[Senate Hearing 110-45]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 110-45
 
                       EXAMINING THE PERFORMANCE
                       OF U.S. TRADE AND FOOD AID
                     PROGRAMS FOR THE 2007 FARM BILL

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



                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                        NUTRITION, AND FORESTRY

                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION


                               __________

                             MARCH 21, 2007

                               __________

                       Printed for the use of the
           Committee on Agriculture, Nutrition, and Forestry


  Available via the World Wide Web: http://www.agriculture.senate.gov




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           COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY



                       TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont            SAXBY CHAMBLISS, Georgia
KENT CONRAD, North Dakota            RICHARD G. LUGAR, Indiana
MAX BAUCUS, Montana                  THAD COCHRAN, Mississippi
BLANCHE L. LINCOLN, Arkansas         MITCH McCONNELL, Kentucky
DEBBIE A. STABENOW, Michigan         PAT ROBERTS, Kansas
E. BENJAMIN NELSON, Nebraska         LINDSEY GRAHAM, South Carolina
KEN SALAZAR, Colorado                NORM COLEMAN, Minnesota
SHERROD BROWN, Ohio                  MICHEAL D. CRAPO, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota             CHARLES E. GRASSLEY, Iowa

                Mark Halverson, Majority Staff Director

                      Robert E. Sturm, Chief Clerk

            Martha Scott Poindexter, Minority Staff Director

                Vernie Hubert, Minority General Counsel

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing(s):

Examining the Performance of U.S. Trade and Food Aid Programs for 
  the 2007 Farm Bill.............................................     1

                              ----------                              

                       Wednesday, March 21, 2007
                    STATEMENTS PRESENTED BY SENATORS

Chambliss, Hon. Saxby, a U.S. Senator from Georgia...............     1

                                Panel I

Hammink, William, Director, Office of Food for Peace, U.S. Agency 
  for International Development, Washington, DC..................     5
Melito, Thomas, Director, International Affairs and Trade Team, 
  U.S. Government Accountability Office, Washington, DC..........     7
Yost, Michael W., Administrator, Foreign Agricultural Service, 
  U.S. Department of Agriculture, Washington, DC.................     3

                                Panel II

Hamilton, Timothy, Executive Director, Food Export Association of 
  the Midwest USA and Food Export USA-Northeast, Chicago, 
  Illinois, on behalf of the Coalition to Promote U.S. 
  Agricultural Exports...........................................    31
Kauck, David, Senior Technical Advisor, Care USA, Richmond, 
  Vermont........................................................    33
Nelsen, Joel, President, California Citrus Mutual, Exeter, 
  California.....................................................    35
Sandefur, Charles, Chairman, Alliance for Food Aid, and 
  President, Adventist Development and Relief Agency 
  International..................................................    29
                              ----------                              

                                APPENDIX

Prepared Statements:
    Harkin, Hon. Tom.............................................    46
    Hamilton, Timothy............................................    48
    Hammink, William.............................................    71
    Kauck, David.................................................    79
    Melito, Thomas...............................................    90
    Nelsen, Joel.................................................   130
    Sandefur, Charles............................................   137
    Yost, Michael W..............................................   151
Document(s) Submitted for the Record:
American Dietetic Association, prepared statement................   166
Bread For The World, prepared statement..........................   168
Goldthwait Consulting and Management, prepared statement.........   202
National Corn Growers Association, prepared statement............   204
Question(s) and Answer(s):
Harkin, Hon. Tom:
    Written questions for William Hammink........................   208
    Written questions for Joel Nelsen............................   209
    Written questions for Michael Yost...........................   210
Kauck, David:
    Written response to questions from Hon. Blanche L. Lincoln...   212



                       EXAMINING THE PERFORMANCE



                       OF U.S. TRADE AND FOOD AID



                    PROGRAMS FOR THE 2007 FARM BILL

                              ----------                              


                       Wednesday, March 21, 2007

                                       U.S. Senate,
                                  Committee on Agriculture,
                                   Nutrition, and Forestry,
                                                     Washington, DC
    The committee met, pursuant to notice, at 9:35 a.m., in 
room SR-328A, Russell Senate Office Building, Hon. Saxby 
Chambliss, presiding.
    Present or submitting a statement: Senators Lincoln, 
Nelson, Salazar, Brown, Klobuchar, Chambliss, Roberts, Coleman, 
Crapo, and Thune.

  STATEMENT OF SENATOR CHAMBLISS, A U.S. SENATOR FROM GEORGIA

    Senator Chambliss. The Committee on Agriculture, Nutrition, 
and Forestry will come to order. We have a hearing this morning 
on ``The Performance of U.S. Trade and Food Aid Programs for 
the 2007 Farm Bill.''
    I welcome you to this hearing to examine the performance of 
trade and food aid programs and I appreciate our witnesses and 
members of the public being here to review this very important 
topic as well as those who are listening through our website.
    Unfortunately, I am sitting here today because Chairman 
Harkin has a family emergency and certainly our deepest 
sympathies go out to Chairman Harkin and his family. We are 
certainly going to keep him and all of his family in our 
thoughts and prayers over the next several days here.
    Trade has always been an essential part of agriculture 
policy and the future profitability of farmers and ranchers 
will continue to rely upon strong export markets. Amidst 
ongoing free trade negotiations with South Korea and other 
countries and the negotiations in the World Trade Organization, 
the importance of trade will only grow in the future.
    Likewise, the food aid programs are a cornerstone of U.S. 
agriculture policy, and along with the domestic feeding 
programs, they are among the most inspirational programs in the 
farm bill. The hearing today will help the committee understand 
what is necessary to better target resources, expand 
agricultural exports, and more efficiently utilize precious 
resources in our food aid programs.
    Export promotion and food aid programs are essential parts 
of the farm bill. As U.S. agriculture remains one of the few 
sectors of the U.S. economy with a net trade surplus, albeit 
getting smaller every year. As we will no doubt hear from our 
witnesses, U.S. agriculture exports continue to set records 
year after year, valued at over $70 billion in 2006. I am 
hopeful the recent reorganization of the agency will allow the 
Department to continue targeting export markets and assist U.S. 
exports abroad.
    In addition, farmers and ranchers are experiencing stiff 
international competition while at the same time key export 
markets are raising import barriers designed specifically to 
keep our products off their domestic markets. Export promotion 
programs at the Department of Agriculture are vital to deal 
with these challenges. As we begin drafting the farm bill, and 
given the tight budget situation that we are in, we are going 
to have to be very creative in order to provide the resources 
needed to fight these trade disputes effectively.
    Regarding food aid, the United States donates over half the 
world's assistance and responds to emergencies on almost every 
continent. As we explore ways to improve the efficiency and 
effectiveness of our programs, we need to continue to provide a 
strong level of support amid growing demands worldwide. I 
believe we can integrate high levels of flexibility while 
retaining the existing structure of the programs. More 
importantly, we should think creatively in order to respond to 
changing circumstances and to attack the fundamental roots of 
poverty around the world while at the same time maintaining 
political support for these programs at home. I am convinced 
food security today leads to greater security for the world 
tomorrow.
    Extensive experience teaches us that hungry children cannot 
learn. Food aid programs, like the McGovern-Dole International 
Food for Education and Child Nutrition Program, are an 
essential part of improving the daily lives of poor populations 
in regions such as Africa and Latin America. Today, the program 
helps promote education and increases school attendance, 
especially for young girls. By tackling food security, U.S. 
food aid programs are helping to increase access to education 
and specialized programs for poor populations, thereby leading 
to greater self-sufficiency, lower infection rates for HIV-
AIDS, and improved resource management.
    Without a doubt, the foreign and domestic feeding programs 
are among the most profound and altruistic parts of the farm 
bill. The commitment of the Congress to these essential 
programs is quintessentially American and an inherent part of 
the longstanding generosity of our country. The farm bill 
provides this committee with a unique opportunity to make a 
positive contribution not only to our less fortunate brethren 
at home, but also those less fortunate around the world. 
Through the contribution of agriculture commodities, American 
farmers and ranchers participate and have a profound effect on 
the foreign policy of the United States.
    Thank you in advance to our witnesses and we certainly look 
forward to your testimony today.
    Our first panel today consists of Mr. Michael Yost, 
Administrator, Foreign Agricultural Service, U.S. Department of 
Agriculture here in Washington, and Mr. Yost has been with us 
any number of times before. We are certainly glad to have you 
back. We also have Mr. William Hammink, Director, Office of 
Food for Peace, United States Agency for International 
Development, Washington, DC, and Mr. Thomas Melito, Director, 
International Affairs and Trade Team, from the U.S. Government 
Accountability Office, also obviously here in Washington.
    Gentlemen, thank you very much for being here. We look 
forward to your testimony. Mr. Yost, we are going to start with 
you for opening statements, then we will go to Mr. Hammink and 
to Mr. Melito.

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

    Mr. Yost. Senator Chambliss, I am pleased to appear before 
you today with my colleague from the U.S. Agency for 
International Development, William Hammink. I welcome the 
opportunity to discuss trade and food aid programs administered 
by USDA.
    Since the farm bill was enacted in 2002, the trade programs 
administered by the Foreign Agricultural Service combined with 
access gained through free trade agreements have served to 
expand new markets and maintain existing 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 this fiscal 
year.
    Free trade agreements have proven to be good for U.S. 
agriculture. Under NAFTA, our exports to Canada and Mexico have 
risen from $9.5 billion to $22 billion annually. Agriculture 
exports to the CAFTA-DR countries totaled $2.6 billion in 2006. 
That is an 18 percent increase from the previous year. 
Implementation of free trade agreements with Colombia, Panama, 
and Peru would further benefit U.S. agriculture.
    Today, I would like to highlight two trade programs 
administered by FAS, the Market Access Program and the 
Technical Assistance for Specialty Crops Program.
    The Market Access Program forms a partnership between USDA 
and nonprofit agriculture trade associations, agriculture 
cooperatives, nonprofit State and regional trade groups, and 
small businesses. In 2006, MAP was used to find new markets for 
poultry products in Mexican supermarkets, to expand wheat 
markets in Nigeria, and to relaunch 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 Technical Assistance for Specialty Crops, or TASC, 
Program has helped U.S. exporters regain market access for 
millions of dollars of products by addressing sanitary and 
phytosanitary and technical barriers. The administration's 2007 
farm bill proposals would increase mandatory funding for the 
TASC 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 data base for 
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 include a new grant program focused on SPS 
issues and supported by $2 million in annual mandatory funding. 
This additional funding would allow us to better address SPS 
issues for all agricultural commodities.
    I would like to turn to two of our development food aid 
programs that provide nutrition and promote economic 
development, the Food for Progress Program 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 their agriculture sectors. Again this year, 
more than 215,000 tons of commodities will be provided. More 
than two million people will be fed by this program this fiscal 
year. But this program is more than about just feeding. For 
example, in Madagascar, proceeds from wheat sales are providing 
micro finance loans to farmers.
    The McGovern-Dole Program supports education, child 
development, and food security in low-income food-deficit 
countries that are committed to universal education. In the 
past 5 years, the McGovern-Dole Program has helped feed more 
than ten million children in more than 40 countries. An example 
is a grant USDA awarded to Counterpart International 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 preschool children over a 3-year period. The 
proceeds from the monetization of soybean oil are being used to 
improve school sanitation, repair schools, and improve skills 
of teachers. The project includes a maternal and a child health 
component, which provides take-home rations to needy mothers 
with young children. We certainly appreciate the strong support 
this program has received from Members of Congress.
    This year, several food assistance issues will come to the 
forefront. USDA and USAID share the concerns of stakeholders 
interested in improving the quality of food aid commodities. 
The quality and formulation of food aid products are crucial to 
delivering safe, wholesome products to the undernourished 
populations, particularly vulnerable groups, including infants 
and young children, women of childbearing age, and people 
living with HIV-AIDS.
    Currently, we are examining options to review the 
nutritional quality and cost effectiveness of commodities being 
provided as food assistance. Our goal will be to have 
consultations with nutritionists, scientists, commodity 
associations, the World Food Program, the PVO community, and 
SUSTAIN to make sure all viewpoints are heard. We want to 
ensure that food aid that we provide is of the highest caliber. 
We will also continue our efforts of reviewing existing 
contract specifications used to obtain food aid commodities and 
in improving our post-production commodity sampling and testing 
regime based upon sound scientific standards.
    The administration's farm bill proposal recommends a policy 
change in food aid programs, providing the option to use up to 
25 percent of PL-480 Title II annual funds to purchase 
commodities grown in regions experiencing an emergency 
situation. The principal reason for the proposal is to save 
lives. This ability would only be used in cases where the speed 
of our response was dictated by unforeseen natural or manmade 
disasters that could not be addressed by delivery of U.S. 
commodities.
    A few days ago, the Government Accountability Office shared 
with us the results of a study on efficiency and effectiveness 
of the U.S. Government's efforts to deliver food aid. The GAO 
has asked that we respond by March 29, and we will.
    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, and improve the competitive 
position of U.S. agriculture in the global marketplace, and 
provide food aid and technical assistance to foreign countries.
    This concludes my statement. I look forward to answering 
any questions. Thank you.
    [The prepared statement of Mr. Yost can be found on page 
151 in the appendix.]
    Senator Chambliss. Thank you very much.
    Mr. Hammink?

  STATEMENT OF WILLIAM HAMMINK, DIRECTOR, OFFICE OF FOOD FOR 
 PEACE, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT, WASHINGTON, 
                               DC

    Mr. Hammink. Mr. Chairman, I am very pleased to be here 
today with you to examine the performance of the U.S. Title II 
food aid program.
    The Title II Food for Peace Program, as you know, 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. 
However, like any 53-year-old institution or program, we need 
to continue to look for ways to improve what we do, how we do 
it, and the impact that it makes.
    I would like to focus my short remarks on two main areas: 
First, the changing world situation affecting Title II food 
aid; and second, how we can continue to improve the overall 
efficiency and effectiveness.
    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, for example, pastoralists in East Africa, 
poor farmers in the Sahel, HIV-AIDS affected populations in 
Southern Africa, whose lives and livelihoods are at severe 
risk. Continuous and overlapping crises are leaving more and 
more people defenseless, chronically vulnerable to major food 
crises.
    Second, there is evidence and understanding that food aid 
alone will not stop hunger. Today, despite the investments and 
progress made over the past 50 years, globally, an estimated 
850 million people are still food insecure. Giving food to 
people, while it does save lives and address short-term hunger 
needs, will not by itself 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 recipient 
country resources to attack underlying causes of food 
insecurity.
    How can we improve? Food aid programs need to be able to 
respond quickly and flexibly to support increasingly more 
vulnerable and desperate populations, and also food aid 
programs must be integrated with other resources to more 
effectively halt the loss of livelihoods and address the 
multiple causes of this vulnerability.
    Let me quickly discuss seven areas that are more discussed 
in my written testimony that we are focusing on to improve food 
aid programs.
    First is local procurement. As mentioned by Mr. Yost, the 
most important change from our point of view that the 
administration has been seeking is the authority to use up to 
25 percent of 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 purchases judiciously in those 
situations where fast delivery of food assistance is clearly 
critical to saving lives.
    Second is strengthening assessments. Accurate assessments 
and well-targeted use of food aid are critical for responsible 
food aid planning. USAID has expanded its support to partner 
PVO's and to WFP to assist them in strengthening assessments. 
We are also expanding the role of the famine early warning 
system network to allow us to do better early warning and, 
therefore, to understand when the next food hunger situation is 
coming up.
    Third, we are pre-positioning emergency food aid. That 
helps reduce the response time needed and it has been 
successful through pre-positioning sites in U.S. ports and also 
overseas. Pre-positioning is an important tool and could be 
expanded, although there are logistical and other limits to 
pre-positioning. Pre-positioning is not a substitute for local 
procurement authority.
    Fourth, the Bill Emerson Humanitarian Trust. The Emerson 
Trust is the mechanism we all use 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.
    Fifth is prioritization. USAID is strategically focusing 
non-emergency 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 in order 
to achieve maximum impact on chronic food insecurity issues.
    Sixth is 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 toward development. For the first time, starting in fiscal 
year 2007, Title II non-emergency programs will be integrated 
in country programs with other funds to achieve maximum impact 
on food insecurity.
    Seven, monitoring. The GAO has recommended that USAID 
increase the monitoring of Title II programs. We fully support 
this recommendation. USAID currently uses multiple sources of 
funding to cover monitoring costs for Title II programs. 
Statutory restrictions on the use of Title II resources limit 
the current level of monitoring.
    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 in using U.S. food aid to save lives and protect and 
improve livelihoods of vulnerable populations.
    We look forward to continued discussions 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 very much.
    [The prepared statement of Mr. Hammink can be found on page 
71 in the appendix.]
    Senator Chambliss. Thank you.
    Mr. Melito?

STATEMENT OF THOMAS MELITO, DIRECTOR, INTERNATIONAL AFFAIRS AND 
TRADE TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, 
                               DC

    Mr. Melito. Mr. Chairman and members of the committee, the 
United States is the largest provider of food aid in the world, 
accounting for over half of all global food aid supplies 
intended to alleviate hunger and support development in low-
income countries. However, the number of food and humanitarian 
emergencies has more than doubled in recent years due in large 
part to conflicts, natural disasters, and worsening poverty 
around the world. Despite the increasing demand for food aid, 
rising transportation and business costs have contributed to a 
43 percent decline in average tonnages delivered over the last 
5 years. For the largest U.S. food aid program, these costs now 
account for approximately 65 percent of expenditures, 
highlighting the need to improve the efficiency and 
effectiveness of food aid.
    My testimony is based on a report that was requested by the 
majority and minority of this committee that we expect to issue 
in April of 2007. My statement today will focus on the need to 
increase the efficiency of U.S. food aid by improving the 
amount, timeliness, and quality of food provided. In addition, 
I will highlight the importance of efforts to monitor U.S. food 
aid programs in order to enhance their effectiveness.
    In the first finding, we identified several factors that 
hindered the efficiency of U.S. food aid programs. First, 
existing funding and planning processes increased delivery 
costs and lengthened timeframes. These processes make it 
difficult to schedule food procurement and transportation to 
avoid commercial peaks in demand. This often results in higher 
prices than if these purchases were more evenly distributed 
throughout the year.
    Second, current transportation and contracting practices 
often differ from commercial practices, increasing food aid 
costs. For example, food aid contracts commonly hold ocean 
carriers financially responsible for delays when food aid is 
not ready for loading or when the destination port is not ready 
to receive the cargo. Ocean carriers factor these costs into 
their freight rates, driving up the cost of food aid.
    Third, legal requirements within the food aid program 
result in the awarding of food aid contracts to more expensive 
providers. For example, cargo preference laws require 75 
percent of food aid to be shipped on U.S. flag carriers, which 
are generally more costly than foreign flag carriers. DOT 
reimburses certain transportation costs, but the sufficiency of 
these reimbursements varies.
    Fourth, coordination between U.S. agencies and stakeholders 
to track and respond to food delivery problems has been 
inadequate. For example, while food spoilage has been a 
longstanding concern, USAID and USDA lack a shared, coordinated 
system to track and respond to food quality complaints 
systematically.
    However, U.S. agencies have taken measures to improve their 
ability to provide food aid on a more timely basis. 
Specifically, USAID has been pre-positioning commodities for 
the past several years and is in the process of expanding this 
practice. Additionally, in February 2007, USAID and USDA 
implemented a new transportation bid process in an attempt to 
increase competition and reduce procurement timeframes. 
Although both efforts may result in food aid reaching 
vulnerable populations more quickly in emergencies, their long-
term cost effectiveness has not yet been measured.
    I will now turn to the second main finding. Despite the 
importance of ensuring the effectiveness of food aid to 
alleviate hunger, U.S. agencies' efforts to monitor food aid 
programs in recipient countries are insufficient. Ensuring that 
food aid reaches the most vulnerable populations, such as poor 
women who are pregnant or children who are malnourished, is 
critical to enhancing its effectiveness and avoiding negative 
market impact. However, USAID and USDA do not sufficiently 
monitor food aid programs, particularly in recipient countries. 
This is due to limited staff availability, competing 
priorities, and restrictions in the use of the food aid 
resources. As a result, U.S. agencies may not be sufficiently 
accomplishing their goals of getting the right food to the 
right people at the right time.
    In our draft report, which is under review by U.S. 
agencies, we recommend that USAID, UDSA, and the Department of 
Transportation work together to improve the efficiency and 
effectiveness of U.S. food aid by, one, improving food aid 
logistical planning; two, modernizing transportation 
contracting practices; three, minimizing the cost impact of 
cargo preference regulations; four, systematically tracking and 
resolving food quality complaints; and five, improving the 
monitoring of food aid programs.
    Mr. Chairman, this concludes my prepared statement. I will 
be happy to address any questions you or the members of the 
committee may have. Thank you.
    [The prepared statement of Mr. Melito can be found on page 
90 in the appendix.]
    Senator Chambliss. Thank you very much, Dr. Melito.
    Mr. Yost, let me start with you. There has been a news 
report that the Office of Inspector General at USDA will issue 
a report on the Foreign Agricultural Service's trade promotion 
operations. In that report, the IG found that FAS has not 
developed a marketing strategy to address the decline in the 
U.S. share of global agricultural exports. Can you briefly 
comment on the findings of that report?
    Mr. Yost. We tend to disagree with the OIG report. We have 
a strategy. It is called the Unified Export Strategies. We are 
also with our new reorganization working on country and 
regional strategies to address an overall goal, expanding the 
marketplace for U.S. agriculture products and food. We also--I 
think our record speaks for itself. As I stated earlier, we 
will have $78 billion in food and agriculture exports this 
year. I also believe that breaking down our new organization 
into our new organization that we will be able to better 
monitor what is going on overseas and overall have a more 
effective implementation of our MAP programs.
    Senator Chambliss. Going a little further there, FAS 
recently underwent one of the most comprehensive 
reorganizations in its history. By aligning the agency by 
policy, program, and support functions, we hope FAS can improve 
market access for U.S. agriculture products and address 
technical barriers to trade. Compared to the previous 
organizational structure, describe the most significant change 
and how USDA hopes the realignment will better address the 
problems of today and challenges of tomorrow, and does FAS have 
the necessary resources to fully implement the reorganization, 
and are you fully staffed in all critical positions?
    Mr. Yost. We underwent and implemented our reorganization 
this past year. We migrated to the new organization in November 
of 2006. We went from five deputy administrative areas to eight 
deputy administrative areas. Some of the more significant 
changes were the development of the Office of Science and 
Technical Affairs, which will now handle all SPS issues that 
were piecemealed across the agency in the previous structure.
    We also have an Office of Country and Regional Affairs, as 
I mentioned previously. We will develop country and regional 
strategies to implement all of our programs and handle our 
issues.
    We have the Office of Negotiations and Agreements that is 
broken down by multilateral, bilateral, and regional trade 
issues. Also, we have monitoring of existing trade agreements, 
an entire branch devoted to that.
    The Office of Global Analysis will now analyze everything 
that comes into our agency, from the impact of a trade 
agreement to the impact of a fruit fly infestation in 
California and how that would affect exports for the respective 
commodities.
    The Office of Trade Programs will handle the supplier 
guarantee programs and all the MAP and FMD and other related 
trade programs.
    The Office of Capacity Building will focus on developing 
capacity, trade capacity building in lesser-developed 
countries, something that needs to be done. We need to focus on 
getting those countries to establish their import and export 
requirements based on international standards, not by politics. 
They also will handle food aid.
    We also have a new Administrative Directorate Area that 
will handle all the overarching administrative issues that go 
with our agency.
    I think our new structure better reflects 21st century 
agriculture. It is the most significant reorganization we have 
done in our 53 years. If we get the President's budget in a 
timely fashion, we will be able to carry out our mission.
    We are currently staffed at 80 percent of what we would 
like to see here in Washington.
    Senator Chambliss. Mr. Hammink, in recent years, food aid 
has been funded at around $2 billion per year. However, the 
administration's budget proposal does not ask for this amount 
and instead has relied upon supplemental spending bills to make 
up the difference. As you stated in your testimony, the need 
for food aid has been constant and is, in fact, growing. The 
GAO report suggests that a more predictable funding stream 
would allow the food dollar to stretch further by preventing 
the bunching effect of purchases. How does the administration 
intend to address this recommendation?
    Mr. Hammink. Mr. Senator, the President's budget for at 
least Title II food aid reflects a careful prioritization among 
competing demands for international humanitarian assistance and 
supports the U.S. commitment to address the most severe and 
critical emergency food aid needs. Our mantra at Food for Peace 
on Title II is ``prevent famine.''
    Emergency food aid needs are difficult to predict far in 
advance, especially the evolution of these increasingly complex 
ongoing conflicts and complex emergencies. We do use the Bill 
Emerson Humanitarian Trust as an additional resource to meet 
unanticipated needs when appropriate.
    If I could add, what we are doing also is putting a lot 
more energy and resources into early warning and assessments of 
emergency food aid needs that we may see coming up so that we 
are looking not only next month, but 6 months, 9 months down 
the line to see where these needs might be so that we can get a 
better handle on what the emergency needs are, even though 
others are unpredictable.
    Senator Chambliss. Does USAID currently have the ability to 
make cash purchases of foreign commodities during a food 
crisis, and if so, how much has been obligated out of that 
fund?
    Mr. Hammink. USAID Title II does not have any authority to 
purchase food other than in the United States, and so we have 
not purchased any food overseas. Other resources for emergency 
purposes have purchased especially therapeutic food, again, to 
save lives in emergency situations. I am sorry, I don't know 
the amount.
    Senator Chambliss. What is that fund? Where does that come 
from?
    Mr. Hammink. I am pretty sure it comes through the Office 
of Foreign Disaster Assistance.
    Senator Chambliss. Senator Salazar?
    Senator Salazar. Thank you very much, Senator Chambliss. I 
want to thank you and Senator Harkin for continuing the work on 
the reauthorization of the farm bill.
    These programs we are talking about today, of course, help 
millions of people worldwide and they are vital humanitarian 
and public diplomacy tools for the United States of America. I 
want to thank the witnesses for your work and for the work of 
the agencies and organizations you represent.
    I also want to underscore the importance of U.S. foreign 
aid food programs. Our country remains the largest provider of 
food aid in the entire world. We know that we have provided a 
benefit to over 70 million people worldwide in fiscal year 2006 
alone. That is a large number and one that we should be very 
proud of. As the world's most powerful economic nation today, 
we also always need to remember that there is still another 850 
million people around the world that are currently 
malnourished, and many of them are children. It is a crisis of 
conscience when we think about these numbers and one in which 
the United States has the ability and resources to help 
address.
    I am concerned today about the findings of the testimony 
submitted by the GAO. According to that draft report, despite 
the growing international demand for food aid, rising 
transportation and business-related costs have increased the 
average tonnage of food aid by 43 percent over the last 5 
years. The government of the U.S. should ensure the resources 
dedicated for foreign food aid programs should go to hungry 
mouths and not to overhead and I hope that we can figure out a 
way of addressing those issues in the weeks ahead.
    I am encouraged by the opportunities that the 2007 farm 
bill gives us on this committee to craft legislation that 
promotes U.S. agriculture abroad while still keeping to our 
commitments under the WTO. I am pleased the administration has 
also shown attention to the trade title in its farm bill 
proposal. Many of my constituents have expressed their support 
for the Market Access Program proposal, especially as it seeks 
to increase parity between program crops and specialty crops. 
Indeed, we must ensure that all commodities have the 
opportunities and resources to compete in global markets.
    I am also pleased that the administration addresses non-
tariff barriers to trade in its proposal. Colorado is home to a 
robust cattle industry as well as numerous specialty crops. 
These products should be able to compete on an equal playing 
field in the marketplace, unburdened by the dubious scientific 
and technical barriers to trade. The 2007 farm bill presents a 
rare opportunity to enhance the competitiveness of our 
producers.
    I have a question to both Michael Yost and to Mr. Hammink. 
One of the recommendations that came out of the GAO report is 
that the Administrator of USAID work more closely with both the 
Secretaries of Agriculture and Transportation to develop a more 
coherent approach to how we deliver the food so that we don't 
end up creating the inefficiencies that apparently the GAO has 
found here. My question to all of you is do we currently have 
that coordination underway between Transportation, Agriculture, 
and USAID, and assuming we do, how can we enhance the 
coordination between those three agencies? Mr. Yost?
    Mr. Yost. Senator Salazar, we meet regularly with USAID to 
work on issues of mutual concern. We have the Food Aid Policy 
Coordinating Committee. That is one of our formalized venues 
that we work through. We are working currently on developing 
proposals to review quality of food aid. We have this 
overarching issue of how we are going to address high 
transportation costs. We are going to review the GAO report. 
We--at this point in time, I have more questions than answers 
on how we are going to respond to that.
    Senator Salazar. Is it a formal coordination that you have 
going on among the three agencies, or do you just meet to 
discuss issues ad hoc as they come up? How do you ensure that 
there is coordination between Agriculture, Transportation, and 
USAID?
    Mr. Yost. We meet with USAID formally with the FAPC, F-A-P-
C, and informally, we talk nearly every day, every week, people 
on our staffs, as we address issues and problems that are 
coming up.
    Senator Salazar. And Mr. Hammink?
    Mr. Hammink. Yes, Senator Salazar. We very much share your 
concern. In fact, in 2006, the percentage of our overall Title 
II going for purchase of commodities has continued to decrease, 
to about 36, 37 percent. We work, as Mr. Yost mentioned, almost 
on a daily basis with colleagues from USDA in Kansas City and 
here in Washington, looking at how we can improve and 
commercialize, if you will, our practices.
    We appreciate the GAO comments and we will work very 
closely with them to continue to look for ways to decrease 
costs, but it is important to note that we are not in the 
normal commercial competitive environment, so within those 
rules, we definitely need to continue to work with USDA, also 
with our partners, PVO's and WFP, who do a lot of the 
contracting for transportation.
    Senator Salazar. My time is up. Thank you very much.
    Senator Chambliss. Senator Brown?
    Senator Brown. Thank you, Senator Chambliss.
    I am sorry, Mr. Hammink, I did not hear your testimony. I 
read your written testimony, especially the part about your 
interest and comments you made about local procurement and what 
you do with local economies.
    Obviously, you all pointed out the difficulty with 
transportation and gathering the food and the response time to 
disasters, getting food aid into a country, into a region, into 
a community. Talk, if you will, just generally, Mr. Hammink, 
about how we use food aid, particularly local farm purchases, 
to strengthen economies, because I think sort of my 
understanding, and not being an expert on this, over the years, 
we have thought of food aid, particularly the Food for Peace of 
a half-a-century ago, getting the food to starving people. We 
know sometimes how that disrupts, as we learn more and more, 
disrupts local economies, especially farm economies.
    Just talk through, if you would, what we can do in our 
delivery of food aid and what we can do with our delivery of 
ability to purchase food locally and how we build stronger 
communities that can then respond to their own situations 
better in the future.
    Mr. Hammink. I guess there are two parts to the question. 
First, our food aid is mainly used for, right now, emergency 
reasons, and so when it goes into a country, for example, 
Sudan, where we are feeding three million people, it doesn't 
have a major impact on the market there, especially since we 
are bringing in commodities, most of which are not grown there.
    If we get the authority to purchase up to 25 percent for 
local procurement in emergency situations, we would work with 
organizations that already have quite a bit of experience doing 
local procurement, including U.S. PVO's and WFP, to put 
together requirements to make sure there is not going to be a 
negative impact on the market.
    In terms of looking for ways to have a positive impact and 
support farmers locally, that would not be the primary reason 
for this request. The primary reason for this request for local 
procurement is speed and getting food in quickly in order to 
save lives.
    Senator Brown. Well, should it become, if not a primary 
reason, should it become a major consideration in the way we 
deliver food, in the way we make those decisions on local 
procurement?
    Mr. Hammink. The impact on local markets is already an 
important factor in terms of how we deliver food from the 
United States and we are required to do, for all non-emergency 
programs, a very detailed Bellmon assessment, looking at local 
markets.
    In terms of the request for emergency up to 25 percent 
local procurement, again, impact on local farmers and markets 
would not be our major consideration. Our major consideration 
would be in those cases where we need to get food quickly to 
people to save lives.
    Senator Brown. Dr. Melito, are we doing that well, taking 
into account the local procurement situation?
    Mr. Melito. We find that in emergency situations, local 
market impact is minimal, because generally speaking, these are 
markets with very--they are very short of grain, so potentially 
the price is going to rise. So we may be helping, actually, 
stabilize it.
    We have some concerns with non-emergency assistance 
monetization, where potentially we are adding grain to a market 
that might already be mature. That issue is not a part of my 
testimony, but it is part of our upcoming report.
    Senator Brown. And I think someone on the second panel is 
going to talk more about the monetization. Good. Thank you very 
much. Thank you, Mr. Chairman.
    Senator Chambliss. Senator Thune?
    Senator Thune. Thank you, Mr. Chairman, and thank you very 
much, gentlemen, for joining us today to discuss with us this 
very important subject as it pertains to the farm bill and the 
work that we are currently undertaking in drafting a new bill.
    Since their inception in 1954, international food aid 
programs have had a very direct impact on humanitarian efforts 
and the fight against world hunger. Programs have also had a 
very strong influence, I think, on how other countries around 
the world perceive the United States as a nation of abundance, 
prosperity, and generosity. And also, of course, international 
food aid programs provide a significant market for our 
agricultural products, and I use the 2002 farm bill as an 
example. Since the enactment of that bill, the U.S. delivered 
an average of four million metric tons of agricultural 
commodities per year overseas. Any changes to food aid programs 
in the 2007 farm bill, in my view, should not undermine the 
productive relationship between our producers and the need for 
international aid.
    The United States, of course, has for a long time been the 
world leader in humanitarian food aid, and in the period 
between 1995 and 2005 has contributed almost 60 percent of 
total global food aid. Over the life of the 2002 farm bill, the 
United States has spent an average of $2 billion per year in 
international food aid programs, and in 2006, these programs 
benefited over 70 million people through emergency and 
development-focused programs.
    The, I guess, challenge we face in the current budgetary 
environment with regard to the next farm bill, it is going to 
be, I think, critical that we try and find savings and improve 
the efficiency of the programs in every part of the farm bill, 
and international food aid programs are no exception, 
especially since program such as MAP and the Food for Progress 
Program rely on CCC funding, which is the same pot of money 
that funds many of our domestic programs.
    According to testimony provided by Mr. Melito of the 
Government Accountability Office, there are several areas where 
our foreign food aid programs can be more efficient and 
effective, and so I have a couple of just questions in that 
vein. One has to do with, Mr. Melito, your testimony, in which 
you stated that certain foreign humanitarian organizations are 
far more efficient in food delivery than the U.S. Government, 
and specifically the issue of transportation costs, which 
account for 65 percent of U.S. food aid expenditures, and our 
freight costs average about $170 per metric ton whereas other 
international food aid organizations average about $100 per 
metric ton and transportation costs account for about 20 
percent of their total costs.
    I guess my question is, how can we lower the transportation 
costs that are associated with our food aid programs, and if 
the GAO recommendations are enacted, how much would we save in 
our international food aid budget?
    Mr. Melito. Thank you. There are several things we can do 
to lower transportation costs. The bunching issue, which we 
referred to earlier, is an important one, and there are two 
components to that. One would be more certain funding. That 
would allow for better planning. But even with the uncertain 
planning environment that we currently have, the agencies can 
do a much better job of planning. They are in a situation where 
there are a lot of emergencies, but these emergencies in many 
ways are not so unforeseen, since they are generally coming in 
similar regions and these countries have had problems year 
after year, Sudan being one notable one. So I think the 
agencies can do a better job of planning, which will help with 
the transportation issue.
    We also highlight the non-commercial aspects of the current 
transportation system. The transportation terms of the contract 
put much more risk on the ocean liners than a commercial 
situation. This raises the cost. The freight operators have to 
pass the costs on somehow. They are passing them on to the 
program.
    The third way we outline is actually the system we have in 
place to partially compensate USAID and USDA for transportation 
costs through the Department of Transportation. The Memorandum 
of Understanding dates back to 1987. The situation has changed 
quite a bit since then. Pre-positioning wasn't envisioned at 
that time. The age of the fleet has gotten--the fleet has 
gotten much older. And there are situations now where there are 
no foreign bids on certain contracts. So the Memorandum of 
Understanding should be renegotiated and that potentially will 
increase the amount of resources for food aid.
    Senator Thune. Are there any legislative barriers to any of 
the things you are talking about, or are those all accomplished 
by MOUs with USDA or AID, and maybe Mr. Hammink and Mr. Yost 
could comment on that, as well. Are these recommendations that 
we can implement?
    Mr. Melito. There are--mostly, yes. There is some 
uncertainty on pre-positioning. There is a disagreement between 
USAID, USDA, and the Department of Transportation about whether 
prepositioning requires a change in the legislation. GAO is 
outside of that because clearly the two agencies are going to 
have to work this out, and maybe they need legislative help. I 
think everything else can be done within existing authorities.
    Senator Thune. Any comment on that from either of our other 
panelists?
    Mr. Hammink. We received the GAO report, and we are happy 
to get it, just last Friday, so our experts now are looking at 
this and we will be responding, as Mr. Yost said, to the GAO by 
March 29. We will be looking to work very closely with them, 
with USDA, and with Transportation at how we can implement 
these, but we share that same concern.
    Senator Thune. I see my time has expired. Thank you, Mr. 
Chairman.
    Senator Chambliss. Senator Klobuchar?
    Senator Klobuchar. Thank you, Mr. Chairman, and thank you, 
Mr. Chairman, for these peanuts. You have put Senator Harkin to 
shame now. I assume he is going to be bringing some corn.
    [Laughter.]
    Senator Chambliss. We will match peanuts against corn any 
day.
    Senator Klobuchar. I asked Senator Brown, since he has so 
much experience in Congress, if I should eat them, and he said, 
no, this isn't a baseball game----
    [Laughter.]
    Senator Klobuchar [continuing]. But then I noticed that 
Senator Nelson was eating them, and so now I plan to do the 
same.
    Senator Chambliss. Georgia's most recent contribution to 
food aid.
    [Laughter.]
    Senator Klobuchar. Thank you to all three of you, and just 
to give you a little background on our State, Minnesota, we 
rank fifth in the Nation with agricultural exports after 
California, Iowa, Texas, and Illinois, and we exported nearly 
$3 billion worth of farm products just in 2005. At the same 
time, we also have trade concerns with our sugar industry with 
CAFTA and NAFTA and what has happened there. Our dairy 
producers want to see Congress address a trade loophole that 
allows virtually unlimited imports of milk protein 
concentrates, and then our cattle producers are also eager to 
see all of our former export markets fully restored.
    We also are big supporters of the Food for Peace Program. 
The program sent Minnesota commodities to Iraq, Afghanistan, 
Sudan, and Haiti to fight food shortages in those countries, 
and so my first question was just along those lines.
    Mr. Hammink, the GAO report says that on the food aid 
programs, it says that USAID had only 23 Title II workers 
monitoring food aid to 55 countries. I am just wondering how 
USAID can make sure that this food is truly getting to the most 
vulnerable in these countries with that number of people 
monitoring it.
    Mr. Hammink. Thank you for the question. The GAO statistic 
only covers those food aid monitors who are funded by Title II 
program funds. We have a restriction whereby we can only use 
Title II program funds for monitors in emergency programs, and 
so we use other sources of funds for funding monitors, 
including development assistance and operating expense, to fund 
monitors and food aid specialists in other countries. We 
actually have somebody covering food aid in all 55 countries 
where we have--I am not exactly sure of the number, but we have 
over ten U.S. direct hire Foreign Service officers who are food 
aid officers in these countries, as well.
    Senator Klobuchar. Do you feel satisfied that the food is 
getting to where it needs to go, or are there some issues with 
the programs?
    Mr. Hammink. As I said in my statement, we agree that we 
need increased monitoring, and that is something we will 
continue to work toward. For the most part, we are satisfied. 
We do rely on PVO reports and reports from WFP, but we do have 
people in these countries who get out into the field and we 
send people from Washington on a regular basis to go to these 
countries. Two weeks ago, I was in Darfur also taking a look at 
our food distribution.
    Senator Klobuchar. It would be nice to get, adding those 
people in, what the numbers truly are----
    Mr. Hammink. Right.
    Senator Klobuchar [continuing]. And I wouldn't expect you 
to have it now, but if we could maybe send you a letter and get 
the information----
    Mr. Hammink. That will be part of our response to the GAO, 
as well.
    Senator Klobuchar. OK. Very good. Second, I had just a 
question relating to the implementation of the Dairy Export 
Incentive Program. USDA did not implement this program for the 
last 2 years. This is for Mr. Yost. We have heard from our own 
dairy community in our State that aggressive use of dairy 
export incentives keeps pressure on other nations to negotiate 
a reduction of dairy export subsidies. So my question is 
whether or not USDA plans to resume implementation of this 
program.
    Mr. Yost. Senator Klobuchar, at this time, we have no plans 
to implement this program. I believe last year, if my memory 
serves me correctly, we exported $1.7 billion worth of dairy 
products. We are doing quite well in the international 
marketplace.
    Senator Klobuchar. Thank you.
    Senator Chambliss. Senator Nelson?
    Senator Nelson. Thank you, Mr. Chairman, and thank you as 
well for the peanuts, a nice little mid-morning snack.
    Administrator Yost, I want to go to another area. With 
regard to sanitary and phytosanitary matters, I notice that 
USDA is requesting funding to better address SPS problems for 
U.S. exporters. The recent actions involving U.S. beef serve as 
a strong reminder about the way some of our trading partners 
misuse SPS and other alleged safety concerns and health 
concerns as cover for unfair trade practices. If an ounce of 
prevention is worth a pound of cure, are the SPS issues being 
properly addressed in advance of problems arising from the 
agreements?
    In other words, based on your experience and that of FAS, 
are we getting good trade agreements that contain sufficient 
and effective enforcement mechanisms that are worked out and 
understood before we sign the agreement so that we are not 
expending resources unnecessarily to fight unfair usage of SPS 
and food safety issues by our so-called trading partners after 
the agreements are in place?
    The Korean beef situation specifically comes to mind, since 
they are violating the agreement. We have a case over their 
interpretation of deboned beef and we have been unable to do 
very much about it except work with the Ambassador on a weekly 
basis getting promises that it will be fixed at some point. 
Maybe you can help me understand this.
    Mr. Yost. Well, we literally have an SPS issue of the week 
at our agency. We call them the new trade barrier. I think we 
are all in agreement on that, Senator.
    We are working very hard on the beef issue. The entire 
Department is. It is extremely frustrating, as I am sure you 
are frustrated and your producers are, also.
    Senator Nelson. Yes, the----
    Mr. Yost. That is a bit of an understatement.
    Senator Nelson. Yes, it is an understatement.
    Mr. Yost. At this moment, Ambassador Crowder is working for 
you, negotiating both the clean FTA and getting beef back into 
the marketplace. We are pushing hard for these countries, 
whether it is Japan, China, Korea, or any other major importer, 
to base their importing standards on the OIE designation. We 
look to get to a favorable designation on BSE from the OIE.
    We continue to try to put more teeth into agreements as 
they are negotiated. Our agency is spending more and more time 
monitoring existing trade agreements to make sure that they are 
enforced. We also are requesting funds to expand those efforts 
in the next farm bill proposal. It is a difficult task when you 
mix science and politics in these other countries. I don't see 
a silver bullet to solve these issues, but we have to continue 
to work on them and continue to force countries to build their 
import and export standards on international standards that are 
science-based and governed by international bodies.
    Senator Nelson. I would hope we would be able to do that. 
It makes one wonder, and I have supported every Free Trade 
Agreement. I have insisted that we include another word, 
``fair,'' and now I am moving toward free, fair, and balanced 
trade agreements so that we are not at the mercy of a trading 
partner violating the agreement and leaving us with very 
little--few options, if any, to move forward. And by the time 
you do move it forward, in many cases, the damage is already 
done to our market. Cattle producers reduce the size of their 
herds because they don't want to have an oversupply without a 
demand. So I am very, very concerned about that.
    There is another area with Director Hammink that I would 
like to raise and that is the growing concern, for example, 
from wheat growers about the cash only aid as opposed to 
commodities and food. I don't understand the administration's 
move toward giving cash only as opposed to giving our 
commodities in lieu of cash as a matter of trade. Maybe you can 
explain to me why this makes sense.
    Mr. Hammink. What we are looking at, Senator, is basically 
the authority to use up to 25 percent of Title II in truly 
emergency situations where by buying food locally we can save 
lives and get food in quicker for emergency situations. The----
    Senator Nelson. Excuse me. Is it limited to emergency 
situations?
    Mr. Hammink. That is what is in the administration's 
request.
    Senator Nelson. We will have to look at the definition of 
an emergency, I guess.
    Mr. Hammink. That is something we will be glad to work with 
Congress, on putting that together.
    Senator Nelson. OK. My time is up. Thank you, Mr. Chairman.
    Senator Chambliss. Before we leave that issue, has there 
been any situation that has come about that truly would be 
characterized as an emergency situation where the lack of the 
ability to purchase food at the local level versus shipping 
U.S. products has come into play?
    Mr. Hammink. We can point to a few instances where if we 
had had this authority, we might have used it. For example, 
Iraq in 2003, the tsunami response in 2004, Niger and Southern 
Africa in 2005, and again, Lebanon and East Africa in 2006.
    Senator Chambliss. Well, I understand you might have used 
it, but have there been any lives lost as a result of not 
having U.S. products shipped over there versus having money to 
buy local products?
    Mr. Hammink. That, I wouldn't be able to know.
    Senator Chambliss. Senator Lincoln?
    Senator Lincoln. Thank you, Mr. Chairman.
    I guess just following up on that, Mr. Hammink, if the farm 
bill were to contain provisions that would authorize that local 
cash purchase, either as a pilot program or, as you said, the 
25 percent, that 25 percent would be of Title II funding, is 
that correct? That has been proposed by the administration.
    Mr. Hammink. Up to 25 percent.
    Senator Lincoln. But it comes out of Title II, right?
    Mr. Hammink. That is correct.
    Senator Lincoln. I guess our concern would be, you know, 
how would it be possible to make sure that those commodities 
would be purchased in the recipient or the neighboring--I am 
assuming, and maybe you have already discussed this, but how it 
would be produced in neighboring countries rather than our U.S. 
export competitors, in the E.U., Australia, and why is it 
necessary to divert funds from Title II for the local cash 
purchase rather than establishing a new funding source, if that 
is what you want to do?
    Mr. Hammink. Well, what we would look at in using this 
authority is some clear procedures and rules. We would most 
likely rely on partners, PVO's and WFP, who already have 
significant experience in local procurement. For example, last 
year, WFP purchased $200 million in Africa alone. There is a 
lot of experience there to make sure we are not impacting on 
markets.
    In terms of your second question----
    Senator Lincoln. What about the first one? I mean, I 
understand you are going to use the local folks that have 
experience in terms of doing that----
    Mr. Hammink. Right.
    Senator Lincoln [continuing]. But how does that ensure to 
us that what you are purchasing is not coming from competitors 
but coming from local countries or the neighboring country?
    Mr. Hammink. Good question. We fully expect that we will 
only purchase food from less-developed countries. We would not 
purchase food from any of our major--any of our European 
competitors. So that is something that is a commitment from the 
administration.
    Senator Lincoln. OK. And the reason you are taking it from 
Title II as opposed to new funding?
    Mr. Hammink. The Title II, right now, the mandate is to 
prevent famine, to save lives, and that is where this would 
fall under.
    Senator Lincoln. Which is, I am assuming, similar to your 
answer to Senator Brown earlier, which is not to encourage the 
development of industry or the economics of the local 
community.
    Mr. Hammink. In highly food insecure countries, USAID, 
USDA, and others have programs to support agriculture 
development.
    Senator Lincoln. Right.
    Mr. Hammink. The purpose of this would be truly mainly to 
save lives and to get food in quickly.
    Senator Lincoln. Well, the concern I think many of us have 
is that, unfortunately, we can get very little attention to 
agriculture, both in terms of needs as well as resources when 
it comes to budget times, and so unfortunately, all we get 
offered is robbing from Peter to pay Paul in the different 
programs that we have, which we all think are very necessary, 
whether it is feeding the hungry across the globe or whether it 
is making sure that our farmers have the kind of safety net 
programs that allow them to be competitive. But we don't 
usually get--so it is hard when folks make suggestions but it 
comes out of an existing program which we have already fought 
hard to get the few dollars we have in there.
    Dr. Melito, your testimony describes both Afghanistan in 
2002 and Iraq in 2003 as situations requiring emergency 
responses. But in both instances, the Department of Defense 
probably knew some time in advance, I suppose, that war was 
likely and that these emergency food aid needs might be met. 
Mr. Hammink talks about Iraq being one of those places where 
this program of being able to take up to 25 percent locally 
would happen or would have been helpful. Were food procurement 
procedures initiated in advance under some of those 
circumstances?
    Mr. Melito. I will leave that to Mr. Hammink, but I will 
say that Afghanistan and Iraq, especially Afghanistan, were 
very difficult environments to move food aid.
    Senator Lincoln. Right.
    Mr. Melito. So that is a large contributor to the 
logistical burden and the high cost of food aid in those 
countries. I am not sure----
    Senator Lincoln. All the more reason why procurement 
procedures would have been wanted to be initiated earlier 
rather than later, right?
    Mr. Melito. Agreed.
    Senator Lincoln. Did that come about?
    Mr. Hammink. Senator, if I can just add, in the situation 
in Iraq, procurement procedures were initiated and we had quite 
a few boats of food on the way to Iraq when it was needed. So 
that was started early because we knew the food aid would be 
needed.
    Senator Lincoln. So it was started, the procurement and 
the----
    Mr. Hammink. Correct.
    Senator Lincoln [continuing]. Processes were started way 
before?
    Mr. Hammink. Correct.
    Senator Lincoln. OK, thanks. Mr. Yost, the President's 
fiscal year 2007 budget recommended zeroing out the fund for 
funding for P.L. 480 and Title I and Congress went along with 
it, and then no funding was requested by the administration for 
Title I in 2008. Yet the proposal that USDA sent us in their 
farm bill did not recommend repealing Title I program 
authority. Can you shed some light on that? And I apologize. I 
came late. I hope you haven't already discussed this, but maybe 
just shed some light on why the administration has presented it 
in P.L. 480 this way and why they have not requested funding 
for Title I.
    Mr. Yost. Senator Lincoln, the major reason we did not 
request funding for P.L. 480 Title I is we have only had three 
agreements last year on government-to-government food aid and 
we are seeing less and less interest in it all the time. It is 
mainly done to subsidize interest rates and the interest rates 
are coming lower and lower and commercial transactions are 
taking its place.
    Senator Lincoln. Because they are more competitive?
    Mr. Yost. They are equally competitive and you don't have 
to go through government red tape.
    Senator Lincoln. What is the criteria that your agency does 
to determine if a particular market for a given commodity has 
kind of graduated from the eligibility for funds under either 
Market Access Programs or the Foreign Market Development 
Program? Is there a criteria?
    Mr. Yost. If a market has graduated? I don't know what----
    Senator Lincoln. Graduated from those programs. When you 
graduate from those programs, is there a criteria that you use?
    Mr. Yost. I don't know if there is a--perhaps I am not 
understanding your question correctly, Senator, and I apologize 
for that.
    Senator Lincoln. Access to those funds, eligibility.
    Mr. Yost. We review the cooperators programs that come in 
with us, the various groups, and we look for the effectiveness, 
what they can do to enhance not only market access, but also 
expand the market period and commercial terms. It is 
competitive and we review it and we send back our comments on 
it and it basically is a give and take between the cooperator 
on who has the best proposals, how they should change their 
proposals, et cetera, et cetera. So it is kind of an ongoing 
process.
    Senator Lincoln. So you would describe it more as a 
competitive-type loan program, grant program, as opposed to a--
--
    Mr. Yost. For market access--for MAP funds, it is a grant 
program and it is a competitive process. Who has the best 
proposals? Who has the best track record?
    Senator Lincoln. Just a last one for Mr. Yost. In your 
testimony, you do point to the fact that our total U.S. 
agricultural exports are up, and yet we also know that our 
total share of global agricultural exports has declined from 22 
percent to 9.7 percent during the time period from 1984 to 
2005. I just kind of wanted to get your perspective on how we 
ensure that our agricultural products are competitive globally 
and that we are maximizing these new market opportunities. Are 
there any steps that the FAS hopes to take to address the 
decline in our global share, and obviously our global share has 
a great deal to do with our competitive ability there, and to 
what extent does FAS conduct outreach to the U.S. agricultural 
groups to identify trade constraints? Is there something that 
you all do in your outreach?
    Mr. Yost. First of all, I would contest that it went down 
from 22 to 9.7 percent. That was an OIG report. It didn't take 
into account--I think they had an apples and oranges report 
there. They talked about--didn't talk about, rather, the 
expansion of the European Union. They counted interstate 
trading within the European Union. They didn't take into 
account the value of the dollar versus the euro. They didn't 
take into account BSEs, other SPS issues, which are very 
significant in trade.
    I think we are doing very well in the marketplace. The $78 
billion is a record. I think we do a good job working with our 
MAP cooperators in reaching out, particularly through State and 
regional trading groups. They work exclusively with small 
businesses, mainly within their States. We have some very good 
success stories, very innovative success stories, and we, I 
think, had $36 million of MAP funding that went to those groups 
last year. I think we are doing a credible job. We are getting 
good feedback.
    Senator Lincoln. I would love to hear some of your stories, 
so I hope that you will share some of those with us in terms of 
your outreach and, as you said, your outreach particularly 
with----
    Mr. Yost. We can supply some of those to you.
    Senator Lincoln. Please do. That is helpful.
    Mr. Yost. We certainly will, Senator.
    Senator Lincoln. Thank you. Thank you, Mr. Chairman.
    Senator Chambliss. Senator Roberts?
    Senator Roberts. I am going to yield to Senator Crapo in 
that I have arrived late and I am still trying to assimilate 
what the heck it is I am going to say.
    [Laughter.]
    Senator Chambliss. Everything is normal, so Senator Crapo?
    [Laughter.]
    Senator Roberts. Mr. Chairman, did something happen that I 
am not aware of?
    [Laughter.]
    Senator Chambliss. Obviously, you slept in this morning, 
but----
    [Laughter.]
    Senator Roberts. Do I have to go back to the Intelligence 
Committee? That is what I really want to know.
    [Laughter.]
    Senator Chambliss. Senator Harkin unfortunately had a death 
in the family and couldn't be here.
    Senator Roberts. I am very sorry to hear that. I am very 
sorry to hear that. Senator Crapo, you are recognized.
    [Laughter.]
    Senator Crapo. Well, thank you very much, Mr. Chairman and 
Mr. Chairman.
    I also arrived late, so I apologize if these questions have 
already been covered, but Mr. Yost, as has been indicated by 
Senator Lincoln's comments, the fiscal year 2008 budget seeks 
no funding for Title I and yet a certain amount of the funding 
for the Food for Progress Program comes from Title I. Is the 
failure to seek funding for Title I going to have a significant 
negative impact on our ability to fund the FFP program?
    Mr. Yost. It will have, Senator Crapo, it will have some 
effect on it. We have some MarAd reimbursements that will go 
back into the Title I fund. We also will be doing some 
reconciling. It will be a certain amount of money that will be 
available to go into the Food for Progress Program from Title I 
for this coming year.
    Senator Crapo. So overall, can we get any kind of a feel 
for you, even on a percentage basis, as to what kind of an 
impact we could see in terms of the funding for the FFP program 
as a result of the----
    Mr. Yost. As a result of the----
    Senator Crapo. Yes.
    Mr. Yost [continuing]. Not final funding? It will take us a 
while until we get to the exact reimbursement amounts. We 
certainly can get those to you, but I would----
    Senator Crapo. Do you think it would be significant 
differences, or are we talking small----
    Mr. Yost. I don't believe it will be great.
    Senator Crapo. All right. If you could get some details to 
us----
    Mr. Yost. I certainly will, Senator.
    Senator Crapo.--I would appreciate it.
    Mr. Hammink, I want to talk for a minute with you about the 
question of basically pre-positioning. I noted that in your 
testimony, you indicated that you didn't really think pre-
positioning is a substitute for local procurement. I am very 
concerned about our efforts to go to cash rather than in-kind 
utilization of products. It seems to me that efforts like the 
pre-positioning at Lake Charles and at Dubai are going to give 
us an ability to continue to rely more heavily on our in-kind 
food aid programs rather than going to commodity purchases. Do 
you disagree with that, and if so, why?
    Mr. Hammink. We think that the pre-positioning has been 
very successful. In fact, we just signed a new contract, I 
think it says in the GAO report, in Djibouti, for warehouse 
space there. What we are saying is that pre-positioning is not 
the answer for what we might need the local procurement for, to 
save lives in emergency situations. It may be--it is yet 
another tool that we have and that we are using successfully to 
get food quickly to where it is needed. Local procurement would 
allow us to have that additional flexibility when pre-
positioning is not available or when it is not appropriate, 
because pre-positioning right now is only processed food.
    Senator Crapo. All right. Well, thank you. I appreciate 
that explanation and I would just encourage you to focus as 
aggressively as you can on pre-positioning because if we are 
aggressive in utilization of that tool, then we have fewer 
circumstances where there may be an unavailability of in-kind 
food aid.
    Mr. Melito, in your testimony, you indicate that USAID and 
USDA don't sufficiently monitor effectiveness of food aid 
programs. What, in your opinion, is needed for sufficient 
monitoring? The question I am kind of getting at, or the aspect 
of this question I am kind of getting at again is the issue as 
to whether cash donations or cash for purchases wouldn't 
exacerbate this problem.
    Mr. Melito. To answer the last part first, we did not look 
at the cash purchase issue. Our study was limited to ways to 
improve U.S. food aid within existing authorities. That was in 
the actual request letter and we abided by that.
    The monitoring issue is a longstanding concern. In the last 
farm bill, 2002, AID was asked to make an assessment of its 
resource needs in this area and has yet to actually report out. 
The IG has reported several times, USAID and USDA, on their 
need to improve monitoring. The agencies themselves are 
recognizing this issue.
    Right now, a lot of the information coming from the 
implementation of the program is coming from the implementors, 
the PVO's, World Food Program. This is just an issue of 
independence. You like to have someone not involved in actually 
implementing the program giving you an independent view of how 
it is working and there is not a sufficient resource on that at 
the moment.
    Senator Crapo. Thank you. I appreciate your explanation 
that you haven't evaluated the cash donation issue since you 
are going under current law, and if you don't have an opinion 
on this, that is fine. I would like to know, though, if just 
intuitively whether you would expect that moving to cash 
donations or cash for purchases would exacerbate the issue of 
monitoring.
    Mr. Melito. That is not something I have thought about, so 
I wouldn't want to speculate.
    Senator Crapo. All right. Thank you very much. That is all 
my questions, Mr. Chairman.
    Senator Chambliss. Senator Roberts?
    Senator Roberts. Dr. Melito, you just said something about 
the World Food Program. Would you repeat that again, please?
    Mr. Melito. What I said was the USDA and USAID have relied 
heavily on reports coming from the implementors in the field, 
and the two implementing bodies are either World Food Program 
or the PVO's. The World Food Program does implement programs in 
the field and they do report back to our agencies on how well 
it is going.
    Senator Roberts. You are satisfied with that?
    Mr. Melito. No. We would like additional resources for the 
agencies to independently monitor. So we think there is too 
much reliance on reports from the implementors and not enough 
independent view on how the programs are working.
    Senator Roberts. Do you have any concern that the World 
Food Program is not being implemented properly?
    Mr. Melito. No. The World Food Program is very experienced 
in this issue. They have been doing it for years. There is no 
reason to doubt their abilities, but it just a truism of 
monitoring that there should be independence in this.
    Senator Roberts. AID at one time, or the administration at 
one time, wanted to take the World Food Program in terms of 
funding away from the Department of Agriculture and put it in 
AID. I guess Mr. Hammink would be a better person to ask about 
that. One hundred Senators signed a letter and said no and 
indicated that it should still come from the Department of 
Agriculture. I know there is discussion to take the money from 
CCC and make it mandatory. I don't think that is possible and I 
don't think that is desirable under the circumstances, but I am 
worried about the funding for the World Food Program.
    Let me just say that WFP is feeding close to 100 million 
people a year and their NGO and other international partners 
feed another 100 million. There has been significant progress 
made in fighting poverty, especially in China and India, but we 
are losing ground in the battle against hunger.
    It became obvious to me that with the World Food Program, 
when you had the World Food Program, i.e. the McGovern-Dole, or 
if you are in Kansas the Dole-McGovern World Food Program, you 
set up and even have schools underneath trees and on a hilltop. 
The families in these developing nations are an emergency 
situation country or a country wracked by all sorts of 
troubles, including terrorist activity. This particular event 
occurred about 2 weeks after I was in Colombia, followed up by 
the mercenaries. During that period, they held school and the 
families involved in that particular area sent a young woman to 
that school because they were being fed. If you don't feed 
them, they don't go.
    And you can replicate that. I have somewhere here a list of 
five countries with the worst rate of hunger, all either caught 
up in war or emerging from long years of conflict--Burundi, 
Eritrea, the Democratic Republic of Congo--I should just say 
the Congo, there is nothing democratic there--Ethiopia, Sierra 
Leone, and then I could just multiply that around the world.
    So in terms of fighting terrorism to allow young women to 
go to school, when they do go to school and they have one, two, 
three, possibly 3 years--in Africa, that would be about the 
best that you could do--I think that is the best long-term 
answer to win this war against terrorism. You educate young 
women around the world and they are not going to put up with 
seventh century servitude and they are also going to insist on 
reforms in their country that I think would make a big 
difference.
    So I am a very strong support of the WFP program. I 
apologize again for being late.
    Senator Lincoln. [Presiding.] That is OK, but that last 
comment came as the father of some very strong and smart women. 
I can tell he has got good daughters out there.
    Senator Roberts. At least two.
    [Laughter.]
    Senator Roberts. We had $100 million in the school feeding 
program, the Dole-McGovern Program. It went up to $300 million 
in 2001 under President Clinton. It went down to $50 million. 
It was supposed to be $100 million and then we had the 
rescission down to $98 million. I just don't think this is 
enough to even start to get the job done.
    In Africa, one person in three is malnourished. Well, let 
us just try the Southern Command, where we have 31 countries, 
360 million people, average age of 14, and a lot of 
malnourishment, and Mr. Hugo Chavez doing his best imitation of 
Castro, which I think is a big problem. I think the World Food 
Program can play an integral part in regards to offsetting that 
danger for millions of people in the crisis in the Sudan, which 
everybody has heard about, the Horn of Africa, the Democrat 
Republic of Congo again, Niger, and other countries.
    HIV-AIDS is worsening, drought, declining government, civil 
strive. Eight million farmers have died of AIDS in the past two 
decades. Twenty-five million AIDS orphans are expected by 2010. 
Now, these orphans are going to be sitting on the top of some 
madrassa with an AK-47 unless we are able to help provide the 
proper education, infrastructure and everything combined. But 
the key to it, I think, again, is if you feed people, you 
provide an important incentive for families to send their young 
women to school.
    Basically, I guess my question is, I think we need more 
money in the World Food Program and I think we need to get at 
it. I would ask Mr. Hammink, who is our resident officer of the 
Food for Peace. Now, you have heard my rant. Would you care to 
comment, sir?
    Mr. Hammink. Just two quick comments. One----
    Senator Roberts. I think the answer is yes and we can move 
right on, but go ahead.
    [Laughter.]
    Mr. Hammink. Yes, we think WFP is doing an excellent job.
    Senator Roberts. I appreciate that, but would you want to 
add anything in regards to the funding?
    Mr. Hammink. The Dole-McGovern or McGovern-Dole school 
feeding program is, as you know, implemented by USDA, something 
that we support where we have programs in the same countries 
and trying to have synergy there. But we continue to work 
closely with WFP in terms of especially targeting and 
assessment, because we do give them a lot of money, a lot of 
food every year, and we want to continue to make sure that food 
gets to those who are the most in need in the countries where 
they work.
    Senator Roberts. We will follow up, and I am already two-
and-a-half minutes over time. I need to talk with you, Senator 
Lincoln, about this whole area. I think a lot more can be done 
and I thank you, and I thank the witnesses for coming and the 
job that you are doing. And again, I apologize for being late 
and somewhat disorganized.
    Senator Lincoln. You have been a valuable addition to this 
committee and we appreciate you being here this morning. Thank 
you, Senator Roberts. I am prepared to get busy and work with 
you on it because I do think it is a critical issue.
    Senator Coleman, are you ready?
    Senator Coleman. Absolutely. Thank you, Madam Chair. I 
agree with the ramblings that I heard of my colleague.
    Senator Roberts. You don't have to call it ramblings.
    [Laughter.]
    Senator Coleman. I also serve on Foreign Relations and have 
been to South Africa, Mozambique, and Botswana and worked very 
closely to look at the AIDS issue, worked very, very closely 
with the African Development Corporation, which is trying to do 
sustainability projects in Africa.
    One of the concerns I have is the emergency portfolio, 
emergency needs squeezing out some of the developmental needs. 
I look at this as a long-term sustainability. You know, you 
teach the food insecure how to fend for themselves. You teach 
somebody to fish rather than feeding them, you have got a 
better opportunity down the road. Perhaps a little provincial 
self-interest, we have Land O'Lakes in Minnesota that has been 
doing, I think, some very, very good things. One of their 
projects in Zambia is providing technical assistance, so I am 
aware of that. Again, reduce food insecurity by increasing 
rural incomes. It all fits together.
    My question, then, is the concern about emergency needs 
taking over the Title II portfolio and squeezing out 
developmental needs, and I don't know if this was addressed. 
The Title II program has a minimal level for non-emergency 
programs of 1,875,000 metric tons. This year, the USAID waived 
the minimum requirement and provided, I think, only 760,000 
metric tons. My concern, then, is these programs build self-
reliance in vulnerable communities. They are buffeted by 
economic downturns, weather, et cetera, et cetera.
    Are there changes that have to be made in Title II to 
ensure that developmental programs are properly funded? How can 
we be assured that USAID will make the increases unless we 
require it by law? How do we kind of ensure the commitment to 
developmental even as we deal with clearly some of these 
emergency issues out there? I would go to anybody, Mr. Hammink, 
probably to you. I guess it would be your area.
    Mr. Hammink. Thank you very much for the question. We have 
those same concerns. I spent 23 years overseas with USAID and 
see the absolute importance of these long-term programs focused 
on chronic issues. As I said in my testimony, giving food away 
only helps the immediate hunger issues.
    We prioritize funding on a regular basis and looking at 
what the emergency needs are. It is a tough call because there 
are urgent needs, pipeline needs, needs for getting food out 
under the development programs quickly as well as the emergency 
programs. But when faced with the dilemma of saving lives today 
or improving long-term food security, we save lives today.
    What we are trying to do, though, is become much more 
predictable in terms of the funding, especially the food aid 
for our PVO partners under the development food aid program. We 
can share with you several areas that we have started, that we 
are carrying out to improve that predictability.
    Senator Coleman. Mr. Yost, let me ask you a Food for 
Progress question, and I apologize if this may have been 
addressed before. Again, what you have, it is a minimum level 
of 400,000 metric tons per fiscal year is required. I 
understand there is a cap on administrative and transportation 
funding and USDA is not providing the full 400,000 tons. So you 
have Title I funding phased out, not being able to afford Food 
for Progress for over 2 years. Are the caps on transportation 
and administrative costs the main restraint in reaching that 
400,000 metric ton minimum or are there some other issues that 
we need to be aware of?
    Mr. Yost. Senator Coleman, the $40 million cap on 
transportation is the limiting factor.
    Senator Coleman. And if the cap wasn't there, what would be 
the level that would be needed to meet the 400,000 tons?
    Mr. Yost. Well, we did about 175,000 tons last year--I have 
to look it up--so you can start to extrapolate from there. It 
depends on where it is going and, you know, some places are 
more difficult to get to in terms of costs, and what overall 
freight rates are going to be.
    Senator Coleman. If it is possible, if you could take a 
look at that and provide----
    Mr. Yost. I certainly will, Senator.
    Senator Coleman [continuing]. A better sense of what it is 
that we need to do what we said that we were going to do.
    Mr. Yost. We will do so.
    Senator Coleman. Thank you, Madam Chair.
    Senator Lincoln. Thank you, Senator Coleman.
    Just one last question, I guess really for all of you. I 
was going to ask Mr. Yost, but I think any comments you may 
have, and I do want to complement my colleague, Senator 
Roberts, for having so much confidence in what women can do if 
we can keep them educated and fed.
    There are 121 million hungry children that are not 
attending school. The potentially really to feed and educate 
more children through the McGovern-Dole Program, which has been 
very successful, is clear. We know we have budget constraints 
that we face. Do any of you all have ideas about the ways that 
we could, with existing resources, leverage further either that 
program or the--that is really our business up here, I suppose, 
is to think outside the box and figure out how we can leverage 
the resources we have. You are more on the ground. You are 
certainly more aware. I hope that if there are any ideas in 
your minds, or if it is just going to always be that we simply 
need more resources. If that is the answer, certainly shoot it 
my way, but my hope is that those of you that are on the ground 
and you realize this enormous need and you understand our 
constraints, what ideas you would have for leveraging the 
resources we have in a greater way. Any suggestions, Mr. Yost?
    Mr. Yost. Senator Lincoln, that is a very good question. I 
don't have any ready answers for that. Clearly, I have seen the 
program in action. It is the most compelling thing I have ever 
seen in my life. I think anyone that has seen it would agree. 
It is so difficult when you are working in some of these areas 
where there are so few resources. I mean, typically, you reach 
out to the local governments, parents' groups, things like 
this, but in that case, there is----
    Senator Lincoln. They don't have them.
    Mr. Yost [continuing]. There is nothing there, so it is 
real difficult to reach out. I guess you would have to reach 
out to contributions from the private sector unless it is 
government funding.
    Senator Lincoln. Mr. Hammink?
    Mr. Hammink. Three quick thoughts. One is that WFP and 
UNICEF are spearheading what they call an ``Ending Child Hunger 
and Undernutrition Initiative,'' and that is something that we 
support. They are looking at increasing advocacy, increasing 
the use of resources already in countries to focus it much more 
at child hunger, the kinds of things you mentioned, Senator. 
That is first.
    Second is that we are looking under the new foreign 
assistance framework whereby the Title II funds for development 
programs are coming to a country where the Ambassador, the 
USAID Mission Director, and other development people are 
getting together to look at how best to use it together to 
achieve these objectives, and in highly food insecure 
countries, they are looking at objectives that are focused on 
the chronic food insecurity issues and they are linking up 
resources like child survival resources with our food aid 
whereby we are using food in clinics in some countries for the 
children and they are providing training for mothers and for 
the nurses through other funding sources.
    Senator Lincoln. So they are doubling up.
    Mr. Hammink. And we are doing the same with HIV-AIDS, as 
well, whereby food is our resource and we can provide food, and 
OGAC and others are providing some funding in specific 
situations to alleviate the food needs for people who are on 
HIV-AIDS----
    Senator Lincoln. Maximize the exposure?
    Mr. Hammink. Correct.
    Mr. Melito. The upcoming GAO report contains nine 
recommendations on ways to improve both effectiveness and 
efficiency of the existing program. This is not thinking about 
new programs, but the existing programs, so I think that is a 
real starting point.
    Senator Lincoln. That is great. That will be very helpful. 
Thank you.
    Mr. Yost. Senator Lincoln, if I may add, we are looking at, 
even though we have small quantities, using some forfeited CCC 
stocks to supplement the McGovern-Dole Program.
    Senator Lincoln. Oh, that is good. OK. Thank you so much. 
You have been wonderfully patient with all of us coming and 
going. We appreciate that. More importantly, we appreciate your 
hard work and look forward to continuing to work with you to 
meet that ultimate objective of making sure that just the most 
basic needs of our fellow man are met. Thank you very much.
    We will call up the second panel now. If I can ask our 
witnesses to take their seats, we will welcome to the panel Mr. 
Charles Sandefur, Chairman of the Alliance for Food Aid and 
President of ADRA International; Mr. Timothy Hamilton, the 
Executive Director for Food Export Association of the Midwest 
USA and Food Export USA-Northeast; Mr. David Kauck, Senior 
Technical Advisor for CARE USA; and Mr. Joel Nelsen, who is 
President of California Citrus Mutual.
    Thank you all, gentlemen, for joining us today. We 
appreciate your willingness to be here and certainly being a 
further resource to us as we move through not only the budget, 
but the farm bill and multiple other areas that we deal with 
here.
    Mr. Sandefur, we will begin with you. I believe you have 5 
minutes for your testimony.

STATEMENT OF CHARLES SANDEFUR, CHAIRMAN, ALLIANCE FOR FOOD AID, 
    AND PRESIDENT, ADVENTIST DEVELOPMENT AND RELIEF AGENCY 
                         INTERNATIONAL

    Mr. Sandefur. Thank you, Madam Chairman. My name is Charles 
Sandefur. I am the President of Adventist Development and 
Relief Agency, ADRA, and the Chairman of the Alliance for Food 
Aid. The Alliance is comprised of 14 private voluntary 
organizations and cooperatives that conduct international 
assistance programs. ADRA has participated in U.S. food 
programs for nearly 50 years. We thank you, Madam Chairman, for 
your unrelenting commitment and support for food aid over the 
years.
    The first millennium development goal calls for cutting 
hunger in half by the year 2015. But since 2000, the number of 
hungry people has actually increased by 5 percent, from 800 to 
842 million people. Food aid is our nation's principal program 
to combat hunger and its causes. In the 2007 farm bill, we ask 
the committee to make a renewed commitment to these programs 
with improvements.
    Most important is assuring predictable levels for both 
chronic and emergency needs and reversing the downward trend in 
funding for multi-year development programs. Making adequate 
funds and commodities available at the start of the fiscal year 
will support good program planning and allow timely 
procurement, delivery, and implementation. We also believe that 
some improvements are needed in program procedures, commodity 
quality, and targeting. Detailed recommendations are provided 
in my written statement, but I would like to call your 
attention to four key recommendations.
    First, we urge you regularly replenish the Bill Emerson 
Humanitarian Trust so that it is readily available for 
emergency needs. Currently, the commodities and funds held in 
the trust are used as a last resort, causing a drain on other 
funds. For emergencies, early and timely response is critical 
for saving lives. The commodities and funds in the trust should 
be immediately available when Title II emergency funds are 
insufficient.
    Second recommendation, establish a safe box for at least 
1.2 million metric tons of commodities for non-emergency Title 
II programs each fiscal year. This amount would not be subject 
to waiver. Title II allows PVO's to develop multi-year programs 
to address the underlying causes of hunger. These are called 
non-emergency programs and they give us the greatest chance to 
make a lasting impact and change in lives. But these programs 
are now endangered because of the loss of Section 416 surplus 
commodities and other budget pressures.
    In recent years, most Title II resources have been shifted 
from non-emergency to emergency programs. As a result, non-
emergency programs are being phased out in 17 countries and cut 
back in others. The amount available for non-emergency programs 
has effectively been frozen at 750,000 metric tons, which is 60 
percent less than the minimum required by law. We believe this 
is counterproductive, because development food aid improves 
people's resilience, gives them the means to improve their 
lives, and helps stabilize vulnerable areas.
    Let me give you an example. ADRA Food for the Hungry and 
several other PVO's are conducting Title II programs in Bolivia 
to enhance household food security. The commodities we 
distribute as payment for work, as conservation projects, as 
take-home ratios for families with young children, the 
commodities we distribute include corn, soy blend, lentils, 
green peas, soy-fortified bulgur, wheat-soy blend, and flour. 
Funds for this program mainly come from the monetization of 
wheat flour. We also receive a small cash grant from Section 
202(e) of Title II.
    ADRA's program has 35,000 direct beneficiaries. Over 70 
percent of the population is extremely poor. Infant mortality 
rates are high, 116 per 1,000 births. Communities must rely on 
their own agricultural production. The roads are terrible. I 
have traveled on them. And most people lack means of 
transportation.
    After 3 years, midway through the project, chronic 
malnutrition amongst children between the ages of two and five 
had decreased by 25 percent. Exclusive breast feeding of 
infants under 6 months nearly doubled to 90 percent. And the 
farmers who participated in the agricultural development 
programs doubled their household incomes.
    We could give additional examples, and we give those in our 
testimony, of Guinea and Kenya and my own favorite country, 
Rwanda. Non-emergency programs in those countries have this in 
common. They and 14 other countries are being eliminated and 
phased out in terms of their non-emergency program funding. 
That is why the safe box to protect Title II non-emergency 
programs is necessary. Without it, the capacity of PVO's to 
serve these vulnerable areas will deteriorate, which will make 
it even more difficult to provide aid when crises occur.
    Third recommendation, continue recognizing that 
monetization is an important component of food aid programs. We 
support its continued use, where appropriate, based on clear 
market analysis. Choosing a commodity that has limited or no 
production in the recipient country helps ensure that programs 
will not create disincentives to local production. There are 
sound methods for avoiding disruption of commercial sales, such 
as bringing in small amounts compared to total imports and 
spreading out the sales.
    Indeed, well-planned monetization prevents the bunching 
that was referred to earlier, creates multiple benefits in poor 
food deficit countries. A commodity that is in short supply in 
the country is provided for sale in the market where there is 
unmet demand. The proceeds are kept in the country and are used 
for development programs. In addition, some programs use 
monetization to help improve local marketing through small lot 
tenders and using food aid commodities to stimulate local 
processing.
    My fourth and last recommendation, lift the transportation 
cap on funds for USDA Food for Progress programs so that we can 
increase commodity levels up to 400,000 or 500,000 metric tons. 
This is a good program. Last year, we and our partners made 116 
proposals, but only 14 of those proposals were able to be 
approved within the existing budget.
    Those are my four recommendations. Thank you, Madam 
Chairman. We look forward to your questions.
    [The prepared statement of Mr. Sandefur can be found on 
page 137 in the appendix.]
    Senator Lincoln. Thank you.
    Mr. Hamilton?

STATEMENT OF TIMOTHY HAMILTON, EXECUTIVE DIRECTOR, FOOD EXPORT 
 ASSOCIATION OF THE MIDWEST USA AND FOOD EXPORT USA-NORTHEAST, 
 CHICAGO, ILLINOIS, ON BEHALF OF THE COALITION TO PROMOTE U.S. 
                      AGRICULTURAL EXPORTS

    Mr. Hamilton. Thank you, Madam Chairman. Good morning. My 
name is Tim Hamilton and I am with the Food Export Association 
of the Midwest USA and Food Export USA-Northeast, which are 
regional trade organizations that offer services to help U.S. 
food and agricultural companies to promote their products in 
foreign markets. Today, I am testifying on behalf of the 
Coalition to Promote U.S. Agricultural Exports, of which we are 
a member. We commend you, Madam Chairman and members of the 
committee, for holding this hearing to review our agricultural 
trade programs and wish to express our appreciation for the 
opportunity to present 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, 
agriculture cooperative, small businesses, regional trade 
organizations, and the 50 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 that 
is still characterized by highly subsidized foreign 
competition.
    Farm income and agriculture's economic well-being depend 
heavily on exports, which account for 25 percent of U.S. 
producers' cash receipts. It provides jobs for nearly one 
million Americans and makes a positive contribution to our 
nation's overall trade balance. In fiscal year 2007, U.S. 
agricultural exports are projected to be $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.
    U.S. agriculture's trade surplus is also expected to be $8 
billion this year, which is up $4.7 billion over last year, but 
unfortunately is a huge decline from the roughly $27 billion 
agricultural surplus that we ran in fiscal year 1996.
    Members of our coalition strongly support and utilize the 
Market Access Program, or MAP, and the Foreign Market 
Development Program, or FMD, which are administered by the 
USDA's Foreign Agricultural Service. Both programs 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 which are 
specifically allowed in unlimited amounts under WTO rules to 
help American agriculture and American workers remain 
competitive in a global marketplace still characterized by 
highly subsidized foreign competition. By any measure, they 
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 was prepared for USDA by Global Insight, 
Incorporated, which is the world's largest economic analysis 
and forecasting firm. That report illustrates the benefits of 
these vital market development programs. According to the 
study, total public-private spending on market development has 
grown 150 percent in the past decade, to over $500 million 
projected for fiscal year 2007. Three-hundred-million dollars 
of this comes from industry and $200 million from government. 
Over this period, industry contributions have grown twice as 
fast as those from the government side under MAP and FMD. 
Industry funds are now estimated to represent almost 60 percent 
of the total annual spending, more than double that level in 
place in 1991, which strongly represents industry commitment to 
this effort.
    The Global Insight study clearly indicates the following 
benefits of increased funding for market development and 
promotion through MAP and FMD authorized in the 2002 farm bill, 
combined with the increased contributions from industry.
    No. 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. That 
level was at 18 percent, but has grown to 19 percent in the 
past year.
    No. 2, for every additional dollar spent on market 
development, $25 in additional exports results within three to 
7 years.
    No. 3, farm cash receipts have increased by $2.2 billion 
during the 2002 farm bill period 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 agriculture, forestry, and fishery products. A significant 
portion of this is carried out here in the United States. As 
the EU and our other foreign competitors made very clear, they 
intend to continue to be aggressive in their export promotion 
efforts.
    For this reason, we believe that the administration and 
Congress should strengthen funding for MAP and other export 
programs 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 currently 
level of $200 million per year. We also urge that no less than 
$50 million annually be provided for the Foreign Market 
Development Program for cost-share assistance to help boost 
U.S. agriculture exports. For the FMD program, this proposed 
increase reflects approximately the 1986 level of funding, 
adjusted for inflation.
    In addition to the success stories attached and further to 
your earlier question, Senator, there are approximately 20 
success stories attached to my written submitted testimony, and 
if it meets your approval, I would like to include one 
additional story from the Northwest Cherry Growers Council.
    I would like to describe one way that my organization uses 
the MAP program to help U.S. food producers to get started 
exporting and to promote our country's value-added exports. The 
50 State Departments of Agriculture participate in MAP through 
four State regional trade groups. These groups coordinate the 
export promotion efforts of the States and focus on assisting 
particularly smaller food and agricultural products producers 
and farmer cooperatives.
    We identify three levels of assistance for smaller 
exporters. No. 1, educating them on exporting. No. 2, helping 
them get established in the new market. And No. 3, growing 
their export sales in those markets once they are established.
    We have our program called our Branded Program, which 
offers cost-share assistance through which we support 50 
percent of the costs of a variety of marketing and promotional 
activities for small companies. This helps companies to expand 
their marketing efforts and stretch their marketing dollars 
twice as far as they otherwise could. We routinely hear from 
small companies that they would simply not be exporting were it 
not for this program.
    One example of that is the American Popcorn Company, which 
is located in the Midwest. It has used these Branded Program 
funds to expand their marketing efforts in Eastern Russia and 
Saudi Arabia. Since starting those promotions, the company has 
achieved a market leading share in Saudi Arabia and experienced 
a 20 percent increase in sales during its first year. The 
minimal cost of promotion in these markets has brought long-
term gains to this company and to the producers that supply it.
    Last year, about 200 small companies in our programs made 
their first export sale of U.S. agricultural products, and 
nearly 250 companies generated sales increases over 20 percent 
above their prior year. None of this would have been possible 
without the MAP program.
    American products are seen worldwide as high-quality 
products, safe products. Selling higher-quality products 
requires promotion and the MAP is an investment in promotion 
that pays off.
    As world trade increases, so does competition. It is 
essential that we increase funding for MAP and for FMD in order 
to continue to build our export programs for U.S. agriculture.
    I appreciate the opportunity to testify in support of these 
programs and look forward to any questions.
    [The prepared statement of Mr. Hamilton can be found on 
page 48 in the appendix.]
    Senator Lincoln. Thank you, Mr. Hamilton.
    Mr. Kauck?

 STATEMENT OF DAVID KAUCK, SENIOR TECHNICAL ADVISOR, CARE USA, 
                       RICHMOND, VERMONT

    Mr. Kauck. Madam Chairman, thank you for this opportunity 
to present CARE's views on U.S. international food aid 
programs. I am a specialist in food security. I have worked for 
CARE for 16 years, most of that time in sub-Saharan Africa.
    There are approximately 820 million undernourished people 
in the developing world. The situation is particularly acute in 
sub-Saharan Africa, where for at least the last three decades, 
hunger has steadily worsened, becoming more widespread and 
persistent over time. Across the African continent, growing 
numbers of people have fallen into such extreme and intractable 
poverty that they lack the means to rebuild their lives 
following disasters. This helps to explain the increased 
frequency and severity of humanitarian emergencies and also the 
exploding demand for emergency food aid. In many parts of 
Africa, events that would not have triggered major emergencies 
25 years ago do so today.
    While humanitarian crises have increased, the funding 
needed to adequately provide food assistance has not kept pace. 
Controlling for inflation, food aid budgets have declined by 
nearly half since 1980. We recognize that these resource 
constraints will not be easy to resolve in the current budget 
environment. Therefore, our main interest here today is to urge 
improvements in the efficiency and effectiveness of the Title 
II program so that we can achieve the greatest possible benefit 
with the resources that we have.
    With these concerns, CARE recommends several specific 
changes in current Title II policies.
    First, CARE endorses increasing procurement flexibility so 
that food may be routinely purchased locally or regionally in 
developing countries. Having a local purchase option can reduce 
delays and therefore save lives. This approach must be 
undertaken carefully. If it is 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. CARE believes that a pilot program would be a useful and 
prudent way to introduce this innovation.
    Second, CARE recommends that Congress consider alternative 
methods to make cash available. Experience has shown that cash-
supported activities are critical to the success of food 
assistance programs. But the practice of purchasing commodities 
here in the U.S., 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 for these programs.
    To improve efficiency, we recommend increasing Section 
202(e) funding levels to at least 25 percent of the overall 
Title II budget and expanding 202(e) flexibility to permit the 
use of these funds for program-related costs. This would 
substantially improve cost effectiveness and it would 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 can sometimes be harmful to local 
farmers and traders. It also shows that monetized food tends to 
replace commercial imports. As a result, monetization has 
become an especially contentious issue during WTO negotiations.
    Madam Chairman, for the reasons just mentioned, CARE has 
made an internal decision to phaseout of monetization. This 
transition should be completed by the end of fiscal year 2009. 
In the future, we will confine our use of food commodities to 
acute emergencies as well as targeted distribution to the 
chronically hungry under non-emergency programs.
    Third, CARE recommends changes in the Bill Emerson 
Humanitarian Trust. The trust was intended to function as a 
reserve of food and funding that can be drawn upon quickly to 
address rapid onset emergencies. 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 it more accessible, the 
conditions for releasing food and funds should be clarified in 
law. Second, we recommend modifying current law to ensure 
replenishment of commodities as part of the normal annual 
appropriation process.
    Finally, chronic hunger is often the result of multiple 
deeply rooted causes. Combating the causes of hunger will 
require common goals and coordinated action across programs and 
agencies. Within the U.S. Government, there are several such 
initiatives underway. One example that we have direct 
experience with is the government of Ethiopia's Productive 
Safety Net Program. Under this program, multiple donors, 
including the United States, engage in coordinated planning 
action. They use a combination of food and cash resources, all 
working toward a common goal, to reduce hunger. We ask the 
committee members to consider this example as an encouraging 
model for coordinated action.
    Madam Chairman, members of the committee, thank you again 
for this opportunity. I look forward to answering your 
questions.
    [The prepared statement of Mr. Kauck can be found on page 
79 in the appendix.]
    Senator Lincoln. Thank you.
    Mr. Nelsen?

STATEMENT OF JOEL NELSEN, PRESIDENT, CALIFORNIA CITRUS MUTUAL, 
                       EXETER, CALIFORNIA

    Mr. Nelsen. Thank you, Senator, and other members of the 
committee, for allowing us the opportunity to testify with 
respect to phytosanitary trade issues. These are vitally 
important to specialty crop growers around our nation. I wish 
to commend the committee for holding this hearing on a very 
important topic.
    First, I would like to note that specialty crop growers 
produce nearly 50 percent of the farmgate value of total 
agricultural crop production in the United States. We look 
forward to working with Congress in the development of a farm 
bill that fully addresses the many issues confronting specialty 
crop growers in today's rapidly changing global markets.
    U.S. trade policy is critically important to our industry. 
Unlike many of the other agricultural crops, specialty crops 
face a significant trade imbalance with our trading partners. 
Between 1995 and 2005, imports of specialty crops more than 
doubled, to $10.1 billion, while U.S. specialty crop exports 
have increased only modestly. As a result, the fruit and 
vegetable trade surplus in 1995 of over $600 million is now a 
trade deficit of $2.3 billion. This trade deficit is a 
manifestation of the many difficulties that specialty crop 
growers now confront in order to remain competitive in global 
markets.
    One of the primary reasons for the trade deficit in 
specialty crops is that access to foreign markets for our 
commodities has often been blocked due to phytosanitary trade 
barriers. In May of 2005, a report by the Department of 
Agriculture's Foreign Agricultural Service identified 36 
phytosanitary barriers that serve as obstacles to our exports 
in various markets. While some of these issues may have been 
legitimate or justified, many are not and some should be 
overcome with a sound scientific approach.
    When the Uruguay Round Agreement was implemented more than 
a decade ago, it was our hope and expectation based upon 
promises made by government officials that specialty crop 
growers would gain access to foreign markets as a result of 
that agreement. Unfortunately, while the U.S. market welcomes 
imports from our trading partners, U.S. growers have not 
received access to many foreign markets. This is largely due to 
the continued existence of phytosanitary barriers.
    It is imperative that Congress take action in the 2007 farm 
bill to address the problem of phytosanitary trade barriers. 
California Citrus Mutual has been an active member of the 
Specialty Crop Farm Bill Alliance, and this coalition has 
developed many recommendations for how the farm bill can 
address this situation. Some of these provisions will be 
included in legislation that is expected to be introduced in 
the Senate by Senators Stabenow and Craig, and believe me, we 
greatly appreciate their strong leadership and the other 
cosponsors that will come forward for this piece of 
legislation.
    These recommendations, which are discussed in detail in my 
written statement, include the following. Increased funding for 
the Technical Assistance for Specialty Crops Program. This has 
been extremely successful in helping to remove phytosanitary 
barriers. Unfortunately, it is over-subscribed. Increased 
coordination of phytosanitary trade policy between Federal 
agencies, such as USDA and USTR. Ensure that APHIS has the 
resources needed to process phytosanitary export petitions in a 
timely manner. We believe the implementation of these 
recommendations would help remove phytosanitary barriers and 
thus provide our growers with the opportunity to maximize their 
export opportunities.
    Another critical issue for our industry is the need for the 
Federal Government to protect U.S. agriculture against invasive 
pests and diseases. Once we are quarantined, we cannot ship. We 
cannot export. With the large increase in international trade 
over the past decade, the threat of invasive pests and diseases 
to U.S. agriculture has grown significantly.
    We recommend several initiatives for inclusion in the farm 
bill to minimize and manage this risk so we can maximize our 
export opportunities. First, we recommend that the farm bill 
direct APHIS to develop a program that clearly identifies and 
prioritizes foreign invasive species threats to specialty 
crops.
    Second, we believe the farm bill should contain language 
that directs the Secretary to provide access to funding for 
emergency response and eradication programs needed to combat 
the invasive species in a timely and effective manner.
    Finally, we are very concerned with the effectiveness of 
the Department of Homeland Security in protecting our nation's 
borders from the introduction of these invasive species. Citrus 
Mutual is recommending that the farm bill require the transfer 
of our border inspection responsibilities back to APHIS. We 
believe this would more effectively protect the specialty crop 
industry and other U.S. interests against the increasing threat 
of foreign invasive species.
    Senator we wish to thank you for this opportunity to 
testify on trade issues of importance to our industry and I 
would be pleased to answer any questions that you may have.
    [The prepared statement of Mr. Nelsen can be found on page 
130 in the appendix.]
    Senator Lincoln. Thank you, Mr. Nelsen.
    Thanks to all of you gentlemen for taking time to be with 
us.
    I will just offer up a few questions here to begin with, 
and to any of you all on the panel, last year, both the Foreign 
Agricultural Service and the U.S. Agency for International 
Development underwent major reorganizations in an effort to 
improve their efficiency. We all know that Rome wasn't built in 
a day, but how would you rate those agencies' success in 
achieving their goals thus far?
    Mr. Nelsen. Well, Senator, I am a member of the Fruit and 
Vegetable ATAC Committee at USDA and Administrator Yost has 
come in and briefed us on a couple of occasions. I would be 
less than honest if I didn't tell you that we had reservations 
about that reorganization. Having said that and running our own 
organizations, we are mindful of the fact that a manager should 
have the ability to change and reorganize if he thinks more 
efficiencies can be developed. We are willing to give him that 
opportunity, but be mindful that the specialty crop industry is 
going to monitor it very closely.
    Senator Lincoln. Great. Any other recommendations?
    Mr. Hamilton. Senator, I would like to concur with Mr. 
Nelsen's comments, but I also would like to recognize 
Administrator Yost for his degree of collaboration and 
communication with the industry in terms of undergoing that 
reorganization and kind of the long-term need for change within 
the agency.
    We are also concerned about the lack of resources in terms 
of staff. As he testified earlier, they are only staffed at 80 
percent, and we would certainly like to see those numbers 
increase as the resources allow in order to fill a lot of these 
new positions and new kind of functions that they have created.
    Senator Lincoln. Do you other gentlemen have any comments 
or oversight?
    Mr. Kauck. I would only comment that we would like to 
acknowledge the collaboration and the consultations that we 
have had with the Office of Food for Peace throughout all of 
this. That is a very constructive relationship.
    Senator Lincoln. Great.
    Mr. Sandefur. We also have benefited from that 
relationship. I do want to register, though, some concerns 
about the F process and acknowledge that in the F process, 
which is a restructuring of aid, to make sure that food for 
development does not lose in that process. We note that while 
the F process is going on----
    Senator Lincoln. Non-emergency?
    Mr. Sandefur. Or non-emergency, especially. We note again 
that there has been this reduction from 32 to 15, then bumped 
back up possibly to 18 countries that are focused, and that 
reduction in food aid is of extreme concern to us.
    Senator Lincoln. So collectively, you seem to have been 
engaged, at least, or included in the conversations of how 
reorganization happens and you want to continue that, 
obviously.
    Mr. Sandefur. Yes.
    Senator Lincoln. Great. Thank you. Mr. Sandefur, if this 
committee went along with the Alliance's recommendation to 
increase the cash payments to cover the logistical costs to the 
10 percent of program level, can you give us any kind of a 
ballpark guess or estimate as to what share of the PVO 
monetization activity that would replace?
    Mr. Sandefur. Our desire is to keep monetization intact and 
not to see it reduced, which is why we are calling for a 1.2 
million safe house so that we don't have that reduction. Our 
concern would be if 202(e) is increased to the level that it is 
seen as a substitute for monetization. There are times when we 
believe there needs to be cash, just the situation demands it, 
and we think that in bumping it up from the current 5 percent 
usage up to 10 percent will more than take that into account.
    Senator Lincoln. How many years should any individual pilot 
project that you might--because I think you recommended earlier 
that you would see it as a pilot project first, is that 
correct?
    Mr. Sandefur. Yes.
    Senator Lincoln. Or maybe that was somebody else's 
testimony, but anyway, how many years should any individual 
pilot project, usually local or regional cash purchase, be 
conducted in order to get an accurate picture of how a broader 
program might perform? What is going to give us a best estimate 
in terms of how the long term would work, or what diminishing 
problems we might have for long term?
    Mr. Sandefur. I am just the President of ADRA. I am not the 
technical expert. But it is going to take several years. You 
know, we have got all the ups and downs and the fragility of 
local economies have to be taken into account. We have got to 
go through some of the seasonal disruptions. And so the more 
longitudinal that is, the better it will be and we will get 
better economic analysis, which is sorely needed. That is one 
of the reasons we are suggesting pilots. While some PVO's have 
had experience, the World Food Program obviously has had 
experience, sometimes it has produced spikes, we need to do 
careful economic analysis and that will take time. It will take 
multiple years.
    Senator Lincoln. Dr. Kauck, I know you had expressed some 
concerns about the monetization and certainly from CARE's 
standpoint. Maybe both of you all would like to answer if there 
is an independent organization that you would recommend to 
perform any kind of overall evaluation of the effectiveness of 
local and regional cash purchase pilot programs. I mean, who do 
we go to to give us that evaluation? I know you mentioned Food 
for Peace, but if one were going to be adopted in the farm 
bill, who would that be? Who do we look to for giving us that 
guidance?
    Mr. Kauck. For the technical work?
    Senator Lincoln. Yes.
    Mr. Kauck. I think that there are probably a number of 
different candidates. One would be the International Food 
Policy Research Institute. There are a number of university-
based agriculture economics programs that also have the 
capacity to do that work.
    Senator Lincoln. Dr. Kauck, much of the real decline in 
food aid funding worldwide since 1980, and I think it was you 
that mentioned that, has been due to less being provided by the 
United States. I guess how much, if you were to compare, how 
much is due really to less being provided by us and how much of 
that decline is attributable to other donor countries? Are our 
neighbors in the global community keeping up with us?
    Mr. Kauck. For a specific answer, I would have to get back 
to you with written testimony. But to be sure, food aid from 
other countries has declined over the years, certainly 
European.
    [The following information can be found on page 212 in the 
appendix.]
    Senator Lincoln. Well, we know that certainly everybody 
does what they can and that proportionately it has to do with 
how large your country is and how well off your country is. But 
just, I guess, in terms of the percentages that they have been 
giving from the 1980's on, I would be interested if you have 
any information on that. We definitely want to make sure, 
whether it is climate change or world hunger, that we are 
really encouraging our global neighbors to do all that they 
can, as well, because it diminishes what we do if they don't 
keep up, obviously. Any light you can shed on that for me is 
good.
    Senator Coleman? I have got a lot more questions, but I am 
going to move to you.
    Senator Coleman. I just have a few, Madam Chair.
    I do want to follow up on the question of monetization. I 
am familiar with the Land O'Lakes program. I was reviewing 
their analysis and I listened to Dr. Kauck's concerns, and your 
testimony indicates economic research supports the view that 
open market sales of imported food may in some cases create 
market distortions and harm for the local farmers and traders 
and economies. It also shows that monetized food tends to 
displace commercial imports, both from the U.S. and other 
countries. So clearly, that is a contentious issue, the 
monetization issue.
    In Land O'Lakes, in their kind of analysis of their 
program, they talk about the Zambia team and they are talking 
about monetization of up to 11,000 metric tons of wheat result 
in a substantial disincentive, interference with domestic 
production due to the structure of Zambia's commercial wheat 
market, the structure of wheat and wheat products, et cetera, 
et cetera. It ends by saying, in order not to compete with 
locally produced wheat, it should have a relatively high 
protein content which is normally mixed in with locally 
produced low-protein wheat to make baked goods. In other words, 
they are kind of looking at this issue and trying to analyze is 
there a distortion.
    So I want to second the Chair's sense that we need to take 
a look at this and figure out whether it is going to have some 
sort of disincentive, whether it is going to create 
interference that is harmful, and whether, in fact, it is 
something that if you look at local conditions you can avoid 
that. In the end, we all want to do good.
    The nice thing about the Emerson Humanitarian Trust, and I 
just hear good things about it and good things about what is 
being done, and I just want to make sure if we make any change 
that we are not going to be doing more harm than good. So I 
would second the Chair. If we could follow up and get some 
objective analysis of this, I think it would be very, very 
helpful.
    Mr. Sandefur, in your testimony about that, you talk about 
the trust and talk about safe box. I think I understand the 
concept. Are what we looking at here is going to be the issue 
that I raised before, to make sure that the emergency programs 
don't take away from the long-term non-emergency? I am looking 
for sustainability here. So is a safe box, would that provide 
the kind of sustainability that I am looking for in these 
programs?
    Mr. Sandefur. Yes, we think it would. The current law calls 
for 1.875 million metric tons for non-emergency programs with 
the allowance for their being a waiver, and the result has been 
that more than a million tons, then, has walked out of the 
development door and moved through the emergency door and we 
need to protect that. So the safe box is to ask for a 1.2 
million guarantee and create that safe box, enlarge and 
increase, which we all agree with the Bill Emerson Humanitarian 
Trust, and to be able to trigger that sooner to help with 
emergency programs.
    The lack of consistency, depending upon supplementals, 
creates a lot of chaos in our community and that instability 
and needing then at times to hibernate and cut back programs 
just ricochets through the countries that we are trying to 
serve. And so creating a safe box would bring lots of stability 
to us and allow us to smooth over our programs, and it would 
also help with monetization. We wouldn't be caught potentially 
with spikes in monetization. We would be able to market that 
more consistently seasonally with the commodities, the right 
quantity at the right time.
    Senator Coleman. Mr. Hamilton, the President's farm bill, I 
think, recommends an increase of funding for MAP to $225 
million, and MAP is a program which I don't think I have ever 
heard anything bad about. People are enthusiastic, very, very 
positive. You talk about the economic benefits, additional 
exports, the impact on market development, et cetera.
    The question I have is are we making this increase in 
funding adequate? Is there a number that we should be looking 
at that is different from the President's number?
    Mr. Hamilton. The Coalition supports going back to the 
number that was originally authorized in the 1980 farm bill, 
which was $325 million, which is obviously in excess of the 
administration's proposal. One of the advantages of the program 
is that there is no limit to it under the WTO because this is 
considered a marketing program, so it is entirely green box. So 
there is no limitation on that side from it.
    Senator Coleman. Let me just go back to Mr. Sandefur for 
one last question. You talk about lifting the transportation 
cap. Again, is this a dollar issue?
    Mr. Sandefur. Yes.
    Senator Coleman. A funding issue?
    Mr. Sandefur. Yes. If we increase that funding, we are 
going to be able to have more tonnage in Food for Progress.
    Senator Coleman. Again, the issue that I raised in the 
first panel, if we could get some sense of the dollar amount 
that we are talking about so we have a target to shoot at, that 
would be helpful.
    Mr. Sandefur. We are asking--I can't remember exactly how 
many millions of dollars, but we are asking for a set--it needs 
to be consistently replenished and capped so that--what is it, 
16 to 20? Sixty million, there we go. Erase 16 and go to 60.
    Senator Coleman. I think that is all I have, Madam Chair. 
Thank you.
    Senator Lincoln. Thanks, Senator Coleman. Well, this is the 
week that we debate the budget, so there is a lot of erasing 
and changing and robbing Peter to pay Paul, quite frankly, in 
this theoretical document that we put together.
    Dr. Kauck, back on CARE's, I think, very thoughtful 
decision to phaseout the monetization by the end of 2009, I 
guess my question is, because we are dealing with the budget 
and it is a very fluid process and a very fluid discussion, 
will CARE continue to try to reach that objective if--will it 
continue to be carried out even if the recommendation that you 
have made on increasing the share of cash available to 
undertake the programming through Section 202(e) is not 
adopted? I mean, is it contingent?
    Mr. Kauck. CARE's decision is not contingent. We will phase 
out of monetization, regardless of whether additional funding 
under section 202(e) becomes available.
    Senator Lincoln. You will?
    Mr. Kauck. Yes.
    Senator Lincoln. OK. Mr. Hamilton, you have talked about--I 
was telling the staff, I don't think we have ever been told 
that there is enough money in MAP, ever. I have seen the 
evidence of it being a very effective program and the taxpayers 
invest $235 million annually in the trade promotion efforts. 
Can you give us any idea cumulatively how much the trade 
associations, the cooperatives, and those small companies that 
you work with that participate in that program typically 
provide in their cost share? I know you mentioned that 50 
percent of the resources, but is that kind of the cost share 
there, or----
    Mr. Hamilton. The legislation requires that there be a 50 
percent match by the trade associations, and in the numbers in 
the recent Global Insight study that was completed, their 
assessment is that currently it is 60 percent. So based on the 
MAP program, which is at $200 million, they estimate that there 
is a, if my numbers are right, $300 million is contributed by 
industry and $200 million by government, so that as the funding 
for the MAP program has increased, the contribution from the 
private sector has actually increased at double the rate that 
the public investment has had.
    Senator Lincoln. OK, great. We like leveraging those 
dollars, that is for sure.
    You also, when you mentioned the Global Insight study, you 
said that it relies significantly in its results on the so-
called ``halo'' effect.
    Mr. Hamilton. As I understand it, and again, I am not an 
author of the study, but when they refer to the halo effect, 
they are referring to kind of what might be described as the 
downstream effect, not just the farmgate income but the 
benefits that accrue to processors, to labor, to 
transportation, to packaging, and to other kind of supporting 
and related industries.
    There is also a kind of a downstream effect over a period 
of time that in market development and export promotion, what 
happens is there is a very immediate effect in terms of 
building relationships and building sales, but even more so, 
there is a long-term effect that can take anywhere from three 
to 7 years to really accrue and it becomes very difficult to 
measure those results on kind of a short-term basis. But their 
estimation is that over three to 7 years is the true effect of 
the program.
    Senator Lincoln. So definitely sustainability, as well, is 
important, is inherent in what you are trying to do, because it 
is the longevity of that that really in the end is productive, 
is that right?
    Mr. Hamilton. Exactly. They are just capturing data in a 
very short term, but in fact, the effect is really much longer 
term.
    Senator Lincoln. Mr. Nelsen, are you aware of the specific 
foreign SPS barriers affecting specialty crop exports which 
were put forward by the industry as potential dispute 
settlement cases under the WTO but that were not carried 
forward by the Office of U.S. Trade Representative?
    Mr. Nelsen. Not for the whole industry, Senator. No, I 
can't speak to that. I can speak to those that are more 
applicable to California citrus quite candidly because that is 
my area of expertise.
    Senator Lincoln. Right.
    Mr. Nelsen. I can tell you that better than a decade ago, 
we had reached an FTA with India, as an example, in which we 
were going to gain access to that country with our lemons. Last 
year, we probably moved a whole pallet of lemons. That is not 
much growth in 10 years.
    We are about ready to reach the aggravation point with one 
of our largest trading partners in South Korea. We have 
approached them about changing some protocols based upon some 
scientific evidence that has been developed by the University 
of California and our industry to modify what we have to do to 
satisfy their concerns. That has not been met with much 
satisfaction to date. There are stories in other commodities 
that we can relate to, the lettuce industry.
    The question becomes, Senator, is how much can a commodity 
like ours spend in an effort such as you are describing. We 
felt that we had ample evidence, as an example, for an EU 
situation, a competitor that was unfair as it related to us and 
our inability to access their market while we were allowing 
their product here. It became an expenditure of somewhere 
around budgeted of $1.5 million after an initial study that we 
conducted. You run out of resources eventually, and as a 
consequence, commodities like ours can't take full advantage of 
that program under its present structure.
    Senator Lincoln. Well, the specialty crop industry has 
experienced a lot of that for years. I have some specialty 
crops in Arkansas and they are growing, but we are mostly the 
larger commodities on the world market. I have got to say, it 
is starting to follow suit even in those areas, too, and we are 
recognizing, as you said, the cost of dealing with those types 
of issues. I think it is as if even when we negotiate these 
agreements, it seems like they know our trade laws better than 
we do and all of a sudden they wear us down to where the costs 
of trying to push forward, our rights or certainly what we feel 
like is due to our growers are gone.
    Mr. Nelsen. Senator, I couldn't agree with you more. We are 
an industry of about 3,500 family farmers and it is a question 
of resources.
    Senator Lincoln. That is right.
    Mr. Nelsen. We are in business to help them generate 
revenue, and if people such as myself or colleagues beat our 
heads against the wall for too long a period of time, we can't 
access other markets and open those up so that we can make 
revenue. It gets very aggravating at times.
    We have no choice as an industry, specialty crop industry, 
during this debate on trade and farm bill activity to be more 
aggressive because what we do in the next 365 days, or probably 
maybe a little bit longer, is going to dictate our ability to 
compete in the next decade. So we have no choice to 
participate, and we will.
    Senator Lincoln. You are right. It is going to be an 
interesting at least next 6 months.
    Just one last one for Mr. Nelsen. Would you say that the 
problems with the transfer of plant protection and quarantine 
responsibilities to the Department of Homeland Security stem 
largely from the lack of appropriate training and timely 
knowledge on the part of inspectors or coordination of 
activities within DHS? I know your final statement was a very 
affirmative, please go back to APHIS. But what is the root of 
the problem, the coordination of activities between DHS and 
USDA, or is it just that there is a silo over there at Homeland 
Security that doesn't connect with the groups over at USDA that 
it is really serving?
    Mr. Nelsen. Well, Senator, we are going to have a long 
discussion on that when two agencies get kind of upset with my 
summation here. But the problem is a mindset. When the transfer 
was made to the Department of Homeland Security, their focus 
was on some very important activities. The agricultural 
inspection program was an afterthought. A prime example of that 
is it took them almost a year to put an administrator in charge 
of that program and then several months after that to give him 
any support staff to assist in managing the agricultural 
inspection program.
    I kind of get this. I understand what is going on. I have 
been a student of the GAO and Congressional Research reports on 
this particular subject. And as a result, you had more 
vacancies created as a result of the transfer, fewer trained 
people, the tools that they have at their disposal, less 
accurate in their implementation of the program, and greater 
infestation of invasive species.
    I think there is a willingness to try. The people on the 
line work hard.
    Senator Lincoln. They do.
    Mr. Nelsen. But unfortunately, we have lost our expertise 
and institutional knowledge and those charged with 
understanding, appreciating, and protecting agriculture lie 
over at the Department of Agriculture. That is where the 
program administration should take place. That is where the 
program should be.
    Senator Lincoln. I had great reservations about moving it 
to Homeland Security and I think you are right. Obviously, it 
has not only done a disservice to the agricultural industry, 
but it has done a disservice, I think, ultimately to the 
objective of what Homeland Security really wanted to and should 
be doing in terms of production safety and the commodities 
coming in safe and going out----
    Mr. Nelsen. With all due respect, it is not just an 
agricultural issue. We have got urban blight taking effect 
because of bark beetles affecting parks, golf courses. These 
invasive species are not totally specific to agricultural 
commodities. They come in on plant products in urbanization 
efforts across this country. There are examples across the 
board. If we as a nation are going to better protect our 
borders as it relates to some of these invasive species and 
diseases, we have to move that program back to the Department.
    Senator Lincoln. Particularly folks that understand it. 
Thank you very much.
    Thanks to the panel for your very thoughtful insight and 
your hard work in the field. I think, ultimately, we all want 
very, very much to end hunger, poverty globally, and I think 
there are some very tough questions for all of us to answer, 
but more importantly, the fact that you are still at the table 
and you want to talk about it and work to make it happen, I 
think is the most evident of success.
    So thank you very much for joining us and we will be 
continuing to look to you for thoughtful answers and concerns 
as we move forward.
    The committee is adjourned.
    [Whereupon, at 12:00 p.m., the committee was adjourned.]
      
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                            A P P E N D I X

                             March 21, 2007



      
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                   DOCUMENTS SUBMITTED FOR THE RECORD

                             March 21, 2007



      
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                         QUESTIONS AND ANSWERS

                             March 21, 2007



      
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