Freer agricultural trade is fundamental to achieving global food security, a top State Department official says.

Speaking November 16 to a meeting of the nonprofit Bread for the World Institute in Washington, Alan Larson, under secretary of state for economic, business and agricultural affairs, said efforts to liberalize agricultural trade -- particularly to reduce agricultural export subsidies -- could provide developing countries with $100 billion in new annual income. That added income could be spent on basic needs such as improving infrastructure, education and health care, he said.

Larson said "the blame" for agricultural barriers does not rest exclusively with rich countries and that developing countries also have high tariffs. "By reducing their own barriers to trade in agricultural products, developing countries would raise incomes, increase investment and ensure that food products flow to where the need is greatest," he said.

Forty percent of developing countries' trade is with other developing countries, Larson noted.

Larson said that while the United States is pressing developing countries to undertake basic governmental reforms, it plans through the Millennium Challenge Account (MCA) to significantly increase its foreign aid to countries that encourage economic freedom, rule justly and invest in their people.

The Bush administration submitted to Congress a plan to create the MCA earlier in 2003. Funding for the account is included in the fiscal year 2004 foreign operations bill, which is still being negotiated by congressional conferees. After a final bill is agreed to, it will be sent to the president for signature or veto.

Larson added that achieving food security is "of primary interest" to U.S. development efforts in both Afghanistan and Iraq.

November 16, 2003

Good evening, and thank you for the invitation to join you tonight. Bread for the World's motto -- Seeking Justice: Ending Hunger -- are also values reflected in the national security strategy and foreign policy of this administration. A world where half of humanity lives on less than $2 per day is neither just nor stable. Bringing all the world's poor into an expanding circle of development -- and opportunity -- is one of our top priorities, and President Bush has made clear that working to address this is in our national interest.

The President has gone on record as supporting the international goals for development, and particularly important among these goals is cutting the number of people suffering from serious malnutrition in half, from 800 million to 400 million. Yet, why be satisfied with half? Is it moral to accept 400 million starving men, women, and children in the world? We are trying to go beyond this target through a series of practical measures that make effective uses of all resources available to the developing world.

Tonight, I would like to speak with you about a number of these, including the Initiative to End Hunger in Africa, the G-8 Famine Initiative [G-8 is the Group of 8 countries: Canada, France, Italy, Germany, Japan, Russia, United Kingdon, United States], the Famine Fund, the Millennium Challenge Account, and our quest to ensure food security for the people of Iraq and Afghanistan. The President s approach does not begin and end with aid, however, and therefore, I would also like to address the importance of trade in the dialogue on development and to touch on the significance of the recent failure of the WTO [World Trade Organization] talks at Cancun in relation to solving the crisis of hunger.

Let us first turn to where the situation is the most dire. Sub-Saharan Africa has the highest rates of malnutrition and hunger in the world, and African farmers have among the world s lowest agricultural production rates. Africa is the only continent where the number of malnourished people and the share of the population that lives with the threat of hunger continue to grow. To reduce hunger, African farmers must have access to better technology to improve the quality of produce, reduce post-harvest losses, relieve pressure on natural resources, and respond to markets.

That is precisely what the Initiative to End Hunger in Africa addresses. This initiative calls for a wide-ranging partnership that includes African leaders from the private sector and governments, civil society, donors, and private companies to work and invest in a small-scale oriented agricultural growth strategy. This strategy is designed to empower African farmers in key countries and regions by increasing access to both new technologies and markets. The goal is to double the production of the basic food crops that make up African diets and increase family income.

In addition, President Bush has proposed in the FY 2004 [fiscal year 2004] budget a new contingency fund, the $200 million Famine Fund, to improve the ability of the U.S. to respond flexibly to current or imminent famine conditions. Use of the fund will require Presidential approval, and we intend to use it to help leverage increased assistance from other donors. The United States is already the world's leading provider of food aid to the UN's World Food Program, contributing 51.4 percent of its budget (about $929 million) this past year. We believe our sustained use of resources combined with coordination from other donor countries will address both immediate needs and the long-term situation.

Our proposal within the G-8 to combat hunger recognized famine as a process and offered actions to defeat it based on the stage at which it is encountered. We were encouraged when this proposal was accepted at the Summit in Evian earlier this year. The first step is to prepare for famines by using advanced early warning systems and improved communication to raise awareness of an impending food crisis and to mobilize support within governments, international organizations, and NGOs [non-governmental organizations] to respond. We have set up within the G-8 a contact group to better coordinate our famine efforts and to improve the sharing of information. Early warning systems in the Horn of Africa worked well, and early donor response there has saved many thousands of lives.

Even as we address an immediate crisis, we need to prevent future ones. Where we cannot stop the onset of famine conditions, the second step centers on famine mitigation and ways to get food or the resources to acquire food to those in need. The United States already provides an exceptionally high percentage of the world's food aid. We are actively encouraging other donors to increase their food aid donations, and we are open to discussions on ways to protect more fully commercial sales and local agricultural production.

In the long run, the most important step is to strengthen the capacity of developing countries to grow more -- whether to feed themselves or to sell in foreign markets. We must increase agricultural productivity, especially in Africa, to give Africans a chance to leave the poverty that is both a cause and an effect of hunger and malnutrition.

Multilateral agricultural trade liberalization is fundamental to the goal of food security. Developing country economies are especially dependent on agricultural. Many developed country subsidies to agriculture -- especially export subsidies -- stymie developing countries' agricultural potential by suppressing the world price of commodities. Moreover, these subsidies are very large and badly undercut the impact of what we spend on development assistance. By some estimates, liberalization of trade in agriculture could provide developing countries with at least $100 billion in new annual income -- money desperately needed for infrastructure, education, health care, and other social services.

Yet the blame for barriers to agricultural trade does not lie solely at the feet of the developed world. Trade between developing countries is already 40 percent of developing country trade. By reducing their own barriers to trade in agricultural products, developing countries would raise incomes, increase investment, and ensure that food products flow to where the need is greatest.

This is one of the reasons why the United States is pressing so hard for comprehensive liberalization of agricultural trade as part of the WTO s Doha Development trade negotiations and why the results at Cancun were so disappointing. We believe freer trade in agriculture would not only advance U.S. commercial interests, but would also promote economic development of the poorer countries and significantly improve food security.

At the same time, we are pressing developing countries to undertake the basic reforms that are fundamental to sustained development. We are seeking to increase significantly our development investment in countries that rule justly, invest in their people, and encourage economic freedom. The vehicle we intend to use is the Millennium Challenge Account (MCA).

The MCA reflects what experience has shown are the key elements of success. It is a profound vote of confidence and support for the citizens of developing nations, and a pragmatic expression of our national interest in their lasting progress. It aims to accelerate growth and lift the most people out of poverty as fast as possible.

MCA is based on the reality that even the poorest countries can succeed given sound policies and strong development partnerships. It will give a substantial added boost to countries already committed to such approaches and encourage other countries to adopt them.

The MCA will focus like a laser on development performance, measurable development results, and lasting progress. We intend it to have unprecedented transparency and to encourage a participatory approach that builds on sound development strategies. We aim to have it encourage innovation and best practices and to engage those best able to implement its activities, drawing from a broad pool, including in MCA countries. The MCA will be a true partnership of mutual goals and shared responsibility. Most importantly, we want MCA activities to build real capacity for self-sustaining development progress.

The MCA will aim to accelerate growth through investments in such activities as trade and agriculture, education and health, and information technologies. We do not have preconceived notions of how its resources will be spent, save that they should be strategic and effective in producing lasting results. When he announced the initiative last year, President Bush made clear that the MCA may be used, among other things, to increase harvests where hunger is greatest. The MCA may well rely and build on the critical partnerships with U.S. NGOs [nongovernmental organizations] like Bread for the World and your local affiliates in building consensus for program proposals, implementing MCA activities, and monitoring in-country results.

The MCA is one example of how the United States is working in new ways, with new resources, and in new and deeper partnerships for measurable and lasting development results. It is a tangible representation of the Monterrey consensus, which recognized all development resources, the primacy of domestic policies and approaches, and the mutual interest and responsibility of us all for development. The United States brings as well a dynamic culture of innovation, pragmatism, and resilience to bear in helping to transform development potential into tangible results. Our engagement recognizes the power of markets, of enterprise, and of the private sector.

Flows from the private sector are the great untold story of development aid. It is estimated that 60 percent of all U.S. assistance to the developing world comes from private sources. These funds flow from foundations and corporations, from faith-based congregations and voluntary organizations, from universities and colleges, and of course, from individuals. This clearly shows that the United States -- our government and our people -- is committed to reducing poverty, eliminating hunger, and eradicating disease around the world.

Even in times of difficulty, we stand firm on these fundamental principles. President Bush has said that we will not use food as a weapon. We were the largest bilateral donor of food aid to Afghanistan during the rule of the Taliban, and we supported the Oil For Food program which aimed to provide a basic standard of living to all Iraqis during the period of UN sanctions.

Now, we are engaged in massive development efforts in both countries, where the people have suffered so much for so long. Of primary interest is the quest for food security. The road to recovery in Iraq and Afghanistan has been difficult at times and we have only traveled part of the way on this arduous journey, but there have been numerous and important examples of progress, and we are committed to see it through to the end.

In Iraq, we are providing oversight support for the country-wide Public Distribution System, which provides basic food and non-food commodities to approximately 26 million people. The Coalition will take over responsibility for the Oil-for-Food program later this month. We also are promoting comprehensive agriculture reform to optimize private participation in production and wholesale markets.

In Afghanistan, we have worked with President Karzai and his team to increase food production and reduced the number of Afghans dependent on food aid in 2002 from approximately 10 million to 6 million. Most importantly, in both countries, we are providing hope for a better future for all people and for the generations to come, and in the process, making the world safer and more secure.

Our goal is simple as articulated by President Bush: "This growing divide between wealth and poverty, between opportunity and misery, is both a challenge to our compassion and a source of instability. We must confront it. We must include every African, every Asian, every Latin American, every Muslim, in an expanding circle of development."

Thank you.