Foreign Aid: Actions Taken to Improve Food Aid Management (Letter Report,
03/23/95, GAO/NSIAD-95-74).

Pursuant to a legislative requirement, GAO reviewed food assistance
programs authorized under the 1990 Agricultural Development and Trade
Act, focusing on actions the Agency for International Development (AID)
has taken to implement previous GAO recommendations.

GAO found that: (1) AID has fully or partially implemented 11 of 13
recommendations that GAO made regarding problems it had in complying
with the 1990 Agricultural Development and Trade Act; and (2) the two
recommendations AID has not implemented relate to establishing criteria
for waiving U.S. procurement and shipping regulations, and reporting to
Congress on the efficiency of food aid for achieving food security.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-74
     TITLE:  Foreign Aid: Actions Taken to Improve Food Aid Management
      DATE:  03/23/95
   SUBJECT:  Foreign aid programs
             International food programs
             Reporting requirements
             Congressional/executive relations
             Food relief programs
             International economic relations
             Agricultural assistance
             Developing countries
             Foreign economic assistance
IDENTIFIER:  UN World Food Program
             Food for Peace Program
             Food for Development Program
             
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Cover
================================================================ COVER


Report to Congressional Committees

March 1995

FOREIGN AID - ACTIONS TAKEN TO
IMPROVE FOOD AID MANAGEMENT

GAO/NSIAD-95-74

Foreign Aid


Abbreviations
=============================================================== ABBREV

  FFP - Office of Food for Peace
  PVO - private voluntary organization
  USAID - U.S.  Agency for International Development

Letter
=============================================================== LETTER


B-259723

March 23, 1995

The Honorable Richard G.  Lugar
Chairman
The Honorable Patrick J.  Leahy
Ranking Minority Member
Committee on Agriculture,
 Nutrition, and Forestry
United States Senate

The Honorable Pat Roberts
Chairman
The Honorable E (Kika) de la Garza
Ranking Minority Member
Committee on Agriculture
House of Representatives

The Honorable Benjamin A.  Gilman
Chairman
The Honorable Lee H.  Hamilton
Ranking Minority Member
Committee on International Relations
House of Representatives

The 1990 Agricultural Development and Trade Act (P.L.  101-624)
requires us to periodically review food assistance programs
authorized under
titles II and III of the act.  In July 1993, we issued a
comprehensive report that made 13 recommendations to the
Administrator of the U.S.  Agency for International Development
(USAID) to improve the management of food aid programs.\1 As agreed
with your offices, this report focuses on actions USAID has taken to
implement the recommendations made in that report. 


--------------------
\1 Food Aid:  Management Improvements Are Needed to Achieve Program
Objectives (GAO/NSIAD-93-168, July 23, 1993). 


   BACKGROUND
------------------------------------------------------------ Letter :1

For over 4 decades the United States has provided agricultural
commodity assistance, or food aid, to foreign countries to combat
hunger and malnutrition, encourage development, and promote U.S. 
foreign policy goals.  The primary legal framework for U.S.  food aid
is provided under the Agricultural Trade Development and Assistance
Act of 1954, as amended, commonly known as Public Law 480. 

The 1990 Agricultural Development and Trade Act made several major
changes in the U.S.  food aid program.  One of the changes involved
providing agricultural commodities to developing countries to enhance
their "food security", that is, access by all people at all times to
sufficient food and nutrition for a healthy and productive life."
Title II (Emergency and Private Assistance Programs) of the act
authorizes food donations in response to famines and other
emergencies and food aid grants to private voluntary organizations
(PVO) and cooperatives, intergovernmental organizations, and
multilateral institutions for nonemergency uses.\2 The act also
restructured the program to eliminate government-to-government
programs, except those for emergencies.  In addition, the act
provided for nonemergency commodity assistance to be distributed
through PVOs, cooperatives, and intergovernmental organizations. 
Title II commodities may be distributed to needy people, sold,
exchanged, or distributed by other appropriate methods. 

Title III (Food for Development) of the act is intended to support
economic development and, if commodities are sold, to use the
resulting local currency revenues for development purposes.  Title
III provides multiyear, government-to-government grants to least
developed countries.  The title III legislation gives USAID
considerable flexibility in designing food aid programs that
complement its overall country development activities. 

USAID's Office of Food for Peace is responsible for managing title II
programs, which are implemented overseas by PVOs, recipient
government agencies, or intergovernmental organizations.\3 USAID's
regional bureaus are responsible for title III programs, and overseas
missions negotiate agreements with recipient countries and monitor
the implementation of both titles II and III programs in the host
countries. 

In fiscal year 1994, title II commodities went to 55 countries, and
title III commodities went to 13 countries.  The most commonly
provided commodities were wheat and wheat flour, corn, corn-soya
blend, rice, and vegetable oil, but non-food commodities, such as
tallow, were also provided.  In fiscal year 1994, USAID distributed
over 2 million metric tons of agricultural commodities under title II
and over 1 million metric tons under title III.  USAID's fiscal year
1994 pledge to the World Food Program was approximately 475,000
metric tons, or about 22 percent of the title II commodities, for
activities in 33 countries. 


--------------------
\2 USAID's regulations exempt the World Food Program from regulations
governing transfers of food to other cooperating sponsors and from
USAID oversight.  This program was the subject of a separate report,
Foreign Assistance:  Inadequate Accountability for U.S.  Donations to
the World Food Program (GAO/NSIAD-94-29, Jan.  28, 1994). 

\3 In USAID's organizational structure, the Food for Peace Office is
under the Bureau for Humanitarian Response. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

In our July 1993 report, we identified a number of problems involving
USAID's compliance with the 1990 Agricultural Development and Trade
Act and its management of Public Law 480 titles II and III food aid
programs.  These problems included USAID's lack of criteria and
guidance for implementing food aid programs, USAID's inability to
demonstrate the impact of food aid on food security, and USAID's
failure to ensure accountability for food aid resources.  We made a
number of recommendations to the USAID Administrator.  In particular,
we recommended that USAID establish criteria and guidance on how food
aid should be programmed, managed, and accounted for; assess the
efficiency of food aid for achieving food security; and evaluate the
impact of food aid on food security. 

USAID has fully or partially implemented 11 of the 13 recommendations
made in our 1993 report.  One of the major impediments to greater
USAID action on these recommendations has been the absence of a clear
policy as to how titles II and III food aid is to be used to enhance
food security, which was one of our major recommendations and which
had not been implemented until February 1995.  USAID has not
implemented two of the recommendations.  These recommendations
focused on (1) establishing criteria as to when U.S.  procurement and
shipping regulations could be waived and (2) reporting to Congress on
the efficiency of food aid for achieving food security.  Table 1
summarizes the status of USAID's implementation of the
recommendations. 



                           Table 1
           
             Summary of USAID's Implementation of
                       Recommendations

