[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




                          REFORMING FOOD AID: 
                      DESPERATE NEED TO DO BETTER

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 7, 2015

                               __________

                           Serial No. 114-108

                               __________

        Printed for the use of the Committee on Foreign Affairs



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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

The Honorable Dan Glickman, vice president and executive 
  director, Aspen Institute Congressional Program (former 
  Secretary, U.S. Department of Agriculture).....................     3
The Honorable Rajiv Shah, senior advisor, Chicago Council on 
  Global Affairs (former Administrator, U.S. Agency for 
  International Development).....................................     9
Christopher B. Barrett, Ph.D., David J. Nolan director, Stephen 
  B. and Janice G. Ashley professor, Charles H. Dyson School of 
  Applied Economics and Management, Cornell University...........    17
The Reverend David Beckmann, president, Bread for the World......    27

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Dan Glickman: Prepared statement...................     6
The Honorable Rajiv Shah: Prepared statement.....................    12
Christopher B. Barrett, Ph.D.: Prepared statement................    20
The Reverend David Beckmann: Prepared statement..................    29

                                APPENDIX

Hearing notice...................................................    58
Hearing minutes..................................................    59
The Honorable Edward R. Royce, a Representative in Congress from 
  the State of California, and chairman, Committee on Foreign 
  Affairs: Written statement from Howard G. Buffett, Chairman and 
  CEO of the Howard G. Buffett Foundation........................    61
The Honorable David Cicilline, a Representative in Congress from 
  the State of Rhode Island: Written statement from Navyn Salem, 
  Founder, Edesia Inc............................................    66

 
                          REFORMING FOOD AID: 
                      DESPERATE NEED TO DO BETTER

                              ----------                              


                       WEDNESDAY, OCTOBER 7, 2015

                       House of Representatives,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 10:14 a.m., in 
room 2172 Rayburn House Office Building, Hon. Edward Royce 
(chairman of the committee) presiding.
    Chairman Royce. This committee will come to order. This 
morning we are going to discuss the need to bring more 
flexibility and efficiency and effectiveness to our U.S. 
international food aid program.
    And let me mention at the outset that there is a problem at 
the tarmac at Reagan Airport so we are going to see Mr. Engel 
in a while, but he is en route.
    So let me make the observation that a number of the members 
of this committee had an opportunity to travel with me to 
Tacloban after the horrible typhoon hit that island and see 
what the situation was like on the ground. Had it not been for 
the ability to work around our food aid program and get food 
there directly, had the food been shipped from the United 
States it would have taken 6 months.
    Fortunately, food was prepositioned in advance of the 
hurricane season so it took 6 weeks. But had USAID not found a 
way to work around the restrictions, get the local purchases, 
get the voucher program in place, and start feeding people that 
week, you would have had an absolute crisis on Tacloban. I and 
other members of our committee saw that.
    So over the last 60 years the U.S. Government, in 
partnership with American farmers, as we know the history, and 
in partnership with shippers and NGOs, has helped to relieve 
the suffering of billions of starving people worldwide, but 
that proud legacy shouldn't blind us to needed reforms here 
today. Desperately needed reforms. As we will hear today, our 
food aid is needlessly expensive, it takes too long to arrive, 
and it often does long-term damage to local economies.
    So those are the issues we are going to be discussing. 
Despite the fact that obtaining food closer to an area in 
crisis or providing vouchers can save time, money, and lives, 
current law requires that our food aid be purchased in and 
shipped from the United States, 6 months away. And that 6 
months to get the food there, that is part of the problem. We 
are the only country that continues this approach to food aid.
    These requirements have real-life consequences. As Andrew 
Natsios, a former administrator of USAID, told this committee, 
``I watched people die waiting for food aid to arrive.'' So 
again it took 4 weeks when we prepositioned for U.S. food to 
arrive in the Philippines following the typhoon, it took 6 
weeks to arrive in Nepal following the 2015 earthquake, and our 
food aid program simply wasn't able to provide food when and 
where it was needed the most.
    Not only do U.S. purchase and shipping requirements slow us 
down and add unnecessary transportation costs, by the way, they 
can also distort local markets. That is the other thing we need 
to look at. In 2008, Americans saw truckloads of U.S. food 
being delivered to northern Kenya where famine threatened to 
kill millions. What we didn't see, but now we understand, is 
that these truckloads of U.S. food depressed local prices and 
pushed farmers in other parts of Kenya who had an abundant 
harvest. But we had not transferred from where that harvest 
occurred to where the famine was occurring. That was not the 
way we addressed the issue. So instead, it pushed those farmers 
into deeper poverty, into bankruptcy. Local purchases of food 
would have avoided this devastating consequence, but that was 
not an option at the time under the rules.
    And this scenario has played out again and again from 
Afghanistan to Haiti.
    The challenges of food aid have changed since the program 
was first established in the 1950s. More and more in areas of 
conflict food is being used as a weapon against the population. 
Groups like ISIS and al-Shabaab are manipulating food aid. 
Convoys are being attacked. Some countries hosting large 
numbers of refugees have seen food aid destabilize their 
economies, and that makes the refugees unwelcome in their 
minds. Here again, the use of more flexible food aid tools 
could work, but we need a little flexibility in the equation 
and that is what we are trying to engineer here.
    Current law has not kept pace with today's world. Our 
Government no longer holds surplus food stocks. Agricultural 
prices are stable, U.S. agricultural exports are at an all-time 
high, and demand is expected to increase. U.S. ports are doing 
quite well. Using food aid as a means to subsidize our economy 
can't really be justified in situations where there is an 
emergency.
    And the ``auxiliary reserve'' that U.S. shipping 
requirements supposedly support--it has never been called up. 
In fact, the majority of U.S. ships that move food aid are not 
even ``militarily useful.'' Those that are, ultimately those 
are foreign owned. They are not owned by U.S. shipping 
companies.
    For the past 3 years, we have been fighting to advance 
common sense solutions that would enable the U.S. to reach more 
people in less time at less expense, and we have been fighting 
to put the emphasis back on saving lives. We have made some 
progress but it is not enough.
    If we allowed for just 25 percent of the Food for Peace 
budget to be used for more flexible food aid approaches when 
there is an emergency, like local purchase, vouchers or 
transfers, we could reduce our response time from months to 
hours and reach at least 2 million more people with lifesaving 
aid. If we bump that number up to 45 percent we could reach 6 
million more.
    As we will hear today, we are in desperate need to do 
better. We need to embrace common sense reforms that allow us 
to use the right tool at the right time in the right place.
    With that I will turn to Mr. Engel after he arrives, after 
the testimony of our four witnesses. And let me introduce Mr. 
Dan Glickman. Many of us know him as the former Secretary of 
Agriculture from March '95 until January 2001, and he served in 
the House for 18 years representing the fourth district of 
Kansas.
    Dr. Raj Shah served as the 16th administrator of the U.S. 
Agency for International Development where he led the Feed the 
Future and Power Africa initiatives.
    Dr. Chris Barrett teaches economics at Cornell University. 
Dr. Barrett has won several national and international awards 
for his research, which focuses on international agricultural 
development and on poverty reduction.
    Reverend David Beckmann has been president of Bread for the 
World since 1991 during which time he has fought to overcome 
hunger around the planet. He was recognized with the World Food 
Prize for his contributions.
    And we appreciate this distinguished panel here today. 
Without objection, the witnesses full prepared statements will 
be made part of the record. Members here will have 5 calendar 
days to submit any statements or any questions or any 
extraneous materials for the record.
    And Mr. Glickman, please summarize your remarks, if you 
will, Mr. Secretary. Thank you.

  STATEMENT OF THE HONORABLE DAN GLICKMAN, VICE PRESIDENT AND 
   EXECUTIVE DIRECTOR, ASPEN INSTITUTE CONGRESSIONAL PROGRAM 
       (FORMER SECRETARY, U.S. DEPARTMENT OF AGRICULTURE)

    Mr. Glickman. Thank you, Chairman Royce. It is an honor to 
be here to see former colleagues. I served with Dana 
Rohrabacher, I think it was on the House Science Committee, a 
long time ago. We both look pretty good, but it was a long time 
ago. And then of course Karen Bass just recently accompanied 
several of your colleagues on a visit to Tanzania as part of 
the Aspen Institute.
    So I am delighted to be here. And I think I am really here 
as much in my former role as Secretary of Agriculture and as a 
Congressman from Kansas and an agriculture guy, who sometimes 
agriculture and humanitarian interests are not necessarily on 
the same wavelength as it relates to the issue of food aid 
reform and flexibility. So I just wanted to give you my 
thoughts and thank you so much for having this hearing which is 
extremely important.
    I do agree with you, Mr. Chairman, that offering more 
flexibility in how food aid is distributed will allow the U.S. 
to feed more hungry people more quickly while empowering them 
to, over time, feed themselves. My first point I would make is 
in the last decade changes in the number and nature of 
conflicts, humanitarian disasters, massive migration, and 
refugee crises are forcing the United States and the world at 
large to rethink old paradigms about how we can deliver food 
assistance effectively and efficiently.
    This year, for the first time in history, we are facing 
four Level 3 humanitarian crises, Syria, Iraq, Yemen, and South 
Sudan. More than ever before our food aid resources are 
strained. And not too long ago the head of the World Food 
Program said that we did not have enough resources, either the 
United States or the world, to provide adequate food assistance 
to the refugees in Syria. This is a big problem, and it is an 
important problem for the United States because we provide 
roughly about half of the food assistance in the world and we 
are viewed as a great leader.
    So to alleviate short term hunger in both emergency and 
non-emergency situations, the U.S. needs a range of food and 
aid tools including food vouchers, local and regional purchase, 
in-kind support, and in some cases direct cash assistance. 
These tools have all been introduced on at least a limited 
basis over the past decade.
    My colleague and friend Raj Shah has done a 
transformational job at USAID trying to do this within the 
statutory authority that we are given. But as you point out, 
Mr. Chairman, statutory limitations often prevent policy makers 
from choosing the tool that will best meet food needs for the 
greatest number of people.
    Traditionally, food has been sourced from American growers. 
That was in part based upon constant surpluses after the Second 
World War, surpluses in corn and wheat and soybeans. And 
farmers have deep humanitarian ties to the rest of the world. 
But those surpluses drove the need for food aid based upon the 
direct transfer of crops and commodities.
    Those times have changed, as you point out. Supply and 
demand are at much better equilibrium around the world, and the 
inhibitions that you have pointed out through cargo preference, 
the NGO process of monetization, are not necessary these days 
like they might have been 20 or 30 years ago.
    The complex nature of emergencies today and the 
circumstances driving chronic hunger have rendered these 
approaches more inefficient than other delivery methods. 
Further, the food aid program no longer yields the same 
benefits to American agriculture and shipping industries as it 
once did. In fact, the whole scheme of humanitarian assistance 
and its resources and infrastructure, both how the U.S. does it 
and the rest of the world, is not up to the task of today's 
problems given the chronic crises we have.
    Evidence suggests however that an important step in the 
right direction is to make America's food aid program far more 
flexible and to favor a cash-based approach to ensure that we 
get the most mileage out of every food aid dollar invested.
    And this is not a one-size-fits-all. We will still need to 
provide commodities as we did in Haiti, as we did in the 
Philippines. It has to be part of our arsenal, but the 
statutory restrictions on how much commodities are given and 
under what circumstances are really hurting our ability to help 
people around the world. And those points have been made, I 
think, by everybody here who is talking about it. So, in my 
testimony I talk about the range of changing in tools in terms 
of cargo preference, in terms of monetization that need to be 
done.
    But I want to finish my testimony as the former Secretary 
of Agriculture. I want to emphasize that U.S. agriculture can 
and should be seen as an important partner in meeting food 
needs. Introducing more flexibility into America's food aid 
program will not negatively impact the vast majority of U.S. 
food producers, but a failure to leverage the strengths of the 
U.S. agriculture and food sector will negatively affect our 
ability to advance food security.
    Food aid was responsible for about 1 billion out of 152 
billion in commodity exports last fiscal year. A recent report 
by the American Enterprise Institute calculated that the share 
of U.S. corn production the previous 6 years used for food aid 
was less than 0.1 percent, and only 0.5 percent of corn exports 
were due to food aid programs. Because of global aid, global 
trade, other issues that are coming up, the need for U.S. 
agriculture to benefit directly from the shipment of American 
commodities overseas is not as great as it used to be before, 
and in fact it has a negative impact on our ability to serve 
the world.
    So, look, American agriculture has a lot to gain by 
stronger economies around the world, greater exports generally, 
bigger purchases of U.S. agriculture and fertilizer and related 
products, and a much stronger worldwide economy will allow U.S. 
producers to benefit rather dramatically. So it really is in 
our interest to make these food aid programs more sensible and 
more flexible, and that is the bottom line in all of this. It 
does not hurt American agriculture; it ultimately will help 
American agriculture rather dramatically.
    So I urge this committee to consider U.S. agriculture a 
partner in pursuing food aid reforms, to talk to people within 
the agriculture community, to find ways that we can work 
through some of the politics of these problems, but at the same 
time recognizing to feed a hungry world and to save millions of 
lives we do need to make these programs much more flexible than 
they currently are. Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Glickman follows:]
   
   
   
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    Chairman Royce. Thank you, Mr. Secretary.
    Raj.

STATEMENT OF THE HONORABLE RAJIV SHAH, SENIOR ADVISOR, CHICAGO 
 COUNCIL ON GLOBAL AFFAIRS (FORMER ADMINISTRATOR, U.S. AGENCY 
                 FOR INTERNATIONAL DEVELOPMENT)

    Mr. Shah. Thank you, Mr. Chairman. And I want to commend 
you for your extraordinary leadership on this issue, also 
Congressman Engel and so many other friends and colleagues on 
this panel.
    The Pope's recent visit reminded us that America's role as 
the world's leader in humanitarian affairs really is a signal 
part of our national security and global presence. Of course, 
our humanitarian history is that we started as a great 
humanitarian nation internationally with food assistance, 
sending surplus American commodities abroad after the Surplus 
Commodity Act. This legacy has fed more than 3 billion people 
over 60 years, and as Secretary Glickman points out, and has 
done so much to preserve this legacy, this is an extraordinary, 
extraordinary achievement.
    But today we have many, many food crises that are not just 
food crises. The fact that there are so many hungry children, 
women, and families in Syria is not just a food crisis, it is 
creating a refugee crisis that contributes to destabilizing 
that region. The fact that so many young children, more than 
1,000 in the camps in South Sudan, have telltale orange hair 
because they are so acutely malnourished and on the verge of 
starvation is not just a humanitarian priority, it is leading 
to instability throughout that region. And the fact that our 
presence and capacity to support those in Nepal is diminished 
because of our lack of flexibility and how we conduct our food 
assistance is also not just a moral issue, it has security and 
stability consequences.
    And today we are having this debate in a context where we 
know a lot of the evidence around whether or not reform and 
flexibility in the food assistance program works. We have 
evidence that shows that targeting the most vulnerable children 
with vouchers, often sent electronically on SMS texts on their 
mobile phone, actually saves their lives in crises far more 
effectively than shipping American food and trucking it into 
communities where that kind of targeting capacity is not 
possible.
    To just put it in perspective, the Somalia famine of 2011, 
which I take as one of the most, in my view, meaningful moments 
of my tenure at USAID, would have led to more than 100,000 
children dying. In fact, 35,000 children already had died 
before the targeting and the SMS program went into place. And 
then the child deaths came down so fast and so effectively that 
we virtually stopped child death from that famine the moment we 
put that program in place. We can only do that because of 
flexibility that we had in other programs.
    Shipping over U.S. grain is now known to be less valuable 
than feeding children with these ready-to-use supplemental and 
therapeutic foods. This little packet of peanut butter-like 
paste, which doesn't taste quite as good as peanut butter, 
having had some, resuscitates children so much faster and so 
much more effectively than giving them corn-soy blend or any of 
the other more traditional food assistance products.
    These products are created in New Jersey and Texas and 
Rhode Island. I have met, along with Congressman Cicilline, the 
employees of these companies that are often refugees themselves 
that take great pride in the fact that they are serving this 
country and our ability to project our values around the world. 
And we can do this in a way that creates American jobs and uses 
American knowledge and medical know-how to actually save lives.
    We know local purchases, as Chairman Royce mentioned, is 
faster and cheaper than the alternatives. It is 25 percent less 
costly in Tacloban, but also in every other crisis the first 
few weeks and months of aid and assistance do not come from the 
traditional Food for Peace program. They come from a different 
pocket of resources that we use so that we can locally purchase 
and locally serve food and meet needs when they are needed. And 
then Food for Peace comes in many months later using a program 
that was designed six decades ago.
    By the way, we also know that those efforts can be branded 
just as proudly. In fact, one of my favorite photos is from the 
Tacloban response when we had U.S. military personnel carrying 
a box of locally purchased foods that were labeled USAID that 
said ``From the American people'' and that communicated the 
same sense of national pride and commitment as any other form 
of branding with respect to food assistance.
    And finally, we know that monetization in its current form 
is just a waste of money at best, and in reality is far more 
consequential and that it depresses prices for local farmers. 
When we ended monetization in Haiti we immediately created 
incentives for tens of thousands of farm households to double 
their food yields. We then supplemented that effort with 
targeted feeding programs that reached the most vulnerable 
children.
    And today, 50 percent of child hunger has gone--child 
hunger is down by more than 50 percent in Haiti compared to the 
day before the earthquake. Not because we are using Food for 
Peace in its traditional form, but because we are ending some 
of the harmful practices of an antiquated program that 
sometimes causes more harm than benefit. This is real data. 
This was enabled by the farm bill's increasing flexibility that 
lets us test new approaches and see what is happening. It was 
enabled by the Bush administration's local and regional 
procurement program which gave us the database to understand 
whether these new ways of working have effectiveness or not.
    And today we live in a world where this reform is 
politically achievable. Big agriculture companies like Cargill, 
growers like the National Farmers Union, policy experts from 
the left and the right, including the American Enterprise 
Institute and even some of the largest shipping companies in 
the world, have come together to say, let's do this differently 
because America's humanitarian leadership matters for our 
world, and they want to see it sustained in a different way in 
the future.
    So I welcome the opportunity to be with you, and I want to 
congratulate and thank you for your interest. I do believe the 
time is now to live up to the Pope's call. I think you can pass 
food aid reform in this body. I think you can pass Feed the 
Future and authorize that bipartisan legislation, which I 
understand now has nearly 80 co-sponsors on its way to 100.
    And I think if you do those two things in this Congress, 
America's leadership in fighting hunger around the world will 
be sustained for the next decades and it will be something we 
can all be very, very proud and grateful for. Thank you.
    [The prepared statement of Mr. Shah follows:]
    
    
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    Chairman Royce. Thank you, Dr. Shah.
    Dr. Barrett.

  STATEMENT OF CHRISTOPHER B. BARRETT, PH.D., DAVID J. NOLAN 
DIRECTOR, STEPHEN B. AND JANICE G. ASHLEY PROFESSOR, CHARLES H. 
   DYSON SCHOOL OF APPLIED ECONOMICS AND MANAGEMENT, CORNELL 
                           UNIVERSITY

    Mr. Barrett. Chairman Royce, honorable members, thank you 
very much for the opportunity to testify today and to summarize 
my written remarks. Let me come straight to the point. The body 
of research on food aid is extraordinarily clear. Restrictions 
imposed on U.S. international food aid programs waste taxpayer 
money at great human cost. Relative to the reformed programs 
operated by other countries, aid agencies, and by private 
nonprofit agencies, the cost of U.S. food aid are excessive, 
delivery is slow, and the programs have not kept pace with 
global emergency needs. And there is no hard evidence that this 
benefits American agriculture, maritime employment, or military 
readiness.
    No debate remains among serious scholars who have studied 
the issue. U.S. food aid reform is long overdue. U.S. food aid 
is a limited and declining resource. Inflation adjusted U.S. 
food aid spending has declined 80 percent since the mid-1960s 
high. Given limited resources, we simply must be much more 
strategic in using U.S. food aid resources.
    Four statutory restrictions imposed on these programs waste 
money and cost lives. First, under the Food for Peace Act, it 
is required that agricultural commodities be bought in and 
shipped from the United States only. Perhaps that made sense 
back in 1954 for the reasons Secretary Glickman explained. But 
today things are different. The government no longer holds 
large commodity stocks and the resulting surplus disposal 
purpose no longer applies.
    Today, the most effective way to help hungry people is to 
provide them with cash or electronic transfers or with food 
purchased locally or regionally, so-called LRP. The peer-
reviewed scientific evidence shows very clearly that LRP and 
cash or electronic transfers save time, money, and lives, while 
providing food that is equally safe and healthy and is in fact 
preferred by recipients over commodities shipped from the U.S. 
I go into further detail in my written comments.
    Second, at least 50 percent of U.S. food aid must be 
shipped on U.S.-flagged vessels under cargo preference 
provisions. Recent studies find that cargo preference inflates 
ocean freight costs by 23 to 46 percent relative to open market 
freight rates. The net result is $40 million to $50 million a 
year that is appropriated to help feed starving children that 
instead turns into windfall profits diverted to mainly foreign 
shipping lines.
    Third, at least 15 percent of non-emergency food aid must 
be monetized under current law. As the previous witnesses have 
explained, monetization is simply a waste of money. GAO 
estimates that inefficiency in monetization reduces the funding 
available for development projects by more than $70 million 
annually.
    Fourth, current law requires that between 20 and 30 percent 
of Food for Peace funding and no less than $350 million be 
available for non-emergency food aid. But with the number of 
people affected by disasters and war at an all-time high, there 
is simply insufficient food aid available to handle all the 
emergencies we face, where the bang for the food aid buck is 
greatest. That hard earmark is binding and limits America's 
capacity to respond to humanitarian emergencies around the 
world.
    Cumulatively, American taxpayers spend far more on shipping 
and handling than on food. Every taxpayer dollar spent on U.S. 
food aid generates only 35 to 40 cents worth of food commodity 
purchased. That doesn't go to hungry and disaster-affected 
people, two-thirds of it is going elsewhere. Canada, by 
contrast, has no such restrictions and makes far more extensive 
use of LRP cash and electronic transfers. As a result, its 
taxpayers get roughly twice as much food for the taxpayer 
dollar, about 70 cents worth, as compared to our 35 to 40 
cents.
    And what are the costs, the human costs of these wasteful 
restrictions on food aid? A very coarse, conservative estimate 
is that we sacrifice 40 to 45,000 children's lives each year 
because of the unnecessary costs associated with restriction 
that is posed by antiquated food aid policies.
    Now special interests claim that cargo preference advances 
military readiness. But that myth has been conclusively 
exploded by multiple careful recent studies that find the 
overwhelming majority of the agricultural cargo preference 
fleet is out of date and fails to satisfy DoD standards of 
military usefulness. In 60-plus years of cargo preference, DoD 
has not once mobilized a mariner or a vessel from the non-
Maritime Security Program cargo preference fleet. Hence, the 
Department of Defense and Homeland Security's clear support for 
food aid reform in recent years.
    Proponents of the status quo also advance claims of 
maritime employment benefits. Yet, the 2012 reduction in cargo 
preference coverage from 75 percent to 50 percent does not 
appear to have led to the ceasing of a single vessel's ocean 
freight services or the loss of any mariner jobs. And this type 
of indirect subsidy is so inefficient that any maritime job 
created comes at a taxpayer cost of roughly $100,000 a year.
    Moreover, the bulk of those windfall profits don't accrue 
to workers, they accrue to vessel owners, and a sizeable 
majority of the vessel owners are actually foreign shipping 
lines running U.S. subsidiaries. So these windfall profits 
aren't even accruing to Americans.
    Some proponents of in-kind food aid claim that food aid 
purchased in the U.S. somehow helps American farmers. Secretary 
Glickman, I think, has addressed this quite well already, but 
there is not a single careful study that supports the claim 
that U.S. food aid helps American farmers. The simple fact is 
that U.S. food aid programs procure only hundreds of million 
dollars' worth of U.S. commodities in a several-hundred-
billion-dollar U.S. agricultural economy that is very tightly 
integrated into a $4-trillion global market. U.S. food aid does 
not determine the prices farmers receive. The global market 
determines the prices farmers receive.
    U.S. food aid has done lots of good in 60-plus years. It is 
an incredibly valuable resource for humanitarian response. It 
is a highly visible symbol of Americans' commitment to feed the 
world's hungry. But we can do better. We could do much better 
if Congress will provide the USAID Administrator and the 
Secretary of Agriculture with the flexibility to employ best 
practices through four reforms.
    First, relax the restriction against cash-based 
international food assistance; second, eliminate the statutory 
minimum on monetization of non-emergency food aid; third, 
eliminate the hard earmark that protects less productive non-
emergency food aid over emergency assistance; and fourth, 
eliminate cargo preference.
    Honorable members, you have a choice. You can keep the 
status quo and keep diverting U.S. taxpayer money from 
disaster-affected children to foreign companies, or you can 
enact changes that will help save the world's hungry far more 
efficiently, effectively and quickly. Thank you very much for 
your time and attention and for taking up this very valuable 
activity.
    [The prepared statement of Mr. Barrett follows:]
    
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    Chairman Royce. Thank you.
    Reverend Beckmann. David, if you just hit that red button.

STATEMENT OF THE REVEREND DAVID BECKMANN, PRESIDENT, BREAD FOR 
                           THE WORLD

    Rev. Beckmann. Thank you, Chairman Royce and members of the 
committee. Bread for the World is a nationwide network of 
individuals and churches and church bodies that encourage 
Congress to do things that will help hungry people in our 
country and around the world. And I want to thank this 
committee for your leadership on this issue of food aid reform, 
also on the related but separate issue of the Global Food 
Security Act. I think they should be kept separate. But in both 
of these, these are both areas of legislation that are clearly 
important to the world's continued progress against hunger and 
I am grateful.
    In my written testimony I explain why Bread for the World 
supports the things we are talking about here, more flexibility 
for local, regional purpose, loosening the cargo preference 
restrictions, and eliminating monetization. I just think the 
evidence is so clear that if we could have reform of food aid 
we would have more efficient, more effective food assistance. 
In my oral testimony I would like to focus on the relationship 
of food aid to three broader concerns. The first one is the 
current surge in humanitarian need. Most of this is because of 
the war in Syria, but there is also severe humanitarian need in 
Iraq, Yemen, Sudan, Central African Republic. The resources are 
just not keeping up with the need.
    I am struck that we are cutting back on food rations for 
Syrian refugees. Just from a national security point of view, 
it does not make sense to cut back on food ration for Syrian 
refugees. And food aid reform is one way of stretching our 
dollars to meet the increased need that we face right now for 
humanitarian assistance.
    I would also like to talk about the connection of food aid 
to American agriculture. I grew up in Nebraska. In fact, I just 
flew back from a visit to my family in Nebraska. So I share in 
the sense, the deep sense of satisfaction, almost a religious 
sense of connection between the production of food in this 
country and the needs of hungry people in our country and 
around the world.
    But food aid isn't any longer economically important to 
American agriculture. What is important to American agriculture 
is the fact that the world is making dramatic progress against 
hunger and extreme poverty. The escape of hundreds of millions 
people from extreme poverty means that there are a lot more 
people in the world who are eating, eating adequately, and that 
creates an expanding and dynamic market for U.S. agriculture. 
So I think that is the basis for the ongoing and continuing 
alliance between U.S. agricultural community and the interests 
of hungry people in our country and around the world.
    There have been questions raised about committee 
jurisdiction. That is important, but it is not pressing in the 
same way that reform of the programs is pressing, and so I hope 
you can handle that question of committee jurisdiction in a way 
that doesn't hold up the reform process.
    Finally, I want to talk about food aid reform in 
relationship to the world's extraordinary progress against 
hunger, poverty and disease. I am a preacher, so I think this 
progress that is happening is an experience of our loving God 
in our own history.
    When the Pope was here, as Raj said, he talked a lot about 
people in need. When he talked to Congress he specifically 
celebrated the progress that the world is now making against 
poverty. And he said, ``The fight against poverty and hunger 
must be fought constantly and on many fronts.'' Reforming food 
aid is one way to fight hunger, and using it as one way to move 
toward the virtual hunger in our times is certainly sacred 
business.
    [The prepared statement of Rev. Beckmann follows:]
    
    
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    Chairman Royce. Thank you, David.
    Rev. Beckmann. Thank you.
    Chairman Royce. We will go now to Mr. Eliot Engel for his 
opening statement.
    Mr. Engel. Thank you. Thank you, Mr. Chairman and thank you 
for calling this hearing. And, as the ranking member, I want to 
just say that this is another wonderful example of the 
bipartisanship of the Foreign Affairs Committee. Thank you for 
bringing the committee's focus to the pressing need to reform 
our food aid program.
    And we are fortunate of course, and we have heard from 
them, to have a panel of experts who have dealt with this issue 
inside government and the NGO world and academic settings. So I 
want to say to all our witnesses, thank you for sharing your 
views and welcome to the Foreign Affairs Committee.
    I want to single out Dr. Shah, who I had the pleasure of 
working with for many years with the USAID, and it is good to 
see you again Raj and welcome you. And Dan Glickman, who, by 
the time I came to Congress 27 years ago, was already a rising 
star in Congress. So actually he was already a star, not even 
rising, and then served as the distinguished Secretary of 
Agriculture. And it is really great to see you as well, Dan. 
Dr. Barrett, Reverend Beckmann, your legend precedes you. So 
this is just a wonderful panel, and we are so fortunate to have 
all of you here today.
    Let's note at the outset the world is better off because of 
the Food for Peace program. Since it was launched in the 1950s, 
this effort has fed more than 1 billion people in more than 150 
countries. It has saved countless lives. Food for Peace is 
something of which we should all be proud.
    But we should also be honest. Food for Peace is now showing 
its age. It was designed to meet challenges in a much different 
world. For example, the majority of our food aid in developing 
countries must be bought and shipped from the United States 
even when local food is available at a lower price. In the 
1950s, this made sense. The Federal Government had a massive 
surplus of food on its hands. Food for Peace was a smart way to 
help those in need and to prevent needless waste.
    But today we don't have that surplus of food. What is more, 
buying food and transporting it from the U.S. to a crisis zone 
costs almost 50 percent more than purchasing food products 
locally. That is not a very good bang for our buck. And when we 
are talking about feeding hungry people, every little bit 
obviously counts.
    But to make matters worse, under our current program, it 
takes 4 to 6 months longer for food to reach hungry people than 
it would if we bought food locally. Raj Shah and I had many of 
these discussions when he was USAID Administrator. To put it in 
the simplest terms, the Food for Peace program is slow, it is 
costly, and it is not doing enough to get food to people who 
are hungry and dying.
    So we need to take a fresh look at this program. After all, 
even though the world has changed a great deal, obviously the 
need for food assistance hasn't. A refugee crisis in Syria is 
spilling from the Middle East into Europe and onto our own 
shores. A devastating earthquake in Nepal has left thousands in 
desperate need of help. And of course, with each passing year, 
we are feeling the far-reaching effects of climate change more 
and more. Hurricanes and typhoons of unprecedented destructive 
power, even as historic droughts endanger the global food 
supply.
    So we need to take a fresh look at the program. We need to 
make sure food aid is tailored to meet the challenges of our 
time. The administration has put forth suggestions, so have 
lawmakers. And let me acknowledge Chairman Royce for his 
leadership in particular on this issue.
    The common theme in these proposals is flexibility. 
Sometimes it will make the most sense to buy American 
agriculture and to contract with American shippers to get food 
where it needs to go. Sometimes buying local products will get 
us the best outcome. We need a program flexible enough to 
respond in the best way on a case-by-case basis.
    Today I am looking forward to hearing our witnesses answer 
questions. I want to hear the ideas of what this program looks 
like and the right way to put it together. In particular, I 
would like to focus on the benefits of a cash-based system 
versus in-kind commodity donations, on new methods of delivery, 
and on local and regional procurement programs.
    Reforming a longstanding government program is never an 
easy task, but the need for these changes is clear. It goes 
back to why we have a food aid program in the first place. Not 
to subsidize growers, shippers, or NGOs, but to prevent men, 
women, and children in the developing world from starving to 
death. So let's work toward building a new program that meets 
this critical demand in the most efficient and effective way 
for the American taxpayer.
    I yield back, Mr. Chairman. Thank you for your courtesy.
    Chairman Royce. Thank you, Mr. Engel. Mr. Engel raises the 
issue, Dr. Shah, of flexibility in this. Maybe you can give us 
an example of when you were director and how in a given 
situation a little more flexibility would have gone a long way 
in terms of responding.
    Mr. Shah. Well, thank you, Mr. Chairman. And I would note 
what David said. In Syria and in neighboring countries you had 
a lot of Syrian refugees leaving Syria going into Jordan and 
Lebanon and they are not living in camps, they are living in 
neighborhoods and communities. And in that context, physically 
finding them inside of apartment buildings and in low-income 
housing situations, and taking to them food or having them come 
with some special designation to pick up American food is both 
deeply inefficient, upsetting to everybody else in the 
neighborhood, and difficult for local businesses that are 
dependent on the local food economy.
    So with the World Food Program we work to let them use, not 
through Food for Peace but other programs, vouchers that would 
go to those households. And I met with mothers and children, 
but the mothers would say, these vouchers--which say from the 
American people, they have the USAID logo on them--they say 
these are saving our lives right now. I don't know where my 
husband is. He may have perished in the fighting inside of 
Syria, but my four children and I are sustained here because we 
can take these vouchers to local stores. And by the way, the 
local merchants and local communities are less upset about the 
big influx of refugees because they are contributing now to the 
local economy.
    The fact that we have run out of money, basically, for this 
kind of approach and are now stuck with just commodity food is 
why you are hearing about the cuts that David highlighted. And 
to me this is a national security issue. This is the heart of 
where refugees are pouring from this region into the rest of 
Europe and elsewhere causing real instability. So we are 
undermining our own capacity to do what we know is right and 
has worked, because we don't have the flexibility.
    Chairman Royce. Let me ask Secretary Glickman, because Dr. 
Barrett in his testimony said Canada uses a different approach 
and gets roughly twice the benefit in terms of the amount of 
food aid on the ground in these situations.
    You noted the GAO study that says that shipping food from 
the U.S. to sub-Saharan Africa took 100 days, on average, 
longer than procuring food from regional sources in cases of 
emergency and such, so we are not the only ones providing food 
aid around the world. Maybe you could share with us how other 
top donors like Europe and Canada and Japan structure their 
food aid.
    Mr. Glickman. Nobody structures their food aid exactly like 
we do, that is for sure. But in history, I remember looking at 
magazines like Time magazine and others, and we advertised that 
all of this overseas food were American grain going in American 
bags, and I remember as a kid seeing all of that. You all 
probably do too as well.
    And so the impression was, is that these were important 
humanitarian products that were moving from a farm in Texas or 
Oklahoma or Kansas or Ohio or wherever directly to people 
overseas. And I think that that has had an impact politically, 
accompanied by the cargo preference thing, to a kind of 
resistance to wanting to make the programs more flexible. It 
has almost become ideological or religious in some circles that 
this is kind of part of the history.
    But other countries--Canada is a huge producer of 
commodities, wheat, corn, cotton; wheat and corn, not so much 
cotton, but grain sorghum, some soybeans and then legumes and 
pulse crops and everything else--they have just got a more 
flexible way of dealing with the problem. They can get their 
crops there faster. But we still provide half the food in the 
world, roughly, the United States of America.
    Chairman Royce. You mentioned also, and maybe I will go to 
Dr. Barrett for this, the cargo preference vessels being a 
factor in this. And Dr. Barrett, what is the setup of these 
corporations? You mentioned that they are not American owned, 
so how are they able to take advantage of U.S. law in this 
respect and how does that figure in the calculus here?
    Mr. Barrett. Well, Mr. Chairman, the law requires that the 
vessels fly a U.S. flag and follow all U.S. laws and 
regulations. They don't require that the ultimate equity 
holders be American. And so foreign corporations, three in 
particular, own at least 45 percent of the U.S. agricultural 
cargo preference fleet. Foreign corporations can set up U.S. 
subsidiaries, purchase a vessel, flag it with a U.S. flag, 
follow all U.S. law, but the profits reaped by those vessels 
accrue to the subsidiary and pass right on through to the 
foreign corporation that ultimately holds the subsidiary.
    Chairman Royce. I see. I see. My time is expired. I need to 
go to Mr. Engel for his questions.
    Mr. Engel. Thank you, Mr. Chairman. Let me ask Dr. Shah. 
There is an ongoing debate over the use of cash-based food 
assistance, whether it is cash or food vouchers. I obviously 
knew, as we all know, the benefits, timeliness of food getting 
to desperate people, and it is less costly to implement. But 
opponents argue that this is susceptible to fraud.
    Let me ask you, with retina and other biometric scans and 
mobile tracking data and other technologies, how secure is a 
cash-based system? We hear of success stories like the one in 
Zaatari, refugee camps in Jordan. There is a market where 
people can buy and select their food, giving them some 
semblance of dignity. Aren't we one of the few remaining major 
donor countries to hold on to an in-kind food donation system?
    Mr. Shah. Well, thank you. And yes, we are the only major 
donor that continues to send our food as opposed to our 
resources, and that impinges the capacity to be successful for 
all of the implementing partners. I would note on security of 
electronic vouchers and paper vouchers, at this point we now 
have 8 years of history doing this.
    So before it was debatable to say, ``Oh, is this going to 
be less secure or less effective?'' What we now know is that 
this is probably more secure because you can target the 
household. You don't get convoys being attacked, because you 
are not sending convoys of cash; you are sending an electronic 
payment through a secure system to a vulnerable household.
    And by the way, the alternative is that food shipments are 
often attacked, and that speaks to the security risks of doing 
this work in increasingly challenging conflict-affected 
environments. So there really is no debate anymore about is 
this more secure, less secure. It is clearly as or more secure.
    There is also no debate about is it effective or less 
effective. It is far more effective. It is certainly more 
efficient, but it also allows us to do a better job of 
targeting the most vulnerable families and children within a 
community. And that was basically the example of Somalia. It is 
like once you had that targeting done well you could make a 
huge, huge difference in a child's death through a famine very, 
very, very quickly. And you would never be able to do that if 
you had the physical responsibility of providing people with 
actual food that came from the United States.
    Mr. Engel. Thank you. Let me ask Secretary Glickman. When 
the Food for Peace program was initiated back in the 1950s, 
obviously the landscape for American food aid was much 
different than it is today. There were high agricultural 
surpluses, low prices that were threatening the security of 
U.S. farmers. The U.S. shipping industry was in decline and 
food needs around the world were ever increasing.
    What is different now, and, in your opinion, why would 
reform be a big plus for American agriculture?
    Mr. Glickman. Surpluses of the major commodity crops are no 
longer nearly as great. There are still some crops with 
surpluses episodically, periodically, but overall we are 
dealing with supply and demand in the world. As Dr. Barrett 
talked about, a global world which is much more in sync and in 
equilibrium. So therefore the need to use surpluses to, let's 
say, bring down supplies to get price up is no longer anywhere 
near what it was before. And it probably has no impact on the 
price, also as Dr. Barrett says. These are global markets and 
the amount of food aid in the total amount of exports of corn 
and wheat and sorghum particularly is extraordinarily small.
    Mr. Engel. Thank you. Let me get back to Dr. Shah. Dr. 
Shah, you and I during the Haiti crisis talked a great deal 
about what we should do in Haiti, and I visited there a number 
of times and we talked about this. So the earthquake there 
really impacted us all.
    The people of the region obviously are still suffering from 
the destruction today. I have seen firsthand how the sale of 
American rice under the Food for Peace program there drove the 
local rice farmers out of business, making it harder for the 
Haitians to feed themselves. So if we had enacted the reforms 
to food aid before the earthquake hit Haiti 5 years ago, how 
would our response to this tragedy have been better and how 
would it have been different in other disaster situations?
    Mr. Shah. Well, we have a very specific answer to that 
question because as a result of using non-Food for Peace 
assistance tools and shutting down Food for Peace, American 
food handouts, and monetization in particular, we were able to 
basically test and answer exactly what would happen. And we saw 
what would happen. We have seen a more than doubling of farm 
production in Haiti as a result of taking away the dumping of 
American food and enabling and supporting those farmers to have 
access to better science and technology through Feed the 
Future.
    We have seen voucher programs like the one implemented by 
CARE International that target the most vulnerable households 
and children, give them a biometrically secure card, as you 
point out, and then allow their children to get access to the 
kinds of foods people need when they are malnourished. Not just 
bags of rice, which as we know has very limited total 
nutritional value for a starving child.
    And the result has been proven in the Demographic and 
Health Survey, which is by far, it is frankly the only, it is 
also the best actual survey out there to tell you what is 
happening, and acute malnutrition in Haiti is 50 percent lower 
today amongst children than it was the day before the 
earthquake.
    This could happen everywhere we do the work if we had food 
aid reform because we know we have the science, we have the 
technology, we have the know-how, and frankly we have the 
capacity to study the impacts and we know how to do this. It is 
just the program was designed 60 years ago and we keep doing 
the same things we did 60 years ago.
    Mr. Engel. Let me just, with the chairman's indulgence, 
pivot it back to Secretary Glickman about this. Critics argue 
that buying food in-country instead of delivering U.S. 
commodities actually undermines the message of U.S. generosity 
and goodwill for those in need. So I don't believe that but I 
want to hear what you believe. Do you believe that USAID can 
still send the message that the U.S. is a partner for 
development and here to help those in need around the world 
while being more flexible in how it spends U.S. food assistance 
dollars?
    Mr. Glickman. I do. Saying that, I think that I am not one 
that would eliminate in-kind assistance totally, because I 
think there is a role for U.S. commodities when it can't be 
purchased locally and/or when the voucher program doesn't work 
or you have these imminent emergencies like we had in Haiti or 
other places.
    However, American generosity is real. Just one example on 
this conference we went in Tanzania that Congresswoman Bass 
went with me on. What struck me about this was the positive 
feelings about the United States of America. There is Chinese 
investment all over Tanzania, mostly in infrastructure, but 
some in agriculture and some in sanitation and water, but 
mostly in infrastructure.
    And yet, the clear acknowledgment from people we went to 
was American generosity writ large is profoundly agreed to, 
well respected, and it is one of the few places in the world I 
have been to where I honestly believe we are very popular in 
terms of what we do. And I think in large part that is due to 
the totality of American assistance in health, which is a big 
thing. It started with President Bush and Bill Gates and 
others, in agriculture, in education and infrastructure. There 
is still a whole litany of problems to be solved there, but I 
don't view this issue as hurting our ability to be a positive 
influence.
    Mr. Engel. Thank you. Thank you, Mr. Chairman.
    Chairman Royce. Thank you. We go now to Congressman Dana 
Rohrabacher from California.
    Mr. Rohrabacher. Thank you very much. We define ourselves 
very much by the things that we do, and not necessarily what we 
say or what we would like to have other people think about us 
but what we actually pay attention to and try to get done. And 
let me commend Chairman Royce. Since he has been here he has 
made his priority, first it was reforming freedom broadcasting 
that America does. That was his number one goal here and worked 
so hard on that and has had an impact on that.
    And also the second thing that he has made it his priority 
has been reforming American food aid. And he fought a big fight 
on the floor, I backed him up I want you to know. And so I 
think we can be very proud of those values, Ed, and very proud 
to serve with you.
    We need to restructure American foreign aid. I don't think 
that we can give grants to people, frankly, anymore. That in a 
way of basically expanding American interests around the world, 
foreign aid, I think, has to go from nation building--and in 
many of those cases in the past what we have done is sustain 
poverty rather than break the chain of poverty and help special 
interests in various groups. That I believe foreign aid needs 
to be an emergency response to the world in times of natural 
catastrophe, times when things are really desperate for people 
we can come and help.
    And we have got to expect America to be able to do that. I 
don't think we can be a nation-building organization for 
everywhere in the world anymore, we just can't afford it. I 
would suggest that when there is a natural catastrophe or some 
upheaval that would be what we would want to do, because, 
Reverend, it is not just up to God. How God makes Himself a 
part of what we do on this planet is to work through those who 
believe in God, and God inspires us to do good work. There is 
not going to be a lightning bolt from heaven solving these 
problems.
    Dr. Shah, I really want to know about that packet because I 
know you have been waving it at us. And I will tell you that 
that makes sense to me. Is that a packet say that will, you can 
give that packet to some starving child and that will prevent 
starvation of a child?
    Mr. Shah. Yes, sir. This is based on a product called 
Plumpy'nut. It is a peanut paste which is very high protein. 
And Dan and I and so many others have been to these places 
where you have a child who can barely hold up their head. They 
are in a dusty camp in Dadaab where they have just come out of 
Somalia, and instead of mixing in that sitting water, corn-soy 
blend, and producing a porridge that is, frankly, low in 
protein, you can give them a pre-prepared food that is much, 
much, much more effective at resuscitating them very quickly. 
And they will go in 2 to 3 weeks, as little as 10 days 
actually, of targeted feeding, they will go from looking like 
they are on the verge of death to being a sort of fat-faced 
smiling little kid that has been resuscitated. And that is just 
knowledge, technology, and know-how.
    Mr. Rohrabacher. And can we produce this in such numbers as 
it makes sense economically to do that as compared to making 
that porridge?
    Mr. Shah. Absolutely. We make this in Rhode Island. We can 
make this all over this country. And frankly, if left to its 
own devices, 10 years from now in my view we should be sending 
almost no bags of grain. I mean, it is just not 1954. I mean, 
we should be sending targeted, nutritionally enhanced foods 
that resuscitate children as they need it.
    Mr. Rohrabacher. How much does that packet cost then to 
send?
    Mr. Shah. So I don't know the actual costs of the different 
products. Some are for supplementary feeding; some are for 
therapeutic feeding, which means children who are right on the 
verge of starvation.
    Mr. Rohrabacher. But what about that nutritional thing just 
that basically you were mentioning?
    Mr. Shah. The nutritional impact of this?
    Mr. Rohrabacher. Yes, yes. No, no, no. How much does that 
cost?
    Mr. Shah. Oh. Well, I would put it this way. Ten days or 2 
weeks of targeted feeding with newer technologies like this is 
a much more cost effective way of resuscitating a child than 
shipping over a bag of grain, mixing it with water, feeding 
them porridge. And by the way, even more on the cost because 
you have to sustain that activity for months in order for them 
to be resuscitated off of porridge. That is why we don't--we 
wouldn't do this in the United States.
    Mr. Rohrabacher. Because you had mentioned it doesn't taste 
as good as peanut butter they will want to go to their own 
local food as soon as they can and as soon as that is 
available.
    Mr. Shah. It is a little dense. They make it so that the 
kids like it, but it is a little dense if you or I were tasting 
it.
    Mr. Rohrabacher. Okay, well, thank you very much. Thank all 
of you for your good hearts and trying to get us to do 
something positive out of Congress here.
    Chairman Royce. Thank you. Karen Bass of California.
    Ms. Bass. Let me join in thanking the chair and the ranking 
member for this hearing and also for your leadership on this 
issue. And like the ranking member said, I think it is another 
example of how this committee works in a very bipartisan 
fashion.
    I have had the opportunity in several countries, Tanzania, 
Ethiopia, Kenya--Mr. Glickman mentioned the trip to Tanzania 
recently--it is really inspiring to meet with local 
communities, local villages, and see how they have moved from 
subsistence farming to now turning a profit and actually being 
able to develop their villages and share that knowledge.
    And I think it is an incredible example of how we can make 
a contribution that is not just a one-time contribution of let 
me give you some food, but let me share our scientific 
knowledge in farming so that you can become independent and 
productive on your own. So I am a big supporter. There is no 
question about that.
    And it is wonderful to see you back with us, Dr. Shah. You 
seem so much more relaxed. And Mr. Glickman and the other 
panelists, really appreciate your time today.
    But I want to raise some questions that have been raised by 
my colleagues who are either not sure whether they support a 
change in policy or actually differ with it. And you have made 
reference to some of these points, but I wanted you to draw out 
and articulate it more. One of my colleagues is concerned about 
the maritime employment, and specifically because there is a 
school in his district for merchant marines and he is worried 
that if we make further changes in the program that then there 
will not be the jobs for merchant marines. So I want to know if 
you would talk about that.
    Other members are concerned about the money. When it says 
that we are going to hand out cash they are worried about the 
accountability and how we manage that. Dr. Shah, you mentioned 
that it is electronic transfers, and I am wondering how that 
takes place specifically in countries like Somalia or in rural 
areas. You talked about problems about monetization, the 
current program. If you could describe that and the change that 
needs to be made. So I would just throw that open to the panel 
for anyone that would like to answer.
    Mr. Shah. Well, thank you. And thank you for your 
leadership. Maybe I will go backwards through these. So 
monetization, just to be clear on what this is I want to offer 
an example about a program we actually ran in the DRC, 
Democratic Republic of Congo. To get money to an NGO to help 
them protect women and girls in a farm community in eastern 
Congo that was characterized by strife, we were buying food in 
the American Midwest, shipping it, I believe, out of Louisiana, 
then watching it go all the way to Africa, having ground 
transport from the port to eastern Congo, selling it on the 
market in eastern Congo thus depressing the local prices of the 
only financial activity folks there do which is farm, taking 
the cash of which there was 42 cents on the dollar left, and 
giving it to a local NGO.
    It was the most--and granted it is one example, and I think 
on average monetization only makes something like 30 percent of 
the money just disappear, but this is an extreme example. But 
the fact that we were doing this struck me as totally 
ridiculous. And so that is just what monetization actually is 
and what it looks like.
    And maybe 50 years ago you were introducing that local 
community to American wheat such that you were creating an 
export market for the American food industry, the American 
farmers today would not want you to be doing that in eastern 
Congo. They would care more about those girls than they would 
that someday they are buying our wheat.
    On the money and the electronic transfers, rural Kenya is a 
good example. But they have an M-Pesa program where you 
literally text money by SMS text. You can, everyone, even the 
poorest households in the most rural, most difficult migratory 
part of that country have M-Pesa accounts and mobile phones. 
You can get them the resources very quickly. They can cash it 
in for food, and it just works. And then we have data from all 
over the world showing it works, it is secure, it is not wasted 
at all. And I think it is actually more efficient and more 
secure than trying to send food into northeast Kenya.
    And then on maritime employment I will let Dr. Barrett 
comment on it. But I will point out we did a very careful 
analysis. The ships in the program that are, they are literally 
called ``military non-useful'' ships that are just dependent on 
food aid. I actually had my team at USAID show me the photos of 
the ships.
    You should ask them for the photos, because all you have to 
do is look at them and you will say there is no way. If the 
American military depends on these ships to keep us safe and 
secure we have a larger challenge than food aid efficiency. And 
the number of mariners that are on the actual ships used that 
are in the non-militarily useful category, which are the highly 
dependent ones, is negligible. It is a very, very small number. 
It is in the tens. It is like 70 or 80.
    And the maritime leaders I spoke to in the United States 
and around the world were more than willing to be flexible in 
order to create a more effective humanitarian picture. These 
are huge companies. They make $60 billion a year. The negative 
publicity of their position on these issues is probably more 
harmful to them than the $20-30 million of profit when you are 
making $60 billion a year.
    Ms. Bass. Mr. Chairman, can I ask just one more question? I 
think you were going to respond, Dr. Barrett, but before you 
do, Dr. Shah, you have made reference several times to the 
data. And it would be nice if we could see that in a couple of 
pages with some of those statistics highlighted. And it has 
just, really, all of this has been an incredible accomplishment 
during your tenure.
    Mr. Barrett. Mr. Chairman, if I may. Congresswoman Bass, 
you ask really important questions. It is important to keep in 
mind that in 1996 the Congress enacted a new program, the 
Maritime Security Program, designed to ensure that militarily 
useful vessels were available to the Department of Defense for 
sealift capacity. So vessels that are militarily useful get 
$3.1 million per year as effectively a call option on vessel 
and crew.
    Very few of those vessels are mobilized, but they have been 
mobilized, for example, in the Gulf War. We have had a few in 
use in recent years as well. That provides the vehicle 
originally intended under cargo preference and ensures that 
only militarily useful vessels are being paid for their 
services and their crews.
    Now maritime employment is a slightly different issue from 
military readiness and sealift capacity. It is crucial to keep 
in mind that we have just run an experiment. In 2012, the 
Congress reduced the cargo preference provision from 75 percent 
to 50 percent, so we have just run an experiment in reducing 
cargo preference. What employment effect did it have in the 
maritime sector? Zero. Absolutely none. There are no documented 
vessels that came out of service because of a reduction in 
agricultural cargo preference coverage, no losses of mariner 
jobs or onshore jobs associated with maritime for our 
agricultural cargo preference.
    The reason is the Jones Act that regulates coastwise trade 
has a 38,000 vessel fleet. There are an enormous number of 
vessels plying American waters with mariners who handle cargoes 
just like those in agricultural cargo preference. That is a 
rapidly growing coastwise trade. It is a far larger source of 
employment. Agricultural cargo preference is a drop in the 
ocean for maritime employment. And having just run this 
experiment we know that it doesn't actually have an impact. 
Thank you.
    Chairman Royce. Thank you. We go to Randy Weber of Texas.
    Mr. Weber. Thank you, Mr. Chairman. Dr. Shah, you said M-
Pesa accounts in Kenya. M-P-e-s-a?
    Mr. Shah. Yes, sir.
    Mr. Weber. And that stands for?
    Mr. Shah. I am not sure. That is a good question. The M, I 
think, is mobile, and Pesa must be reference to currency.
    Mr. Barrett. Pesa is the Swahili word for money, and the M 
prefix in Swahili is for person. It literally means 
``moneyman.''
    Mr. Weber. Okay, well, being from Texas I am used to peso, 
just not used to pesa. I guess that makes sense. How do you 
protect against fraud? You said it is secure and you said it is 
a good system, but these hackers and these internet thieves are 
very, very capable and very, very creative. How do you protect 
against that?
    Mr. Shah. Well, I would just say the comparison is against 
shipping American food. And a truck filled with American food 
is a more vulnerable target and has been proven to be a more 
vulnerable target than an electronic transfer that goes through 
an M-Pesa system or an alternative system like that.
    Mr. Weber. I guess that makes sense. And also it is a bit 
more protective of the personnel involved. It is hard to get 
somebody shooting at you through the internet.
    Okay, and we will go to Secretary Glickman. I represent the 
second largest rice producing district in Texas and rice is a 
commodity often used in U.S. food aid programs. Now these 
packets--and by the way, what was the second packet?
    [Audio malfunction in hearing room.]
    Mr. Glickman. And then this, what was this here?
    Mr. Shah. There are actually three products. One is the 
supplementary food which is the Plumpy'nut that I think is made 
in Rhode Island, one is the therapeutic version of it which is 
a much denser----
    Mr. Weber. Okay.
    Mr. Shah [continuing]. More richer version of the same----
    Mr. Weber. Got you. You said that, okay.
    Mr. Shah. This is a cracker that--a cookie that is also 
enhanced.
    Mr. Weber. All right, thank you. Last week, Jamie Warshaw 
with USA Rice testified before my counterparts on the 
Agricultural Committee regarding the strong amount of good that 
comes with a bag of rice that is raised from the American 
people. Now if I understand correctly, you just said you would 
believe that in 10 years no more grain is being shipped over 
there.
    Secretary Glickman, as Secretary of the Agriculture you 
were directly behind much of the international food aid 
contributions. You believe that that got us goodwill. So large 
bag of grain or rice or whatever, is there a mix here? Do you 
think this gets us as much goodwill? What is your take on it?
    Mr. Glickman. I think there is a mix. I don't think we are 
going to eliminate in-kind assistance for everywhere in the 
world. There is just too much stuff that has been in the 
politics lately, but there is too much stuff happening.
    Mr. Weber. Forgive the pun. There is too much stuff that 
has been ingrained?
    Mr. Glickman. That are ingrained. No, there is too many 
things happening with respect--I was thinking about if the 
South Carolina tragic flooding had happened, which it has 
happened, in Taiwan or in South Korea or in Central America, we 
just had this problem in Guatemala last week with massive 
floods, we would be shipping some in-kind assistance. There is 
just no question about it.
    So, it is a mix and it requires flexibility, it requires 
judgment. And yes, I think it probably helps the U.S. to have 
that physical commodity go there, but that is not the prime 
reason we ought to be doing it. Because you also will get the 
similar benefit on the products that you are seeing there 
because they will say product, or help from the American people 
or USAID or whatever.
    Mr. Weber. Okay. And then, finally, with the development of 
food aid programs targeting the most poor and chronically 
hungry communities, and having impressive results shown by the 
USAID-commissioned second Food Aid and Food Security Assessment 
and important linkages with Feed the Future, we want to be 
careful not to lose such unique programs and tools that have 
been become vital and effective within the range of our global 
food security strategy.
    So I know we have tremendous pressures to respond to 
significant humanitarian crises, but with development program 
waiver language in Section 300 of Senate Bill 525's food aid 
reform bill, have we reached the point where we need to allow 
the USAID to waive those fragile developmental gains of the 
Title II development programs to create those more emergency 
response programs? Do we need to change that? Any of you.
    Mr. Barrett. If I may, absolutely, Congressman Weber. It is 
important to keep in mind it costs about $125 for treating 
children's severe acute malnutrition with the sorts of products 
that Dr. Shah has shown----
    Mr. Weber. 125 per----
    Mr. Barrett. Per child life-year saved.
    Mr. Weber. Per year?
    Mr. Barrett. Per year. So that is a relatively modest 
investment. You compare that against the cost of delivering 
grain from, purchased in the United States, we are talking 
something on the order of 11 or 12 children's lives per 
shipment, just the excess cost of shipments. And keep in mind 
that providing the Secretary of Agriculture and the USAID 
Administrator with flexibility, it doesn't say U.S. agriculture 
won't participate.
    We are the most productive agricultural economy in the 
world. We are the world's largest agricultural exporter. The 
rice farmers in your district, sir, will continue to ship rice 
to these very places, providing in many cases the rice that 
will be bought locally because they are the most efficient 
farmers in the world right now.
    The key thing is being able to buy the best quality product 
at the best price at the time it is most needed, and American 
agriculture and American food producers, manufacturers, 
millers, can play a very valuable role in that with no 
impediment whatsoever. And for just $125 per child life-year we 
will get a much better product for the productivity of American 
industry and agriculture. To me it is a no-brainer, sir.
    Mr. Weber. Okay, thank you. Mr. Chairman, I yield back.
    Chairman Royce. The Chair thanks the gentleman. The Chair 
recognizes Mr. Cicilline.
    Mr. Cicilline. Thank you, Mr. Chairman. And I want to thank 
you, Chairman Royce and Ranking Member Engel, for this really 
important hearing on an issue that is, literally, a question of 
life and death. I think there is nothing more important in our 
humanitarian assistance than food because without proper access 
to food and nutrition children cannot live and attend school, 
men and women can't work, mothers can't take care of their 
children. And that is why I am very proud that the United 
States is the biggest supplier of food aid in the world. And I 
appreciate this hearing that will draw attention to ways that 
we can improve and streamline the food aid process and make it 
even more effective and impactful.
    I just want to take 1 minute to recognize the work of a 
wonderful nonprofit based in my district in Rhode Island that 
does so much work in this area of food aid and global 
nutrition. Dr. Shah was raising Plumpy'nut, which is produced 
by Edesia Global Nutrition Solutions, a really innovative and 
targeted approach to ensuring that populations around the world 
have access to healthy nutritional food by producing ready-to-
use therapeutic and supplementary foods through large 
humanitarian organizations such as UNICEF, the World Food 
Program, and USAID.
    This organization has demonstrated incredible leadership in 
tackling the issue of international food aid and I applaud them 
and particularly their founder Navyn Salem for their 
extraordinary work. And Mr. Chairman, I ask unanimous consent 
to enter into the record the statement of Edesia which is based 
in the first congressional district of Rhode Island. And I will 
pass that along.
    Chairman Royce. Without objection.
    Mr. Cicilline. Thank you.
    I want to thank the witnesses for your extraordinary work 
in this area and for your testimony, and ask, I just really 
have three questions and open it up first to Dr. Shah. I know 
that in response to the Syrian humanitarian crisis the 
Emergency Food Security Program has allowed the use of cash 
resources, and I wonder if you could speak a little bit about 
the experience in Syria and why that has been important and 
what the benefits are in responding to emergencies like Syria.
    One of the questions that some of the opponents of these 
reforms have raised, as my colleague Congresswoman Bass has 
mentioned, is about the nutritional value. How do we ensure 
that the food is meeting certain nutritional standards and 
maybe what we can do to ensure that that happens?
    And then finally, the most important question for me is, as 
you listen to the testimony and you study this issue it seems 
really obvious that these reforms are necessary to make our aid 
work more effectively and to reach more people who are needing 
this nutrition and food. And it seems as if, according to the 
testimony today it is supported by the maritime industry, it is 
really supported by most farmers. Why hasn't it happened? What 
do you see as the obstacles and what can we do to overcome 
those obstacles, because it makes so much sense to me. And I 
know Mr. Glickman will have some insight on that as well.
    Mr. Glickman. Some of this is just historical. As I pointed 
out before, we have grown up with the physical observation of 
giving things overseas and it has been part of our culture. And 
I think it was based on, as I said, the nature of agriculture, 
although I think the farm community always had a strong 
humanitarian core to it in addition to the need to relieve 
themselves of the surpluses that they have had.
    But I do think that more education is needed on this 
because the facts are really clear: We need more flexibility. 
It doesn't have to be 100 percent, but we need to move like 
what you have done already, from 25 to 50 percent or whatever 
the number that you would come up with. I think we would save a 
lot of lives.
    Second of all, nutrition, as Dr. Shah's organization has 
done so much in this. Raw commodities are not necessarily 
nutritional salvation. We are learning a lot more about 
nutrition and vitamin content and nutrients to not only to 
build lives but to prevent disease, particularly non-
communicable diseases.
    And so we are going to have a lot of technology in the 
future with private sector groups like the ones in your 
district and others to amplify what we are already sending and 
most of that is not going to be in bags of food. But I just 
think we need more and better education----
    Mr. Cicilline. Education.
    Mr. Glickman [continuing]. As we are talking about these 
issues.
    Mr. Shah. I just want to build on Dan's point, because I 
think within the traditional three stakeholder groups, 
agriculture, shipping, and NGO, there is mainstream support for 
reform in each of those groups. There has been a history of 
categorizing those groups together though and saying the 
shippers think X or the NGOs think Y.
    And the reality is, in each of those categories there are 
one or two parts of the stakeholder community that would rather 
not see reform and are promulgating the concept that the 
program will somehow fall apart if its focus shifts from 
essentially requirements on behalf of agricultural and shipping 
interests to results and evidence on behalf of what saves the 
most lives most efficiently.
    And the only response to that I would say is, if you look 
at every other country that has made this shift over the last 
50 years their level of commitment has not gone down, it has 
gone up. And even in tough environments, even in just the last 
decade, countries like the United Kingdom have managed under a 
conservative government to significantly increase their 
investments in these kinds of activities motivated more by the 
idea that they are getting efficiency and results and outcomes 
than by the idea that they are somehow protecting or taking 
care of a domestic stakeholder group and constituency. Because 
as Dan points out, mathematically the program no longer really 
meaningfully supports those constituencies on a financial 
basis. So that hopefully is helpful.
    Mr. Cicilline. Thank you. I yield back, Mr. Chairman.
    Rev. Beckmann. May I just add, I think there is real 
concern that food aid programs have been sustained by a 
particular set of partly self-interested actors for all these 
decades, and so if you take the self-interest out of it that 
maybe the funding for food aid will drop.
    So, in fact, I think say for rice growers the real self-
interest stake at this point is that between 1990 and today the 
number of people in extreme poverty has dropped in half. And 
those people are now eating, and a lot of those people are 
eating rice. So somehow within the ag community especially we 
need to make the shift to help--the real stake, the real self-
interest stake of U.S. agriculture is that people get out of 
hunger and be able to buy food, and then not just raw 
commodities but also ideas and knowledge about how to do it 
right.
    And then I think what is important about that is not only 
funding for food aid, it is funding for all of our, everything 
we do to help reduce poverty around the world. There is just 
deep cynicism still among the American people. People don't 
know that the world has made progress against poverty. I think 
only 10 percent of American voters know that. And then if you 
ask a typical voter how much of our aid, our foreign aid really 
gets to the people it is supposed to get to, something like 10 
percent think that, oh, yes, it really gets to the people who 
need it. They support it anyway.
    So it is really crucial that you reform food aid partly 
because of that broader constituency, because this is really a 
scandal and it has to be fixed or it undercuts support not just 
for food aid but for everything that our country is doing to 
support progress against hunger and poverty around the world.
    Mr. Perry [presiding]. Thank you, Reverend. The Chair also 
thanks the representative from Rhode Island. The Chair now 
turns to himself for some questions. Dr. Barrett, in 
determining fair and reasonable rates, MARAD allows for a 19-
percent profit margin for U.S. ships moving food aid but only a 
9-percent margin for ships moving DoD cargoes. Given the 
humanitarian mandate of Food for Peace does this seem fair and 
reasonable? Just if you can talk us through that.
    Mr. Barrett. I run an undergraduate business school, the 
Dyson school at Cornell. If I offered my students the 
opportunity to make a guaranteed 19 percent return on all their 
activities I don't think we need to teach them a whole lot. 
Just let them sign up and take the option. That is an 
extraordinarily high guaranteed rate of return. Because keep in 
mind, this is a reimbursement-plus margin contract that is on 
offer. And the fact that it is a higher rate of return 
guaranteed on humanitarian shipments than it is on military 
shipments begs the question of why would we offer a 10-percent 
profit premium because you are helping out people who are 
starving? It sort of defies logic and it is clearly an anti-
competitive practice.
    Again I run a business school. I am a big believer in the 
virtue of competition and private enterprise. And what we 
really need to see is that the shipping lines that are able to 
provide very cost effective freight delivery services over long 
distances--the mariners who do these activities are very brave 
souls, tragically we just saw a vessel lost during Hurricane 
Joaquin. These are not jobs to be taken lightly. These are not 
tasks that are unimportant. But the question is why are we 
guaranteeing an extraordinarily high profit margin when this is 
a highly competitive industry? Let the vessels compete, and 
let's let the commercial producers who now also need those same 
ocean freight services get access to the same vessels without 
having to see them diverted from time to time because there are 
these windfall profit opportunities associated with the MARAD 
rules on mark up.
    Mr. Perry. So in keeping with that, a study by AEI has 
found that U.S. shipping companies are charging higher rates 
for U.S. food aid cargoes than other commercial cargoes carried 
on the very same vessels. Any idea how this cost discrepancy 
can be accounted for?
    Mr. Barrett. The economics of it are rather simple, sir. 
When you don't have competition the provider can mark up the 
price. Commercial cargoes are highly competitive. It is a very 
competitive market out there. That is one reason why----
    Mr. Perry. So there is nothing special with carrying food 
that would justify the increased cost for the sake of itself?
    Mr. Barrett. No, it is----
    Mr. Perry. In your opinion.
    Mr. Barrett. The same vessels are carrying agricultural 
commodities commercially and they are just charging less when 
they are carrying them commercially because the market won't 
sustain the inflated price associated with the cargo 
preference. The protections drive up the price. It is monopoly 
pricing.
    Mr. Perry. Okay. Dr. Shah, the farm bill, the 2014 farm 
bill provided some cash flexibility, and you also have the 
Emergency Food Security fund. Can you explain why you are 
pressing for more flexibility? Has not enough been provided at 
this point?
    Mr. Shah. No, not enough has been provided. And if you look 
at what the farm bill did, and I was very, very grateful for 
the progress made in the farm bill, it took the part of the 
food aid account that goes to administration but also to 
results monitoring and measurement data and analytics, and took 
that from 13 percent to 20 percent and then made that more 
flexible such that that could be used for the kinds of things 
we are talking about on this panel. Cash transfers, vouchers, 
medical foods, et cetera.
    So in practice it was a 7-percent on the total volume of 
additional flexibility, which isn't a big gain but it is 7 
percent. I mean, it should be 50 percent or 60 percent or 
something like that if we are going to get serious about 
reform.
    Mr. Perry. So just to codify the argument, it is a move in 
the right direction but just way too small from the perspective 
of what absolutely needs to be done and what actually needs to 
be done.
    Mr. Shah. Exactly.
    Mr. Perry. Okay, thank you. The Chair now turns to the 
representative from California, Mr. Bera. Dr. Bera.
    Mr. Bera. Thank you, Chair. Yes, it is good to see Dr. Shah 
back in here, Secretary Glickman, and all the witnesses. 
Obviously an incredibly important topic as we reflect our 
values as Americans wanting to relieve suffering around the 
world. Would it be accurate to say the goal of this program and 
Food for Peace primarily is to relieve that suffering, relieve 
suffering from hunger, starvation, and food insecurity? Is that 
an accurate assessment?
    [Nonverbal response.]
    Mr. Bera. That that should be our driving goal. So in that 
context, when we look at using the taxpayers' resources, we 
should evaluate that in the context of how do we best use those 
resources to achieve that goal; is that fair?
    [Nonverbal response.]
    So in that context, Dr. Barrett, I think you suggested that 
for every dollar we are spending about 35 to 40 cents that goes 
to achieve that goal, compared to comparative economies like 
Canada where it is 70 cents per goal?
    [Nonverbal response.]
    So we are not doing a very good job in using our resources 
to achieve what the driving goal is. Is it accurate that 
potentially a secondary goal is, within U.S. industries, within 
the agricultural sector, within the maritime sector, to help 
stabilize those industries, was that a secondary goal in the 
original design or was that just--I guess Secretary Glickman.
    Mr. Glickman. Well, certainly, 1 secondary goal in the 
agriculture sector was relieve the U.S. from massive surpluses 
which kept prices low. I can't speak as much to the maritime, 
but my guess is that there were similar pressures there as well 
a long time ago.
    Mr. Bera. But again, that may have been a secondary goal in 
the original design of the program back in the 1950s. I guess, 
Secretary Glickman, if we allowed some flexibility in the 
program today to change from just shipping commodities to 
perhaps purchasing product in-country or shipping higher 
nutritional commodities, how would that affect the agricultural 
sector today?
    Mr. Glickman. In terms of net income on reduced, let's say 
in-kind shipments it would be negligible. It would be virtually 
insignificant. Now there are a few things that we have seen 
some increase in in-kind assistance. I think grain sorghum we 
have seen some increase on the purchase for humanitarian 
assistance. And I mention these pulse crops which are largely 
lentils, they are still very, very small. But in terms of the 
major U.S. commodities, wheat, corn, soybeans, it would have 
virtually no impact at all.
    Mr. Bera. And Dr. Barrett, on maritime security, on 
maritime employment would it have much impact?
    Mr. Barrett. Zero. And let me also just echo in the 
agricultural sector growth, small specialty crop sales into the 
food aid system is being driven largely by needs assessments in 
countries that are calling for commodities that are more suited 
to that population and naturally eat sorghum, et cetera. The 
income effects on American growers are zero. Same effects for 
maritime employment, sir.
    Mr. Bera. Okay. So in that context the secondary goal, 
really, again we should be making our decisions as Members of 
Congress, and I think the taxpayers would expect us to make 
those decisions for that primary goal of relieving suffering, 
using our resources in the most efficient way to relieve 
suffering around the world.
    Even if there was a secondary goal of U.S. employment, Dr. 
Shah, I think in your earlier answers suggested there would be 
a better way to use resources and manufacture products, some of 
these highly nutritional products that can help relieve 
suffering in a more efficient way; is that accurate?
    Mr. Shah. Yes, absolutely. In fact, we did a study when I 
was at USAID with Tufts University that demonstrated the 
nutritional frontier here, and there is plenty of room for new 
products that are both peanut based, rice based, U.S. commodity 
based, but nutritionally enhanced and prepared. And as I have 
noted, 10 years from now it should all be, the program should 
be advanced manufactured foods, and we have seen a track record 
of creating U.S. jobs here as a result of that opportunity.
    Mr. Bera. Fabulous. And I would imagine there is a 
secondary, because if we are shipping direct commodities I 
imagine there are some costs to loss of food for spoilage and 
certainly the cost of storage as well in-country, as well as 
the shipping costs that products like these highly nutritious 
products are probably easier to ship and certainly easier to 
store, and spoilage is less of a factor. That is probably 
pretty accurate.
    Just in my short time left, I think, Dr. Barrett, you 
quoted a number, $125 per child-years saved. If you could just 
expand on that.
    Mr. Barrett. Sure. That figure, that estimate comes out of 
a recent study published in the journal Lancet, a leading 
global public health journal, where a collection of leading 
scholars looked at the cost effectiveness of different 
interventions for public health. And child acute malnutrition 
is commonly identified as the single most cost effective 
intervention we can make in the world.
    The Copenhagen Consensus, for example, in assessing a wide 
range of prospective global interventions identified addressing 
child nutrition, in particular severe acute malnutrition, as 
the highest benefit-cost ratio investment available to the 
global community. So it is at $125 per child life-year saved. 
That is the cost per child life-year saved. So for a newborn 
with a 70-year life expectancy, multiplied by 70 we are talking 
something like $8,000 for a child to live a full, healthy life.
    Mr. Bera. Mr. Chairman, if you would indulge me. Dr. Shah, 
within that $125 would it be more efficient for us to spend 
those resources on these highly nutritious products?
    Mr. Shah. Absolutely. Absolutely. In fact, it is important 
to recognize that the sort of bulk grain feeding approach was 
never designed as a targeted solution for child malnutrition. 
It was designed for exactly what it was, getting rid of 
American commodities and in places that were commodity-scarce 
having some food, because it seems logical that food helps 
saves lives during a famine.
    Mr. Glickman. I just want to make one other point. This is 
for agriculture. A lot of these programs grew in recent years 
in large part because of bipartisan support of two farm-state 
Senators, Bob Dole and George McGovern. I am sure there were 
some foundation for getting rid of surpluses, but most of this 
is because of the nutritional efforts of the program. And so I 
don't want people to think that agriculture is just interested 
in moving commodities, it has got a long history on the 
humanitarian side as well.
    Mr. Bera. Absolutely. Thank you, Mr. Chairman.
    Mr. Perry. The Chair thanks the gentleman. The Chair now 
recognizes the gentleman from Virginia, Mr. Connolly.
    Mr. Connolly. Thank you and welcome to our panelists.
    My first job here in Washington was to be the executive 
director of the American Freedom from Hunger Foundation, and I 
spent 10 years doing that before I went to graduate school. And 
during that time, Reverend Beckmann, by the way, worked with 
Arthur Simon in the founding of Bread for the World. I didn't 
found it, he did, but I provided some counsel and assistance in 
how to set up that nonprofit. I also worked with Paul Simon. 
When he was lieutenant governor of Illinois I wrote the 
introduction to one of his books on the politics of hunger. So 
this topic is near and dear to me.
    Candidly, Dr. Shah, what you just said about the founding 
of the program and the purpose of the commodities, I think, is 
at variance with Secretary Glickman just said. And I am old 
enough to remember George McGovern and Bob Dole and most 
certainly there was a nutritional aspect to the program. I am 
old. And I think we are being a little facile in just 
dismissing the commodities aspect of this program, and I think 
we are being more than a little facile, with all due respect, 
to the politics up here of continued support for these kinds of 
interventions and efforts.
    Can one really imagine a Bob Dole and a George McGovern 
coming together in this Congress to support the new food aid 
program? Really?
    Mr. Glickman. I would do it. I can't tell you----
    Mr. Connolly. Who would do it?
    Mr. Glickman. I think Bob Dole and George McGovern----
    Mr. Connolly. They aren't here anymore.
    Mr. Glickman. No, I know.
    Mr. Connolly. I am talking about this Congress. Can we 
imagine a Bob Dole, a George McGovern coming together and 
saying, yes, let's fund this. Let's decommoditize it and fund 
it because it is the right thing to do. I am skeptical. I am 
concerned. I helped write the last foreign aid authorization 
bill passed by a Congress. That was in 1986, Dr. Shah. We have 
not passed a foreign aid authorization bill since 1986. There 
is a reason. It certainly isn't the popularity of foreign aid.
    So I am just concerned. I don't have a dog in the fight. I 
don't represent an agricultural area. The last dairy farm in 
Fairfax County is Frying Pan Park where we take kids to see 
what a cow looks like. We used to be the largest dairy 
producing county in Virginia. So I don't have shipping 
interests. I don't have agricultural interests. I am actually 
concerned about trying to make sure we are the most efficient 
and we are helping the largest number of people.
    Reverend Beckmann, you pointed out about the fact that we 
actually have some success stories in lifting people out of 
poverty. And I agree with you, although I would suggest that 
the largest single example, certainly in my lifetime and in 
human history, is in China and it is not because of foreign 
aid. It is because of policy reform that lifted the largest 
single number of people out of poverty in the history of 
humanity and in the briefest most condensed time frame, which 
is a sobering thought.
    It wasn't because of foreign aid or AID or any of the U.N. 
agencies. Not that they are irrelevant, but that is not what 
happened in China. And yes, they now have purchasing power. I 
remember in the '50s there was a famine in China. No one would 
think about a famine in China today. That is how much the world 
has changed in a relatively brief period of time.
    So at any rate you are welcome to comment. I would start 
with Secretary Glickman because you come from up here, you were 
part of those wars, you were Secretary of Agriculture. Just how 
easy will it be, do you think, to put together a coalition that 
will readily support this kind of intervention long term in 
terms of appropriating dollars?
    Mr. Glickman. Not easy, but not impossible. You all did it 
in the last farm bill. You made changes. You made the programs 
more flexible. There was opposition, you negotiated the 
percentages and what you were going to be doing. These are not 
the kind of changes that have to gridlock a congress, to be 
honest with you. And right and left there is history of 
bipartisanship in feeding the hungry and dealing with the 
problems of poor and poverty around the world, as you know, 
that I think that you can do it. I also don't think it takes 
huge amounts of additional funding. We don't have that. We know 
that.
    So I don't think you are talking about an impossible task, 
to be honest with you. And I think your history shows there is 
reason to believe that you can work together on this. The other 
thing I would tell you is Dr. Shah, I am just going to stroke 
him for a moment. He is out of this job.
    Mr. Connolly. If I may interrupt.
    Mr. Glickman. Yes.
    Mr. Connolly. Don't make a straw man. No one talked about 
it being an impossible task. What I said was I think we are 
being a little too facile about the struggle we will face in 
this Congress.
    Mr. Glickman. Yes, well, straw is an agricultural commodity 
so I can say that as well. I think the fact that you showed 
that you can make some progress before, just in the last few 
years, means you can make more progress. And also the nature of 
the conflicts now, they dwarf the conflicts of the last 20 or 
30 years. Not the Second World War necessarily, but they are 
just everywhere. The levels are higher, the problems are much 
greater. So I think you have got a chance here to really do 
something good. That would be my--I didn't get a chance to----
    Mr. Connolly. From your lips to God's ears. Dr. Shah.
    Mr. Shah. Representative Connolly, if I could just add a 
few thoughts. First is I would in no way contradict Dan. I 
agree with not only everything he said, my comment about the 
nutritional focus there is no question the agricultural 
community has supported these programs with the desire to have 
significant nutritional impact.
    I have been with committee members from the agricultural 
committees as we have traveled in settings, and the passion is 
extraordinary and it is about saving those children's lives. 
The point I wanted to make was that the science about how to do 
that has evolved such that actually there is more, we know so 
much more today about how to save those lives effectively and 
efficiently and it is different from the strategies we used to 
deploy even 10, 15 years ago. And that is all I meant to imply 
by that.
    The second answer on the politics is I had this experience 
as I learned and met many of the leaders in the shipping 
community and the agricultural community. But the shipping 
community in particular, I just believe there has been a 
mismatch of understanding that this program is not going to be 
able to sustain itself as a major source of revenue for 
shippers over the course of the next decade because of natural 
transitions in what is happening in the program. The volume of 
food is coming down. The replacement of grains with more 
targeted foods that are just denser and lighter in aggregate 
and cheaper to ship in aggregate.
    And so the structure of the program is already changing, 
and that is already impacting these constituencies. So I do 
think the time is now to have an open and partnership oriented 
discussion. We had structured, maybe about a year ago, some 
compromise ideas that landed in a place where there was 
significant additional flexibility, 2 million to 3 million more 
people reached and lives saved.
    A role for shippers but not in the current context, not the 
same as today's deal, and a focus on bringing some agricultural 
partners into this more advanced food picture by creating rice 
and legume based products as opposed to just peanut based 
products that are more targeted and more effective. So there is 
a way to design the future that builds on the politics of the 
past and I believe there is an opportunity to do it now.
    Rev. Beckmann. Well, I didn't know about your help in 
starting Bread for the World so thank you for that.
    Mr. Connolly. No, no. I just provided advice.
    Rev. Beckmann. No, I appreciate it. I am encouraged, 
actually, by the degree of bipartisanship that we have seen on 
international aid issues. You are in the fray so you may not 
feel it, but it is really extraordinary that during the Bush 
administration, the Obama administration that we have had real 
improvements and expansion of the programs that are focused on 
poverty, hunger, and disease. And it has been done in a 
bipartisan way with some authorizing legislation, and then 
steady and pretty rapid increases in appropriations for the 
programs that are focused on poverty, hunger, and disease.
    And those increases have continued since 2011, and I think 
it is partly because that our aid programs have worked. People 
have seen that PEPFAR has dramatically improved the situation 
in relationship to the global AIDS pandemic. And people can see 
that Africa, half of Africa is doing remarkably well. But some 
of that is because of policy reform, but it was also supported 
by the Millennium Challenge Corporation and IDA and other 
things that have been supported by this committee. So I think 
in a certain way we are in a really encouraging situation, and 
getting the reform of food aid done is really important to 
sustaining American confidence in all of these efforts to 
participate in what the world is doing to reduce poverty, 
hunger and disease.
    When I talk to church groups across the country, and I was 
in Wichita yesterday. There are a lot of Republicans in 
Wichita. I talk about food aid reform in Wichita. I start on 
that because everybody is shaking their heads that last year 
Congress got some additional food aid reform, enough to give 
food aid to 1\1/2\ million more of the world's poorest people 
last year at no cost to U.S. taxpayers. Folks in Wichita liked 
that a lot. And so I think getting this done is really 
important to a continued bipartisan collaboration on some of 
the things that this committee has provided leadership for.
    Mr. Perry. Thank you, Reverend. Mr. Connolly, and thank 
you. The Chair recognizes now Mr. Sherman from California.
    Mr. Sherman. Thank you. I begin by pointing out that I have 
no farms in my district. I have no ports in my district. I do 
have oranges growing in my state, but I am not sure that 
oranges are part of our food aid program. I do not have a dog 
in this fight. I do not have an orange in this fight.
    But I am convinced that if we simply abolish the Food for 
Peace program, and let's face it, turning it into the money for 
peace program means that it is simply a Xerox of several of our 
other foreign aid programs, that we are going to have less 
total expenditures on aid in the future. That if you abandon 
the interests that have been pushing for this program and say 
we are not with you, they will not be with us.
    Mr. Glickman, you know a little something about Congress, a 
little something about agriculture. Could you imagine the ag 
approps subcommittee just declaring that their total allotment 
should be reduced and that money transferred to the 
subcommittee on foreign operation?
    Mr. Glickman. Probably not. But let me just say this. I am 
not advocating turning the Food for Peace program into the 
money for peace program, period.
    Mr. Sherman. No, I just wanted that----
    Mr. Glickman. But all we are talking about is flexibility 
so you can move money and commodities around a little more.
    Mr. Sherman. Okay, as to flexibility the State Department 
has come into this room on many occasions and they have shown 
an incredible hostility, if anything, to American jobs, to the 
idea that anything purchased in America relates to jobs. They 
have testified that there is no connection between our trade 
deficit and employment. And they certainly act that way, and if 
you wonder whether that is true, just look at the fact that we 
have the largest trade deficit in the history of a million 
years.
    So giving them flexibility is pretty much the same thing if 
you give them a lot of flexibility. Do you think that if the 
State Department is given the authority to turn the Food for 
Peace program into basically a money for peace program, Dr. 
Shah, do you think that the shippers, agriculture, will 
continue to support the program?
    Mr. Shah. The bill that passed or the bill that came very 
close to passing here, I guess 2 years ago now, called for a 
50-percent commodity, 50 percent flexibility oriented approach. 
That strikes me as about right in terms of the range of both 
what is politically possible and what would dramatically 
enhance the quality of outcomes. It would allow you to have 
commodities used and deployed where they are valued and needed 
and play a role, and it would allow you to use the flexible 
resources to do the targeted feeding, lifesaving activities, 
fast and efficient activities. And in that context, I believe 
the shipping community together with the agricultural community 
together with the NGO community could support that type of 
package of flexible-plus commodity.
    Mr. Sherman. We clearly need some flexibility and the exact 
number that would keep the alliance together while providing 
the most efficient aid. There is another part of our aid. 
Obviously we want to feed people, but it is also sold to the 
American people as a for-peace program, which basically means 
it is not just for humanitarian reasons. It is to enhance the 
image of the United States.
    When we buy food locally that is less of a statement to the 
recipients that this food is really from America. What is done 
to make sure that we have the same, Dr. Shah, impact on the 
recipients and on the press covering it and on the whole world? 
I mean, we have done nothing as successful in the Islamic world 
than our aid after typhoons that hit Indonesia and Malaysia. So 
what can we do with the buying food locally and still have that 
impact? Dr. Shah?
    Mr. Shah. Well, I would just point out that in Haiti, in 
Tacloban and the Philippines, in Syria today, in Jordan and 
Lebanon, whenever we use flexible resources they come in the 
form of a branded voucher or a branded biometric ID card that a 
family will hold in their pocket, will tell you it is saving 
their family and their society at a critical time, and is 
emblazoned with the USAID logo and the phrase ``From the 
American People'' usually written in the local language. And 
they take extraordinary pride in that.
    So I think we have seen in all of these settings that you 
can have a flexible assistance program that is cognizant of the 
importance of projecting America's values, and people react 
very, very favorably to that.
    Mr. Sherman. So some of us are old-fashioned enough to 
think a flag on the bag, in this century it is flag on the 
card. Okay, I yield back.
    Mr. Perry. And just for the record, as I understand it, 
right, this is the bag we are talking about?
    Mr. Sherman. Okay.
    Mr. Perry. The Chair thanks the gentleman. The Chair now 
thanks the gentleman from New York, Mr. Engel.
    Mr. Engel. Thank you, Mr. Chairman. I just wanted to ask 
Reverend Beckmann one last question. So the statistics show 
that we can feed between 2 million and 6 million more people in 
need with simple common sense reforms, but like everything else 
special interests get in the way, people looking at how it 
affects some of these interests.
    So as the CEO of Bread for the World, how do you build--you 
touched on it but I would like you to expand on it--how do you 
build public and political will to reform our international 
food aid system?
    Rev. Beckmann. I think this is a really good issue to build 
public and political will for our foreign assistance generally, 
because I mean just within Bread for the World it is clear to 
our constituency that we fight just as hard to make these 
programs effective as we do to get more money. And across the 
political spectrum the demonstrated concern about effectiveness 
and efficiency and not just trying to get more money for poor 
people but protecting taxpayer dollars in that process, I just 
know that that builds support. Not only for the food aid 
program but for everything that our Government is doing to 
support what the world is doing to reduce poverty and hunger.
    I thought Mr. Sherman's point about the agriculture support 
is important. We need to, not necessarily, but all of us, I 
think, need to be cognizant of the agricultural community's 
strong support for food aid over many decades. Really at this 
point their self-interest is not the food aid, their self-
interest is reducing hunger. When in the 1990s when East Asia 
had a big improvement, lots of people got out of poverty. That 
was great for U.S. agriculture.
    In the same way as Africa comes out, as people come out of 
hunger and poverty that means--poor people typically spend two-
thirds of their total income on a couple plates of food a day. 
So some of the increased food that people are able to buy, the 
more variety, some of that will come from the U.S. and 
especially like breeder stock and technology behind the 
expanded production of food.
    So U.S. agriculture has a real and enduring self-interest 
reason for being in alliance with hungry people around the 
world, and it is really important that as we make this 
transition that we maintain that. So in practical terms it is 
going to mean compromises and doing this step-by-step, 
probably. And I don't know about the shippers. I am not sure we 
can keep them with us. But agriculture, they have a real stake 
in this.
    And then on top of it most of the farmers and people in 
farm states I know, they are conservative, church-going people. 
If you tell them that this is a way to save money on a 
government program and then reach more of the world's most 
desperate people with food they are for it.
    Mr. Barrett. If I may, Congressman Engel. There may be a 
lesson to be learned in the Canadian experience of reforming 
their food aid programs 10 years ago. Canada, like the United 
States, ran a surplus disposal program. Like the United States 
they had price support programs that absorbed surpluses 
generated by Canadian farmers then shipped them overseas as 
food aid.
    And then the Indian Ocean tsunami hit right after Christmas 
in 2004, and the Canadian law prescribed that Canada could only 
send up to 10 percent of its food aid through cash-based 
assistance. Ninety percent of the budget had to be commodities 
procured in Canada. The Indian Ocean tsunami hit rice-eating 
communities. There is not a lot of rice grown in Canada.
    So the Canadian farm community, note the farm community, 
led by the Canadian Foodgrains Bank, was so embarrassed by the 
Canadian food aid program's restrictions that the Canadians 
could not respond to populations in desperate need of food 
because they ran out of their budget in the first 2 weeks, that 
immediately, within the year, the Canadian Parliament changed 
Canadian food aid law. It went from 90 percent by Canada 
shipped from Canada to 50 percent within the year.
    We shouldn't have to wait for the same sort of tragic 
event. The farm community cares about food. It cares about 
people eating a nutritious diet. And these restrictions inhibit 
our ability as the world's most productive agricultural economy 
to advance that shared goal. This should be doable.
    Mr. Engel. Thank you. Thank you very much.
    Mr. Perry. The Chair thanks the gentleman. We also thank 
the witnesses for their time and insightful testimony. It is 
clear that in a time of unprecedented need we need to do 
whatever we can to make our food aid programs as efficient and 
as effective as possible. You have all clearly laid out the 
challenges and opportunities lying ahead of us and we thank you 
for that. With that this hearing is adjourned.
    [Whereupon, at 12:10 p.m., the committee was adjourned.]

                                     

                                     

                            A P P E N D I X

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              Material Submitted for the Record


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 Material submitted for the record by the Honorable Edward R. Royce, a 
Representative in Congress from the State of California, and chairman, 
                      Committee on Foreign Affairs

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 Material submitted for the record by the Honorable David Cicilline, a 
       Representative in Congress from the State of Rhode Island

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