In his budget proposal, President Barack Obama laid out significant changes in how the United States would fund its food aid. Most notably, the proposal suggests putting a 55% floor on funds to purchase American commodities which the administration said would provide greater flexibility.
The reconfiguration comes under the Title II of the Food for Peace (PL 480) program included in the farm bill which is currently administered by the U.S. Agency for International Development. An administration official explained the proposal would take $1.5 billion and redistribute it into three cash accounts.
The official explained that the goal of the changes is to create "greater flexibility" and "get the right kind of food to the area that needs it faster."
First $1.1 billion would be transferred to International Disaster Assistance. There is already $300 million in that account available for flexible response to food crisis situations by using local and regional purchases and cash and voucher purchases. The change establishes a 55% floor on funds to still be used to purchase American commodities "which recognizes the central role U.S. commodities have and continue to play in global hunger needs," the official said.
A portion of Title II funds historically would be made by monetizing aid – selling U.S. commodities in the region and then using the money to provide the assistance. GAO estimates this costs 25 cents for every $1 generated, which is an "inefficient way" to generate development assistance funds.
Instead, funds would go directly to non-governmental organizations and private voluntary organizations to provide the same kind of community development now being utilized.
Lastly the change would create a new emergency contingency fund of $75 million to enable emergency food assistance.