GAO Presentation 2007 International Food Aid Conference Various Challenges Impede the Efficiency and Effectiveness of U.S. Food Aid

2 Objectives of the GAO Study We examined some key challenges to the (1) efficiency of U.S. food aid programs and (2) effectiveness of the use of U.S. food aid. Definitions: Efficiency is the extent to which a program is acquiring, protecting, and using its resources in the most productive manner—in terms of cost, time, and quality of food aid. Effectiveness is the extent to which U.S. food aid programs are used to achieve their goals and objectives.

3 Scope and Methodology Analyzed USDA and USAID food aid proposals and procurement and funding data. Conducted interviews with U.S. agencies, U.S.- and foreign-flag ocean carriers, NGOs, freight forwarders, and agricultural commodity groups. Conducted fieldwork in Rome, Ethiopia, Kenya, and Zambia. Visited ports in Texas, South Africa and Kenya, and prepositioning sites in Louisiana and Dubai. Convened roundtable of 15 food aid experts and practitioners. Conducted work between May 2006 and March 2007 in accordance with generally accepted government auditing standards.

4 Background Selected Trends in U.S. Food Aid, Fiscal Years 2002 to 2006 Source: GAO analysis of USAID and USDA data.

5 Multiple Challenges Hinder the Efficiency of U.S. Food Aid Programs Funding and planning processes that increase delivery costs and lengthen time frames. Example: bunched procurement in 4 th quarter when prices are higher. Ocean transportation and contracting practices that differ from commercial practices and create high levels of risk for ocean carriers, increasing costs. Example: transportation claims may take years to get resolved. Legal requirements that result in awarding food aid contracts to more expensive providers and contribute to delivery delays. Example: cargo preference costs that may sometimes exceed DOT payments. Inadequate coordination between U.S. agencies and stakeholders in tracking and responding to food and delivery problems. Example: agencies track different information on food quality.

6 U.S. Agencies Have Taken Measures to Improve Timeliness in Food Aid Delivery USAID has been stocking food commodities, or prepositioning them, in Lake Charles (Louisiana) and Dubai (United Arab Emirates) for the past several years and is expanding this practice. Challenges include: Higher costs for increased cargo loading and unloading Appropriateness of prepositioning locations Inventory management and cargo infestation Phytosanitary certification Regulations such as marking requirements for bags In February 2007, USAID and USDA implemented a new transportation bid process to increase competition and reduce procurement time frames.

7 Monetization Is An Inefficient Practice Monetization--converting food to cash to fund development projects-- is inefficient due to costs such as shipping and marketing. It also diverts resources from NGOs’ core missions. Monetization rate has far exceeded the15 percent minimum requirement. Title II monetization rate was nearly 70 percent in 2001 but has since declined to about 50 percent in U.S. agencies do not collect the data electronically to allow them to monitor the extent to which revenues cover the costs of monetization.

8 Various Challenges Reduce the Effective Use of Food Aid Challenging operating environments in recipient countries restrict access to populations in need and cause delays. Example: physical safety and security concerns have limited access to vulnerable populations in Darfur. Insufficient coordination among key stakeholders results in disparate estimates of food needs. Example: separate assessments and use of different assessment methods. Difficulties in identifying the most vulnerable groups and understanding the causes of food insecurity. Example: distinguishing between chronic versus transitory food insecurity.

9 Various Challenges Reduce the Effective Use of Food Aid Resource constraints adversely affect the timing and quality of assessments, as well as the quantity of food and other assistance. Example: funding for assessments in advance of program implementation is limited. Impediments to improving the nutritional quality of U.S. food aid may result in recipients not receiving the most nutritious or appropriate food. Example: lack of an interagency mechanism to update products and specifications. USAID and USDA do not sufficiently monitor food aid programs. Example: USAID has 23 Title II-funded positions in 10 countries to monitor food aid programs costing $1.7 billion in 55 countries. USDA has even less of a field presence.

10 USAID,USDA, and DOT should work together on measures to improve food aid logistical planning, modernize transportation contracting practices, update reimbursement methodologies to minimize the cost impact of cargo preference regulations on food aid transportation expenditures, track and resolve food quality complaints systematically, and develop an information collection system to track monetization revenues and costs. GAO Recommendations to Improve Efficiency of U.S. Food Aid

11 GAO Recommendations to Improve Effectiveness of U.S. Food Aid USAID and USDA should work to enhance the reliability and use of needs assessments, determine ways to provide adequate non-food resources when appropriate, develop a coordinated interagency mechanism to update food aid specifications and products, and improve monitoring of food aid programs.