	Local and Regional Procurement (LRP) Issues

Local and regional procurement (LRP) of food aid refers to the purchase of commodities for emergency food aid by donors in countries with food needs or in another country within the region. LRP is used extensively by the United Nations World Food Program (WFP) and has been proposed as a cost-effective, time-saving tool that the United States could use to meet emergency food needs. Food aid budget submissions in FY2006 through FY2009 included a proposal with suggested legislative language to authorize the Administrator of the U.S. Agency for International Development (USAID) to allocate up to 25% of the funds available for U.S. food aid (Title II of P.L. 480, or the Food for Peace Act) to local or regional purchase. The budget justification for this authority was that it would increase the timeliness and effectiveness of the U.S. response to overseas food aid needs by eliminating the need to transport the commodities by ocean carriers. Congressional and other critics of the local purchase proposal maintain that allowing non-U.S. commodities to be purchased would result in undermining the coalition of commodity producers, agribusinesses, private voluntary organizations (PVOs), and shippers that participate in the food aid program and in reducing U.S. food aid. Instead, the 2008 farm bill ( P.L. Are there risks that could be associated with LRP that would make it a less-effective response to emergency food needs than provision of U.S. commodities? U.S. and Other Donor Food Aid Policy

Almost all U.S. food aid is provided in the form of U.S. commodity donations. P.L. Section 491 of the Foreign Assistance Act authorizes the provision of international disaster assistance (IDA). Experience with LRP

The WFP and PVOs have been using donor funding to procure commodities in developing countries for more than 30 years. In 2008, the United States donated $2.1 billion in U.S. commodities to the emergency operations of WFP. Evaluation of LRP Experience

Evaluations of LRP have focused on the cost-effectiveness of LRP versus U.S. commodity donations and the timeliness of delivery of LRP versus overseas donations. These include a lack of reliable suppliers, poor infrastructure and logistical capacity, weak legal systems, timing and restrictions on donor funding, and quality considerations. However, the OECD study points out that, based on its food aid study, "in most circumstances, financial aid rather than food aid in-kind is the preferable option.... (but) In many food deficit situations, local procurement is not always a feasible option.... [c]ontext-specific rationale is always required for relying on food aid in kind in preference to financial aid." However, USAID LRP initiatives and the WFP's Purchase for Progress program have begun explorations of how low-income farmers in developing countries could participate in LRP efforts carried out by WFP or USAID. 110-246 , 7 U.S.C. USAID-Funded LRP

Separate from USDA's pilot LRP program, the FY2008 Supplemental Appropriations Act ( P.L. The FY2010 Foreign Operations appropriations measure ( P.L. Bills under consideration would give the U.S. government the flexibility to use LRP in response to food emergencies without reducing the funds available for P.L. FY2010 Appropriations Bills

The President's FY2010 foreign affairs budget called for $300 million to be allocated to USAID's International Disaster Assistance (IDA) program to be used for LRP and the financing of cash transfers and cash vouchers to meet food security objectives. The Senate committee-reported bill ( S. 1434 ) directed that $1.5 billion of USAID development assistance be allocated to agricultural development and food security efforts, "including for local and regional purchase and distribution of food." 3288 , P.L. 2997 ), funds for P.L. S. 384 and H.R.
Using federally appropriated funds to procure commodities for international food aid in countries with emergency needs or in nearby countries is a controversial issue. In budget submissions for FY2006-FY2009, the Bush Administration proposed allocating up to 25% of the funds available for U.S. food aid (Title II of P.L. 480, or the Food for Peace Act) to local or regional procurement (LRP) of food aid commodities. Each time Congress rejected the proposal. The Administration argued that LRP would increase the timeliness and effectiveness of the U.S. response to overseas food emergencies by eliminating the need to transport commodities by ocean carriers. Congressional and other critics of the local procurement proposal maintain that allowing non-U.S. commodities to be purchased would undermine the coalition of commodity groups, agribusinesses, private voluntary organizations, and shippers that participate in and support the U.S. food aid program and would reduce the volume of U.S. commodities provided as aid.
The United States is alone in providing practically all of its international food aid in the form of its own commodities. U.S. food aid legislation precludes the provision of any but U.S. commodities to meet international food aid needs. The Foreign Assistance Act (P.L. 87-195), however, permits the use of some U.S. funds for LRP as part of the U.S. response to international disasters. The European Union provides almost all of its food aid via the United Nations World Food Program (WFP) in the form of cash; Canada's food aid also is cash-based. The WFP has been using donor funding to procure commodities locally or regionally in developing countries for more than 30 years.
Several recent studies have evaluated the timeliness and cost-effectiveness of LRP versus commodity donations and conclude that LRP in Sub-Saharan Africa (SSA) costs substantially less than shipping food aid from the United States to Africa and that food aid delivery times are substantially shorter. The studies point to risks associated with LRP, including lack of reliable suppliers, poor infrastructure, weak legal systems, donor funding delays, and quality (i.e., food safety or nutrition) considerations, that could impede the efficiency of LRP. On the other hand, the studies suggest that risks associated with LRP are no greater than risks associated with in-kind donations and that they could likely be countered with better market intelligence and effective management of LRP activities. One study suggests that in many food deficit situations, LRP may not be a feasible option. Inadequate local supplies or adverse market effects on producers or consumers in a country or region could rule out using LRP.
The U.S. Department of Agriculture has begun implementation of the pilot LRP program established in the 2008 farm bill (P.L. 110-246). Separately, the U.S. Agency for International Development is implementing LRP activities with funds appropriated in an FY2008 supplemental appropriations act (P.L. 110-252). In addition, the WFP has initiated a Purchase for Progress (P4P) program that will evaluate how small farmers in developing countries can participate in WFP procurement.
The FY2010 Foreign Operations appropriation (P.L. 111-117) includes funds in international disaster assistance appropriations that could be used to fund LRP and food-security-related activities such as cash vouchers or cash transfers for purchasing food. In addition, P.L. 111-117 directs that $1.17 billion of development assistance be allocated to agricultural development and food security efforts. Proposed legislation, S. 384 and H.R. 3077, would authorize a $500 million appropriation, separate from P.L. 480 food aid, for responding rapidly to emergency food needs, including with LRP. The FY2010 Agriculture appropriations bill (P.L. 111-80) provides $1.7 billion to finance provision of U.S. commodities under P.L. 480.