International Food Assistance: Local and Regional Procurement Can Enhance the Efficiency of U.S. Food Aid, but Challenges May Constrain Its Implementation

To respond to this recommendation, on September 21, 2009, USDA drafted implementation guidelines for its LRP pilot program that specified commodity safety and quality assurance requirements for all food aid purchased locally or regionally abroad. In fiscal year 2010 and 2011, USDA funded 21 LRP pilot programs in 19 countries. In fiscal year 2011, USDA hired an independent contractor to complete an evaluation of the pilot that included an analysis of the quality and safety of the commodities purchased with USDA LRP project funds. In December 2012, USDA released the evaluation that noted that participants in the pilot tracked quality standards and specifications of the commodities purchased for the program. Specifically, participants answered standardized questions and submitted relevant evidence to ensure systematic compliance with the quality and safety requirements of LRP agreements.

In August 2009, USAID said it was drafting guidance for future LRP purchases that articulated requirements with regard to quality standards and product specifications, as well testing and reporting procedures to ensure adherence to those requirements. By April 2010, USAID launched the Emergency Food Security Program, which supports local and regional procurement, cash transfers, and food vouchers using International Disaster and Famine Assistance Funds. Under this program, USAID began requiring implementing partners to meet strict commodity quality standards, such as including commodity safety and quality assurance inspection results in their final reports. At the time, USAID did not systematically maintain these final reports in a single database, but planned to do so in a new system called the Food for Peace Management Information System. In December 2012, the Food for Peace Management Information System became available for implementing partners' use and all of USAID's fiscal year 2013 program reporting submissions, such as commodity quality reports on locally and regionally procured food aid, were made available.

In August 2009, USAID stated that as part of its new 2008/2009 funding for LRP, USAID's implementing partners were to monitor and report on specific market indicators specified in grants or cooperative agreements. In addition, USAID stated that the World Food Program (WFP), the major recipient of USAID's 2008-2009 LRP funding, already had in place an effective system to ensure that LRP did not disrupt local and regional markets. By April 2010, USAID launched the Emergency Food Security Program, which supports local and regional procurement, cash transfers, and food vouchers using International Disaster and Famine assistance Funds. Under this program, USAID requires implementing partners to complete detailed market analysis for proposed LRP interview to determine potential impacts. This market analysis includes a variety of information to ensure that programs are unlikely to do discernible economic harm, and may be based upon anticipated tonnage amounts procured as a percentage of tonnage produced and consumed in the location of origin and distribution, commodity price fluctuations in world and local markets, and other economic indicators. Implementing partners are also expected to monitor market impacts of their program and report any concerns to USAID.

To respond to this recommendation, on September 21, 2009, USDA drafted implementation guidelines for its LRP pilot program that required applicants to provide an explanation of steps the applicant would take to gather market intelligence and ensure that LRP would not cause adverse economic effects on producers, consumers, and market systems. In addition, USDA supported a group of implementing partners that pooled their resources to form an LRP Learning Alliance with Cornell University. This group collaborated to develop a methodology for collecting reliable market information in order to verify that LRP would not have negative market impact, and to provide training for implementing partner staff about how to collect market information in a manner useful for evaluating the impact of LRP. In fiscal year 2010 and 2011, USDA funded 21 LRP pilot programs in 19 countries. In December 2012, USDA released a third-party final evaluation on the LRP pilot project, which had a section devoted to market analysis. This section noted that of the 20 pilot projects evaluated, LRP interventions were not found to have caused market impacts. The report also noted that "USDA can be confident that its [LRP] had negligible and fleeting impacts, if any, in procurement markets."