US FOOD AID PROGRAMS DESCRIPTION:
PUBLIC LAW 480, FOOD FOR PROGRESS AND SECTION 416(b)
PROGRAM AUTHORITIES: The major authorities for grant and concessional credit food aid are the Agricultural Trade Development and Assistance Act of 1954 as amended (Public Law 480), the Food for Progress Act of 1985, and Section 416(b) of the Agricultural Act of 1949. Amendments to these authorities are contained in Title XV of the Food, Agriculture, Conservation, and Trade Act of 1990 (FACT Act).
PROGRAM PURPOSE: Public Law 480 (P.L. 480) also known as the Food for Peace Program. The P.L. 480 food aid program is comprised of three titles. Each title has different objectives and provides agricultural assistance to countries at different levels of economic development. Title I of the P.L. 480 program is administered by USDA, and Titles II and III are administered by the Agency for International Development (AID). P.L. 480 programs are entered into to combat hunger and malnutrition; promote broad-based equitable and sustainable development, including agricultural development; expand international trade; develop and expand export markets for United States agricultural commodities; and to foster and encourage the development of private enterprise and democratic participation in developing countries.
Title I provides for government-to-government sales of agricultural commodities to developing countries under long-term credit arrangements. Repayments for agricultural commodities sold under this title may be made either in U.S. dollars or in local currencies on credit terms up to 30 years, with a grace period of up to seven years. Local currencies received under Title I sales agreements may be used in carrying out activities under section 104 of the Agricultural Trade Development and Assistance Act of 1954, as amended. Activities in the recipient country for which these local currencies may be used include developing new markets for U.S. agricultural commodities on a mutually beneficial basis, paying U.S. obligations, and supporting agricultural development or research. The local currency provisions contained in section 104 have not been implemented for budgetary reasons.
Title II provides for the donation of U.S. agricultural commodities by the U.S. government to meet humanitarian food needs in foreign countries. Commodities may be provided to meet emergency needs under government-to-government agreements, through public and private agencies, including intergovernmental organizations such as the World Food Program, and other multilateral organizations. Non-emergency assistance may be provided through private voluntary organizations, cooperatives, and intergovernmental organizations. Commodities requested may be furnished from the Commodity Credit Corporation's (CCC's) inventory acquired under price support programs or purchased from private stocks. The CCC also finances the costs of ocean transportation to ports of entry, or to points of entry other than ports in the case of landlocked countries, or when the use of a point of entry other than port would result in substantial savings in costs or time. The CCC may also pay transportation costs from designated ports of entry or points of entry abroad to storage and distribution sites, and associated storage and distribution costs for commodities, including pre-positioned commodities, made available to meet urgent or extraordinary relief requirements.
Title III provides for government-to-government grants to support long-term economic development in the least developed countries. The U.S. Government will donate Title III agricultural commodities without charge to the recipient country and will arrange for and pay the costs of purchasing, processing, handling and transporting the commodities to the port or point of entry in the recipient country. The donated commodities are sold on the domestic market, and revenue generated from the sale in the recipient countries is used to support programs of economic development.
Section 416(b). This program provides for overseas donations of surplus commodities owned by the CCC to carry out assistance programs in developing countries and friendly countries. Surplus commodities acquired by the CCC as a result of price support operations may be made available under section 416(b) if these surplus commodities cannot be sold or otherwise disposed of without disruption of price support programs or at competitive world prices. These donations are not permitted to reduce the amounts of commodities that traditionally are donated to domestic feeding programs or agencies, prevent the fulfillment of any agreement entered into under a payment-in-kind program, or disrupt normal commercial sales.
The Food for Progress (FFP) program. This program authorizes the CCC to finance the sale and exportation of agricultural commodities on credit terms, or on a grant basis, to support developing countries and countries that are emerging democracies and have made commitments to introduce or expand free enterprise elements into their agricultural economies. Commodities may be provided under the authority of P.L. 480, Title I, or Section 416(b). Under certain conditions, CCC may also purchase commodities for use in Food for Progress programs if the commodities are currently not held by CCC in stocks. For commodities furnished on a grant basis, the CCC may pay, in addition to acquisition costs and ocean transportation, such related commodity and delivery charges.
--Commodities will not be made available unless there are adequate storage facilities in the recipient country and the distribution will not interfere with domestic production or marketing.
--For each year under Title II there is an appropriation limit of $1 billion to reimburse the CCC for all costs incurred. Of the funds made available in each fiscal year under Title II, at least $10 million and not more than $13.5 million shall be made available to cover program costs of private voluntary organizations and cooperatives.
--For FY 1995, a minimum of 2,025,000 MT must be made available for food distribution under Title II, of which a minimum of 1,550,000 metric tons must be made available for non-emergency food distribution.
--The Food for Progress program is limited by a global 500,000 MT legislative ceiling, and by a $30 million cap on non-commodity costs (primarily transportation) paid directly by CCC.
--Cargo preference requirements require that at least 75 percent of all U.S. food aid tonnage be shipped on U.S.- flag vessels. This requirement applies to shipments under P.L. 480, Food for Progress and Section 416(b).
P.L. 480. No agricultural commodity shall be available if its disposition would reduce the domestic supply below domestic requirements and provide adequate carryover, unless the Secretary of Agriculture determines that some part of the supply should be used for urgent humanitarian purposes. Alcoholic beverages and tobacco products shall not be made available under P.L. 480.
Section 416(b). Eligible commodities include: dairy products, rice, feed grains and products, and oilseeds and other commodities acquired by the CCC through price support operations. Commodities may not be made available in amounts that will reduce amounts traditionally used for domestic feeding programs or will prevent fulfillment of a payment-in-kind program.
Food for Progress. Commodities eligible for Food for Progress programs are: 1) those available under the P.L. 480 program when Title I funds are used, 2) those available under Section 416(b), or (3) CCC funds can be used for both the procurement and shipment of commodities when CCC does not have surplus commodities in inventory.
--A developing country shall be considered eligible for P.L. 480 Title I if it has a shortage of foreign exchange earnings and has difficulty meeting all of its food needs through commercial channels.
--Under Title II countries are eligible where emergency food needs exist and non- emergency food may be provided through eligible organizations.
--To be eligible for donation of agricultural commodities under Title III the country must meet poverty criteria established by the International Bank for Reconstruction and Development for Civil Works Preference for providing financial assistance, or the country is determined a food deficit country by meeting all the indicators of national food deficit and malnutrition, including: per capita caloric consumption of less than 2,300 calories, an inability to meet food security requirements through domestic production or imports due to a shortage of foreign exchange earnings, and a child mortality rate of children under 5 years old in excess of 100 per 1,000 births.
-- Countries that engage in violations of human rights as determined by the President are ineligible for P.L. 480.
--Commodities are eligible to friendly and developing countries.
Food for Progress.
--Commodities are eligible to developing countries and emerging democracies that have made commitments to introduce or expand free enterprise elements in their agricultural economies. Legislation was amended in 1992 to include the independent states of the former Soviet Union as eligible countries under this program.