Gov’t Is Finally Going To Track What Food Aid Does To Foreign Markets

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Two government agencies plan to better track how food aid affects the local economies in foreign countries that receive deliveries of food commodities from the U.S.

The U.S. Agency for International Development (USAID) and the Department of Agriculture (USDA), which combined managed $1.5 billion in food aid programs last year, do not measure how dumping food products into small communities affects the local market, according to a Government Accountability Office (GAO) report released Monday.

The GAO observed “unusually low commodity prices” in nine different countries that received food aid in 2015 through 2016.

The U.S. provides more food assistance than any other country in the world, usually to countries in desperate need after a crisis or famine. The GAO found in a 2009 study that shipping food from America to another country costs, on average, 34 times what it would take to buy food within that country.

USAID’s Food for Peace initiative, which received $1.47 billion in 2016 funding, provides food to populations affected by conflicts or natural disasters. The agency also funds programs aimed at addressing long-term hunger.

USDA’s McGovern-Dole program typically buys food raised in the U.S. and sells it overseas to support infrastructure, agricultural and economic development projects.

In Malawi and Guatemala, where GAO investigators visited for the study, commodity prices “were significantly lower than would be predicted based on seasonality and other factors,” according to the report. The GAO could not attribute the drop in prices for food grown locally directly to the food aid, partly because USAID and USDA don’t track what happens to the market in local economies.

In the all nine countries, GAO found that prices of key staple commodities, like maize, cassava and rice, were unusually low 12 percent of the years observed. In Guatemala, “white-maize prices in the central market were unusually low during most of 2015,” but were especially low during the fall of that year when the U.S. distributed food in several communities.

“USDA guidance contains requirements for monitoring and evaluation of Food for Progress projects, but the required monitoring and evaluation is not intended to identify potential negative market effects,” the GAO said.

Without tracking what happens to prices of food in the local economies, the agencies “may remain unaware of the occurrence of unusually low prices and may miss opportunities for adjusting the type or amount of assistance in response to observed price behavior,” the GAO said.

The GAO recommended that both agencies “monitor markets during implementation of development projects to identify any potential negative effects, such as unusual changes in prices,” and the agencies agreed.

The USDA and USAID will both develop guidance for monitoring markets for negative effects after food programs begin, and will also better ensure that food assistance projects are properly researched before starting.

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