for these programs. We recommend 1.2 million metric 
tons and that cannot be waived. Second, we believe that the 
Food for Progress Program could be increased. Right now we are 
not even meeting the minimum tonnage of 400,000 metric tons. 
That is for countries that are making economic reforms, and we 
are using it to improve agricultural development, critical 
programs, so we would love to see that increase. We do realize 
that has a budget impact so we understand there may be issues 
there.
    And finally, I want to say that we believe there are ways 
to improve the efficiencies of this program and we are happy to 
discuss that with you, but one of the main ways is spreading 
out the deliveries throughout the year. Right now, program 
approvals, particularly under Public Law 480 Title II, lag. 
They aren't approved, and the commodities are not called 
forward, early in the fiscal year. If we could have early 
approvals of programs, have the commodities able to be ordered 
and delivered throughout the year, we wouldn't have what we 
call bunching of orders at the end of the fiscal year that the 
GAO recently reported. It could contribute to 12 to 14 percent 
higher prices. So I think all the way around, and it is better 
for us as implementing agencies so we can get the commodity at 
the right time for the right purpose. And so I think that is 
one recommendation----
    [The prepared statement of Ms. Levinson follows:]

 Prepared Statement of Ellen S. Levinson, Executive Director, Alliance 
 for Food Aid (AFA); President, Levinson & Associates, Washington, D.C.

    Mr. Chairman, thank you for this opportunity to testify before the 
Subcommittee, today, on U.S. food aid programs. My name is Ellen 
Levinson and I am testifying today as the Executive Director of the 
Alliance for Food Aid (AFA or ``Alliance''). The Alliance is comprised 
of 15 private voluntary organizations and cooperatives (jointly called 
``PVOs'') that operate humanitarian and development assistance programs 
in 130 countries, are partners in USDA and USAID food aid programs, and 
conduct both emergency and non-emergency food aid programs.
    The members range from some of the largest charitable organizations 
in the United States that implement a wide variety of projects all over 
the world to smaller organizations that specialize in particular 
regions of the world or have expertise in particular types of programs. 
What they have in common is that they focus their efforts on 
communities that lack the wherewithal to meet their basic food needs on 
a regular and sustainable basis. They use participatory methods that 
emphasize local initiative, provide technical assistance and training, 
and focus on building local capacity, institutions and leaders. Most of 
our members also conduct emergency programs, as well, where food aid is 
needed to save lives and help people regain their health and strength.
    Mr. Chairman, we thank the Congress for its unrelenting support of 
food aid over the years. Food aid is our nation's principal program 
supporting food security in the developing world. It contributes to 
meeting the Millennium Development Goal of cutting hunger in half by 
2015 and is critical for saving lives in the face of disaster. Some 
improvements and upgrades are needed in administrative programmatic 
procedures and greater efficiencies can be built into procurement and 
transportation procedures. However, most important for the 2007 Farm 
Bill is assuring predictable levels for both chronic and emergency 
needs in order to support good program planning and implementation and 
to reverse the downward trend in multi year developmental programs.
    The Alliance has three core recommendations for the 2007 Farm 
Bill--

   Assure adequate amounts of food aid are available from the 
        Bill Emerson Humanitarian Trust and it is available to respond 
        quickly in the face of food shortages, civil unrest, and other 
        crises.

   Increase resources for multi year programs that improve the 
        food security, health and welfare of populations that suffer 
        from chronic hunger by (1) making available at least 1,200,000 
        MT of food aid each year for Title II non-emergency programs 
        that promote food security and protect against the erosion of 
        health and incomes, and (2) lifting the transportation cap on 
        Food for Progress so 500,000 MT can be provided to developing 
        countries that are implementing reforms in the agricultural 
        economies.

   Improve administrative procedures through early program 
        approvals, spreading out procurement throughout the year, 
        improving product quality oversight, and requiring the 
        submission of annual reports from administrative agencies that 
        include information about program targeting and implementation, 
        including monetization and distribution results.
Role of PVOs in Food Aid
    Identifying populations in need is part of the initial program 
planning process for PVOs. Alliance members use data from nationwide 
and regional surveys provided by recipient countries, the United 
Nations, and other recognized sources. Such data may include mortality 
rate of children under the age of 5, infant mortality rates, prevalence 
of malnutrition among children, percentage of people living under the 
poverty line, susceptibility to drought, and prevalence of disease, 
such as HIV/AIDS.
    Once areas of greatest need are pinpointed, PVOs meet with local 
administrators and community groups to determine what types of services 
are already being provided, which services are lacking, and the types 
of interventions that would be most helpful. They use focus groups, 
rapid surveys, and other methods to narrow down the target population 
to those with greatest need. To avoid stigma programs often target the 
community and not just particular households and individuals. The next 
step is working with local partners to design and implement programs. 
For your reference, Attachment A summarizes the program planning and 
approval process for P.L. 480 Title II non-emergency programs for FY 
2007.
    PVOs are audited according to U.S. Government requirements and have 
well-established mechanisms for monitoring and reporting on the use of 
commodities from the point of departure from the U.S. to the ultimate 
recipient. In the case of monetization or if funds have been provided 
for program support, itemized records of the bidding process, funds 
generated and use of such funds are maintained and provided in regular 
reports to USAID and USDA. They also keep records to assess the 
ultimate impact of the program on the intended beneficiaries. Value is 
added to programs by strengthening the management capabilities of local 
institutions and building community capacity; providing a network of 
contacts and relationships linking people overseas with Americans; 
encouraging entrepreneurship and private sector development; and 
creating programs that have lasting benefits.

Why Change Is Needed
    Food security is negatively affected by a wide range of issues, 
including poor agricultural productivity; high unemployment; low and 
unpredictable incomes; remoteness of farm communities; susceptibility 
to natural disasters, civil unrest and instability; wide discrepancies 
between the well-off and the poor; chronic disease; and lack of basic 
health, education, water and sanitation services. Thus, rather than 
just distributing food to needy people, U.S. food aid has evolved into 
a multi-faceted program that addresses the underlying causes of hunger 
and poverty. This mixture of food and support for local development is 
the program's strength and was reinforced in the 2002 Farm Bill. 
However, the Administration was given wide berth to set priorities and 
waive requirements, which has taken food aid down a different road than 
anticipated in 2002.
    Policy changes over the past 5 years have essentially reduced 
overall food aid levels (particularly by eliminating Section 416 
surplus commodities and Title I appropriations), shrunk development-
oriented programs to 42% their 2001 levels (according to an April 2007 
GAO report) , and exposed the lack of contingency planning for food 
emergencies. While the 2002 Farm Bill called for increased levels of 
P.L. 480 Title II development programs to 1,875,000 metric tons, 
instead these programs were reduced and are now about 750,000 metric 
tons.
    The 2002 Bill also called for upgrades and improvements in 
governmental management and information systems, but instead the level 
of programming has become less predictable; program priorities and 
proposal review processes have become more opaque; the ``consultative'' 
nature Food Aid Consultative Group process has deteriorated; Title II 
procedures are making it more difficult for PVOs to access funding; and 
commodity quality control systems have not been renovated to modern 
standards.
    Meanwhile, the world's efforts to meet the Millennium Development 
Goal of cutting hunger in half by 2015 is far from reach--the number of 
people suffering from chronic hunger increased from 1996 to 2004 from 
under 800 million to 842 million--and international appeals for 
emergency food aid are under-funded. While U.S. food aid alone cannot 
resolve this sad and complex problem, it is a critical component of an 
international food security strategy and is particularly effective in 
countries with chronic food deficits and for vulnerable, low-income 
populations.
    Several food aid statutes set tonnage minimums--to assure that food 
is provided in times of high prices. These requirements are important, 
but they need to be updated and supported by sufficient appropriations.
    Finally, Doha Round international trade negotiators, the Food Aid 
Convention and the UN Food and Agriculture Organization all have 
particular roles in international food aid policies and procedures. 
They are examining the use of food aid by donors and are looking 
critically at certain modalities and methodologies, including in-kind 
food aid, monetization and non-emergency programs. While U.S. programs 
are typically well-focused and food security oriented, this is often 
unclear or misrepresented to others. As the largest donor in the world, 
Americans should be proud of their food aid program. It is critical 
that government agencies collect and make available sufficient 
information to show how these programs work and their impact.
    With these factors and trends in mind, we offer recommendations to 
improve the quality and predictability of food aid, and to assure the 
United States has a plan and effective methods to address both chronic 
and emergency needs.
P.L. 480 Title II--the Core U.S. Food Aid Program

1. Administrative Upgrades: Adequate Funding at the Start of the Fiscal 
        Year, Predictable Tonnage Levels, Early Program Approvals, and 
        Sufficient Reporting

    Administered by the U.S. Agency for International Development 
(USAID), Title II provides food aid donations for development programs 
and emergency needs through ``eligible organizations,'' which are PVOs 
and the UN World Food Program. The law sets a minimum commodity level 
for the program of 2,500,000 MT, of which 1,875,000 MT is for non-
emergency programs that address chronic hunger.
    From FY 1999 through FY 2002, the Section 416 surplus commodity 
program provided significant amounts of food aid, and much of it was 
for emergencies. This was a source of supplemental funding for the 
Title II program. As the attached funding chart shows, availability of 
Section 416 surplus commodities was phased out starting in FY 2002. 
While Title II funding increased over the same period and enough is 
provided to meet the 2,500,000 MT minimum commodity level set by law, 
this increase has been insufficient to make up fully for the loss of 
Section 416 commodities. Current funding levels are not maintaining 
adequate levels for both emergency and non-emergency requirements. This 
has resulted in cutbacks in developmental food aid programs, 
uncertainty about the levels of food aid each year and increased 
reliance on supplemental appropriations to fill gaps in emergencies.
    The Government Accountability Office (GAO) noted in a recent report 
that cost savings of 12-14 percent may be possible if commodity orders 
could be spread out more evenly throughout the program year, rather 
than ``bunched'' toward the end of the year. A variety of factors 
contribute to the ``bunching'' of commodity orders, including piecemeal 
appropriations, unreliable levels and late program approvals. From the 
perspective of implementing organizations, these practices have also 
created a series of other unfavorable consequences: commodity 
distribution and sales overseas cannot be well planned when dates of 
delivery are not reliable or when commodities are not made available 
throughout the year. This causes concern about the potential for 
disrupting commercial markets and having the food arrive at the wrong 
time in the program cycle.
    While some emergencies, such as sudden natural disasters and 
outbreak of civil war, cannot be predicted in advance and can occur any 
time during a fiscal year, other emergency needs are ongoing and can be 
factored into the regular budget request and appropriations process. 
For example, areas such as the Horn of Africa that are prone to 
drought, flooding, locusts or other natural disasters are monitored 
through a variety of early warning systems. Other emergencies, such as 
the ongoing conflict in Sudan, are expected to continue until the 
source of the problem is resolved. Because the Administration does not 
ask for adequate funding to meet these anticipated emergency needs, 
funds have been withheld from the non-emergency programs for several 
months as USAID adjusts its budget and waits to see if there will be 
supplemental funding.
    As a result, there are gaps in food aid deliveries for both 
emergency and non-emergency programs, PVOs must cover local costs while 
programs are on hold and some programs are, de facto, cut back. Later 
in the year, the Administration often receives supplemental 
appropriations for the extra emergency needs or uses commodities from 
the Bill Emerson Humanitarian Trust. Because the actual amounts needed 
are not requested up front as part of the regular budget cycle and the 
Administration only uses the Trust as a ``last resort,'' commodity 
orders are concentrated in the last months of the fiscal year.
    The Alliance has several recommendations for improving the 
reliability and timeliness of food aid programs.

   Assure that minimum tonnages are taken seriously and 
        incorporated into USAID's planning and budgeting. Our 
        recommendation for a 1,200,000 MT ``safe box'' for non-
        emergency programs, described under point 2, would help to 
        achieve this goal.

   Require USAID to approve non-emergency programs and 
        commodity levels 2 months in advance of the beginning of the 
        fiscal year. This would allow the first commodity orders to be 
        placed in time for delivery during the first few months of the 
        fiscal year. Since all agreements are subject to 
        appropriations, early approval would not override the budget 
        process. In addition, the Title II account holds extra funds at 
        the end of each fiscal year that are typically carried over and 
        these funds can be used to secure the early orders.

   While we recognize that the Committee on Agriculture may not 
        be in the position to effect this change, on-time 
        appropriations and sufficient appropriations at the beginning 
        of the fiscal year would allow orderly program planning and 
        more timely and efficient delivery of commodities throughout 
        the year, without program disruptions. When adequate sums are 
        available, more commodities can be pre-positioned off-shore for 
        more timely deliveries if an emergency arises. The procurement 
        can be spread out throughout the year, which will allow USDA to 
        plan its procurement to get the best prices possible for 
        commodity and inland transport.

   As described later in our testimony, clarify that the Trust 
        should be used rather than curtailing developmental food aid 
        programs to shift the funds to emergencies.

    With these procedures, commodity ordering and delivery would be 
more reliable, which agricultural processors are seeking so they can 
plan their inventories, which PVOs are seeking so the commodity arrives 
when needed, and which saves money because commodity purchases and 
shipping can be spread out throughout the year rather than spiking 
during the last 3 months of the year.
2. A Safe box for Developmental Food Aid Programs
    Establish a safe box for Title II non-emergency programs that 
assures 1,200,000 metric tons will be made available each for non-
emergency Title II programs each fiscal year. This amount would not be 
subject to waiver.
    Section 204(a)(2) of P.L. 480 directs USAID to make available 
1,875,000 metric tons of commodities for Title II non-emergency 
programs each fiscal year. The law permits USAID to waive this minimum 
after the beginning of the fiscal year if there are insufficient 
requests for programs or the commodities are needed for emergencies. 
This implies that USAID should seek proposals for the full non-
emergency minimum tonnage and only waive the minimum under 
extraordinary circumstances. Instead, months in advance of each fiscal 
year USAID acknowledges that non-emergency programs will be limited to 
about 750,000 MT and does not make the minimum tonnage available.
    We therefore recommend only allowing USAID to waive up to 675,000 
MT of the non-emergency minimum tonnage level, which would assure that 
USAID makes available at least 1,200,000 MT each year for multi year 
food for development programs--reestablishing America's commitment to 
help those suffering from chronic malnutrition and hunger. This is less 
than the minimum tonnage required under law for these programs 
(1,875,000 MT), but more than the amount USAID is actually providing 
(750,000 MT).
    Programs that address the underlying causes of chronic hunger 
include mother-child health care, agricultural and rural development, 
food as payment for work on community infrastructure projects, meals in 
schools and take-home rations to encourage school attendance, and 
programs targeting HIV/AIDS-affected communities. Chronic hunger leads 
to high infant and child mortality and morbidity, poor physical and 
cognitive development, low productivity, high susceptibility to 
disease, and premature death.
    Reducing these programs has been counterproductive, as 
developmental food aid helps improve people's resilience to droughts 
and economic downturns. Giving people the means to improve their lives 
also provides hope for a better future and helps stabilize vulnerable 
areas. Valuable expertise of PVOs to help these communities and to 
respond to food crises is being lost as they must stop their food aid 
activities, leave their local partners and lose their strategic 
networks in these vulnerable areas. Giving people the means to improve 
their lives also provides hope for a better future and helps stabilize 
vulnerable areas.
    We also note with alarm that due to budget constraints, in 2006 
USAID established a policy to limit non-emergency food aid to fewer 
countries in order to ``focus'' the remaining resources. Under this 
policy, non-emergency programs are being phased out in 17 countries and 
cutback in others and programs will be allowed in only 15-18 selected 
countries. Concentrating food aid resources in areas where there is 
high prevalence of food insecurity and vulnerability is appropriate and 
was anticipated in the USAID Food for Peace Strategic Plan, 2006-2010. 
However, the current policy eliminates too many areas where chronic 
hunger is prevalent and was driven by the decision to reduce the budget 
for non-emergency programs. Many poor, vulnerable populations will be 
excluded from receiving food aid, even though their needs are as 
compelling as those populations that will be served. The capacity of 
PVOs to serve populations in non-eligible countries will be lost, 
making it more difficult to respond effectively at the early signs of 
an emerging food crisis, which runs counter to the intent of the 
Strategic Plan.
    The two examples below are in phase out countries, Bolivia and 
Kenya. They show how food aid programs are often conducted in areas 
where poverty, unpredictable or unfavorable climate, and remoteness 
have made it very difficult for people to improve their lives without 
help from the outside. These programs leverage resources and create 
benefits beyond the targeted recipients, increasing the impact per 
dollar spent.
    Bolivia:  Adventist Development and Relief Agency International 
(ADRA), Food for the Hungry (FH) and several other PVOs are conducting 
multi-faceted, 6 year programs in Bolivia using food distribution 
(corn-soy blend, lentils, green peas, soy-fortified bulgur, wheat-soy 
blend and flour) and proceeds generated from the monetization of flour 
to support individual, community and municipal efforts to overcome 
development constraints and to enhance household food security.
    In the targeted rural areas over 70% of the population live in 
poverty and infant mortality rates are 116 per 1,000 births. These 
communities must rely on their own agricultural production as they are 
remotely located, have poor roads and lack transportation.
    The current PVO programs focus on addressing their lack of access 
to markets, health care, schools and social services by increasing 
production and incomes and improving nutrition among vulnerable groups. 
Food aid is distributed (1) for Maternal and Child Health and Nutrition 
(pregnant and lactating mothers, infants and children under 5, the most 
critical stages for cognitive and physical growth); and (2) in 
conjunction with training and technical assistance for improved 
agricultural production, diversified crops to improve the diet, and 
marketing of agricultural products. Concurrent activities included 
increasing access to clean water, improving health and sanitation 
practices, natural resource management, building greenhouses, and 
improving marketing roads and irrigation systems.
    In FH's midterm evaluation (2006, 3 years after the program began, 
compared to 2002 baseline data), they found a 35% decrease in chronic 
malnutrition in children (height/weight or ``stunting'') and household 
incomes had increased by 270% or more. The direct beneficiaries of the 
FH program, alone, were 212,292 people and indirectly, 410,000 people 
benefited. Because of program efficiencies and FH's ability to raise 
more matching funds after the program began, the number of 
beneficiaries was 283% greater than originally planned.
    Kenya: A World Vision Title II program in Kenya targeted 1,528 
pastoralist families in the Turkana region, an arid environment that is 
plagued by recurring droughts. Before the program, these families were 
dependent on emergency food aid nearly every year.
    Some of the commodities provided were distributed as payment for 
participation in training and for working on projects that improved 
irrigation infrastructure, cultivation techniques and land management. 
Other commodities were sold through open tenders and the funds 
generated supported the food for work projects. Within 6 years, even 
though there had been droughts in between, income increased from a 
baseline of $235 per year to $800 per year, families could afford to 
send their children to school, and the communities no longer depended 
on relief. In fact, the program was turned over to the participants and 
they have spread their knowledge to 475 other farmer families.
    PVOs were hoping to replicate this successful model in other areas 
of Kenya where pastoralists are still dependent on emergency rations 
nearly every year. However, USAID is phasing out non-emergency projects 
in Kenya as part of a larger effort to limit the scope of developmental 
food aid programs. Meanwhile, Kenya remains a recipient of emergency 
food aid and pastoralists are particularly at risk.
    Reports accompanying appropriations bills for the past 5 years 
admonish the Administration to meet the Title II non-emergency minimum 
tonnage and to rely on the Bill Emerson Humanitarian Trust for urgent 
needs. However, this language has had no perceivable effect. This 
follows the general trend indicated in a recent GAO's report--from 2001 
to 2006 developmental food aid fell by 42%.
3. Maximize Use of the Section 202(e) Support Funds
    Make 10% of the Title II program level available for Section 202(e) 
support funds and allow these funds to be used to support complementary 
activities associated with food aid programs.
    Section 202(e) funds are provided by USAID to Title II eligible 
organizations to support (A) the establishment of new programs; and (B) 
specific administrative, management, personnel and internal 
transportation and distribution costs associated with carrying out 
programs in foreign countries. The law provides no less than 5% and no 
more than 10% of ``funds made available in each fiscal year'' under 
Title II for these purposes. The Alliance proposes the following 
changes:

   Allow Section 202(e) funds to be used to cover costs for 
        development-related activities conducted under a Title II 
        program by an eligible organization. Monetization is often used 
        for these purposes and Section 202(e) is not sufficient or 
        intended to replace monetization. However, monetization is not 
        appropriate in all target countries and in some countries the 
        ability to monetize varies year-to year based on the market 
        situation. Thus, flexibility is needed so Section 202(e) funds 
        may be used for activities that monetization funding often 
        supports, such as materials, technical assistance and training 
        for agricultural, materials for mother-child health care, and 
        food-for-work infrastructure programs.

   Allow USAID to provide funds to eligible organizations to 
        improve methodologies, such as needs assessments for 
        identifying target populations and monitoring and reporting on 
        the impact of monetization and other aspects of their programs. 
        These are activities that will benefit program implementation 
        overall and are not associated with one particular program.

   Provide not less than 10% of total Title II funding for 
        Section 202(e) purposes. Currently, the law allows between 5% 
        and 10% of Title II funds for this purpose, but when developing 
        its 202(e) allocations, USAID does not want to overshoot the 
        10% maximum. USAID therefore limits 202(e) use to about 7-8% of 
        the regular appropriations level; as it cannot predict how much 
        money may be provided later in the year through supplemental 
        appropriations, carry in funds, or maritime reimbursement. As a 
        result, about 5-6% of the Title II program level is being 
        provided for Section 202(e) (approximately $90 million) Setting 
        a minimum of 10% of total funding provided from all sources 
        will provide the additional funds needed for meeting costs 
        associated with program implementation and improving program 
        methodologies.

    Before the early 1990's, when most non-emergency food aid was 
provided to Latin America and Asia, there were other ways to obtain 
support funds. For example, the Government of India contributed to some 
large-scale Title II food for education and early childhood development 
programs. In some countries, such as Bolivia and Bangladesh, proceeds 
generated from sales of commodities under government-to-government P.L. 
480 Title III programs were available.
    However, Title III programs were phased out more than a decade ago, 
so those funds are no longer available. Now, most Title II food aid is 
provided to sub-Saharan Africa, where the infrastructure is poorly 
developed. While non-emergency programs can be coordinated with 
recipient country developmental or food security plans, the governments 
themselves generally do not provide direct financial or logistical 
support. Instead, they look to the PVO to fill gaps in areas of poor 
coverage. Thus, over the past 10 years PVOs have relied, primarily, on 
monetization to generate funds to cover program costs and, secondly, on 
Section 202(e) funds.
4. Update Food Quality Systems and Product Formulations
    Title II funds should be provided to bring the food aid quality 
enhancement project to completion over the next 3-4 years.
    Both the quality and formulation of food aid products are crucial 
to delivering safe, wholesome products to undernourished populations, 
particularly vulnerable groups such as infants and young children, 
women of child-bearing age and people living with HIV/AIDS. 
Formulations for the value-added products used in Title II have been 
static for decades and food aid distribution overseas has sometimes 
been disrupted due to quality concerns. Through private funding, 
SUSTAIN (a nonprofit that provides technical assistance for food 
systems and was referenced in the 2002 Farm Bill), has made progress to 
address these issues in a scientific, systematic and impartial manner. 
As neither USDA nor USAID has provided funding to support these 
reforms, if necessary, we support the use of Title II funds for this 
purpose.

Assure Timely Use of the Bill Emerson Humanitarian Trust
    To maintain the Trust as a contingency reserve for emergencies 
replenish the Trust with $60 million per year until it is full and 
assure it is available to respond to emergencies in a timely manner and 
without interfering with the provision of Title II non-emergency 
programs each year.
    Administered by USDA, the funds and commodities in the Bill Emerson 
Humanitarian Trust (BEHT or ``Trust'') are needed to supplement P.L. 
480 Title II when there are urgent humanitarian food aid needs. The 
commodities are provided by the Trust and CCC covers the ocean freight 
and delivery costs. The Trust can hold up to 4 million metric tons or 
cash equivalent, but currently only holds about 915,000 metric tons of 
wheat and $107,000,000 (which is available to buy commodities when 
needed). Because a diversity of commodities is needed for emergencies, 
it is best for the Trust to be replenished with funds that can be used 
to procure the appropriate commodities when needed.
    Two mechanisms need to be improved to make the Trust more readily 
available for emergencies: the ``trigger'' for releasing commodities 
and the level of reimbursement. We urge you to make the needed changes 
in the 2007 Farm Bill.
    Trigger:  Section 302(c)(1)(c) of the Bill Emerson Humanitarian 
Trust Act states that a waiver of the Title II non-emergency minimum 
tonnage is not a prerequisite for the release of commodities from the 
Trust. Nonetheless, the Administration has taken the stance that it 
will only use the Trust commodities as a last resort after all other 
avenues, including the Title II waiver, are considered. This may 
partially be driven by the 500,000 metric ton limitation on BEHT 
tonnage that can be provided in any fiscal year, although if the Trust 
is not used 1 year the 500,000 metric tons for that year can be added 
to future year releases. Another reason may be the term 
``unanticipated'' emergencies, which is how the BEHT Act refers to 
releases for international humanitarian crises versus ``emergencies,'' 
which is how the BEHT Act refers to releases in case of short supply of 
a commodity. Thus, we have several recommendations for fixing the 
language.
    First, create safe box for 1,200,000 metric tons (about $600 
million total cost) for Title II non-emergency programs that cannot be 
waived. This takes away the confusion about whether the waiver is used 
before the Trust can be accessed. Second, eliminate the part of the 
Trust that refers to ``short supply,'' as it is a vestige of a time 
when food aid was considered ``surplus'' and is outdated now that the 
Trust can hold funds. Third, change the terminology and allow 
commodities or funds to be released when there are emergency food aid 
needs. And, forth, allow up to 1,000,000 metric tons to be released in 
any fiscal year.
    Replenishment: Currently, the Trust may be replenished either 
through a direct appropriation or by capturing $20 million of funds 
reimbursed to CCC from P.L. 480 as repayment for previous use of the 
Trust. The Administration has never requested a direct appropriation, 
but Congress provided $67 million for replenishment as part of the FY 
2003 Iraq Supplemental Appropriations Act. In addition, USDA has twice 
captured $20 million from P.L. 480 reimbursements. Thus, the Trust now 
holds $107,000,000. This amount plus the 915,000 MT of wheat held in 
storage makes up the total value of the Trust, which is about 1,500,000 
metric tons in wheat equivalent prices. To bring the Trust to its full 
4 MMT wheat-equivalent level, we urge that the $20 million be raised to 
$60 million per year.

Expand Food for Progress
    Increase the Food for Progress to 500,000 metric tons for programs 
that improve private sector agricultural, food and marketing systems in 
developing countries that are implementing market reforms.
    The Food for Progress Act directs USDA through the Commodity Credit 
Corporation (CCC) to provide a minimum of 400,000 metric tons of 
commodities each year to developing countries that are introducing 
market reforms and supporting private sector development. These 
programs may be implemented by PVOs, the World Food Program and 
recipient country governments. The amount actually provided through CCC 
falls short of 400,000 metric tons because there is a cap on the amount 
of funds that CCC can provide for delivering the commodities and 
administering the programs overseas.
    USDA has authority to use P.L. 480 Title I funds in addition to the 
CCC funds to implement Food for Progress programs. In FY 2006, about 75 
percent of Title I funds were used for this purpose. As no funds were 
appropriated for Title I in FY 2007, and the Administration seeks no 
funding in FY 2008, this means a cut in funding in Food for Progress.
    Many poor, developing countries are undergoing economic reform and, 
therefore, the demand for Food for Progress programs is great. Forty-
six different PVOs apply for Food for Progress programs. For FY 2007, 
100 proposals were submitted by PVOs and 16 by governments, but only 11 
new proposals were approved and three other programs were provided 
second year funding.
    We therefore recommend increasing the minimum to 500,000 metric 
tons and assuring that this amount is available for proposals submitted 
by PVOs. To accommodate the additional tonnage the amount available for 
transporting the commodities would have to be lifted or increased.
Example: International Relief & Development (IRD), Azerbaijan
    Commodities: 10,000 MT soybean meal; Total value: 2,125,467 (1 
year).
    Beneficiaries: 26,899.
    IRD targeted Ganja, Goranboy, and Khanlar in western Azerbaijan, 
because in these regions there is a high concentration of internally-
displaced persons (IDPs), the level of unemployment is close to 70%, 
and the local farmers and IDPs are poor and are not able to support 
their basic needs. Soybean meal monetization was chosen because of 
shortages of feed grains in the country. IRD trained farmers in crop 
and livestock production and market development and distributed small 
grants to start-up local businesses. HIV/AIDS awareness was also 
conducted in the targeted communities.
    Results:

   Business development classes were provided for 1,532 
        farmers, in the town of Ganja and four local regions (Kahnlar, 
        Geranboy, Samukh and Zakatala). As a result, farmers submitted 
        business proposals to IRD, and IRD funded 106 of them.

   IRD published two leaflets, ``Raising chickens in your 
        backyard'' and ``Chicks' diseases and their prevention''; five 
        handbooks on various agricultural topics: ``Recommendations for 
        sheep keepers,'' ``Recommendations for cattle keepers,'' 
        ``Recommendations for beekeepers,'' and ``Recommendations for 
        chicken keepers.''

   The total number of people who benefited from the small 
        grants was 26,899. The farmers and small entrepreneurs formed 
        several groups that were eligible for receiving grants. 
        Recipients included 16 cattle breeding groups, 22 women poultry 
        groups, 38 sheep breeding groups, two women geese groups, 19 
        agro-service groups, two harvesting groups, and seven 
        beekeeping groups. Within a year, monthly income of 
        beneficiaries at least doubled. Each of the 19 agro-service 
        groups received approximately $5,090 and in the first year 
        members provided services in their communities valued at 
        $46,421.

Monetization's Continued Contribution
    Monetization is an important component of food aid programs and we 
support its continued use where appropriate, based on market analysis. 
    Monetization is the sale of commodities in net food-importing, 
developing countries and the use of proceeds in projects that improve 
local food security. It can have multiple benefits and is appropriate 
for low-income countries that must depend on imports to meet their 
nutritional needs. Limited liquidity or limited access to credit for 
international purchases can make it difficult for traders in these 
countries to import adequate amounts of foodstuffs and monetization is 
particularly helpful in such cases. In all cases, the proceeds are used 
to support food security efforts or the delivery of food in the 
recipient country.
    Monetization can also be an effective vehicle to increase small-
scale trader participation in the local market and financial systems, 
can be used to address structural market inefficiencies, and can help 
control urban market price spikes. The commodity can also be integrated 
into agricultural processing operations, helping to establish and 
expand feed mills, fortified foods, and other locally-important 
products. For example, International Relief & Development used bulk 
wheat and soy flour provided through Food for Progress to establish 
small noodle production plants in Cambodia and the soy-fortified 
products were incorporated into school feeding programs. ACDI/VOCA used 
soybean meal donated by USDA to help reestablish the feed industry in 
Indonesia after the economic crisis. Both of these activities expanded 
local enterprise, increased jobs, and had a long-lasting food security 
benefit.
    Market analysis is an important element of all food aid programs, 
but is more extensive for monetization programs. A ``Bellmon 
Determination'' is required for both monetization and distribution to 
make sure the commodities chosen will not interfere with local 
production and marketing and that there is adequate storage for the 
commodities provided. Commodities chosen for monetization are not 
locally produced, are produced in small amounts or are available only 
during certain times of the year. Therefore, the likelihood of creating 
local disincentives to production is small. However, some countries in 
a region have linked markets, so the analysis must also consider inter-
country trade. For example, there is a Bellmon analysis that covers all 
the countries in West Africa.
    As the potential disincentive effect of food aid is oft cited, but 
little researched, one study worth noting is by Abdulai, Barrett and 
Hoddinott [October 2005], which looks at disincentive effects of food 
aid provided in Ethiopia, the largest food aid recipient country in 
Africa over the 10 year review period. It received food for 
distribution and monetization. The study found no disincentive effect 
and note on page 1701 of the article: ``In rural Ethiopia, simple test 
statistics. suggest that the disincentive effects of food aid on 
household behaviors are many, large in magnitude and statistically 
significant. However, when we take into account household 
characteristics. That can affect behaviors and on which food aid is 
commonly targeted--many of these adverse effects vanish. In fact, there 
is some suggestion in these data that food aid leads to increases in 
labor supply to agriculture, wage work, and own business activities.''
    Save the Children and World Vision prepared a review of the PVO 
monetization programs under Title II, covering six commodities in 30 
countries and 48 programs from 2001-2005. They found that the commodity 
choice and quantities avoided competing with local production and 
marketing and therefore diminished potential disincentive effects. As 
the commodity levels provided were small in comparison to needs and 
required imports, the potential for commercial import disruption was 
also small.

Example: Africare's P.L. 480 Title II Development Program in Guinea
    Africare began implementation of a 5 year Guinea Food Security 
Initiative (GnFSI) in the Prefecture of Dinguiraye in the Upper Region 
of Guinea in September 2000. This program represents an expansion of a 
very successful first phase program (1995-2000). This multi-sector 
program is currently operating in 50 of 84 districts of the Prefecture 
providing support to a population of 107,750 people.
    Africare's program focuses on decreasing post-harvest storage 
losses, improving the nutritional status of children under the age of 
5, and increasing the capacity of District Development Committees to 
understand and address the challenges to food availability, access and 
utilization. Dinguiraye is an area that prior to Africare's 
intervention, received no outside assistance and limited support from 
its own governmental ministries. Chronic malnutrition of under five 
children was in excess of 50% and the amount of food available to 
households was adequate for less than 4 months per year.
    The program's positive impacts due to the introduction of improved 
storage techniques include adding a month to post-harvest storage 
without damage to commodities, and doubling the months when adequate 
food is available in the households.
    Working with the Ministry of Health, Africare's nutritional program 
reduced chronic malnutrition rates from 50% to 21% and the number of 
caretakers of under five children that participate in growth 
monitoring, food demonstrations and guided health discussions increased 
to more than 90% of the population. The prospective for these 
activities to continue under the auspices of the Ministry of Health is 
strong, because they are low cost and very popular with the 
beneficiaries themselves. More importantly, the target population has 
had an active role in improving the methodology by which more 
nutritious foods are identified and made available.
    The financial resources for the program are generated by 
monetization of Title II food commodities (approximately 4,600 MT's of 
vegetable oil during FY05 for Africare and two other PVOs). This 
innovative program promotes private sector development and broadening 
of local markets, both for producers and consumers, independently of 
the food security activities funded with the sales proceeds.
    Vegetable oil was chosen for monetization because little is 
produced in country. The amount imported for monetization was small in 
comparison to import needs, which minimizes the likelihood of 
interfering with commercial imports. Further, vegetable oil 
availability is concentrated in the main city, not the outlying areas. 
Africare therefore arranged for the sales to reach the outlying areas 
through the sale of small lots to multiple buyers.
    Africare worked with the Guinean Government and private sector to 
increase the involvement of small-scale distributors to have access to 
vegetable oil, which is usually sold at the high end of the local 
market. A consequence has been the increased distribution of vegetable 
oil throughout the country, outside of the capital and principal urban 
markets to key rural areas that had never been served. Cost recovery 
was at or above local prices and averaged about 87% of the full cost of 
U.S. procurement and shipping. This methodology included private sector 
sales techniques (e.g. closed tender bids, bank guarantees reflecting 
local interest rates and payment of required taxes by the buyer), and 
generated the following benefits:

    1. Higher prices received from the buyers compared to if it was 
        just sold to regular importers, which translates into a larger 
        amount of sales proceeds to support the development activity.

    2. Increased sophistication and understanding of commercial 
        business practices by the private sector, especially the small-
        scale operator who was often unable to participate in these 
        types of transactions (or even the formal financial system).

    3. Increased availability of high quality commodities throughout 
        the national market.

Example: Joint Aid Management Processing Plants in Africa, USDA 
        Programs
    One Alliance member, Joint Aid Management, is a Christian 
humanitarian organization based in South Africa that focuses on 
nutrition programs in schools and for the needy, assistance to orphans 
and vulnerable children, water and sanitation, skills development and 
community training. It established food processing plants to produce 
corn soya blend and other blended and fortified foods for use in its 
nutrition programs, including sales to the UN World Food Program and 
distribution through their own programs. While much of the food it uses 
is locally procured, it also participates in USDA food aid programs, 
processing donated commodities that are then used for nutrition 
programs. This is one of the ways that food aid programs allow the 
creative use of monetization to support local processing while also 
contributing to targeted food security programs.

Pilot Program for Local/Regional Purchase
    We recommend a field-based, pilot program for local purchases for 
famine prevention and relief.
    In-kind food aid continues to be the most dependable and important 
source of food aid. Commodities committed by and sourced directly from 
donor countries, which have more than adequate production to meet their 
domestic needs, is required to assure that sufficient levels food aid 
are available each year. However, there are situations where purchases 
closer to the area of need could provide more timely response, 
diversity of the food basket, and benefits to local agricultural 
development.
    Members of the Alliance were under the impression that Title II 
gives broad discretion to the Administrator of USAID under section 
202(a) to provide commodities under any terms or conditions deemed 
necessary for an emergency. Therefore, we assumed local purchase was 
already possible, albeit not meant to be used on a regular basis. 
However, we understand that USAID interprets this section differently.
    The Administration has proposed to provide up to 25% of Title II 
funds for local or regional purchase for emergencies. Many of the areas 
where food aid is delivered need additional commodities from imports to 
meet their needs and there may little room to expand on the local/
regional purchase, considering the large amounts that the UN World Food 
Program is already procuring. Therefore, we recommend assuring adequate 
U.S. commodities are assured to meet the minimum tonnages under Title 
II and to add a field-based pilot program for local purchase.
    While PVOs have experience using privately-raised funds and, to a 
limited degree, USAID International Disaster and Famine Assistance 
account funds for local purchases, information from these programs has 
not been systematically collected and therefore is inadequate to use 
for developing appropriate methodologies and best practices for future 
programs. Thus, as part of the 2007 Farm Bill we recommend a pilot 
program for local purchases for famine prevention and relief--

    1. Within recipient countries or nearby low-income countries,

    2. In cases where the procurement is likely to expedite the 
        provision of food aid,

    3. Where the procurement will support or advance local agricultural 
        production and marketing, and

    4. Conducted by PVO implementing partners that have experience with 
        food aid programming in the recipient countries and are fully 
        audited according to U.S. Government regulations.

    To assure that accepted practices for food aid programs are 
followed and to identify appropriate methodologies and best practices 
for future programs, each PVO implementing a pilot program shall:

    1. Prior to implementing a local purchase program, conduct an 
        analysis of the potential impact of the purchase on the 
        agricultural production, pricing and marketing of the same and 
        similar commodities in the country and localities where the 
        purchase will take place and where the food will be delivered;

    2. Incorporate food quality and safety assurance measures and 
        analyze and report on the ability to provide such assurances;

    3. Collect sufficient data to analyze the ability to procure, 
        package and deliver the food aid in a timely manner;

    4. Collect sufficient data to determine the full cost of 
        procurement, delivery and administration; and

    5. Monitor, analyze and report on the agricultural production, 
        marketing and price impact of the local/regional purchases.
McGovern-Dole Food for Education
    The McGovern-Dole Program provides incentives for poor families to 
send their children to school. Requiring an appropriation of no less 
than $100,000,000 each year will give certainty that funds are 
available for multi year programs. These types of programs used to be 
included in Title II, but with the establishment of McGovern-Dole in 
2002, such programs under Title II are being phased out. Increased 
funding would allow more multi year programs, improve program impact, 
and allow broader use of the authority in the law to support both 
educational programs and programs for children under the age of 5, 
which is when malnutrition can have its most devastating impact on 
child development.

Eliminate Objectives That Link Food Aid to Expansion of Export Markets
    Policies and programs for U.S. and other international food aid 
should be established and operated based on the food security needs of 
recipient countries and vulnerable populations rather than donor 
country objectives to expand its export markets. In practice, U.S. food 
aid programs do not include objectives to expand U.S. markets and their 
success is not measured on this basis, but there are provisions in 
current law that state market expansion as an objective. Changes are 
needed to correct this problem: (1) Eliminate the statement in the 
preamble to P.L. 480 that it is the policy of the United States to use 
food aid to ``develop and expand export markets for United States 
agricultural commodities.'' (2) In P.L. 480 Title I, eliminate the 
priority for countries that ``have the demonstrated potential to become 
commercial markets for competitively priced United States agricultural 
commodities'' and other references to using Title I for market 
development purposes.

Conclusion
    In conclusion, Mr. Chairman, we can see the many benefits U.S. food 
aid programs are now creating for poor communities, improving incomes, 
living conditions and nutrition and sowing the seeds for a promising 
future.
    Thank you for supporting these life-giving programs. I would be 
pleased to answer any questions you may have.
                              Attachment A
Summary of PVO/Cooperative (``Cooperating Sponsor'') Proposal Planning 
        Process for P.L. 480 Title II Multi-Year Assistance Programs 
        (MYAPs) for FY 2007 *
---------------------------------------------------------------------------
    * These are commonly called ``non-emergency'' or ``development'' 
programs.
---------------------------------------------------------------------------
FY 2007 Title II Proposal Time Line
    February 22, 2006--Title II Draft FY 2007 MYAP Guidelines for 
Cooperating Sponsors (CSs) were provided for submitting new program 
proposals. The Guidelines list eight evaluation criteria that will be 
used for grading proposals.
    The Guidelines state that activities must fit within the Food for 
Peace (FFP) Strategic Plan 2006-2010, which focuses on reducing food 
insecurity in vulnerable populations and is available on the USAID/FFP 
website. A variety of activities may fall under this overall objective, 
such as natural resource management, income security and social 
services, community development, agriculture development, employment-
labor-training, food and nutrition, disaster prevention and relief. 
Proposals must clearly describe each objective, its rationale and 
implementation plan, and the method for tracking and measuring impact.
    There is a section in the Guidelines called ``legislative mandates 
for type of commodity, programming and program size,'' but no mention 
is made of the 1,875,000 metric ton minimum requirement for non-
emergency programs. No information is provided about the amount of 
funding available or the tonnage level available for MYAPs. However, 
simultaneously, the USAID FFP Office issued a ``priority country plan'' 
that made clear that there would be little, if any additional commodity 
available overall and it the amount available for all non-emergency 
programs would be approximately 750,000 MT ($350 million).
    The priority country plan was introduced at meetings between the 
FFP Office and CSs. USAID informed CSs that for FY 2007, new programs 
will only be accepted in 15 ``priority countries,'' while for FY 2006 
there were 32 countries. Multi year programs that were underway in the 
17 countries not on the priority list would be phased out over the next 
2-3 years, requiring changes in many of the already-approved program 
plans.
    CSs were advised to check with the USAID Missions in each country 
and the USAID/Food for Peace Office (FFPO) to find out how much 
commodity would be available. However, the amount available was not 
clear in any case, as USAID kept adjusting the levels downward over the 
next 6 months.
    May 1, 2006, a final set of Guidelines was published, which were 
similar to the February 22 draft, but specifically reference the 
``priority country plan'' for phasing out 17 countries and identifying 
the 15 countries where programs will be allowed.
    May 15, 2006--Proposals are due. [They were originally due on March 
15th, but this was extended to May 15th.]
    September 11, 2006--120 days after proposal submission and 
according to the law, the deadline for USAID/FFP to send approval or 
disapproval letters to CSs. Disapproval letters must include reasons 
and what needs to be corrected to be eligible. In the past, the CS and 
FFP would discuss the outstanding issues in a disapproval letter and 
after clarification, the proposal was often approved. An approval 
letter does not guarantee a program agreement will be signed. A 
Transfer Authorization (TA) must be signed before a CS can ``call 
forward'' (order) commodities and receive funds under the agreement.
    CS Program Planning (typically starts 4 months or more before 
submission):

    1. Decision to write proposal.  CS headquarters and country office 
        staff discuss whether a Title II program would be appropriate 
        for a particular country. CS staff meets with the FFP 
        representative at the USAID Mission in the recipient country or 
        regional office to determine the Mission's views about Title II 
        programs and whether the USAID Mission received notice from 
        USAID/FFP that non-emergency (e.g. multi year) food aid will be 
        made available for that country. A CS will also confer with 
        other CSs operating in the country.

    2. Proposal preparatory work. A team is developed to work on the 
        proposal, which may in HQ and field staff as well as 
        consultants. The skill sets include: (a) Ability to conduct a 
        Bellmon analysis (e.g. to determine which commodities can be 
        provided as food aid without having a negative impact on the 
        local market or creating a disincentive to local production and 
        to assure availability of adequate storage). Bellmons may be 
        conducted through the USAID mission or in conjunction with 
        other CSs working in the recipient country. (b) Technical 
        skills in collecting baseline data, assessing nutritional and 
        other information indicative of food security status, and 
        knowledge of program interventions. (c) Country-specific 
        knowledge and relationships.

    3. Needs assessment.  Identify the target population and needs 
        broadly by available nationwide data and more specifically 
        through a variety of techniques such as informant interviews, 
        focus groups and weighing children. Collected data are combined 
        with information and input from the USAID Mission, national and 
        local governments, community-based groups and others to 
        determine (a) which areas and populations the project will 
        target and (b) what information to collect in the baseline 
        survey (which, if the proposal is approved, is updated at the 
        project start-up when the detailed implementation plan is 
        developed.) Baseline survey data may include percentage of 
        children under age 5 with stunting or underweight (the 
        primarily measures of poor nutrition), adequacy of household 
        food supplies, agricultural productivity and sales, and other 
        indicators of food security. These indicators are also measured 
        at intervals during the 5 year tenure of the typical program. 
        Comparisons of baseline data to mid-term or final data are used 
        to determine whether the program is making the progress 
        intended, whether adjustments are needed in methodologies and 
        to measure impact.

    4. Develop the core elements of the proposal.  Compile all data 
        collected and begin to determine the following:

      a. Activities that will address the constraints to food security, 
            e.g. the situations and risks that threaten availability of 
            food (such as the types and amounts of food available in 
            local markets during different times of the year), access 
            to food (such as household income levels), and utilization 
            of food (such as the degree of malnutrition/under-nutrition 
            among children and women of reproductive age). As 100% 
            monetization programs are no longer allowed, even if these 
            types of programs are considered well suited to the needs, 
            they cannot be proposed. Typically, a mix of monetization 
            and commodity distribution activities are selected to 
            achieve identified objectives.

      b. Commodity choice and frequency of deliveries is based on the 
            local context (what are people eating that is also 
            available from the U.S. or what is needed to supplement 
            diets), market analysis (what is appropriate to provide 
            considering local market availability and conditions--
            reflected by the Bellmon analysis), and what other 
            organizations may be distributing or monetizing. In 
            addition, a nutritional analysis (i.e. number of calories 
            and other nutrients in the food basket) is conducted based 
            on the proposed commodities for distribution versus the 
            nutritional value of the current typical food intake of the 
            target population.

      c. Coordination of monetization with other CSs. Sometimes CSs 
            conduct monetization jointly and each of their 
            corresponding proposals will have the same description of 
            the monetization process. The commodity for monetization is 
            determined based on the usual marketing requirements (e.g. 
            patterns of commercial imports of the same or similar 
            commodities) determined by USDA and the Bellmon 
            Determination (e.g. identification of commodities that can 
            be provided that will not interfere with local production 
            and marketing and for which adequate storage is available) 
            conducted by CSs and in some cases the USAID Mission.

      d. An Initial Environmental Estimate is prepared, which accounts 
            for potential environmental hazards the project may 
            encounter and conforms to USAID/FFP Guidelines.

      e. The program implementation plan that will be used, including 
            the evaluation and monitoring methodology and impact 
            indicators that will be measured.

    5. Prepare a rough draft and present it to the USAID Mission for 
        feedback to ensure that the program continues to be in line 
        with the USAID Mission objectives.

    6. Finalize proposal. This is often done at HQ and includes:

      a. Collect letters of support from the USAID Mission, local 
            government, relevant non-governmental organizations and 
            other entities that are counterparts in the project and are 
            important for sustainability or may provide services such 
            as supervision and/or storage for commodities.

      b. Prepare the Annual Estimated Requirements (AER), which 
            reflects the commodities and tonnage levels for each 
            activity and schedule of delivery, is the basis for ``call 
            forwards'' (commodity orders) and must be approved by the 
            USAID Mission.

      c. Complete and submit the proposal in accordance with USAID 
            Guidelines, which are available on the USAID/Food for Peace 
            website.

    7. Approval and call forwards. The signing of the Transfer 
        Authorization (TA) by USAID is the official approval of the 
        program. Then, the CS is permitted to send call forwards for 
        commodities based on the approved AER through the electronic 
        Commodity Tracking System, which is monitored by FFP and USDA. 
        Prior to the 4th of each month, FFP informs a CS whether its 
        call forward is accepted or denied. If approved, it will be 
        included in that month's USDA/KCCO commodity purchase. Once the 
        call forward is approved, typically the freight forwarder for 
        the CS becomes engaged in monitoring USDA commodity 
        procurement; tendering for shipping; seeking USAID/
        Transportation approval for the freight fixture and whether it 
        is flagged U.S. or foreign (based on lowest landed cost of the 
        commodity and freight combined and 75% cargo preference); and 
        tracking the loading at U.S. port and the vessel's progress 
        until the commodities are delivered to the destination port. 
        Specific regulations govern the tendering, awarding and 
        contracts for ocean freight.

    8. The CS's responsibility for the commodity begins when the 
        commodity crosses ship's tackle as it is being loaded at U.S. 
        port.  The CS has a marine survey conducted at the delivery 
        port to assess any losses or damages. The survey must be 
        submitted to USDA and used as the basis for any claims against 
        the vessel owner. The CS is responsible for receiving and using 
        the commodity according to the terms of its agreement with 
        USAID.

    9. Monitoring progress against baseline data is required throughout 
        the tenure of the program and annual reports are submitted to 
        USAID with information about the levels received and used, 
        monetization, progress to date and estimated requirements for 
        the upcoming year. In addition, evaluations are conducted mid-
        term and at the end of each program and PVOs are subject to OMB 
        Circular A-133 audit requirements for non-governmental 
        organizations.

                                                                                          Attachment B
                                         P.L. 480 Title II: Appropriations Compared to Actual Expenditures in U.S. Dollars and Section 416 Expenditures
                                                                                        [FY 2001-2008] *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                  FY08 (Admin.
                                                        FY01              FY02              FY03              FY04              FY05              FY06           FY07 (est.)        Request)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Title II Appropriations.........................       835,200,000       945,000,000   a 1,809,575,000     1,185,000,000   a 1,415,000,000   a 1,632,000,000   b 1,675,000,000     1,219,000,000
Title II Actual Program Level c.................       925,900,000     1,039,100,000     1,881,000,000     1,670,100,100     1,668,000,000     1,773,000,000     1,765,000,000               N/A
Sec 416(b) d....................................     1,103,000,000       773,000,000       213,000,000       173,000,000       147,000,000        20,000,000                 0                 0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Updated: May 7, 2007.
a FY03 Includes supplemental of $369 million; FY05 includes supplemental of $240 million; FY06 includes supplemental of $350 million.
b FY07 Final Continuing Appropriations of $1,215,000,000 and assumes FY07 Supplemental Appropriations of $460,000,000, which was in the bill passed by Congress that was vetoed and is now being
  revised.
c Actual levels include appropriations, maritime reimbursement and carry-in funds and represent the amount actually reported as expended by USAID.
d Section 416(b) is funded through the Commodity Credit Corporation and is not subject to FY appropriations. It is shown because until FY03, the commodities were often used for emergencies,
  supplementing Title II funding.


    Mr. McIntyre. Thank you, ma'am. We have run over a good 
bit.
    Ms. Levinson. I am sorry, sir.
    Mr. McIntyre. That is all right. And we are happy for you 
to submit a full statement; plus I am sure there may be some 
questions. So feel free to supplement what you said in 
answering questions or in your further statement.
    Ms. Reilly.

STATEMENT OF ANNEMARIE REILLY, CHIEF OF STAFF, CATHOLIC RELIEF 
                 SERVICES (CRS), BALTIMORE, MD

    Ms. Reilly. Good afternoon, Chairman McIntyre, Ranking 
Member Musgrave and Members of the Subcommittee. Thank you for 
calling this hearing and for providing Catholic Relief Services 
with the opportunity to share our recommendations for 
strengthening food security aid in the farm bill. We believe 
the reforms we propose today will improve our ability to reduce 
chronic hunger by making the current system more efficient and 
effective.
    My name is Annemarie Reilly. I am Chief of Staff for 
Catholic Relief Services and with your leave I will summarize 
my written statement.
    Operating in 98 countries around the world, CRS is the 
international development and relief agency of the U.S. 
Catholic community. For more than half a century we have worked 
in partnership with Food for Peace, expressing the goodwill of 
the American people through the food aid programs. The American 
people should be proud that the U.S. Government, through Public 
Law 480 Title II resources, is the largest food aid donor in 
the world. This program assists millions of people living on 
the edge to meet their daily food needs. In addition, the 
complementary cash support dedicated to strengthening 
livelihood systems improves their ability to feed themselves in 
the long term. For example, over a 5 year period CRS worked 
with a local partner to reverse severe environmental 
degradation and improve the livelihoods of 570 poor households 
in Legedini, a rural community of eastern Ethiopia. This 
assistance enabled one woman, Nuria Umere, to purchase an ox, 
seven goats and a cow, send one of her three children to school 
and help her husband to meet their household food needs. The 
success of this program is a direct result of the effective 
combination of food aid to meet immediate needs and cash for 
complementary livelihood support.
    Catholic Relief Services and other private voluntary 
agencies are very supportive of the U.S. Government response to 
emergencies but this should not be done at the expense of the 
chronically hungry. We are offering some proposals to improve 
response to food emergencies while at the same time protecting 
resources for programs that address chronic hunger and its 
underlying causes. I would like to share with you two 
recommendations that CRS has developed in collaboration with 
sister PVOs CARE, Mercy Corps and Save the Children.
    First, we believe that with some adjustments, the Bill 
Emerson Humanitarian Trust could become an invaluable backup in 
addressing food emergencies. The current mechanism for 
realizing the benefits of the Emerson Trust is cumbersome. We 
propose that, with Title II emergency resources when they have 
been exhausted in a given fiscal year, additional emergency 
funding would automatically come from the Emerson Trust. Of 
course, we would need to ensure that the Emerson Trust is then 
replenished in a timely fashion. CRS is currently drafting 
specific proposed fixes for the Emerson Trust to make this 
possible. We also propose that the resources available for 
emergencies be increased to 50 percent of Title II.
    Second, it is our position that if more cash were available 
through Title II, we would have greater efficiency and 
effectiveness in our programs to fight world hunger both 
chronic and emergency. We recommend that Section 202(e) Title 
II cash resources be increased to 25 percent of the overall 
Title II budget and that the law be amended to allow greater 
flexibility in its use for food aid program support.
    CRS has three additional recommendations we would like to 
share. First, Title II export shipments are repeatedly bunched 
together early in the fiscal year with resulting delays and 
increased shipping costs due to demand for vessel space, just 
as my colleague, Ms. Levinson, has talked about. We think that 
there are ways to address this. Under our proposal, the 
Administrator can rely on the availability of Commodity Credit 
Corporation funds to contract for commodities and freight to 
meet programming needs in the next fiscal year prior to the 
actual enactment of an appropriation. CCC would be reimbursed 
promptly from the Title II appropriation or continuing 
resolution when it comes available. Second, we ask that 
Congress appropriate a realistic annual target of $2 billion 
for Title II per year. Furthermore, we propose that a minimum 
of $600 million, or 50 percent of total Title II resources, 
whichever is greater, be dedicated exclusively to developmental 
food aid to address chronic hunger. In other words, a safe box. 
Sufficient funding up front with simplified programming in the 
field eliminates delays and extra storage and transportation 
expenses, and would ensure more effective and dependable links 
with partners. Third, CRS supports the Administration's request 
for flexibility in the use of a portion of the Title II budget 
for local or regional purchase of food. We believe local 
purchase is an option worthy of Congressional support in 
situations where it can bolster local food security or 
contribute to faster and more appropriate response to an 
emergency. It can be more effective and efficient use of 
American resources in the right context.
    In conclusion, I want to once again thank you, Chairman 
McIntyre, and all the Members of the Subcommittee for holding 
this hearing to respond to the needs of the hungry throughout 
the world. Our proposed changes to U.S. food security programs 
will make a potent program even more powerful in wiping out 
chronic hunger. By adopting these recommendations, you will 
enable Catholic Relief Services and other organizations that 
implement U.S. international food assistance programs to 
improve food security programs, alleviate hunger and save 
lives. Thank you.
    [The prepared statement of Ms. Reilly follows:]

Prepared Statement of Annemarie Reilly, Chief of Staff, Catholic Relief 
                     Services (CRS), Baltimore, MD

    Good afternoon Chairman McIntyre, Ranking Member Musgrave, and 
Members of the Subcommittee. Thank you for calling this hearing and for 
providing Catholic Relief Services the opportunity to share our 
insights based on our long experience of delivering and programming 
food aid for long-term development and emergencies.
    My name is Annemarie Reilly, Chief of Staff for Catholic Relief 
Services (CRS). Operating in 98 countries around the world, CRS is the 
international development and relief agency of the U.S. Catholic 
Conference of Bishops. We represent the 65 million members of the U.S. 
Catholic community in a partnership with Food For Peace that has 
expressed the goodwill and compassion of the American people for more 
than half a century. The reforms we propose will improve our ability to 
reduce chronic hunger, unlocking the power of food security aid.
    According to the World Food Program, more than 850 million people 
on our planet are suffering from chronic hunger. The American people 
should be proud that the U.S. Government, through P.L. 480 Title II 
resources, is the largest food aid donor in the world. These programs 
assist millions of people living on the edge to meet their daily food 
needs while also strengthening their livelihood systems to help them to 
help themselves over time.
    For example, with 5 years investment of Title II food and funds, 
CRS worked through a local partner to reverse severe environmental 
degradation and improve the livelihoods of 570 poor households in 
Legedini, a rural community in eastern Ethiopia. Through support 
provided by USAID and CRS, this community has been able to use small-
scale irrigation to grow marketable vegetables. They have also used 
this investment to develop small livestock herds and increase sales of 
milk, improve water and sanitation management, increase the engagement 
of women in microenterprise, and improve the nutritional content of 
family meals. Participants in a women's group have begun to save and to 
invest their savings in business activities that diversify their 
assets. One woman, Nuria Umere, has been able to purchase an ox, a cow 
and seven goats, and she is able to send one of her three children to 
school and help her husband meet their household food needs. The 
success of this program is a direct result of the effective combination 
of food aid to meet immediate needs and cash to support complementary 
livelihood support activities.
    Title II resources are used to set up feeding programs in 
desperately poor communities around the world and are often coupled 
with agriculture projects, village banking schemes or other livelihoods 
enhancement efforts. Social safety net programs feed orphan-headed 
households and people who are too old or too sick to function in the 
local economy. Title II also provides food for maternal/child programs 
that combine food aid with prenatal and postnatal education and 
support. This is only a small sample of the variety of programs Title 
II supports to fight chronic hunger. Title II programs are extremely 
important to the families, communities and even nations that they 
serve.
    Although these are significant efforts, there remains a huge unmet 
need. According to Food For Peace, the U.S. Government feeds only about 
50 to 70 million of those 850 million chronically hungry people. We 
don't expect the U.S. Government to feed all of the world's hungry. CRS 
is working on recommendations for improvements to the Food Aid 
Convention, due to be renegotiated, which could ensure that more 
resources will be made available worldwide to fight hunger. We also 
invest significant private resources and funding from other donors to 
support livelihood systems that address chronic food needs. But given 
the enormity of the hunger program, more must be done. Yet, more and 
more of our Title II resources are being diverted away from programs 
that address chronic hunger in order to fund an increasing number of 
emergencies around the world.
    Catholic Relief Services and other private voluntary agencies are 
very supportive of the U.S. Government stepping up to the plate to 
address emergencies, but not at the expense of the chronically hungry. 
We are offering some proposals to continue this vital work in 
responding to food emergencies, while at the same time protecting 
resources for programs that address chronic hunger and the underlying 
causes of that hunger.
    As you are well aware, current law requires that 75% of Title II 
food aid resources be devoted to development (non-emergency) programs. 
Over the past several years, however, the Administration has 
consistently used the emergency provision to waive the 75% rule. The 
program percentages have now been reversed as developmental food aid 
programs are diminished or eliminated in many countries so that about 
75% of commodities are used for emergencies year to year, while only 
about 25% remain for development.

I. Recommendations From CRS, CARE, Save the Children, Mercy Corps
    We believe that the Bill Emerson Humanitarian Trust (BEHT) has 
played an important role in responding to acute hunger. Our first 
recommendation is that with some adjustments the Emerson Trust could 
become an invaluable tool in addressing food emergencies. Catholic 
Relief Services, along with our PVO colleagues CARE, Mercy Corps and 
Save the Children, propose that Congress change both the way the Bill 
Emerson Humanitarian Trust is used and the way it operates. When Title 
II emergency resources have been exhausted in a given fiscal year, 
additional emergency funding would automatically come from the Emerson 
Trust. We also propose that the resources available for emergencies be 
increased to 50% of Title II. Using the Emerson Trust first as an 
emergency back-up will also protect non-emergency developmental 
programs.
    Of course, to make this system work, we need to ensure that the 
Emerson Trust is replenished in a timely fashion. Catholic Relief 
Services is currently drafting specific proposed fixes for the Emerson 
Trust that would make it a more effective component in the food aid 
arsenal in our fight against global hunger. The current mechanism for 
realizing the benefits of the Emerson Trust is cumbersome, the 
underlying authority is vague, long-term availability is uncertain, and 
the legal and policy constraints on accessing the Trust may conflict 
with long-term economic development goals. The Emerson Trust is in need 
of reform and the overall goal of such reform should be to make it a 
reliable source of food resources in emergency situations and one that 
may be accessed easily to mitigate the detriment to planned non-
emergency development funding under Title II.
    CRS is working with others to design three significant changes to 
the Bill Emerson Humanitarian Trust: (1) the orderly liquidation of 
current stocks in the Emerson Trust, so that it will hold only cash to 
acquire commodities as needed; (2) establishing a true Trust by 
allowing the cash to be invested in conservative short-term 
instruments; and (3) providing limited authority to Commodity Credit 
Corporation to replenish the Emerson Trust in a fiscal year.
    Second, it is our position that if more cash were available through 
Title II, we would have greater flexibility in carrying out our 
programs to fight world hunger, both chronic and in emergency settings. 
The real causes of global food insecurity and hunger are complex and 
cannot be solved over the long term by the provision of food assistance 
alone. Responding more appropriately means that additional resources in 
the form of cash, both within and outside of Title II, are essential to 
support a variety of targeted activities that can more effectively 
address the root causes of vulnerabilities and risks that afflict 
hungry and food insecure populations. Current Section 202(e) law 
permits a small percentage of Title II to be used for program 
logistics, management and related costs. However, these allowable uses 
do not go far enough to serve as an effective critical cash support 
mechanism. Section 202(e) needs to be amended to allow greater 
flexibility in the use of the funds to include administrative, 
management, technical and program related costs to enhance the 
effectiveness of Title II commodities. The percentage of funding in an 
expanded Section 202(e) also needs to be increased to no less than 25% 
of the Title II program levels.
    We could more flexibly use commodities and/or cash in Title II by 
using language patterned after the McGovern-Dole Food for Education and 
Child Nutrition Program. The McGovern-Dole Food for Education and Child 
Nutrition Program addresses the issue of cash resources with simple 
language that allows for a mix of commodities and cash for implementers 
to use to carry out the program. This has worked well as implementers 
are discouraged from monetizing commodities because it is much easier 
and more cost effective to use cash.

II. Additional Recommendations From CRS
    The third recommendation for fighting chronic hunger is that the 
Congress must appropriate adequate funds for Title II. The consistent 
under-funding of Title II has required the annual passage of 
supplemental appropriations bills to cover some of the shortfall. These 
kinds of piecemeal appropriations for food through supplemental 
appropriations are disruptive to well-planned developmental programs 
and hamper emergency response.
    Repeatedly, Title II export shipments are bunched together early in 
a fiscal year with the result that delays occur and shipping costs 
increase due to the increased demand for vessel space. One of the 
reasons for this ``bunching'' of shipments is that availability of 
funds for a fiscal year is not often known early enough to allow for 
efficient programming commitments and planning of purchases. Under our 
proposal, the Administrator can rely on the availability of CCC funds 
to contract for commodities and freight to meet programming needs in 
the next fiscal year prior to the actual enactment of an appropriation. 
Of course, CCC would be reimbursed promptly from the Title II 
appropriation or continuing resolution when it becomes available.
    Fourth, we ask that Congress appropriate a realistic annual target 
of $2 billion per year for Title II. Furthermore, we propose that a 
minimum of $600 million or 50% of total Title II resources, whichever 
is greater, be dedicated exclusively to developmental food aid to 
address chronic hunger--in a word, to put this money for developmental 
food aid in a ``safe box.'' The $2 billion figure is consistent with 
the U.S. share of annual needs for the last several years. Sufficient 
funding up front would simplify programming in the field, eliminate 
delays and extra storage and transportation expenses, and ensure more 
effective and dependable links with partners who look to the U.S., 
above all others, for life-saving aid. Designated funding would 
guarantee that we don't lose the fight against chronic hunger by 
diverting almost all food aid to emergency uses.
    Fifth, CRS supports the Administration's request for flexibility in 
the use of a portion of the Title II budget for local or regional 
purchase of food. CRS endorses and undertakes the local purchase of 
commodities as a cost-effective tool for some emergency and non-
emergency programs, when analysis of markets indicates it is feasible. 
CRS also engages in the use of vouchers to promote beneficiary 
acquisition of local food. CRS believes local purchase is an option 
worthy of Congressional support in situations where it can bolster 
local food security and/or contribute to faster and more appropriate 
response to an emergency. It can be a more effective and efficient use 
of American resources.
    In conclusion, I want to once again thank you Chairman McIntyre and 
all Members of the Subcommittee for holding this hearing to respond to 
the needs of the hungry throughout the world. Our proposed changes to 
U.S. food aid programs are a sincere effort to help make a great 
program even greater. By adopting these recommendations CRS, and other 
organizations that implement U.S. international food assistance 
programs, can better promote food security, alleviate hunger, and save 
lives.
    Thank you, Mr. Chairman. I would be pleased to respond to any 
questions that the Committee may have.

    Mr. McIntyre. Thank you very much, and thank you for your 
eloquent words in the time prescribed. That worked out well.
    Mr. Gillcrist.

    STATEMENT OF JOHN GILLCRIST, CHAIRMAN, BARTLETT MILLING 
               COMPANY; DIRECTOR, NORTH AMERICAN 
   MILLERS' ASSOCIATION; ON BEHALF OF AGRICULTURAL FOOD AID 
                   COALITION, KANSAS CITY, MO

    Mr. Gillcrist. Mr. Chairman and Members of the 
Subcommittee, I am here today on behalf of the North American 
Millers' Association and a broad coalition of groups 
representing American farmers and food processors called the 
Agricultural Food Aid Coalition. I am here to express my strong 
support for the continuation of our time-tested and effective 
U.S.-produced food commodity donation programs. We are reaching 
50 to 100 million malnourished people all over the globe every 
year.
    I have seen these programs in action and they are 
remarkable. Our food aid clearly labeled ``gift of the people 
of the United States'' is a source of pride for Americans and 
is the most visible manifestation of the goodwill of the United 
States in the developing world. We also need to recognize that 
these programs are an essential part of our national security 
structure. The Agricultural Food Aid Coalition has drafted 
principles on food aid for Congress to consider when writing 
the farm bill. I would like to submit those for the record. In 
short, we strongly support the current structures of U.S. food 
aid programs. However, we recognize the need to constantly 
improve the efficiency and effectiveness of these programs such 
as pre-positioning food aid closer to recipient countries. But 
we do oppose the Administration's proposal to authorize the use 
of cash for regional and local purchases of food aid 
commodities. The United States currently provides over 50 
percent of the world's food aid, yet there is still a huge 
shortfall of aid for the 850 million chronically malnourished 
people in the world. Our in-kind donation system is working. 
Humanitarian donations of U.S.-grown, processed, fortified and 
inspected agricultural products have ensured that safe and 
nutrient-rich foodstuffs reach a broad array of people in need. 
In fact, in 2007, the Ethiopian Government actually prohibited 
the local purchases of cereal grains for humanitarian programs 
due to the price instability those purchases created. We must 
be certain that the large purchases of scarce food supplies 
don't actually harm the people we intend to help. We believe 
that in-kind food aid is the most dependable form of food aid, 
and the least susceptible to fraud and misuse.
    Yes, American farmers, food processors and transportation 
companies benefit from current programs. One billion dollars of 
processed Title II U.S. food generates $2.7 billion in U.S. 
economic activity. If that same $1 billion was donated in cash, 
the U.S. would lose $2.7 billion in economic activity, and all 
the benefits accrued to that including jobs and the tax 
revenues it would generate.
    I traveled to Ethiopia and saw how the food produced in 
American mills was making a difference in people's lives. We 
visited land reclamation projects that are successful in 
stemming erosion--growing trees and grass essential to building 
their homes and feeding their cattle. We also witnessed water 
basins villagers had hand dug to capture water during the rainy 
season to be used throughout the year. These catchments 
provided clean water for the village, and reduced the time and 
energy women and children spent carrying water--in some cases 
as much as 12 miles per day. The United States provided food 
which enabled the completion of these self-sustaining projects. 
Developmental projects like these are critical to addressing 
the underlying causes of poverty and chronic hunger which is 
the intended focus of Public Law 480 Title II. In fact, 
Congress requires that 75 percent of commodities procured for 
food aid must be committed to developmental programs. However, 
the Administration has waived this Congressional mandate 
routinely. We suggest that the Administration only be permitted 
to waive a maximum of 675,000 tons annually.
    Developmental dollars are being redirected to fund an ever-
increasing number of emergencies. We know emergencies will 
occur. The Bill Emerson Humanitarian Trust, now serving as a 
last resort, should be used as a more predictable and viable 
response for emergencies.
    The McGovern-Dole Program fights hunger and promotes 
education. A school meal is often the only one these children 
get, and is the primary reason that parents send their children 
to these schools to begin with. We support full funding of this 
program. Public Law 480 Title I has operated very successfully 
for more than 50 years and we support its reauthorization.
     In closing, rising world hunger and the resulting turmoil 
created begs for an expansion of U.S. food aid programs. U.S. 
food aid is the best weapon we have in our arsenal to 
demonstrate our true intentions, disarm our adversaries and 
establish America as the world's undisputed superpower in the 
delivery of humanitarian assistance.
    Thank you for letting me speak today.
    [The prepared statement of Mr. Gillcrist follows:]

   Prepared Statement of John Gillcrist, Chairman, Bartlett Milling 
  Company; Director, North American Millers' Association; on Behalf of
            Agricultural Food Aid Coalition, Kansas City, MO

    Mr. Chairman and Members of the Subcommittee, my name is John 
Gillcrist. I am the Chairman of Bartlett Milling Company, former 
Chairman and a current Director of the North American Millers' 
Association. Thank you for holding this hearing today on food aid and 
trade, two important elements of the 2007 Farm Bill.
    I am here today on behalf of both NAMA and a broad coalition of 
groups representing American farmers, food processors, and agribusiness 
called the Agricultural Food Aid Coalition. NAMA is comprised of 48 
wheat, corn and oat milling companies several of whom have been 
involved in P.L. 480 since its inception over 50 years ago.
    I'm here to express my strong support for the continuation of our 
time-tested and effective U.S. produced food commodity donation 
programs. They are reaching millions of malnourished people all over 
the globe every year. Our great agricultural bounty should continue to 
be used as a powerful force for the good of food insecure people 
worldwide.
    I have seen these programs in action and they are remarkable. In-
kind food donations are a source of pride for American taxpayers, 
farmers, food processors and agri-businesses and express our sincere 
and long-term commitment to humanitarian assistance. Our food, clearly 
labeled ``Gift of the People of the United States,'' is the most 
visible manifestation of the good will of the United States in the 
developing world. We also need to recognize that these programs are an 
essential part of our national security structure.
    The Agricultural Food Aid Coalition has drafted principles on food 
aid for Congress to consider when writing the farm bill. I would like 
to submit those for the record, including the names of the 
organizations that support these principles. In short, we strongly 
support the current structures of U.S. food aid programs.
    However, the members of the Agricultural Food Aid Coalition oppose 
the Administration's proposal to authorize the use of up to 25% of P.L. 
480 Title II resources for regional and local purchases of food aid 
commodities. We believe that diverting such a significant amount of 
limited Title II resources for these purposes would be 
counterproductive. We must defend our in-kind donations because if the 
U.S. does not supply the food, who will? The U.S. currently provides 
over 50% of the world's food aid, yet there is still a global shortfall 
of food aid for the 850 million people who do not have enough food to 
lead healthy, productive lives. EU food donations have dropped 
significantly since they converted their food donations to cash. The 
World Food Program already purchases significant quantities of local 
and regionally produced food in emergencies. We must be certain that 
such large purchases of scarce foods don't actually harm the people we 
are intending to help. The law of unintended consequences can produce 
disastrous results in these largely unmonitored situations.
    Our in-kind donation system is working. Currently, humanitarian 
donations of U.S. grown, processed, and inspected agricultural products 
have insured that safe and uniform foodstuffs reach disaster victims, 
refugees, people living with HIV and AIDS, mothers, children and 
communities in need. Furthermore, the U.S. Government, private 
voluntary organizations and the World Food Program take great care when 
they distribute or monetize our food to avoid commercial disruptions. 
Purchasing food locally and regionally has the potential to be both 
more market distorting and less rigorously regulated than food shipped 
from the U.S.
    We believe that in-kind food aid is the most dependable form of 
food aid and the least susceptible to fraud or misuse. Programs such as 
pre-positioning of food commodities and processed products closer to 
recipient countries and expedited procurement and shipping procedures 
can increase the efficiency of in-kind food aid and cut down on the 
time and costs of responding to emergencies.
    Yes, American farmers, food processors and transportation companies 
benefit from the current programs. Indeed, the farm bill is intended to 
strengthen the U.S. farm economy; scarce agricultural budget resources 
should benefit U.S. farmers and secure U.S. jobs. One billion dollars 
of processed Title II commodities donated generates $2.7 billion in 
U.S. economic activity. If that same $1 billion were donated in cash, 
the U.S. would lose $2.7 billion in economic activity and all of the 
benefits accrued to that, including the tax revenues it would generate.
    I traveled to Ethiopia and saw with my own eyes how the food 
produced in American mills was making a difference in people's lives. 
We visited a WFP land reclamation project near Nazeret. A group of 
Ethiopian villagers proudly described their project which consisted of 
terracing and planting the hills around their village in a successful 
effort to stem erosion, retain top soil, grow trees, attract wild life, 
and grow grass essential to building their roofs and feeding their 
cattle.
    U.S. food aid was key in providing the sustenance that allowed them 
to complete this physically challenging project over 3 years. They 
thanked us repeatedly for the food we provided. They were immensely 
proud of the fact that they no longer relied on or received food aid 
due to the success and sustainability of their conservation project.
    We also visited a water catchment project south of Addis Ababa. 
Villagers had hand dug a large water retention basin to capture water 
during the rainy season and to hold it throughout the year. This 
development project provided clean water for the village and reduced 
the time and energy women and children spent carrying water every day 
when they no longer needed to walk 12 miles. U.S. aid provided food 
during the construction of this catchment.
    Development programs like these are critical to the goal of 
reducing chronic hunger and addressing the underlying causes of hunger 
and poverty, which is the intended focus of P.L. 480 Title II. In fact, 
Congress requires that of the 2.5 million metric tons of commodities 
that must be procured for food aid, 75% or 1.875 million metric tons 
must be committed to development programs in areas such as child 
nutrition, agricultural development, HIV/AIDS and micro-enterprise. In 
recent years, however, the P.L. 480 Title II development programs have 
not had a stable and secure funding stream because the Administration 
is waiving this Congressional mandate routinely instead of using their 
waiver authority, as it was intended, on rare occasions. We suggest 
that the Administration only be permitted to waive up to 675,000 metric 
tons of their development-tonnage requirements so that it can be 
assured that 1.2 million metric tons will be used for these critical 
programs. The crippling impact of HIV and AIDS in African communities 
makes the need for stable sources of funding for multi year programs 
that much more imperative.
    Development dollars are being redirected to fund an ever-increasing 
number of emergencies. Although we cannot predict where these natural 
and man-made emergencies will occur, we know that they will occur. The 
Bill Emerson Humanitarian Trust, now serving as a last-resort, should 
be used as a more predictable and viable response mechanism for 
emergencies. To do that a robust mechanism to replenish the Trust must 
be in place.
    In addition to P.L. 480 Title II and the Bill Emerson Humanitarian 
Trust, other U.S. food aid programs play an important role. The 
McGovern-Dole International Food for Education and Child Nutrition 
Program provides food to school children in the world's poorest 
countries and has established a proven track record of fighting hunger 
and promoting education. In countries where school feeding programs are 
offered, enrollment and attendance rates increase significantly, 
especially for girls. It is widely known that school attendance by 
girls has long-term benefits for them, their future children and their 
communities. A school meal is often the only one these children get, 
and the primary reason that parents send their children to school. We 
applaud Congress for funding this program and hope full funding will be 
available in the future.
    P.L. 480 Title I has operated very successfully for more than 50 
years. We support reauthorizing Title I, both in its original 
concessional sales role and as an additional funding tool for Food for 
Progress. Title I's concessional sales assist eligible governments' 
hungry and malnourished with humanitarian food aid resources and its 
Food for Progress program supports economic and agricultural 
development. Demand for Title I concessional sales and Food for 
Progress 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.
    The Food for Progress program operates under a number of 
constraints which Congress could address if funding were available. 
Perhaps the greatest funding constraint on Food for Progress currently 
is the lack of funds appropriated for the Title I portion of P.L. 480. 
We urge Congress to maintain authorization for Title I so that it 
continues to be an available food aid resource in the future for 
governments who are seeking U.S. food aid commodities and so the Food 
for Progress program can be maintained as a viable funding source for 
organizations seeking to promote private enterprise in emerging 
democracies.
    The agriculture community has been and remains committed to working 
with the government to actively address issues to increase the 
efficiency and effectiveness of U.S. in-kind food aid. One way to 
achieve this goal is to improve the current systems that the U.S. 
Government uses to procure and transport food aid commodities overseas 
as pointed out in the Government Accountability Office's recent report.
    It is clear to me that the United States needs to expand foreign 
food aid programs to best demonstrate our true intentions and deeply 
held humanitarian beliefs to the rest of the world. Thank you for 
inviting me to participate in this hearing.
                                 ______
                                 
                     Agricultue Food Aid Coalition
               Food Aid Principles for the 2007 Farm Bill

                         Submitted May 10, 2007

1. Support Current Programs/Structure
    We support current structures of U.S. food aid allowing the bounty 
of U.S. Agriculture to be the fundamental resource for food security, 
development and humanitarian relief in developing countries. On that 
basis, we support the reauthorization of Public Law 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)
    U.S. Food Aid programs are a source of pride to American taxpayers, 
farmers, food processors and agri-businesses. We support continuation 
of U.S. in-kind food aid and oppose the diversion of funds from U.S. 
food aid program(s) for the purchase of products from other countries. 
Without the win-win nature of using U.S. food products as the base for 
the programs, the constituency will be lost and both appropriations in 
the U.S. agriculture budget and authorizations will be jeopardized.

   World Food Program (WFP) already uses significant amounts of 
        LRP when they consider it 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.''

   U.S. 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 U.S. 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 U.S. 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 U.S. commodities and 
        processed products.
3. Reauthorize Title I
    We support reauthorizing Title I of P.L. 480 both in its original 
concessional sales role and as an additional funding tool for Food For 
Progress (FFP). 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 Commodity Credit Corporation (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 effects 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 U.S. interests and the positive impacts on learning when 
children are provided adequate food and nutrition. The program was able 
to fund just 11 out of 90 proposals that were received. This program 
enjoys widespread and deep congressional support and with U.S. 
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; 114 proposals for FFP were submitted 
for FY 2007, but only 12 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 and the implementing agencies of the U.S. Government. We 
support clarifying language to restore and strengthen its role in 
providing interactive input among stakeholders and to clarify its 
membership to include all food aid system stakeholders.
10. HIV/AIDS and Nutrition
    We encourage the appropriate integration of U.S. food aid programs 
with PEPFAR initiatives.
11. Increased Efficiency and Effectiveness in Food Aid Programs
    As noted in the recent Government Accountability Office report on 
food aid, we encourage initiatives to reduce the lag time between needs 
assessments and product delivery in U.S. food aid emergency 
procurements. We also recommend the lifting of arbitrary limits on 
storage expenses for the pre-positioning of products for emergency 
response. The agriculture community has been and remains committed to 
actively addressing issues to increase U.S. 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 Corn Growers Association;

National Farmers Union;

National Oilseed Processors Association;

National Potato Council;

North American Millers' Association;

USA Dry Pea and Lentil Council;

USA Rice Federation;

US Dry Bean Council; and

US Wheat Associates.

  


    Mr. Salazar [presiding]. Thank you, Mr. Gillcrist. I also 
would like to take the opportunity to welcome Mr. Wickstrom. As 
many of you know, he was my classmate when I was in the 
Colorado Ag leadership program and we spent several weeks here 
in Washington.
    Mr. Wickstrom.

         STATEMENT OF CARY L. WICKSTROM, WHEAT FARMER;
   MEMBER, BOARD OF DIRECTORS, U.S. WHEAT ASSOCIATES (USW); 
            IMMEDIATE PAST PRESIDENT, COLORADO WHEAT
       ADMINISTRATIVE COMMITTEE; ON BEHALF OF U.S. WHEAT
        ASSOCIATES' FOOD AID WORKING GROUP, ORCHARD, CO

    Mr. Wickstrom. Thank you, Congressman Salazar, and Ranking 
Minority Member Musgrave and Members of the Committee. My name 
is Cary Wickstrom. I am a 4th-generation wheat farmer from 
northeastern Colorado. I am currently immediate past President 
of the Colorado Wheat Administrative Committee. I serve on the 
U.S. Wheat Associates' Board of Directors. During this time I 
have been a Member of the U.S. Wheat Food Aid Working Group. 
That group includes representatives from U.S. Wheat as well as 
the National Association of Wheat Growers.
    The philosophy of the U.S. Wheat Food Aid Working Group is 
very simple: keep the food in food aid. The Food Aid Working 
Group and the foreign offices of U.S. Wheat work closely with 
private volunteer organizations both in the United States and 
around the world to ensure that wheat is used appropriately and 
efficiently. Through education, training and technical 
assistance, we try to ensure that the wheat that leaves the 
borders of our nation will be accepted by 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' speech at the International Food Aid Conference 
in April, he said we give half of the world's food aid followed 
by a distant 10 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 to 40 to 50 percent on average of all food aid tonnage 
and it went to 30 countries last year. Sixty-two percent of the 
wheat in that 2005-2006 marketing year is hard red winter and 
hard white winter classes. These are the two classes of wheat 
that I grow on my farm.
    Funding: The wheat industry encourages reauthorization of 
Title I of Public Law 480 funding as an additional tool to fund 
Food for Progress. We recommend no less than 1.2 metric tons 
under Title II programs which would require roughly $600 
million to provide commodities and support funds. Specifically 
for Food for Progress programs, the wheat industry supports a 
minimum level of 500,000 metric tons and a freight expense cap, 
currently at $4 million, that would be high enough to allow 
this. The freight cap should not limit approval of Food for 
Progress projects. We also support the expansion of McGovern-
Dole and full replenishment of the Bill Emerson Humanitarian 
Trust.
    Wheat donations save and improve lives. With a global 
presence, the U.S. wheat industry is intimately familiar with 
the impact the agriculture 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 the goal of reaching some 130,000 households in 250 farmer 
communities in the next 2 years. Involvement by the U.S. wheat 
industry through the USDA food aid programs contributed to 
improving the quality of life in rural communities including 
construction of schools and daycare centers, onsite school 
feeding for over 40,000 undernourished children and over 60,000 
girls enrolled in primary schools. Studies indicate a direct 
link between alleviation of poverty and food insecurity through 
formal and informal education of girls and women. Developmental 
programs like these are critical to the goal of reducing 
chronic hunger and addressing the underlying cause of hunger 
and poverty--the focus of Public Law 480 Title II programs.
    Efficiency and logistics: The efficiency 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 quite 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 ensure they receive the appropriate wheat for the 
end-use need.
    Cargo preference: The Food Aid Working Group suggests it is 
time to revisit cargo preference laws. At 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, and that is supported by the 
Agricultural Food Aid Coalition. Also attached is the Food Aid 
Policy Statement that is approved by U.S. Wheat and the 
National Association of Wheat Growers.
    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 a fundamental resource for food security, 
development and humanitarian relief in developing countries. We 
look forward to working with you again on this important issue 
as you begin to write the 2007 Farm Bill.
    Once again, I would like to thank you for the opportunity 
to be here, and I would like to send my special thanks to 
Congresswoman Musgrave from Colorado. She represents 95 percent 
of the wheat production in Colorado. Colorado is fortunate to 
have such good leadership. We are well represented here today, 
obviously. Thank you.
    [The prepared statement of Mr. Wickstrom follows:]

Prepared Statement of Cary L. Wickstrom, Wheat Farmer; Member, Board of 
   Directors, U.S. Wheat Associates (USW); Immediate Past President,
    Colorado Wheat Administrative Committee; on Behalf of U.S. Wheat
            Associates' Food Aid Working Group, Orchard, CO

    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 P.L. 
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 
2 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 
P.L. 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)

1. Support Current Programs/Structure
    We support current structures of U.S. food aid allowing the bounty 
of U.S. Agriculture to be the fundamental resource for food security, 
development and humanitarian relief in developing countries. On that 
basis, we support the reauthorization of P.L. 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)
    U.S. Food Aid programs are a source of pride to American taxpayers, 
farmers, food processors and agri-businesses. We support continuation 
of U.S. in-kind food aid and oppose the diversion of funds from U.S. 
food aid program(s) for the purchase of products from other countries. 
Without the win-win nature of using U.S. food products as the base for 
the programs, the constituency will be lost and both appropriations in 
the U.S. 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.''

   U.S. 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 U.S. 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 U.S. 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 U.S. commodities and 
        processed products.
3. Reauthorize Title I
    We support reauthorizing Title I of P.L. 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 U.S. 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 U.S. 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 nine 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 U.S. 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 U.S. food aid programs 
with PEPFAR initiatives.
11. Increased Efficiency and 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 
U.S. food aid emergency procurements. We also recommend the lifting of 
arbitrary limits on storage expenses for the pre-positioning of 
products for emergency response. The agriculture community has been and 
remains committed to actively addressing issues to increase U.S. 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: U.S. 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
    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'' \1\
---------------------------------------------------------------------------
    \1\ 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?con
tentidonly=true&contentid=2007/04/0104.xml. 

    Mr. Salazar. Thank you, Mr. Wickstrom.
    Mr. Binversie, please, 5 minute rule.

  STATEMENT OF ROBERT BINVERSIE, VOLUNTEER, FARMER-TO-FARMER 
                       PROGRAM, KEIL, WI

    Mr. Binversie. Thank you, Mr. Chairman. My name is Bob 
Binversie. I am a retired dairy farmer and businessman from 
Kiel, Wisconsin. I started out as a dairy farmer taking over a 
2nd-generation dairy farm, and after age 28 became allergic to 
cows on contact so I had to come up with a different 
occupation. Good excuse, too, for never going back. Now, my 
wife decided that she wanted to run the farm. She said this is 
the place to raise the kids. So, what we did was hire an 
employee to help us and I went into harvester sales, which gave 
me the background of working with people. In harvester sales, 
you being a farmer, you know it is an expensive piece of 
equipment. Not only do you have to sell the product, you had to 
sell a way of life and how the person was going to pay it back. 
From there, I went into another sideline. We built housing 
projects for the elderly in Waupaca County, Wisconsin--148 
units--acting as general contractor, which again gave me a lot 
of background to draw on. And I became a harvester dealer in 
Ohio for 5 years, which is some more background to draw on. My 
latest venture was starting a bank 10 years ago in my basement 
which has now grown into a half a billion dollars in loans 
through the State of Wisconsin, mainly to farmers--that was our 
niche--and small businesses, starting them out.
    My wife has Pick's disease, which is like Alzheimer's 
Disease, so last year after about a 7 year stint with this, she 
had hit the point that she didn't know if I was going to be 
gone a day, a week, or a month, and we had traveled in the 
past. We had been to Russia, the eastern part of Europe and all 
of the western part of Europe, China, Japan, Brazil. So I had a 
real good feel for what is happening in this world. I told my 
children I said look--I have five children. They are all very 
successful in business. They really didn't need a 72 year-old 
man to tell them what to do anymore.
    One of the Russians when I was in Russia asked me to come 
back and give him some advice on how they should run their 
farms, and this was just before the privatization of the farms 
took place in Russia. I was going to do it but after my wife 
got sick I dropped it. But, I took the challenge last year and 
contacted Norman Devorak, who had done a lot of volunteer work 
in the past. In fact, there were five volunteers that come 
within 20 miles of my home territory right now who are 
volunteers of Farmer-to-Farmer.
    Now, what is Farmer-to-Farmer? It is an organization that 
deals with individual people in individual countries helping to 
solve their problems, and also businesspeople in helping to 
solve their problems. You know, we can throw food, we can throw 
everything at them, but we still have to teach someone how to 
get out of their rut.
    If you can picture yourself--us right now tomorrow--our 
economy goes down the tubes, our farms are worthless, our bank 
accounts are worthless, everything is gone. This is exactly 
what happened with the privatization of the collective farm 
business. Seven years these people, that is what I felt, walked 
around in a trance not knowing where they should go and what 
they should do. After 7 years, the survivors start coming up. I 
was lucky enough to be sent to one of those survivors through 
the Farmer-to-Farmer Program. This man was milking 13 cows last 
spring when I got there and he was getting 250 pounds of milk 
out of these 13 cows. The lady that he had hired is paid $100 a 
month for milking these cows. She arrives at 6 in the morning, 
and she leaves at 10:30 at night. This year, when I got back, I 
suggested to him that he improve his handling, how he 
harvested. He had beautiful land. They just have no equipment 
and no money. So I said what you have to do is harvest your 
crops better and store them better. I personally gave him a 
$10,000 loan. I said ``Lonnie, I want you to build a new bunker 
silo.'' He had an old contraption of a chopper that, Mr. 
Chairman, you being a farmer, you would appreciate this piece. 
It was a real relic, but he made it work. I said, ``Now, get 
all the equipment and everything you need in order to get this 
bunker in place. I am going to send someone else after me to 
help you design this bunker.'' He did it. This spring when I 
got back, his milk production from the same 13 cows was 500 
pounds. The lady that is doing the milking, she said to me, 
``Can you help me out? I can't hardly bend my hands anymore 
because to get 500 pounds of milk out of a cow takes twice as 
many squeezes as 250.''
    I am going to help him. I brought him to the United States 
2 weeks ago as a guest of mine--him and an interpreter. I 
showed him some very inexpensive milking parlors and I am going 
to help finance a milking parlor and a free stall barn for this 
man. We have bought some secondhand equipment for him, and we 
have bought milking equipment for him.
    Mr. Salazar. Mr. Binversie, can you conclude your remarks?
    Mr. Binversie. Thank you.
    [The prepared statement of Mr. Binversie follows:]

  Prepared Statement of Robert Binversie, Volunteer, Farmer-to-Farmer 
                           Program, Keil, WI

    Thank you Mr. Chairman for inviting me to testify today on an 
important subject that has great value to our nation and to many 
developing countries around the World.
What Is Farmer-to-Farmer?
    The John Ogonowski Farmer-to-Farmer Program provides voluntary 
technical assistance to farmers, farm groups and agri-businesses in 
developing and transitional countries to promote sustainable 
improvements in production, food processing and marketing. The Program 
relies on the expertise of volunteers from U.S. farms, land-grant 
universities, cooperatives, private agri-businesses and NGOs to respond 
to the local needs of host-country farmers and organizations. In 
general, these individuals are not overseas development professionals 
but rather individuals who have domestic careers, farms and agri-
businesses or are retired persons who want to participate in 
development efforts. Typically, volunteers spend approximately 3 weeks 
on assignment, living with host families at the level of the local 
population.
    The current FY04-FY08 extension of the Program will provide over 
3,000 U.S. volunteers to 40 core countries. In the 22 years since it 
was first authorized by congress as part of the 1985 Farm Bill, Farmer-
to-Farmer has sent more than 11,000 ordinary Americans from all 50 
states and the District of Columbia, who have donated professional time 
worth an estimated $80 million, to work in over 80 countries. In so 
doing, FtF has become one of the longest-running and most highly-
regarded U.S. Government initiatives abroad. Following the terrorist 
attacks of September 11, 2001, the Program was renamed in honor of John 
Ogonowski, the pilot of American Airlines flight 11 that crashed into 
the World Trade Center.\1\
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    \1\ U.S. Agency for International Development.
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Funding
    The Farmer to Farmer Program is currently authorized as part of the 
2002 Farm Bill (Farm Security and Rural Investment Act--FSRIA, P.L. 
107-171). This authorization continues through FY 2007. The process is 
underway in the 110th Congress to reauthorize the farm bill which will 
include consideration for reauthorization of Title III, Agricultural 
Trade and Aid which includes P.L. 480 Food for Peace.
    P.L. 480, the Agricultural Trade and Development and Assistance Act 
of 1954, has three food aid titles. Title I, Trade and Development 
Assistance, provides for long-term, low interest loans to developing 
and transition countries and private entities for their purchase of 
U.S. agricultural commodities. Title II, Emergency and Private 
Assistance Programs, provides for the donation of U.S. agricultural 
commodities to met emergency and non-emergency food needs. Title III, 
Food for Development, provides government-to-government grants to 
support long-term growth in the least developed countries. Title I of 
P.L. 480 is administered by USDA; Titles II and III are administered by 
the Agency for International Development (AID).
    The FSRIA provides minimum funding for FtF at 0.5% of the funds 
appropriated for P.L. 480 programs. In actuality, under the current 
farm bill funds have been $10 million per year under Title II plus a 
declining amount of funds from Title I. Funding from Title I reached a 
high of $702,000 in 2003 and was $381,000 in 2006. These funds include 
a percentage of Title I appropriations plus ``ocean freight 
differential'' for the commodities shipped under Title I. In 2006 the 
total budget was $10,381,000.
    In the 2007 Farm Bill, with Title I zeroed out and Title III 
dormant, the funding for Farmer-to-Farmer is potentially at risk of 
significant reduction.

Personal Experience
    After turning my family farm over to my son in 1993, I had more 
free time on my hands. I had served in the army before buying my farm 
and then worked as an award-winning salesman for Smith Harvestore. 
Later, I also originated a community bank in Wisconsin, while 
continuing to work on the farm, so I was not accustomed to having free 
time on my hands. One of my colleagues from the community bank 
suggested I fill my time by volunteering with farmers from the former 
Soviet Union. That colleague had already made several trips to Moldova 
and hearing about his experiences motivated me, as well as some of our 
other friends and colleagues in Wisconsin, to want to visit the country 
and do what we can to help the people.
    In April, 2006, I accepted the challenge and traveled to the 
Republic of Moldova to work with the Volodeni Dairy Cooperative through 
the Farmer-to-Farmer Program, implemented in Moldova, Ukraine and 
Belarus by CNFA, Inc. I was the first volunteer to ever work with this 
group of 280 dairy farmers but, soon after arriving, my translator, the 
cooperative leader, Leonid Platon, and I became a tight knit group, 
discussing various available low cost ideas and methods to improve the 
coop's milk sales and the health of their herds. I conducted training 
sessions with group members, visited numerous dairy farms in the 
community and met with the group's milk buyers to determine their 
quality and supply demands. During our work, which started at 5 a.m. 
and lasted till 11 p.m. every day, I realized that farmers are 
basically the same all over the world. We covered all aspects of dairy 
cattle housing, sanitation, nutrition, breeding and basic veterinary 
care. Although I soon finished my 3 week assignment and headed home, a 
bond had been forged and I had also found a new business partner and 
friend.
    After I left, a variety of things happened. I provided Leonid with 
instructions and a $10,000 low interest loan from my own money and he 
set about building a modern silage bunker. I also worked with CNFA to 
craft subsequent volunteer assignments that would help push and develop 
the Volodeni Cooperative. The cooperative and CNFA kept in constant 
contact with me and the other volunteers who had worked with the group, 
to identify and solve small issues before they became large problems.
    When I came back to Moldova for my second assignment in early 2007, 
I was amazed. The advice given by Farmer-to-Farmer volunteers had led 
to great results: increased milk yields, enlarged herds, improved 
cattle housing conditions and higher prices for clean milk. The 
cooperative achieved a $10,000 increase in milk sales and a nearly 40% 
increase in net profit in just 1 year. In turn, the farmers had created 
new jobs and increased payrolls by 31% as well, passing on their 
increased prosperity to the wider community.
    While the impact on the local economy was gratifying for me and the 
other volunteers who worked with Volodeni, I felt we had gained even 
more ourselves by being taken into the Moldovan farmers' homes, 
families and rural life and by learning about their culture and 
traditions. I was eager to return the hospitality and give my Moldovan 
friends the opportunity to meet my family and experience our farm life 
back in the U.S., so this spring I personally sponsored my friend 
Leonid to visit me and several other volunteers in the U.S.. The trip 
was an opportunity for Leonid to learn more about American agriculture 
and meet the families of the volunteers who had made such an impact on 
him and his community. Upon his return to Moldova, Leonid hopes to use 
what he has seen and learned in the U.S. to build a modern milking 
parlor to serve his village.
    I strongly believe in the help we have provided and the exchange 
between the two countries offered by the Farmer-to-Farmer Program. In 
all, the bridge between Moldova and Wisconsin established by that first 
colleague of mine has since drawn in a total of six Wisconsin farmers, 
neighbors and friends, including myself. Together, we have performed 13 
volunteer assignments, contributed our own money to support the 
Moldovan farmers and raised charitable donations from our communities 
worth more than $30,000. As I like to say, ``A candle loses nothing by 
lighting another candle''.

Benefits of the Farmer-to-Farmer Program
    My experience is but one example of the good work being done by 
Farmer-to-Farmer volunteers all over the world. Given its modest cost, 
the FtF Program generates remarkable impact, both at home and abroad.
Economic Development
    The Farmer-to-Farmer Program emphasizes economic impact and has 
been very successful in bringing tangible economic benefits to farmers 
in the developing world. Approximately one million farm families 
(representing about five million people) have been direct beneficiaries 
of the FTF Program since its inception.\2\
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    \2\ U.S. Agency for International Development.
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    Over just the last 3 years, as part of the current FY04-FY08 
program, nearly 1,900 volunteer specialists have been fielded in 
support of 1,745 host institutions in 39 countries, including farm 
producers, agri-businesses, processors, retailers, exporters, input 
suppliers, cooperatives, associations, financial institutions, 
government agencies, NGOs and other agricultural sector stakeholders. 
Almost 80%, of host organizations assessed for impact of economic 
growth have reportedly adopted volunteer recommendations in some way 
and approximately 2.2 million direct and indirect beneficiaries have 
reported measurable improvements. With the support of U.S. volunteers, 
they have realized an increase in gross annual sales of $122.4 million 
and in total annual income of $17.9 million.\3\ The assistance the 
volunteers provide continues long beyond the original assignments, as 
well. My relationship with the Volodeni, Moldova dairy farmers is not 
unique. Eighty five percent of volunteers continue to have some kind of 
contact with the farmers and host organizations in the countries in 
which they volunteered.
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    \3\ Farmer-to-Farmer Mid-Term Assessment Report, by QED LLC.
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Promoting an Image of the American People
    Importantly, the program provides people all over the world the 
opportunity to get to know ordinary Americans. Each year, Farmer-to-
Farmer fields approximately 650 U.S. volunteers who provide technical 
assistance to agriculture and agribusiness in 40 different countries. 
In addition to the technical assistance, the volunteers serve as 
citizen diplomats and carry the knowledge and culture of the American 
people directly to the public of the countries where they work. Hosts 
see volunteers caring and working hard for their development, which 
helps dispel many negative stereotypes about Americans that persist 
around the world. Moreover, they bring knowledge and understanding of 
those countries back with them to the U.S., conducting outreach and 
public information activities upon return to the United States and 
helping improve the American public's understanding of the world around 
them and of the challenges facing developing countries.
International Trade
    FtF implementing organizations go beyond simply placing volunteers 
on an individual basis. They focus on development of specific market 
chains for which overall impact can be evaluated. FtF volunteers build 
institutions and transfer technology and management expertise to link 
small farmers with markets that capitalize on comparative advantages in 
production, processing and marketing. As these developing markets 
expand and become more sophisticated, not only are standards of living 
increased for FtF hosts, but new trade and investment opportunities are 
created for U.S. agri-businesses, making the FtF Program a sensible 
long-term investment for American agriculture. Volunteers have even 
helped to establish subsidiaries of U.S. companies where they 
volunteered, assisted their hosts to procure productivity and quality-
enhancing inputs and equipment from the United States and fostered 
lasting partnerships between U.S. educational institutions, 
agricultural organizations and private sector companies and their 
counterparts in developing countries around the world.

Concluding Remarks
    I thank you again for allowing me to share my thoughts and 
experiences on the Farmer-to-Farmer Program with you today. I truly 
believe that Farmer-to-Farmer represents a superb value for the 
taxpayers' money, achieving measurable results, increasing economic 
stability and sustainability in the developing world and empowering 
private enterprise as the engine of growth in agricultural production, 
processing and support services.
    In the greater goal of promoting awareness, understanding and 
friendship between ordinary Americans and people around the world, we 
simply cannot do enough in this day and age. We need more of the 
Farmer-to-Farmer Program and other initiatives like it and I would like 
to encourage you to at least double the size of the Program in the 2007 
Farm Bill and to fully fund it in the years to come.
    Now, more than ever, America needs to show the world that our 
people care, are willing to give of themselves for the benefit of 
others and to work hard, shoulder to shoulder with our friends in 
developing countries, to improve their standards of living.



    Salazar. Your full statement can be submitted for the record.First 
of all, let me just thank all of you for your commitment to ending 
world hunger.
    Ms. Levinson, the combination of commodities and cash: What do you 
think the combination of commodities and cash would be optimum for the 
Emerson Trust that was primarily a response to food emergencies around 
the world?
    Ms. Levinson. Thank you. Well, the Bill Emerson Humanitarian Trust 
currently can hold up to 4 million metric tons of commodities or an 
equivalent amount in cash, and that is toward--the cash can only be 
used for procuring the commodities. When the Trust is drawn down, the 
commodities are either released or cash can be used to buy on the 
market, and then CCC funds are used to pay for transportation and 
delivery. So in our view, the best and most efficient way would be to 
have cash in the Trust because at different times you need different 
commodities. Right now it holds about 915,000 metric tons of wheat and 
about $107 million and it is about \1/3\ full, not at the 4 million 
metric ton capacity.
    Mr. Salazar. Would that cash be used to buy just U.S. products?
    Ms. Levinson. U.S. products, corn. I mean, actually in the past we 
have had a swap where we swapped wheat in 2003 for rice, and that was 
for Iraq. I think the best way to go rather than to have the swapping 
mechanism is to put the cash in there and hold it and have that 
available for emergency needs. But, it is not being replenished. That 
is one of the problems. Except the current supplemental legislation 
that you are voting on does have $40 million in it to help replenish 
it.
    Mr. Salazar. Thank you.
    Ms. Reilly, would you support a pilot project rather than the 
Administration's farm bill food aid proposal for local regional 
purchase of food for emergencies, and why or why not?
    Ms. Reilly. Yes, we believe that local purchase or regional 
purchase can be extremely useful in the right context, and when this 
proposal was initially presented by the Administration we did advocate 
for pilot programs to really test the approach because there are also 
circumstances in which it can be a very dangerous approach. It can 
distort local markets, and there can be all sorts of other unintended 
negative consequences. So we do support a pilot approach. My particular 
organization has over 5 years of experience now with local purchase. We 
have purchased almost $7 million worth of commodities and we think 
there are ways in which it can be done.
    Mr. Salazar. Thank you.
    The next question is for both Mr. Gillcrist and Mr. Wickstrom. If 
the Trust were to be replenished, should replenishment be limited just 
to wheat as the statute permits, or should other grains such as corn, 
sorghum, and rice also be added and held in the Trust?
    Ms. Gillcrist. My personal opinion would be that the greater 
flexibility in the program that you allow, the greater the efficiency 
we will see in the results of the program.
    Mr. Wickstrom. I guess obviously my bias is toward wheat so we 
think that that commodity is better utilized around the world probably 
than some of the other commodities.
    Mr. Salazar. Thank you.
    Mr. Binversie, how do you think we can encourage more farmers to 
participate in the Farmer-to-Farmer Program?
    Mr. Binversie. Actually, just what we are doing--publicizing it a 
little more. What we did back home when I had these people there, we 
had all the state's press involved and the real thing on Farmer-to-
Farmer is the benefit that is happening not only to Farmer-to-Farmer 
individually but as a community. These people when they see us and they 
see that we bear the same type of ideals and things that they are 
interested in, number 1, we all are interested in our families, and 
once they understand that America is also interested in families, then 
they have a face on it, it really helps.
    Mr. Salazar. Can you also describe what the cost is of this program 
to the American taxpayers?
    Mr. Binversie. Well, how much would you pay me for my expertise? I 
am a volunteer. I do it for nothing. They just send me over, and pay 
the plane fare to take us over, and that is basically their cost.
    Mr. Salazar. Is there a certain budget? Is there a certain amount 
per year that is established for this program?
    Mr. Binversie. This I can't tell you. You would have to ask the 
people in charge. But as far as the individuals themselves or 
volunteers like myself, we pretty much do it out of--we feel it is our 
obligation to do it, and out of the goodness of our hearts. Myself, I 
just felt I had too much talent at age 72 to sit and look at the four 
walls. I had started all these other businesses; why shouldn't I help 
people in undeveloped countries also start businesses? And, we start at 
the bottom. We don't try to get them to shoot at the Moon.
    Mr. Salazar. Thank you.
    One quick final question. I remember during the tsunami aid package 
that was sent out from this House where there was a big bundle of money 
that was initially sent out and given to the victims. I have great 
concerns that these countries then turn around and buy food or other 
products from other countries when you provide funding instead of 
providing food, and I am of the same bias that Mr. Wickstrom is. I 
mean, I think we should maybe try to provide food from this country 
because it would help the agricultural market. Could you make just a 
quick comment, any one of you?
    Mr. Binversie. Actually I am very biased in one thing. I do not 
believe in grants. Make an appropriation, but make somebody accountable 
on the other side. We have had an experience. Mr. Devorak, in the 
village just south of the one I had, he started a cooperative-type 
thing. Everybody was in charge. It failed. In my situation, I said I 
was going to have one person in charge and then have him start--in 
other words, let us start a business. Let us run it the way it is 
supposed to be run and charge them interest, and that is why I gave 
them that personal loan. It made him be accountable, and he thanked me 
for it, and so did all the other people that I talked to while I was 
over there, and I got as high as the Ministry of Agriculture.
    Mr. Salazar. Thank you.
    We recognize now under the 5 minute rule Mrs. Musgrave.
    Mrs. Musgrave. Thank you, Mr. Chairman. Cary, I saw in your 
supplemental information, you were talking about delivery of food aid, 
and two of the things that you mentioned might assist in that are pre-
positioning and advanced purchase that would help us be more efficient 
in the delivery. Could you elaborate on those, please?
    Mr. Wickstrom. Well, some of the experts that are involved in this 
tell me that if we would expand our pre-positioning capabilities, we 
would be better able to deliver food on a timelier basis, and some of 
the logistics problems I think, in my testimony we had talked about 
cargo preference and I guess it seemed a little frustrating to me as a 
producer, and this might not be the only reason that it seems like we 
are spending huge amounts of money on transportation versus what the 
foods cost.
    Mrs. Musgrave. I know in your verbal testimony you talked about how 
the delivery shouldn't cost more than the food aid that we are sending. 
You talked about a very impressive delivery time of 45 days, and that 
is absolutely amazing. And then you also had some remarks in your 
supplemental materials about the E.U. wanting to use cash instead of 
commodities to feed people. You were saying it actually would take 
longer to get the monetary aid than the actual food aid in place. Could 
you speak about that a little more, please?
    Mr. Wickstrom. Well, I think we are getting criticized by the 
European Union, and I think it is easy for them to put pressure on us 
to go to cash only when in fact they are not donating that much food 
aid. So I think we have become a target because they realize that it is 
easy to complain about the amount of giving that we do, or our 
taxpayers in the United States, when in fact they don't give that much 
aid. So sure, they are going to be in favor of cash only. I mean, it 
would be frustrating to me as a producer to know that some of our tax 
dollars were buying wheat from, for instance, the French, to provide 
aid to the countries that may or may not have those labels on the bags 
that say it is a gift of the people of the United States.
    Mrs. Musgrave. A gift from the people of the United States. Thank 
you very much.
    Thank you, Mr. Chairman.
    Mr. Salazar. Thank you.
    I now recognize the gentleman from Kansas, Mr. Moran, who has done 
an incredible job now serving his people back in Kansas after that 
major disaster. Thank you for your service.
    Mr. Moran. Mr. Chairman, thank you very much. I am not a Member of 
this Subcommittee, and it requires unanimous consent that I am able to 
be seated here and asking any questions. Assuming that you will give me 
that, I would like to direct a couple of questions to our panelists 
today.
    Mr. Salazar. Without objection.
    Mr. Moran. Thank you. I am apologetic for the portions of the 
hearing that I missed. I now am a Co-Chairman of the House Hunger 
Caucus, and I am very interested in these international issues as well 
as domestic food stamps and nutrition programs in the United States.
    Let me just make certain, having not heard all of the testimony of 
this panel, are there specific items that there is disagreement among 
the five of you? Was there any contention in your testimony, one to the 
other? I just want to sort that out.
    Mr. Gillcrist. Congressman, probably with respect to cash versus 
in-kind.
    Mr. Moran. And I assume that is the male side of the table and 
female side of the table although I think those are unrelated.
    Ms. Reilly. Well, I think there is also some difference of opinion 
between the Alliance for Food Aid and CRS and some of our fellow other 
PVOs in terms of monetization. We agree that we both would like to see 
more cash to provide support for complementary livelihood activities, 
but I think we have some disagreement in terms of the role of 
monetization.
    Mr. Moran. Thank you very much.
    I paid particular attention to Mr. Gillcrist's testimony because I 
know him well and hold him in high regard. In particular I wanted to 
give Mr. Gillcrist a moment to highlight, in his attachment, he talks 
about an appropriate integration of U.S. food aid programs in regard to 
HIV and nutrition. Mr. Gillcrist, you have visited with me about this 
in the past, and I wanted the record to indicate why you think this is 
important.
    Mr. Gillcrist. Thank you, Congressman. If you look at the 
dedication this country has had to helping others, and the history we 
have had in doing that, the PEPFAR program particularly was a program 
designed to address an increasing and devastating problem of HIV/AIDS 
in the world, but in the course of the development of that program it 
seems that nutrition was a side issue and not considered in the total 
context of a successful program. In other words, retroviral drugs in 
the treatment of AIDS are not successful without substantial diets and 
substantial nutritional help. So, when we look at a program like 
PEPFAR, which is a proposed $15 billion program, and compare that to a 
food aid program which is a $1.2 or $3 billion program the likelihood 
of success in doing the things that we need to do to address HIV/AIDS 
is limited, given the number of people beyond the scope of AIDS that 
are in dire need of nutritional assistance to begin with. So to 
integrate those two programs and to try to be successful in addressing 
both hunger and the HIV/AIDS program, the AIDS initiative has to have a 
substantial nutritional component to it.
    Mr. Moran. Is my understanding accurate that in the programs that 
the United States Government has in attempting to meet the nutrition 
needs of people around the world, we have Public Law 480 with Title I 
and Title II, the McGovern-Dole International Food for Education and 
Children Program, and the Food for Progress? Is that our basic array of 
weapons in fighting hunger?
    Ms. Levinson. Yes, Mr. Congressman. First of all, the Public Law 
480 Title I program of course is a loan program primarily to foreign 
governments, but that program has been zeroed out in the budget. A lot 
of that money had been used to back up what we call the Food for 
Progress Program, which is CCC funded, and the reason I want to bring 
that to your attention is that that means that as that has been zero 
funded, there is less money for Food for Progress as well, and that 
targets countries that are making economic reforms. That is of great 
concern to us. We are doing agriculture programs there to improve the 
development of the private sector. So that is of great concern. The 
Title II program is a donation program primarily through private 
voluntary organizations like the groups I represent and Catholic Relief 
Service and through the World Food Program primarily, and it is our 
largest program, and I think all of us shared the concern. In fact, I 
know all of us agreed that the development side of that program is now 
anemic and really needs to be bolstered. The kind of programs that Mr. 
Gillcrist is referring to for nutrition for HIV/AIDS, targeting food 
security in those types of communities, those are what we call 
developmental food aid programs and we need more of it. And then, of 
course, McGovern-Dole Food for Education is a small program. It is $100 
million. It is discretionary spending and it is particularly to 
encourage the attendance and enrollment of kids in school.
    Mr. Moran. Thank you. My time is expired, but if any of you have 
suggestions about the efficient operation of those programs, I would be 
interested in hearing that. As we look at the variety of options that 
are out there, is there any effort that needs to be made in the 
structural change of how we deliver food aid, food services and meet 
nutrition needs around the world in addition to your point that, my 
guess is that all of you have made, about the need for additional 
dollars?
    Thank you, Mr. Chairman.
    Mr. Salazar. Thank you, Mr. Moran.
    I want to thank the panel for their enlightening testimony and we 
would invite the 4th panel to the table. We have been called for votes. 
This is a 15-minute vote, so if we can have the 4th panel join us at 
the table, I would appreciate it.
    Thank you. For panel four, we have Mr. James Sumner, President of 
the U.S. Poultry & Egg Export Council on behalf of the Coalition to 
Promote U.S. Agricultural Exports from Stone Mountain, Georgia. We also 
have Mr. Patrick Ford, of Ford's Gourmet Foods from Raleigh, North 
Carolina. We would like you to summarize your testimony to a total of 3 
minutes if you possibly could and then we would ask the Members of this 
Committee to submit questions for the record. Being as that we are 
called to vote, we do appreciate that. Thank you.
    Mr. Sumner.

              STATEMENT OF JAMES H. SUMNER, PRESIDENT, USA
 POULTRY & EGG EXPORT COUNCIL (USAPEEC); ON BEHALF OF THE COALITION TO 
                       PROMOTE U.S. AGRICULTURAL
                      EXPORTS, STONE MOUNTAIN, GA

    Mr. Sumner. Thank you, Mr. Chairman, Congresswoman Musgrave, it is 
a pleasure to be here. My name is Jim Sumner, and I am President of the 
USA Poultry & Egg Export Council, USAPEEC, we go by. We are a trade 
association that is dedicated to increasing the exports of U.S. poultry 
and egg food products. We have about 200 member companies that account 
for more than 95 percent of all U.S. poultry and egg exports. Today I 
am testifying on behalf of the Coalition to Promote U.S. Agricultural 
Exports of which we are a member.
    The Coalition is an ad hoc committee of over 100 organizations 
representing farmers, ranchers, fisherman, forest product producers, 
cooperatives, small businesses, regional trade organizations and 
various state departments of agriculture. We believe that the U.S. must 
continue to have in place policies and programs that help maintain the 
ability of American agriculture to compete effectively in a global 
marketplace still characterized by highly subsidized foreign 
competition. Agriculture exports provide jobs for one million 
Americans, and make a positive contribution to our overall trade 
balance. U.S. agricultural exports are projected to set another record 
this year of $78 billion, up $9.3 billion over last year. However, 
exports could be significantly higher if it were not for a combination 
of factors including high levels of subsidized foreign competition and 
crippling trade barriers.
    Members of our Coalition strongly support and utilize the Market 
Access Program, MAP, and the Foreign Market Development Program, FMD, 
which are administered by USDA's Foreign Agricultural Service. Both 
programs are administered on a cost-share basis with farmers and other 
participants who are required to participate with at least 50 percent 
of their own resources. These programs are among the few tools 
specifically allowed in unlimited amounts through the WTO rules for 
agriculture. By any measure, they have been tremendously successful and 
extremely cost-effective in helping maintain and expand U.S. 
agricultural exports to protect American jobs and strengthen farm 
income.
    A recent independent cost-benefit analysis of MAP and FMD, which 
was prepared for USDA by Global Insight Incorporated, which is the 
world's largest economic analysis and forecasting firm, clearly 
illustrates the following benefits of increased funding for market 
development and promotion through these two programs. Number 1, the 
U.S. share of world agricultural trade since 2001 grew by over one 
market share point to 19 percent, which translates into $3.8 billion in 
agricultural exports. A second point is that for every additional 
dollar spent on market development, $25 in additional exports resulted 
within 3 to 7 years. And third, farm cash receipts have increased $2.2 
billion during the 2002 Farm Bill due to the additional exports from 
market development. This translated into $4 increase in farm income for 
every additional $1 increase in government spending on market 
development. In fact, we would like to offer a copy of this independent 
study for the record if we may do so at a later time.
    In contrast, to the roughly $235 million the U.S. spends annually, 
the E.U., the Cairns Group and other foreign competitors devoted 
approximately $1.2 billion annually on similar market development 
activities. A significant portion of that was even spent here in the 
United States. The E.U. and other foreign competitors have made it 
clear that they intend to continue to be aggressive in their export 
efforts. For this reason, we believe that the Administration and 
Congress should strengthen funding for MAP and other export programs as 
a strong trade component in the new farm bill, and also ensure that 
such programs are fully and aggressively utilized.
    Perhaps the most important thing I am going to say here is the fact 
it should be noted that MAP was originally authorized in the 1985 Farm 
Bill at a level of $325 million and the Coalition strongly supports 
returning the program to that authorized level of funding from its 
current $200 million level. We also urge $50 million annually be 
provided for the FMD program for cost-share assistance to help boost 
agricultural exports. This is approximately the amount that would be 
adjusted from 1986-level funding.
    As I mentioned, I represent the poultry industry. We have done a 
number of things to utilize these funds. I wanted to give you a few 
examples. One such example, in 2005 we organized a donation of two 
containers of U.S. chicken leg quarters, which we donated----
    Mr. Salazar. Mr. Sumner, could you submit the rest of those 
examples for the record? I would appreciate that, just because we are 
so limited in time and we have been called to vote and I think there is 
only 5 minutes left.
    Mr. Sumner. I would be happy to do so.
    [The prepared statement of Mr. Sumner follows:]

  Prepared Statement of James H. Sumner, President, USA Poultry & Egg
    Export Council (USAPEEC); on Behalf of Coalition to Promote U.S.
                Agricultural Exports, Stone Mountain, GA

    Good morning, Mr. Chairman. My name is James H. Sumner. I am 
President of the USA Poultry & Egg Export Council (USAPEEC), which is a 
trade association that is dedicated to increasing exports of U.S. 
poultry and egg food products. USAPEEC's 200 member companies account 
for more than 95% of all U.S. poultry and egg exports. Today, I am 
testifying on behalf of the Coalition to Promote U.S. Agricultural 
Exports of which we are a member. We commend you, Mr. Chairman, and 
Members of the Subcommittee, for holding this hearing to review our 
agricultural trade programs and wish to express our appreciation for 
this opportunity to share our views.
    The Coalition to Promote U.S. Agricultural Exports is an ad hoc 
coalition of over 100 organizations, representing farmers and ranchers, 
fishermen and forest product producers, cooperatives, small businesses, 
regional trade organizations, and the State Departments of Agriculture 
(see attached). We believe the U.S. must continue to have in place 
policies and programs that help maintain the ability of American 
agriculture to compete effectively in a global marketplace still 
characterized by highly subsidized foreign competition.
    With the 2002 Farm Bill, Congress sought to bolster U.S. trade 
expansion efforts by approving an increase in funding for the Market 
Access Program (MAP) and the Foreign Market Development (FMD) Program. 
This commitment began to reverse the decline in funding for these 
important export programs that occurred over the previous decade. For 
MAP, funding was increased over the course of the 2002 Farm Bill from 
$90 million annually to $200 million annually, and FMD was increased 
from approximately $28 million to $34.5 million annually.
    Farm income and agriculture's economic well-being depend heavily on 
exports, which account for over 25 percent of U.S. producers' cash 
receipts, provide jobs for nearly one million Americans, and make a 
positive contribution to our nation's overall trade balance. In FY07, 
U.S. agriculture exports are projected to be $78 billion, up $9.3 
billion over last year and up $25 billion since 2002. However, exports 
could be significantly higher if it were not for a combination of 
factors, including continued high levels of subsidized foreign 
competition and competition crushing trade barriers. Agricultural 
imports are also forecast to be a record $70 billion, continuing a 35 
year upward trend that has increased at a faster pace recently. If 
these projections hold, agriculture's trade surplus is expected to be 
$8 billion, up $4.7 billion over last year but still a huge decline 
from the roughly $27 billion surplus of FY 96. In FY 99, the U.S. 
recorded its first agricultural trade deficit with the EU of $1 
billion. In FY07, USDA forecasts that the trade deficit with the EU 
will grow to $7.6 billion, the largest agriculture deficit the U.S. 
runs with any market.
    America's agricultural industry is willing to continue doing its 
best to offset the alarming trade deficit confronting our country. 
However, the support provided by MAP and FMD (both green box programs) 
is essential to this effort.
    Both MAP and FMD are administered on a cost-share basis with 
farmers and other participants required to contribute up to 50 percent 
of their own resources. These programs are among the few tools 
specifically allowed in unlimited amounts under World Trade 
Organization (WTO) rules to help American agriculture and American 
workers remain competitive in a global marketplace still characterized 
by highly subsidized foreign competition. The over 70 U.S. agricultural 
groups that share in the costs of the MAP and FMD programs fully 
recognize the export benefits of market development activities. By any 
measure, such programs have been tremendously successful and extremely 
cost-effective in helping maintain and expand U.S. agricultural 
exports, protect American jobs, and strengthen farm income.
    A recent independent cost-benefit analysis of the MAP and FMD 
programs prepared for the Department of Agriculture by Global Insight, 
Inc.--the world's largest economic analysis and forecasting firm--
illustrates the benefit of these vital market development programs. MAP 
and FMD are public-private partnerships that use government funds to 
attract, not replace, industry funds. According to Global Insight, 
total partnership spending on market development has grown 150% in the 
past decade to over $500 million projected for FY07 ($300 million from 
industry and $200 million from government). Over this period, industry 
contributions (up 222%) have grown twice as fast as government funding 
(up 95%) under MAP and FMD. Industry funds are now estimated to 
represent 59% of total annual spending, up from 46% in 1996 and less 
than 30% in 1991, which strongly represents industry commitment to the 
effort.
    Another key finding by Global Insight is that \2/3\ of market 
development funding through MAP and FMD is directed at technical 
assistance and trade servicing, not consumer promotions such as 
advertising. This category includes trade policy support, which has 
grown rapidly in recent years, as industry groups use program funds to 
help address rising levels of SPS barriers that U.S. products face in 
global markets. Only 20% of program funds are used in consumer 
promotions, largely for high value products supported under MAP.
    The Global Insight study clearly illustrates the following 
favorable benefits of increased funding for market development and 
promotion through MAP and FMD that has occurred under the 2002 Farm 
Bill:

    Market development increases U.S. competitiveness by boosting the 
        U.S. share of world agricultural trade.

     The study found that the increase in funding for MAP and 
            FMD authorized in the 2002 Farm Bill--combined with the 
            increased contributions from industry--increased the U.S. 
            share of world trade since 2001 by over one market share 
            point to 19%, which translates into $3.8 billion in 
            agricultural exports.

    Market development increases U.S. agricultural exports.

     As mentioned above, Global Insight found that U.S. 
            agricultural exports are forecast to be $3.8 billion higher 
            in 2008 than they would have been had market development 
            not been increased in the 2002 Farm Bill. Furthermore, 
            export gains will accrue well beyond 2008, reaching $5 
            billion once the full lagged impacts of market development 
            are taken into account. For every additional dollar spent 
            on market development, $25 in additional exports result 
            within 3&7 years. The study also found that 39% of the 
            export benefits of market development accrued to U.S. 
            agricultural products other than those that were being 
            promoted. Known as the ``halo'' effect, this provides 
            empirical evidence that the program generates substantial 
            export benefits not only for industry partners carrying out 
            the activity (they receive 61% of the total export benefit) 
            but for other non-recipient agricultural sectors as well 
            (that receive 39% of the total export benefit).

    Market development improves producers' income statement and balance 
        sheets.

     The income statement is improved by the price and output 
            effect that higher exports have on cash receipts and farm 
            net cash income. Additional cash receipts have increased 
            $2.2 billion during the 2002 Farm Bill due to the 
            additional exports from market development. Higher cash 
            receipts increased annual farm net cash income by $460 
            million, representing a $4 increase in farm income for 
            every additional $1 increase in government spending on 
            market development.

    In recent years, the EU, the Cairns group, and other foreign 
competitors devoted approximately $1.2 billion on various market 
development activities to promote their exports of agricultural, 
forestry, and fishery products. A significant portion of this is 
carried out in the United States. Market promotion is permitted under 
WTO rules, with no limit on public or producer funding, and is not 
expected to be subject to any disciplines in the Doha Round 
negotiations. As a result, it is increasingly seen as a centerpiece of 
a winning strategy in the future trade battleground. Many competitor 
countries have announced ambitious trade goals and are shaping export 
strategies to target promising growth markets and bring new companies 
into the export arena. European countries are expanding their 
promotional activities in Asia, Latin America, and Eastern Europe. 
Canada, Australia, New Zealand, and Brazil have also budgeted 
significant investments in export promotion expenditures worldwide in 
recent years.
    As the EU and our other foreign competitors have made clear, they 
intend to continue to be aggressive in their export efforts. For this 
reason, we believe the Administration and Congress should strengthen 
funding for MAP and FMD as part of a strong trade component in the new 
farm bill, and also ensure that such programs are fully and 
aggressively utilized. It should be noted that MAP was originally 
authorized in the 1985 Farm Bill at a level of $325 million, and the 
Coalition strongly supports returning the program to that authorized 
level of funding from its current level of $200 million per year. We 
also urge that no less than $50 million annually be provided for the 
Foreign Market Development (FMD) Cooperator Program for cost-share 
assistance to help boost U.S. agriculture exports. For FMD, this 
proposed increase reflects approximately the 1986 level of funding, 
adjusted for inflation.
    We appreciate the Administration's recognition of the merit and 
value of MAP in the 2007 Farm Bill proposals by increasing funding for 
the program to $225 million annually, although we strongly believe a 
higher funding level of $325 million annually is needed. Furthermore, 
we believe that USDA's Foreign Agricultural Service's (FAS) current 
system of funding based upon the competitive merit of applicants' 
proposals works well and should not be changed. We do not believe that 
targeting funds to specific sectors is necessary.
    At this time, I will give several examples of how MAP and FMD, 
along with industry initiatives, have helped USAPEEC to improve exports 
of U.S. poultry and eggs.
    As an approved USDA Cooperator organization, USAPEEC is responsible 
for administering funds from both MAP and FMD, which are combined with 
industry contributions to fund various market-specific promotional 
activities. These activities can be targeted toward consumers, retail, 
food service, the HRI trade, or any combination of those market 
sectors. In fact, the availability of MAP and FMD funding is an added 
incentive for our member companies to contribute to this overall 
promotion effort.
    USAPEEC utilizes its annual MAP allocation largely for promotional 
activities. However, it has become an increasing necessity that the 
funds be used in part to address the numerous trade issues that hinder 
U.S. exports. The FMD allocation helps to maintain USAPEEC offices in 
Russia, China, Mexico and Singapore, and is therefore also used largely 
to help overcome developing new restrictions on trade. The staffs of 
these offices are the industry's eyes and ears in those key markets. 
They work closely with key agriculture officials in the local 
government and with the U.S. Government's embassies and Agricultural 
Trade Offices, as well as the import trade. They are essentially a 
``quick reaction force'' for our industry, and are able to identify 
trade issues early. This helps our industry and government to work 
together to resolve trade issues involving poultry and eggs quickly and 
efficiently.
    As an example of cooperation between industry and government under 
MAP, USAPEEC organized a donation in 2005 of two containers of U.S. 
chicken leg quarters to the Vietnamese poultry industry. The Vietnamese 
industry then auctioned the donated product to raise funds for its 
campaign against highly pathogenic avian influenza that had devastated 
the industry. Fear of this disease had also caused a dramatic drop in 
chicken consumption in Vietnam. Auction proceeds also helped to calm 
consumers' fears about eating chicken.
    How did this help to increase exports? As a result of this donation 
and auction, USAPEEC has gained the support of the Vietnam Poultry 
Association, which actually helped us promote the importation of safe 
poultry from the U.S. so that Vietnamese consumers would not sacrifice 
poultry from their normal diets. As a result, U.S. chicken exports to 
Vietnam which had dropped to just over $500,000, largely because of AI 
fears, climbed back to more than $6 million by the end of 2006. In the 
first 2 months of 2007, U.S. chicken exports to Vietnam were nearly 
$2.2 million.
    Exports of U.S. turkey from major producing states, such as North 
Carolina, have become increasingly important. In the Republic of Korea, 
USAPEEC has conducted restaurant and deli promotions that have helped 
to increase U.S. turkey meat exports to Korea from less than $1 million 
in 2004 to $2.8 million in 2006.
    In the Middle East, USAPEEC has coordinated activities to increase 
consumer awareness in the retail sector of the versatility of U.S. 
turkey parts. Exports of turkey to the Middle East have grown 
accordingly, from $2.3 million in 2004 to $3.1 million in 2006.
    Mexico has been our largest market for U.S. turkey for years. Since 
2000, turkey exports have risen from $138 million to more than $216 
million, an average of $13 million per year. Mexico is also the fourth-
largest market for U.S. chicken, valued at nearly $200 million in 2006.
    USAPEEC has developed a unique partnership with UNA, the Mexican 
Association of Poultry Processors, which has helped to keep that market 
thriving. Named the NAFTA Egg and Poultry Partnership (NEPP), the 
USAPEEC&UNA collaboration has organized several industry-to-industry 
meetings funded by MAP, as well as industry-government technical 
symposia on export issues affecting U.S. poultry.
    Under NEPP, USAPEEC and UNA worked together to establish a special 
safeguard arrangement that was approved by both governments to extend 
the NAFTA duty for U.S. chicken leg quarters through the end of 2007. 
(In the original NAFTA, all poultry import duties were to be eliminated 
in 2002). Had that not happened, radical elements of the Mexican 
poultry industry, fearing a deluge of leg quarter imports, were poised 
to file a dumping action against the U.S. industry, which would have 
been extremely costly. NEPP continues to coordinate industry-to-
industry activities to discuss issues of mutual interest and to 
formalize industry recommendations to our respective governments. In 
fact, our organization has developed similar relationships in Central 
America and South America in support of CAFTA and the ANDEAN Free Trade 
Agreements.
    Also in Mexico, USAPEEC has promoted the use of U.S. processed egg 
products (liquid, dried, etc.) among food manufacturers, such as 
bakeries, confectioners and mayonnaise makers. Food makers in Mexico, 
which has the world's highest per capita consumption of eggs, had 
traditionally used locally produced shell eggs to manufacture their 
products. Now, however, manufacturers are making the switch to high-
value U.S. processed eggs. Exports of U.S. egg products to Mexico have 
grown dramatically, from $7 million in 2004, to $13.1 million in 2005 
to $15.8 million in 2006.
    On another front, as highly pathogenic avian influenza spread from 
Asia into the Middle East and Europe in the fall of 2005, consumption 
of poultry plummeted in many countries by as much as 20 to 50%, as 
fearful consumers simply stopped eating poultry. In 4 months, the price 
of chicken leg quarters--a market benchmark--fell from 48 cents per 
pound to less than 10 cents per pound. The estimated cost to the U.S. 
industry in lost export income was estimated at $142 million per month.
    In early 2006, USAPEEC launched a worldwide initiative aimed at 
countering consumer fears. Funded by $1 million in combined MAP and 
industry contributions, the campaign carried a simple message: 
``Properly handled and cooked poultry is safe to eat.'' The ``Just Cook 
It!'' campaign quickly spread around the world, and gained the 
endorsement of the World Health Organization's chief expert on avian 
influenza, Dr. David Nabarro. USAPEEC's international offices were 
instructed to tailor the message to suit local markets, and USAPEEC 
shared materials developed for the campaign with poultry organizations 
around the globe free of charge. The campaign helped to reassure 
consumers worldwide that poultry is safe to eat. Chicken leg quarter 
prices have since rebounded to the mid-40 cents range.
    These examples represent only a small sample of the activities in 
which the organization is engaged throughout the major export markets. 
USAPEEC also works to open new markets, and is actively promoting U.S. 
products in underutilized markets in Africa, such as Kenya, Tanzania, 
Ghana, Nigeria, Angola and others.
    In closing, I cannot overemphasize the importance of MAP and FMD to 
the success of U.S. poultry and egg exports. Thank you, Mr. Chairman, 
for this opportunity to share with the Subcommittee some of our 
successes, and I would be pleased to respond to any questions you may 
have.



Korea Continues To Purchase U.S. Potatoes Despite Phytosanitary Issues
    Korea has been a strong growth market for U.S. fresh chipping 
potatoes. Yet after steadily rising in recent years--up 2,665% from 119 
MT in MY 01/02 to 3,290 MT in MY 04/05--U.S. exports hit a snag last 
year because of Columbia Root Knot Nematode (CRKN) finds. To address 
this, the USPB worked closely with Korean manufacturers to help them 
continue using U.S. chip-stockpotatoes and with the U.S. industry to 
resolve problems. In the U.S., the USPB worked with growers to 
implement a more vigorous inspection process to eliminate shipping 
potatoes with CRKN. In Korea, snack manufacturers and the USPB worked 
to get a processing protocol implemented that would enable U.S. 
chipping potatoes to safely enter the market despite CRKN issues. This 
safeguard system encouraged the major snack manufacturers to make 
commercial contracts again for the next marketing year. Korean 
manufacturers that were not able to make changes to their production 
facilities began purchasing finished chips in bulk from the U.S. as a 
way to supplement their production. Thanks to this collaboration of 
efforts, U.S. exports of fresh chipping potatoes fell only 39% to 1,995 
MT in MY 05/06, and are poised to resume growth in the coming year.
                U.S. Beef Progress Evident Across Japan

                           February 14, 2007

    It has been just a little more than 6 months since Japan removed 
the ban on U.S. beef imports. Since then, the U.S. Meat Export 
Federation (USMEF) has been using a multi-faceted campaign called ``We 
Care'' to help rebuild confidence in U.S. beef among consumers, meat 
buyers, retailers and restaurant owners.
    And although increases in U.S. beef exports to this region cannot 
come fast enough for the U.S. beef industry, USMEF sees encouraging 
progress with each passing month.
    Just a few weeks ago the second largest beef bowl chain in Japan, 
Matsuya, started featuring U.S. beef in yakiniku and karubi meals at 
all its 733 locations due to positive customer response. The ``We 
Care'' campaign is utilized in each restaurant on posters, banners and 
menu cards.
    Since the resumption of U.S. beef imports, Costco has been selling 
product with successful monthly results. The retailer sells 
approximately 35 to 40 metric tons (mt) per month, which is a 50 to 70 
percent increase from August 2006 when the warehouse store restarted 
U.S. beef sales.
    Costco started with four U.S. beef cuts: chuck eye roll, boneless 
short rib, chuck short rib and chuck flap tail. Since U.S. beef sales 
were successful, Costco added rib eye roll, strip loin and flap meat, 
an underutilized cut.
    USMEF is working with Grand Hyatt Fukuoka as the hotel plans to put 
U.S. beef back on restaurant menus. An American Beef promotion will 
kickoff at the hotel March 11.
    A cooking school featuring U.S. beef recipes developed by a well-
known cooking personality will be held Feb. 28 at the Better Home 
Cooking School in Shibuya. Several newspapers and magazines have 
advertised the event.
    In 2006, the United States exported 13,736 mt of beef and beef 
variety meat to Japan, worth $66.5 million.
                                 ______
                                 
              Retail Chain Sees Results From USMEF Efforts

                             March 14, 2007

    Alsuper, a retail chain with 30 outlets in northeastern Mexico, 
reports that the U.S. Meat Export Federation (USMEF) promotions have 
helped the chain increase U.S. meat sales by 3 percent compared to 2 
years ago. Approximately 80 percent of meat purchases made at the 
stores come from the United States.
    ``USMEF promotions and assistance with developing business 
relationships with U.S. meat companies have been very positive,'' said 
Ricardo Duran, Alsuper meat purchasing director. Duran said meat sales 
currently comprise 9.4 percent of all sales at Alsuper. The company has 
set a goal to increase that number to 10 percent by December.
    ``With 5 new stores opening and continued USMEF promotions and 
assistance, we believe we can reach that goal,'' Duran said.
    Chad Russell, USMEF regional director for Mexico and the Dominican 
Republic, noted Alsuper's experience is an excellent example of how 
USMEF marketing efforts help build demand and loyalty for U.S. red meat 
in Mexico.
                                 ______
                                 
                     National Sunflower Association

Mexican Baker Creates New Bread
    Using Foreign Market Development (FMD) funds, grower check-off and 
industry dollars the National Sunflower Association (NSA) has 
aggressively pursued improved market opportunities in Mexico. NSA has 
been aggressively promoting the use of confection sunflower kernel in 
bakery products in Mexico for the last 4 years. As a result of this 
promotion, the largest Mexican baker is using confection sunflower 
kernel in two of its breads. The breads are being distributed 
nationwide in all major supermarkets. The baker has imported 350 MT of 
confection sunflower kernel valued at $420,000 in the past 6 months of 
this marketing year. Sales of the breads are expected to double in the 
next year. In the past 4 years, as a result of these activities, the 
value of U.S. confection sunflower product exports has averaged over 
$5,700,000 per year.
MAP Increases Spanish Imports of U.S. Sunflower Seeds
    Spain is currently the largest export market for U.S. confection 
sunflower seed. The primary use of sunflower seeds in Spain is for 
snacks. Five years ago using Market Access Program (MAP), grower check-
off and industry dollars, and in partnership with key Spanish snack 
roasters, the National Sunflower Association (NSA) kicked off a 
national point-of-sale (POS) campaign to promote U.S. confection 
sunflower seeds. NSA developed and printed POS materials and our 
Spanish partners distributed and maintained them. The POS materials 
were placed at points of sale in supermarkets, kiosks, and nut shops 
throughout Spain. The display materials highlighted the fact that 
participating Spanish roasters' products use USA confection sunflower 
products that are high quality and fun-to-eat at a low cost. Red, 
white, and blue colors and our `Pipas USA' logo were used in all 
materials to show USA origin. Since the inception of the campaign, 
exports of U.S. confection sunflower seeds have grown from just over 
$13,000,000 to $25,350,000 and now account for 52 percent of the total 
U.S. confection sunflower seed exports.
    Exported sunflower seed and kernel are value-added products with 
processing facilities located in rural locations of North Dakota, South 
Dakota, Minnesota and Kansas accounting for approximately 3,100 jobs in 
these states. The economic impact of the confection sunflower seed 
industry was estimated at $693 million per year in a NSA-sponsored 
study.
                                 ______
                                 
                      California Walnut Commission

Asian Market Diversification
    The California Walnut Industry has actively engaged in marketing 
programs in Asia since the mid-1990's. Utilizing MAP funds, the 
California Walnut Commission (CWC) entered the Japanese and Korean 
markets through targeted activities in the trade sector to create 
demand for California walnuts as a bakery/pastry/confectionary 
ingredient while also generating consumer awareness and purchase of 
walnuts and walnut inclusive products. The concentrated efforts in the 
bakery sector continue to yield favorable results as over 80% of the 
customer base in Japan remains concentrated in this sector while in 
Korea it accounts for 35%.
    Continued growth in these markets has been demonstrated through 
diversification within the marketplace. In Korea, high trade awareness 
and success with walnut inclusive products lead the CWC to develop 
relationships with manufacturers outside the baking sector. Keen 
interest from ice cream manufacturers, confectioneries and beverage 
manufacturers lead the CWC to conduct one-on-one meetings introducing 
possible applications customized for each company's needs, provided 
technical assistance in developing new products using California 
walnuts, and invited key product development managers to California to 
assure quality and food safety of California walnuts. MAP funds were 
utilized to engage in these activities while fostering the 
relationships.
    As a result, an all-time best selling ice cream bar product was 
launched by a leading Korean ice cream manufacturer, Haitai, which 
brought a 30 percent market growth by a single item in the launching 
year of 2003/04. Thanks to the great success of this item, the same 
company launched various products with the same concept and brand name, 
i.e. ice cream in cup, cone, soft candy and sweet bar in the marketing 
year 2004/05. This actually made a big boom of ``walnut'' in the 
confectionery industry, and in the marketing year 2004/05, many other 
leading confectioneries and bread manufacturers like Lotte, Orion, 
Samlip and Crown were developing new California walnut items. Among 
them, two items- brownies and cookies using California walnuts--were 
launched by Orion in the beginning of the marketing year 2005/06, and 
one steamed bun item with California walnut stuffing was launched by 
Samlip. All these new items from the end of marketing year 2003/04 and 
marketing year 2004/05 almost doubled the California walnut market in 
Korea over the last 2 years, growing from 3.2 million pounds in the 
2002/03 crop year to 6.8 million pounds in 2004/05. This accounts for a 
value increase of 130% from $6.7 million to $16.1million over the over 
the past 2 years, making the dairy/ice cream sector now 20 percent of 
the total market in Korea.
    The success of the above items has lead manufacturers to export 
some of the products developed in addition to sparking interest in 
other markets, such as Japan in developing walnut inclusive products, 
to achieve the success seen in Korea. In the 2005 marketing year the 
first ice cream bar including walnuts launched in September followed by 
line extensions planned for later in the year. The CWC looks forward to 
the growth that mimics that of Korea, should the launches achieve the 
success intended.
    The Asian market continues to evolve despite unjustified duties in 
both markets--30% in Korea and 10% in Japan. The potential for these 
markets to continue to evolve would be even greater if the duties were 
lifted. The CWC continues to work with USTR and in-country partners to 
remove barriers to trade. Further, MAP funding continues to be of vital 
importance to support the industry's efforts to overcome barriers to 
trade, as well as develop and evolve markets. Many of the tactics 
utilized would not be possible without MAP.
                                 ______
                                 
          American Soybean Association-International Marketing

                               March 2007

Technical Support to Latin America Livestock Producers
    American Soybean Association-International Marketing (ASA&IM) 
activities funded by USDA Foreign Agricultural Service (FAS) developed 
a program to provide technical support to Latin America livestock and 
poultry producers and feed mill operations. This program divided the 
work into three sections: farm and feed mill visits, field days and 
seminars, and feed formulation and the development of feeding programs. 
Poultry, swine, tilapia, dairy, beef farms, as well as feed mills, were 
visited in different Latin American countries under this program. The 
purpose of these visits was to teach animal producers different new 
nutrition and management techniques, and as a result of this servicing, 
animal operations will have implemented modern management practices and 
will have improved their technical skills and use more soybean 
products. Participating farms were used as an example for other 
producers, encouraging them to implement the new technology and thereby 
impact the consumption of soybean meal. This program was complemented 
with the presentation of conferences, congresses, seminars and field 
days showing the importance of using high quality soybean meal in 
animal diets, as well as different techniques to improve animal 
performance. Furthermore, a 24 hour on-line program was offered to 
animal producers for the development of feeding programs and diet 
formulations to improve the use of U.S. soybean meal in livestock and 
poultry diets, as well as animal performance.
    The most important effect was the great amount of diets that were 
formulated. It was interesting to observe how each day animal producers 
are more interested to use well balanced diets, using corn and soybean 
meal as the main ingredients. Every day the concept of buying 
ingredients on the basis of the cost per unit of nutrient is adopted by 
more animal producers. In many places, the concept of buying by price 
has changed to buying by quality. Feed mills are adopting laboratory 
techniques to evaluate feed ingredient quality and in the case of 
soybean meal, analytical technique procedures for determining protein 
solubility values, urease activity and total trypsine inhibitors were 
discussed with the quality control staff of the more important feed 
mills in Latin America.
    In relation to animal performance improvement, the recommendations 
presented during the seminars and congresses, as well as the effect of 
the changes in the feeding programs, have produced good results in the 
livestock operations. Higher weight gain and feed conversions were 
reported for pigs, broilers and beef cattle. Increments in milk 
production and reproductive efficiency in dairy cattle and higher 
percent egg production and egg weight in layers were also reported. 
Most of the monogastric producers attributed this improvement in 
performance to the use of the ``Ideal Protein Concept'', which uses as 
a base the digestible amino acid content of the different feed 
ingredients. Big differences between the cost of diet and the effect on 
performance were found when diets are formulated based on digestible 
amino acid content.
                                 ______
                                 
                U.S. Hide, Skin and Leather Association

    The biggest export market for U.S. bovine hides is China. Exports 
to China have grown from $640 million in 2005 to $875 million in 2006.
    There are a number of reasons for this, but one that has been 
singled out by some of the U.S. hide exporters is the Foreign Market 
Development (FMD) program that U.S. Hide, Skin & Leather Association 
(USHSLA) participates in.
    Through funding provided by the U.S. Department of Agriculture' 
Foreign Agricultural Service (USDA/FAS) and matching dollars put up by 
about a dozen member companies of USHSLA, we have participated in two 
shows in China over the last couple of years--one in Hong Kong and the 
other in Shanghai. Both shows bring in hide buyers from all over the 
world but primarily from the industrializing Asian nations. China is 
the main importer of hides and remains the most dominant buying 
presence at both shows. In 2005 these two shows accounted for $46 
million in on-site sales. In 2006 the two shows accounted for an 
increased $74.7 million in on-site sales.
    Would USHSLA's member companies have accounted for this increase of 
$120.7 million if we had not attended the shows? Probably some of this 
business may have gotten done, but in addition to an increase in sales 
both shows facilitate networking within the global industry which 
results in new contacts, new agents signed and additional business 
throughout the year.
    In fact, according to survey's filled out by participating USHSLA 
companies, over $110.9 million in increased business in 2006 was done 
as a result of participation in those two shows. That is nearly equal 
to the increase in hide trade in China over the last 2 years. In 
addition to on-site sales USHSLA member companies reported signing 87 
new agents at both shows.
    USHSLA and USHSLA members plan to attend these same two shows in 
2007. The Hong Kong show brings traders, transportation companies, 
tanners and others from around the world and is the largest hide and 
leather show in the world. The Shanghai show is more focused on the 
growing hide and leather industry in solely China. Both shows are a 
vital part of the growing demand for U.S. hides and leather in Asia. 
USHSLA's members will continue to attend these shows in the future and 
plan on similar successful results within China because of 
opportunities allotted to the U.S. hide and leather industry by 
participating in the FMD program funded by the USDA/FAS.
                                 ______
                                 
                    Southern U.S. Trade Association
Alabama Department of Agriculture Helps India Embrace Southern Cuisine

    In January 2006, the Southern U.S. Trade Association (SUSTA) 
focused on promoting value-added food products and pecans from the 
southern U.S. in India. SUSTA representatives from the Alabama 
Department of Agriculture participated in two trade events--the India 
International Food and Wine Show (IFOWS) 2006, an event for the retail 
industry, and HospitalityWorld 2006, an event for the hospitality, 
restaurant and institution industry. These events were followed by 
cooking demonstrations and tasting events, a culinary contest with 
budding chefs, a press conference, market visits and research assessing 
opportunities in India's pet food industry.
    At IFOWS 2006, in New Delhi, nearly twenty importers and industry 
leaders visited SUSTA's pavilion. The show provided a platform to 
establish contact with local importers and introduce them to the 
southern U.S. food products. Products from twenty-four companies from 
the SUSTA region were featured in the pavilion. The promotion was a 
tremendous success. The importers and buyers, several of whom had one-
on-one meetings with SUSTA representatives, expressed interest in the 
products and their willingness to import them.
    A cooking demonstration and tasting event was carried out by Ms. 
Vaishali Sood, SUSTA's brand ambassador chef in India. The event was 
well attended with more than fifty people participating. Ms. Sood made 
pecan cake and jambalaya, which were an instant success with the 
attendees.
    A culinary contest with twenty-two budding chefs from Banarsidas 
Chandiwala Institute of Hotel Management and Catering Technology was 
held in New Delhi. These chefs used products from the southern U.S. to 
prepare a full course meal. The objective was to establish a 
professional platform where up-and-coming culinary professionals could 
display their skills and creative talent in a competitive environment.
    HospitalityWorld 2006, in Mumbai, provided a unique opportunity for 
strategic cross promotion and professional dialogue with the hotel, 
restaurant and institutional food sectors. The response from 
institutional buyers was overwhelming. A dialogue was established with 
Cremica Group, which showed interest in procuring condiments that could 
be further processed and consumed in the local market. While in Mumbai, 
SUSTA representatives had a one-on-one meeting with Reliance Industries 
Limited promoting southern U.S. products. The company is entering the 
Indian retail sector in an unprecedented way.
    ``Power Pecan--The nutritionally powerful nut'' is the mantra used 
in SUSTA promotions to create awareness of pecans in India. SUSTA seeks 
to familiarize the Indian consumer with the uses and the versatility of 
the pecan, as it is not available in India. The press conference at 
Hyderabad sought to promote, create awareness and develop brand 
recognition for pecans, the power pecan. Nuts & Spices, a leading 
retail outlet in Chennai that exclusively sells dry fruits and spices, 
were enthusiastic to include pecans in their product offering during 
their meeting with SUSTA representatives.
                                 ______
                                 
                    Southern U.S. Trade Association
Georgia Department of Agriculture Organizes Market Access Program 
        Generic Promotion in Dubai With Projected Sales of Over $8 
        Million

    Eight companies from the southern U.S. traveled to Dubai, United 
Arab Emirates in February 2007 to find success at the Gulfood trade 
show. The Georgia Department of Agriculture organized the Southern U.S. 
Trade Association (SUSTA) booth, along with booths for eight SUSTA 
region participants, as a Market Access Program (MAP) Generic 
promotion. MAP Generic promotions represent more than one product or 
commodity and allow suppliers to participate in trade shows, in-store 
promotions and other activities for a reduced cost. The U.S. companies 
promoted various food products at the show, including fruit juices, 
rice, processed meat products, popcorn and other snack foods.
    Importers and buyers visiting the booth were given the opportunity 
to meet with U.S. companies, find out more about southern U.S. food 
products, and even taste products prepared by a chef in the booth. 
Importers and buyers also expressed interest in making additional 
contacts with suppliers of nuts, dairy products, honey, confectionery, 
spices, oils, fresh vegetables, fresh fruits and sauces.
    Five companies participating in the MAP Generic promotion conducted 
by SUSTA at Gulfood reported immediate sales totaling $964,000. Others 
indicated that they expected orders within the year, projecting sales 
to reach approximately $8,370,000 as a result of the show.
                                 ______
                                 
                    Southern U.S. Trade Association
The Long Green Road to Success

    In support of the notion that it takes years to tackle a foreign 
market, the Southern U.S. Trade Association (SUSTA), with the support 
of the Southern Nurserymen's Association (SNA), organized the U.S. 
pavilion at the Internationale Pflanzen Messe (IPM) in Essen, Germany 
for the 12th consecutive year.
    IPM, the largest horticulture trade show in the world, includes 
about 1,350 exhibitors from 37 countries in 19 halls totaling more than 
1 million square meters of exhibit space. The 4-day event attracts 
nearly 60,000 visitors from around the world looking for plant 
material, technology, and related goods.
    Participants from eight different U.S. nursery companies, including 
five first-time exhibitors, took advantage of the institutional 
knowledge SUSTA has gained over the last 12 years. In this promotion, a 
first-time exhibitor has a leg up on the competition because of the 
groundwork laid at the past promotions. Many new exhibitors find a 
``built-in'' relationship exists with many buyers because of past 
exhibits and nursery tours. European buyers return each year to the 
U.S. Pavilion because it introduces them to a wide range of new U.S. 
products and producers.
    In their experience, the exhibitors have found that repeated 
participation is one of the keys to success in the European market. For 
example, an exhibitor the first year may garner interest and a few 
small orders. The second year and third year exhibitor shows a buyer 
that the company is committed to the European market and the 
relationship is solidified. This relationship brings about larger and 
repeated orders.
    As in the past, most interest is in young plant material, mostly 
large quantities of ``bare-root'' stock of ornamental trees and shrubs. 
At the 2006 show, exhibitors reported $380,000 in sales and anticipated 
sales. There are also long term results; many past exhibitors have 
moved into growing agreements with European nurseries. In this 
arrangement, an EU grower either purchases the rights to grow a 
licensed plant variety or actually exclusively purchases young plant 
material to be grown out in-country. This partnership allows a U.S. 
supplier to gain a larger margin of profit than marketing the product 
themselves, due to many issues with trying to sell and ship 
``finished'' nursery products to Europe.
    Exhibitors and participants also point out that gaining new 
customers and making sales are not the only reason they attend IPM or 
go on the nursery tours. Several participants use the time at the show 
to seek out trends that can give them an advantage over their 
competition or products that can make their business more efficient. As 
with most industries, the nursery industry is constantly changing and 
evolving. IPM gives SUSTA participants a chance to stay one step ahead 
in the market.
    Part of the reason this promotion has been consistently successful 
is its multi-layered aspect. Nurserymen are given multiple 
opportunities to deal with the market each year. For example, this 
year's promotion includes: exhibition at the trade show, post-show 
nursery tours in a selected country (Italy) and then a follow-up 
reverse trade mission to the U.S. the following summer. An exhibitor 
has the potential to be introduced to a customer, visit the customer's 
business and then have the customer visit his business--all in 1 year!
    Another reason of continued success is the cooperation of state, 
federal and private organizations. A list of this year's cooperators 
reads like a who's who: the Southern Nursery Association, North 
Carolina Association of Nurserymen, Ohio Florist's Association, 
Tennessee Department of Agriculture, North Carolina Department of 
Agriculture, Rome FAS office, Berlin FAS office. In the past we have 
had participation from APHIS, and a multiple selection of grower 
organizations.
                                 ______
                                 
                Peanut Farmers Regain Lost Market Share

    Peanuts are a vital crop for farmers in Alabama, Georgia, and North 
Carolina. Market Access Program (MAP) funds have been used successfully 
to increase exports of peanut butter made in Georgia and other states 
to Mexico. Peanut butter exports increased 64% from 2005 to 2006 with 
an increase in value from about $3.5 to $5 million dollars in 1 year. 
MAP funds have also been used to promote raw peanut exports with 
exports increasing 14% from 2005 to 2006, regaining lost market share. 
The Market Access Program is also assisting a small peanut processing 
company in North Carolina to get a foothold in the export market by 
providing market information and advertising support for its products 
in Canada and the UK.
                                 ______
                                 
                U.S. Dairy Export Council Success Story
Arkansas, Colorado, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, 
        Minnesota, Mississippi, Nebraska, Ohio, Pennsylvania, South 
        Carolina and South Dakota

                  New Commodity Cheese Imports to Japan
------------------------------------------------------------------------

------------------------------------------------------------------------
Impacted States........................  A company that benefited from
                                          this program has members in
                                          the following states:
                                          Arkansas, Colorado, Georgia,
                                          Idaho, Indiana, Iowa, Kansas,
                                          Kentucky, Minnesota,
                                          Mississippi, Nebraska, Ohio,
                                          Pennsylvania, S. Carolina and
                                          S. Dakota, among others.
Background.............................  U.S. suppliers of cheddar have
                                          had difficulty penetrating the
                                          Japanese market due to
                                          competitive pricing from New
                                          Zealand and Australia.
Goal...................................  Increase awareness and market
                                          share of U.S. commodity
                                          cheese.
Strategy...............................  Educate Japanese traders and
                                          importers about the
                                          Cooperatives Working Together
                                          program which offers price
                                          parity with international
                                          competition and allows product
                                          trial.
Tactics................................  Continuous trade visits.
Results................................  During the first half of 2006,
                                          a major Japanese company
                                          imported 300 metric ton of
                                          cheddar from a U.S. supplier
                                          through the CWT program. These
                                          transactions amounted to
                                          approximately $840,000. The
                                          company has committed to
                                          import an additional 200
                                          metric tons of cheddar from
                                          the same U.S. supplier by the
                                          end of the year.
------------------------------------------------------------------------

                                 ______
                                 
                U.S. Dairy Export Council Success Story

         Sports Nutrition Mission Spurs WPC&80 Exports to Brazil
------------------------------------------------------------------------

------------------------------------------------------------------------
Background.............................  A Brazilian bar manufacturer
                                          attended a USDEC-sponsored
                                          sports nutrition mission and
                                          seminar that was conducted at
                                          Cal Poly University. USDEC
                                          promoted the mission and
                                          seminar to U.S. dairy
                                          suppliers as an opportunity to
                                          learn how to incorporate whey
                                          proteins such as texturized
                                          whey into protein and energy
                                          bars.
Goal...................................  Increase U.S. market share for
                                          WPC&80.
Strategy...............................  Introduce the Brazilian food
                                          supplement industry to U.S.
                                          suppliers and help
                                          manufacturers understand how
                                          best to incorporate whey
                                          proteins in sports nutrition
                                          and energy bars. Assist USDEC
                                          members with documentation
                                          issues and other regulatory
                                          information.
Tactics................................  --Act as a liaison between the
                                          Brazilian food supplement
                                          industry and U.S. suppliers
                                          through trade servicing
                                          activities.
                                         --Support USDEC members in
                                          South America markets.
Results................................  With knowledge obtained through
                                          the mission, the Brazilian
                                          company was able to re-launch
                                          a better tasting sports
                                          nutrition bar that contained
                                          whey proteins. The Brazilian
                                          manufacturer also will soon
                                          launch a new beverage using
                                          WPI from the United States.
                                          The company purchased 20 tons
                                          of instant WPC&80, with an
                                          approximate value of $5.5/kg.
                                          It expects to import about 240
                                          tons in 2006 from the United
                                          States, at an approximate
                                          value of about $1,320,000.
------------------------------------------------------------------------

                                 ______
                                 
                USA Poultry & Egg Export Council--Russia

------------------------------------------------------------------------

------------------------------------------------------------------------
Constraint: Russia uses veterinary requirements as technical barriers
 for U.S. poultry..
Description: The Russian Veterinary Service (RVS) uses differences in
 U.S. and Russian standards and risk assessment as technical barriers to
 limit imports of U.S. poultry..
Activities:
   Technical Regulations for         U.S.-Russian
   Poultry Meat                              Technical Consulting Center
   Comparative Testing of Poultry    Database of
   Products                                  official RVS documents
   HACCP manuals reprinting and mailing (CANCELLED, FUNDS
   TRANSFERRED FOR AI).


----------------------------------------------------------------------------------------------------------------
         Performance measures                 Benchmark                   Goal                   Current
----------------------------------------------------------------------------------------------------------------
1. Number of HACCP manuals                           1,600.0                  2,500.0                  1,600
 distributed in Russia.
2. Number of new Russian standards     Chicken products: terms  Develop draft of         Analysis conducted, RPU
 based on the U.S. System.              and definitions.         technical regulations.   draft blocked.
3. Number of translated official                         24                       50         41 (1,700+ pages)
 documents on poultry meat safety.
----------------------------------------------------------------------------------------------------------------
1. USAPEEC started collecting information about development of new technical regulations for poultry. A draft TR
  initiated by the Russian Poultry Union was translated into English and presented for analysis to U.S. poultry
  industry specialist, processors, traders and importers.
2. The U.S.-Russia Technical Consulting Center translated 41 official Russian and U.S. technical documents
  (total of 1,700 pages) regulating poultry production and safety control; sets of docs were copied on CDs,
  printed as books and distributed in Russia and U.S. USAPEEC helped organize the U.S.-Russian Meat Safety
  Conference ``A Safe Meat Supply--From Farm to Table'' in May. USAPEEC conducted comparative tests of official
  U.S. and Russian analytical methods for salmonella detection in poultry.
3. Together with the National Association for Consumer's Rights, USAPEEC continued comparative testing of
  poultry products from foreign and domestic producers. The testing proved adequate quality of the U.S. poultry
  product compared to other producers, especially Russian ones.
4. A veterinary information agency was contracted to obtain new official documents from the VPSS.
5. 27 articles based on HACCP manuals and U.S. professional print and on-line publications were placed in
  Russian professional veterinary periodical publications.

                                 ______
                                 
                             Wine Institute
U.S. Wines Continue To Gain Market Share in the United Kingdom
    The United Kingdom is the largest, most competitive market for 
imported wine in the world. It is also the number one destination for 
U.S. wines and those from most producing countries.
    In 2006, U.S. wines continued to increase market share in the UK 
according to retail sales monitored by AC Nielsen. Because wines 
shipped to the UK trade may be bottled in Italy or France or shipped 
in-bottle from Belgium or The Netherlands, export shipment statistics 
to a particular country are a poor indication of sales growth in the 
UK.
    During 2006, U.S. wines achieved an off-premise market share of 
16.0% by volume (+8.3%) and 16.2% (+8.0%) share by value. This places 
U.S. wines third in market share behind Australia (22.3% share) and 
France (16.4% share). Considering current growth rates, U.S. wines 
should overtake France for second place in the UK during 2007.
    In the on-premise market, U.S. wines grew 18% in value and 15% in 
volume, although market share is considerably less as European wines 
still dominate this sector.

    Mr. Salazar. Thank you very much for your testimony.
    Mr. Ford.

 STATEMENT OF PATRICK FORD, DIRECTOR, INTERNATIONAL MARKETING, 
               FORD'S GOURMET FOODS; ON BEHALF OF
        COALITION TO PROMOTE U.S. AGRICULTURAL EXPORTS,
                          RALEIGH, NC

    Mr. Ford. Good afternoon. My name is Patrick Ford. I am the 
International Marketing Director of Ford's Gourmet Foods. I am 
honored to have been selected among my peers to speak on behalf 
of the Market Access Program and the Foreign Market Development 
Program and how they increase export potential for U.S. 
companies.
    Although our company's growth in recent years into an 
internationally recognized gourmet food company is testimony to 
the success of the MAP and FMD programs, it is important to 
understand the many ways in which these programs have been able 
to significantly increase our foreign trade in a relatively 
short period of time. I thank you for that opportunity.
    My family has been in the food business for many years. My 
great-grandfather, Andrew J. Ford, and his sons, Connie Mac, my 
grandfather, and Carl had a small farm outside of Raleigh, 
North Carolina, back in the early 1940s. With a small crop 
surplus to sell 1 year, they founded Ford's Produce Company. My 
parents, Len and Sandy Ford, took over the family business from 
my grandfather who retired in 1985. My mother began a new 
division, Ford's Gourmet Foods, a specialty foods company, 
shortly thereafter, and today our company employs around 80 
people.
    In 1992, we introduced Bone Suckin' Sauce--an all-natural 
western North Carolina style barbecue sauce. It is my 
grandmother's recipe. My uncle modified it. My mom named it. 
And it changed everything about our business. When I rejoined 
the family business after college in 1997, we shipped a few 
small orders to the U.K., Hong Kong and Canada. There was no 
brand awareness in the overseas markets, no product support and 
no real marketing plan to speak of. The international buyers 
that we did business with found us at the New York and San 
Francisco trade shows. We had no knowledge of the regulations 
and basically did not know how to get into the game. We were 
dependent on people in other countries to tell us what to do.
    I knew there must be market demand in other parts of the 
world and with the help of the Foreign Agricultural Service, 
the North Carolina Department of Agriculture, Southern U.S. 
Trade Association and MAP funds, we researched countries, 
trends, market conditions and potential customers. Our first 
international trade show was a Specialty and Fine Food Fair in 
London in 2003. It proved to be a huge success but it came with 
a hefty price tag. We knew that we would not be able to afford 
to attend international trade shows on an ongoing basis without 
help. We became a member of SUSTA shortly thereafter, and were 
made aware of the MAP funds.
    Since then we have relied heavily on MAP to help us with 
many items including correct labeling for all of our products. 
Foreign labeling is not just about language translation. For 
example, in England each port has different requirements and 
different ways of listing ingredients on each label and they do 
not accept the U.S. nutritional panel. In Canada, Montreal has 
different guidelines than the rest of the entire country. The 
details of the labels alone can take months to work out and are 
extremely costly for a small business to produce. Funding from 
MAP programs has also helped with market research, information 
on qualified buyers, trade show support, shipping costs, 
advertising and product support. Most small businesses do not 
have the resources, time or money to fully investigate all the 
export requirements. It simply will not get done.
    Breaking into a foreign market doesn't happen overnight. It 
takes years of building familiarity, having a presence at trade 
shows, sending samples, advertising, in-store samplings and 
building relationships with buyers to make a product successful 
on foreign soil. Add to this the fact that our foreign 
competitors are constantly increasing their investment into the 
market and I hope you can see why without significant increases 
in the MAP and FMD program funding, it will be impossible for 
U.S. products to keep up. While these same competitors are 
focusing export dollars on the U.S., jobs on U.S. soil are at 
stake.
    I know that increasing the MAP funding to $325 million 
means a major investment in the future of exports in our 
country. I represent the small business. We get up early, we 
stay late, and we don't take days off. We do this to be able to 
seize opportunities. This is not only an opportunity but a 
partnership between the U.S. Government and all small 
businesses. The goals of this partnership are to benefit the 
small business by developing opportunities abroad and to 
benefit our country by protecting and creating jobs, and to 
begin to correct the trade deficit by protecting small 
businesses across the country.
    In closing, please do vote to increase the MAP program 
budget to $325 million. I cannot stress enough the importance 
of the MAP and FMD to the success of U.S. small business 
exports. Thank you.
    [The prepared statement of Mr. Ford follows:]

Prepared Statement of Patrick Ford, Director, International Marketing, 
      Ford's Gourmet Foods; on Behalf of Coalition to Promote U.S.
                   Agricultural Exports, Raleigh, NC

    Good afternoon. My name is Patrick Ford; I am the International 
Marketing Director of Ford's Gourmet Foods. I am honored to have been 
selected among my peers to speak on behalf of the Market Access Program 
and Foreign Market Development Program, and how they increase export 
potential for U.S. companies. Although our company's growth in recent 
years into an internationally recognized gourmet food company ought to 
be testimony enough to the success of the MAP and FMD programs, it is 
important to understand the many ways in which these programs have been 
able to significantly increase our foreign trade in a relatively short 
time. I thank you for that opportunity.
    I hope you will consider my testimony to be justification for a 
significant increase in funding of these programs so that other small 
U.S. companies may take advantage of the vast export market available, 
and gain assistance in conquering the many roadblocks that commonly 
interfere with or prevent altogether the possibility of export.
About Ford's Gourmet Foods
    My family has been in the food business for many years. My great-
grandfather, Andrew J. Ford and his sons Connie Mac (my grandfather) 
and Carl had a small farm outside of Raleigh, NC back in the early 
1940s. With a small crop surplus to sell 1 year, they founded Ford's 
Produce Company. My parents, Lynn and Sandi Ford took over the business 
from my grandfather who retired in 1985. My mother began a new 
division, Ford's Gourmet Foods, a specialty foods company.
    In 1992, we introduced Bone Suckin' Sauce, an all-natural, Western 
North Carolina style barbeque sauce. It is my grandmother's recipe that 
my uncle modified and my mom named, and it changed everything about our 
business.
    When I re-joined the family business after college in 1997, we 
shipped a few small orders to the United Kingdom, Hong Kong, and 
Canada. There was no brand awareness in the overseas markets, no 
product support, and no real marketing plan to speak of. The 
international buyers that we did business with found us at the San 
Francisco and New York food shows. We had no knowledge of the 
regulations and we basically did not know how to get into the game. We 
were dependent on the people in other countries to tell us what to do.
    I knew there must be market demand in other parts of the world. 
With the help of the Foreign Agricultural Service, North Carolina 
Department of Agriculture, Southern U.S. Trade Association and MAP 
Funds, we researched countries, trends, market conditions, and 
potential customers. Our first international trade show was the 
Specialty and Fine Food Fair in London in 2003. It proved to be a huge 
success, but it came with a hefty price tag. We knew that we would not 
be able to afford to attend international trade shows on an ongoing 
basis without help.
    We became a member of SUSTA and were made aware of MAP Funds 
shortly after that show.
    Since then we have relied on MAP to help us with many items 
including correct labeling for all our products. Foreign labeling is 
not just about language translation. For example in England, each port 
has different customs requirements, different ways of listing the 
ingredients on each label, and they do not accept the U.S. nutritional 
panel. In Canada, Montreal has different labeling guidelines than the 
rest of the country. The details of the labels alone can take months to 
work out, and be extremely costly for a small business to produce. 
Funding from MAP programs has also helped with market research, 
information on qualified buyers, trade show support, shipping costs, 
advertising, and product support. Most small businesses do not have the 
resources, time or money to fully investigate all the different export 
requirements. It simply will not get done.
    MAP branded funds level the playing field for small businesses 
looking to expand into the international market place. They have 
provided the advice and guidance to enter into the market. Since 2004 
our sales in the UK have increased 300%, and we now have a presence in 
over 30 countries.
    Breaking into a foreign market doesn't happen overnight. It takes 
years of building familiarity by having a presence at trade shows, 
sending samples, advertising, in-store sampling, and building 
relationships with buyers to make a product successful on foreign soil. 
Add to this the fact that our foreign competitors are constantly 
increasing their investment in market promotions, and I hope you can 
see why without significant increases in MAP and FMD program funding, 
it will be impossible for the U.S. products to keep up. And while these 
same competitors are focusing their export dollars on the U.S., jobs on 
U.S. soil are at stake.
Conclusion
    I know that increasing MAP funding means a major investment in the 
future of exports for our country. I represent the small business. We 
get up early, stay late, and don't take days off. We do this to be able 
to seize opportunities. This is not only an opportunity, but a 
partnership between the U.S. Government and all small businesses. The 
goals of this partnership are to benefit the small businesses by 
developing opportunities abroad, and to benefit our country by 
protecting and creating jobs, and to begin to correct the trade deficit 
by protecting small businesses across the country.
    In closing, please vote to increase the MAP program budget to $325 
million. I cannot stress enough the importance of MAP and FMD to the 
success of U.S. small business exports. Thank you, Mr. Chairman, for 
this opportunity to share with you and the Subcommittee some of our 
successes, and I would be pleased to respond to any questions you may 
have.

    Mr. Salazar. Thank you, Mr. Ford.
    We want to thank all of you who testified today for 
enlightening the Committee on these critical issues. Speaking 
on behalf of the Members of the Committee, we very much 
appreciate that.
    Under the rules of the Committee, the record for today's 
hearing will remain open for 10 days to receive additional 
material and supplementary written responses from witnesses to 
any question posed by a member of this panel. This hearing of 
the Subcommittee for Specialty Crops, Rural Development, and 
Foreign Agriculture is adjourned.
    [Whereupon, at 2:58 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

  Prepared Statement of David Beckmann, President, Bread for the World

    I appreciate the opportunity to submit written testimony on a 
subject very close to my own heart and a prime policy interest of Bread 
for the World.
    Founded in 1974, Bread for the World is a Christian, nonpartisan 
organization supported by 45 denominations and more than 2,500 churches 
that works to bring about public policy changes that address the root 
causes of hunger and poverty in the United States and overseas. Bread 
for the World's 58,000 members lobby Congress and the Administration to 
this end, and mobilize a quarter of a million constituent contacts with 
Members of the U.S. Congress every year. Bread for the World helps 
concerned people learn about policy issues that are important to poor 
and hungry people, and then helps them turn this knowledge into 
positive political action.
    The dimensions of global hunger are well known: More than 850 
million people--half of them children--live in a state of chronic 
hunger and food insecurity; 25,000 die daily due to hunger and related 
ailments. We are seeing the Millennium Development Goal of halving 
global hunger and poverty by 2015 slipping from our grasp. For such 
demeaning hunger and poverty to persist when we have the technological 
and economic means of ending it is a moral affront to American values.
    Food aid has been an important tool in combating global hunger, and 
has saved many lives, and the U.S. can rightly feel proud of its role 
as the world's most generous donor of food aid. Its efforts have saved 
millions of lives. However, the food aid program has also been burdened 
with ancillary objectives that undermine its effectiveness and 
efficiency in meeting the needs of hungry people around the world.
    Bread for the World has as its fundamental mission seeking justice 
for hungry people. And while we appreciate the political argument for 
maintaining a broad coalition of U.S. support for food aid, we are 
convinced by our own polling results that ending global hunger is a 
topic that resonates with the U.S. public. Americans understand that 
this is fundamentally an issue of social justice, and that meeting the 
real needs of hungry and malnourished people should be the overriding 
objective of a U.S. food aid program.
    The food aid environment has changed significantly from when Food 
for Peace was initiated over 50 years ago, and changes in the food aid 
program are overdue. One need is to simplify and clarify the multiple 
and sometimes conflicting objectives and statutory requirements, which 
cannot all be met. Specific legislative objectives set for U.S. food 
aid include, in addition to combating world hunger and malnutrition, 
``promoting broad-based, equitable and sustainable development,'' 
``developing and expanding export markets for U.S. agricultural 
commodities,'' ``fostering and encouraging the development of private 
enterprise and democratic participation,'' and ``preventing conflict.'' 
On top of these are added operational requirements, including minimum 
tonnage (generally met), sub-minimum tonnage for non-emergency programs 
(not met since 1995), and value added (generally not met). It is time 
to clarify the mandate of food aid, giving unambiguous priority to 
combating hunger and malnutrition.
    Bread for the World favors a transition to demand-driven food aid, 
based more on the needs and opportunities and less on supply and 
availability. Food aid is no longer a surplus disposal program, and the 
volumes involved are too small to affect commodity prices in any but 
exceptional cases. In fact, food aid tends be pro-cyclical, so that 
food aid volume tends to decrease in times of high prices--such as the 
present--when the food needs tend to be the greatest. This is exactly 
counter to the stated objective of meeting the nutritional needs of the 
world's hungriest people.
    Bread for the World believes that the farm bill should ensure 
ongoing and consistent U.S. assistance to people in need of emergency 
food and nutrition support around the world. This means increasing the 
authorized funding levels for emergency food aid--especially in light 
of recent agricultural commodity price increases.
    We also need to recognize that commodity food aid is not always the 
most appropriate response to food insecurity, whether chronic or 
emergency. One life-affecting consideration is that of timeliness, 
ensuring the quickest response to emergencies or windows of 
opportunity. Other considerations include market impact--whether the 
commodity food aid serves as an incentive or disincentive to local or 
regional production and commerce--and commodity composition--i.e., 
whether the needs are best served by commodities or products available 
from the U.S. In order to facilitate the most effective and efficient 
responses to food insecurity, Bread for the World strongly supports 
providing the Office of Food for Peace with the flexibility to procure 
food locally or in the region. We think the Administration's request in 
the farm bill principles for authority to use up to 25 percent of Title 
II appropriations for local or regional purchase is a step in the right 
direction, and urge the Committee's support. Local and regional 
procurement is not going to be appropriate in every case and needs to 
be carefully applied, but there is already sufficient information and 
experience on the part of the World Food Program, the NGO community and 
other donors to clearly demonstrate the circumstances under which this 
instrument can be effectively applied.
    Along the same lines, we support loosening the restrictions that 
mandate the processing (``value added'') of food aid and U.S. flag 
shipping. While these reflect legitimate interests, our main focus 
should be on meeting needs and saving lives, and employing the most 
appropriate and efficient means to that end. Surely, other means can be 
found for ensuring the viability of the U.S. merchant marine than by 
imposing onerous and costly restrictions on the shipment of food to 
meet the urgent nutritional needs of hungry people around the world.
    The Bill Emerson Humanitarian Trust (BEHT) is another useful weapon 
in combating global hunger. We support changes that would render the 
BEHT more efficient and reliable in addressing food crises. These 
include making use of the BEHT easier and more transparent by 
clarifying the ``trigger'' for its utilization relative to Title II; 
increasing efficiency by directing it to hold reserves in the form of 
cash or options instead of commodities, thus reducing costs and 
increasing flexibility and responsiveness; and instituting provisions 
for regular replenishment.
    The new farm bill could also open opportunities for poor countries 
to become more food self-reliant by reducing protectionist forms of 
assistance to U.S. farmers. Funding within the farm bill could be 
shifted from trade-distorting commodity payments to programs that would 
be much more helpful for rural America, especially for farm and rural 
families of modest means, and to nutrition assistance for hungry people 
in rural and urban America. These reforms, together with reduced 
protectionism in Europe and Japan, would remove significant obstacles 
to agriculture and food security for many of the world's poorest 
people.
    Finally, we would like to encourage Members of this Committee to 
consider the problem of world hunger from the broadest perspective, 
recognizing that getting beyond chronic food insecurity requires 
developing recipient country capacity to produce and trade. Emergency 
commodity food aid is at one end of a spectrum of responses, and needs 
to be recognized as a temporary fix at best. The U.S. Government, along 
with other donors, needs to put more resources into effectively 
addressing long-term food security. International aid for agricultural 
development has plummeted over the past 20 years, from 11 percent to 
just 3 percent of ODA. Increased crop yields in developing countries--
something achievable with current technologies--would have a profound 
and lasting impact on global hunger.
    Growth in the developing world would also be good for U.S. 
agriculture. A 2006 study, commissioned by Bread for the World 
Institute and conducted by the International Food Policy Research 
Institute, showed that a 7 percent GDP growth rate in the developing 
world would generate nearly $26 billion in additional U.S. agricultural 
exports between 2006 and 2020.
    We have the obligation and the opportunity to end hunger. We need 
to take advantage of every means for doing so. The changes to the food 
aid portion of the farm bill noted above will, I am confident, move the 
U.S. closer, in concert with the NGO community, the WFP and other 
donors, toward meeting this urgent objective.
    In closing, I would like to call attention to our policy paper on 
food aid, ``Feeding a Hungry World,'' issued in April 2006, a copy of 
which is submitted with this testimony. We would be happy to provide 
further information on any of the above points.
    Thank you.
                                 ______
                                 
 Prepared Statement of David Kauck, Senior Technical Advisor, CARE USA

    Mr. Chairman and Members of the Subcommittee, thank you for this 
opportunity to present CARE's perspectives on the performance of United 
States international food assistance programs. Ensuring that our 
nation's food assistance programs achieve success at reducing hunger 
around the world is a critical challenge for all of us. CARE shares 
your commitment to combat hunger by providing effective and accountable 
programming wherever it is needed. CARE would like to express its great 
appreciation for all the support that both the Subcommittee and the 
Committee have given to programs using food aid.
    CARE has been a cooperating partner of the Food for Peace program 
since it was established in 1954. Over the past 53 years, CARE has 
programmed more than 18.5 million tons of food from Food for Peace 
(valued at over $7.4 billion) to reach more than 200 million people. 
CARE operates food assistance programs today in twenty-two countries in 
Africa, Latin America, and Asia.\1\ In the half-century or so that U.S. 
food aid programs have existed in their current form, our work together 
has helped to save countless lives, and protect and improve the health 
and well-being of millions of people living on the edge of disaster. 
CARE is proud to be a part of this great effort.
---------------------------------------------------------------------------
    \1\&In FY08, CARE will program Title II non-emergency resources in 
about 12 countries. This reduction is primarily due to the Office of 
Food for Peace's decision to focus its non-emergency resources in 15 
countries. CARE was consulted by the Office of Food for Peace before 
this decision was made. CARE supports FFP's efforts to concentrate its 
non-emergency programs in those countries that are the most food 
insecure.
---------------------------------------------------------------------------
    CARE's approach to food assistance has evolved over the years. We 
began by focusing on the provision of food and other assistance to 
people facing the threat of famine. We still use food in this way, but 
we have learned that food resources alone, although valuable, are not 
enough to address hunger. To improve people's lives, we developed multi 
year programs that combine food assistance with other resources. These 
programs target the neediest people, often before a humanitarian 
emergency is apparent. They are designed to address the underlying 
causes of hunger and to strengthen poor peoples' capacity to cope with 
misfortune.
    When it uses food aid, CARE's central focus is on helping poor 
people overcome hunger. Our objectives are always to save lives and 
protect livelihoods--while minimizing any unintended harmful 
consequences that might result from the use of food resources. CARE 
strives to use food only when and where it is appropriate.\2\ Well-
managed food aid continues to be an important component of a global 
strategy to reduce hunger.
---------------------------------------------------------------------------
    \2\&CARE&USA, ``White Paper on Food Aid Policy'', 2006.
---------------------------------------------------------------------------
    While acknowledging the important contribution of U.S. food 
assistance programs, we also accept the challenges that we still face, 
and they are daunting. There are currently approximately 820 million 
undernourished people in the developing world.\3\ Many of these people 
are now so poor that they lack the means to rebuild their lives 
following natural disasters or other humanitarian emergencies. These 
problems are particularly acute in sub-Saharan Africa, where, for at 
least the last 3 decades, hunger has steadily worsened, becoming more 
widespread and persistent over time. The growing numbers of highly 
vulnerable people who have fallen into extreme and intractable poverty 
helps to explain the increased frequency and severity of humanitarian 
emergencies, and the exploding demand for emergency food aid. In parts 
of the Horn of Africa, the Sahel, and southern Africa, events that 
would not have triggered major humanitarian emergencies twenty-five 
years ago do so now.
---------------------------------------------------------------------------
    \3\&Food and Agricultural Organization of the United Nations, ``The 
State of Food Insecurity in the World: Eradicating World Hunger--Taking 
Stock Ten Years After the World Food Summit'', (Rome: FAO Information 
Division, 2006) .
---------------------------------------------------------------------------
    While humanitarian crises have increased, the funding needed to 
adequately support food assistance demands worldwide has declined by 
nearly half in real terms since 1980.\4\ We recognize that these 
resource constraints will not be easy to resolve in the current budget 
environment. This is why everything possible must be done to improve 
the efficiency and effectiveness of food aid practices so that we can 
achieve the greatest impact possible with the resources that we have. 
One important way to achieve this is to improve the timeliness and 
targeting of food aid. Food aid is especially valuable when it arrives 
on time and reaches the people who need it most. If it is late or 
poorly targeted, essential food aid can be wasted. Worse yet, untimely 
deliveries and poorly targeted food aid can have unintended, and 
sometimes harmful, economic consequences.
---------------------------------------------------------------------------
    \4\&Christopher B. Barrett, ``The United States International Food 
Assistance Programs: Issues and Options for the 2007 Farm Bill'', 
February, 2007.
---------------------------------------------------------------------------
    With these concerns in mind, CARE recommends several specific 
changes to current policies affecting U.S. food assistance programming.
Local Purchase
    CARE endorses increasing procurement flexibility in the Title II 
program so that food may be routinely purchased locally or regionally 
in developing countries. Under the right circumstances, having a local 
purchase option can reduce delays and improve program efficiency and 
effectiveness, and therefore save lives.
    Although local purchase can be a useful tool under the right 
conditions, this approach must be undertaken carefully. If not managed 
properly, local purchase can trigger price spikes that are harmful to 
poor people who must purchase food in order to meet their basic needs. 
This is why we feel that a carefully monitored program would be a 
useful way to introduce this innovation.

Better Strategies Are Needed To Provide Cash Resources for Food 
        Security Programs
    In addition to direct distribution of food, there is a need for a 
reasonable level of cash assistance for complementary activities 
intended to reduce hunger. Experience has shown that cash-supported 
activities are often critical to the success of food programs. Although 
current law provides authority for limited cash assistance, CARE 
recommends that Congress increase the total amount of cash assistance 
provided within the Title II program and consider new strategies on how 
best to make those resources available.
    Currently, the Title II program provides three conduits for 
distributing in-country cash support: (1) Section 202(e) funds, 
provided primarily for administrative and operational costs; (2) 
funding for Internal Transport, Storage and Handling for logistics-
related support; and (3) proceeds from the sale of monetized 
commodities made available for costs associated with enhancing the 
effectiveness of Title II programs. The practice of purchasing 
commodities here in the United States, shipping those resources 
overseas, and then selling them to generate funds for food security 
programs is far less efficient than the logical alternative--simply 
providing cash to fund food security programs.
    As a step towards improving the efficiency and effectiveness of 
non-emergency food aid programs, we recommend: (a) increasing Section 
202(e) funding levels to at least 25% of the overall Title II 
appropriation; and (b) expanding Section 202(e) flexibility to permit 
the use of funds to enhance the effectiveness of program efforts. Not 
only would this substantially improve the cost-effectiveness of non-
emergency programs, it would also eliminate a source of unnecessary 
controversy that hangs over U.S. food assistance. Economic research 
supports the view that open market sales of imported food aid may in 
some cases create market distortions that are harmful to local farmers, 
traders and economies. It also shows that monetized food tends to 
displace commercial imports, both from the U.S. and from other 
countries. For this reason, monetization became an especially 
contentious issue during recent WTO negotiations.
    Mr. Chairman, for the reasons just described CARE has made an 
internal decision to phase out of monetization. This transition should 
be completed by the end of Fiscal Year 2009. In the future, CARE will 
confine its use of food aid to emergency and safety net programs that 
involve targeted distribution to the chronically hungry.

The Bill Emerson Humanitarian Trust
    The Bill Emerson Humanitarian Trust was intended to function as a 
reserve of food and food-associated assistance funding that can be 
drawn upon quickly to address unanticipated, rapid onset humanitarian 
crises. Unfortunately, at present the Trust is difficult to access and 
is usually deployed as a last resort, rather than a first response. Two 
changes would help the Trust function as it was originally intended. 
First, to make the Trust more accessible, the conditions for releasing 
food and funds should be clarified in law. Second, we recommend 
modifying current law to ensure replenishment of resources as part of 
the normal, annual appropriations process. CARE is eager to work with 
the Committee to strengthen the statutory provisions affecting the Bill 
Emerson Humanitarian Trust in order to make this vital assistance tool 
as effective as possible.

Addressing the Underlying Causes of Food Insecurity and Hunger
    Chronic hunger is often the result of multiple, deeply rooted 
causes. In the long term, achieving a lasting reduction in the 
incidence of chronic hunger will require: improvements in agricultural 
productivity; greater access to information, capital, basic education, 
health services, and technical training for the poor; and changes in 
the status of women and girls. This ambitious list obviously goes well 
beyond the mandates set forth in the farm bill. Indeed, it is beyond 
the means of any single donor government. But this crucial, broader 
objective is not impossible, and it is fully consistent with the values 
of the American people to help others help themselves.
    Addressing the underlying causes of hunger will require setting 
common goals and promoting coordinated action across programs and 
agencies, as well as with national governments, implementing partners 
and other donors. Within the U.S. Government, there are several such 
initiatives underway. One example that CARE has direct experience with 
is Ethiopia's Productive Safety Net Program. Under this program, 
multiple donors, including the United States, engage in coordinated 
planning and action. All are working toward a common goal to reduce 
levels of food insecurity in a country where conditions for its poor 
have not improved, in spite of extraordinary levels of food aid since 
the 1980s. While food aid plays an important role, the program does not 
rely on food aid alone. Program objectives include building 
infrastructure, expanding markets, diversifying and expanding the 
assets of poor households, and increasing the Government of Ethiopia's 
capacity to provide sustainable safety nets for chronically vulnerable 
citizens. We ask the Chairman and Committee members to consider this 
example as an encouraging model for coordinated action.
    In closing, we must push ourselves to make food aid a more 
effective tool for reducing poverty and hunger.
    CARE welcomes this opportunity to communicate our perspectives on 
U.S. food assistance policy at this important moment in the Committee's 
work. The intolerable crisis of 820 million hungry people worldwide 
represents a moral and ethical challenge to us all. But with your help, 
Mr. Chairman, I am convinced that we have both the will and the means 
to make a difference. CARE looks forward to working with the 
Subcommittee and the Committee in the months ahead to further 
strengthen the U.S. response to the problem of international hunger.
    Mr. Chairman and Members of the Committee, thank you again for the 
opportunity to present our views. I would be pleased to answer your 
questions or provide additional information.
                                 ______
                                 
                White Paper on Food Aid Policy--CARE&USA

                              June 6, 2006

    CARE International Vision: We seek a world of hope, tolerance and 
social justice, where poverty has been overcome and people live in 
dignity and security. CARE International will be a global force and a 
partner of choice within a worldwide movement dedicated to ending 
poverty. We will be know everywhere for our unshakeable commitment to 
the dignity of people.

Introduction
    Food aid has indisputably assisted and, in many cases, saved the 
lives of millions of people in the half-century or so that it has 
existed in its current form. CARE has long been associated with food 
distribution programs and can be justifiably proud of some of the 
accomplishments achieved through food aid programming in assisting 
poor, vulnerable, and crisis-affected people throughout the world. CARE 
believes that, if it is well managed, food aid continues to be an 
important component of a global strategy to reduce vulnerability and 
food insecurity. At the same time however, it is clear that many of the 
practices of procurement, distribution and management of food aid--as 
well as the politics of allocating resources for food aid--are not 
always compatible with the CARE International Vision and Mission 
Statement, adopted by the organization in 2001.
    This paper is part of an ongoing effort to ensure that CARE&USA's 
policies for use of food resources are aligned with the organization's 
vision, mission and programming principles. In reviewing our policies, 
the CARE has sought to develop an understanding of the challenges and 
trends associated with food aid; to identify key policy options and 
their potential risks and implications; and to outline strategic 
directions that will position CARE to use food resources even more 
effectively. This paper briefly summarizes our analyses, options and 
directions.

Rationale for CARE's Food Policy Review
    Recent analysis has shown that under some circumstances food aid 
can harm local production and markets, undermining long-term food 
security. Studies have also shown that food aid is often not the most 
efficient use of resources for alleviating poverty. These findings 
oblige CARE to review our food aid policies and management practices in 
order to ensure that our strategies and practices are consistent with 
our goals and values.
    Food aid has recently become the focus of important policy debates 
in the U.S. and abroad:

   Many features of the current system of food aid management 
        have been challenged in the current round of trade negotiations 
        at the World Trade Organization (WTO).

   In Washington, budget constraints in a time of increased 
        demand for emergency food aid have resulted in inadequate 
        funding, particularly for non-emergency food aid.

   The authorizing legislation for U.S. food aid--the farm 
        bill--is soon to be renegotiated in Washington. The legislative 
        process will provide another arena for debate about food aid.

    These factors have important implications for how CARE approaches 
humanitarian response and other programs using food resources. They may 
also have important operational and budgetary consequences for some of 
our country offices.
    In short, the rules of the game are changing with regard to food 
aid. CARE's Food Policy Review is part of its effort to actively engage 
in the food policy debate in order to encourage the evolution of food 
aid management towards being a more flexible and appropriate resource, 
while also being aware of the possible consequences of changes in food 
aid on our policies, programming, and budgets.
Principles for Food Aid Management
    CARE adheres to its own six Programming Principles in all of its 
operations,\1\ but specifically two principles guide our use of food 
resources:
---------------------------------------------------------------------------
    \1\&CARE's Programming Principles are: Promote empowerment; Work 
with partners; Ensure accountability and promote responsibility; 
Address discrimination; Promote non-violent resolution of conflicts; 
and Seek sustainable results.

    1. When it uses food aid, CARE's central focus is on helping poor 
        and vulnerable people overcome food insecurity and 
        vulnerability. Our objectives are to save lives, protect 
        livelihoods, reduce vulnerability, and address underlying 
        causes of poverty-while monitoring for and minimizing any 
---------------------------------------------------------------------------
        potential harm from using the resource.

    2. CARE is committed to maximizing efficiency and impact, and 
        minimizing unintended harmful consequences. CARE will use food 
        aid only when and where it is appropriate. In CARE's view, 
        appropriate roles for food aid include emergency response 
        programs, safety net (asset protecting) programs, and a more 
        limited role in asset building programs. CARE takes 
        responsibility for managing food aid appropriately and will:

     Improve its understanding of local markets and patterns of 
            vulnerability, so that it can make appropriate food aid 
            management decisions.

     Target the right kind of assistance to the right people at 
            the right time and in the right place.

     Ensure that when food is used, appropriate non-food 
            complimentary requirements are also met.

     Ensure the flexibility to choose between food and other 
            resources depending on local conditions. CARE will actively 
            advocate for this flexibility with donors.

     Follow appropriate, internationally-accepted guidelines 
            and codes of conduct, including the SPHERE Guidelines and 
            the NGO Code of Conduct on Food Aid and Food Security.

Specific Policy Decisions
    In its food aid review, CARE USA has focused on four major policy 
areas that affect the overall effectiveness of the food aid system and 
have potential implications for CARE programs. These are: local and 
regional purchases of food; monetization; U.S. Department of 
Agriculture (USDA) programs; and international trade, agricultural 
subsidies and food aid. After careful analysis, the following decisions 
have been made:

1. Local/Regional Purchase
    CARE supports making funding available to purchase food locally or 
regionally in developing countries. The two main justifications for 
local and regional purchases of food supplies are (i) to reduce costs, 
delays and market distortions brought about by ``tying'' food aid to 
domestic procurement programs in the donor country and (ii) to increase 
procurement flexibility while providing economic opportunities for 
small farmers in countries where purchases are made.
    CARE recognizes that local purchase is a complex undertaking. A 
greater understanding of local markets and potential risks and 
unintended consequences is necessary before engaging in local purchase 
on a significant scale. CARE will support efforts to increase the 
provisions for local purchase in donors' budgets. Some donors 
(especially the European Commission (EC) and Canada) have already moved 
towards more local/regional procurement.
    Our reasoning:

    1. Currently, most food aid (including virtually all U.S. food aid) 
        must be sourced from the donor country (i.e. in WTO language, 
        it is ``tied aid''). This means that:

     Food aid deliveries can be slow and expensive. The average 
            time for delivery of Title II emergency food aid from call 
            forward to arrival in-country is 5 months.

     Food aid is nominally tied to the export and surplus 
            disposal objectives of the exporting country.

     Imported food aid can cause commercial displacement, 
            causing harm to traders and local farmers.

     The cost of tied food aid has been shown to be 
            significantly higher--in many cases 30&50% higher--than 
            alternative, non-tied sources of food aid.\2\
---------------------------------------------------------------------------
    \2\&OECD (2005) ``The Development Effectiveness of Food Aid: Does 
Tying Matter?'' Paris: OECD.

    2. The local purchase option will increase procurement flexibility. 
        In countries (or regions) where food supplies are adequate and 
        where markets function properly, shifting from imported food 
        aid to local purchase has the potential to significantly reduce 
        delays and delivery costs. It can also provide important 
        economic opportunities for small farmers in countries where 
        food purchases are made. However, certain caveats need to 
---------------------------------------------------------------------------
        betaken into consideration:

     Most humanitarian organizations have only recently begun 
            to experiment with local purchase. Experiences to date are 
            still being assessed, and no broad consensus has yet 
            emerged about when to resort to local/regional purchase and 
            how to best manage it.

     It is clear that local purchase is a complex undertaking. 
            It brings significant operational challenges and risks, as 
            does the use of imported food aid.

     The appropriateness of local purchase will depend on 
            various factors, including highly variable local market 
            conditions.

     If not managed properly, local purchase can cause harm. Of 
            particular concern is the possibility that local purchase, 
            in places where markets do not function effectively, will 
            trigger price spikes for basic food stuffs. Surging prices 
            can be very harmful to poor people who must purchase food 
            in order to meet their basic needs. New analytical 
            procedures are required to predict and monitor the impact 
            of local and regional purchases.

2. Monetization
    By September 30, 2009, CARE will transition out of monetization--
that is, the sale of food aid to generate cash for humanitarian 
programs. The only exceptions will be where it can be clearly 
demonstrated that monetization can be used to address the underlying 
causes of chronic food insecurity and vulnerabilities with reasonable 
management costs and without causing harm to markets or local 
production. CARE will use monetization only when it is sure that the 
food which is monetized reaches vulnerable populations and has 
effective targeting of poor people with limited purchasing power. This 
will result in minimum or no displacement of domestic production.
    CARE's transition away from monetization will take into 
consideration the project cycle in our country offices, replacement of 
lost revenue by alternative sources, and any other adjustments needed 
in our country offices and headquarters. It also means that all country 
offices submitting Multi-Year Activity Plans (MYAPs) for USAID/Food for 
Peace in the current fiscal year will need to ensure that their 
programs do not have a monetization component after September 30, 2009.
    CARE recognizes that the elimination of monetization will probably 
lead to a reduced stream of cash resources for some country offices. 
CARE will seek ways to replace some monetization proceeds, in part, by 
advocating for the conversion of monetization funds to cash accounts 
and for the allocation of additional resources to address underlying 
causes of food insecurity.
    CARE will advocate the adoption of a principled approach by the 
U.S. Government and Private Voluntary Organizations (PVOs) that 
addresses the potential harm to markets and local production as well as 
the high management costs associated with monetization.
    Our reasoning:
    For many years, monetization has been a useful source of funding 
for programming to protect and enhance the livelihoods of poor people. 
However, there are three major problems with monetization:

    1. Experience has shown that monetization requires intensive 
        management and is fraught with risks. Procurement, shipping, 
        commodity management, and commercial transactions are 
        management intensive and costly. Experience has shown that 
        these transactions are also fraught with legal and financial 
        risks.

    2. Monetization is economically inefficient. Purchasing food in the 
        U.S., shipping it overseas, and then selling it to generate 
        funds for food security programs is far less cost-effective 
        than the logical alternative--simply providing cash to fund 
        food security programs.

    3. When monetization involves open-market sale of commodities to 
        generate cash, which is almost always the case, it inevitably 
        causes commercial displacement. It can therefore be harmful to 
        traders and local farmers, and can undermine the development of 
        local markets, which is detrimental to longer-term food 
        security objectives.

3. U.S. Department of Agriculture (USDA Programs)
    Most of the food resources programmed by CARE come from the P.L. 
480 Title II (USAID/ Office of Food for Peace). Occasionally, CARE has 
utilized other resources, managed by the USDA, including food resources 
from Title I and Section 416b, whose stated objective is to support 
U.S. farmers, and Food for Progress, whose stated purpose is to promote 
free enterprise and competition in agricultural economies.
    CARE takes the position that food aid should not be used to enable 
a donor to establish an unfair commercial advantage and must not create 
disincentives to local production and markets. CARE believes two USDA 
programs, Title I (concessional sales) and Section 416(b) (surplus 
disposal) are inconsistent with its position and therefore will phase 
out of participation in these programs. Regarding a third program, Food 
for Progress, CARE's stance is more complex. In many contexts, the goal 
of Food for Progress Programs is compatible with CARE's focus on 
addressing the underlying causes of poverty. However, in recent years 
past, some of the food aid provided under Food for Progress has come 
from Title I or Section 416(b), and much of it has been monetized. CARE 
will not accept Food for Progress Resources that originate from those 
resources; nor will CARE monetize from this (or any other) program.
    In practice, these policies are likely to mean that CARE will 
receive little support from Food for Progress.
    Our reasoning:

    1. The USDA food programs under Title I and Section 416b: Title I 
        programs involve concessional (subsidized) sales of food for 
        the stated purpose of promoting export market development for 
        U.S. goods. Section 416(b) programs involve disposal of surplus 
        production.

     Evidence shows that these programs actually have no 
            measurable effect either as strategies to promote the 
            development of export markets or as price support 
            mechanisms.

     However, tying food aid to domestic agricultural 
            priorities makes it difficult to maximize the cost-
            effectiveness and minimize the unintended harmful 
            consequences of food aid.

    2. Food for Progress: While the goal of this is broadly compatible 
        with CARE's focus on the underlying causes of poverty:

     Some of the resources programmed under Food for Progress 
            come from Title I and Section 416(b).

     Much of the food aid programmed under Food for Progress is 
            monetized.
4. International Trade, Agricultural Subsidies and Food Aid
    Generally, CARE supports free and fair trade as far as it does not 
increase food insecurity and vulnerability of poor and marginalized 
populations. By focusing on the impact of that trade liberalization, 
CARE believes that it can make an important contribution in this area 
to the trade debate. Of particular interest is the possibility that the 
proposed reduction of agricultural subsidies and trade barriers may be 
linked to reform of the food aid system, a development that could lead 
to the elimination of safety nets at a time of rising commodity prices, 
thus causing the erosion of poor people's purchasing power and access 
to food.
    CARE will enhance its capacity to understand how the poor are 
likely to be affected by trade liberalization. In order to do this, it 
will build on and improve CO capacity to document and analyze patterns 
of vulnerability and to assess the impact of changes in trade policy. 
It will also work in partnership with research organizations that have 
expertise in economic analysis and vulnerability assessment. Finally, 
it will carry out a series of case studies in a small number of 
countries to document the effects of trade liberalization on poor 
people.
    Our reasoning:
    Current debates about food aid are, to some degree, linked to a 
much larger discussion about international trade and agricultural 
subsidies. In the Doha Round negotiations of the WTO, European 
negotiators have demanded stringent restrictions against tied food aid, 
in-kind food aid, and non-emergency food aid (including monetization) 
in exchange for substantial reductions in European agricultural 
subsidies. In short, achieving dramatic reductions in agricultural 
subsidies may in the end be offset by dramatic changes in the way food 
aid is currently organized and managed.
    The potential impacts of these policy changes are complex. A 
significant reduction of agricultural subsidies in developed nations is 
expected to cause international agricultural commodity prices to rise. 
Broadly speaking, this trend will lead to uneven development, producing 
economic opportunities for some and harmful consequences for others. 
The rise of commodity prices is expected to create economic 
opportunities for households, firms and countries that produce and sell 
agricultural commodities. At the same time, households and countries 
that must purchase food in order to meet basic needs will have to cope 
with rising commodity prices. This can be expected to erode purchasing 
power and deepen patterns of poverty amongst the urban poor. In rural 
areas, the impact will be mixed. Rising commodity prices can be 
expected to provide benefits for small farmers and traders. However, 
many poor households whose food production is insufficient to meet 
basic needs may find that a higher percentage their income must go for 
food purchases.
    Some have argued that reforming the food aid system in exchange for 
the reduction of agricultural subsidies is a good deal for poor 
farmers. Others have pointed out that eliminating subsidies will cause 
hardship for poor people who purchase food, and that linking the reform 
of the food aid system to economic liberalization would have the effect 
of eliminating safety nets precisely at the moment when they are most 
needed.


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