Conaway and Rouzer send letters to USAID, USDA, and MARAD asking for answers

Today, House Agriculture Committee Chairman K. Michael Conaway (R-TX), joined by Livestock and Foreign Agriculture Subcommittee Chairman David Rouzer (R-NC), sent a letter to administrators at the U.S. Agency for International Development (USAID), U.S. Maritime Administration (MARAD), and U.S. Department of Agriculture (USDA) requesting answers by July 21, 2015, to recent news reports suggesting closed-door negotiations to amend or change the Maritime Security Program (MSP) in a way that would have dire consequences for the delivery of U.S. in-kind food aid.

The U.S. has been the global leader in providing international food aid for more than 60 years, and U.S. agricultural producers have been central to those efforts. However, according to a May 15, 2015, article in the American Shipper, USAID, the Maritime Administration, and other stakeholders are engaged in private negotiations to circumvent the agricultural industry and shift from U.S. in-kind commodity-based food aid to cash-based assistance, which according to a recent Government Accountability Office report is subject to significant waste, fraud, and abuse.

At a June 24, 2015, Agriculture Committee hearing, Chairman Conaway said, “The Agricultural Act of 2014 made several important reforms to U.S. international food aid programs to improve efficiency.  The Agriculture Committee will continue to monitor implementation of those changes as part of its review of international food aid programs in advance of the next farm bill. Though there are continued calls for reforms to these programs, any additional reforms should be debated in an open and transparent manner and should fully involve the agricultural community.”

Excerpts from the three letters follows, links included below:

Ambassador Lenhardt, USAID
Administrator Jaenichen, MARAD
Administrator Karsting, USDA

Pursuant to House Rule X, the House Agriculture Committee has “general oversight responsibilities” for all matters related to agriculture, including international food assistance authorized in Title II of the Food for Peace Act.  As such, the Committee is conducting oversight related to a recent press report stating that certain government agencies are contemplating changes to the Maritime Security Program (MSP), which funds the U.S. Merchant Marine.   As part of this oversight, we are writing to request documents and information relating to negotiations to change the MSP program.

For years, all stakeholders have benefitted from the current construct of MSP.  Under the Food for Peace Act, implementing partners ship U.S. grown commodities internationally for direct distribution or for sale, also referred to as monetization.   The law requires at least fifty percent of the U.S. agricultural commodities, financed by U.S. food aid programs, be shipped on privately-owned, U.S.-flag commercial vessels — some of which are part of MSP.   This requirement ensures that even in times of peace, commercial vessels stay active.  Should the need arise for these vessels to transition to the transport of defense materiel such as tanks during a ramp up of our military activity abroad, the U.S. has a fleet — the U.S. Merchant Marines — to augment the Navy.  National security dictates that we maintain a robust Merchant Marine fleet at the ready.  Food aid programs ensure the fleet will not be scrapped in times of low military conflict globally.

According to a May 15, 2015, article in the American Shipper, USAID, the Maritime Administration, and other stake holders are engaged in negotiations related to “raising the MSP stipend to $5 million from $3.1 million because the current stipend is seen as not sufficient to offset the higher cost of operating a U.S.-flag, U.S.-crewed vessel.”   Unfortunately, this proposal would have dire consequences for U.S. farmers and taxpayers, generally.  According to the American Shipper article:

[T]he plan in the works would obtain the money for the increase from U.S. food aid programs in exchange for allowing U.S. Agency for International Development to spend 45 percent of its food aid budget on local and regional purchases rather than buying food in the U.S.

This appears to be another attempt on the part of USAID to shift from U.S. in-kind commodity-based food aid to cash vouchers.

However, cash-based assistance is highly vulnerable to fraud, waste, and abuse.  In fact, on March 26, 2015, the Government Accountability Office (GAO) issued a report finding numerous weaknesses in USAID’s financial oversight of cash-based international food assistance.   GAO’s report referred to several instances in which USAID’s implementing partners investigated fraudulent behavior in the cash-based voucher programs.

In addition to exposing taxpayer dollars to fraud in a voucher-based system, the proposal could have implications for the defense of our nation.  Shippers quoted in the recent press report raised concerns about having to scrap vessels.  One U.S.-flag vessel owner stated: “if such a bargain [the proposal] came to pass, it could reduce the amount of agriculture cargo that would be available to be shipped in U.S.-flag vessels and could lead to the ‘flagging out’ of vessels to foreign registries or even scrapping of some U.S.-flag ships.”   If U.S.-flag vessels are scrapped, not only is our military readiness affected, but U.S. jobs are lost.

In an effort to avoid these harms, the Committee is embarking on a methodical and sequential review of all international food assistance programs to determine an appropriate balance of cash-based assistance and in-kind food aid.  As part of this ongoing initiative, on June 24, 2015, the full Committee held a hearing entitled “Review of U.S. International Food Aid Programs.”  In preparation for drafting and negotiating the next farm bill, it is incumbent upon the House Agriculture Committee to have in-depth insight into all stakeholder roles, responsibilities, and future needs.