Policy Point Wednesday: Sticky Fingers in the USAid Pie

I've researched and written several articles here about USAid; recently, this article caught my attention, as it's a whole new twist on the lobbying efforts of industry vs charity. Oxfam America, part of Oxfam International, an "international relief and development organization that creates lasting solutions to poverty, hunger, and injustice," recently tweeted this article* on how various special interest groups are lobbying to preserve the current form of USAid in the Farm Bill. Unfortunately, those interests are at cross-purposes with USAid's intended mission to "promote broadly shared economic prosperity; strengthen democracy and good governance; improve global health, food security, environmental sustainability and education; help societies prevent and recover from conflicts; and provide humanitarian assistance in the wake of natural and man-made disasters."

Ben Grossman-Cohen of Oxfam America, writes that about $0.32 of every food dollar spent on USAid by American taxpayers goes to "waste." He points to shipping restrictions that require 75% of USAid to be shipped on preferred US ships, using money from set-asides in the Farm Bill (apparently via the Jones Act, although I am unable to find the actual language of this legislation.) US shipping often costs more than other transportation options because of heightened regulations. In addition, providing aid using commodities grown in the US and shipped abroad means precious time is lost to transportation, and unnecessarily increases the carbon footprint of aid.

The policy of the United Nations' World Food Programme is to "buy food as close to where it is needed as possible. By buying locally the agency can save money on transport costs and also help sustain local economies." This is made possible by the support of donors, both individuals and governments, who offer cash instead of in-kind donations. Some governments, notably Canada, have moved entirely from in-kind donations ("tied" aid) to direct aid: "Tied aid is not cost effective and is inefficient. It undermines the ability of developing nations to produce or buy goods for themselves and delays the assistance from reaching the people who so desperately need it." Oxfam is asking USAid to consider moving towards purchasing local and regional foods in the country of need, rather than transporting our own products around the globe.

In the recent Google + hangout, President Obama outlined the importance of foreign aid: “We only spend about 1 percent of our budget on foreign aid, but it pays off in a lot of ways, because if we are contributing to an improving economy in a country, if we're giving people opportunity, if we're preventing a famine that results in huge numbers of refugees, that potentially saves us from having to deal with some military crisis somewhere down the road that could be even more expensive....aside from it being the right thing to do, as a very wealthy country… it’s also important to make sure that people understand this is part of our overall security strategy.”

Considering the complex set of regulations limiting USAid to preferred US growers and preferred US transportation, can we say in good conscience that USAid is as effective as it could be? Research shows that these restrictions cost taxpayers approximately $213 million a year; shipping restrictions alone cost taxpayers approximately $140 million annually. In light of our current domestic economic climate, wouldn't it make sense to make sure that our foreign aid does the most it can do in the least expensive way possible?

*Note: to see lobbyists in action, make sure to read the comments below the linked Oxfam article.