The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Budget cuts making choices even tougher

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If cuts are made to food aid programs, emergency funding should not bear the brunt of the budget knife.

USAID containers delivered to flood destroyed areas of Ethiopia in 2006.  Under the current House budget proposal, the largest food aid program would take a 42% cut.
USAID containers delivered to flood destroyed areas of Ethiopia in 2006. Under the current House budget proposal, the largest food aid program would take a 42% cut. Photo by Liz Lucas/Oxfam America.

The World Bank made headlines last week with the release of their food price bulletin which is tracking prices of basic agricultural commodities as well as their impact. The Bank estimates that 44 million people have been pushed into hunger overall since June as a result of the increase in prices. The situation remains rather fluid at the moment with some hope that good harvests will help to stabilize or even lower prices later this year. Less optimistically, with a bad harvest in a few exporting countries or higher oil prices (resulting, for example, from supply disruption in oil producing countries that are experiencing unrest, increased demand or both), prices could actually continue to rise.

How will the US respond if hunger follows the rise in food prices? It’s a question which brings us back to the budget debate. The current proposal on the table, passed by bleary-eyed Representatives early Saturday morning, takes an axe to funding for humanitarian and development assistance. Development assistance, including funding for the president’s Food Security Initiative, takes a 30% cut. And humanitarian assistance takes an even harder hit.

Under the House budget bill the largest food aid program, Title II, would take a 42 percent cut. Making the situation worse, almost all the cuts to food aid will fall on emergency programs. This is the unfortunate outcome from successful lobbying during the last farm bill negotiation process to ring-fence a certain amount of food aid from being used for emergencies. The creation of a non-emergency food aid “safebox” in the 2008 farm bill mandates that for fiscal year 2011 not less than $425 million must be used to finance development activities. In practice the safebox limits USAID’s flexibility in administering programs or, in this instance, in using scarce available resources to address food emergencies.

Many aid groups see the safebox as a way of keeping their program funds from being raided every time USAID needs to fund an emergency food aid operation. But under the House budget proposal, USAID will face the opposite problem of not being able to respond to emergencies because roughly half the Title II budget will only be available for development activities. If more funding for emergencies is needed, the Administration will be forced to request supplemental appropriations, which will likely face an uphill battle given the tough budget environment – to say nothing of the fact that it could seriously slow our response time to emergencies.

Oxfam America opposed the development of a safebox for non-emergency food aid during the 2007/08 farm bill fight. A large percentage of Title II non-emergency food aid is monetized (sold on markets in developing countries to generate cash), often with low rates of return, making it an inefficient means for aid organizations to get the cash they need to run their programs. (See this GAO report which gives more details of efficiency issues with US food aid programs.) In many instances aid agencies would rather have the cash in the first place rather instead of having to go through the monetization process, but the safebox spares them from funding cuts for development programs that others instead will have to bear.

This is an unfortunate strait-jacket that has been placed on USAID, and one that Congress should work to fix both in the short-term through the budget and during the next farm bill debate in 2012 (where food aid programs are authorized). The Senate should not accept the draconian budget cuts to the international affairs budget proposed by the House. But if cuts are made to food aid programs, emergency funding should not bear the brunt of the budget knife.

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