The U.S. government provided 72 percent of the total financial and commodity donations to the World Food Program in 2002, but U.S. firms accounted for only 2.6 percent of the sales of food distributed by the WFP.
Concerns about this seeming disparity and questions about the World Food Program's “cloaked system” for sourcing food aid have been raised by the Arlington-based USA Rice Federation in a letter to U.S. representatives to the United Nations Food and Agriculture Organization.
Under UN resolutions passed following the 1991 Gulf War, the UN's World Food Program was charged with distributing food aid to Iraq through the Oil for Food program that allowed Saddam Hussein's regime to sell oil in exchange for food and drugs.
Because of its previous role, U.S. officials have agreed that the World Food Program should continue to distribute food aid in Iraq. But, in their discussions on how to include more U.S. rice in that aid, USA Rice leaders said they have encountered a number of puzzling incongruities in the way the WFP buys and distributes food.
“In the current system, WFP internally decides which companies in which countries will be allowed to see and respond to commodity tenders,” USA Rice President Stuart Proctor said in a letter to Ambassador Tony Hall, who heads the U.S. Mission to the U.N. Agencies for Food and Agriculture in Rome.
“The tenders are then awarded without a public statement on who received the award or at what price.”
Proctor said this “cloaked system” leaves itself open to many questions. “Why, for example, is Canada the largest recipient of commodity tenders in the developed world, receiving 53.2 percent? Why are U.S. companies — which are able to provide the same commodities — usually kept unaware that a tender has been made and are not allowed to make a bid?”
In reviewing the list of donors to the WFP in 2002, USA Rice found that the United States was by far the biggest contributor, providing $929,968, 72 percent of the cash donations made by developed countries. Canada, in contrast, provided $47,874 — 3.7 percent of the total.
“The USA Rice Federation was told by WFP that the large purchases in Canada were made because that was the only place WFP could obtain yellow split peas,” said Proctor. “The United States is certainly in the same region as Canada and does produce yellow split peas. Why were Canadian companies allowed to bid on yellow split peas while no American companies, to the best of our knowledge, were allowed to bid?”
Proctor said U.S. vendors are frequently told by WFP that they are not cost competitive with other countries. “How it is possible to know at any given time — in a constantly changing market — if one is or is not competitive without knowing the prices WFP is paying for commodities?”
WFP officials also told USA Rice that sourcing the commodity in the United States would require the commodity to be shipped on a U.S. flag vessel, thus increasing the transportation costs.
“No such regulations are in effect on commercial purchases,” said Proctor. “The cost of shipping a commodity from the United States would be very close, if not cheaper in some cases, than shipping from Canada.”
WFP representatives have indicated they try to make local purchases when possible or, failing that, to buy from regional suppliers. The definition of regional appears to be arbitrary and inconsistent, according to Proctor. On a recent purchase for Iraq, WFP considered Thailand, Pakistan and Vietnam regional.
The United States, which counted Iraq as one of its major markets for rice before the Gulf War, was not considered for the purchase.
“Regional purchases do not always guarantee the quickest delivery,” said Proctor. “If WFP had purchased U.S. rice, it would have arrived in port as quickly, if not faster, than the rice purchased in Southeast Asia. This point becomes particularly important when the Iraqi Ministry of Trade takes over the WFP program, and Iraq moves to commercial purchases of food commodities for the feeding programs.
“On a commercial basis, U.S. rice exporters believe they are equally competitive in responding to commercial tenders and do not want to be excluded from the process for any reason, including distance.”
Proctor said there is no question that the World Food Program should purchase quality commodities that will be delivered in a timely matter at the lowest possible price.
“It would seem that WFP's goal could be better achieved through open market competition and complete public transparency,” he noted in the letter. “This would allow anyone, worldwide, to easily access applications to register a company as a food aid vendor.”