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Abstract:
U.S. Response to the Global Food Crisis: Humanitarian Assistance and Development Investments
Before the Committee on Agriculture
U.S. House of Representatives
July 16, 2008

Statement of James R. Kunder Acting Deputy Administrator, U.S. Agency for International Development

Washington, DC | Posted on July 16th, 2008

Thank you. Chairman McIntyre and distinguished members of the Committee. I appreciate the opportunity to be here today to address this important topic.

We are in the midst of a global food crisis unlike other food crises we have faced in the past half century, one not caused by natural disasters, conflict or any single event such as drought. It is not localized-instead it is pervasive and widespread, affecting poor people in developing countries severely. It is one that has demonstrated how worldwide markets transmit price rises rapidly, underscoring the need for global solutions.

The members of this Committee are familiar with the new reality we face; Last year, the international food price index rose by 27.1 %, compared with just 14.4% in 2006. So far from April 2007 to April 2008, the index is up more than 45%, and the prices of some major staples have increased even more. Dwindling global stocks of grain make prices even more sensitive to shocks, whether from a drought in Australia or floods in our Midwest. When countries react to high prices or tight supplies by hindering trade, the global food system functions less efficiently, further exacerbating price volatility.

While sharply higher prices have been welcome news for many farmers, for the world's poor subsisting on $1/day or less they can mean deprivation and real hunger. The World Bank estimates that ranks of the chronically food insecure have grown, due to the impact of high prices, by over 100 million in the past year-to nearly 982 million. In addition to current estimates of 75 to 100 million people whose needs require immediate response, over 2 billion people, more than one third of humanity, are being seriously affected.

The rapidly increasing cost of food is also weakening the ability of governments of both poor and middle-income countries to sustain growth, protect the vulnerable, or even to maintain order. The fear of food riots, even in some middle-income countries, presents a new dynamic that puts pressure on sound decision-making for long term growth and stability. The same high prices also limit our own ability to respond to critical emergency hunger needs around the world through our food aid programs.

In response to the challenge posed by rising food prices, President Bush has called for a three-pronged strategy to the crisis resulting from high global food prices. The first and most pressing component involves expanding humanitarian assistance, the second increasing agricultural productivity in at-risk regions, and the third, a vigorous policy effort to promote agricultural trade and investment.

Our food assistance programs have to be more efficient and targeted than ever. In fiscal year 2007, USAID provided more than 2 million metric tons of P.L. 480 Title II commodities, worth $1.87 billion, that reached an estimated 41 million beneficiaries in 56 countries around the world. In Sudan alone, more than 350,000 metric tons of food commodities, valued at $356 million, were provided to an estimated 6.4 million beneficiaries.

These amounts include approximately $1 billion annually to the U.N. World Food Program (WFP), or approximately 40 percent of all contributions to the organization. We also contribute significant international food aid through private voluntary organizations (PVOs), and are committed to working with other donors, from both the commercial and non-profit sectors.

To assist in meeting these immediate needs, the United States has taken various steps:

On April 14, President George W. Bush directed the Secretary of Agriculture to draw down on the Bill Emerson Humanitarian Trust to meet emergency food aid needs. The Emerson Trust is a food reserve of up to 4 million metric tons of wheat, corn, sorghum, and rice administered under the authority of the U.S. Secretary of Agriculture. The Secretary of Agriculture may authorize the release of commodities from the reserve to meet unanticipated emergency needs that cannot otherwise be met under Title II of P.L. 480. This release was estimated to provide $200 million in emergency food aid through USAID. This additional food aid is being provided for emergency needs in Afghanistan, Ethiopia, Kenya and Zimbabwe.

In addition, President Bush on May 1 requested $770 million in additional allocations, including $395 million intended to preserve price parity in existing food aid programs. These funds will allow USAID's emergency food aid program partners to meet their ongoing humanitarian obligations.

We thank Congress for passing the emergency supplemental spending last month, with $850 million in P.L. 480 resources for fiscal year 2008. Working closely with USDA, within days of the President's signature of the emergency supplemental, USAID initiated expedited commodity procurement procedures to ensure rapid arrival of lifesaving assistance.

Food for Peace has already provided significant assistance to the drought emergency affecting the Horn of Africa, particularly Ethiopia and Somalia. In fiscal year 2008 to date, more than 780,000 metric tons of Title II food aid, valued at nearly $650 million, has been provided to assist the region. With the new funding made available through the supplemental appropriation, much more food will soon be in the pipeline.

In summary, USAID's Food for Peace funding committed to address food insecurity and price increases totaled $1.87 billion in fiscal year 2007, with more than $1.53 billion to date in fiscal year 2008. Additionally, the emergency supplemental appropriation makes available in fiscal year 2009 $395 million for additional emergency food assistance.

To aid in addressing the new challenges we face, I'd like to share with you two new tools that will assist us in identifying populations impacted by rising food prices. The urban poor are particularly vulnerable to price increases because such a large portion of their income goes to purchasing food. These new early warning tools, developed by USAID's Famine Early Warning Systems Network (FEWS NET), will allow us to monitor more closely emerging food security threats in urban settings.

The first tool is an urban food market price watch, which tracks price changes for staple foods in 20 countries. This price information will provide advance warning to better target our food aid resources to the most vulnerable. The second tool, which emerged from a workshop with private voluntary organizations and World Food Program experts, is an urban food aid programming manual that will allow us to better target and deliver food aid to those most impacted by rising food prices.

As I have stressed, food and emergency assistance are short-term measures; they are critical tools but food aid alone will not solve the food crisis. Our approach links those emergency tools to growth in agricultural production, access to markets and advancement of global policy solutions that foster trade and investment in agriculture.

In its invitation, the Committee also asked for information about our agricultural development efforts-essentially the second thrust of our three-part effort in humanitarian assistance, growth in agricultural productivity, and sound global policies.

Agricultural productivity in developing countries grew at between 3 and 4 percent per year during the 1970s and 1980s. These gains fueled broad economic growth and marked reductions in hunger and poverty; food became both more available and more affordable for literally billions of the world's people. Now, annual agricultural productivity growth rates in the developing world are less than 1%-a rate that will not keep up with rising demands from ever-larger populations.

A coordinated global effort will be required to reverse the downward trend in productivity growth, and engagement by the United States as a leader will be essential. We have the world's largest and most diversified agricultural research capability, in our partnerships with USDA, the Land Grant universities and in the private sector. Our seed, fertilizer and food industries represent tremendous resources in strengthening markets, reducing losses and generating economic gains through value addition.

Many of the threats faced by agriculture are global-for example the new stem rust disease of wheat spreading in Africa and Asia that Norman Borlaug has warned of. By working with the International Agricultural Research Centers and partners in Africa and India and here at home, USAID and USDA have combined forces to reduce the impact of an epidemic overseas and at the same time help protect American farmers and consumers from this devastating disease which could potentially cause billions of dollars in losses. Sources of resistance have been identified through research partnerships and resistant varieties are being developed and multiplied.

Similarly, our work to stop the spread of Avian Influenza is helping to protect both the health and livelihoods of millions of people in Africa and Asia. Valuable information is gained and lessons are learned that we can apply in similarly protecting our own nation's health as well as its poultry industry and wildlife.

Agricultural growth and resilience not only lead to reduced needs for food aid and emergency assistance, they open up new markets opportunities for American farmers and business to reach new markets. Traditionally, as developing countries invest more in crops, livestock and irrigation, demand for feed grains, other commodities and technology increases.

USAID has a proven track-record of promoting agricultural growth in many countries-we are seeing remarkably positive trends in countries that invest in technology and infrastructure, and build markets and trade that helps farms access the inputs they need and market the output they produce. Through the President's Initiative to End Hunger in Africa (IEHA), we have focused squarely on productivity, markets and trade-in other words, growth, but growth with special attention to the most vulnerable. This vision has now been widely acknowledged as the only sustainable means of reducing hunger.

Unfortunately, in recent years funding for agricultural development investments have declined as we face budgetary constraints. Let me stress that there has not been opposition to agricultural investment by USAID. In fact, current and past leadership of USAID have called for the need to do more in this vital sector. And within our budgetary constraints, we have done what we can. However, support to some of our most effective and strategic investments-for example in agricultural biotechnology and the Consultative Group on International Agricultural Research centers-had to be reduced.

Now that a renewed understanding of agriculture's vital importance to combating hunger, poverty and even civil unrest has emerged, the outlook for agricultural investment for FY 2009 has improved. USAID is gearing up to provide renewed leadership to the global development community. The emergency supplemental just passed by the Congress will provide an additional $200 million in FY 2009 development assistance to help us begin to mount an effective response to the crisis. Of that amount, $50 million will support regional market development and local procurement of major food crops, $130 million will target production increases and markets in countries that have the potential to mount a rapid production response, and $20 million will support science and technology aimed at increasing productivity of food staples.

Our strategy focuses on increasing the availability and affordability of food staples on which low-income people depend in the most at-risk regions. We will do this by helping the agricultural sector in those countries modernize, providing new opportunities for millions of farm families, especially smallholders, to respond to the market. We can achieve this vision by building a coalition that aligns the resources of the U.S. government with the commitment of the target countries themselves, other donors and the private sector-both for profit and non-profit.

Our investments will focus on restoring the growth in agricultural productivity in the developing world, especially of key staple foods, to levels that can meet rising demands. We will work to achieve rapid growth in agricultural trade-making markets more efficient for both low-income consumers and producers. The gains we make will actually reduce the need for emergency food assistance, as communities and nations make gains in ensuring their own food security. As we work toward these vital objectives, we will continue to meet the needs of those most vulnerable through both food assistance and emergency resources, all the while helping them to rebuild their livelihoods and resilience.

The Development Leadership Initiative recently endorsed by the Congress will help us build the institutional capacity necessary to lead in the global development community. Our partnership with the U.S. University community through Collaborative Research Support Programs (CRSPs), Higher Education for Development and other partnerships remains strong, and are helping to build a new generation of scientists and decision-makers from our partner countries ready to apply technology, policy and marketing know-how to solving the problems facing developing countries.

We are aligning our humanitarian and development assistance efforts in new ways. We are coordinating our efforts to address the near-term humanitarian crisis with the design of new programs that will build the foundation-information, technology, institutions, policies, safety nets-for the modernization of agriculture, transforming more small producers into commercial enterprises. To be successful we must focus our effort in agriculture while scaling them up to the level of the challenge.

Following are the key elements of our vision:

First, we must halt the slide into hunger and absolute poverty. Maintaining our global commitment to emergency food and nutrition assistance, and expanding local purchase and IDA funding to quickly reinforce productive safety nets (e.g. cash or food for work) and livelihoods, we will stabilize the situation, beginning this year in East and West Africa, and expanding to encompass other at-risk countries.

Second, we must expand development and use of modern technology for staple foods. We know that we can double yields of staple foods by ensuring that small-holder producers access the tools of modern agriculture - improved seeds, fertilizer, irrigation, dairy management. This is an area for U.S. leadership. Through our universities and industry, we are global leaders in the area of science and technology. U.S. farmers are in the forefront of adoption of modern technologies and practices. We see this very clearly in the area of biotech crops, for example. We must dramatically expand the use of existing technology and practices by small farmers, while also investing in longer-term challenges to agricultural productivity - climate change, the high price of fertilizer linked to high fuel prices, natural resource degradation, competition for water resources, and emerging diseases such as avian influenza or wheat stem rust.

To do this, we are expanding funding for research and development, harnessing traditional breeding, biotechnology, geospatial technology to guide resources management, as well as consider the role of advances in nanotechnology and energy efficiency. We will expand our partnerships with the biotechnology industry and the seed sector, U.S. universities, the Consultative Group on International Agricultural Research, and national research systems to leverage advance scientific research while training a new generation of agricultural researchers.

Third, we must empower the private sector to deliver inputs and information. More than ever before, agribusiness will take the lead in getting up-to-date production and marketing information to smallholder farmers. We must support small and medium enterprises as the key means of delivering seeds and fertilizer to rural communities. That will mean expanding support for business services, strengthening linkages between public research and commercialization of technology, access to credit, and policy reform to reduce the barriers to private sector investment.

Fourth, we need to expand market access and efficiency. We will connect small-holder producers to the market by expanding rural roads and information technology to provide access to market and price information. To stimulate market-led growth, we will strengthen the ability of producers to meet market standards - the quality, product diversity, and safety standards that will generate opportunity for commercial growth. Export restrictions, taxes and other hindrances to market signals and producer responsiveness will be reduced or eliminated. We will work to foster science-based regulatory policies that will foster trade, particularly in food staples, as well as investment by both the public and private sectors.

Fifth, we must work with the partner countries and the private sector to expand access to financing. We must expand and strengthen mechanisms to stimulate private investment in agriculture - from small producers to the value chain industries that take the product to the market. We must go beyond producers, however, and develop new mechanisms to fund the larger agribusiness engaged in the value chain - commodity importers, millers, processors, and distributors. Developing country policies must foster renewed confidence on the part of the financial sector that farming and other agro-enterprises are emerging as principal drivers of economic growth.

Sixth, the United States must lead a global effort to promote policies that support growth. This is, in effect, the third, longer term dimension of the President's response to the food crisis. As we engage our own government as well as other donors and the target countries themselves, we will support further analysis and discussion on policy dimensions and especially the successful conclusion of the Doha agreement.

Seventh, we must reduce risks to food security for the poor. We will align our humanitarian efforts with this growth strategy to maximize the synergies between meeting basic needs and enhancing productivity investments. This means linking our agricultural investments to humanitarian interventions (e.g. diversifying diets, delivering nutritional outreach alongside agricultural extension and health services) making sure that as we deliver humanitarian aid, we protect household productive assets and move families, communities, and the agricultural sector towards a growth strategy. We will also ensure that our productivity, market and finance activities build resilience for small producers. We are engaging the PVO and NGO community more comprehensively in ways that align with this growth strategy.

And finally, eighth, we need to develop a new coalition based on commitment to a common agenda. The United States is a crucial part of a global response to a global problem. To be effective, we must work as a partner and engage leaders at the highest levels in the target countries, regional economic organizations, the international development community (UN, World Bank, regional banks, private foundations) and the private sector (agrifood, seed, fertilizer industry, and finance institutions).

In sum, our vision calls for an unprecedented humanitarian and development assistance effort by the United States, distinguished by:

* Significant attention to staple foods.
* Action at scale with the problem.
* Real integration of targeted safety nets with wealth creation.
* Building the capacity in the target countries to carry the growth process beyond our assistance.
* Partnership with the target countries to ensure the commitment to policy and good governance needed to reach success. Our partner countries must demonstrate political will to invest and set a positive policy environment.
* Clear targets and metrics to gauge progress towards longer term goals.
* A "whole of government" approach, uniting the resources of multiple agencies;
* A coordinated effort with other donors; and,
* A major role for the private sector in implementing this agenda.

We know we can increase food security in the world's poorest countries-in both its supply and demand dimensions-through strategic investments in agricultural development, markets and trade. The task of reducing hunger is huge, but the moral imperative is compelling. And in the long run, the cost of action will be less than the cost of inaction.

The FY 2009 bridge funding just approved by the Congress is an important step in the right direction. I urge the members of this committee to help make United States' leadership in combating global hunger all that it should be. No one is better positioned to lead-in food assistance, in science and technology, and in fostering markets and trade.

We are confident that, with U.S. leadership and investment, we can stem and reverse the supply-demand imbalance that exists today in food staples. Some of it will occur here at home, but some of it must occur in countries where poor, food insecure populations generally make their living in agriculture. We know how to do it-we know what works and what does not; we know that we must rely much more on the private sector and on broad alliances than was the case in the first Green Revolution. We have new tools, and we need to use them: markets, trade and science will transform our approach.

Political leadership can help solve this crisis. Over the past months we have seen major commitments from the President and the Congress, and from leaders around the world. Ban Ki-moon, Bob Zoellick and Josette Sheeran have put the full force of their respective organizations behind this effort. But U.S. leadership remains vital to success and to the pursuit of a sustainable growth agenda for agriculture.

Failure is not an option. Though I have concentrated on the problem and its solution, we must never lose sight of the terrible human cost of hunger. Even short term hunger can unalterably affect a child by exposing him or her to disease, threatening normal cognitive development and lifelong productivity, or, tragically, even early death. Yet the problem posed by high food prices is one we know how to solve-and in doing so we can also recommit to ending the scourge of chronic hunger once and for all. Thank you.