[Senate Hearing 115-751]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-751

              INTERNATIONAL DEVELOPMENT: VALUE ADDED THROUGH 
                       PRIVATE SECTOR ENGAGEMENT

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 4, 2017

                               __________

       Printed for the use of the Committee on Foreign Relations

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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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                 COMMITTEE ON FOREIGN RELATIONS        

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 ROBERT MENENDEZ, New Jersey
RON JOHNSON, Wisconsin               JEANNE SHAHEEN, New Hampshire
JEFF FLAKE, Arizona                  CHRISTOPHER A. COONS, Delaware
CORY GARDNER, Colorado               TOM UDALL, New Mexico
TODD YOUNG, Indiana                  CHRISTOPHER MURPHY, Connecticut
JOHN BARRASSO, Wyoming               TIM KAINE, Virginia
JOHNNY ISAKSON, Georgia              EDWARD J. MARKEY, Massachusetts
ROB PORTMAN, Ohio                    JEFF MERKLEY, Oregon
RAND PAUL, Kentucky                  CORY A. BOOKER, New Jersey
                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        



                              (ii)        

  
                        C O N T E N T S

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                                                                   Page

Corker, Hon. Bob, U.S. Senator From Tennessee....................     1
Cardin, Hon. Benjamin L., U.S. Senator From Maryland.............     2
Kolbe, Hon. Jim, Honorary Co-Chair, Modernizing Foreign 
  Assistance Network, Washington, DC.............................     5
    Prepared statement...........................................     6
Macnee, Walt M., Vice Chairman, Mastercard Incorporated, 
  Purchase, New York.............................................    10
    Prepared statement...........................................    11
Goltzman, Michael, Vice President, International Government 
  Relations and Public Affairs, the Coca-Cola Company, Atlanta, 
  Georgia........................................................    14
    Prepared statement...........................................    16
Goodejohn, Kelly, Director, Ethical Sourcing, Global Social 
  Impact and Public Policy, Starbucks Coffee Company, Seattle, 
  Washington.....................................................    20
    Prepared statement...........................................    22

              Additional Material Submitted for the Record

Statement Submitted for the Record by John Ellenberger, Senior 
  Vice President for International Development, Land O'Lakes, 
  Inc............................................................    48
Statement Submitted for the Record by Mark Shriver, President of 
  Save the Children Action Network...............................    52


                             (iii)        

 
                       INTERNATIONAL DEVELOPMENT:
                      VALUE ADDED THROUGH PRIVATE
                           SECTOR ENGAGEMENT

                              ----------                              


                         THURSDAY, MAY 4, 2017

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:00 a.m. in 
room SD-419, Dirksen Senate Office Building, Hon. Bob Corker, 
chairman of the committee, presiding.
    Present: Senators Corker [presiding], Flake, Gardner, 
Young, Paul, Cardin, Menendez, Shaheen, Coons, Murphy, Kaine, 
Markey, and Booker.

             OPENING STATEMENT OF HON. BOB CORKER 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. The Foreign Relations Committee will come to 
order.
    We thank our distinguished witnesses for being with us 
today.
    At today's hearing, we will consider ways the public and 
private sectors can promote their mutual interests through 
economic growth in the developing world.
    As we all know, the administration is currently conducting 
a comprehensive review of our foreign aid policies and budget, 
something that I certainly support. We talked a little bit 
about this prior to the meeting.
    With rising deficits, it is prudent to thoroughly review 
these programs, and I strongly believe we can strike an 
appropriate balance that recognizes the critical role of 
diplomacy and aid while ensuring taxpayer dollars are used in 
the most efficient and effective manner.
    The reality is that the United States spends only 1 percent 
of our federal budget on diplomacy and foreign assistance. And 
military leaders tell us that without these reforms, our brave 
men and women in uniform would more likely be asked to enter 
harm's way. Still, in comparison to other countries, we are a 
very generous donor of foreign aid, and it is clear that 
official development assistance alone will not achieve the 
development goals we seek.
    Looking to the free market provides an opportunity for us 
to be more effective in fostering sustainability and will 
diminish the need for our assistance over time.
    Now more than ever the private sector is playing an 
increasingly prominent role in the growth of developing and 
emerging economies. In many respects, businesses are making 
investments not out of charity but because they see real 
potential for gains and building suppliers in markets in the 
developing world.
    As a result, private sector interest and returns on 
investment is intersecting with longstanding public sector 
interest in promoting economic growth and development in the 
world's poorest countries.
    For example, the Organization of Economic Cooperation and 
Development, the OECD, has estimated that with full 
implementation of the World Trade Organization facilitation 
agreement, developing and developed countries could reduce 
global trade costs by as much as 15 percent. Not only does that 
help developing countries attract investment, grow their 
economies, create jobs and trade with the world, but it also 
helps U.S. businesses export to these developing countries and 
build their supply chains.
    Therefore, we must look for appropriate ways to leverage 
shared private sector and public sector interests and 
eliminating unnecessary barriers to trade and investment, 
promoting business environments that will attract investment.
    Our witnesses today will provide examples of how their 
companies' pursuit of business opportunities has intersected 
with public sector development objectives. I hope we will hear 
about both the opportunities, as well as the challenges of 
partnering with the U.S. Government on development so we can 
fully realize the potential of private sector engagement.
    Thank you again for being here.
    I will turn to our distinguished ranking member, Ben 
Cardin, for his comments.
    And again, we look forward to a great hearing.

             STATEMENT OF HON. BENJAMIN L. CARDIN, 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. Well, Mr. Chairman, thank you very much for 
convening this hearing. I am looking forward to hearing from 
our witnesses.
    And I agree with your assessment that we can always do 
things better. And in development assistance, we very much 
depend upon our partnerships with the private sector. And I am 
anxious to hear how we can be more effective in leveraging 
activities in the private sector.
    Before that, I want to acknowledge some special guests that 
are in the audience for today's hearing. Tebabu Assefa and his 
wife Sara Mussie are founders of Blessed Coffee, a diaspora 
small business and benefit corporation based in Takoma Park, 
Maryland, just a few miles north of the capital. And I just 
want to acknowledge them. Blessed Coffee employs a holistic 
approach to development, supporting schools and clinics and 
providing training and investment opportunities to benefit the 
communities of 300,000 small coffee growers organized under the 
Oromia Coffee Farmers Cooperative Union in Ethiopia.
    I have visited their community here and have seen their 
approach, and I must tell you I am very proud of what the 
diaspora community has done in building opportunity here in 
Maryland but also giving hope for entrepreneurship in Ethiopia. 
So I just really wanted to acknowledge that and thank them for 
their leadership in our community.
    Maryland was in fact the first State in the Nation to 
incorporate benefit corporations in 2010. Today more than 30 
States have followed suit.
    So I am very proud to have Tebabu and Sara as constituents, 
and I am even more proud of the example they are setting for 
social responsibility business practices. I know as members of 
Maryland's large Ethiopian diaspora community, they are proud 
to invest in the coffee farming communities in Ethiopia. I wish 
you all the best as you continue your venture.
    Today's private sector witnesses are also doing good work 
to promote international development. Your companies recognize 
both the social and economic benefits of improving the welfare 
of the international communities in which you operate. I look 
forward to hearing your stories. It is important that we 
highlight your work and hope it inspires more large 
multinational corporations to emulate your actions.
    The valuable contributions of the private sector to 
international development also highlight the significance of 
U.S. Government development efforts. U.S. international 
development programs invest in people, our programs invest in 
saving lives, educating young people, training farmers, 
doctors, and entrepreneurs. The programs exemplify U.S. values 
and promote the power of democracy and the importance of 
protecting human rights.
    When U.S. international development is successful, it 
inspires faith in our country. When it is done right, these 
programs help create a world that is safer for the U.S. and 
more open to U.S. economic opportunities.
    Mr. Chairman, I just really first want to underscore that I 
am pleased to see that later today we are going to pass the 
fiscal year 2017 budget, and that when we take a look at the 
appropriations that is within the sphere of what we are talking 
about today, we have done well. We have been able to maintain a 
strong presence by the Federal Government in development 
assistance globally. And I say that despite that during the 
consideration of the fiscal year 2017 budget, we had President 
Trump's fiscal year 2018 skinny budget that was presented that 
had significant cuts in these programs. That was not carried 
out by the Congress in fiscal year 2017.
    Now, we are going to have our debate on the fiscal year 
2018 budget, and I hope our committee will weigh in. I think 
our testimony here today is important. But one thing I just 
really want to underscore, as I look at the companies that are 
represented here at the dais and I look at Blessed Coffee, and 
I know the challenges they have of doing business in other 
countries. Our USAID missions in these countries provide the 
local expertise that many times is absolutely essential in 
order to be able to get these opportunities moving. And as we 
talked about before the hearing began, the United States USAID 
provides a lot of the basic infrastructure support that 
otherwise could not be possible for these companies to be able 
to do their business in these other countries.
    So these are partnerships, and I just want to hear directly 
how we can leverage more private sector but also at the same 
time make it clear that there is a public role and how that 
public role can be done more efficiently.
    I also want just to acknowledge, if I might. We have a 
couple witnesses that are here--we have the representative from 
Starbucks. I cannot let this opportunity go by without thanking 
you for what you are doing in my own State of Maryland with 
innovative programs to help challenged communities. You have 
shown social responsibility not only globally but here in the 
United States, and I personally want to thank you for that.
    And with Congressman Kolbe here, I need to acknowledge his 
extraordinary leadership as a Member of the House of 
Representatives. I had a chance to travel with Jim to Africa on 
a USAID fact-finding mission, and I must tell you your legacy 
is very strong here in the importance of development assistance 
to our national security budget.
    I welcome the other witnesses that are here.
    Coke is a very important part of our community. All of you 
do business that are very important. So we look forward to your 
testimony.
    The Chairman. Thank you, Senator Cardin.
    We welcome our witnesses and Blessed Coffee. Thank you for 
being here.
    Our first witness is the Honorable Jim Kolbe, someone well 
known to all of us, former Member of the U.S. House of 
Representatives from Arizona serving from 1985 to 2007. Mr. 
Kolbe is Honorary Chair of the Modernizing Foreign Assistance 
Network, very much on task here today. We look forward to your 
testimony.
    Our second witness is Mr. Walt Macnee, Vice Chairman of 
Mastercard. We had a chance to visit before the meeting for a 
few moments. Is it not great to have a business that can be 
utilized and really helping people in places like where Senator 
Coons and I were just a few weeks ago? He has led initiatives 
to foster public-private partnerships around the globe. And I 
know his testimony will be very valuable.
    Our third witness is Mr. Michael Goltzman of the Coca-Cola 
Company. My gosh, you all are all over the world and a brand 
known to many. I know you all have been very, very involved in 
helping us with this type of initiative. He is Vice President 
of International Government Relations and Public Affairs. We 
welcome you.
    And our fourth witness is a competitor to Blessed Coffee, 
Ms. Kelly Goodejohn from the Starbucks Coffee Company where she 
is Director of Ethical Sourcing, Global Social Impact and 
Public Policy. You all have been a leader in those efforts. We 
thank you for being here.
    If you could each hold your comments to about 5 minutes, 
without objection, your written testimony will be entered into 
the record. And if you would just go down the line in the way 
that you were introduced, it will save a lot of time. So, 
Congressman, thank you and welcome.

  STATEMENT OF HON. JIM KOLBE, HONORARY CO-CHAIR, MODERNIZING 
           FOREIGN ASSISTANCE NETWORK, WASHINGTON, DC

    Mr. Kolbe. Thank you very much, Chairman Corker and Ranking 
Member Cardin, and the other members of the committee here. It 
is a great pleasure to be able to testify today especially with 
this distinguished panel who are really the practitioners of 
public-private partnerships.
    This is certainly a timely topic to be talking about today 
as we consider the impact of United States assistance and 
contrast this with the foreign affairs budget for fiscal year 
2018 which, as proposed, would significantly reduce our 
diplomacy and development programs.
    So I want to commend both the chairman and the ranking 
member and this committee for keeping the committee focused on 
the importance of U.S. global leadership, effective 
partnership, and good development practices.
    As you mentioned, I serve as Honorary Co-Chair of the 
Modernizing Foreign Assistance Network. It is a coalition of 
international development practitioners and foreign policy 
experts that advocate for reform to increase the effectiveness 
of U.S. foreign assistance. It was founded in 2008. It has been 
a vocal advocate for elevating development as a national 
security pillar equal to that of defense and diplomacy.
    I also appear today with the background of having chaired 
for 6 years, as was mentioned, the Appropriations Subcommittee 
on Foreign Operations, responsible for many of the programs 
that we are talking about.
    Today we face a growing number of complex crises involving 
failed states and terrorist organizations. We also see a number 
of developing countries experiencing high rates of economic 
development and improved health and productivity of their 
citizens.
    There is an important role for U.S. foreign assistance and 
the private sector in each of these contexts. Recent Presidents 
of both parties have partnered with Congress to make assistance 
smarter, more efficient, and more effective. These efforts, 
from the establishment of the Millennium Challenge Corporation, 
which I was very much involved with, the President's Emergency 
Plan for AIDS Relief, PEPFAR, to enacting the Foreign Aid 
Transparency and Accountability Act, the Global Food Security 
Act, the Electrify Africa Act, all advance in different ways 
our national interests and the cause of development.
    The connection between U.S. foreign assistance to the 
private sector and economic growth is clear. Eight of America's 
10 top export markets are former recipients of U.S. foreign 
assistance, and they are now close U.S. allies.
    In 1960, official development assistance made up nearly 70 
percent of all capital flows to the developing world. Today the 
figure is less than 10 percent with the overwhelming majority 
of capital coming from the private sector, remittances, and 
philanthropy.
    Thus, there are significant opportunities for the U.S. to 
engage with the private sector to advance inclusive economic 
growth and our own interests at the same time, such as 
supporting good governance, free market institutions, 
investments in infrastructure, and a capable workforce. The 
Millennium Challenge Corporation I think is an outstanding 
example of this approach.
    And USAID has transformed itself in recent years, 
increasing partnerships with the private sector, significantly 
strengthening its policy, evaluation, transparency, and 
learning capabilities.
    By focusing further on effective engagement of the private 
sector, U.S. development assistance can achieve even more. And 
so I would just close by recommending six steps for your 
consideration.
    First, strengthen U.S. development finance mechanisms such 
as establishing a new development finance bank that would pull 
together different agencies like OPIC and the Trade Development 
Authority.
    Second, work with partner governments to support policies 
and programs that are designed to foster a productive 
environment for U.S. and local businesses.
    Third, systematically review the effectiveness of U.S. 
public-private partnerships to determine how we can increase 
their development impact.
    Fourth, enhance coordination between U.S. development 
agencies and the U.S. and local private sector. One plan, the 
Economic Growth and Development Act, proposed by Senator 
Isakson in recent years, would do just that.
    Fifth, build on the demonstrated success of the MCC by 
expanding its threshold programs and compact agreements to more 
countries.
    And finally, maintain and strengthen U.S. global engagement 
and development by ensuring that funding and aid agency 
structure reflects agency effectiveness principles, clear 
objectives, and a global development strategy drafted in 
consultation with the development community.
    I thank you, Mr. Chairman, for this opportunity to give 
this brief testimony and look forward to any questions we may 
have at the end.
    [The prepared statement of Mr. Kolbe follows:]

                    Prepared Statement of Jim Kolbe

    Chairman Corker, Ranking Member Cardin, and members of the 
Committee:
    Thank you for the opportunity to testify today on the subject of 
the role of the private sector in international development. This is a 
timely topic, as we contrast the strategic purpose and impact of United 
States assistance programs with the administration's proposed foreign 
affairs budget, which would make significant reductions in diplomacy 
and development programs. I would like to commend the Chairman and 
Ranking Member for convening this hearing and for keeping the Committee 
focused on the importance of U.S. global leadership, effective 
partnership, and good development practices.
    I am also delighted to be joined by the other distinguished 
panelists here today. There is enormous experience here from the U.S-
based private sector about how to advance economic development abroad.
    I serve as an Honorary Co-Chair of the Modernizing Foreign 
Assistance Network (MFAN), a reform coalition composed of international 
development practitioners and foreign policy experts. MFAN advocates 
for responsible reforms to increase the effectiveness of U.S. foreign 
assistance programs. Since its founding in 2008, MFAN has been a vocal 
advocate for elevating development as a national security pillar equal 
to that of diplomacy and defense. I also appear today with the 
background of having served, while a Member of Congress, as chair for 
six years of the Appropriations Subcommittee on Foreign Operations--
responsible for the funding the programs we are talking about today.
    The world has changed dramatically over the past 15 years. We face 
a growing number of complex, global crises involving failed states and 
terrorist organizations that impact entire regions and jeopardize 
America's safety and security as well as the lives of innocent 
civilians. We must honestly acknowledge the failures of our foreign 
assistance programs, such as in a country like Zimbabwe, where we once 
had a robust development assistance program, only to see the country 
become an autocratic kleptocracy. On the brighter side, we see a number 
of developing countries experiencing high rates of economic 
development, leading to improved health and productivity of their 
citizens.
    There is an important role for U.S. foreign assistance and the 
private sector in each of these contexts. Recent Presidents of both 
parties have partnered with Congress to make assistance smarter, more 
efficient, and more effective. These efforts--from establishing the 
Millennium Challenge Corporation (MCC) and the President's Emergency 
Plan for AIDS Relief (PEPFAR), to enactment of the Foreign Aid 
Transparency and Accountability Act, the Global Food Security Act, and 
the Electrify Africa Act--all advance in different ways our national 
interest and the cause of development.
    There is widespread bipartisan agreement that the United States 
needs strong and effective development programs to promote sustained 
economic growth and poverty reduction, foster stability, counter major 
global health threats, and bolster free societies. Under Republican and 
Democratic administrations alike, U.S. assistance has played a key role 
in shaping a broad alliance of like-minded, free-market democracies.
    Today, the connection between U.S. foreign assistance, the private 
sector, and economic growth is clear: eight of America's top ten export 
markets are former aid recipients, and all are now close U.S. allies. 
There are significant opportunities for the U.S. Government and the 
private sector to work more closely together to achieve global 
development that advances U.S. economic, diplomatic, political, and 
security interests as well as our core values, ensuring that every 
individual has a fair chance to achieve his or her potential and shape 
the world around them.
               adding value to international development
    In 1960, Official Development Assistance made up nearly 70 percent 
of all capital flows to the developing world. Today, that figure is 
under 10 percent, with the overwhelming majority from private capital, 
remittances, and philanthropy.
    The benefits of a private sector led approach to inclusive 
development are numerous. Developing countries benefit from the 
dynamism that comes from private sector job creation, foreign direct 
investment and technology transfer, workforce development, access to 
foreign markets and customer bases, and from the development of a tax 
base that ultimately funds social investment programs in health and 
education. The international private sector benefits as well, from the 
ability to develop new customers and markets, expand global supply 
chains, and expand workforce talent.
    To foster inclusive growth and job creation, U.S. foreign 
assistance programs and the private sector can work in partnership to 
reinforce four conditions for economic development.
    First, good governance and the rule of law is vital. This includes 
adherence to due process, property rights, intellectual property 
protections, anti-corruption regimes, and fair and transparent 
procurement systems.
    Second, free market institutions and protections should be 
fostered. The examples are numerous and include functioning capital 
markets and banking systems, financial and investment legal system, 
protections against expropriation, and even providing political risk 
protections.
    Third, investment in hard and soft infrastructure in developing 
countries is essential. Building air and sea ports and road systems and 
supporting transparent and efficient customs systems yield substantial 
returns. Congress's recent adoption of the Electrify Africa Act is a 
prime example of the opportunities that exist to leverage public and 
private dollars for maximum development impact.
    Fourth, workforce development is an essential precursor to economic 
development. Quality education and health systems, worker training 
programs, and worker safety protections are examples of investments in 
people that can spark vibrant economies in the less developed world.
    As I testified before this Committee in December, 2015, the 
Millennium Challenge Corporation is an outstanding example of the power 
of U.S. foreign assistance to support an enabling environment for 
economic growth and poverty reduction. In 2004, while serving as 
chairman of the House Appropriations Foreign Operations Subcommittee, 
our subcommittee worked to pass--with strong bipartisan support--the 
legislation creating the Millennium Challenge Corporation (MCC). MCC 
represented a new approach to foreign assistance, with a radical 
departure from the way programs had been designed and countries 
selected for aid assistance in the past. It was designed with the 
singular mission of reducing poverty through economic growth in the 
world's poorest but relatively well-governed countries. The MCC's model 
of assistance is focused on four sound principles:

    1. Selectivity in determining which countries to partner based on 
agreed-upon criteria--objectively measured and objectively applied;

    2. A business-like approach to choosing investments using well 
designed analyses of constraints to economic growth;

    3. A focus on country ownership through the consultation, 
development, and implementation processes of each MCC compact; and

    4. A rigorous commitment to transparency and accountability from 
beginning to end of a country compact.

    What has made the MCC successful has been its unwavering commitment 
to the principles upon which it was founded: democracy, rule of law, 
good governance, and transparency and the inclusion of outside, private 
directors on its governing board. These are principles deeply imbedded 
in the American value system. But they are also principles which 
peoples of other countries strive to incorporate into their own 
governing process.
    Over time, MCC has integrated a number of requisite steps to foster 
inclusiveness and accountability, including constraints-to-growth 
analysis, broad local consultation, economic rate of return 
assessments, and monitoring and evaluation plans.
    One theme that has emerged in MCC's work is the importance of 
working with the private sector, in sectors including transportation, 
power, water, sanitation, public health, and other services. There is 
recognition that government partnership with the business community can 
in many cases deliver, operate, and maintain services more efficiently 
than the government acting alone--but only if the proper legal 
frameworks are in place to make sure that both the public and private 
stakeholders are treated fairly. MCC has a growing track record of 
success incentivizing reforms to ensure that these frameworks are 
there.
    In Ghana, for example, MCC and the Government of Ghana have heard 
clearly from businesses that a major obstacle to investing in power is 
uncertainty about the financial strength of the public utility, the 
Electricity Company of Ghana (ECG). So as part of MCC's nearly $500 
million investment in the power sector, MCC is helping the government 
structure a concession for a private sector operator that will ensure 
ECG's financial viability. MCC's investment in Ghana is expected to 
generate nearly $4 billion in new private investment and economic 
activity in the coming years, including major investments from GE and 
Endeavor Energy. These companies have said that Ghana's MCC-backed 
reforms marked important steps towards building the creditworthy off-
taker they needed.
    In Jordan, MCC invested $93 million to expand Jordan's As-Samra 
Wastewater Treatment Plant. This investment mobilized an additional 
$110 million in private finance through a public-private partnership. 
Critical to the success of the project was the use of a financing model 
that enabled the Government of Jordan to invest more public funds in 
the water sector. As a result of the project, more high-quality treated 
wastewater can be used in irrigation, and Jordan gets more than one use 
out of each drop of water.
    Facilitating a process for governments and communities--including 
the private sector--to lead their development and be accountable for 
results should be the guiding principle of all U.S. assistance 
programs.
    Indeed, we are seeing U.S. agencies increasingly adopt these 
practices, significantly strengthening partnerships, country ownership 
of development, and accountability for results. USAID, in particular, 
has transformed in recent years, increasing its partnership with the 
private sector and significantly strengthening its policy, evaluation, 
transparency, and learning functions. A recent GAO review (GAO-17-316) 
of the six largest U.S. aid agencies, for instance, found that MCC and 
USAID had the highest number of good and high quality evaluations.
    With increased attention to accountability, multi-stakeholder 
partnerships, and local ownership, U.S. development assistance can 
better support poverty-reducing economic growth and strengthen the 
citizen-state compact so that governments are more responsive to the 
needs of their people.
           recommendations to better tap into this potential
    U.S. global leadership remains paramount even though we face an 
increasingly constrained budget environment. Faced with these 
challenges, we must identify opportunities to achieve greater leverage 
from U.S. private sector investments. There are a number of avenues 
that are ripe to pursue.
    One such area is a systematic review and removal of obstacles to 
greater investment and trade within regions that are often stymied by 
poor infrastructure, inefficient customs regimes, and corruption. We 
should focus on laws and practices that hamper not just U.S. 
enterprises from conducting business in these countries, but 
simultaneously cripple the creation and growth of home-grown local 
small and medium-sized enterprises (SMEs). Too often, local 
entrepreneurs in developing countries are unable to start and expand 
businesses because of unnecessary and outmoded regulations, lack of 
access to land titles, lack of a legal identity, or other institutional 
obstacles. In turn, international companies will be more inclined to 
invest in emerging economies in which clear codes of conduct and the 
rule of law are institutionalized and functioning.
    Another area of potential is improving the impact of U.S. public-
private partnerships (PPPs). With an estimated 1,600 PPPs initiated by 
USAID since 2001, there is clear recognition of the potential that 
exists in leveraging private expertise and resources towards a public 
purpose. Despite wide acknowledgment of the pivotal role the private 
sector must play in advancing inclusive growth, too little is known 
about either the impact of specific PPPs or the efficacy of particular 
PPP structures.
    I recommend six steps for your consideration:

    1. Strengthen U.S. development finance mechanisms, such as 
establishing a new Development Finance Bank that would pull together 
under a single roof agencies like OPIC, TDA, and existing strands of 
USAID and Treasury that promote development finance. It must be 
provided with enhanced authorities, including additional risk 
mitigation tools, technical assistance resources, and equity investment 
capacity, as my colleague Robert Mosbacher, former president and CEO of 
OPIC and MFAN Principal, recently described in a recent article titled, 
``How this little known government agency helps put America first.'' 
Such a Development Finance Bank should adopt a self-sustaining 
financial model where its operational budget, including technical 
assistance, is fully paid for by operating profits.

    2. Work with partner governments to support policies and programs 
that are designed to foster a productive private sector environment for 
U.S. and local business. For local businesses, this could include means 
of transitioning local small and medium enterprises (SMEs) from the 
informal economy to the formal economy.

    3. Systematically review the effectiveness of U.S. public private 
partnerships to determine how to increase their development impact. 
There is growing support for the gamut of dynamic public-private 
partnerships that have emerged on the development stage, but they 
require rigorous evaluation if we are to improve future partnerships 
and their impact.

    4. Enhance coordination between U.S. development agencies and the 
U.S. and local private sector. The private sector perspective must be 
overtly incorporated into country development plans and a rigorous 
analysis to constraints to growth must be pursued, as proposed in the 
Economic Growth and Development Act sponsored in previous years by 
Senator Isakson.

    5. Build on the demonstrated success of the Millennium Challenge 
Corporation's ability to operate in environments that are more fertile 
for private investment by expanding its threshold programs and compact 
agreements to more countries.

    6. Finally, we must maintain and strengthen our tools of global 
engagement and development--not abandon or undermine them. The 
effectiveness of MCC, USAID, PEPFAR, and other U.S. agencies is real, 
and we should focus on opportunities to strengthen this impact. As you 
consider the foreign assistance budget and the agencies that deliver 
this assistance, it is vital that decisions of funding and structure be 
based on sound reform principles, clear objectives, and a global 
development strategy drafted in consultation with Congress, the 
administration, and the development community.

    In conclusion, the power of U.S. foreign assistance and inclusive 
private investment are major opportunities for economic growth, job 
creation, and poverty reduction. In a time of limited budgets, 
effective coordination between the U.S. Government and the private 
sector to achieve goals that benefit both are more vital than ever.
    Thank you, and I look forward to answering any questions you may 
have.

    The Chairman. Thank you so much.

    STATEMENT OF WALT M. MACNEE, VICE CHAIRMAN, MASTERCARD 
                INCORPORATED, PURCHASE, NEW YORK

    Mr. Macnee. Good morning, Mr. Chairman, Ranking Member 
Cardin, and the other committee members. My name is Walt 
Macnee. I am Vice Chairman at Mastercard. I would like to thank 
the committee for the opportunity to speak today about the 
private sector role in development and humanitarian 
programming.
    Billions of people around the world cannot meet their basic 
human needs, needs like food, access to health, education, 
jobs, and commerce. But the challenges stretch beyond the 
capabilities of governments and civil society alone. Private 
sector assets and expertise can create more effective, scalable 
solutions that improve the lives of those who suffer most.
    For Mastercard, we view our efforts as strategic 
investments in the long-term development of communities.
    A common misconception about Mastercard is that we are a 
credit card company. In fact, Mastercard is a technology 
company, and we are in the payments industry. Our network 
connects buyers and sellers in 210 countries and territories in 
an efficient, scalable, and secure manner.
    Mastercard has invested in building and expanding a public-
private partnership division that measures our performance both 
in terms of financial and social impact. We leverage our 
industry-leading expertise in digital infrastructure, data 
analytics, innovation practices, and sustainable business 
models to build scalable solutions. We have developed 
transformational programs that deliver humanitarian assistance 
efficiently. We connect smallholder farmers to markets, and we 
work with health care companies to track the dosage of 
lifesaving vaccines.
    We do not and cannot operate alone. Notably, we rely on the 
knowledge of implementing organizations such as Mercy Corps, 
World Vision, Save the Children, and the International Rescue 
Committee. Each have deep expertise in understanding 
beneficiary needs and delivering programs in extremely complex 
environments. Their inputs ensure we build products and 
services that are fit for purpose.
    We believe that long-term, sustainable private sector 
engagement in the development and humanitarian space requires 
incentives to encourage companies to participate. We are 
incentivized to promote citizen well-being, domestic security, 
and economic growth in the countries where we work because 
stable economies are an ingredient to building markets of the 
future. Plus, engaging in development and humanitarian work is 
not only the right thing to do, it also infuses our corporate 
culture with an intellectual vibrancy that drives greater 
internal productivity and enables us to attract top talent.
    To date, we have used our digital infrastructure to 
facilitate the transfer of aid to over 2.5 million vulnerable 
people worldwide. In 2015, Mastercard made a bold commitment to 
universal financial access with a goal of 500 million people 
and 40 million micro-merchants who are currently excluded from 
the financial mainstream. And we are well over halfway to 
meeting that goal.
    The private sector and public sector can each serve as a 
force for good independently. However, working together, we 
unlock the potential to achieve much more.
    Looking ahead, I encourage the U.S. Government to consider 
new ways to drive efficiency, security, transparency, and 
scalability in development and humanitarian programming. 
Promoting a digital means of aid distribution is, we believe, a 
significant step in the right direction.
    I appreciate being able to speak today and look forward to 
questions. Thank you.
    [The prepared statement of Mr. Macnee follows:]

                  Prepared Statement of Walt M. Macnee

    Good morning, Mr. Chairman, Ranking Member Cardin, and other 
Committee Members. My name is Walt Macnee, and I am the vice chairman 
of Mastercard. I would like to thank the Committee for the opportunity 
to speak today about the private sector's role in development and the 
potential for digital technology to improve the effectiveness of 
humanitarian and development programming.
    Billions of people around the world cannot meet their basic human 
needs like food, shelter, clothing, and health. Access to capital, 
education, jobs, and commerce that would help them build livelihoods 
and resilience remains inadequate. The needs are great, and we 
acknowledge the necessity of development assistance.
    But, the challenges stretch beyond the capabilities of governments 
and civil society, and, as such, there has been broad recognition that 
private sector capabilities and expertise can advance social progress. 
Philanthropy alone cannot manage the task. Key competencies in 
investments, technology, product development, operations, and the 
maintenance of profitable, sustainable business models, if applied to 
the humanitarian and development space, could help create more 
effective, scalable solutions that improve the lives of those who 
suffer most. Through this concept of shared value partnerships, 
companies can utilize their strengths to empower individuals, grow 
communities, stretch aid dollars, and advance business interests in a 
globalized world.
    For Mastercard, a digital technology company in the payments space, 
we view our efforts as strategic investments in the long-term 
development of communities. Working with partner humanitarian and 
development organizations, we build products and services that bring 
dignity to the vulnerable and help improve the way the system works--
making it more efficient and transparent, and enabling more rapid 
response and greater scale.
                      mastercard's unique approach
    A common misconception about Mastercard is that we are a credit 
card company. In fact, Mastercard is a technology company in the 
payments industry, and our network connects buyers and sellers in 210 
countries and territories across the globe in an efficient, scalable, 
and secure manner.
    Mastercard has long been committed to improving the quality of life 
of the most vulnerable, delivering social impact for more than a 
decade. In 2006, we served as a model for other corporations in 
creating the Mastercard Foundation, a breakthrough public private 
entity. At the time of its public offering, Mastercard contributed 
approximately 10% of its stock, valued today at over $12.5 billion, to 
found an independent non-profit organization. Each year the Mastercard 
Foundation spends approximately $200 to $300 million helping 
economically disadvantaged young people find opportunities to lift 
themselves, their families, and their communities out of poverty.
    Through the Mastercard Foundation, we built a successful self-
sustaining model for traditional philanthropy, yet we knew our company 
could do more. How could we reimagine philanthropy such that private 
sector assets and capabilities catalyze scale growth? In 2013, we 
formed the Mastercard Center for Inclusive Growth, an independent 
subsidiary. The Center combines expertise, data, technology, and 
philanthropic investments to empower a community of thinkers, leaders, 
and innovators to advance equitable and sustainable economic growth.
    We recognize that philanthropy, while catalytic, is not sufficient 
to meet the large scale needs of the billions of impoverished people 
who lack basic necessities and access to social infrastructure that can 
improve their condition.
    Mastercard has invested in building and expanding a public private 
partnerships division that measures our performance both in terms of 
financial as well as social impact. We leverage our industry-leading 
expertise in digital infrastructure, data analytics, innovation 
practices, and sustainable business models to build scalable solutions 
that address the humanitarian, health, education, employment, and 
commerce needs of the poor. We have developed transformational programs 
that deliver social benefits efficiently, reducing fraud and leakage 
for governments, while giving beneficiaries control over their money; 
we connect micro- and small- merchants to the formal economy providing 
them with access to digital commerce and credit in order to expand 
their businesses; and we work with healthcare companies to track the 
administration of life-saving vaccines--all help to advance social and 
economic development in the markets where we operate.
    It must be stated that we do not and cannot operate alone. We 
believe that for significant, scaled impact, companies need to engage 
in shared value partnerships that match the capabilities and objectives 
of governments, civil society, and the private sector. Notably, we rely 
upon the knowledge of implementing organizations such as World Vision, 
Mercy Corps, Save the Children, and the International Rescue Committee 
that have unparalleled expertise in understanding beneficiary needs and 
delivering programs in extremely complex environments. Their inputs 
ensure that we build products and services that are fit for purpose. As 
the sector continues to face a growing gap between need and available 
funding, cross-sector collaboration ensures that together we have 
greater impact.
    We believe, however, that long-term, sustainable private sector 
engagement in the humanitarian and development space requires shared 
value partnerships that go beyond appealing to a company's desire to 
``do the right thing,'' rather they should also encourage companies to 
benefit. Mastercard benefits from promoting citizen welfare, domestic 
security, and economic growth in the countries where we work. As we 
earn the trust of local authorities and local populations become more 
familiar with our brand, we build markets of the future with relevant 
solutions that solve everyday needs. And, we believe, genuinely, that 
engaging in humanitarian and development work is not only the right 
thing to do, it also infuses our culture with an intellectual vibrancy 
and dynamism that drives greater internal productivity and enables us 
to attract top talent.
      mastercard's role in the humanitarian and development space
    Turning to today's topic, over the past five years, Mastercard has 
helped our NGO partners respond to crises in some of the world's most 
challenging environments. To date, we have facilitated the transfer of 
aid to over two and a half million vulnerable people worldwide, and at 
last year's United Nations General Assembly, we pledged to expand our 
suite of humanitarian and development solutions to reach an additional 
two million aid recipients. We view humanitarian and development 
programs as an onramp to financial inclusion, providing vulnerable 
populations with tools and skills that then allow them to build vibrant 
communities. In 2015, Mastercard made a bold commitment to universal 
financial access, targeting 500 million people and 40 million micro-
merchants currently excluded from the financial mainstream. To date, we 
have made the financial system accessible to over 300 million people 
worldwide through over 500 programs in more than 50 countries.
    examples of mastercard's public private partnership achievements
    Allow me to briefly describe the four solutions that we offer along 
with some of the results that we have experienced.
    2KUZE. Launched in January 2017, 2KUZE is a digital platform that 
connects smallholder farmers, agents, buyers, and banks in East Africa. 
2KUZE, which in Swahili means ``Let's grow together,'' enables farmers 
to buy, sell and receive payments for agricultural goods via their 
feature phones. The platform brings the benefits and security of mobile 
commerce and payments to farmers in Kenya, Uganda, and Tanzania. It was 
developed at the Mastercard Labs for Financial Inclusion in Nairobi, 
established in 2015 as a landmark partnership combining the 
philanthropic capital of the Bill and Melinda Gates Foundation and the 
business acumen of Mastercard. The Lab innovates practical and cost-
effective financial tools that expand access and help build stable 
futures for more than 100 million people globally.
    In the initial pilot, 2KUZE launched in partnership with Cafe 
direct Producers Foundation, a non-profit organization working with 
300,000 smallholder farmers globally. We are excited about the results 
we are seeing in the early stages, specifically throughout the 
continent of Africa, where we are seeing thousands of farmers adopting 
our solution. Our solution empowers these farmers to sell their produce 
by working with farmer-friendly agents to ensure that they reach the 
right buyers and secure the best price.
    Mastercard Aid. The Mastercard Aid Network is a flexible, digital 
aid solution that works without constant connectivity and eliminates 
the need to partner with a financial institution. Mastercard Aid 
programs are modeled on improving the outdated practice of delivering 
aid via paper vouchers. In these programs, Mastercard provides a local 
NGO with card terminals and chip cards that function as digital 
vouchers and can be loaded with ``points'' instead of a currency. The 
NGO staff on the ground distributes the cards to aid recipients and 
also selects local merchants to participate in the programs. It 
provides these merchants with a terminal consisting of a card reader 
and Android device. Aid recipients use the digital vouchers at 
participating merchants to redeem points for basic supplies. The NGO is 
able to track card usage through reports, and then pays the merchants 
for points redeemed during a given period. In less than two years, we 
have provided digital vouchers to four leading international 
organizations and two consortiums, collectively targeting 120,000 
households, in countries as diverse as Nepal, Mozambique and the 
Philippines.
    In conflict-ridden Yemen, we partnered with Save the Children, 
which was charged with managing a food security program. Expatriate 
staff had to be evacuated due to the security situation, but they were 
able to manage the program remotely. As of May 2017, Save the Children 
has distributed aid to over 6,000 households.
    Mastercard Prepaid. To respond to the refugee crisis in Southern 
Europe, we launched programs in partnership with Mercy Corps to 
distribute Mastercard-branded prepaid cards to eligible refugees 
traveling through Serbia and Greece. These cards, preloaded with funds, 
are capable of being used at any Mastercard accepting merchant.
    This was the first program in the region to use an international 
cashless payment mechanism to help the tens of thousands of people 
seeking haven in Europe cover their basic needs. According to figures 
from Mercy Corps, over 90 percent of cardholders said in November 2016 
that their safety had either improved or remained stable. Mercy Corps 
is now responsible for roughly 25 percent of all cash programming among 
the refugee response in Greece and its islands, currently digitally 
distributing over $650,000 a month. Since December 2015, a total of 
16,828 beneficiaries received a share of $3.1 million on the Greek 
mainland and islands. These funds not only provide refugees with the 
dignity of choice but they significantly reduce logistical and other 
expenses associated with more traditional methods of aid. Mastercard 
card solutions have been deployed in humanitarian and development 
efforts in other countries such as Turkey, Lebanon, Jordan, Rwanda, and 
Kenya.
    Mastercard Send. Our Mastercard Send technology facilitates the 
disbursement of funds from a government or NGO to a variety of account 
types--payment cards, mobile money, bank accounts, and cash-out 
agents--from anywhere in the world. This enables organizations to more 
efficiently distribute funds in local markets. For our very first 
deployment in a humanitarian context, we partnered with the American 
Red Cross and the Indonesian Red Cross (locally known as Palang Merah 
Indonesia) on a pilot in a region outside of Jakarta, Indonesia. The 
project targeted a drought-affected population in the spring and summer 
of 2016 with messaging to encourage the purchase of water and other 
critical items to meet daily needs. The local Indonesian Red Cross 
organized the distribution and registration of SIM cards and mobile 
money wallets and also carried out monitoring and evaluation of the 
program.
    Mastercard provided a connection to local mobile money operator 
Indosat to facilitate the transfer of funds from the American Red Cross 
in the United States to over 700 beneficiary households in Indonesia. 
Funds reached nearly every targeted beneficiary: 99.7 percent of 
households received cash grants, and 100 percent of transactions 
reached the correct beneficiary accounts within 24 hours. Though only a 
pilot, the program was well received with 98.1 percent of recipients 
saying that the distributed funds helped them to fulfill their 
household needs and 79.2 percent saying that they would like to receive 
aid via mobile wallet again.
    Overall Benefits. In general, these types of programs increase 
efficiencies and reduce expenses associated with humanitarian and 
development programming in various ways.

     Cost reduction--Reusable, reloadable cards decrease waste 
associated with producing multiple cards or vouchers and lower costs 
associated with manual, paper-based processes.

     Remote program management--Programs managed from a central 
location permit government or NGO staff to view results or distribute 
aid remotely. Partners can track aid usage, which reduces fraud and 
enables the use of aid for intended purposes.

     Standardized data reporting--Central program management 
allows government or NGO staff to leverage data to provide insights 
into the workings of a program. Analysis of such data leads to better 
decision-making on the use of funds and the needs of the targeted 
population.

     Stronger risk management--Merchants participating in 
programs cannot take advantage of governments and NGOs by creating 
fraudulent tokens and claiming excess reimbursements, and our partners 
can turn off access if they observe suspicious patterns in redeeming 
points.

     Better compliance--Digital assistance enables greater 
adherence to cross-border regulations by ensuring that aid is delivered 
to the right beneficiary. Transfers become visible, trackable, and 
accountable.

     Value for time--Beneficiaries have access to smarter, 
faster, and simpler transactions that allow for them to focus on their 
day to day lives.

     Scalable results--Our technology allows for scale in aid 
delivery. We have reached an estimated 2.5 million people through 
programs in: Lebanon, Jordan, Turkey, Yemen, Nepal, the Philippines, 
Indonesia, Mozambique, Niger, Ethiopia, Nigeria, Kenya, and Somalia.
                               conclusion
    The private sector and public sector can each serve as a force for 
good independently; however, when the public and private sectors work 
together, they unlock the potential to achieve even more.
    Looking forward, I encourage the U.S. Government to consider new 
ways to drive efficiency, speed, security, and transparency in 
development and humanitarian programming. Promoting a digital means of 
aid distribution is a significant step in the right direction for all 
the reasons I mentioned earlier.
    From our perspective, you have Mastercard's commitment--we will 
continue to leverage our technology, data, and know-how in an effort to 
solve many of the world's most pressing problems. It is the right thing 
to do, and it is also good for business. By integrating purpose into 
our work at Mastercard, we are able to attract top talent, grow our 
base of customers, and create brand affinity with consumers, merchants, 
and governments all around the globe. In a larger sense, and as a 
responsible any, we remain compelled to act, as the needs around the 
world are far too great for the public sector to tackle alone.
    I appreciate the opportunity to share our experiences with the 
Committee today and I welcome any questions that you may have.

 STATEMENT OF MICHAEL GOLTZMAN, VICE PRESIDENT, INTERNATIONAL 
GOVERNMENT RELATIONS AND PUBLIC AFFAIRS, THE COCA-COLA COMPANY, 
                        ATLANTA, GEORGIA

    Mr. Goltzman. Chairman Corker, Ranking Member Cardin, and 
members of the committee, thank you very much for the 
opportunity to be here today to discuss how the Coca-Cola 
Company creates shared value and contributes to international 
development through our investments in more than 200 countries 
and territories globally. In fact, this marks the 111th 
anniversary of Coca-Cola's international operations. And on 
behalf of more than 700,000 Coca-Cola system employees 
globally, we are honored to participate today.
    As our Chairman Muhtar Kent often states, neither business 
nor government nor civil society can solve the world's greatest 
challenges on its own. It is only through collaboration and 
creating a golden triangle of partnerships between these three 
actors that we can address today's global development 
challenges.
    I worked for the Coca-Cola Company both at our corporate 
headquarters but also in North Africa, West Africa, and the 
Middle East. And I can speak from firsthand experience about 
the creation of shared value for the communities where we 
operate, as well as for the continued sustainable growth of our 
business.
    First and foremost, we are investing to respond to 
increasing demand from growing middle classes for packaged 
beverages. And some of the recent public investment commitments 
that we have made include a commitment to invest $17 billion 
across the African continent from 2010 to 2020; $5 billion 
across the Middle East from 2012 to 2021; another $5 billion in 
India from 2011 to 2020; and $1 billion each in Ecuador and 
Argentina in the coming years.
    Since the Coca-Cola system is a local business in every 
country where we operate, our beverages are nearly always 
produced locally, using local ingredients, local employees, 
local factories, and distributed through a local network of 
outlets where consumers purchase them. As a result, we have an 
enormous economic employment multiplier effect. For every job 
in our system, a further 10 jobs are created in the broader 
national economy. And this means that we employ thousands of 
people in each of the countries around the world where we 
operate.
    Our partnership investment priorities are closely linked to 
our sustainability priorities. We know that for our business to 
be successful over the long term, communities in which we 
operate must be sustainable, sustainable economically with good 
jobs and quality beverages, environmentally sustainable with 
access to safe water, and with strong community support 
networks that enable them to respond to their biggest 
challenges.
    We are proud to have worked with governments, NGOs, as well 
as private sector actors to address key challenges like women's 
economic empowerment, water stewardship, sustainable 
agricultural production, education, and improved medical supply 
chains. And we have been privileged to work with the U.S. 
Government, as well as numerous NGO partners like CARE, Mercy 
Corps, the Global Water Challenge, the Millennium Development 
Corporation, the U.S. State Department, USAID, and the World 
Wildlife Fund, to name a few.
    I would like to just focus on one project in particular, 
RAIN, which includes our USAID partnership Water and 
Development Alliance to increase access to clean drinking water 
and sanitation and improving the stewardship of water in many 
developing countries.
    We have invested in this because 300 million people in 
Africa lack access to safe water. The Coca-Cola Africa 
Foundation in 2009 established its flagship program, the 
Replenish Africa Initiative, and to date, we have worked with 
more than 140 government, private sector, and civil society 
organizations to touch and improve nearly 3 million African 
lives with $65 million in investment from Coca-Cola and 
leveraging another $130-plus million investment from other 
sources, including public sector sources such as the U.S. 
Government and the Millennium Development Corporation.
    We have been proud to work in these partnerships and to 
work on things like water stewardship and women's economic 
empowerment, and I would be delighted to answer questions about 
the challenges or any further information that you would like 
about these partnerships.
    Thank you.
    [The prepared statement of Mr. Goltzman follows:]

                 Prepared Statement of Michael Goltzman

    Chairman Corker, Ranking Member Cardin, Members of the Committee, 
thank you for the opportunity to discuss how The Coca-Cola Company 
creates shared value and contributes to international development 
through our investments in the more than 200 countries and territories 
where we operate globally. In fact, this marks the 111th anniversary of 
Coca-Cola's international operations.
    On behalf of the more than 700,000 Coca-Cola system employees 
globally, we are honored to participate in today's hearing. As our 
Chairman Muhtar Kent often states, neither business nor government nor 
civil society can solve the world's greatest challenges on its own. It 
is only through collaboration and creating a ``golden triangle'' of 
partnership between these three actors that we can make progress toward 
addressing global development challenges. As someone who has worked for 
The Coca-Cola Company both at our corporate headquarters and also in 
North Africa, West Africa and the Middle East, I can speak from first-
hand experience about how Coca-Cola's investments create shared value--
value for the communities in which we operate as well as supporting the 
continued sustainable growth of our business.
    Like many businesses around the world, the Coca-Cola system is 
investing in our own operations to ensure that we have the capacity and 
capability to satisfy the growing consumer demand for non-alcoholic 
beverages, including carbonated soft drinks, juices, waters, sports 
drinks, dairy, tea and coffee. Our business has greatly diversified 
over the past several decades, and today we have over 500 brands, 3,900 
beverages, 30% of which are low or no calorie beverages. In 2016 alone, 
we launched 500 new products, offering consumers with more choices than 
ever before. And, of those 500 new beverages, nearly 400 are teas, 
juices, coffee, waters, and other drinks. As countries grow and 
increase the size of their middle classes, the demand for packaged 
beverages also increases. Some of recent public investment commitments 
to respond to this growing demand include:

     Commitment to invest $17 billion across the African 
continent 2010-2020

     Commitment to invest $5 billion across the Middle East 
2012-2021

     Commitment to invest $5 billion in India 2011-2020

     Commitment to invest $4 billion in China 2015-2018

     Commitment to invest $1.5 billion in Colombia 2014-2018

     Commitment to invest $1.2 billion in the Philippines 2016-
2020

     Commitment to invest $1.0 billion in Ecuador 2014-2018

     Commitment to invest $1.0 billion in Argentina 2016-2019

     Commitment to invest $200 million in Myanmar 2013-2017

     Commitment to invest $200 million in Pakistan 2017-2019

    Since Coca-Cola is a local business in every country where we 
operate, our beverages are nearly always produced locally, using local 
ingredients, local employees in local factories and distributed through 
local networks to the outlets where consumers purchase them. We pride 
ourselves on being a local business that contributes significantly to 
local employment and economic activity. In fact, as a result of 
linkages with our upstream supply chain of raw materials and 
ingredients as well as with our downstream value chain of retailers and 
distributors, we estimate that on average for every job in the Coca-
Cola system, a further 10 jobs are created in the broader national 
economy. This is an enormous positive development impact that creates a 
virtuous cycle of growth in national economies.
    For example:

     In Colombia, the Coca-Cola system employs more than 8,000 
people.

     In Argentina, the Coca-Cola system employs more than 9,000 
people.

     In Ecuador, the Coca-Cola system employs more than 9,000 
people.

     In Egypt, the Coca-Cola system employs more than 10,000 
people.

     In India, the Coca-Cola system employs more than 25,000 
people.

     In the United States, the Coca-Cola system employs more 
than 50,000 people. In Tennessee and Maryland alone, we employ 3,000 
and 1,000 people respectively.

    While the United States remains the Company's leading market for 
our beverages, 80% of our sales come from outside of the United States 
and therefore our overseas investments are critical to driving the 
Company's overall growth. Indeed, since our overseas sales are so 
important to the Company's global business and continued growth, much 
of the work done at our corporate headquarters supports our business 
outside of the United States. In fact, one out of every six jobs at our 
global headquarters in Atlanta, Georgia is directly tied to our 
international business.
    As an American company, Coca-Cola seeks to invest and build its 
business wherever U.S. law allows it to go, and currently our beverages 
are available in every country and territory in the world except Cuba 
and North Korea. The Coca-Cola system seeks an investment environment 
where people are thirsty, with a promise of thriving middle class 
growth, and with a legal and regulatory environment that is supportive 
of business and entrepreneurship allowing our system to function 
effectively and to grow. However, every country's legal and regulatory 
framework is constantly changing, and therefore Coca-Cola's objective 
is to begin building its business in a market as soon as legally 
possible.
    Since every country is different, our local operations have the 
ability to adapt to each market and develop plans that fit with its 
level of development. However, like any business, we do face 
challenges, such as the quality of the water supply, the transportation 
infrastructure, the workforce's level of education and training, or the 
consistent application of the rule of law.
    While the private sector can contribute to community development in 
many substantive ways, there remain areas where public sector financing 
is critical, such as creating clean water supplies that support healthy 
communities; creating a functioning national transportation 
infrastructure; or building an education or legal system that will 
support sustainable business growth. Governments around the world 
continue to play the pivotal role in their countries' development, both 
in mobilizing all stakeholders behind a shared vision as well as 
providing resources to respond to the public's expectations. The 
private sector works in partnership with these governments to 
accelerate opportunities for growth and stability.
    Over many decades, The Coca-Cola Company's partnerships with the 
U.S. Government have allowed the Company to expand the scope and impact 
of our interventions, to play a positive role in contributing to local 
communities' development and to ensure that our work leverages the 
broader development initiatives financed by the U.S. Government, other 
donors, and local governments and institutions. Furthermore, by 
partnering with the U.S. Government and others in ways that complement 
our expertise and resources, we can be assured that our development 
partnerships are as impactful as possible. In short, as noted earlier, 
we are stronger together than we are alone.
    Our partnership investment priorities are closely linked to our 
sustainability priorities. We know that for our business to be 
successful over the long-term, the communities in which we operate must 
be sustainable--economically sustainable with good jobs and quality 
beverages, environmentally sustainable with access to safe water and 
with strong community support networks that enable communities to 
respond to their biggest challenges. Investments we make in community 
development support our business by improving the lives and economies 
of our consumers.
    Coca-Cola is proud to have worked with governments, NGOs as well as 
other private sector actors to build public-private partnerships that 
help address key challenges such as women's economic empowerment, water 
stewardship, sustainable agricultural production, education and 
improved medical supply chains. Partnerships are about bringing 
together expertise from a variety of different sources, and The Coca-
Cola Company has been privileged and proud to work with the U.S. 
Government as well as numerous NGO partners on these initiatives, 
including CARE, Mercy Corps, Global Water Challenge, TechnoServe, the 
Millennium Challenge Corporation, the U.S. Department of State, USAID, 
the Bill and Melinda Gates Foundation and the World Wildlife Fund just 
to name a few.
    Although The Coca-Cola Company is involved in countless 
partnerships around the world, I would like to focus on a few that 
illustrate our belief that we can do more good for more people when we 
act together than we can when working alone:

        1. Project Last Mile, a partnership between the Company, USAID, 
        the Global Fund on HIV/AIDS, Tuberculosis and Malaria and the 
        Bill and Melinda Gates Foundation, to build supply chain and 
        distribution capability in African Ministries of Health.

        2. The Water and Development Alliance (WADA), a global 
        partnership between The Coca-Cola Company and USAID to increase 
        access to safe drinking water and sanitation, and to also 
        improve water stewardship in developing countries.

        3. Coca-Cola's 5by20 Initiative, a commitment to empower 5 
        million women economically throughout the global Coca-Cola 
        value chain by 2020.

        4. Entrepreneurship initiatives through the Coca-Cola MENA 
        Scholars program, a partnership between The Coca-Cola Company, 
        Indiana University's Kelley School of Business and the U.S. 
        Department of State as well as the Company's Youth Empowered 
        for Success (YES!) program, a partnership with Mercy Corps, 
        Harambee, Microsoft and the Coca-Cola Africa Foundation, which 
        seeks to train 25,000 young people to prepare them for 
        productive jobs across six African countries: Kenya, Uganda, 
        Nigeria, Liberia and Tunisia and South Africa.

        5. Project Unnati, a partnership to invest in improving Indian 
        mango and orange farmers' productivity and farming techniques 
        to produce fruit for Coca-Cola beverages.

    1. Through our work on Project Last Mile, we share Coca-Cola's 
logistics, supply chain, distribution and marketing expertise to help 
African health ministries maximize their own capacity to deliver 
critical medicines and medical supplies to the ``last mile'' in remote 
African communities. To date, Project Last Mile has reached regions 
within seven countries including: Tanzania, Ghana, Ethiopia, 
Mozambique, Nigeria, South Africa, and Zambia. This work clearly 
demonstrates the value of public private partnership because through 
our joint work we are able to increase significantly the efficiency of 
the U.S. government's aid that supports the purchase of medications to 
treat HIV/AIDS, tuberculosis and malaria. For example, the U.S. 
government and other major donors, such as the Global Fund, provide the 
vast majority of the funding to African governments for the purchase of 
these critical medicines. Through the Project Last Mile partnership, we 
ensure that we are sharing the most up-to-date private sector models 
for distribution, marketing, and supply chain efficiency with African 
governments. We help establish systems to track out of stock products; 
create human resource systems that allow governments to track 
employees' objectives and performance, and benchmark private sector 
spending on third-party services to ensure optimal use of public funds.

    2. Access to safe drinking water has been a significant focus of 
our public-private partnerships. Investments in water create a powerful 
multiplier effect for communities; every dollar invested generates at 
least a four-fold economic return to individuals and communities. 
Through WADA, the Water and Development Alliance, Coca-Cola is 
partnering with USAID to address the lack of access to safe water and 
sanitation that creates a significant hazard to community development. 
Coca-Cola is engaged in this work because access to safe water is as 
important for the communities where we operate as it is for our 
business. Without safe water, women and girls spend significant amounts 
of time and energy fetching water for their families, which takes them 
away from education and productive economic activity as well as 
creating other obstacles for sustainable local development. And without 
access to water, Coca-Cola can't make any of its beverages. WADA's 12 
year public private partnership leverages the strengths and resources 
of both the public and private sector to maximize the returns on their 
development investments. Through a combined $40MM investment, WADA is a 
high impact partnership improving water access and protecting 
watersheds through projects in 35 countries. Today, WADA is improving 
access to water for over 600,000 people and improving access to 
sanitation and hygiene to over 250,000 people. Additionally, over 
400,000 hectares have been put under improved management practices 
through WADA interventions. In June of 2016, Coca-Cola and USAID 
extended this Alliance through 2021, with two additional programs in 
development in Madagascar and Nigeria and many more to come.

     In response to the severe safe water access challenges 
faced in Africa where over 300MM lack access to safe water, The Coca-
Cola Africa Foundation (TCCAF) introduced its flagship program, RAIN--
Replenish Africa Initiative, in 2009. To date, RAIN has worked with 
more than 140 government, private sector and civil society partners to 
support high-impact projects that have already improved the lives of 
nearly 3 million people in Africa through access to safe water and 
sanitation. We are on track to reach 6MM people by 2020. Our $65MM 
investment in RAIN has attracted $132MM from other sources including 
the public sector. Using the Golden Triangle partnership model, RAIN 
has emerged to be the largest corporate investment in water in Africa. 
RAIN's achievements would not be possible without our partners coupled 
with the Coca-Cola ecosystem that allows us to scale RAIN's work across 
communities in 37 African countries. RAIN will also economically 
empower up to 250,000 women and youth; promote health and hygiene in 
thousands of communities, schools, and health centers; and return up to 
18.5 billion liters of water to nature and communities.

     Similarly, through RAIN, Coca-Cola has partnered with the 
Millennium Challenge Corporation (MCC) to better achieve our common 
goals around access to water and sanitation, management of water 
resources, empowerment of women and youth, and strengthening health 
systems. In this partnership, Coca-Cola brings an expertise in water 
resource management, data on water and environmental resources, support 
for entrepreneurship, and marketing and communications while MCC brings 
expertise in policy reform, knowledge management, gender analysis and 
program development. Coca-Cola and MCC have already partnered together 
through the RAIN program in Cape Verde to improve water access for over 
22,000 people.

     Coca-Cola also partners with other non-U.S. Government 
actors, such as the NGO CARE, in the WASA through Pathways partnership 
which focuses on integrating water smart agriculture into local 
practices to assist women smallholder farmers to better manage soil 
moisture and increase their agricultural outputs. Through this program, 
14,000 women smallholder farmers will benefit from training across 
Ghana, Malawi, and Mali.

    3. In addition to safe water access, another area of key investment 
for Coca-Cola is in the economic empowerment of women. Women are a 
positive force multiplier for communities and our business. Through 
Coca-Cola's 5by20 initiative launched in 2010, our company has 
developed and implemented programs that address barriers that prevent 
women entrepreneurs from succeeding in the marketplace. 5by20 is doing 
this by increasing access to 1) business skills training, 2) financial 
services and assets and 3) networks of peers or mentors. We are working 
with key partners to build on best-practices in the Coca-Cola business 
system worldwide and on the valuable insights and programs our partners 
bring to the table, encouraging innovation, scale-up and replication. 
By the end of 2016, more than 1.7 million women were impacted by 
programs implemented across 64 countries. To be clear, Coca-Cola is 
empowering women, helping them to earn more money through the work they 
do, but we are also helping expand the Company's business as part of 
this work whether it is by opening more retail venues or distribution 
centers, or bringing our agricultural ingredients closer to our 
production centers.

     A good example of this work is our partnership in Nigeria 
to help address the large numbers of young women who do not get a 
formal education and face barriers to developing their own economic 
activities. We are working with the UK Department for International 
Development, Mercy Corps, the Nigerian Bottling Company, the MasterCard 
Foundation and the Nike Foundation, in a program entitled `Educating 
Nigerian Girls in New Enterprises' or ENGINE. The program is an 
initiative to improve the learning outcomes and economic status of 
18,000 marginalized adolescent girls in Nigeria aged 16-19.

        i. In the ENGINE evaluations, 44% of surveyed ENGINE girls have 
        started their own business and 98% of girls said they now feel 
        more confident because of their participation in the program.

        ii. An external midline survey revealed that 64% of ENGINE 
        girls began participating in savings groups, as compared to the 
        13% reported at baseline.

        iii. In the northern state of Kano, 100% of surveyed 
        gatekeepers from ENGINE communities were willing to reassign 
        household tasks to provide time for girls to attend school.

    4. Through the Coca-Cola MENA Scholars program, the Company is 
delighted to work with the U.S. Department of State to help create the 
next generation of entrepreneurs across the Middle East, North Africa 
and the Near East. More than 500 college students have participated in 
the program, including the latest class of 100 scholars set to arrive 
in Indiana next month to develop business plans for their social or 
business entrepreneurship ideas. Over the last five years, Moroccan, 
Tunisian, Egyptian and Palestinian students have worked as interns at 
the Company's global headquarters. Scholars have gone on to lead their 
own businesses, work for our bottling partners or receive prestigious 
scholarships, such as the Fulbright scholarship.

    5. Project Unnati: In the Chittoor district of Southern India, 
through Project Unnati (mango), we're partnering with local experts, 
including our supplier Jain Irrigation, to train thousands of mango 
farmers in new methods like ultra-high density planting, helping them 
increase the quality and quantity of the fruit they grow while also 
improving their water use ratios. Started in 2011, the project aims to 
harness the increased productivity potential of mango farms, allowing 
owners of small-sized farms to increase crop yields and improve their 
livelihoods. To date, we've trained 18,000 mango farmers, including 
3,300 women, established 200 demonstration farms, and increased 
productivity by 200%.

    In 2016, we initiated Project Unnati Orange with the Government of 
Maharashtra state and Jain Irrigation to set up a juice manufacturing 
facility and to support local farmers in the cultivation of Indian 
oranges through the adoption of ultra-high density planting techniques 
to boost orange yields. Coca-Cola's global system and far reaching 
supply chain provide many opportunities to improve agricultural 
sustainability, and our purchasing power and long-standing 
relationships with suppliers and processors provide an opportunity to 
drive a positive change in practices and sustainability outcomes at 
scale.
    The most challenging aspect of working on public-private 
partnerships with the U.S. Government has been the time it takes to go 
from identifying an opportunity to implementing it on the ground. 
However, the U.S. Government is not unique in this respect. When The 
Coca-Cola Company works with other governments around the world, we 
face similar timing challenges. In addition, the U.S. Government has 
made improvements that create greater flexibility, speed and 
willingness to collaborate. For example, The Coca-Cola Company works 
both with USAID's dedicated partnership office as well as the USAID 
Global Development Lab, and these efforts have greatly improved the 
efficiency of our interactions.
    In general, governments often have legislative mandates on which 
types of development programs can be used for specific funding sources. 
In the development world, government agencies often refer to these 
legislative mandates as the ``color of the money,'' which limits how 
that money can be spent. For example, some funding could be 
specifically mandated to treat specific diseases, and the rigidity of 
these mandates can make it challenging at times for companies. However, 
to date, we have been able to overcome these challenges in partnership 
with the U.S. Government agencies involved.
    As public development assistance funds continue to face budgetary 
hurdles, it is important that the private and public sectors coordinate 
more closely to achieve mutual development goals. Coca-Cola has learned 
that its local business is only as sustainable as the community it 
serves. Programs such as Project Last Mile and RAIN offer a clear model 
for future collaboration that bases aid in programs valued and 
supported by both business and civil society actors. Our focus is 
continuous improvement, measuring results and capturing lessons that 
will allow us to take these partnerships to even greater scale for 
shared benefit of all.
    Thank you.

    The Chairman. Thank you.

   STATEMENT OF KELLY GOODEJOHN, DIRECTOR, ETHICAL SOURCING, 
   GLOBAL SOCIAL IMPACT AND PUBLIC POLICY, STARBUCKS COFFEE 
                  COMPANY, SEATTLE, WASHINGTON

    Ms. Goodejohn. Chairman Corker, Ranking Member Cardin, and 
members of the committee, thank you for inviting us today. It 
is a pleasure continuing our strong relationship with this 
committee. On separate occasions, we have had the honor of 
welcoming members of this committee and staff to our Farmer 
Support Center in Rwanda to learn more about the work we are 
doing in development.
    Each day at Starbucks, we ask ourselves what is the role 
and responsibility of a for-profit public company. And I hope 
my testimony today will provide a glimpse into how we answer 
that question.
    With over 11 years at Starbucks and working 20 years in 
supply chains, I have seen firsthand the impact that 
development work can have on rural communities. And we at 
Starbucks know that our success and growth in the United States 
depends on the success of coffee farmers abroad. Coffee is the 
second most traded commodity after oil, and 25 million farmers 
rely on income generated from growing coffee.
    Core to our support for coffee farmers is our open-source 
agronomy commitment. Starbucks currently operates eight farmer 
support centers around the world from Indonesia to Rwanda to 
Mexico. And I would like to invite the founders of Blessed 
Coffee to spend some time with our farmer support center in 
Ethiopia.
    Our open-source agronomy approach provides free access to 
top knowledge to farmers from our agronomists, including 
information on new tree varietals that are disease-resistant 
and good soil management techniques, all with the purpose of 
raising the profitability of farmers so that we can ensure that 
there is a strong future of coffee for everyone.
    Starbucks purchases 3 percent of the world's coffee, and 
while coffee is grown in some of the most beautiful locations, 
they are also some of the most challenging, often with war-torn 
pasts. But we see coffee as a stabilizing force, one that can 
create prosperity and economic stabilities in those areas.
    Coffee farmers in Colombia, as an example, really faced 
challenges in maintaining their crops during the 50-year civil 
war. Through an alliance with Starbucks and USAID, we are 
working with farmers helping them refocus on their crop to 
improve the quality. And therefore, these farmers now have 
access to a global market, including Starbucks, and creating 
economic stability in those areas.
    In addition to Colombia, we also source from other post-
conflict parts of the world like the Democratic Republic of 
Congo. In 2012, the U.S. Government invested in the coffee 
sector to revitalize a once vibrant coffee sector after decades 
of violence. As a result of this effort and creating a 
sustainable and resilient supply chain, Starbucks made a 5-year 
purchasing commitment to purchase coffee from this region, and 
as a result, Congolese farmers are now benefiting through 
higher incomes from coffee.
    In addition to using our green coffee purchases as a local 
economic boost, we also leverage the Starbucks Foundation which 
really looks at and invests in critical needs for communities, 
whether it is access to water, sanitation, health, or 
education.
    Additionally, we have established a $50 million global 
farmer fund, and this is a fund that gets low interest loans to 
farmers. And we would like to scale this effort by partnering 
with others such as the Inter-American Development Bank, the 
IFC, the U.S. Government, Root Capital, even our competitors to 
ensure that farmers have access to financing and can reinvest 
in their crops.
    In summary, Starbucks understands that our success is 
linked to a very resilient and prosperous supply chain. And, 
therefore, we will continue to make investments by providing 
open-source agronomy, access to funding, financing, and 
partnering with government entities and others.
    And in closing, I would like to share a story of female 
farmer, Jackie, that I spent some time with last year in 
Rwanda. For someone who should have low levels of hope, given 
the atrocities that she personally and her country have faced, 
she is a woman of remarkable strength. And she is working with 
our farmer support center in Kigali to improve the yield of her 
coffee, to improve the quality, and therefore her income.
    She also had recently received a cow through one of our 
nonprofit partners. And this cow will provide food security, 
nutrition, and opportunity for her and her family for years to 
come. And while Jackie was not looking for charity, she was 
looking for a way to support her family, and we were very proud 
to play a small part on her journey.
    We look forward to continuing our partnership with others, 
including this committee, to answer the question that we ask 
ourselves each and every day. What is the role and 
responsibility of a for-profit public company?
    Thank you.
    [The prepared statement of Ms. Goodejohn follows:]

                 Prepared Statement of Kelly Goodejohn

    Chairman Corker, Ranking Member Cardin, and members of the 
Committee, thank you for inviting us today. Today's hearing is the 
latest chapter of our strong working relationship with this committee. 
Last year at our Farmer Support Center in Rwanda we had the pleasure of 
welcoming a bipartisan Congressional Delegation which included two 
Members of this committee. On another occasion, we hosted a senior 
member of your staff and provided her with an in-depth look into our 
development work.
    Each day at Starbucks we ask ourselves, ``What is the role and 
responsibility of a for-profit, public company?'' I hope my testimony 
today will provide a glimpse into how we answer that question.
    With over 11 years at Starbucks and 20 years working on supply 
chains, I have seen first-hand the impact that development has on rural 
communities and I know that Starbucks growth and success in the United 
States depends on the success of coffee farmers abroad. Coffee is the 
second most traded commodity after oil and 25 million farmers around 
the world rely on income generated from growing coffee. Coffee is grown 
in challenging regions, often with war-torn pasts but we have seen 
coffee as a stabilizing force that provides prosperity and economic 
stability.
    Starbucks purchases 3% of the world's coffee, and for over 40 years 
we have partnered with others, like Conservation International and the 
United States Government by investing in coffee growing regions because 
it is good for business. If we have a strong and resilient supply 
chain, we have limitless opportunity to grow. In fact, we plan on 
opening 3400 new stores and hiring 70,000 people in the U.S. by 2020.
    This testimony discusses four of our key initiatives:

    1. 100% Ethically Sourced Coffee: Starbucks is dedicated to helping 
farmers overcome the challenges facing coffee communities. We are 
committed to buying 100 percent ethically sourced coffee, in 
partnership with Conservation International through our C.A.F.E. 
Practices program, an industry-leading set of guidelines and verified 
by independent third-party organizations.

    2. Open-Source Farmer Support Centers: To improve productivity and 
sustainability, Starbucks shares our research and resources through our 
Farmer Support Centers--located in coffee-producing countries around 
the world. They're open to farmers regardless of whether they sell to 
us. Thanks to the support of our customers, we're also donating 
millions of disease-resistant trees to help farmers fight threats like 
coffee leaf rust.

    3. Global Farmer Fund: Through our Global Farmer Fund program, 
Starbucks is investing $50 million toward financing for farmers, 
allowing them to renovate their farm or pursue more sustainable 
practices.

    4. Strengthening Coffee Communities: Working through the Starbucks 
Foundation, we are making grants in rural coffee communities to improve 
access to clean water, support education and improve food security.

    Through these initiatives, Starbucks believes it can increase the 
prosperity and resiliency of one million farmers and workers who grow 
our coffee in coffee communities around the world and, in turn, ensure 
a strong supply chain as we, a proud U.S. company, continue to grow.
                       starbucks coffee heritage
    Every day, we go to work hoping to do two things: share great 
coffee with our friends and help make the world a little better. It was 
true when the first Starbucks opened in 1971, and it's just as true 
today. Back then, the company was a single store in Seattle's historic 
Pike Place Market. From just a narrow storefront, Starbucks offered 
some of the world's finest fresh-roasted whole bean coffees. Today, we 
have over 22,500 stores all over the world, which serve as neighborhood 
gathering places for meeting friends and family.
    We've always believed in serving the best coffee possible. It's our 
goal for all of our coffee to be grown under the highest standards of 
quality, using ethical sourcing practices. Our coffee buyers personally 
travel to coffee farms in Latin America, Africa and Asia to select high 
quality beans. And our master roasters bring out the balance and rich 
flavor of the beans through the signature Starbucks Roast.
    According to a National Coffee Association (NCA) economic study, 
coffee is the most commonly consumed beverage in the U.S. (even more 
than tap water). But it turns out that coffee touches communities 
across the country in amazing ways, from generating tax dollars to 
creating jobs, from the supermarket to the dairy farm. According to the 
NCA recent economic study:

     The total economic impact of the coffee industry in the 
United States in 2015 was $225.2 billion

     Coffee-related economic activity comprises approximately 
1.6 percent of the total U.S. gross domestic product

     The coffee industry is responsible for 1,694,710 jobs in 
the U.S. economy

     Consumers spent $74.2 billion on coffee in 2015
       initiative 1: commitment to 100% ethically sourced coffee
    The cornerstone of our ethical sourcing approach is Coffee and 
Farmer Equity (C.A.F.E.) Practices, one of the coffee industry's first 
set of sustainability standards, verified by third-party experts. 
Developed in collaboration with Conservation International (CI), 
C.A.F.E. Practices has helped us create a long-term supply of high-
quality coffee and positively impact the lives and livelihoods of 
coffee farmers and their communities. C.A.F.E. Practices includes 
guidelines in four key areas: quality, economic accountability and 
transparency, social responsibility and environmental leadership. Taken 
together, the standards help farmers grow coffee in a way that's better 
for both people and the planet. Today, C.A.F.E. Practices includes over 
300,000 coffee farmers in 25 countries that are committed to improving 
working conditions and spanning more than 170,000 hectares of land 
committed to sustainable growing practices.
    Starbucks is proud to have reached the milestone of 99 percent 
ethically sourced coffee. However, we are not done yet. We will 
continue to work with the last one percent to bring producers along on 
this journey with us, like we have done with our Lake Kivu supply chain 
in the Democratic Republic of Congo, where we are working with farmers 
to expand our ethical sourcing efforts. Our work with Eastern Congo 
Initiative (ECI) and its Congolese partners, including USAID, aims to 
make Eastern Congo a reliable source of high quality Arabica coffee, 
and to link Congolese farmers to the international marketplace. The 
Starbucks Foundation has also partnered with ECI to support college 
scholarships for young women studying agriculture and has invested in 
local Congolese organizations creating jobs for disadvantaged young 
adults and former child soldiers in coffee-growing communities.
                initiative 2: open-source farmer support
Farmer Support Centers
    For the last decade, we have been taking an open-source approach 
with our latest research from places like our Global Agronomy Center in 
Costa Rica, and sharing our tools, best practices, and resources with 
growers around the world--whether they sell to us or not.
    Today's farmers are facing constant challenges and Starbucks is 
committed to helping them. Starbucks currently operates nine Farmer 
Support Centers in key coffee producing countries around the world, 
from Costa Rica to Rwanda. There, farmers get free access to the latest 
findings of our top agronomists, including new varietals of disease-
resistant trees, and advanced soil management techniques. The goal is 
to build upon traditional growing methods to help farmers continue to 
improve both the quality of their crops, and their profitability, 
ensuring the future of high quality coffees for everyone.
    Coffee farmers in Colombia, for example, faced challenges 
maintaining their crops during the country's 50-year civil war. As the 
largest purchaser in the world of premium Arabica coffee from Colombia, 
Starbucks is committed to the livelihoods of Colombian coffee farmers. 
In 2012, Starbucks opened a Farmer Support Center in Manizales, 
Colombia, to deliver training and agronomy support to Colombian coffee 
farmers. Two years later, Starbucks forged an alliance with the U.S. 
Embassy, through USAID, to help farmers focus on their crops with an 
emphasis on coffee quality. Through this partnership, Starbucks has 
been able to reach out to more farmers and build up economic stability 
in the region. As a result, Starbucks became a major buyer of this 
coffee and has allowed greater market access for this supply chain with 
other international companies.
    ``[Previously], coffee farmers were unable to travel in certain 
areas held by guerrilla forces, which prevented them from obtaining the 
technical assistance necessary to maintain the health of their crops,'' 
said Alfredo Nuno, general manager, Starbucks Farmer Support Center in 
Colombia. ``Through Starbucks work with USAID, we have been able to 
help 17,500 farmers improve their crops.''
    ``The quality of Colombian coffee is one of the best in the world 
and the idea behind this public-private alliance with Starbucks is to 
improve its quality even more, to be able to produce more coffee to 
export and thus contribute to the development of rural areas in 
Colombia,'' said Kevin Whitaker, U.S. Ambassador to Colombia.
    The initial task of the Starbucks and USAID collaboration was to 
promote a soil analysis program. ``Most farmers here do not use soil 
analysis because it's cost prohibitive,'' Nuno said. ``By offering the 
service to them free of charge, they were able to learn so much more 
about their crops.'' Starbucks agronomists helped farmers learn how to 
collect soil samples, which were shipped to a local laboratory for 
examination. More than 13,000 farmers submitted samples for evaluation. 
``It took us about a year to collect all of the samples,'' Nuno said. 
``We learned that 85 percent of them had similar needs, so we enlisted 
the support of a local fertilizer manufacturer to develop a formula 
addressing the nutrient deficiencies of the soil.'' Farmers who 
provided the remaining 15 percent of the soil samples received 
recommendations for existing fertilizers to use or how to build their 
own formulas to support their crops.
    Starbucks also conducted a series of workshops to educate farmers 
about agronomy and maintaining quality to sell coffee at a premium 
price. Nearly 8,500 farmers were trained at the 349 workshops organized 
over the past two years.
    Also, proper treatment of coffee processing waste water is key to 
avoid pollution and the consequent acidification of the soil in the 
coffee plots. We provided farmers with coffee processing waste water 
treatment systems (SMTA's methanogenic generators units for waste water 
treatment), namely those with high volume of coffee cherry processing, 
or group/common use wet mills. Starbucks Farmer Support Center in 
Colombia, using the funds made available by the USAID GDA, provided the 
full amount of all the equipment free of charge to the producer, 
leaving the preparation and conditioning of terrain and any additional 
conditioning to the farmers receiving this equipment. The Starbucks 
Farmer Support Center is not just organizing the installation of the 
units, but also training the coffee farmers on how to use them in an 
appropriate manner.
    Starbucks remains committed to continue our follow up and 
assistance to the coffee farmers participating in this program. We 
believe that the best way to ensure a proper follow up and a true 
sustainable coffee farming is to participate in the C.A.F.E. Practices 
program during the lifetime of this agreement, 8,389 coffee farmers 
joined successfully the C.A.F.E. Practices program. We continue to work 
with more coffee growers to assist them in becoming better farmers. 
Additionally, suppliers such as CENCOIC and FNC Cauca Committee were 
able to sell 5,225 bags (365 metric tons) of coffee produced by 
beneficiaries of this program during 2016 season. This represents the 
successful integration of the value chain that started with the USAID/
Starbucks GDA productivity improvement program.
    In addition to the work underway in Colombia, our other Farmer 
Support Centers support the unique needs of coffee farmers in the 
country. Locations of Starbucks Farmer Support Centers include:

     San Jose, Costa Rica--opened 2004 (relocated to Hacienda 
Alsacia in 2016)

     Guatemala--opened 2011 (satellite)

     Kigali, Rwanda--opened 2009

     Mbeya, Tanzania--opened 2011

     Addis Ababa, Ethiopia--opened 2014

     Manizales, Colombia--opened 2012

     Yunnan, China--opened 2012

     Alajuela, Costa Rica Farmer Support Center and Global 
Agronomy Research & Development Center--opened 2013

     North Sumatra, Indonesia--opened 2015

     Chiapas, Mexico--opened 2016
Hacienda Alsacia: A Global Agronomy and Research and Development Center
    In addition to the Farmer Support Centers, Starbucks is restoring a 
240-hectare farm located on the slopes of the Poas Volcano into a 
global agronomy and research and development center. The work happening 
on this farm will enable the company to provide hands on learning for 
farmers to expand its Coffee and Farming Equity Practices (C.A.F.E.), 
the innovative ethical sourcing model developed in association with 
Conservation International to ensure coffee quality while promoting 
social, environmental and economic standards.
    In addition to supporting resiliency for farmers with techniques 
that can be implemented around the world, this farm will also influence 
the development of coffee varietals and provide new insights on soil 
management practices.
    ``This investment, and the cumulative impact it will have when 
combined with programs we have put into place over the last forty 
years, will support the resiliency of coffee farmers and their 
families, as well as the one million people who represent our 
collective coffee supply chain,'' says Howard Schultz, Starbucks 
chairman. ``It also opens up an opportunity for Starbucks to innovate 
with proprietary coffee varietals that can support the development of 
future blends.''
    Work at the farm will include the development of hybrid coffee tree 
seedlings at the farm's nursery in collaboration with industry experts 
to directly address the increased risks to the coffee industry, such as 
incidences of coffee leaf rust or ``roya'' in parts of Latin America. 
In 2015, Starbucks donated thousands of seedlings from five different 
coffee tree hybrids developed through its research to the Costa Rican 
Coffee Institute (ICAFE).
Donating 100 Million Trees
    To address critical needs in the coffee sector, Starbucks announced 
that it will make sure 100 million healthy coffee trees get into the 
hands of coffee farmers that need them by 2025. This effort is part of 
the company's ongoing commitment to provide comprehensive support to 
farmers around the world which includes open-source agronomy research, 
farmer financing and access to information.
    This expanded commitment builds on Starbucks One Tree for Every Bag 
initiative, which launched in September 2015, ensuring that a coffee 
tree is planted for every bag of coffee purchased in a participating 
U.S. stores. The seedlings will replace trees that are declining in 
productivity due to age and disease, such as coffee leaf rust. More 
than 25 million trees have been donated thus far with the initial 
distribution of 10 Million having started in the summer of 2016.
    Having already built a successful tree distribution network and as 
one of the largest purchasers of Arabica coffee, Starbucks can now 
integrate the purchase of healthy, rust-resistant coffee trees into its 
green coffee buying program. By working with long-term suppliers, the 
company will seamlessly ensure that a total of 10 Million coffee tree 
seedlings per year are available to farmers in need.
    Going forward, the company will continue its relationship with 
supplier nurseries set up in Mexico, Guatemala, and El Salvador as well 
as look to develop new supplier nurseries in additional coffee regions 
that would benefit from re-planting. By integrating this into their 
purchasing behavior and evolving their current initiative, Starbucks 
expects at least 100 Million trees to get to farmers by 2025. Not only 
will this ensure that farmers get trees at a critical time, but it will 
help stabilize the income of thousands of farming families.
    This effort will have an amplified effect when added to the work of 
The Sustainable Coffee Challenge that recently announced an industry 
wide effort to replant 1 billion coffee trees, to ensure positive 
outcomes for both productivity and the environment. The Sustainable 
Coffee Challenge is a joint initiative of over 60 partners including 
corporations, governments, NGOs and research organizations working 
together to make coffee the first sustainable agricultural product. A 
key tenet of the Challenge is to encourage partners to tackle some of 
the most pressing challenges facing the coffee sector--both 
individually and via collective action. This replanting effort will be 
one of the organizations Collective Action Networks and, in addition to 
Starbucks, is supported by non-profits, government agencies and coffee 
roasters.
              initiative 3: $50 million global farmer fund
    The Starbucks Global Farmer Fund is a $50M impact investment 
commitment to provide financing to coffee farmers. Since many farmers 
lack the ability to secure traditional financing through commercial 
banks, this program fills a gap in financing needs around the world and 
enables farmers to reinvest in their small businesses. Through these 
loans, farmers are able to support agronomy, restoration and 
infrastructure improvements. This work directly influences coffee 
quality, sustainability and overall profitability for the entire 
specialty coffee industry.
    We began investing in farmer loans in 2000, providing access to 
credit at reasonable terms is a critical aspect of our farmer support 
model. By investing in farmer loans, we're helping cooperatives manage 
risk and strengthen their businesses. Our loan partners made loans in 
13 countries in FY16--including Peru, Nicaragua, Honduras, Rwanda, 
Guatemala, Mexico, Costa Rica, Colombia, Kenya, Uganda, The Democratic 
Republic of Congo, Tanzania and Indonesia--to suppliers we both buy 
from as well as ones we do not. Loan recipients also receive technical 
assistance in the form of agronomy best practices, business planning 
and price risk management training.
    Starbucks has also partnered with Root Capital, USAID and other 
coffee companies to create a $23M Coffee Farmer Resilience Fund that 
will provide financial assistance to more than 40,000 farmers combating 
the devastation of coffee leaf outbreak in Latin America. The Fund 
will:

     Leverage $8 million in funds from USAID and partners, 
including Cooperative Coffees, DOEN Foundation, Keurig Green Mountain 
Coffee, Open Road Alliance, and Root Capital, to provide on-farm, 
agronomic trainings on resilient practices to coffee farmers and farmer 
organizations in Mexico, Guatemala, Honduras, El Salvador, Nicaragua 
and Peru.

     Unlock $15 million in investment capital for Root Capital, 
including $3 million in new investment from Starbucks, through a USAID 
credit enhancement for long-term financing for rehabilitation of 
disease-affected fields and short-term financing to stabilize coffee 
supply chains in Latin America and the Caribbean.

     Enable participating coffee roasters to negotiate the cost 
of combatting coffee rust into their purchase contracts with farmer 
organizations to ensure sustainable solutions rather than one-time 
charitable gifts. The pooled funds will provide technical assistance, 
leading to sustainable supply chains and increased farmer incomes in 
the short and long term.

    Starbucks has partnered with others to specifically support farmers 
in Nicaragua. The Inter-American Development Bank (IDB) will provide 
long-term loans to help Nicaraguan coffee farmers combat the 
devastating effects of the coffee rust fungus, which has swept through 
Central America, crippling production and threatening the livelihoods 
of millions who depend on the coffee industry. The project is a 
partnership between the IDB, Exportadora Atlantic (a Nicaraguan 
subsidiary of the coffee trader Ecom), Starbucks Corporation, the 
International Finance Corporation (IFC) and the Global Agriculture and 
Food Security Program (GAFSP). This project will help approximately 550 
farmers, many of whom work less than 12 hectares, replant and renovate 
their farms. It will provide them with new coffee varieties that are 
resistant to the fungus and technical support to improve their 
agricultural practices.
             initiative 4: strengthening coffee communities
    Starbucks has a long history of working with coffee and tea 
communities to address their most critical needs such as access to 
water, sanitation, health and education. The Starbucks Foundation 
awards origin grants to support smallholder farming families in coffee 
and tea-growing communities. Since 2014, these grants have reached 
approximately 47,000 direct and indirect beneficiaries. Our grantees 
are working in remote and rural regions in developing nations to reach 
these families.
    NCBA CLUSA, as an example, was the recipient of a $750,000 grant 
from Starbucks Foundation to support coffee farmer livelihoods by 
providing clean, abundant and accessible water to 25,000 people in 90 
Arabica coffee-producing villages in Sumatra, Indonesia. Despite an 
abundance of surface and ground water in the Sumatran highlands, close 
to half of the population accesses drinking water from unsafe sources, 
resulting in a high prevalence of water-borne diseases, such as 
diarrhea and cholera. According to the government's Ministry of Health, 
some 30 percent of Indonesians suffer from water-borne disease every 
year. The shortage of safe water also impacts women and girls, who are 
often tasked to collect and carry water long distances.
    Lack of accessible, clean water also compromises coffee quality in 
Indonesia. Much of the coffee grown in Sumatra is pulped at the village 
level and sold in a ``wet hulled'' state. Farmers who don't have access 
to clean water recycle the water they need for pulping, leading to 
bacterial contamination of the hulled coffee and off-flavors.
    The three-year project, called Cooperative Water and Sanitation for 
Health (CoopWASH), will install gravity-fed and deep-well water systems 
that are expected to provide new sources of water for 80 percent of 
community members and reduce the workload of women and girls by 75 
percent. CoopWASH will significantly increase the amount of household 
water available for drinking, cooking, hand and dishwashing, sanitation 
and coffee pulping. The project will also provide health clinics and 
schools in the region with clean water sources.
    Already, NCBA CLUSA and its local implementation partners, 
including the Baitul Qiradh Baburrayyan Cooperative and Sumatra 
Specialty Coffee, have completed six of the water installations funded 
by the grant--three each in the Indonesian provinces of North Sumatra 
and Aceh. To embed sustainability into the project, NCBA CLUSA is also 
developing village water management committees and providing community 
education on good water use and hygiene practices. Water projects often 
fail because communities are technically or financially unequipped to 
maintain complex infrastructure, but the only ongoing maintenance 
CoopWASH systems require--detailed in a community water management 
plan--is cleaning the spigots and ensuring good drainage to avoid 
standing water.
    Another example is a three-year, $500,000 grant to World Neighbors. 
This project will improve the lives and livelihoods of 4000 
marginalized rural ethic families living in 24 coffee-growing 
communities in the Atitlan and Ch'orti regions of Guatemala through 
improving community health, nutrition, and water, sanitation and 
hygiene practices. In both regions, 98 percent of the population is 
formed by native ethnic groups, and there is a high rate of poverty. As 
a result of this grant, nearly 4000 people have access to clean water 
through the installation of chlorination system tanks and clean 
sanitation through the installation of over 300 latrines for schools 
and families.
    These grants are part of Starbucks comprehensive approach to 
ethical sourcing. To date, Starbucks has contributed $15 million in 
social projects to support farming communities around the world. In 
2014, the Starbucks Foundation granted more than $3.7 million to 
multiple organizations who help address relevant needs in specific 
communities. Each investment is targeted to create a sustained impact 
in a local community developing the necessary infrastructure to help 
support systemic, long-term change.
    The following organizations are current recipients:

     Lutheran World Relief
        Location: Colombia
        Focus: WASH, coffee wet mills, diversified agro-forestry 
        systems

     Eastern Congo Initiative
        Location: DRC
        Focus: Coop management, coffee washing stations, at risk youth

     Mercy Corps, CHAI V Project
        Location: India, Guatemala
        Focus: Healthcare, nutrition, economic development in tea 
        growing communities

     National Cooperative Business Association (NCBA)
        Location:Indonesia
        Focus: Providing clean water to 27,000 people in 90 Arabica 
        coffee producing villages

     Heifer International
        Location: Tanzania
        Focus: Improving sustainable livelihoods, quality of life for 
        5,000 smallholder coffee farmers in Mbozi district

     Mercy Corps (BUILD project)
        Location: Colombia
        Focus: Creating more resilient communities with improved food, 
        security, land tensure, and sustainable water management for 
        1,022 families in Southern Tolima

     Seeds for Progress
        Location: Nicaragua
        Focus: Increasing quality of education in primary, secondary, 
        schools in coffee growing communities in Northern Nicaragua

     World Neighbors
        Location: Guatemala
        Focus: Improved community health, nutrition, hygiene, water and 
        sanitation practices of 4,000 marginalized rural families in 24 
        coffee-growing communities in Atitlan and Ch'orti.

     World Coffee Research
        Location: Guatemala
        Focus: Increasing farmer incomes through introduction of new 
        rust resistant, high yielding F1 coffee hybrid varieties.

     Conservation International
        Location: Mexico
        Focus: Implementing a net-positive-impact demonstration that 
        delivers & quantifies positive outcomes for coffee farmers, 
        communities, and water quality in Oaxaca, Mexico.
            collaborating with industry to scale our impact
    We know that the most pressing issues in coffee can't be solved by 
one company alone, and that the best solutions require everyone coming 
together to collaborate in bringing about a better future for farmers. 
Our journey of ethical sourcing requires looking beyond our own supply 
chain. After achieving our 99 percent ethically sourced milestone, 
Starbucks asked ``what's next, and how can we work with the whole 
sector to get to 100 percent sustainable coffee?''
    Starbucks is a founding member, alongside a growing coalition of 
industry leaders, of the Sustainable Coffee Challenge, a call to action 
led by Conservation International to make coffee the world's first 
sustainable agriculture product. The Sustainable Coffee Challenge is 
convening the sector to sustain the future supply of coffee while 
ensuring the prosperity and well-being of farmers and workers and 
conserving nature.
    The Sustainable Coffee Challenge, is a joint initiative of over 60 
partners working together to make coffee the world's first sustainable 
agricultural product. Members include coffee producers, retailers, 
traders, roasters, importers, industry associations, governments, donor 
agencies and other non-governmental organizations (NGOs) that are 
building a sustainability roadmap for achieving a fully sustainable 
coffee sector.
    In 2017, the Sustainable Coffee Challenge launched its first action 
networks to coordinate industry action and investment. By launching 
Collective Action Networks the Challenge will advance sharing of 
experience and collaboration to significantly advance our progress 
toward sustainable coffee production. One of the first Action Networks 
tackles the issue around aging trees and a focus to support tree 
replacement or rehabilitation. Starbucks recent commitment to provide 
100 million trees to farmers by 2025, discussed above, has a cumulative 
effect when added to the work of The Sustainable Coffee Challenge who 
recently announced an industry wide effort to re-plant 1 billion coffee 
trees.
                               conclusion
    Starbucks success is linked to the success of the global farmers 
who grow coffee. Starbucks is taking a long-term view to ensure the 
overall sustainability of the coffee industry through our generational 
commitments to improve and strengthen coffee communities through 
sharing technical assistance, providing low interest rate loans, 
investing in access to water, supporting education and health and 
promote sustainable agricultural practices. Coffee farmers will only 
continue growing coffee if they can support their families.
    How does this relate to U.S. poverty-focused foreign assistance? 
Our answer is that such assistance, in conjunction with private 
partnerships, is in the U.S. interest because it helps engender 
goodwill toward the U.S. and it helps create global stability by 
empowering people with economic opportunity.
    Empowerment is a key to the Starbucks mission and our partnership 
with USAID. Together we empower small farmers--many of whom are women--
by training them to develop their coffee crop in a sustainable manner 
and then get it to market. For example, in the Democratic Republic of 
Congo (DRC), we have partnered with USAID and the Eastern Congo 
Initiative (ECI) to help reinvigorate the coffee market in that 
country. As a result of our partnership, we have helped triple the 
income of as many as 5,000 Congolese farmers. Likewise, we are linking 
farmers to the global trading system in neighboring Rwanda. In Colombia 
we are working with USAID to teach farmers how to conduct soil 
analysis, as a means of enhancing the quality of their coffee crop. In 
Nicaragua we partner with USAID on a farmer loan program that provides 
seed money to rural communities. These are just a few of numerous 
examples.
    The world is a volatile place. However, we have witnessed firsthand 
how public-private partnerships, like those between Starbucks and 
USAID, help empower small farmers with economic opportunities they 
might not otherwise see. We know that an investment in rural coffee 
communities means strong economic opportunity for the millions of 
farmers who rely on coffee for their income and enables Starbucks to 
pursue our growth trajectory because of the availability of high 
quality coffee. We are proud to work directly within our supply chain 
and see firsthand the difference that coffee can make in the lives of 
so many. And if you want to see the results for yourself, then you need 
walk no further than the Starbucks on the House side, where you will 
find a multitude of coffee choices from our small farming initiatives 
around the globe.
    Thank you for the opportunity to testify on this important topic. 
We look forward to continuing our partnerships with others, including 
this committee, to answer the question we ask ourselves each day: 
``What is the role and responsibility of a for-profit, public 
company.''

    The Chairman. Thank you all for your testimony. I have to 
believe anybody listening to this would want, as a big part of 
what we do, to ensure that companies like your all's are able 
to do business all around the world. My sense is there are very 
few Chinese or Russian companies that look at things in the 
same manner that you do. And I know you all probably operate in 
those countries. But we thank you so much for being here.
    I would just love to hear whether you look at investments 
in some of the places that you are talking about today as 
something that is primarily corporate, social responsibility, 
something you are committed to do as a global citizen, whether 
it is about developing a business and customer base for the 
future, or both. And if the three companies could just briefly 
respond to that, I would appreciate it.
    Mr. Macnee. Certainly. For us it is both, and it does not 
really work if it is two separate objectives. We think that 
sustainability requires profitability, which should not be too 
controversial. But without some sort of economic model, without 
some sort of sustainable economic model, we are talking about 
philanthropy, which is generally smaller and less certain. So 
for us, it is completely tied. And while we are having trouble 
figuring out economic models that work at the beginning of 
these projects, we think in the long term or the very long 
term, it will provide some kind of payback.
    The Chairman. Would the answers from the other two be 
similar to that?
    Mr. Goltzman. Mr. Chairman, absolutely. I mean, we have 
moved beyond corporate responsibility to what we call shared 
value. So it is creating value both for the community but also 
creating value that is going to help the long-term 
sustainability of our business as well.
    The Chairman. If you could--I have a sense I know Starbucks 
is going to say yes. What are some of the issues that inhibit 
your ability to actually go down this route in many of the 
countries that you are trying to do business in? Why do you not 
answer first, Kelly?
    Ms. Goodejohn. Thank you for the question, Senator.
    You know, I think the only limiting factor is a small sense 
of stability that we can go in and make a difference. And I 
think that is where, as an example, working with USAID in 
Colombia has been really a great partnership. It was a conflict 
area. We were able to go in there having the U.S. alongside us 
to build up the economy in that area and the stability in that 
area, which is a win-win for both. It is a win for Starbucks. 
It is a win for that area.
    The Chairman. As I have traveled, as many of us have, 
around the world, so many of our ambassadors tell me that so 
much of what we have done has been sort of a Cold War model of 
buying influence. And one of the things that we need to do is 
really promote the ability of companies like the three that are 
here to do business because it does create, as they have just 
mentioned, sustainable opportunities where you really create 
jobs and opportunities. And, obviously, people there understand 
the way we do business, which is helpful to their own culture. 
So I do hope as a part of any revamp that that is a big part of 
what we do going forward.
    Traditionally U.S. food aid has been delivered through bags 
of U.S. commodities that often take months to transport to 
beneficiaries and undermines local markets. Senator Coons and I 
saw this in Uganda recently where it takes 6 months in many 
cases for food aid to get there.
    Mastercard's partnership with USAID provides food 
assistance more quickly and efficiently through market-based 
solutions like debit cards and electronic transfers. How does 
this partnership move beyond the emergency and into developing 
livelihoods, which is what we would all like to see happen, and 
prosperity for the beneficiaries? And I am going to go ahead 
and add on critics often say that a market-based solution might 
create an opportunity for diversion and fraud. And have you 
found that to be the case?
    Mr. Macnee. In reverse order, actually the opposite. 
Electronic commerce provides great transparency, and it is one 
of the best ways to fight fraud. So many countries around the 
world have found that there is an enormous benefit from 
removing assistance from cash and paper protocols. India did a 
study that showed something like 10 percent of the government-
to-citizen benefits was saved through electronic transfer, one 
of the reasons India is trying to move to a cashless society. 
So transparency, efficiency is very much part of what we are 
doing.
    In terms of American foodstuffs, that can happen as well. 
But in a crisis situation, it is really the first 72 hours that 
are critical. And I think digital delivery of aid is simply 
faster and more efficient.
    The Chairman. And it actually promotes local economy. Does 
it not? I mean, people are actually buying from those regions 
which generates sustainability from the standpoint of them 
being able to take care of themselves over the longer term. Is 
that correct?
    Mr. Macnee. That is correct. And then if the infrastructure 
remains, there can be a great economic impact as well.
    The Chairman. And just as an editorial comment, I cannot 
imagine anything more destabilizing than the monetization that 
we do where we basically ship commodities over, ask NGOs to 
sell it out on the marketplace at 50 cents on the dollar, 
basically destroying the local market in order to create cash. 
I mean, is there anything more back-ended, foolish, silly than 
monetizing commodities in an area where you are trying to 
stimulate growth? You do not have to answer that.
    [Laughter.]
    The Chairman. Senator Cardin?
    Senator Cardin. And I applaud the work that our chairman 
has done and Senator Coons has done in modernizing our food 
aid.
    It does create a challenge and that is to get political 
support because if you have commodities that you are using--the 
farm program, for example, has benefited by it. But that is an 
issue that we have to deal with in our political system.
    The Chairman. If I could, since you brought it up. It is 
less than one-half of 1 percent of all farm exports. And what I 
have found--and please stop the clock, not to use his time. 
What I have found is when local farmers--I know back home in 
Tennessee, when I shared with them what they are doing, they 
are aghast. They have no idea that there is a farm lobby up 
here that is causing their commodities which matters nothing to 
them--matters nothing to them--relative to their own economic 
benefit. They are shocked by it. And I think if we would just 
talk to local farmers around the country or farmers in our home 
States, they would revolt against this practice.
    But anyway, put time back on the clock. Thank you for the 
advertisement.
    Senator Cardin. No, thank you. We were proud of the work 
that we did together on that, and I agree with you.
    Today I think U.S. development assistance, foreign 
assistance enjoys much more political support than it did a 
couple decades ago. So I think the public understands the 
importance. And the testimony here today just underscores a 
point that this committee has been very strong about, and that 
is, as we conduct our foreign policies, good governance, human 
rights, anticorruption, democratic institutions need to be the 
framework in which we engage the international community 
because, as you talk about Colombia, Colombia is a country that 
had a tradition of a democratic system. And it allowed it to 
resolve its conflict, and hopefully the peace process is moving 
forward. And what you have been able to do is give the economic 
pinning so that the unrest will not create a vacuum where 
extremists could come in.
    And today I doubt any one of the three companies here are 
happy about what is going on in Venezuela. You cannot expect a 
company to go into that environment where you are questioning 
not only your return on investment but the safety of your 
people.
    So our government has a strong obligation to help stabilize 
countries under democratic principles and respect for human 
rights and anticorruption for many reasons but one of which is 
what the chairman is talking about, to be able to go those 
routes in those countries in order to get reliable partners and 
consumers who can buy American products. So I agree with all of 
that.
    I want to ask all of you--and I will start with Congressman 
Kolbe--how important the U.S. mission is in these host 
countries for your economic exploration and opportunities. And 
I say that from two points of view.
    One--and I visited with Congressman Kolbe--the 
infrastructure projects that the United States was instrumental 
in developing in parts of the world that allowed private 
companies to come in and be able to take advantage of that 
being in place.
    And then secondly, as you deal in these countries, how 
important is the U.S. mission? I visit, every time I travel, 
our U.S. mission and see the economic officers, the USAID 
officers, et cetera. And I usually bring a list of Maryland 
companies that are interested in doing business and give them 
to the embassy and see whether we cannot advance those causes.
    So as we are looking at the appropriate role for the State 
Department and its international affairs, including development 
assistance, how important is it for us to maintain capacity in 
the country missions with U.S. personnel that are American but 
also our employment of the local expertise in the country that 
assists U.S. companies?
    Mr. Kolbe. A very excellent question, Senator Cardin.
    Let me just say that I think that they are very important. 
The missions are important in these countries. We are talking 
about public-private partnerships. So there is a public element 
to this. And I think there are two things that the embassies 
and the missions do. One is they provide the link when our 
companies come to a country. They provide a link that is there. 
And the second thing is they can be the advocates for making 
the changes that need to be made in these countries that make 
it possible for businesses to flourish and thrive in those 
countries.
    It is often not the tariffs that are the big problem. It is 
the other kind of barriers that are the problem, whether it is 
social barriers, legal barriers, trade-related barriers, 
customs barriers, those kinds of things. And I think it is 
those changes that our missions can advocate for and constantly 
be on the alert for and work to change those things. So I think 
it is very important to have those missions available to us.
    Senator Cardin. The three companies that are here, have the 
local missions in host countries assisted you in your efforts?
    Mr. Macnee. I would agree absolutely. Again, it is on the 
advocacy side, especially around social and legal issues. If a 
woman is not allowed to own land in a country and we are trying 
to stimulate economic development and entrepreneurship, U.S. 
mission advocacy is very important, and it is not something we 
can do.
    The flip side is that we are often up against charges of 
being simply an American company, which in parts of the world 
is a bad thing. And so we have to be very careful how we 
navigate that. I mean, we see ourselves as a global company 
that is domiciled in the U.S., but sometimes there is a flip 
side.
    Mr. Goltzman. We work very closely with the missions both 
from a perspective of having to help them be advocates for us 
when there is discriminatory regulation or policy being imposed 
by the local government, but also in terms of the shared value 
partnerships that we are creating. Whether it is working on 
ensuring the delivery of medicines, the USAID missions in 
countries are critical partners for us in our Project Last 
Mile. And the State Department is an essential partner in the 
scholarship programs we do. We could not do the 
entrepreneurship training programs that we do without the in-
hand partnership, some funding, but more importantly the on-
the-ground partnership with the State Department in each of the 
countries where we are doing it.
    Ms. Goodejohn. And I would echo the comments and say that 
the missions have been very important for us from our 
experience as far as access to the local expertise and 
understanding the landscape.
    Senator Cardin. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Absolutely.
    Senator Flake?
    Senator Flake. Thank you for the testimony. I am sorry I 
was not here to hear it in person.
    But it is also great to see Congressman Kolbe. I do not 
know anybody who has more experience at a number of levels in 
this area. And I would be interested in your perspective. And I 
read some of the testimony with regard to Africa, for example. 
You mentioned a couple of examples, Ghana, for example, with 
the MCC. What examples can we point to of where our programs to 
try to nudge these countries in the direction of reforms, 
economic reforms and what not--where has it worked? What are 
the best examples?
    Mr. Kolbe. Well, I think that is one of them, as a matter 
of fact. Ghana is a great example of one where our program, our 
MCC program has really moved them, and it is a shining star in 
West Africa where, unfortunately, there are not as many shining 
stars as we would like to see. So that is one country that I 
would definitely say that we have had great success.
    But I think there is a number of other countries where the 
MCC compact has worked to make real changes within the way the 
government operates, that is, just take the procurement process 
that in many cases--because we insisted on transparency and 
open procurement process that is not restricted to U.S. 
companies--that is the key thing about the MCC. It is not 
restricted to just U.S. companies. But the openness of that 
process and insisting that the government in that country 
follow that has led, I think, to reforms within their own 
procurement that has gone far beyond the MCC compact. So I 
think it has made those kinds of changes in a number of 
different countries, particularly in Africa and in Latin 
America.
    Senator Flake. Do these companies represented here take 
advantage of OPIC? Can somebody talk about where that is going, 
what we need to do? Is that program working? Go ahead, anybody. 
Overseas Private Investment Corporation.
    Mr. Macnee. I can give a quick answer, which is we have not 
participated too much with OPIC. We know of their work and it 
is good work. There is not much experience with it.
    Senator Flake. Any others on that?
    I just spent time in southern Africa. I was reading 
testimony with regard to Zimbabwe, a tough country where we 
have not been able to, with development aid, nudge them really 
anywhere, but where humanitarian aid, certainly PEPFAR, has 
been invaluable obviously to many of the countries in Africa, 
particularly in southern Africa.
    And what has struck me in southern Africa, for example, 
Namibia, where I spent 1989 and 1990, we were not there for 
them, they feel, during their liberation struggle. But since 
then, we have been there with things like AGOA and with PEPFAR 
and other things that have helped build a relationship there 
that has helped with security arrangements that we have, 
agreements on wildlife protection, anti-poaching efforts.
    Congressman Kolbe, can you talk about the value of soft 
power in that way in terms of what that enables and fosters and 
helps in our ability to work with these countries on security 
arrangements and other things that have a tangible benefit for 
people here at home?
    Mr. Kolbe. Well, we are all aware of what the Secretary of 
Defense has said recently about the importance of soft power 
and the fact that he needs it as much as he needs any--if you 
do not provide the soft power, he is going to have to have more 
guns and more bullets. And soft power is I think 
extraordinarily effective. So I think it is very important.
    You touched on a couple of things. One, Zimbabwe is a 
spectacular example of our failure of aid. But as you pointed 
out, other sources of aid, like PEPFAR and GAVI on the 
vaccination program, continue to operate in those countries and 
are doing good work of saving people's lives. And so the 
multiplicity of different agencies that are working, public-
private agencies, can make a real difference in these countries 
like Namibia with the World Conservation Fund and others 
helping to preserve animal kingdoms in those countries. So I 
think there are a lot of ways in which we can do that.
    But the soft power is absolutely essential. We need to have 
that. We cannot have a military force around the world. We need 
to have the soft power.
    Senator Flake. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Shaheen, I do want to tell you that I talked to 
President Carter this morning and shared with him that with 
your leadership, we are about to produce the bill that deals 
with women in leadership. And I just want you to know that that 
occurred this morning. We look forward to marking up a bill 
that you have led strongly on.
    Senator Shaheen. Well, I appreciate that. I also talked to 
President Carter this morning, and he told me about your 
conversation. So I said I would follow up.
    Senator Kaine. I am feeling a little left out. I did not 
talk to anybody this morning.
    [Laughter.]
    Senator Shaheen. You lose. What can I say?
    Well, thank you all very much for being here and for the 
work that you are doing in so many parts of the world.
    Mr. Kolbe, I think I am going to direct this question to 
you, although everybody in your presentations talked about the 
partnerships that you have had with USAID and how important 
those have been as part of what you are doing. But what we know 
about what the President is proposing for the 2018 budget 
suggests that it will include dramatic cuts to the State 
Department, that it will also include dramatic cuts to 
development assistance. There is a suggestion that all of those 
development funds might be diverted into the economic support 
fund which is tied to specific U.S. political or strategic 
objectives and that USAID will actually be collapsed into the 
State Department and not continue as a separate agency.
    So can I ask you how important you think it is that we 
continue these economic efforts and how important it is to have 
USAID, and as Senator Cardin said, the mission in countries 
that can work with our private sector partners in so many 
areas?
    Mr. Kolbe. The brief answer to your question of how 
important USAID is and whether it should be separate is that it 
is very important. If you fold it into the State Department 
completely, there is a link and there has to be a link, of 
course. But if you fold it into the State Department 
completely, what you are doing is you are subjecting it to the 
political considerations. I have seen that over and over again 
with the Millennium Challenge Corporation. Thank heavens the 
Congress had the good sense to put private sector members on 
the board of directors there because it is a natural thing for 
the government officials that are on it to say, well, we have 
some political objectives we really want to meet. Why do we not 
give a compact to this country instead? But that is not the 
objective of what the MCC was supposed to be about. So I think 
it is very important that the USAID maintain its independence.
    I also happen to serve--just one other comment I would make 
is I also happen to serve, in addition to being Honorary Chair 
of MFAN, Modernizing Foreign Assistance Network, I am Vice 
Chairman of the International Republican Institute and on the 
board of the Freedom House. And in both of those cases, we are 
very concerned about the collapse or proposed collapse of 
democracy promotion. And I think that, related to the things we 
are talking about here today, transparency, openness, 
corruption, all that, is extraordinarily important. So I do 
believe we have a significant role for that as well.
    Senator Shaheen. I certainly share those views. I think it 
is absolutely critical that we continue the democracy promotion 
that we are doing.
    As Senator Corker said, I have been working on the Women's 
Peace and Security Act. I think that women's empowerment is one 
way for us to promote stability and development in countries 
around the world. So I would ask those of you who represent the 
private companies here what you have seen in terms of women's 
empowerment and whether you have seen that as being helpful in 
terms of promoting stability. One of the statistics that is one 
of my favorites is that women give back 90 percent of what they 
earn to their families and communities. Men only give back 35 
percent. So what have you all seen as you have been working in 
other countries?
    Ms. Goodejohn. Thank you for the question.
    Women actually make up a significant part of coffee, of the 
labor of coffee, of the processing of coffee. And I think 
oftentimes they are under-represented as far as their ability 
to get technical assistance or financing. And so a lot of the 
work that Starbucks is doing through our farmer support centers 
and working with other nonprofit organizations is how do we 
build up empowerment of women in our coffee supply chains.
    One great example is we have been working with a women's 
cooperative in Colombia separate from our alliance with the 
government. And they are going to be receiving a loan for the 
first time, and this is because they have been trained with the 
technical side of coffee, the financial side. They now have the 
business acumen, and they are ready to take on a small loan but 
one that will help propel them.
    Thank you.
    Senator Shaheen. Others want to comment?
    Mr. Goltzman. Senator, I just would build on that. I mean, 
we could not agree more. Women are a force multiplier for 
communities and for our business. We have what we call the 
Coca-Cola 5 by 20 Initiative, which is our effort to empower 
economically 5 million women by 2020 by giving them increased 
access to business skills training, financial services and 
assets, and networks of peers and mentors. As of the end of 
last year, 2016, we have reached more than 1.7 million women 
across 64 countries. And this is truly shared value. It is 
about empowering the women so they can earn more money, be more 
successful, improve the quality of life for their families and 
communities. But it also helps our business be more successful 
because they are opening retail venues or they are becoming 
more effective farmers and bringing the agricultural 
commodities that we need for our beverages closer to our 
production facilities.
    Senator Shaheen. Mr. Macnee?
    Mr. Macnee. Just quickly. We have, I think, direct evidence 
of it in South Africa where they converted their cash and 
paper-based social assistance to a Mastercard. So there are 
about 10 million people who receive it monthly. And what we saw 
was that women head of households behave exactly as you 
suggested. And by having the money flow electronically, two 
things happen. One is they did not have a 3-hour bus ride to go 
and collect and stand in line so that their time was available 
to them. The other thing is that their personal safety was 
enhanced because so often when they received the funds in cash, 
it was stolen and it was, unfortunately, often a family member 
who was taking the money.
    Senator Shaheen. Thank you very much. Yes, we have seen 
that in other countries as well. In Afghanistan, I think that 
has also been true.
    My time is up, but I just want to--given what we have seen 
about the importance of empowering women, I am especially 
concerned that this administration is proposing eliminating the 
Office of Global Women's Issues, which has that focus.
    So thank you, Mr. Chairman.
    The Chairman. Senator, I do want to mention my daughter was 
working in Tanzania creating village savings and loan programs 
where people would pool together--12 to 15 people pool together 
resources and loan to each other to help small businesses. And 
one of the rules they had was no more than two men could ever 
be a part of it because beyond two men would mess the whole 
thing up. So I do want to say that you are right relative to 
those monies being used to support families instead of other 
things.
    Senator Shaheen. We could try for that in the Senate.
    The Chairman. I would not want to go quite that far.
    [Laughter.]
    The Chairman. But you all are gaining, I know.
    Senator Paul?
    Senator Paul. Thank you to the panel for your testimony.
    It has been said over time that foreign aid is taking money 
from poor people in rich countries and giving it to rich people 
in poor countries. That is the criticism that has been leveled 
against foreign aid. Throughout time, there have been a lot of 
examples of billionaires in countries that seem to have 
converted somehow some of the aid or access to the aid or 
access to goods somehow to their own personal aggrandizement. 
The Mubarak family is said to be worth $10 billion to $15 
billion. Nobody is quite sure how legitimately that was 
achieved, but some of us would argue that some of it came from 
the $60 billion that we have sent them over the last 30 years.
    What would you say to that statement, I guess, Congressman 
Kolbe? Agree, disagree and better or worse than it used to be?
    Mr. Kolbe. I absolutely agree with your statement. We would 
be lying to ourselves if we tried to say that there has not 
been examples of where our assistance has ended up going into 
the hands of a handful of people in the country and enriching 
them. And you mentioned a couple, and I certainly in my 
experience when I was in Congress have seen that in those 
countries myself where this has happened.
    I think the importance of what of what we are talking about 
here today is what we have got here are these public-private 
partnerships. This is not a public-private partnership with 
Lockheed. Nothing wrong with Lockheed, but just saying some 
major company that is selling huge numbers of aircraft.
    Senator Paul. Do you think we are a lot better, though, 
overall than we were 20 years ago as far as billionaire 
leaders, dictators, despots taking our money?
    Mr. Kolbe. Yes. Do we have as many despots? Yes, we do have 
as many despots as we had. But I think we have a little bit 
better sense of where the money should be going. So I think we 
are better.
    Senator Paul. Going to the point of trade and how we sort 
of improve the lot of people and do it in a way that is 
mutually beneficial to the world, the young man that burned 
himself in Tunisia that sort of set off the Arab Spring--there 
was a great article in the ``Wall Street Journal'' a couple 
years ago. Hernando de Soto I think wrote it, the economist 
from Peru.
    Mr. Kolbe. I am familiar with it.
    Senator Paul. The point he made I thought was an incredible 
point. He made the point that if you look at the unofficial 
market, the black market of Egypt and of most countries, that 
it exceeds our foreign aid like by 20-fold. It is just an 
enormous amount. His frustration was really--the man who burned 
himself--was not a religious protest. It was that he could not 
get a license for his truck. He wanted to be a truck farmer, 
which is actually what my family was when they came here. We 
peddled vegetables and then became truck farmers and then 
somehow doctors and other things. But the thing is that it was 
that economic limitation.
    And de Soto's point is that somehow we have to figure out--
I do not know that we can necessarily do that, but it is 
incredibly important for these countries if they want to 
develop, it is sort of making the unofficial official--the 
black market, bringing it into the normal market and letting it 
grow. But so much of that is bureaucracy and socialism and too 
much government, lack of title to your land. You know, our 
capital in our country comes from borrowing mostly against our 
houses. That is the biggest form of capital in our country, 
that or real estate. It is not some kind of borrowing power.
    But I guess knowing or understanding that that is part of 
the problem, what are the solutions, and are we closer to 
achieving those solutions than we have been in the past? 
Congressman Kolbe?
    Mr. Kolbe. Well, once again, you are on the right track. 
You are absolutely correct.
    Hernando de Soto, of course, has made much of his name in 
the work that he has done on property rights in these titles in 
countries like Peru and then in Egypt as well. If you do not 
have title to land, how can you sell it? How can you develop 
it? What can you do? So you need to have titles, and these 
countries have not had titles. So just something as simple as 
that I think is one of the key things.
    Before you were here, I mentioned that the key problems 
that I think we face in these countries is not often the 
problem of high tariffs. It is the barriers within the country 
to making development happen. It is the internal things that 
occur that make it impossible to start a business, the number 
of regulations that you have. I think Hernando de Soto 
identified something in Peru to start a small business, it was 
179 or something like that different approvals you had to have.
    Senator Paul. And I just want to interject one quick point. 
We do a lot with NGOs with democracy promotion that you have 
talked about. But I wonder if we do enough with the promotion 
of good economic sense. The NGOs that do democracy promotion--I 
do not think they are really necessarily extolling Adam Smith 
or Milton Friedman. It seems like those ideas are what hold 
back the third world as much as anything. The miracle in Chile 
was all of a sudden they accepted great free market ideas. It 
may not have been perfect, but definitely Chile has done quite 
well over the time.
    But I wonder if there is a role somewhere for something. 
And I would just as soon even see a private role but for some 
kind of group that believes in international trade to promote 
the ideas of title, capital, and how it develops so these 
countries would choose it.
    Mr. Kolbe. Just to conclude, I think there is a role for 
that, but right here we have the practitioners of the people 
who are in the country doing this on a daily basis and that is 
the best antidote for the problems that these countries face.
    The Chairman. We have a Global Gateways piece of 
legislation that I would love to talk to you about that 
promotes all the things you were just talking about. I really 
appreciate the line of questioning.
    Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    Thank you to the panel. I am thrilled to see that 
Congressman Kolbe is still at it and a strong voice, including 
in his days in the House where foreign aid at that time and 
generally the engagement were not the hallmarks of the views of 
the time. So I appreciate your long-term commitment.
    I appreciate the committee looking at this one component of 
foreign aid and investment. But I would hate for any of us to 
leave this hearing with the impression that somehow now or in 
the future, private businesses and corporations could take the 
place of U.S. foreign aid in development overseas. Comprising 
less than 1 percent of the federal budget, our foreign 
assistance--and ``assistance'' may really be a misnomer--is a 
critical foreign policy tool that promotes our values, our 
interests, and it builds strategic alliances for the United 
States. And so I applaud what you all are doing but I worry 
that there are some views that we can head in a direction in 
which we can dramatically reduce that foreign assistance and 
what flows from it.
    So I would take the opportunity here to stress that again. 
I have gleaned from the written testimonies you have provided--
in fact, much of the work you do is either in cooperation or 
working off the information that, for example, agencies like 
USAID have. Is that a fair statement?
    Mr. Macnee. Yes, it is fair. And USAID is I think the 
largest funder of our partners. So that funding is critical to 
their success. So if we are dealing with the Red Cross or World 
Vision or Save the Children, there is an enormous funding 
provided by USAID. So it is critical.
    Senator Menendez. And if that was dramatically cut, there 
is only so much that you are going to be able to do. Even as 
you are good corporate citizens and also see a value, there is 
only so much that you are going to be able to do in that 
respect. Right? Because it seems to me like USAID, MCC, and 
others lay the vertebrae, the backbone of the development 
issues in which you will be able to engage.
    Mr. Goltzman. Senator, if I could just add. I could not 
agree more. There is absolutely a critical role for government 
and government aid in this process. There are sectors and parts 
of the economy that the private sector cannot be invested in, 
developing the rule of law, and helping ensure intellectual 
property protection. We cannot public-private partner on that 
to help develop that capability or to build the transportation 
infrastructure on which our delivery trucks actually can 
deliver Coca-Cola beverages around the world. These are things 
that governments have to invest in, and then we can do public-
private partnerships in the areas that are actually priorities 
for our business and make sense both from a business and a 
sustainability perspective for us to build in. But there is a 
critical role for government to continue.
    Senator Menendez. I appreciate it.
    Now, when the United States Government selects 
organizations and governments with whom to partner on 
development initiatives, there is a lengthy vetting process of 
these organizations to determine not only the feasibility and 
success of a particular project but to ensure that U.S. 
taxpayer dollars are going to reputable and reliable partners.
    For anyone on the panel, can you tell me what steps do you 
take to ensure that the people and organizations with whom you 
work adhere to international human rights and governance 
standards? Is there anybody who does that?
    Mr. Goltzman. Well, first, I would say we work with the 
State Department, and we certainly ask the U.S. Government 
their opinion before we engage in many of those partnerships. 
We have our own supplier guiding principles, and we have 
specific audits that are also done with various partners that 
we have. But I would reiterate that the U.S. Government's 
opinion about in-country actors and their reliability is a 
critical part of the information that we gather.
    Senator Menendez. Is that generally true for the rest of 
the panel?
    Let me ask you this, Congressman Kolbe. We have in New 
Jersey a very large diaspora of many parts of the world who 
have embraced the American dream and been successful. They want 
to help their home countries. I hear from many about the USAID 
procurement and contracting process is often opaque and 
difficult to understand. Do you believe that there are reforms 
that can be made within the U.S. Government, USAID in 
particular, to help capture and effectively utilize the 
enthusiasm from these communities?
    Mr. Kolbe. Yes, there are. And I think actually USAID has 
undertaken, in these last several years, a lot of those 
reforms. It is definitely much improved, I would say, but there 
is certainly much more to be done. I cited earlier the 
Millennium Challenge Corporation, which Congress had the good 
sense to set up and say that the procurement did not have to 
come from just a U.S. company, but it was an open process. And 
I think that has been very, very helpful. So I think there are 
things that can be done. We can certainly make it better than 
it is today, but I think we have made significant improvements.
    Senator Menendez. Thank you.
    The Chairman. Thank you.
    I do want to respond. This hearing is actually to highlight 
aid and the way we can leverage it just like Senator Coons and 
my trip to Uganda recently was. I am all for top-to-bottom 
reviews. I think we ought to do those kind of things 
constantly. I know your companies do that every year. But I 
think what we should highlight is how to leverage what we do 
and maybe reform it, as you just mentioned, in such a way to 
deliver even more aid and stability around the world.
    And to an earlier comment someone else made, I do not get 
the sense that the beginning point of the administration in any 
way is to subsume USAID into State. I mean, I think they are 
looking at how those things should work together, but I do not 
think the beginning point is that. I know there has been a lot 
written about that, but I just do not think that is where they 
begin. It could end up there, but I do not think that is their 
beginning point of view.
    Senator Coons?
    Senator Coons. Thank you, Chairman Corker, Ranking Member 
Cardin.
    I am grateful for our panel of witnesses, Congressman 
Kolbe, for your long service. I know you do not remember but we 
met when I was in the private sector and you were representing 
a district in Arizona. And I have had a great opportunity to 
visit sites where Starbucks and Mastercard and Coca-Cola are 
doing good things around the world. And I am a strong believer 
in engaging and mobilizing public-private partnerships as a way 
to extend the catalytic power of federal leadership but to make 
it go farther with the insights, the connectedness to the 
ground, the applications of new technology that the private 
sector can bring to bear.
    In my recent visits to five different posts in countries, 
the first one with Senator Corker, but others in South Asia as 
well, I recognized there is real concern amongst the staff of 
USAID and the State Department about impending budget cuts. And 
to anyone listening, I just want to reassure them that we 
intend to pursue a disciplined and thoughtful course. The 
President can propose whatever budget he wants, but at the end 
of the day, it is the Congress that makes decisions about our 
strategy going forward. And I view this as a constructive 
hearing that helps us better understand the potential for 
public-private partnerships and what they can do.
    Let me just ask, if I might, of you, Congressman Kolbe, and 
then if others want to pitch in. I see a lack of access to 
capital routinely as a major constraint for development, 
particularly for smallholder farmers, for women's cooperatives, 
for startup manufacturing companies. Would an empowered 
development finance bank help address this challenge? You 
mentioned it in your opening comments. What sort of a 
difference would a newly reimagined development finance entity 
by the United States contribute to this challenge?
    Mr. Kolbe. I think it could. I am not an expert in this, 
and perhaps some of the people here at the table would have a 
better answer to this than I could give you. But I think it 
could make a difference because our efforts right now are very 
fragmented. Whether you are talking about the Trade Development 
Authority, OPIC, the EXIM Bank, the Millennium Challenge 
Corporation, whatever we are talking about, it is very 
fragmented. And I think there are some ways in which we could 
have a better way of making sure that the capital is flowing in 
the amounts and into the right places that we need. I think it 
is something that is worth exploring. That is why I was 
suggesting it.
    Senator Coons. It is certainly worth exploring.
    Let me just ask if there is anyone else on the panel who 
has seen--most of our major economic competitors have 
significantly bigger, broader, better-funded, broader authority 
competitor financing institutions. Have you seen that? Have you 
seen the impact of that in the developing world?
    Mr. Goltzman. Senator, I would just add that I think it 
could be helpful. But what I think is important to realize is 
that it needs the deep resources not just of money but people 
on the ground in country because what we have seen in the 
partnerships that we have had with big financial institutions 
is that they do not actually have the capability to identify 
the women, for example, who could get a small loan. And they 
need us and the Coca-Cola system, and that is why 5 by 20 is so 
powerful is that we have this network of thousands of women 
that we are working with. And so there is a way for them to 
say, well, actually it is viable to give this woman a loan 
because she is connected to the Coke value chain and we see 
something there. But on the whole, those bigger financial 
institutions--they do not have those kind of on-the-ground 
resources to actually identify individual beneficiaries. And so 
that on-the-ground resource is really critical.
    Senator Coons. And I will just say that Coca-Cola has 
literally the single largest network on the continent of 
Africa. You are the single largest employer. Susan Mboya and I 
have had a chance to meet a couple of times and for me to hear 
and see what that means on the ground.
    If you would, Mr. Macnee.
    Mr. Macnee. Yes. I think it is something we are seeing now 
more and more. When we bring digital commerce, electronic 
commerce, for example, to a smallholder farmer, we are creating 
data. It is no longer anonymous. It is no longer some kind of 
secret what they do. And they can slowly build a profile, which 
lets a bank, a local bank, lend to them, just essentially a 
credit file.
    Senator Coons. I have got relatively little time left. If 
you would, Mr. Macnee, just tell us a little bit more about the 
2KUZE model. It as in your written testimony, but I do not 
think you spoke about it enough yet. And I think it is very 
compelling. Obviously, anyone from Delaware loves it when 
credit cards get extended to the world, but it is much more 
than that. And I wanted to give you a moment to talk about 
that.
    And if the chairman would indulge me, Ms. Goodejohn, I had 
a chance to visit in Rwanda a Starbucks-sponsored smallholder 
farmer education center. Anything more you wanted to say about 
the coffee value chain and access to water.
    I would be grateful if each of you would speak briefly to 
those points.
    Mr. Macnee. I will be very brief.
    This product, 2KUZE, came out of a lab that we established 
in Nairobi. The Gates Foundation gave us $19 million to set up 
an incubator in Nairobi. One of their first products was 2KUZE. 
It is essentially a mobile phone-based product for smallholder 
farmers that lets them access markets directly as opposed to 
being forced to work with agents who are middlemen with the 
ultimate buyers. And so it does not destroy that agent 
relationship, but it opens up information so that they know if 
they are selling some produce for a nickel per. If they can see 
the end market is a dollar, the information is changing their 
own economic behavior.
    Senator Coons. That is exciting.
    Ms. Goodejohn and then we will conclude.
    Ms. Goodejohn. Thank you for the question.
    So, yes, ensuring that these communities that are growing 
coffee oftentimes rural, oftentimes smallholder farmers is very 
critical for Starbucks. We leverage our Starbucks Foundation. 
For years we have been investing in clean water around the 
world in Indonesia, Colombia, Guatemala, Mexico, Rwanda, 
Tanzania, et cetera, all with the purpose of trying to create 
resilient communities so that in addition to investing in 
coffee technical assistance, they also have strong livelihoods.
    Senator Coons. That is wonderful. Thank you. I would like 
to thank the whole panel; Mr. Chairman, Ranking Member, for 
holding this hearing. I see enormous power in leveraging the 
private sector and the strengths of their value chains, their 
analytical capability, and I am excited to keep working with 
you both on this in the future. Thank you.
    The Chairman. I think all of us while Governor Branstad had 
been elected for 23 years last week, an incredible politician 
who was able to tie things to anecdotes and things back home--
but I have to say you and Senator Cardin are doing a marvelous 
job today and would rival him.
    Senator Kaine?
    Senator Kaine. Thank you, Mr. Chair.
    And thanks to the witnesses.
    A couple of different topics. I heard you all testify that 
in your own engagement through your companies or the IRI and 
others, you work very closely with the missions in these 
countries. That is how you leverage success on international 
development and your own business interests.
    So it is imperative that we fill out the missions as 
quickly as we can. The chairman and ranking have a good track 
record of getting things through once they come to the 
committee. I really hope the administration will give us the 
names so we can fill out the mission. And then, frankly, even 
though the committee often acts with great expedition in 
getting things to the floor, during the latter half of the 
Obama administration, it was very difficult to get people 
approved. You have testified that it helps your work to work 
cooperatively with the mission. That means the mission should 
be filled, and I hope we will all work together expeditiously 
on that.
    On public-private partnerships, one of the entities that 
helps in this area is OPIC. The President's budget proposal 
zeroes out OPIC. We have got a company in Charlottesville. It 
is actually kind of jointly in Charlottesville and India called 
Husk Power Systems. It has developed a very small energy 
producing technology using rice husks that they have deployed 
all across India. And they were greatly helped by an OPIC loan.
    If we are going to be about public-private partnership, as 
Congressman Kolbe said, there has got to be a public in there 
somewhere. It is not all going to be private. And I think it 
would be very shortsighted to eliminate an agency whose purpose 
is the public-private partnership that adds value to the 
international development chain.
    I want to ask Ms. Goodejohn and Mr. Goltzman about this. 
Both of your companies, Coca-Cola and Starbucks, have done a 
tremendous amount of work to promote a new energy economy and 
to grapple with the realities of climate change and build into 
your own business models strategies to work on reduction of 
greenhouse gas emission, carbon footprint, and even to support 
our initiatives like the Paris Climate Accord. And I applaud 
you for that.
    I gather your companies would not be doing that if you did 
not believe in the science or if you thought working on climate 
change issues were somehow harmful to the economic health of 
Coca-Cola and Starbucks. Am I fair to make that assumption?
    Mr. Goltzman. Absolutely. We see with climate change even 
greater risk to water scarcity and quality. We see the movement 
of agricultural commodities changing and where they can be 
cultivated, and those are certainly significant risks that we 
see to our future growth.
    Ms. Goodejohn. With regard to coffee farmers, we need a 
resilient and stable supply chain. And with changing weather 
patterns, we are trying to support coffee farmers through our 
farmer support centers and nonprofit partners to build up the 
capabilities of those farmers to help them adapt. So whether 
that is improving soil, shade trees, other things that will 
help them adapt to changing weather, that is very important for 
a long-term supply of coffee and to keep those coffee farmers 
growing coffee.
    Senator Kaine. Do you see the United States' participation 
in and even leadership of other nations on things like the 
Paris Climate Accord as counter to the economic interests of 
Coca-Cola and Starbucks?
    Mr. Goltzman. I would just say that we have our own targets 
in place about what we are doing to make sure that we minimize 
our impact on the climate, and that is going to continue 
regardless. And so that is what I would say.
    Senator Kaine. As far as either of you know, your companies 
have not taken a position that we should not be involved in the 
Paris Climate Accord. Correct?
    Mr. Goltzman. Correct.
    Ms. Goodejohn. Starbucks is part of a business coalition 
that supports the Paris Climate Accord.
    Senator Kaine. I worry about this. And I was asking this 
the other day because I thought Governor Branstad's story was 
so powerful about the connection between a clean energy economy 
and a strong economy for his State.
    And just my own thought, I would view the U.S. backing out 
of the Paris Climate Accord as essentially a statement of 
pessimism. We do not think we are innovative enough. We do not 
think we are economically creative enough to be able to meet 
our obligations. And why would we be pessimistic when we have 
got great companies or great governors or a great ag sector in 
Iowa who are showing us the way forward? So that is just my own 
editorial comment.
    And finally, Congressman Kolbe, I really appreciate the 
work that you are doing on democracy promotion through IRI. We 
have had a lot of hearings in this committee and Armed Services 
too where I serve about sort of the whole Russia angle. And one 
of the things that Russia is interested in-- they do not like 
the U.S. presence near them, but there is a bigger thing at 
stake with Russia right now. They are really trying to 
undermine the notion that democracy is a preferred model of 
governance and that maybe an authoritarian government is just 
fine. Maybe it is even better in the 21st century as you are 
dealing with terrorism issues. There is significant effort to 
undermine the notion that democracy is a preferred government 
model.
    And groups like IRI and others that do democracy 
promotion--if the U.S. is not promoting democracy, who is going 
to do it?
    Mr. Kolbe. Senator, you are absolutely right. Without 
getting into the weeds on the issues of the presidential 
campaign, the activities of Russia and the former Soviet Union 
to undermine democracy around the world have been going on for 
a long time. We can go back to the end of World War II and look 
at how they tried to change the French elections then in a way 
that would have elected a socialist or communist government 
back then. So this kind of propaganda is not anything new.
    What is new, of course, is the technology that exists 
there, particularly the social media that enables them to do 
things that they have not been able to do before. That is one 
of the things that IRI, International Republican Institute, 
Freedom House, which I am also on the board of, POMED, the 
Project on Middle East Democracy, which I am on the board of, 
are all trying to do, is to make sure that democracy gets 
promoted or that we encourage people how to use the social 
media in a way that enhances democracy, that promotes it, that 
encourages it.
    And so these programs are very important, and they do rely 
on government support. We do have grants that come from the 
private sector and I might add from foreign countries, but most 
of the grants come from USAID, from, of course, NED, which is 
the National Endowment for Democracy, and from the State 
Department.
    Senator Kaine. Thank you.
    Thanks, Mr. Chair, for letting me go over.
    The Chairman. Absolutely. Thank you.
    Senator Murphy?
    Senator Murphy. Thank you very much, Mr. Chairman. And I 
certainly accept the premise that the point of this hearing is 
to lift up the great work that is being done in private-public 
partnerships. And I thank you all for the commitment.
    I think what you are hearing from this side is a real worry 
about what is happening in this administration. A lot of us 
feel that there seems to be a really strong bias against 
diplomacy and development aid. The budget proposal for State 
would have been absolutely devastating and I am glad that our 
budget rejects it, although I will note that our budget still 
does include a $600 million cut to the State Department.
    And then we have heard these rumors, as you mentioned, 
about State taking USAID in, which would greatly damage their 
ability to do their job, side by side with rumors of up to 
2,300 position cuts, largely through attrition. So I appreciate 
your comments that these may just be rumors.
    The Chairman. I do not think the latter necessarily is just 
a rumor.
    Senator Murphy. But 2,300 cuts by attrition in the State 
Department would be absolutely crippling to the State 
Department and USAID's mission overseas.
    Anyway, I hope at some point we will be able to get a high 
level State Department witness before this committee so that we 
can ask some of these questions in open session. I know that is 
difficult when----
    The Chairman. There are not any.
    Senator Murphy.--very few exist.
    [Laughter.]
    Senator Murphy. But again that is another concern that we 
have that this does not look accidental. This looks pretty 
purposeful at this point, the failure to staff the State 
Department at high levels.
    So with those concerns in mind, I just want to ask our 
panelists. You are involved in countries with a medium to large 
USAID footprint, and you are involved in countries that do not 
have as big a U.S. footprint. You might be involved in 
countries where China is more involved than the United States 
is.
    You have sort of spoken to this a little bit here and 
there. But talk to us about the consequences of the United 
States essentially withdrawing from the development playing 
field. What happens if you do not have USAID or State 
Department to partner with? What are the consequences to your 
work if all of a sudden you show up to a country where you got 
to lean on USAID, got to ask for their advice, and they are 
gone? Tell us about the importance of that work that you do and 
the threat if that relationship no longer exists.
    Ms. Goodejohn. Thank you for the question.
    You know, Starbucks has and we will always continue to 
invest in these regions because it is important for our 
business. It is important for us to have the stable supply 
chain. But having the presence of the U.S. Government to be 
able to scale the work we are doing, to be able to scale some 
of the knowledge and connect with the local resources and 
understand the landscape is very important.
    Mr. Goltzman. I would just add that we are giving up the 
scale opportunity. So the impact that you can have through the 
partnership is that much greater. There are other actors, China 
among them certainly on the African continent that is making 
major investments. They generally do it in a different way by 
bringing much of the labor force with them to do the work of 
whatever they are building and constructing as opposed to 
building the capability locally and doing those partnerships 
that create knowledge there on the ground. And so I think the 
U.S. does give up some of that engagement with the local 
government by not being present.
    Mr. Macnee. We are all scale players. But the funding 
provides for reach. So I think the change would be how many 
jurisdictions could be influenced.
    Senator Murphy. Mr. Goltzman, you are involved in virtually 
every country around the world in some way, shape, or form with 
respect to commerce. You talked about the limits of what you 
can do with respect to issues like rule of law. But you are 
selling product in a lot of places with high levels of 
corruption, both at the national level and at the local level.
    What is the role for a company like yours to try to have 
some say on rule of law and on governance, given the fact that 
you are putting a lot of money into these local economies? Is 
that purely a public function, or is there a role for private 
companies to play in jurisdictions where you have major 
corruption programs and you are selling a lot of product?
    Mr. Goltzman. What I would say is I would look at what we 
have done very publicly with the State Department and our 
disclosures in terms of our investments in Myanmar where we 
have put out reports on an annual basis that look at the 
situation and the challenges of doing business there and being 
very transparent in the reporting on that. I would say that it 
is difficult for companies, private sector actors, over which 
the local government actually has regulatory control to be able 
to be the voice to push them in that direction. And so that is 
the role--I mean, we would face issues, for example, of 
intellectual property people wanting to take our trademark, use 
our trademark packaging or other things, and put something else 
in that. That is something that we need support of the U.S. 
Government to be able to engage on and to help combat that in 
the countries where that is happening, for example.
    And things like workforce training and the ability of a 
workforce to be able to do the kinds of things we need. For 
example, in one country where we were building a new facility, 
we had to import the plumbers because there were not qualified 
plumbers to work on stainless steel piping that we were using 
in our facilities. These kinds of things are a long-term 
investment in development planning that private sector actors 
cannot do just on their own. The government support and 
partnership and major investment in that is really needed to be 
successful.
    Senator Murphy. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Markey?
    Senator Markey. Thank you, Mr. Chairman, very much.
    Donor fatigue is a well known problem that we have in this 
area. When Haiti suffered their catastrophic event in 2010, $3 
billion of aid went in. $1.1 billion of it came from the United 
States. But by 2014, Haiti was down to a level of aid that was 
lower than 2009, the year before the catastrophe, almost like 
out of sight, out of mind, forgetting it. So obviously that is 
a real challenge for us because the fierce urgency of ``now'' 
gets replaced by something that then draws people's attention 
away and it gets forgotten.
    Mr. Macnee, you have testified that private sector 
development partnerships require shared values that help 
companies build their brands within recipient companies and 
create new markets for their products.
    Could you talk about that in terms of the private sector 
contributions to a country to its development if that market 
does not develop the way in which the private sector company 
had been anticipating that it would?
    Mr. Macnee. Yes. I mean, it is our hope that we can be part 
of the impetus for development. In Haiti, when the aid was 
being delivered, we learned a lot in Haiti. The electronic or 
digital aid was being delivered a week faster than the more 
traditional in-kind aid.
    What is important to us is that we work on long-term 
economic models so that you shift from humanitarian aid to 
development. There is a border there. It should be a blurred 
border. And so just fixing a problem and then leaving is really 
not what any of us want to do.
    Senator Markey. So are there risks in measuring success by 
whether or not there has been a private sector development that 
the companies or philanthropic groups had been expecting that 
did not occur, and therefore the country is in a situation 
where--and Haiti is a good example - where there is kind of an 
abandonment that has taken place and the United Nations does 
not provide the funding that it had promised today to deal with 
the aftermath of the epidemic that broke out and the investment 
in the infrastructure? At the same time, that then has an 
impact on the private sector that is thinking about moving into 
that community. So can you talk a little bit about that 
interaction?
    Mr. Macnee. Certainly so our approach to humanitarian and 
development programs is essentially our approach to business. 
So what we are trying to do is apply our capabilities, our 
assets, our technologies to the humanitarian and development 
issues, but we are using the same logic, the same calculus that 
we do in business. So we are taking a long-term view. I think I 
understand your question.
    Senator Markey. Is there something that Congress can do to 
incentivize companies to move into areas that may not pay back 
a huge immediate dividend? It may not pay back a dividend at 
all, but that perhaps Congress could create an atmosphere that 
is welcoming to your investment, encouraging your investment in 
a country that needs that private sector? Mr. Goltzman?
    Mr. Goltzman. I would just add, look, we are present in 
more than 200 countries and territories. We are invested in all 
of them for the long term. It is not about is the economic 
development this year sufficient, and if it is not, then we are 
looking to reduce our presence. We are there for the very long 
term. And like my colleague from Mastercard or Starbucks, we 
are investing in projects that are very long-term.
    It is different than trying to respond to the immediate 
aftermath of the earthquake. And when we did that, in 
partnership with USAID, on an initiative called Haiti Hope, it 
was investing to help Haitian mango farmers. And they are now 
more productive and shipping those mangos to the U.S. and for 
sale in Whole Foods.
    So I think the ability of U.S. agencies to have matching 
funds is an incentive for private sector actors to actually go 
in and develop partnerships that we can work together on.
    Senator Markey. Thank you, Mr. Chairman. I just want to 
thank Starbucks and Coca-Cola for their advocacy on climate 
change. I think it is very, very important to have been told--
the Washington Post reported that the administration has been 
advised to pull out of the Paris agreement. And I think that 
would be a terrible thing. But it is good to know that there 
are private sector companies stepping up and saying that it is 
an important issue for us to have to deal with. Thank you, Mr. 
Chairman.
    The Chairman. Thank you.
    I want to thank all of you for being here. Mr. Goltzman, 
Senator Cardin noticed you took advantage of a branding 
opportunity there in front of you. But we appreciate all of 
your testimony. It has been, I think, very helpful to all of 
us.
    The record will remain open through the close of business 
Friday, and if you could respond fairly quickly. We know you 
have other responsibilities.
    Congressman Kolbe, it is good to see you again. Thank you 
for all of your life's work.
    And with that, the meeting is adjourned. Thank you.
    [Whereupon, at 11:35 a.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


  Statement Submitted for the Record by John Ellenberger, Senior Vice 
      President for International Development, Land O'Lakes, Inc.

    Thank you for the opportunity to provide testimony on the value the 
private sector adds to international economic development. My name is 
John Ellenberger--I'm the Senior Vice President for the Land O'Lakes 
International Development organization. I assumed this role in February 
after leading the U.S. Dairy Foods business team for Land O'Lakes, Inc. 
since 2008.
                        about land o'lakes, inc.
    In 1921, 320 dairy farmers joined together in St. Paul, Minnesota 
in an effort to more effectively market and distribute their dairy 
production across the country. They formed the Minnesota Cooperative 
Creameries Association. Soon after, the cooperative expanded into 
animal nutrition and the crop inputs businesses to aggregate farmers' 
demand for feed and seed.
    The cooperative has evolved into a $13 billion company owned by 
more than 3,800 U.S. farmers and local farmer-owned cooperatives that 
all share a single driving purpose: feeding human progress.
    Land O'Lakes' commercial expertise spans raw agricultural inputs to 
consumer foods through four business units: the flagship LAND O LAKES 
dairy foods business; research-based, high performance Purina Animal 
Nutrition feed; data-driven Winfield United crop inputs and decision 
insights; and innovative Land O'Lakes SUSTAIN, a platform to capitalize 
on our farm-to-fork knowledge and meet the consumers' evolving desire 
for transparency and continuous improvement in sustainability. Through 
these businesses, Land O'Lakes, Inc. touches 25 percent of U.S. farmers 
and 50 percent of domestic productive land--and does business in all 50 
states and more than 60 countries.
 about land o'lakes international development and the relationship to 
                           land o'lakes, inc.
    Land O'Lakes International Development was formed in 1981when Land 
O'Lakes, Inc. leaders recognized that farmers around the world wanted 
to improve their livelihoods and market position--just like Land 
O'Lakes' original member-owners. In keeping with the values of our 
cooperative owners, these leaders decided that ``helping your 
neighbors'' meant global neighbors, too.
    Today, Land O'Lakes International Development operates 
independently as a 501(c)(3) nonprofit (ID became a nonprofit in 2016) 
while maintaining an important affiliation with Land O'Lakes, Inc. With 
support and expertise from a multi-billion-dollar agribusiness in our 
corner, we understand how to help farmers and enterprises in 
challenging contexts transform into profitable, business-minded 
entities.
    Over the years, Land O'Lakes International Development has worked 
in 80 countries through nearly 300 projects primarily funded by the 
U.S. Agency for International Development (USAID) and U.S. Department 
of Agriculture (USDA). We use our practical experience and in-depth 
knowledge to facilitate market-driven business solutions that generate 
economic growth, improve health and nutrition and alleviate poverty. In 
2016 alone, our 17 projects in 13 countries directly impacted 289,534 
lives (over half of which were women), created 21,549 full-time jobs, 
supported 716 businesses and trained 162,209 people in agricultural 
best practices.
                      public private partnerships
    The modest investments America makes in development and diplomacy 
have an outsized impact. The International Affairs Budget, while less 
than one percent of total U.S. government spending, advances U.S. 
national security interests at home and abroad. It also spurs American 
economic vitality and job growth by promoting stability and economic 
growth around the world while upholding our values.
    Strategic investments in the International Affairs Budget serve as 
force multipliers that hold our partners more accountable while 
creating a greater return on our own investments by leveraging private 
sector and NGO resources. The State Department, USAID and USDA have a 
decades-long track record of partnering with the private sector to 
catalyze and leverage additional investments. These investments tackle 
global challenges in sectors such as global health, agriculture, 
energy, and water. These public-private partnerships have the unique 
ability to leverage U.S. government resources, expertise and convening 
power with the private sector's technical expertise, innovation and 
scalable solutions. We should continue to expand these partnerships to 
get the most out of every dollar the U.S. government spends.
              importance of agriculture sector development
    At first glance, it may seem strange for a farmer-owned cooperative 
to be so deeply involved in international development. The reason we've 
invested our time, expertise and resources is simple: We recognize the 
critical link between food security, economic prosperity and political 
stability.
    We must use all of the tools available to address this crucial 
need. As noted by the Conference Report of the 2014 Farm Bill, the 
``[M]anagers understand that an array of programs and tools are needed 
to balance the diverse and complex food aid demands of various 
countries and regions.'' We strongly support a whole of government 
approach for global food security, provided through initiatives like 
Feed the Future and the Global Food Security Act. Programs like the 
USDA's Food for Progress and Food for Education Programs and USAID's 
Development Assistance, Cooperative Development, Food for Peace, and 
Farmer-to-Farmer programs are essential, given that nearly three-
quarters of the world's poorest people live in rural areas in 
developing countries. And, according a study by the World Bank, gross 
domestic product (GDP) growth originating in agriculture is about four 
times more effective in reducing poverty than GDP growth originating 
outside this sector for the world's poorest people.\1\
    Food security is also a matter of national security. According to 
the United Nations, almost 800 million people are undernourished 
globally.\2\ Access to food, and the resources to grow it, creates the 
stability necessary for countries to thrive--and costly U.S. 
interventions are less likely.
    Whether it's a farmer in Wisconsin or an entrepreneur in Tanzania, 
Land O'Lakes, Inc. leaders, farmer-owners and Land O'Lakes 
International Development believe that feeding human progress starts 
with helping those who bear the great responsibility of growing food to 
fuel their communities. Land O'Lakes, Inc.'s nearly 100-year history is 
living proof: Agricultural development means that farmers and 
businesses in other countries don't just nourish themselves, but also 
propel people out of poverty, build savings, diversify diets and more 
fully participate in the world economy.
    And from a U.S. private sector growth perspective, the cooperative 
just looks at the numbers. Nearly 95 percent of U.S. farmers' future 
customers live outside of our borders.\3\ This figure opens the door to 
increase exports and expand international partnerships--countries need 
value chain development programs to create mature enough economies to 
participate in global markets. It also means more job security for 
Americans. From 2009-2013, a 27 percent increase in U.S. exports led to 
an increase of 1.6 million export-supported domestic jobs.\4\ Eleven of 
our top 15 trading partners were once recipients of U.S. assistance.\5\ 
This is not about giving a hand out, but a hand up. Given the global 
nature of commodity prices growth in demand anywhere is good for 
producers everywhere.
    I am pleased to share how Land O'Lakes International Development is 
leveraging commercial best practices to multiply the effectiveness of 
U.S. foreign assistance spending.
adapting domestic business frameworks and employee expertise for global 
                                 impact
Dairy Expertise in Rwanda
    Rwandan dairy farmers and producers face many of the same 
challenges that the Minnesota farmer-founders of Land O'Lakes, Inc. 
faced here in the U.S. almost 100 years ago. Challenges inherent to 
dairy farming include long distances that can easily turn milk sour and 
difficulty finding a reliable milk buyer without formal relationships. 
This instability means financing is difficult to attain.
    Between 2012 and 2017, Land O'Lakes International Development 
implemented a $15 million USAID-funded Rwanda Dairy Competitiveness 
Program II (RDCP II) that increased regional competitiveness of Rwandan 
dairy products. The program used the following approaches: Increased 
production and production efficiency; improved market access; improved 
milk and dairy product quality; and increased local demand.
    Dairy Supply Chain Associate Andi Musselwhite supported these 
quality activities for a five-month assignment in 2015. This assignment 
was made possible through the Land O'Lakes, Inc. Talent
    Acceleration Program (TAP). This program identifies high-potential 
supply-chain employees and embeds them in important rotational roles 
where they can make a significant impact.
    During Andi's time in Rwanda, she supported implementation of 
quality assurance practices for three dairy processors. Her focus was 
on improving traceability, documentation and general hygiene practices 
in cheese plants. She also facilitated development of a yogurt, butter 
and cheese instruction manual for Rwandan cheesemakers for future 
training.
    As a result of the RDCP II program, 63,000 individuals were trained 
in milk production and quality, 54,000 of which adopted improved 
technologies--nearly doubling the program's target. Sixty-eight percent 
of milk processed by program participants was marketed under an 
internationally recognized seal of quality.
Strengthening the Supply Chain in Bangladesh
    In mature dairy industries, milk is chilled once its drawn from the 
cow and a ``cold-chain'' of continuous refrigeration is maintained 
through transportation, manufacturing and distribution to consumers. 
Where cold-chains are interrupted, the quality of dairy products is 
hurt. In Bangladesh, where dairy herds are typically one or two cows, 
farmers do not have sufficient resources to install chilling equipment 
on their farms nor are there means of refrigerated transport.
    In 2014, the Bangladesh Dairy Enhancement Project (BDEP) was funded 
by the USDA Food for Progress program to improve the livelihood of 
dairy farmers in rural areas, primarily by modernizing their formal 
market connections. BDEP partners with dairy processors to establish 
milk chilling centers (MCCs) staffed with advisory services that can 
help farmers improve their cows' productivity and their farms' 
profitability.
    Most milk procurement systems have multiple ``tiers'' in which milk 
from many farmers is aggregated by an intermediary or agent of the 
processor. It's then transported, unrefrigerated, from a milk 
collection point (MCP) to a regional milk chilling center (MCC). By 
decreasing the distance that raw milk travels to the first point in the 
supply chain with refrigeration capability, the single tier system 
reduces the growth of bacteria and better preserves milk quality. 
During a six-month TAP rotation with BDEP, Kai Knutson compared the 
quality of milk procured by milk processors in Bangladesh through these 
two procurement systems: the widely employed multi-tier system and the 
recently developed single-tier system.
    As BDEP ends in mid-2017, the program expects to exceed its goal of 
improving 10,000 dairy farmers' productivity and profitability. It also 
expects to link farmers to the formal market with the establishment of 
55 milk collection centers--meaning that many more Bangladeshis will 
have access to safe and nutritious dairy products.
Building the Cooperative Model in Rwanda
    Through the USAID Cooperative Development Program, the cooperative 
model of shared ownership is displayed as a key tool for sustainable 
agricultural and business markets in emerging nations. As part of this 
program, the Seed Cooperative Alliance (the Alliance) was formed in 
2013 in Rwanda. It is a hybrid group of experts--Land O'Lakes, Inc., 
Land O'Lakes International Development, African seed company Seed Co 
and local cooperatives from across the region.
    Land O'Lakes, Inc. is sharing its knowledge and sales approach from 
Winfield United's crop inputs business with Seed Co, while Land O'Lakes 
International Development bridges the gap between Seed Co and the 
fourth and final partner, the local Rwandan cooperatives.
    Currently working with 15 cooperatives in two countries--Rwanda and 
Tanzania--the Alliance is testing and promoting a cooperative model 
that offers customized services to cooperative members and emphasizes 
buying new hybrid seed varieties.
    The Alliance's long-term goal is to develop a trust-driven, 
sustainable approach for cooperatives and the private sector to make 
hybrid maize seed more available to smallholder farmers. The theory is 
that more hybrid seed will increase crop productivity in the region to 
meet growing demand for maize.
    Over three years, the Alliance has helped cooperatives engage in 
partnerships with multiple seed and fertilizer companies. Those 
companies have since provided valuable services to cooperative members. 
By using hybrid seeds, farmer-members are experiencing lower costs of 
production, higher yields and getting better prices for their produce 
at market. And best of all, the farmer-members are recognizing even 
more opportunities to improve their livelihoods.
Quality Assurance--a Universal Language
    The John Ogonowski and Doug Bereuter Farmer-to-Farmer Program (F2F) 
is explicitly designed to leverage private sector experience by 
engaging U.S. volunteers (farmers, farm groups, agribusinesses and 
other agriculture sector institutions) in food security development 
projects. The program works by matching highly-skilled volunteers in 
short-term international roles as technical advisers for development 
needs.
    Food safety, from farm-to-fork, is a common need across cultures. 
Hazard Analysis and Critical Control Points (HACCP), a food safety 
management approach, is applicable to any business, anywhere in the 
world. Land O'Lakes, Inc. food and feed employees participate in HACCP 
trainings twice a year for their commercial roles and, this past June, 
three quality employees took that training knowledge and facilitated a 
training for 20 students at the American University of Beirut in 
Lebanon through F2F. Another quality expert, Sherry Gruber, who is a 
laboratory lead in Land O'Lakes, Inc.'s Orland, California dairy plant, 
spent time at a dairy processing plant in Cairo, Egypt, where she 
trained their lab lead on how to test for milk quality and establish 
laboratory procedures. These volunteers then returned to their day-to-
day jobs with an expanded understanding about how to make food safe for 
the global consumer.
Research and Development Provides Remote Support
    Sometimes corporate employees are able to add technical support 
without ever leaving their day jobs. A USAID project in Zambia worked 
to improve the intake of key nutrients for people living with HIV by 
fortifying several products already popular in the local market. One of 
the fortification priorities was consumption of lactic bacteria, an 
element found in probiotic fermented milk that supports health and 
digestion, and which eases the digestibility of antiretroviral drugs. 
Rolf Campell, a Land O'Lakes, Inc. dairy foods research and development 
expert, supported the project by testing Mabisi, a naturally fermented 
milk product popular in Zambia at the pilot plant at our headquarters 
in Arden Hills, Minnesota. The final product, a Parmelat product called 
LactoLive Mabisi, was later produced commercially for local consumers. 
Two other related products--Go-Power! Peanut Biscuits and Super Formula 
5, an enriched maize-based drink--were created for the local market in 
partnership with local processors Sunrise Biscuits and Trade Kings.
                               conclusion
    Land O'Lakes International Development exists to transform 
generations of lives in challenging environments. These transformations 
come in many forms: A farming family has enough yield to pull itself 
out of poverty. A young entrepreneur creates jobs in her community. 
Local food supplies are safer and communities healthier. A little girl 
is sharper in school now that she gets a nutritious breakfast every 
morning. These transformations matter. Piece by piece, they build food 
security and economic strength.
    Nonprofits like Land O'Lakes International Development are proud to 
be stewards of these efforts, and the commercial sector makes us 
better. But sustainable, effective development programs aren't possible 
without our most critical partner, the U.S. government. Funding these 
programs is not only the right thing to do--it's also a smart 
investment. It benefits American businesses, the U.S. economy, American 
jobs and the security of the American people.
    Together we can continue to work in communities around the globe to 
grow more with less, foster new ideas and talent and build economies by 
strengthening local agriculture.

------------------
Notes

    \1\ World Bank. 2007. ``World Development Report 2008.''
    \2\ United Nations. 2015. ``The State of Food Insecurity in the 
World.''
    \3\ World Bank. 2016. The World Bank Data: Population. http://
data.worldbank.org/indicator/SP.POP.TOTL
    \4\ International Trade Administration and Economics and Statistics 
Administration. 2014. The Role of Exports in the United States Economy. 
Washington, DC: U.S. Government.
    \5\ Gates, Bill. 2017. ``Cutting Foreign Aid Makes America Less 
Safe.'' Time, March 17.

                               __________

 Statement Submitted for the Record by Mark Shriver, President of Save 
                      the Children Action Network

    Chairman Corker and Ranking Member Cardin, thank you for convening 
this important hearing today and for the opportunity to testify.
    Save the Children Action Network supports efforts to bolster U.S. 
leadership in helping end preventable child and maternal deaths 
throughout the world. As the sister organization to Save the Children, 
we are the political voice for kids. With the foundation of a respected 
nonprofit and the mindset of a startup, we approach our core issues, 
including ending preventable child and maternal deaths, with an 
entrepreneur's eye: what has been done? How can we do better? How can 
we give more children the chance to survive?
    More than five million women and children die needlessly each year 
due to preventable diseases such as pneumonia and diarrhea. American 
leadership in international development has contributed significantly 
to a 50 percent drop in the number of preventable deaths over the past 
25 years, we still have a long way to go in eliminating these tragic 
deaths completely.
    The U.S. has contributed generously to addressing this problem 
through our bilateral assistance programs (through the Maternal/Child 
Health and Nutrition accounts) and multilateral assistance (through 
Gavi--the Vaccine Alliance). Yet, while we are using all of the 
bilateral and multilateral assistance mechanisms currently available to 
us, the World Bank estimates that far more funding is needed to meet 
current needs, particularly among women and children living in extreme 
poverty and those living in fragile and conflict-affected states. We 
simply lack financing mechanisms to bring proven and effective programs 
to scale.
    Recognizing that the United States' government cannot and should 
not close this funding gap on its own, it is imperative that we find 
another way. We know what the solutions are, but we need to look 
creatively at ways to bring those solutions to the women and children 
who need them the most. One approach is to grant USAID the authority to 
explore and implement ways in which it can leverage our longstanding 
moral leadership to bring new resources to the table, complementing 
traditional bilateral and multilateral assistance.
    USAID began this process in 2015 by launching a financing framework 
to improve efforts to end preventable child and maternal deaths, the 
outcome of a commitment made at the 2014 U.S.-Africa Leaders' Summit. 
This framework was designed to help USAID Missions learn the language 
of finance, identify underlying economic barriers preventing better 
health outcomes, and understand potential solutions to these barriers. 
These solutions do not necessarily require additional U.S. funding. 
Instead, they take a different, more targeted, approach to allocating 
existing assistance dollars and resources. The long-term goal of the 
framework is to help countries move toward self-sustainability by 
increasing each country's own investment in maternal, newborn, and 
child survival.
    The bipartisan Reach Every Mother and Child Act, sponsored by 
Senators Collins and Coons and cosponsored by 34 Senators in the last 
Congress, builds on this financing framework by providing USAID with 
the authorities to explore and implement new tools beyond traditional 
bilateral and multilateral assistance to leverage additional sources of 
public and private capital.
    One of the key innovative financing mechanisms intended to increase 
private sector engagement is pay-for-success contracting, also known as 
development impact bonds or social impact financing. This approach 
enables the U.S. government to mobilize the private sector, drive 
innovation and accountability, and protect U.S. taxpayers from 
ineffective programming. It requires that all partners (including 
investors, implementers, and outcomes funders) agree on a common goal 
and a way to measure success. Private investors finance a program aimed 
at achieving these agreed-upon outcomes. Once the outcomes have been 
achieved (and confirmed by an independent body), an outcomes funder, 
such as USAID, would repay the investors. The structure of pay-for-
success and its emphasis on results can help to incentivize the most 
effective solutions to a health or development challenge. If a program 
does not achieve the intended outcomes, then taxpayers would not be on 
the hook to repay the investor.
    Pay-for-success has not yet taken off within international 
development circles but we believe that the time to begin is now. In 
the U.S. we have witnessed first-hand the success of pay-for-success 
contracting in helping to solve social problems. In Salt Lake City, for 
example, a pilot project on early childhood education was successful in 
keeping students in a general education setting. USAID should have the 
ability to fully explore the use of this financing model, which may 
help attract new investors to the global health sector, reduce 
government bureaucracy, reward innovation, and foster greater 
accountability and effectiveness of programming.
    Again, I thank Chairman Corker and Ranking Member Cardin for the 
opportunity to testify before the Committee today. I look forward to 
working with you on international development issues in the months 
ahead.

                                  [all]