Hearing Of The Africa And Global Health Subcommittee Of The House Foreign Affairs Committee - Local And Regional Purchases: Opportunities To Enhance U.S. Food Aid

Statement

Chaired By: Rep. Donald M. Payne

Witnesses: Thomas Melito, Director, International Affairs And Trade Team, United States Government Accountability Office; Jon C. Brause, Deputy Assistant Administrator, Bureau For Democracy, Conflict, And Humanitarian Assistance, United States Agency For International Development; Bud Philbrook, Deputy Under Secretary, Farm And Foreign Agricultural Services, United States Department Of Agriculture; Jean Mckeever, Associate Administrator, Business And Workforce Development, Senior Program Manager, Office Of Cargo Preference Program, Maritime Administration, United States Department Of Transportation; Allan Jury, Director, United States Relations Office, World Food Program

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REP. PAYNE: (Sounds gavel.) Let me call this hearing to order. I was waiting for the ranking member but many of you may know that he is involved in a very intense case of a constituent, who is in Brazil and his son is in a legal entanglement. So I assume he will be here if his schedule permits.

But we will move forward. As you know there is always many conflicts in our schedule, but let me certainly welcome all of you here this morning for this very important continuation of the subject that we've been dealing with here at the Subcommittee on Africa and Global Health for several years.

Let me welcome all of you to the fourth hearing that we've had of this subcommittee this year. But today's hearing is entitled "Local and Regional Purchases: Opportunities to Enhance U.S. Food Aid." The hearing will be followed by a briefing of the same title.

This is the third in the series of hearings we've held on U.S. food aid programs and food security. The hearing will focus on the results of a Government Accountability Office, GAO report, which I requested last year related to the role that purchasing food locally or regionally can play in improving efficiency and effectiveness of the U.S. in-kind food programs.

The 2007 GAO report has shown that there was great room for improvement within our judicial in-kind food aid programs. Local and Regional Procurement, LRP and we will be using an acronym. Local and Regional Procurement, LRP, is the purchasing of food commodities in countries with emergency food needs or in another country within the region to be provided as food aid.

As we will hear today, this approach is already being put to use to some extent in U.S. programs and is used extensively by the World Food Program, the WFP. As many of us know, the U.S. is the largest food aid provider in the world. In 2008, the U.S. gave ($)2.1 billion in U.S. commodities for WFP emergency food operations.

Almost all U.S. food aid is provided in the form of U.S. commodities and has been that way for the last 50 years. Other donors, such as the EU, the second largest provider of food aid have switched over almost entirely to cash donations to WFP to purchase world -- to purchase food aid.

In 2008, the WFP purchased more than $1 billion worth of commodities or 2.1 million metric tons worldwide. More than half of those commodities were purchased in developing countries. In recent years, LRP have been discussing -- have been discussed as a cost efficient, time saving option, to be employed to meet emergency food needs and it has been explored through several programs.

The food aid budget request for fiscal year 2006 through 2009 include language authorizing the U.S. Agency for International Development, USAID, to allocate up to 25 percent of funds for food aid Title II of PL 480 or as it's been recently renamed Food for Peace to local or regional purchase.

The justification for this request was it would increase the timeliness and effectiveness of our response to emergency food aid needs. The language did not make it in the final bill. The former administration's farm bill proposal also authorized PL 480 funds for LRPs. The 2008 food -- Farm Bill did include a five year $60 million U.S. Department of Agriculture, USDA pilot project for LRP.

The U.S. Agency for International Development, USAID provided ($)125 million to implement LRPs in developing countries through Fiscal Year 2008 supplemental appropriations bill. There are currently several LRP initiatives before the 111th Congress.

President Obama's FY 2010 budget proposal has, in addition to other food security related items, ($)300 million in International Disaster Assistance, IDA funds for LRPs. Cash transfers and cash vouchers to meet emergency food needs.

Additionally, the president announced that the G-20 meeting in April has planned to double agricultural assistance towards helping nations around the world reach and sustain their food security. Secretary Clinton has begun the plan and we look forward to holding a hearing and working closely with the administration on these new critical initiatives to see just what form, as the new administration is developing its programs, they will take.

Also under consideration are the Lugar-Casey Global Food Security Act and a similar measure in the House to be led by Congresswoman McCollum, in which I am collaborating with her as this legislation moves forward. Some of the questions which have been raised about LRPs include the following.

One, could the U.S. respond to emergency food needs at lower cost in a more timely manner if commodities were purchased in locations closer to where they were needed. Number two, what risk would be associated with LRPs that would make it a less effective response to emergency food needs than provisions of U.S. commodities.

Three, could LRPs -- could LRP contribute to agriculture development, increase production, productivity, development of markets of small holders or low income farmers in developing countries. And finally, could LRP adversely affect agriculture development and make poor consumers more food insecure.

So there is still a number of questions that need to be answered as we move forward. It is not as simple as it might seem at first blush. The GAO report found that overall LRP is more cost effective and arise quicker, than U.S. in-kind donations.

In fact, 95 percent of WFP local procurement in sub-Saharan Africa costs roughly 34 percent less than similar food purchased by USAID, which was shipped from the U.S. to the same countries between 2001 and 2008. This is quite remarkable.

The report also mentions, however, some of the challenges that prevent wider use of LRP. These include a lack of reliable suppliers, poor infrastructure and logistical capacity, weak legal systems, timing and restrictions on donor funding and quality considerations.

There are also questions about the disruption factor on local markets by LRP, a feature of the in-kind approach, which we've long decried. These issues highlight the need for greater U.S. investment in these areas in Africa, particularly, in infrastructure and legal systems for long term development.

Other issues include the limitations on LRP due to cargo preference requirements that 75 percent of the gross tonnage of agricultural foreign assistance cargo be transported on U.S. flagged vessels. These and other issues have been addressed in the GAO report and will be discussed in this hearing.

It is my belief that we must begin to think more creatively about our food aid program. Ultimately, the objective should be the elimination of food assistance. This can only be reached if we focus on development of agricultural systems and infrastructure among other things, particularly in Africa.

However, food aid including the -- including in-kind aid will likely be a feature of U.S. government programs for a very long time for several reasons. One, there will always be emergencies, the global population is said to increase dramatically over the coming decade. And increasing industrialization across the globe will lead to more urbanization and less agriculture production.

And we can see that in the United States as we continue to see industrial development, we see former farmlands being taken for housing development and industrial development, et cetera. So this is going to be a worldwide trend, especially in new industrialized countries like India and China, countries that are large food consumers.

In other words, there will likely always be the need for food assistance somewhere in the world. It is incumbent upon our generation to think strategically about how to strike a balance between meeting the world's emergency food needs and working towards long-term food security and the elimination of chronic hunger among the world's poor.

I welcome the testimony of our distinguished panel. We'll hear from Tom Melito of the GAO, Jon Brause of the U.S. Agency for International Development, Burnham "Bud" Philbrook of the U.S. Department of Agriculture, and Jean McKeever of the U.S. Department of Transportation. Following their testimonies and member's questions we will be briefed by Allan Jury of the World Food Program.

The committee thanks each of you for your participation today. And I will open our panel for remarks from our members, and then I will introduce our panelists. We will start with our representative from California, Congresswoman Watson.

REP. DIANE E. WATSON (D-CA): Thank you so much. Mr. Chairman, just a follow-up with your opening.

I'd like to take a few minutes to discuss the monumental nature of world hunger. A child dies every six seconds because of malnutrition related causes. And already there are 963 million people worldwide who go to bed hungry or malnourished. Two-thirds of the world's (hunger ?) live in the Asian-Pacific region.

Around the globe, the need for food assistance is on the rise as a result of warfare, natural disasters, crop failure, or the inability to work due to medical and illness reasons. In the future, climate change too will play a role by exacerbating water shortages in some areas while flooding others.

As most of you may already know UNICEF's Humanitarian Action Report of 2009, which was released just this past weekend found they required a 17 percent increase from its 2008 funding level to meet emergency response needs worldwide.

This report also noted hunger is at a 40 year high in South Asia, especially Nepal, Bangladesh, and Pakistan. This is in addition to the doubling in emergency needs in Eastern and Southern Africa. Through U.S. food aid, and though it does not solely focus on emergency funding, it is a large function of the provided aid irrespective of agency.

The U.S. has traditionally provided in-kind food aid which ensures quality and reliability rather than contributing cash funds. In-kind aid requires over 100 days to reach its destination. And in many instances it is excessively costly. That is 100 days that flood victims are without food, with local and regional procurement, food aid can reach those in need in a third of the time and at a lower cost.

In addition to speed and cost, local and regional food and procurement provides incentives to farmers to raise cash crops and governments to invest in infrastructure building. I'm aware that local and regional procurement faces its own set of problems. Small farmers are subject to the whims of the environment and thus cannot always deliver their promised crop or the crop may not be up to standard.

However, I feel that local procurement holds much promise. Each situation is unique and we must concentrate on developing a method to evaluate the best method of delivery, be it in-kind or aid or cash aid. We must consider the rising fuel costs, the availability of food in the locality and the sustainability of the program.

We must not forget our goal, and that is to end hunger. We must feed the hungry and teach them to feed themselves as well. And I hope the panelists can enlighten us on how best to do just that. And with that I yield back my time and thank you for the opportunity, Mr. Chairman.

REP. PAYNE: Thank you very much, Congresswoman Watson.

Another congressperson from California, Congresswoman Woolsey.

REP. LYNN WOOLSEY (D-CA): Thank you, Mr. Chairman.

I think what I'm going to be listening for today -- I'm so thankful to have such a great panel, is -- how is 850 million malnourished people in this -- on this -- in this world of ours and 30 (percent) to 40 percent of them in Africa. How we're going to, sort of, follow the parable in the Bible that I couldn't tell you where it is, and I'm not going to quote it right, because I don't know that much about it except that there is some truth in giving somebody a fish to eat for that day, teach them to fish and indeed they know how to feed themselves from then on.

So I'll be looking at egg development investment, local egg, and whatever else the United States can do to help the local areas feed themselves in the very best possible way, which means, of course, they need development assistance and they need infrastructure, irrigation, they need fertilizer, they need power and powered tools and machinery, and they need roads to market.

I mean, there is a lot that's missing in this picture. But rather than just bring food from our country and handing it to them, I think we could do a lot better by bringing seeds and education and the support that they need. So I understand that's what the Europeans and the Canadians are doing now. So I'm anxious to hear more about that. Thank you.

REP. PAYNE: Thank you very much. Today, we will hear from our distinguished witnesses Mr. Melito, and Mr. Brause, Mr. Philbrook and Mr. McKiver -- Mr. McKeever. And miss, we are pleased to -- if I'd looked up I would have known that but I was looking down.

Let me first introduce Dr. Melito, who is the director of International Affairs and Trade Team at the Government Accountability Office, and they are the ones that do so much good work in giving us reports that therefore give us the tools that we need to move forward and I really thank that outstanding government agency.

In this capacity he is primarily responsible for GAO work involving multilateral organizations and international finance.

Over the past 10 years, Dr. Melito has been focusing on a wide range of development issues including debt relief for poor countries, international food security, and human trafficking.

Since 2007, Dr. Melito testified several times at Congress on GAO reports, on challenges U.S. agencies face in improving the efficiency and the effectiveness of food aid. Dr. Melito holds a MA and a Ph.D. in economics from Columbia University and a B.S. in industrial and labor relations from Cornell University.

Next, we will have Mr. Jon Brause, who is currently serving as the deputy administrator in the Bureau for Democracy, Conflict, and Humanitarian Assistance. In this capacity, he is responsible for disaster response, food aid, and transitional assistance.

Mr. Brause has 18 years of experience in USAID covering procurement issues, operational and budgetary policies and programming and managerial -- management of humanitarian and development resources. During his tenure in the office of Food for Peace, Mr. Brause managed all aspects of the U.S. government's food aid programming for humanitarian activities worldwide.

Prior to his current position, Mr. Brause was special assistant to the president and senior director for relief, stabilization, and development at the National Security Council's Directorate on International Economic Affairs.

Mr. Brause has a bachelor's degree in International Relations from the University of California at Davis and a master's degree in National Security Strategy from the National Defense University's National War College in Washington, D.C.

Next, we have Mr. Bud Philbrook, representing the U.S. Department of Agriculture. In 2009, Agriculture Secretary Tom Vilsack appointed Bud Philbrook as USDA's deputy undersecretary for Farm and Foreign Agricultural Services. In this role, Mr. Philbrook has the responsibility for the international side of the Farm and Foreign Agriculture Services' mission area.

His mission area includes the Foreign Agricultural Service that works to expand existent and build new markets for U.S. products and improve the competitive position of U.S. agriculture in the global marketplace and to provide food aid and technical assistance to foreign countries.

Mr. Philbrook received his bachelor's degree from the University of Minnesota, his master's degree from the Hubert Humphrey Institute of Public Affairs at the University of Minnesota and earned a law degree from Hamline University School of Law in St. Paul, Minnesota. He and his wife Michelle have three adult sons.

And finally, we have Ms. Jean McKeever -- McKeever, I'll get that straight, well, I'll get it all together at one point. She joins us from the United States Department of Transportation. Ms. McKeever serves as the assistant maritime assistant associate administrator for Business and Workforce Development. She is responsible for the agency's Title XI ship financing guarantee program as well as tax deferral funds for ship construction.

In addition, she oversees the Maritime Administration shipbuilding, maritime insurance, labor and training programs. Previously, she served as the assistant administrator for shipbuilding at the Maritime administration, a post that was created in 2000 to combine the Maritime Administration's main shipbuilding related functions under one single manager.

She has served over 25 years in various financial and analytical positions, most recently as deputy director of the agency's office of ship financing; holds her degree from Mount Holyoke in Massachusetts and M.A. from Frostburg State University in Maryland.

And let me once again thank all of the panelists and we'll begin with Dr. Melito.

MR. MELITO: Mr. Chairman and members of the subcommittee, I am pleased to be here to discuss how local and regional purchase or LRP can provide opportunities to enhance U.S. food aid. This hearing is of particular importance given today's environment of growing global food insecurity in which the United States and other donors face intense pressures to feed the world's expanding undernourished population.

The number of chronically hungry people in the world has been growing and now stands at almost 1 billion; despite, international commitment to halve the number of hungry people by 2015. My testimony is based on our May 2009 report, which has been publicly released today. I will focus on four topics. First, I will discuss the impact of LRP on the efficiency of food aid delivery.

Second, I will discuss the impact of LRP on economies where food is procured. Third, I will discuss U.S. legal requirements that could affect U.S. agencies' use of LRP. Finally, I will summarize our recommendations regarding improvements to U.S. agencies' use of LRP.

Regarding the first issue, we found that donors can reduce food aid costs and delivery time through LRP. Our analysis show that LRP in sub-Saharan Africa costs about 34 percent less than similar food aid purchased and shipped from the United States. However, the cost of LRP in Latin America was comparable to the cost of U.S. in-kind food aid.

We also found that in-kind food aid donations to sub-Saharan Africa took on average 147 days compared to about 35 days for locally procured food. Despite these benefits, donors face challenges to ensuring cost efficiency and timely delivery including a limited number of reliable suppliers and legal systems that could limit buyer's ability to enforce contracts.

In addition, while LRP may provide food that is more suited to local preferences, concerns persist about the quality of food aid procured in developing countries. However, evidence on how LRP affects donors ability to adhere to quality standards and product specifications has not been systematically collected.

Regarding the second issue, LRP has the potential to make food more costly to consumers in areas where food is purchased by increasing demand. However steps are being taken to reduce these risks such as coordination among donors. LRP's impact can depend on the scale of procurements and whether the market is sufficiently integrated with neighboring markets to absorb increased demands.

The most significant challenge to avoiding potential adverse market impacts when conducting LRP is unreliable market intelligence. For example, in 2007, inaccurate information on production levels in Malawi led WFP to believe it was purchasing maize in a surplus market. Malawi faced food shortages, a few months later.

LRP does have the potential to support local economies by increasing demand for agriculture commodities and raising farmers' incomes. But little data exist to demonstrate that these benefits have occurred or are sustainable in the long term.

Regarding the third issue, legal requirements may constrain agencies' use of LRP. First, LRP cannot be funded out of the Food for Peace Act, but instead must come from other authorities such as the Foreign Assistance Act.

Second, the Cargo Preference Act requires up to 75 percent of the gross tonnage of all U.S. funded food aid to be transported on U.S.- flag vessels. However, there is disagreement among U.S. agencies on how to interpret these requirements such as which agency is responsible for determining the availability of U.S.-flag vessels.

The Memorandum of Understanding, MOU that helps guide U.S. agencies' implementation of cargo preference does not address these areas of ambiguity. The resulting lack of clarity could constrain agencies ability to fully utilize the authority to conduct LRP when responding to food emergencies.

Regarding the final issue, to address the concerns I've just summarized, we recommend that USAID and USDA first, systematically collect evidence on LRP's adherence to quality standards and product specifications. Second, work with implementing partners to improve the reliability of market intelligence. And finally, work with the Department of Transportation to update the MOU to resolve uncertainties associated with the application of the cargo preference.

In summary, the timely provision of food aid is critical in responding to humanitarian emergencies and food crises. LRP has the potential to meet the needs of hungry people by providing food in a more timely and less costly manner. However, to fully realize this potential, challenges to its effective implementation must be addressed.

Mr. Chairman, this concludes my statement. I would be pleased to respond to any questions you or the other members of the subcommittee may have.

REP. PAYNE: Thank you very much.

Mr. Brause.

MR. BRAUSE: Thank you, Chairman Payne and distinguished members of the committee. I appreciate the opportunity to be here today to address this important topic. As I intend to keep my comments brief, I ask to submit for the record a longer response to the information requested in the committee's invitation and a copy of the USAID, USDA Annual International Food Assistance Report.

As the committee is aware, the current global economic downturn and continuing food security crisis impose constraints that exacerbates the severity of emergencies and further strain the capacity of both donors and the vulnerable to respond to them. This is resulting in decreased purchasing power, loss of livelihood and the erosion of coping mechanisms, thus imperiling a generation's future in many countries.

Today, over 1 billion people live in poverty and chronic hunger and this number appears to be rising. As food insecurity respects no boundaries, it is vital to U.S. government interests to enhance the capability and flexibility of USAID to respond to emergency.

While in-kind U.S. government food aid remains our primary food assistance response and is the most visible and valuable humanitarian resource in the world, the ability to procure food aid commodities locally and regionally over the last twelve months has increased USAID's capacity to meet emergency food aid needs in an efficient and timely fashion.

We fill pipeline gaps prior to the arrival of food shipped from the United States. We increase the total amount of life-saving food aid that U.S. assistance resources can provide into response to the crisis.

It has also increased our understanding of LRP's limitations and the need for further data collection, analysis, and discussion on its roles in the U.S. government humanitarian tool kit. Turning to the recently released Government Accountability Office report on local and regional procurement, USAID appreciates the amount of time and effort that is reflected in the audit.

We believe that it provides a useful perspective of locally and regionally procured food assistance as a tool which complements the U.S. government's considerable humanitarian response capabilities. The GAO report supports our own experience this year that LRP has the potential not only to stretch the food aid dollar, but also to reduce response time when in-kind food assistance is not already in the pipeline.

A current example of this is Pakistan, where due to sharp increases in the numbers of people displaced by violence we are procuring locally even while we expedite the shipment of additional Title II assistance from the United States.

While we agree that the impact data is currently lacking we believe that LRP has the potential to significantly contribute to broader U.S. government efforts to reduce global food insecurity by stimulating local and regional food production, encouraging value- added post-harvest practices and supporting open and fair market practices, LRP can strengthen the real economy and reduce the vulnerability of those who depend on it.

USAID concurs with the GAO comments on the need to take a close attention to food aid quality and its view that reliable market intelligence is critical for any LRP efforts. We intend to work closely with our non-governmental partners, WFP, and our colleagues at USDA to tackle these important issues.

I would like to take one more minute of your time to give you an idea of what we are looking at as we move forward in FY 2010. I made the point earlier that we believe LRP has a special role to play in a whole of government approach to addressing global food insecurity.

As we move forward, we intend to work closely with our regional bureaus in AID and the interagency to help ensure that whenever possible our emergency response supports other U.S. government efforts to stimulate agriculture productivity and strengthen the participation of the small-holder farmers in local and regional trade in the developing world.

This could mean ensuring that Title II commodities are available when food shortages threaten the lives and livelihoods of subsistence farmers, facilitating the flow of food from surplus to deficit areas to local procurements or implementing a cash-based voucher program when food is available in local markets, but vulnerable households simply cannot afford it.

Even as we respond to emergency needs, we want to make sure that we are using the right tools, at the right time, and in the right way to contribute to a sustainable solution to global hunger. I would again like to thank you for the support that your committee has given the administration in addressing food security needs abroad and demonstrating to the world the great heart of the American people.

I would be happy to take any questions that you might have. Thank you very much.

REP. PAYNE: Thank you.

Mr. Philbrook.

MR. PHILBROOK: Yes, Mr. Chairman and members of the committee. I am pleased to appear before you to discuss the role of LRP in the context of the United States Department of Agriculture's food aid programs. The 2008 Farm Bill directed USDA to undertake a local and regional procurement pilot program to be completed in Fiscal Year 2012.

Local and regional purchase of food aid has the potential to provide another tool in support of President Obama's commitment to work in partnership with the people of economically poor nations. This pilot program will help inform USDA whether local and regional purchases are more quickly available and cost-effective than traditional food aid donations.

Congress directed that the pilot program be used for emergency food crisis as well as field-based projects that provide development assistance. Further, Congress directed that it not disrupt local and regional markets. And the first step was for secretary of agriculture to submit a study on local and regional procurement to the Congress and that report was provided in January of this year.

USDA consulted with USAID, other donor countries, PVO's and the World Food Program and the study found the following. First, local and regional purchase is an important tool enabling food aid agencies to respond quickly to a emergency food needs both during and after food crisis and disasters.

Second, local and regional purchase can be a timely and effective complement to in-kind food aid programs. And third, to ensure the success of LRP market intelligence is critical. USDA will issue guidelines to implement the pilot program by mid-July. We will then solicit proposals to conduct a field-based local purchase pilot program.

The Farm Bill provides $25 million each in Fiscal Years 2010 and 2011 for the pilot program and requires that a diversity of field- based projects be undertaken in food surplus regions, food deficit regions, and multiple geographic regions.

Africa is designated as the priority region and USDA is required to conduct a majority of field-based projects in Africa. A portion of the funds is to be used for development assistance projects of not less than one year. USDA has the capacity to implement the pilot program and our experience with the pilot will help inform us for future efforts.

USDA has reviewed the GAO study thoroughly and we have come to many of the same conclusions.

We agree with GAO that local and regional procurement is an important tool that can reduce commodity and transportation costs and shorten delivery times. And we share GAO's concern that poorly targeted local and regional purchases have the potential to lead the price spikes and shortages of staple foods in source countries.

But likewise, poorly targeted distributions of in-kind food aid have the potential to depress prices and negatively impact domestic production in recipient countries. USDA agrees that the best way to mitigate these potential adverse effects is through improved market intelligence.

In addition to feeding hungry people, USDA's food aid programs are opportunities to use USDA's global capacity building and development expertise to help developing countries create sustainable economic growth that improves peoples' lives. Successful development efforts come from the local level. USDA and others have knowledge and resources that can assist with development, but the recipients, village farmers, and community folks best know the barriers to their development and what's required to move forward.

We must work in partnership with the recipients' to design sustainable and effective human and economic development projects. We're particularly proud to administer the food for progress and McGovern Dole programs. To date, USDA has provided meals to more than 22 million children in 41 countries and boosted attendance in the schools served.

These programs have helped build school gardens and fish ponds, improved sanitation systems, rehabilitate schools and remove unexploded ordinance that prevent children from attending school. This administration is committed to a permanent solution for food insecurity. We look forward to implementing the LRP pilot program and using it as another tool to achieve our goal of feeding the hungry and malnourished. And I look forward to answering any questions that you may have. Thank you.

REP. PAYNE: Thank you very much.

And Ms. McKeever.

MS. MCKEEVER: Good morning, Mr. Chairman, and members of the subcommittee. I appreciate the invitation to brief the House Committee on Foreign Affairs, Subcommittee on Africa and Global Health on the recent Government Accountability Office study on local and regional purchases used for food aid.

The Cargo Preference Statute of 1954 as amended in 1985 was envisioned by the Congress to help support the U.S. Merchant Marine which is vital to the nation's defense by requiring the use of U.S.- flag carriers for at least 75 percent food aid shipments.

Support of the U.S. fleet was structured in a way that reimburses the food programs on shipments in excess of 50 percent of food aid shipped. Any additional cost on the first 50 percent of food aid shipped under cargo preference and not reimbursed are borne by the agencies implementing the food aid program.

Mr. Chairman, the subcommittee asked that we address three specific issues in our testimony today. First, relating to the need to update the Memorandum of Understanding or MOU. Second, obstacles to ensuring that an updated framework governs the application of cargo preference requirements to LRP.

And third, whether there are actions that Congress could take to clarify the application of cargo preference with regard to LRP. I'll defer to my colleagues in the food aid programs on any issues related to the implementation of food aid program.

In regard, to ensuring that an updated framework governs the application of cargo preference requirements to U.S. food aid that clarifies how they pertain to U.S. agencies' use of LRP. We believe the requirements as established by law are clear and there are no obstacles except as otherwise exempted by law, cargos financed by the American taxpayer and moving by water are subject to 50 percent carriage on U.S.-flag vessels when practicable.

Only food aid specified in 46 U.S.C. 55314 exported from the United States is subject to the 75 percent requirement, otherwise it's 50 percent. With regard to the GAO recommendations on the Memorandum of Understanding we maintain that the MOU is not an impediment for the agencies' use of LRP.

The MOU among USAID, the Commodity Credit Corporation of USDA and the Maritime Administration merely describes the process of how MARAD's ocean freight differential reimbursement to USDA and USAID is calculated. In addition, because LRP is subject to cargo preference at the 50 percent level, the MOU is not applicable.

Finally, we appreciate the subcommittee's consideration in asking whether there are actions that Congress could take that can clarify some of the ambiguities in the application of cargo preference requirements as they pertain to LRP.

We anticipate holding discussions with the agencies whose programs are affected by the legislation in P.L. 110-417 and we look forward to working with them towards an appropriate consensus in advance of submitting regulations to review by the Office of Management and Budget.

In summary, I want to thank the members of the subcommittee and the chairman for your leadership in holding this hearing today. And I'll be glad to answer any questions that you may have. Thank you.

REP. PAYNE: Thank you very much.

And let me thank all of you for your testimony and we'll move into questions, but before I do that I would like to welcome the members of the National Assembly of Cambodia on my right side of the room who're visiting the U.S. Congress hosted by the National Democratic Institute. And one of you would stand and we'll --

(Applause.)

Thank you.

Let me begin by asking this question and anyone can chime in. In your opinion, what are the macro and micro economic impacts locally and regional -- from local and regional purchases vis-à-vis in-kind contributions. For example, does it reduce unemployment while increasing production as a result of increased consumer demand in agricultural products. Is there evidence that the (LPR ?) leads to agricultural and micro enterprise development in general. Anyone like to tackle that?

Yes.

MR. BRAUSE: Mr. Chairman, thank you very much. We believe that the LRP can have significant impact in at both macro level and at micro level. And as I think it's been pointed out we have to be careful because those impacts can be both positive and negative. We have to watch out that both LRP commodities and in-kind food aid don't have a negative impact on macro market systems in the countries in which they are provided.

But in a more positive sense, having the flexible tools available to us both in-kind food aid and LRP will let us target our assistance so that we can have the greatest positive impact on not only the vulnerable people, but the market systems in which they -- in which they work and live.

Part of our efforts under LRP will be to strengthen the local market systems for the small farmers to give them the knowledge and the technical skills they need to bring their fruits to market so that they can strengthen their livelihoods and increase the income that they have for their families. So if LRP is used properly, it can have an impact at the household level, and it can have an impact at the more macro level in the countries in which it's used.

REP. PAYNE: Thank you very much. Wonder if anyone would like to talk about, you know, what kind of strategies or mechanisms would you recommend to increase effective and reliable market intelligence to make informed decisions about LRP? We've heard that some inaccurate information led to, you know, problems, and I don't know if anyone could think of any strategies on how we can determine that information is more accurate? Yes.

MR. BRAUSE: Mr. Chairman, AID has been paying very close attention to the Bellmon Amendment which is in the Food for Peace Act, which requires us to track the market impact of in-kind food aid. That same system can be used to help us track the potential impact of local and regional procurements on markets.

In addition, the Office of Food for Peace and AID in general, support the Famine Early Warning System, which currently has 25 offices around Africa and the world, that track food security issues, including market data, to help ensure that we have the information available to know what the right resource should be to address a particular food security situation.

We also work very closely with our partners, U.S. CBOs and the World Food Program who also have very significant technical knowledge that allows them to identify the most appropriate response for a given food security situation and we will be looking to them to help guide us as well on what resources we should bring to bear on any particular situation in the developing world. Thank you.

MR. : Sir, I would like to add that I agree with what Mr. Brause said, create a coordination among the donors is probably the area that they should explore the most. I mean there is a lot of individual efforts going on. Each transaction provides good information about the market. You aggregate those transactions, you know, you learn a lot more; so create a collaboration.

REP. PAYNE: Thank you very much. Let me just -- before I yield -- ask Ms. McKeever, you did mention in your testimony that you would be getting together with the various agencies to discuss the Memorandum of Understanding. But I wonder -- do you think that it's recommended to revisit the '85 statutes of the Memorandum of Understanding to meet the -- understanding of the Memorandum of Agreement and the Memorandum of Understanding to meet current food crisis cost effectively and in a timely way?

Do you feel that there really needs to be a -- there was some mention of ambiguity in the agreement as was mentioned in the testimony of Dr. Melito?

MS. MCKEEVER: In our view the Memorandum of Understanding is strictly limited in scope to how our reimbursement methodology works with regard to paying and there is a great differential to the food agencies when there is a preference shipping requirements for cargoes over 50 percent. Between the 50 percent and 75 percent it is a strictly a process memorandum of how we pay that differential and it doesn't extend to other matters, it's very limited in scope.

So to the extent there are matters in the cargo preference arena that have to be clarified, we think it's more appropriate to do it through regulation, rather than extending that MOU, which really is not germane to this particular topic. That's strictly a procedural MOU.

And we think it should be kept that way and limited in scope to the ocean freight differential payment. It wasn't intended to be an all encompassing vehicle to embrace any number of elements of the cargo preference program. That was never the intention.

MR. MELITO: Mr. Chairman.

REP. PAYNE: Yes.

MR. MELITO: GAO recommended in 2007 to update the MOU based on our in-kind system, which was directly related to the systems for compensating the programs. So there is a need to update the MOU, even within the context of DOT's criteria. However, when the memorandum was created in 1987, with the -- when it was signed, it never envisioned LRP. And these ambiguities do have the potential to really restrict the use of LRP.

So there needs to be a vehicle for resolving ambiguities and the MOU is the most direct way to bring the agencies together and resolve the issue.

REP. PAYNE: Thank you, thank you very much. I yield to the gentle lady from California, Congresswoman Watson.

REP. WATSON: First, let me get to a domestic question that has been of great concern to all of us. I would like to address this question to Mr. Philbrook.

Unemployment is on the rise in this country -- that doesn't even have to be said. And as the tragic results of General Motors having to declare bankruptcy, many of the families in Michigan may struggle to provide food -- and how is the USDA planning on addressing the increase in demand for food stamps in our nation? And can we provide enough food stamps to meet the demand?

MR. PHILBROOK: Congresswoman, I can't answer that question. I --

REP. WATSON: Is it an unknown?

MR. PHILBROOK: I don't know that it's an unknown. It's just way outside my area of responsibility or knowledge.

REP. WATSON: Uh-huh.

MR. PHILBROOK: But we will get you an answer to that question.

REP. WATSON: I'd like to have that question. It's right here. I'm going to relate to the subject of this hearing, but that's been on my mind --

MR. PHILBROOK: Yeah, we will --

REP. WATSON: -- for the last 48 to 72 hours.

MR. PHILBROOK: We will get you an answer to that question very quickly.

REP. WATSON: Okay, I would like to address this to Mr. Brause, and maybe Ms. McKeever, whoever.

We are finding more and more that international aid agencies are disjointed and uncoordinated and that has been mentioned. And oftentimes we can find several agencies working in one area whereas other areas are completely ignored.

In terms of food aid, how does the United States agencies coordinate with international bodies? And how does the World Food Program coordinate what other relief efforts, and how are efforts coordinated internationally?

And are blankets and clothing say, you know, mixed kind of, along with food. Are they shipped in the same shipments or are they required to be shipped separately? And are they locally procured? So these are all relative kinds of activities. We just need to have some clarity. So let me start with Mr. Brause.

MR. BRAUSE: Thank you very much. Fortunately, I can tell you, I just returned from a meeting in Helsinki with a group of major donors. We were meeting with the Office of the Coordinator for Humanitarian Affairs, Sir John Holmes of the United Nations. And our whole sole purpose was to discuss how we can better coordinate our assistance and ensure that the response in any crisis is well coordinated, well managed, and that all areas of assistance needs are identified and met.

So there is a great deal of work that is actually done among the donors to ensure that we were always cooperating. Now, having said that, of course it's not a perfect system. But for us, that's why -- it's important that the United States has as many tools available to it as possible to make sure that we can fill gaps that develop.

But I do want to say that the coordination is actually quite good. Also in the case of WFP specifically, I leave over the weekend together with Mr. Philbrook, we will be heading off to Rome to meet with the World Food Program at their executive board meeting, which again is a gathering of all the donors who support the World Food Program, and part of the purpose of being there is to discuss how to better support their activities worldwide.

REP. WATSON: I guess it was a couple of years ago. We were in Chad and we were told by Mr. Rusesabagina, who was the subject of the movie that dealt with Darfur. And he said that shipments of food from our various foreign agencies were hijacked and the food never got to camps. You know they had 250,000 in the camps in Chad which we visited and so he brought his own company and the whole issue was security.

When we roll the trucks in, are we finding that we are free to deliver the food or do we have trouble along the way as they are hijacking -- are they attacking these food supplies? Anyone can respond that has any recent information.

MR. BRAUSE: Congresswoman, unfortunately the situation in the developing world is rather difficult and we find that in many of the countries in which we work, Sudan, Somalia as examples, and I guess now also in Pakistan, that security is a very, very significant issue. And it can in fact impede our programs and the efforts of the international community to meet the needs of the vulnerable groups we are trying to help.

So it is an issue and all of the donors and the international organizations do work together on security planning, but it's often an imperfect system. Can I answer one of your other questions? You asked whether the other resources that we provide are -- whether they are locally procured?

In some cases they're locally procured and in other cases they are procured in the United States. But as an example, our assistance in Pakistan, much is -- much of our materials are being resourced in Pakistan because Pakistan has the markets and manufacturing capabilities to provide much of what the displaced in Pakistan needs. So in that example, we do buy locally.

REP. WATSON: Let me refer to Ms. McKeever. How do we strengthen our food delivery program?

MS. MCKEEVER: Do you mean in terms of ship security?

REP. WATSON: Yeah.

MS. MCKEEVER: We are working very closely with DOD and the U.S. Coast Guard and the State Department on security issues. And that's an ongoing, very serious matter to all of us.

REP. WATSON: Yeah.

MS. MCKEEVER: And as you are well aware, Congresswoman, so those are -- they are developing the best steps that can be taken within the constraints under which we have to operate.

REP. WATSON: I want to address this question to the chair. He just came back from Zimbabwe and our conversation was really in South Africa. It's about the food fights and the fact that most of the native people were starving and they were eating from the piles of garbage on the streets and so on. I would hope that part of this discussion, you would share with us what are they doing about food there in Zimbabwe? And I yield back my time.

MR. : Thank you very much. Just in a nutshell, the situation has improved. In Zimbabwe, the currency has been changed. There was hyper inflation, and of course, a very worthless currency. And you know -- and so it's gone to the dollar and the rand. And interestingly enough, there are commodities that are back on the shelves.

And the new MDC government Tsvangirai and President Mugabe's ZANU-PF government are attempting to move forward, but primarily dealing with, not only the food situation but the water situation with cholera. And we visited the water supply for Harare and other parts to get a first hand knowledge of what's going on.

But thank you for your interest and we will be giving the report soon.

REP. PAYNE: Congresswoman Woolsey.

REP. WOOLSEY: Thank you Mr. Chairman. Maternal mortality in underdeveloped nations is a huge problem. We know that, that's an understatement. We also know that one of the keys to promoting healthy pregnancies and births is good nutrition.

So how do you see -- what would be the best effort -- probably you, Mr. Brause, would be the one that would talk about this, to get food into these needy areas and make sure that the people who need them the most get the food -- need it the most get it and that they get quality food, balanced diets of some sort, I mean that's -- it has to be part of what we are working on. And what role does food security play in our overall goal for healthier mothers and babies?

MR. BRAUSE: Thank you. Those are two critical issues that Food for Peace has been working on. And actually the entire agency has worked on not only with our food aid resources but with our development assistance resources and our health resources.

But with food aid, specifically, the Title II program has been supporting maternal child health programs around the world for decades and will continue to do so. And we work very closely with our partner organizations who also feel very strongly about addressing the needs of pregnant women and young children to ensure that the children are born healthy and that they develop healthy during those critical first few years.

And that leads me to the response on what we can do on food assistance. The Office of Food for Peace has just recently signed an agreement with Tufts University School of Nutrition to do an evaluation of the commodities that we have available to us, and their nutritional composition to meet the needs of the beneficiaries around the world. And the group that we are trying to work on now is the under twos.

What commodities and what nutritional makeup do those commodities need that would be appropriate for young children, because if you miss the nutrition for children under two, then you've lost pretty much the entire ball game and we really, really want to focus on that. And that's actually something that WFP and the NGOs are keenly interested in.

So we are working together -- if I might just add with USAID on that effort to make sure we get the commodities available.

REP. WOOLSEY: Do you see any difference in delivery of these food products between the urban areas and the rural areas -- the moms who do all the toting, walk miles to get what they -- commodities and what they need. Is it easier -- I mean do those urban families -- are they treated differently than the rural families? Is there difference in their health?

MR. BRAUSE: I would say, generally in the rural areas, families have more access to the locally grown food. And we are paying particular attention to the urban poor and they are the ones who often are in an environment where food is available but they don't have access to it. So they have to make the difficult decisions on what to buy what not to buy.

REP. WOOLSEY: Mr. Philbrook, you look like you wanted to say something.

MR. PHILBROOK: Well, thank you Congresswoman. I just wanted to add that in rural areas of developing countries, that's where the largest percentage of the population is, it's up to 70 percent in many countries. And most of the women are also the farmers, like the vast majority of farmers in developing countries are women. And so maternal health and child health and nutrition need to go hand in hand with what women do. And it would be our judgment that if we want to address the issue that you raise, we need to look at it comprehensively.

We need to do rural agricultural development and that includes a wide range of activities from extension -- information to irrigation -- appropriate irrigation technology to education to health care, to assisting folks with understanding the values of biotechnology et cetera. It's a comprehensive development that needs to be done at the local level, at the village level, with the local people, mostly with women.

If we address that comprehensively, then I believe we address the issue that you raise.

REP. WOOLSEY: And do you believe we also address the issue of self-sufficiency for the communities?

MR. PHILBROOK: That is the key -- that would be one of the key results of that activity, yes.

REP. WOOLSEY: Thank you, Mr. Chairman.

REP. PAYNE: Yes, Congresswoman Watson, you want to ask another question?

REP. WATSON: And I am sensitive to the fact that we have a bill on the floor. But I want to address this to Mr. Brause because you mentioned something that really triggered a memory -- intelligence -- in going into the -- I guess the biology of the food that we supply.

I'm reminded in the early '70s, the Nestle (ph) Company sending Similacs to the western coast of Africa and many of the babies died. And we realized then the biological and integrant makeup of the African child was so different and they couldn't process the milk sugars and so on.

So in the laboratories that you mentioned, are we looking at the kinds of foods that we sent geographically? And you know, if we don't have time really get into it, I could it take in writing. But I'm really concerned about the products that we send over to meet the hunger needs.

MR. BRAUSE: Yes, madame. As a matter of fact, cultural and regional food uses are a very big issue for AID and the team that we have working on this. And again, it's going to take all of us. It's going take assistance from USDA and our partners, and even it's going to take assistance from industry.

Our industry in the United States have the knowledge, the depth of knowledge on food manufacturing and food nutrition that we need to draw into this discussion. And so I think with the help of Tufts we are going to have that kind of information available to us very soon. And then again, we will work with industry to see if we can manufacture those products in the United States.

REP. PAYNE: Thank you very much. I had several other questions but because there is a vote on, we will probably send some questions to you in writing. This whole question of how to deal with food aid, as a matter of fact it goes way back to -- if you look at the potato famine in Ireland in the 1840s -- it was a question of food that was in the country, but it was high value food.

And the question about importing wheat from the U.S. and the question was who was going to pay the tariffs as people died. So this whole question of food and food security is certainly not a new issue.

And we certainly are trying to look at how we can have the most positive impact and we really look forward to working with GAO and the rest of you to try to figure our what's the best way to -- how we avoid price insecurities of what happened in the Ethiopia, in Niger and other places when food was purchased locally and it created -- de- stabled the market locally and then increased the price because of the scarcity for the local people. So it's a very complicated issue as we know.

We will follow up with this and since we have a vote on I would like to adjourn the meeting. I did have many, many more questions, but I would like to adjourn this portion of the meeting and ask for the -- our next witness Mr. Jury, if he would come forward. So thank you all very much panelists. Thank you.

One of the reasons that we are going to try to have the second portion of our -- to have the briefing is because the -- there are three votes that are scheduled. The first vote we will not -- the time we will not end until about 10 minutes left. That means about 15 minutes from now and then there are two other votes.

So I will go on for about another 10 minutes or so, perhaps 15 minutes, and then we will adjourn the briefing. But let me thank Mr. Allan Jury from the World Food Program. The meeting, as I mentioned, is officially adjourned and now we will have a briefing.

The committee rules require that officials from foreign governments and international organizations brief rather than testify, simply a technical issue, but we will now, as I mentioned, have Mr. Allan Jury from the World Food Program.

Mr. Jury has been the director of the World Food Program's U.S. relations office since September 2008. In his current post based in Washington, D.C., Mr. Jury is responsible for managing the WFP's relationship with major partners in the U.S. government and representing the WFP in dialog with U.S. based civil society and private organizations interested in global food assistance issues.

He also coordinates the WFP's relations with the World Bank headquarters. Mr. Jury previously served as the WFP's director of external relations from 2004 to 2008, where he was responsible for representing the program and developing organizational policy on U.N. reform interagency affairs and relations with nongovernmental organizations.

He joined the World Food Program in March 2001 as chief of Policy Service, a post he held since June 2004. Now a national -- Mr. Jury, a national of the United States of America, came to WFP following a 25-year career with the United States Department of State, served as director of Policy and Resource Planning in the United States Departments Bureau of Population, Migration -- Refugees, and Migration prior to joining the organization and has a very distinguished career being educated in Minnesota and then Macalester College in St. Paul, and fathered two sons, married. And we're very pleased to have you with us. Thank you.

MR. JURY: (Off mike.)

REP. PAYNE: Is your -- your mike may not be on, you might have to push.

MR. JURY: Okay. I'm sorry. Okay.

I'm pleased to have been invited to brief on behalf of the World Food Program at this hearing. There is no more important partnership in global food assistance than the collaboration between the United States and the World Food Program and no more important element in keeping that collaboration strong than the support of the U.S. Congress.

In the chairman's letter inviting me to speak today the first question I was asked to address was what are the greatest challenges the World Food Program faces in meeting critical food needs around the world? And the answer to that is, question is clear the greatest challenge we face is the unprecedented scale of need for food and nutritional assistance in the world today.

Hunger is on the march. As Congresswoman Watson eloquently said in her opening remarks, the number of undernourished people worldwide has increased to nearly a billion people. Just as the United States had to significantly increase its expenditure on domestic food safety net in the face of tough economic times the impact of natural disasters, economic shock, and high food prices have led to increased demands on the global food assistance system.

The World Food Program in 2009 has needs to assist a 108 million people in over 70 countries at a total cost of over $6 billion. And those needs continue to rise on a daily basis.

Just in the last two weeks nearly 2 million people have become displaced in Pakistan's Swat Valley that need food assistance. So WFP needs support of its major donors now more than ever before. U.S. is the largest donor to WFP and the Congress has been generous in recognizing how critical this U.S. support is for the world's hungry. We need your continued support in both the supplemental appropriations in Fiscal 09 and the upcoming FY10 regular budget.

Another challenge we face is broadening the range of tools we have at our disposal to address the needs of the hungry. The most recognizable face of world food aid is deliveries of large amounts of food commodities, and there the U.S. in-kind commodity program is vitally important.

But there are, however, other hunger situations that require other types of responses; targeted feeding programs responsive to market conditions are often the best way to reach the most vulnerable. The World Bank and many others in the development and humanitarian community are advocating the increased use of national safety net and social protection programs that can expand quickly when economic shocks force more people into hunger.

WFP's tested existing programs such as School Feeding and Food- for-Work have proven excellent mechanisms for scaling up that safety net and we're also looking at innovative programs such as new options in nutrition, nutritional supplements, cash, and voucher programs.

The topic of today's hearing is on local and regional procurement purchases is a good example of the kind of thinking that is needed to meet the challenge of an expanded tool box for international food and nutritional assistance.

WFP is already the world's largest local and regional purchaser of food assistance. Seventy-eight percent of the food we bought last year or approximately $1.1 billion was purchased in developed -- developing countries.

We apply the same basic food quality standards in our local purchasing operations as we do in international procurement. WFP believes that the evidence is clear that local and real -- regional procurement can in an appropriate circumstance improve the timeliness and cost effectiveness of food aid delivery in both emergency and non emergency hunger situations.

We welcome the GAO's report that draws upon the experience of WFP and U.S. private voluntary organizations to demonstrate those benefits. We also believe that local purchase can, in carefully designed and managed situations, contribute to the development of smallholder farmers increasing their incomes and reducing their vulnerability to hunger. And this is why we have developed Purchase for Progress Program designed specifically to target 21 countries and look at how we can link our purchasing to smallholder farmers.

We recognize that local and regional procurement are not the appropriate response in every situation and that's why we monitor local and regional markets and still purchase some of our food in developed countries. We only purchase locally and regionally when the available information indicates these purchases result in more timely and cost effective procurement and does not disrupt local market.

Let me conclude by offering four quick thoughts on what the U.S. Congress can do to help improve the effectiveness of U.S. food aid. First, the U.S. needs to be -- continue to leader in the amount of food aid it provides. The current level of U.S. food assistance is essential to meet the growing needs of a hungry world. Any change in the type of food assistance provided, such as to increase local and regional purchase to the minimum maintained current volume of food aid.

Second, flexibility in the use of food aid resources is essential to maximize the volume -- value of the contributions to the beneficiaries of WFP assistance. We are a multilateral organization that combines -- that maximize benefits by combining the resources of many countries. Flexibility in the use of U.S. funds or in-kind food, either ones, both make it easier for WFP to reach beneficiaries faster and cheaper.

Third, we support the carefully monitored expansion of U.S. resources to -- voted (ph) to local and regional purchase and stand willing to work with the U.S. in addressing some of the issues such as food quality and market effects that have been identified in the GAO report, which as Mr. Philbrook said, are not unique to the local and regional purchase but also apply to in-kind food aid.

And finally, WFP welcomes the U.S. administration's leadership in developing a new global food security initiative following up on the president's announcement at the G-20 summit. We urge the Congress to work together with the administration to ensure that initiative produces a truly comprehensive food security strategy that addresses emergency food aid and safety nets and nutritional assistance for the chronically hungry as well as long-term agricultural development. That strategy can ensure the U.S. leadership in all three areas access, availability, and utilization required to achieve food security for all.

REP. PAYNE: Well, thank you very much.

Our time has expired but I wonder, Ms. Woolsey, do you have any questions you'd like to ask?

REP. WOOLSEY: No, thank you, Mr. Chairman.

Thank you, Mr. Jury.

REP. PAYNE: Well, let me just as in your -- you mentioned that solutions to hunger must give sufficient attention to food access and availability issues. Given that hunger is on the rise and emergency food aid can also rise, what is the real time effect of food availability and access considering the average 147-day delay for U.S. in-kind food donations versus LRP purchases?

And has the WFP been able to meet the immediate need for food aid by LRP purchases and the -- supplanted the rest once the U.S. food arrives or is there usually a shortage of food until the cargo ship arrives?

MR. JURY: WFP uses a multiple range of resources from different governments, some of which permit local and regional purchase. We also can often borrow from stocks that are available in the region and then replenish later with resources received from other donors. And this allows us to often meet the very quick and immediate needs. But it is also true that in continuing emergency situations such as Darfur over several years that really has been valuable, even with U.S. in- kind aid to be planned early and committed early.

When we know when it's coming and we can make a decision early in a fiscal year, we can get the food there and get it in position in time to make a significant difference. And in this I would particularly like to commend the work of USAID to make early commitments to the Sudan.

It's been absolutely critical. In the last couple of years, USAID has committed its in-kind aid for Darfur and also Sudan early in the fiscal year which allows it to get in place in Sudan before the rainy season raises transportation costs and decrease availability.

So local and regional purchase is quite helpful to us with a quick response, but as emergencies continue if we have borrowing authorities and if we have flexibility in how we can use in-kind aid, and if we have timeliness and early planning of in-kind aid, it dramatically reduces any potential negative effects from the long shipping times that you cited.

REP. PAYNE: Just how much more production do you think is needed, it's kind of a difficult question I'm sure, before there could be food sufficiency around the world? The -- in a standard developing country the average person is getting, maybe, one meal a day or one- and-a-half meals a day when we should be, you know, I mean, the ideal in the United States will be about three meals a day, perhaps too much.

But what more production, do you think, it would take for the production to catch up with real needs so that there are just not hungry people? And maybe a quick -- believe it or not, the time has expired about five minutes ago, but if you can give a quick answer to that -- (laughs.)

MR. JURY: I think the documentation will show that the issue is not a global problem of availability, access, and distribution. We produce enough food in the world now to give people more than the daily ration that they need.

And when we talk about production, and access, and availability for smallholder farmers, to us it is much an issue of giving the income to those farmers to have the food and get the food as it is in the production benefit.

So we really think the most important issue is to focus on access to food and ability to purchase. And that can mean for the 50 percent of the world's hungry that our farmers who are dependant on rural income that helping them get income through agricultural development and through access to roads and other things can be a very important part. But it is fundamentally access, not aggregate production, that is the principal challenge to hunger today.

REP. PAYNE: All right. Well, I will have to leave. We will give members five days to revise and extend their remarks. I'm sure there may be some other questions that we'd like to direct to you. But thank you very much for coming.

And with this the meeting is adjourned. Thank you.

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