The Africa: Seeds of Hope Act of 1998 enacted a number of policies promoting sustainable agricultural development and food security in Sub-Saharan African countries. The Act was celebrated as “…non-controversial legislation with strong bipartisan support in the House and Senate, tremendous grass-roots support throughout the nation, and support from the Administration, including the United States Department of Agriculture.” [Cong. Rec. H11685 (Oct. 20, 1998) (statement of Rep. Bereuter)]. Indeed, the House (Senate) version of the bill had over 100 (16) biparisan cosponsers, and the act was endorsed by over 220 agricultural and humanitarian organizations.
The Act also established the Bill Emerson Humanitarian Trust (Emerson Trust) as a “new and more reliable mechanism for providing emergency food aid overseas.” [Cong. Rec. S12861 (October 21, 1998) (statement of Sen. Sarbanes)]. The Emerson Trust amended two earlier aid programs. The Food Security Wheat Reserve Act of 1980 authorized the Commodity Credit Corporation (CCC)  in the U.S. Department of Agriculture (USDA) to hold a reserve of up to 4 million metric tons of wheat. The Act allowed the release of wheat for use in P.L. 480, the Food for Peace aid program, if wheat were unavailable through normal channels. The Food Security Commodity Reserve Act of 1996 expanded the commodity reserve to include 4 million metric tons of any combination of wheat, corn, sorghum and rice. Despite this expansion, the reserve has held only wheat (Aldaya 2004). The Emerson Trust authorized the CCC to “exchange an eligible commodity for another United States commodity of equal value…” [1736f-1(c)(4)] Consequently, the CCC can sell reserve wheat to generate revenue to purchase other aid commodities. This is commonly called ‘monetization’ of the wheat reserve. The Emerson Trust also authorized the Secretary of Agriculture to release reserve commodities, an act previously reserved for the President. The 2002 Farm Bill (P.L. 107-171) reauthorized the Emerson Trust through 2007.
The Emerson Trust was touted in Congress as a “win-win combination” of international humanitarian and U.S. agricultural interests [Cong. Rec. H9108 (Sept. 28, 1998) (statement of Rep. Bereuter)]. It would provide for a ready reserve of commodities to use for emergency aid overseas, and would help agriculture by purchasing commodities for reserve during times of surplus supply and low prices.
The CCC’s monetization of wheat reserves strained this ‘win-win’ relationship after the trust was enacted. Prices that go up when the government purchases surplus commodities can come down when the government eventually decides to sell them to finance overseas aid. For example, in March 2003, the CCC announced that it would sell two hundred thousand metric tons of wheat for unanticipated emergency needs in Africa and Iraq. The CCC intended to use the proceeds to purchase rice and other aid commodities tied to the dietary needs of the recipient regions. The announcement sent the price of soft white wheat under $3.45 a bushel, much lower than the previous year’s price of $4.80 (Caldwell 2003).
Wheat producers do not believe that Congress intended for the Emerson Trust to operate in this way:
“We do not believe it was the intent of Congress that portions of the reserve be utilized in a way that threatens to depress market prices received by the producers of commodities held in the reserve.” (Frederickson 2003)
Consequently, the National Association of Wheat Growers, U.S. Wheat Associates, the Kansas Association of Wheat Growers and other state wheat producer groups have lobbied in opposition to the monetization of wheat reserves to “buy other relief foods, such as rice and flour” (Hegeman 2003). These interests prefer either that wheat be sent directly as aid, or that Congress make new appropriations to purchase other aid commodities and wheat remain in storage.
Two recent government sales of federal wheat reserves to finance aid to Africa gave anti-monetization interests a political foothold to mount a full-scale attack. Large corporate grain trading companies took advantage of revised governmental sales procedures—designed to expedite the sales process (Gill, Murray & Thompson 2002)—to purchase and empty out a large percentage of federal wheat held in the warehouses of their smaller competitors. The purchasers left the reserve wheat stored in their own warehouses intact. As a result, the smaller warehouses suffered substantial losses in federal storage fees, and alleged diminished capacity to compete in the grain market. In previous grain sales, the government had protected warehouse revenues by capping the percentage of wheat that a purchaser could remove from any single warehouse.
The political fallout over the predatory market behavior precipitated by the revised sales procedures was fast and furious. Reportedly describing the sales as “unethical,” “predatory,” and “outrageous” (Yates 2002), Rep. George Nethercutt (WA), requested the USDA’s Inspector General’s office to investigate “whether any wrongdoing occurred in connection with [the changed sales procedures]” (Nethercutt 2002).
The fallout soon escalated beyond requesting investigations of sales procedures to attacking the government’s authority to monetize wheat reserves in the first place. Rep. Nethercutt characterized the CCC’s sale of wheat reserves as “poor decision-making” because it “dump[ed] wheat on the market when prices were finally high, dropping prices by about $1 per bushel” (Weekly Update, February 28, 2003). Subsequently, he led a charge to prohibit the “monetization of stocks in the Bill Emerson Humanitarian Trust to purchase different communities for humanitarian aid to Iraq…” in the House version of the Emergency Wartime Supplemental Appropriations Act of 2003 (H.R. 1559) (Washington Association of Wheat Growers 2003). The final version passed by Congress stopped short of banning monetization altogether, but placed a moratorium on its use for the remainder of 2003 after the Act’s enactment. The Act compensated for its moratorium on selling trust wheat by appropriating $69,000,000 to purchase aid commodities.
We consider whether monetization should be removed as an arrow in the quiver of U.S. overseas humanitarian aid. We posit that monetization could be removed justifiably under three conditions.
Condition (1): Monetization accomplishes nothing more than depressing wheat prices. Condition (2): Congress did not intend for the trust program to depress wheat prices, and this intent supercedes its intent regarding the effectiveness of the food-aid program. Condition (3): Congress intended to protect the market position of storage warehouses holding trust commodities, this intent supercedes its intent regarding the effectiveness of the food-aid program, and the only way to offer such protection is by banning monetization.
We immediately reject Condition (1). Monetization allows the trust to match aid to the particular dietary needs of the recipient region when the commodities held in reserve are not a good match. Since the reserve currently holds only wheat, the trust, without monetization, would fail to meet the complete needs of any region whose diet were more varied than wheat. As in the Emergency Wartime Supplemental Appropriations Act of 2003, Congress would have to appropriate new money to purchase other aid commodities in the dietary mix, and the wheat reserve would fail to completely meet its humanitarian objectives.
We test Conditions (2) and (3) by applying two canons of statutory interpretation to the laws governing the operation of the Emerson Humanitarian Trust. We first investigate the ‘plain meaning’ of the statutes to determine the CCC’s legal responsibilities to provide emergency overseas humanitarian aid and to protect commodity interests from adverse market conditions. We then investigate ‘legislative intent’ to provide this type of market protection to commodity interests as evidenced by congressional statements made about the Africa: Seeds of Hope Act.
We apply our findings to recommend policies for striking an effective balance between humanitarian and U.S. agricultural interests in providing overseas aid.
PLAIN MEANING OF STATUTES REGULATING HUMANITARIAN AID
The Emerson Trust provides for a commodity trust stock of wheat, rice, corn, or sorghum “solely to meet emergency humanitarian food needs in developing countries” [41 U.S.C. 1736f-1(a)]. The CCC may replenish the trust through direct purchases from producers, or open market transactions that do “not unduly disrupt the market” [1736f-1(b)(2)(A)]. The government may release commodities from the trust:
“[i]f the eligible commodities needed to meet unanticipated need cannot be made available in a timely manner under normal means for obtaining eligible commodities for food assistance because of unanticipated need for emergency assistance…” [1736f-1(c)(1)(B)]
The CCC “may exchange an eligible commodity for another United States commodity of equal value…” [1736f-1(c)(4)] In dispensing aid, the government also is bound by the Anti-Deficiency Act. In particular, the CCC has only a short time after purchasing other aid commodities to cover the expense with sales of commodities held in reserve. 
The plain meaning of the statutes permits two major conclusions. First, the stated overall purpose of the trust is solely to provide emergency humanitarian aid in developing countries. If another overall purpose is to protect the market position of commodity interests, then it must be drawn from another legal source.
Second, the CCC is directed to “not unduly disrupt the market” when it undertakes open market purchases to replenish the reserve. The CCC is not so directed when exercising its authority to release and sell wheat in exchange for other aid commodities. A reasonable explanation might be that the urgency of dispensing emergency humanitarian aid tied to the dietary needs of the recipient region takes precedence over commodity-market concerns when wheat is released from trust. Also adding to the urgency of dispensing aid is that the CCC has only limited time (under the Anti Deficiency Act) to sell reserve wheat if it is to help finance the emergency purchase of other aid commodities.
LEGISLATIVE INTENT BEHIND THE AFRICA: SEEDS OF HOPE ACT
Did Congress intend to protect the market position of commodity producers and storage facilities when commodities are sold from the trust? We draw the following conclusions from an investigation of congressional statements made at the time that the Africa: Seeds of Hope Act was being considered:
First, Congress clearly intended that the food-aid program benefit both humanitarian and U.S. agricultural interests. The Emerson Trust would benefit overseas humanitarian aid because, as explained by the bill’s sponsor in the Senate,
“Rather than waiting until emergencies arise to purchase food for donation, the bill establishes a humanitarian trust that buys commodities when they are in surplus and distributes them immediately when they are needed. This mechanism will allow for more timely and cost-effective responses to humanitarian crises.” [Cong. Rec. S12861 (October 21, 1998) (statement of Sen. Sarbanes)].
U.S. agriculture would benefit because, as explained by the bill’s sponsor in the House, the Emerson Trust would allow the CCC to:
“…purchase surplus agricultural commodities when prices are low, isolate them from the market, and distribute them at times of international disasters and famines. This cost-effective mechanism is especially beneficial to U.S. farmers because it takes U.S. commodities off the market when commodity prices are at the lowest…” [Cong. Rec. H9108 (Sept. 28, 1998) (statement of Rep. Bereuter)].
Second, the benefits to be received by agriculture were clearly specified and limited. The Emerson Trust would purchase reserve commodities and isolate them from market forces during periods of surplus production and low prices. This would help farmers when they need it the most, i.e., when “commodity prices are at the lowest.”
No statements were found to support the above-quoted contention of a wheat industry spokesperson that Congress intended agricultural interests to be protected from market forces when the CCC monetizes the wheat reserve. Congress explicitly intended to provide relief to farmers from low prices when commodities are placed in reserve. However, the objective of protecting agriculture from market forces evidently recedes into the background when commodities are released and sold from the trust to meet urgent humanitarian crises.
Third, protecting agriculture in this way also would increase the cost effectiveness of the Emerson Trust. As succinctly stated by Rep. Bereuter:
“By providing a mechanism to replenish the commodity reserve in times of low agricultural prices, this legislation…ensur[es] that a reserve for humanitarian purposes will exist when prices are high” [Cong. Rec. E588 (April 1, 1998)].
Sen. Sarbanes spoke of “maximiz[ing] the efficiency of current aid programs”
[Cong. Rec. S12860 (October 21, 1998)]. Finally, Rep. Hamilton (who introduced the House bill along with Rep. Bereuter) expressed the intent that the trust operate in a “business-like manner”: “…the trust now sets up an orderly way to respond to humanitarian crises without disrupting local markets…[T]he trust can now be operated in a businesslike manner. Commodities can be purchased in advance when prices are low, taken off the market and set aside to respond to humanitarian crises” [Cong. Rec. H9108 (September 28, 1998).
Rep. Hamilton’s initial statement, taken out of context, might appear to support the notion that Congress intended for the trust to operate in all of its activities without “disrupting local markets.” However, his subsequent explanation focuses attention only on aiding commodity producers when commodities are “taken off the market and set aside” for the trust. It does not mention commodity market impacts when commodities are released from trust to provide emergency aid.
Fourth, Congress was fundamentally concerned with the timeliness of humanitarian aid. The Emerson Trust was to deliver aid “at times of international disasters and famines” [Cong. Rec. H9108 (Sept. 28, 1998) (statement of Rep. Bereuter)], in “respons[e] to humanitarian crises” [Cong. Rec. S12861 (October 21, 1998) (statement of Sen. Sarbanes)], and to meet “urgent…and unanticipated emergency needs in developing countries” [Cong. Rec. E586 (April 1, 1998)(statement by Rep. Hamilton)].
In summary, the ‘plain meaning’ and ‘legislative intent’ canons of statutory interpretation applied to the Africa: Seeds of Hope Act do not support Conditions (2) and (3) (specified above) as justifications for the removal of monetization as a policy tool in the government’s food-aid program.
RECONCILING HUMANITARIAN AND AGRICULTURAL INTERESTS
We investigate three means of safeguarding the Emerson Trust as a win-win program for both humanitarian and U.S. agricultural interests when reserve commodities can be monetized: (1) Diversify the commodities held in federal reserve; (2) Diversify the government agencies involved in dispensing aid; and (3) Adapt USDA sales procedures to protect the market position of storage warehouses when reserve wheat is monetized.
A. DIVERSIFY COMMODITIES HELD IN RESERVE
Despite the statutory authorization in the Food Security Commodity Reserve Act to store other commodities, including corn, sorghum and rice, the trust has held only wheat. A more diversified commodity reserve would reduce the need to dump large quantities of wheat on the market to purchase other aid commodities when a mix of commodities is more closely tailored to particular humanitarian needs. A ready mix of commodities also would allow the government to act more expeditiously in providing emergency aid. The trust would operate in a more business–like manner because other aid commodities are purchased and placed in reserve when supplies are plentiful and prices are low. Finally, the agricultural benefits of the trust would be spread over more commodity groups. As an example of their eagerness to participate in this ‘win-win’ government program, Rep. Chris John of Louisiana (a rice-producing state) introduced a bill in May 2003 to “encourage more rice purchases for food-aid programs” (Rep. Chris John 2003).
B. DIVERSIFY FEDERAL AGENCIES DISPERSING AID
Currently, the Emerson Humanitarian Trust is managed solely by the USDA. The problem is that the USDA is viewed by policy-makers as an agency whose primary purpose is to serve agricultural interests. Consider, for example, the following statement by Rep. Nethercutt:
“The USDA is supposed to help farmers, not hurt them…It hurt farmers everywhere by dumping wheat on the market when prices were finally high, dropping prices by about $1 per bushel” (Nethercutt 2003).
Sen. Murray emphasized the importance of “…ensuring that the United States meets its commitments to the Iraqi people in a way that helps—not hurts—America’s farmers” (Murray 2003). This latter statement acknowledges that an important purpose of the trust is to deliver aid, but places a heavier restriction on the effort than we found in aid statutes or in the legislative intent behind them.
Predictably, humanitarian goals may yield to agricultural goals when aid programs are managed in this political and administrative environment. A solution might be to involve another federal agency to manage the dispersal of federal-reserve commodities for aid—an agency, for example, with expertise in international development and with more political leeway to defend and effectuate the humanitarian goals of the trust.
C. ADAPT USDA SALES PROCEDURES TO PROTECT STORAGE WAREHOUSES
The protection of small storage warehouses from the predatory market behavior of their larger competitors during reserve wheat sales does not require that monetization be abandoned as a policy tool in food-aid programs. We next consider how modifications in reserve sales procedures allowed for predatory market behavior, and how the modified procedures have been further modified to prevent such undesirable behavior in the future.
Before 2002, wheat sales from the trust were based upon catalogues published before the sale (Gill, Murray & Thompson 2002). The catalogues defined the lots of wheat for sale, and described the location, quality, quantity and load-out rates for each lot. The total quantity listed in the catalogue was about twice the amount of the wheat to be released. The quantity available for sale from each warehouse was limited to thirty-five percent of the warehouse’s inventory of federally wheat to spread the economic burden of lost storage payments over a larger number of warehouses. Neither the uniform grain and rice storage agreement nor federal statute obligated the USDA to impose this sales restriction. Only lots in warehouses with the highest storage rates were listed in the catalogue. Warehouses with lots listed in the catalogue were given written and timely notification that their lots were up for sale. Interested buyers submitted sealed bids for specific lots. Upon a deadline, all envelopes were opened. A successful bid was required to be the highest for a particular lot. However, acceptance of the bids started from the highest and continued downward until the quantity of the release was reached so that some lots with bids might not have been sold.
In Spring 1996, the USDA violated the Anti-Deficiency Act by purchasing commodities without having sold sufficient trust commodities to cover the expenses until later that fall. The current USDA interpretation of the Act allows just two weeks between the purchase of commodities and sale of released Trust commodities to cover the expense. Consequently, the USDA streamlined its sales procedures to expedite market-based commodity exchanges consistent with this statutory deadline Gill, Murray & Thompson 2002).
Under the revised sales procedures, no catalogue was issued. Buyers could bid on every lot in the country listed at the time of the release. Warehouses were no longer protected from releases of federal wheat over a certain percentage of their individual federal-reserve holdings. The USDA checked each bid for acceptability without waiting for any deadline. An acceptable bid was followed by notification of the implicated warehouse. The warehouse was given the option to counter-bid and purchase the wheat itself within forty-eight hours. Otherwise, the wheat was sold to the buyer with the acceptable bid.
The modified sales rules were put into practice in July 2002 when the Secretary of Agriculture released 275,000 tons of Trust wheat to finance the purchase of commodities for drought relief in Southern Africa. Two large corporate grain trading companies took advantage of these new rules to completely remove, or considerably diminish, the stock of trust wheat held in competing warehouses. As a result, the warehouses suffered substantial losses in federal storage fees, and alleged diminished capacity to compete in the grain market.
In one sale, Columbia Grain, Inc. purchased all (over one million bushels) of CCC owned wheat stored by Cooperative Agricultural Producers, Inc.  (Co-Ag). Columbia Grain competes with Co-Ag in the grain business. As a result of the purchase, Co-Ag lost an annual federal storage payment of 300,000 dollars. Co-Ag believes that Columbia Grain intentionally purchased all of its reserve to cause economic harm to Co-Ag. Co-Ag officials suggest that Columbia Grain, which also has a large storage capacity, would like to achieve total control of grain origination in the area (Conklin 2002).
In another sale, CLD Pacific (a joint venture between Cargill, Inc. and Louis Dreyfus) purchased over one million bushels of Trust wheat stored by the Ritzville Warehouse Company  (RWC). This constituted forty-eight percent of RWC’s holdings of Trust wheat with an annual storage value of three hundred and sixty-six thousand dollars. In the six months following the July sales, RWC terminated eight positions within the company. The RWC believes that the recently-begun construction of a one hundred and ten car shuttle train loader that directly competes with a CLD barge house would prompt CLD to attempt to harm the warehouse (Anderson 2002).
To prevent the agricultural sector from preying upon itself in future sales, the USDA adjusted the revised rules in August 2002 for a release of more than two hundred forty-eight thousand metric tons of reserve wheat for Southern Africa. Under the most recent revisions, all reserved stocks of wheat are made available for sale. In an effort to limit the economic impact on individual warehouses, the USDA gives each warehouse the first option to bid on reserve wheat that it stores. If further sales are required to meet release goals, then outside bidding is permitted. However, it is restricted in several ways. Most importantly, a single bid to purchase and remove wheat stored in an individual warehouse cannot exceed 150,000 bushels. Moreover, a single bidder can not make more than nine bids at a time, and only three bids for lots in the same warehouse code location are allowed. Finally, no more than four hundred and fifty thousand bushels can be bid at any single warehouse location.
In summary, modifications in previous sales procedures were required to meet time restrictions imposed the Anti-Deficiency Act. Early modifications unintentionally permitted undesirable predatory market behavior in large reserve-wheat releases. The most recent modifications, and possibly others that can be made in the future, should suffice to prevent this type of behavior. Consequently, attenuating the government’s statutory monetization authority is unnecessary. It also is contrary to legislative intent that the Emerson Trust respond expeditiously to emergency humanitarian needs in developing countries in a business-like manner.
The Bill Emerson Humanitarian Trust—the most recent federal program delivering emergency humanitarian aid overseas—benefits both humanitarian and U.S. agricultural interests. The trust provides a ready reserve of aid commodities to developing countries in humanitarian emergencies. Commodity producers benefit because the government purchases commodities for the reserve when supply is in surplus and prices are low.
This ‘win-win’ situation is imperiled by political pressure to revoke the government’s statutory ‘monetization’ authority to release and sell reserve commodities on the open market to finance the purchase of other aid commodities. Understandably, commodity producers disfavor public policies in which the government ‘dumps’ federal-reserve commodities on the open market and prices fall. Equally understandably, monetization is crucial to providing humanitarian aid closely tailored to the dietary needs of recipient regions, to operating the humanitarian trust on a business-like basis, and to economizing on the unnecessary appropriation of scarce federal dollars to finance overseas aid when a revenue-generating commodity reserve is already available for the purpose.
We suggest three policies for resolving this impasse. First, the reserve should store a wider variety of commodities in trust than just wheat. It also is authorized to hold other commodities, including corn, sorghum and rice. A more diversified commodity reserve would reduce the need for the government to ‘dump’ large quantities of wheat on the market to purchase other aid commodities when a mix is more closely tailored to particular humanitarian needs. Second, the federal agencies involved in dispensing aid from the federal commodity reserve should be diversified beyond the USDA. Policy-makers tend to view the primary purpose of the USDA as serving agricultural interests. A federal agency removed from a primary emphasis on U.S. agriculture and focused on international development might have more political latitude to defend and effectuate the humanitarian goals of the trust. Third, recently revised USDA sales procedures should be relied upon to protect the market position of storage warehouses when reserve wheat is monetized. Revoking the USDA’s authority to monetize commodity reserves for this purpose is unnecessary.
Aldaya, George (2004), Director of the Kansas City Commodity Office, Farm Services Agency, USDA, personal communication (March 5).
Anderson, John (2002), CEO of the Ritzville Warehouse Company, Letter to Rep. George Nethercutt, Jr., July 31.
Caldwell, Bert (2003) “Farmers Left in the Lurch,” Spokane Spokesman-Review, April 22.
Conklin, Michael, (2002), General Manager of Co-Ag, Letter to Rep. George Nethercutt, Jr., August 7.
Frederickson, Dave (2003), President of the National Farmers Union, Letter to Agriculture Secretary Ann Veneman.
Gill, Steve, Timothy Murray, and Candace Thompson (2002) CCC, Farm Service Agency Warehouse and Inventory Division, personal interview, Washington D.C., personal communication.
Hegeman, Roxana (2003) “Iraq Aid Plan Worries Farmers,” The Associated Press, CBSNEWS.com.
John, Chris (2003) “John Introduces Bill to aid Rice Producers,” Press Release (May 12), Contact: Alisha Prather, 202-225-2031.
Murray, Sen. Patty (2003) “Protecting Wheat Farmers,” Patty Murray’s Washington View (April 4).
Nethercutt, Rep. George (2002) Letter to Joyce Fleishman, Acting Inspector General, CCC, Office of the Inspector General (July 24).
Nethercutt, Rep. George (2003) “Questioning CCC on Investigation of Emerson Trust Sales,” Weekly Update (February 28).
Yates, Scott (2002) “Nethercutt Demands Probe of Grain Sales,” The Capital Press (August 2, 2002).
Africa: Seeds of Hope Act, Pub L No 105-385, 7 USC 1691 (1998).
Emergency Wartime Supplemental Appropriations Act, Pub L No 108-11 (2003).
Anti Deficiency Act, 31 USC 1341 (1982).
Food Security Commodity Reserve Act, Renamed the Bill Emerson Humanitarian Trust Act, 7 USC 1736f-1 (1998).
Food for Peace Act, Pub L No 83-480 (1954).
Farm Bill, Pub L No 107-171 (2002).
 The Commodity Credit Corporation, a division of the United States Department of Agriculture (CCC), was established in 1933 to stabilize, support and protect farm incomes and prices. A board of directors chaired by the Secretary of Agriculture manages the CCC, however no operating personnel exist to carry out the duties of the corporation. The Farm Service Agency (FSA), an agency within the CCC, administrates CCC commodity programs and the acquisition and disposal of CCC owned commodities. (Farm Service Agency, 1999).
 The Anti-Deficiency Act restricts federal employees from entering into “…a contract or obligation for the payment of money before an appropriation is made…”
 Co-Ag, based in Rosalia, WA, is one of Eastern Washington’s largest wheat cooperative. It operates 41 storage facilities and represents 850 wheat producers.
 The Ritzville Warehouse Company (RWC), located in Ritzville Washington stores wheat for the cooperative of 1450 wheat producers in 46 different facilities. The cooperative has held CCC owned wheat for over two decades.
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