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The US agricultural sector is critical to global food security. American farmers account for 25 percent of all corn and wheat exported globally, and the US is the largest foreign aid donor providing assistance to, among other things, improve food production in many developing countries.
Yet, at the same time, many of the US’s agricultural policies can negatively impact people in the rest of the world. In a new book entitled Global Agriculture and the American Farmer: Opportunities for US Leadership, CGD visiting fellow Kim Elliott argues for practical policy reforms in three areas that are particularly damaging to developing countries: food aid, biofuel subsidies, and antibiotic resistance in livestock.
As the US Congress works through a major new farm bill, Elliott joins the CGD Podcast to discuss how the US can reform agricultural policy to achieve better outcomes.
“The Trump budget actually zeroes out the main food aid program,” Elliott tells me in the podcast. “So that seems to me to open up a space for Congress to say, ‘Well, we recognize there are some inefficiencies. But let’s fix it, not end it.”
Click below to hear some of Elliott’s recommendations, and check out the full podcast at the top of this page.
We assessed the methodological quality of global health program evaluations from five major funders between 2009 and 2014. We found that most evaluations did not meet social science methodological standards in terms of relevance, validity, and reliability. Nevertheless, good quality evaluations made it possible to identify ten recommendations for improving evaluations, including a robust finding that early planning is associated with better quality.
The United States is a major player in global agricultural markets. American farmers account for around 25 percent of world exports of wheat and corn, and are also among the largest producers and exporters of beef, pork, and poultry. This success is partly the result of those farmers having access to abundant land, deep financial markets, and modern technologies. But as I explore in my new book, Global Agriculture and the American Farmer: Opportunities for U.S. Leadership, it is also the result of government policies that distort markets and undermine the provision of global public goods. The poor in developing countries are particularly vulnerable to the negative spillovers of these policies.
Congress has already begun deliberations on next year’s farm bill, which provides an array of subsidies that form the core of US agricultural policy. In recent years, premium subsidies to encourage farmers to buy crop insurance has been one of the most costly. Producers of sugar, peanuts, and some other crops also receive protection from import competition. Both kinds of policies support higher domestic prices, but they suppress prices for farmers elsewhere. And many developing country governments cannot afford their own subsidies to offset the effects on their farmers. More disturbingly, the aid that the United States provides to help the hungry in overseas crises is far more costly and slower to arrive than it should be, thanks to the farm bill. This is due to obsolete provisions originating in a 1950s farm bill that require food aid to be purchased in the United States, and transported on US-flagged ships.
Other policies that are not always as visible as the farm bill support farm incomes by bolstering demand for their crops, or reducing their production costs. Two that I focus on in the book are the mandate to blend biofuels—made mainly from corn and soybeans—in gasoline and diesel, and the failure to effectively regulate the widespread use of antibiotics in livestock. The biofuels mandate contributed to the 2007-08 food price spikes and is more likely to contribute to climate change than mitigate it as intended. In the latter case, livestock producers have been using antibiotics to promote growth and prevent, rather than treat, disease and these practices are contributing to the global spread of antibiotic resistant superbugs.
In the book, I analyze these policies in detail with particular attention to the deleterious effects for the poor and vulnerable in developing countries. While an overhaul of US agricultural policy to make it less trade-distorting and more focused on providing public goods—such as research and development, environmental amenities, and infrastructure—is desirable, it does not seem likely in the short run. Thus, in the book I recommend more limited steps that still provide important benefits for American taxpayers and consumers, as well as developing countries.
In next year’s farm bill, I recommend that Congress:
Reduce the amount of the subsidy that farmers receive for buying crop insurance (now more than 60 percent of the value of the average premium).
Reform the complicated and increasingly expensive program protecting domestic sugar producers and remove the tight restrictions on imports.
Remove the requirements to purchase food aid in the United States and transport it long distances on US-flagged ships.
In addition, I recommend that Congress eliminate the mandate to blend biofuels in gasoline and diesel, or at least make the mandate more flexible and reduce the amount of biofuel that is derived from food crops. Finally, the executive branch should negotiate global targets to reduce the use of antibiotics in livestock and ensure that veterinarians who oversee such use do not have financial incentives to prescribe antibiotics. In a policy brief accompanying the launch of the book, I focus on food aid reform and more modest steps that Congress could take in the farm bill to lessen the distortions associated with the biofuels mandate and antibiotic use in livestock.
Farmers face numerous risks that markets alone cannot address, so there is a role for government assistance. But the US government supports the agriculture sector at levels far beyond what is socially optimal, or what other sectors receive. Unbeknownst to many, these subsidies go disproportionately to larger, richer farmers and only a few crops receive the bulk of the support—mainly grains, oilseeds, sugar, and dairy, rather than fruits and vegetables. This is not a set of policies that serves most Americans well, much less poor and vulnerable people around the world.
A year ago, I requested comments on a draft manuscript about corruption. Last week, we launched the resulting book: Results Not Receipts: Counting the Right Things in Aid and Corruption. I think the text was considerably improved by the comments process (and I hope the commenters agree). So I’m hoping the discussion can continue even though the book is now out.
Last week, Frank Vogl, a founder of Transparency International and long-time advocate and leader in the global fight against corruption, emailed me with a set of comments on the resulting book before the launch, and then raised many of his concerns during the book launch event. In the spirit of an ongoing discussion, I asked him if I could publish his written comments and he was kind enough to agree. They follow below.
Results Not Receipts: Counting the Right Things in Aid and Corruption is an excellent starting point for an important and overdue discussion.
Almost exactly 20 years ago (September 1997) ministers attending the World Bank-IMF joint “Development Committee voiced strong support in their communiqué for major actions by multilateral and bilateral development agencies, as well as by the IMF to promote governance and counter corruption.
Charles Kenny and CGD have gone far further than the reports mentioned above and challenged the core approaches of aid agencies in this area.
Since that time there have been a number of reviews about the ways in which the international community and official public institutions have implemented the Development Committee’s mandate. In September 2007, an independent panel chaired by Paul Volcker issued a report finding fault with the World Bank’s own integrity vice presidency. In 2008, the Bank’s Independent Evaluation Group issued a major report that found far-reaching problems in the ways in which the Bank had sought to counter corruption in its operations. A further IEG critical report was published in 2011.
But Charles Kenny and CGD have gone far further than the reports mentioned above and challenged the core approaches of aid agencies in this area. Millions of very poor people in many countries are what I call ‘double-victims:’ first they suffer because of corruption; second, they suffer because efforts by aid agencies to help them too often do no good and sometimes do harm. As Kenny asserts: “It is time for donor agencies to fundamentally rethink their anticorruption approaches.”
Results do matter and he argues that it is often the case that aid agencies spend so much resources—staff and cash—in bending over backwards to ensure that not a single cent of aid cash flows into corrupt hands that their impact on poverty alleviation is far less than it could be.
But the new book is insufficiently clear in articulating effective remedies. It falls short in fully explaining why the core approaches of the aid agencies are just wrong. In addition to Kenny’s points, the facts are that staff incentives at aid agencies are far greater in terms of shoveling out the cash, than waving red flags because of feared corruption; that aid agencies shy away from meaningful confrontations with governments over grand corruption and wrongly operate, as a result, as if widespread petty corruption is quite separate from grand corruption; and, the aid agencies are extremely reluctant to listen to and work with civil society in the most effective ways.
Kenny devotes considerable space in the book to a discussion of how best to measure corruption. To a degree, like so many others, he overstates the purposes and significance of Transparency International’s Corruption perceptions Index, which is a poll of 13 different polls, makes no claim to be more than a snapshot in time based on surveys. The CPI was originally designed to strengthen public awareness of the pervasiveness of corruption and that continues to be its prime objective.
In discussing aspects of measuring corruption, the new book fails to explore issues of income and wealth inequality. The 2013 report by the African Progress Panel, for example, researched why extreme poverty is so widespread in most of the 20 sub-Saharan African countries endowed with extractive natural resources. The analysis pointed to a good deal of waste and inefficiency, but also to corruption. Studies like this provide us with in-depth understanding of the impact and scale of corruption.
The more we anyalze public sector projects and programs, looking for funding discrepancies, searching for opacity in contracting, seeking weaknesses in project implementation, so more detailed pictures of the scale and impact of corruption emerge. Those most able to purusue such analysis are locally-based non-governmental organizations. Today, there are hundreds of such NGOs across the developing world. They have precise knowledge. They have the skills to engage citizens. They have demonstrated results, as many TI national chapters can attest and is evident by looking at the evaluations of scores of small projects funded and advised by the Partnership for Transparency Fund.
Aid agencies provide relatively small funding to NGOs—and it is decreasing. They rarely listen seriously to what they have to say in so-called “civil society consultations.” Many aid agencies are reluctant to agree to substantive monitoring of their projects by NGOs (this is a positive example).
The first sentence of this important new book in its Preface states: “Governance and corruption remain at the heart of discussion around global development.”
That may have been true a few years ago, but I do not think it is the case today. Part of the reason may be the recognition within aid agencies that curbing corruption is difficult, it does not yield results swiftly and it measurement is complicated. Part of the reason is that there has not been enough high-profile discussion of the inadequacies of the approaches that aid agencies deploy.
So Kenny’s book should be seen as a starting point for what needs to become a robust discussion. In the early 1990s, a few of us waged a campaign to convince the aid agencies to recognize that corruption is a problem in development and to ensure that curbing corruption becomes a meaningful priority for these agencies. Now, it is time to have a new and substantive set of initiatives—and I hope the aid agencies will be constructive partners with CGD and others—to look at all possible approaches to addressing the needs of the victims, especially those who live in acute poverty, so that their basic human rights are secured and that they can live in dignity.
I agree with much of what Frank says. And where I disagree, it is worth noting our comparative credentials on the topic. But here a few reactions:
There certainly are a lot of incentives at donor agencies to “shovel out the cash”—I wonder if the receipts-monitoring process is in part a response to that incentive. While not particularly effective at reducing corruption, receipts monitoring precisely measures the shoveling. Results measurement (and in particular payment on results) is at least a distraction and at worst a positive block to getting cash out of the door.
I do think inequality is linked to corruption—in particular in the broad sense of systems being stacked against the average person. Inequality is about equal between rich countries and poor, and I take this as evidence corruption in this broad sense is not simply a “problem of poor countries.” That even though straightforward bribery is far more common in poor countries than rich ones.
I’d say that aid agencies are very focused on corruption, but very narrowly focused. They are spending a lot on financial and procurement oversight of their own projects and not nearly enough on tackling corruption at the country level.
Frank’s helpful and deeply informed reactions certainly demonstrate the benefit of an ongoing discussion. I’d be very grateful for any more reactions to the book, by email or below. And many thanks in advance!
The US agricultural sector is critical to global food security, but many of the policies that currently govern it negatively impact people around the world. In a new book, CGD visiting fellow Kim Elliott argues for practical policy reforms in three areas that are particularly damaging to developing countries: food aid, biofuel subsidies, and antibiotic resistance in livestock. As the US Congress works through a major new farm bill, Elliott joins the CGD Podcast to discuss how the US can reform agricultural policy to achieve better outcomes.
The bevy of hearings revealed an Administration struggling to get its message straight on foreign aid. In one camp are those who favor sharp budget cuts and a shift away from a values-driven foreign policy—OMB director Mick Mulvaney, senior strategist Steve Bannon, and (perhaps to a lesser extent) Tillerson. But another camp advocates robust continued support for US global engagement and promotion of US values—including UN Ambassador Nikki Haley, Green, and Ivanka Trump. One of the big questions surrounding the President’s draconian foreign aid budget was how aggressively and effectively the administration would defend it, given these internal divisions.
In his hearings, Tillerson tried to split the difference but ultimately offered no compelling strategic rationale for the proposed cuts. With his strategic review of the Department still underway, he struggled to articulate why his “cut first, strategize second” approach wasn’t putting the cart before the horse. He asserted that the United States could slash resources by a third but sustain its leadership in international development, global health, and disaster response—but this ran into widespread, bipartisan skepticism from legislators.
Mark Green’s nomination hearing was strikingly different, and put him squarely in the more traditionalist camp. Speaker Paul Ryan, a fellow Wisconsinite, opened the hearing by praising Green and calling USAID “a very important agency at a very important time.” Green expressed a foreign aid vision more in step with the bipartisan consensus of the past decade—and received glowing reviews from senators as a result. Congress seems to be signaling its support for Green and Haley’s more mainstream approach to foreign assistance—but Green and Haley could still face an uphill battle in persuading their colleagues in the administration.
2. …and with Congress
Of course, the administration does not set foreign aid policy on its own. And Congress, importantly, controls the purse strings. Congressional leaders have been signaling for months that they continue to see value in constructive US engagement. But the big question has been how aggressively members would stand up to oppose the President’s proposed aid cuts.
If these hearings are any indication, Trump’s proposed spending reductions face strong headwinds on the Hill. Key members of both appropriations and authorizing committees have repeatedly indicated they will disregard them: Senator Lindsey Graham (R-SC) called the President’s budget “reckless,” Senator Bob Corker (R-TN) opened his hearing by calling it a “total waste of time,” and Representative David Cicilline (D-RI) noted that virtually every serious foreign affairs expert has dismissed it. Tillerson’s counter-arguments fell flat, and the administration’s efforts to defend the broader request have fallen short as well. In one telling example of the administration’s weak budget outreach, Representative Kay Granger (R-TX) told Tillerson that had she called his office four weeks ago to offer help and never received a response. This outreach is unlikely to improve: the lack of senior political appointees at State and USAID means the administration has few officials in place to sell its budget behind the scenes.
However, this does not mean development advocates can declare victory and pack it in. There is clear Congressional opposition to the massive cuts proposed in the Trump budget. But individual accounts still face risks, and cuts of even 5-10 percent—though less politically toxic—could still be damaging.
3. Cuts to humanitarian assistance are a front and center concern
Trump’s FY2018 budget request proposes to cut foreign aid across the board, but the 38 percent cut to humanitarian assistance garnered some of the most vocal opposition from lawmakers. Given four potential famines and the ongoing mega-crisis in Syria, we’re glad to see attention to these cuts. Multiple lawmaker across committees and party lines, including Senator Graham, Representative Chris Smith (R-NJ), and Representative Karen Bass (D-CA), pressed Tillerson and Green on the cuts to humanitarian assistance. Green pledged USAID would not be walking away from its commitment to humanitarian assistance.
The crisis in Yemen got particular attention—not just as a budget priority but as a policy issue. Senators Todd Young (R-IN) and Chris Murphy (D-CT) pressed Tillerson on the importance of diplomatic engagement to support humanitarian access there. This is critical, as humanitarian assistance on its own will not be able to contain the crisis there—a big diplomatic push will be needed.
4. The Hill wants a say in the State Department-USAID reorganization efforts
Members of Congress pressed Tillerson about plans to reorganize US development and diplomacy functions amid rumors the administration may seek to merge USAID into the State Department. Tillerson mostly punted on these questions. Numerous lawmakers nonetheless indicated they expect congressional involvement in any substantial decisions. Senator Todd Young directed attention to a task force on reform and reorganization he is co-chairing with Senator Jeanne Shaheen (D-NH), and Representative Eliot Engel (R-NY) pointed out that a reorganization process would require statutory changes (i.e. Congress would need to be involved).
During Green’s hearing, Senator Bob Menendez (D-NJ) likewise noted the USAID-State rumors and pressed the nominee on whether the United States’ primary aid agency should remain independent. Green avoided answering the question directly, but noted that USAID and the State Department have distinct roles and cultures.
Here at CGD, we have explored how to judge a State Department-USAID reorganization plan and will be publishing further ideas of potential reforms. Stay tuned for more work on this front in the coming weeks. Speaking of which….
5. A real opportunity for foreign aid reform?
Interestingly—and unexpectedly—the stars may be aligning to enable one of the best opportunities for serious foreign aid reform in years. But it will depend on which camp within the administration ends up leading on the design of potential reforms. Mark Green emphasized the need for reform as one of the main pillars of his testimony, citing the United States’ evolving relationship with the rest of the world and the need to update the US development policy toolbox. But Tillerson’s vocal defense of aid cuts raises questions about whether the ongoing review process at State will simply lead to a predetermined outcome. And OMB’s credibility to lead good-faith reforms is also questionable, given the draconian vision it outlined in the President’s budget.
But if, once confirmed, Green can grasp the lead on aid reform within the administration, he will find a receptive audience in Congress. The leadership of the congressional authorizing committees—on both sides of the aisle—is fairly unified in support for constructive reform. Given his favorable standing on Capitol Hill and the Hill’s clear interest in the issue, Green may have a unique opportunity to build bipartisan support for a smart set of reforms. There a plenty of options, from development finance to a multilateral review. Here’s hoping he can seize the opportunity.
When you read what economists have to say about development, it is easy to be disheartened about the prospects for poor countries. One big reason is that slow changing institutional factors are seen as key to development prospects. I’ve just published a CGD book that’s a little more optimistic: Results Not Receipts: Counting the Right Things in Aid and Corruption.
Most of the book is about what donor agencies like DFID and the World Bank should do about corruption in aid projects, but Results Not Receipts also discusses the role of corruption and weak governance in determining development outcomes more broadly—the subject of the sample chapter. And in that chapter, I’m more optimistic about progress both through improved institutions and despite weak institutions than some of my peers.
The dominant view amongst development economists is that historical forces and slow-changing government institutions have significantly determined development outcomes. In their blockbuster paper “The Colonial Origins of Comparative Development,” published in 2001, Daron Acemoglu and Simon Johnson from MIT and James Robinson from the University of Chicago traced through a causal chain, noting a strong relationship between mortality rates faced by soldiers, bishops, and sailors in colonies and the type of legal and political institutions they created—and between those early institutions and institutions today. Since then, economists from around the world have linked historical differences from soil type, through the extent of the slave trade to ancient knowledge of the wheel all through norms, culture, and institutional forms to modern economic outcomes.
And development economists have compiled measures of institutional quality that directly suggest institutions are slow to improve. CGD’s Lant Pritchett and colleagues studied the Worldwide Governance Indicators (initially complied by researchers at the World Bank). They suggest it would take over 600 years for Haiti to reach Singapore’s quality of government effectiveness as measured by those indicators, even with a generous interpretation of its previous rate of progress.
The abiding relationship between comparative development success today and historical measures of development cannot be denied. Nonetheless, for all the importance of history to comparative development, there’s a lot more to progress than the past. Around 5.1 billion people worldwide live in countries where we know average incomes have more than doubled since 1960. Nearly 2.2 billion people are in countries where average incomes have more than quintupled over the past 50 years. In Africa, eight economies in the region ended the last decade twice the size they’d started it. And as a whole, the developing world significantly outperformed rich countries in weathering the storm of the global financial crisis. It isn’t just income; other measures of the quality of life including health are rapidly improving worldwide—about two million children born this year will live to their fifth birthday who would have died were mortality rates unchanged from 10 years ago.
That progress is possible because countries at a given level of settler mortality or other measures of historical development are seeing better outcomes over time. And that suggests one of two things: either institutions can change faster than some measures suggest, or development isn’t just about slow-changing institutions. It is probably a bit of both. On the side of institutional change, Acemoglu, Johnson, and Robinson certainly didn’t support the notion that such change was always and everywhere achingly slow—they pointed to case of Japan during the 1870s and 1880s as well as South Korea during the 1960s as showing that rapid institutional change could underpin considerable growth. That should give hope to corruption fighters in developing countries who are doing brave and important work improving local institutions.
And the same institutions might produce better outcomes when new technologies allow for cheaper, simpler solutions. Think of vaccines and antibiotics allowing for health outcomes that previously could only be achieved by complex water and sewer systems alongside rigorously enforced public health measures. Or look at the mobile phone that so simplified telecommunications provision that over five billion people worldwide gained phone access in the space of around two decades.
The facts that institutions can rapidly improve whatever our imperfect measures suggest and that there is more to development outcomes than the quality of a country’s governance means that it isn’t naïve to be optimistic about the prospects of poor countries. And the progress we have seen in reducing poverty and increasing incomes worldwide over the past two decades implies it might be the pessimists who are being unrealistic.
I hope you’ll join me tomorrow to celebrate the release of Results Not Receipts: Counting the Right Things in Aid and Development. You can RSVP to attend the event here or watch the webcast online.
Results Not Receipts explores how an important and justified focus on corruption is damaging the potential for aid to deliver results. Noting the costs of the standard anticorruption tools of fiduciary controls and centralized delivery, Results Not Receipts urges a different approach to tackling corruption in development: focus on outcomes.