In the years since my experience in Thailand, I have become far more preoccupied with the second element of my reaction to the postdisaster response. I had seen what disorganization and lack of a culturally appropriate plan looked like. That single experience affected my way of approaching any project, place, or partner in the future, and forced me to ask the following: What would doing better look like?
HOW DO WE STRENGTHEN THE ACTUAL DESIGN OF PROJECTS?
Philanthropists, NGOs, and government agencies tasked with helping those living in conditions of hunger and extreme poverty have made great strides in identifying global needs. However, every approach requires refreshing over time. One area of practice due for a makeover is the structure and framework of the relationships among NGOs, donors, and the communities they serve. Keeping the donations flowing to large NGOs with significant overhead to support makes it necessary to convince donors that their money is being put to good use. That goal has a tendency to result in narrow-focused, quick-turnaround projects that have highly visible results: such as digging a well, for example, or delivering agricultural inputs including seed and fertilizer to help local farmers increase yields. There is nothing wrong with these projects’ goals, but both my father and I have come to believe that there often is something wrong with the process used to design them and the lack of sustainable impact.
This issue goes well beyond the emergency aid world. It is even more frustrating to see these design flaws in projects intended to address chronic hunger or limited access to clean water, or where NGOs have plenty of time to plan and the experience to get things right. Many aid development projects break too easily. They may be dependent on technology that has to be taught, or products and services delivered over uncertain roads or through territory plagued by thieves and guerrillas. They may require training and the expertise of team leaders, but when the people who brought the project to the region leave, it becomes unclear who will carry on the efforts. Later we will highlight some initiatives that take a more sustainable, market-oriented approach, but it’s fair to say that short-term, project-oriented interventions are still the norm. The failing norm.
Rather than just throw stones—because development is hard work, and I know these are difficult problems to solve—let me say that I’m truly hopeful about some of the new models that are being developed, including some supported by our foundation. All of us involved, in whatever capacity we have to take on poverty and hunger, need to rethink old structures and abandon those that no longer work. And we must do a better job of investing in the social value of communities and their committed leaders so that we can produce comprehensive results for the people we’re trying to help. Even if we are doing good where we can, I’m also convinced that each of us must do better. Otherwise when the aid stops, everything will go back to the way it was before, like the tides taking back an abandoned sand castle.
Story 24
“Who Came Up with This Crazy Idea?”
In December 2005 a 7.6-magnitude earthquake killed at least seventy-five thousand people in Pakistan and injured twice that many, according to the World Health Organization. It also left at least two and a half million people, many in remote mountain villages, homeless just as the brutal Himalayan winter was approaching.
A few weeks later, I went to Pakistan to see if our foundation could be of assistance, and, at the suggestion of Allen Greenberg, who runs my late mother’s foundation, I made sure to visit a WFP operation at a Pakistan military base in Abbottabad.
When I arrived, workers were shuttling thousands of bags of food nonstop—primarily basic staples such as flour, cooking oil, and peas—from trucks to storage facilities and onto helicopters. The region is so mountainous and the population so spread out that helicopters were the only realistic option to get the supplies to people who needed them. Yet that option came with some risk. The weather was freezing cold, windy, and foggy. I saw WFP personnel loading up Russian-manufactured Mi-8 helicopters, and I managed to get permission to go on several of the delivery missions.
When I saw how precisely the World Food Programme executed this complex food aid drop in Pakistan, it helped refine my thinking about the proper use of food aid and led to one of our foundation’s most significant partnerships. Photo: Howard G. Buffett
The situation for survivors was dire, and the landscape was alternately beautiful and bleak. We flew over craggy mountains with evergreen forests dusted in snow, but also over villages that had been crumpled, even flattened, by the quake. We could see tent camps made of hastily arranged tarps flapping in the strong winds; they seemed barely adequate to protect supplies, much less people. Settlements in this region are so isolated, with few roads, and between the quake and the wet weather, mud slides had left many existing roads impassable.
We flew an hour to Chattar Plain (elevation, five thousand feet), where we picked up more bags of flour and some other supplies. Chattar Plain was a staging area for the next leg up into the truly thin air. The helicopters had to be loaded carefully—not exceeding weight limits, as the high elevation depleted fuel much faster. As we traveled to Kandol (elevation, seven thousand feet), we were well bundled in parkas and gloves. When we landed, it was painful to see people waiting for deliveries dressed in the traditional thin-fabric shalwar kameez—long tunics and baggy trousers—they wear year-round, with just an extra sweater or two and a scarf or a blanket around their shoulders. Some children were waiting by the makeshift landing pad. Many had no gloves. One girl appeared to have little more than striped socks around her lower legs despite the freezing cold. Another group of men had hiked down the snow powder of a nearby hill to collect supplies. We saw the deep trough created by a trek that we knew would be even more difficult for the men going back, carrying heavy bags of flour and other vital supplies.
As we came in tight between the mountains at eight thousand feet, through the window I could see men wrapped in loose clothing waiting to help unload lifesaving food. Photo: Howard G. Buffett
However, the WFP operation was as precise as a finely crafted watch. The plan was ten relief flights per day per helicopter, for a total of forty-five tons of food assistance. We had to be in and out quickly. We could not waste time on the ground, and the personnel on board were poised and ready to hand off the supplies to the locals the minute we touched down. The coordination was extensive, and from what I observed firsthand, it was lifesaving for thousands of people who easily could have starved or died of exposure in these remote, snowy mountains.
Food aid is vital in emergency situations. But making sure that food aid is available on an emergency basis is a more complicated challenge than many people realize. It takes preparation, storage, and a transportation plan that can be activated in short order. To be prepared to offer food aid quickly, US farmers need policies and incentives to support production at full levels. With close to a billion food-insecure people in the world, there are plenty of emergency food aid situations where that capacity will be needed, but we can’t wait for an emergency to reauthorize an investment. Emergencies happen when they happen.
My former boss at Archer Daniels Midland, Dwayne Andreas, was a friend and supporter of Senator Hubert Humphrey of Minnesota when he fought for a permanent food aid program that became the Public Law 480 Food for Peace program, initially signed into law in 1954. Officially the Agricultural Trade Development Assistance Act, managed by the USDA and USAID, the program was to use American grain surpluses to fight world hunger and help our farmers find markets for their crops—and support our shipping industry as well, as Congress eventually called for at least 75 percent of the aid to be transported on US-flagged vessels. The PL 480s were designed as a win-win-win for American farmers, shippers, and the world’s hungry. And as the name suggests, “food for peace” food aid can perform an important diplomatic function, too.
But in August 2006, just a few months after I was so impressed with WFP’s emergency food aid operation in Pakistan, I went to Mozambique to review several agric
ultural projects that had a conservation-agriculture component and also some water initiatives. I was in Nampula City in the offices of CARE. I asked if I could borrow the fax machine to trade some documents back and forth with my team in Decatur. I was standing at the fax when I overheard two CARE officials talking about completing a commodity trade in the local market. This struck me as completely bizarre. What was CARE doing trading commodities?
The local administrator explained to me, somewhat sheepishly, that they were planning to take food aid sent from the United States and “monetize” it: in other words, take the in-kind aid of grain, sell it locally, and then use the proceeds to help fund other development programs.
I knew that Mozambican farmers grew corn and sold into the same market. My first thought was “Who came up with this crazy idea?” Selling imported commodities turned NGOs into quasi grain traders. It would add supply to the local market that was bound to undermine prices for local farmers. I could imagine how US farmers would feel if an American charity talked Brazil into sending it container ships of surplus soybeans for the charity to sell on US grain markets—raising money to do good works but also creating a surplus and lowering prices. More specifically to the developing world, this market distortion would devastate local prices while also having an unintended consequence of discouraging farmers from growing that crop in the future. What was the point of wrecking the price that poor local farmers could get for crops, making them more food insecure, and then turning around to use the cash from that to provide farm training services to the same people or overhead for an NGO? It was worse than just being wasteful; it was wrongheaded and even harmful. If the idea of aid is to get people back on their feet so they can better help themselves, why would we possibly weaken the local market?
This conversation was my introduction to the concept of monetization. I had no idea that it began in the 1980s, when the US government was struggling to get rid of a large surplus of subsidized grain. In the 1990s, cuts at USAID meant that NGOs had to find a way to offset direct cuts in cash funding they had been receiving, and so they became even more active traders in foreign markets. It has become a big business—and it can be an inefficient one if your goal is to fight hunger. We take food grown in the United States, ship it to remote areas at great cost, and then when it gets there, NGOs don’t distribute it to hungry people—they sell it so they can take the cash and use it for other program and budget expenses. A June 2011 report by the US Government Accountability Office (GAO) found that the $722 million in cash used by the government over three years to buy US commodities for monetization resulted in only $503 million in cash at the other end of the pipeline.1
According to existing PL 480 regulations, the bulk of US food aid must be moved on US-flagged vessels. Therefore it is no surprise that the US shipping industry has been lobbying to keep this program intact, joining forces with US agriculture interests and NGOs in what is sometimes called the “iron triangle” that has kept monetization going for years—even though the practice hurts many of the people it is designed to help. In some cases, it works out that the cost of shipping a particular food aid commodity for monetization is more than the commodity is worth. The GAO reported one 2008 case in which it cost $4.5 million in shipping charges to send Malawi ten thousand metric tons of wheat worth $3.9 million. We could have had much more impact if we had just used the total $8.4 million to support local purchase programs.
US shippers and some food processing and agricultural interests have vowed to fight for the existing regulations to stay in place. Some shippers have resented my speaking publicly about this issue, but I continue to do so. The program’s provisions generate significant shipping costs that should be going to help feed people. It was a small step in the right direction in 2012 when Congress lowered the minimum requirements for using US ships to transport aid from 75 percent to 50 percent. However, it is hard for me to imagine any dramatic changes happening soon enough, and it is likely that the new minimum threshold requirement will have little real-world impact. I think our food aid programs need to be reevaluated to ensure that they are first and foremost about feeding people. That means shipping food aid at competitive rates when that is the best option, and buying food locally if that maximizes the value of the aid dollars.2
FOOD AID BECOMES A BUSINESSMAN’S MORNING CROISSANT
It concerns me that NGOs know the negative impact of monetization in the communities they serve, and yet a number of them continue to use monetization. Put simply, it is about self-preservation. According to the GAO, nongovernmental organizations traded 1.3 million tons of US-grown food for cash in thirty-four countries from 2008 to 2010. I should point out that the CARE official I spoke to in Mozambique in 2006 was not proud of the organization’s history of monetizing commodities. But one of the reasons I mention CARE by name is that it was already in the process of adopting the brave and principled position not to use the monetization process any longer.
To understand the sacrifice that CARE made, you need to realize that it had the closest ties to the US government of any NGO. The charity was formed by Americans at the end of World War II to send to survivors in Europe packages of food recovered from army surplus. Washington’s support of CARE grew as the group expanded its work to fighting poverty in eighty-four countries.
By 2006, CARE was generating $45 million annually from monetizing US commodities. That money was paying for poverty-fighting programs that formed the nucleus of many of CARE’s country offices, several of which depended on monetizing US food aid for half their budget. The money paid for about twenty development programs in Africa, which did everything from teaching farmers how to make more money by growing alternative crops, such as sunflowers, to teaching them about soil conservation and agroforestry.
But here’s what happened: CARE’s leadership developed the position that it needed to get poor people more involved in making decisions about programs that are intended to help them. A central tenet of this “rights-based” philosophy is that CARE officials should consider whether their poverty-fighting programs have unintended consequences. Monetizing US commodities became a moral issue because they realized it was harming farmers in places where CARE was acting as a grain trader. What’s more, CARE officials realized that the basic proposition that food aid from America was supposed to be consumed by poor people was being distorted; when monetized, it was ending up in the hands of middle-class and upper-class consumers in developing countries. For instance, in Uganda, some US food aid ended up at a bakery across the street from the US embassy. In Ethiopia, some cooking oil monetized by CARE ended up at a Sheraton hotel in Addis Ababa.
Daniel Maxwell, a senior CARE official based in Nairobi, told us that the revenues raised through monetization had been important to the organization, but he and others became increasingly uncomfortable with it. Dan’s concerns about monetization grew as he worked on a book, Food Aid After Fifty Years: Recasting Its Role, with a friend from graduate school, Cornell University economist Christopher Barrett. They concluded that the primary objective of food aid had devolved to where it was less about helping food-insecure people than it was “heavily oriented toward domestic concerns in donor countries.”
What’s more, the extent to which NGOs were dependent on monetizing food aid for project funding made them leery of lobbying for reforms that would stretch the food aid budget. Eliminating the PL 480 cargo preference mandate, for example, risks angering shipping companies that might withdraw support of food aid in general. Similarly, agricultural interests like the safety net that the program offers for the government to buy surplus crops. Dan and Chris presented their findings to a gathering of senior CARE executives in 2004, and by 2006, the organization moved to stop the practice.I
The decision to stop monetizing commodities blew a hole in CARE’s budget. The value of support in all forms from the US government sank 18 percent in the charity’s fiscal year that ended June 30, 2007: to $243 million from $298 million in FY 2006. By 2011, US go
vernment support to CARE had dropped further to $176.1 million. The organization gave its country offices until 2009 to wean themselves from monetization, hoping that would be enough time to find alternative funds to keep the programs alive. But many of the monetization-backed CARE projects have disappeared.
CARE is still paying the price for its stand in 2006. Five years later the organization raised $589.7 million, 10 percent less than it had to work with when it was selling US food aid to generate cash. “It is an understatement to say we weren’t truly prepared for the practical implications,” says Helene D. Gayle, president and chief executive officer of CARE USA. “That said, I think it has also hastened our adaptation to a new development paradigm and made us more prepared to embrace new (and we think better) ways of doing development.”
I admire the people at CARE for doing the right thing. This decision took guts, and it cost them. CARE had to lay off hundreds of employees across several countries and shrink its number of projects. From what I understand, CARE asked other NGOs to follow its example, hoping that a unified front would prod Washington to shift the monetization budget to other programs that they could all use for development work. Instead, the other NGOs quit the Washington food aid lobbying group to which CARE belonged and started their own. The money CARE no longer collects flows to other NGOs, which apparently justify the practice as a necessary evil. I find this development troubling, given the mission of these organizations.
40 Chances Page 20