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H.R. 5234 (103rd): Food for Trade Act of 1994

The text of the bill below is as of Oct 6, 1994 (Introduced).

HR 5234 IH


2d Session

H. R. 5234

To amend the Agricultural, Trade, Development, and Assistance Act of 1954 to authorize the use of agricultural commodities to promote market development.


OCTOBER 6, 1994

Mr. PENNY introduced the following bill; which was referred jointly to the Committees on Agriculture and Foreign Affairs


To amend the Agricultural, Trade, Development, and Assistance Act of 1954 to authorize the use of agricultural commodities to promote market development.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


    This Act may be cited as the ‘Food for Trade Act of 1994’.


    Title I of the Agricultural Trade Development and Assistance Act of 1954 (7 U.S.C. 1701 et seq.) is amended by adding at the end the following new section:



      ‘(1) IN GENERAL.-The Secretary shall carry out a pilot program under this title to establish permanent, self-sustaining organizations in eligible recipient countries to promote and provide financing for broad-based economic development activities in the countries.

      ‘(2) COOPERATION- The Secretary shall carry out this section by entering into contracts with non-profit organizations or entities (referred to in this section as ‘facilitators’) to facilitate the establishment and operation of approved pilot projects in eligible recipient countries utilizing agricultural commodities provided under this section.

    ‘(b) Eligible Projects-

      ‘(1) IN GENERAL- An organization or other entity may participate in this program by submitting a complete proposal for the operation of a project in an eligible recipient country, according to guidelines developed by the Secretary.

      ‘(2) PROJECT FUNDING- Upon approval of a project proposed under this section, the Secretary shall make available agricultural commodities under this title to the facilitator on a grant basis for the purpose of funding and carrying out the project. The Secretary shall cover the costs of transporting the commodities to the recipient country under paragraph (4).

      ‘(3) DURATION OF ASSISTANCE- Assistance may be provided under this section in annual installments for up to 5 years per individual approved project, or such longer period of time as deemed appropriate by the Secretary.

      ‘(4) MONETIZATION- The facilitator shall transport the agricultural commodities received under this section for sale in the recipient country. After deduction of any associated expenses, the proceeds generated from the sale shall be used to establish a permanent, self-sustaining investment fund in the recipient country according to guidelines established under subsection (h).

      ‘(5) ROLE OF THE FACILITATOR- A facilitator participating in this program shall--

        ‘(A) be responsible for the storage, transport, and monetization of agricultural commodities in eligible recipient countries pursuant to guidelines established by the Secretary under subsection (h);

        ‘(B) establish and manage an investment fund in the recipient country using the proceeds from the monetization of the agricultural commodities, until such time as the facilitator transfers control of the project to the joint commission under subsection (g);

        ‘(C) establish and operate an advisory board to advise in the management of the investment fund; and

        ‘(D) coordinate the eventual transfer of the advisory board and the investment fund to the joint commission in the participating recipient country.

      ‘(6) EXPENSE PROJECTIONS- Each project proposal submitted under this section shall contain a projection of the estimated expenses necessary to carry out the project, including the monetization of the agricultural commodities and the establishment and operation of the investment fund.

    ‘(c) Investment Fund-

      ‘(1) ESTABLISHMENT- The facilitator shall establish a permanent, self-sustaining investment fund in the participating recipient country from the proceeds of the sales of the agricultural commodities provided under this section.

      ‘(2) USE OF FUND- Monies in the investment fund shall be invested and managed in a manner that provides the best possible return for the fund, without posing an undue risk to the principal balance used to establish the fund.

      ‘(3) RESTRICTION ON INVESTMENT OF FUNDS- Monies from the fund may be invested in any appropriate investments as determined by the Secretary pursuant to regulation.

      ‘(4) INVESTMENT PROCEEDS- Profits generated by the investments shall be made available to the joint commission to carry out development activities under subsection (f). The facilitator shall be reimbursed for any administrative costs associated with the operation of the investment fund.


      ‘(1) ESTABLISHMENT- The facilitator shall operate an advisory board (referred to in this section as the ‘board’) in each participating recipient country to advise the facilitator on the management of the investment fund and other investment issues.

      ‘(2) MEMBERSHIP- The members of the board shall be selected by the facilitator from the local and international business and investment community. Members of the board shall serve without pay.

      ‘(3) TRANSFER OF AUTHORITY- After control of the project is transferred to the joint commission under subsection (g), the advisory board shall provide advice to the joint commission on investment fund issues.


      ‘(1) ESTABLISHMENT- The Government of the United States shall enter into an agreement with the government of each recipient country that participates in this program, along with the facilitator organization that oversees the project in that country, for the establishment in the country of a Food for Trade Joint Commission (referred to in this section as the ‘joint commission’).

      ‘(2) MEMBERSHIP- The joint commission shall be composed of representatives of--

        ‘(A) the participating recipient country;

        ‘(B) local nongovernmental entities;

        ‘(C) international nongovernmental entities; and

        ‘(D) the United States diplomatic mission in the recipient country, which may include a representative of the Foreign Agricultural Service.

      ‘(3) BOARD OF DIRECTORS- The joint commission shall elect a board of directors that provides equal representation for each of the 4 entities specified in paragraph (2). The directors shall serve without pay.

      ‘(4) SECRETARIAT- The joint commission may hire administrative personnel to handle the day-to-day activities of the joint commission.

      ‘(5) DUTIES- The joint commission shall be responsible for--

        ‘(A) the selection and approval of recipients for loans and grants for eligible activities under this section;

        ‘(B) the dispersal of funds to approved applicants from investment fund profits;

        ‘(C) monitoring of activities funded under this section; and

        ‘(D) overall operation and maintenance of the program including the investment fund, upon the final transfer of control under subsection (g).

    ‘(f) ELIGIBLE ACTIVITIES- The joint commission may make available funds from the profits generated by the investment fund for developmental activities including:

      ‘(1) CREDIT- Loans may be made under this section to--

        ‘(A) local private co-operative banks,

        ‘(B) credit unions,

        ‘(C) non-profit venture capital investment organizations,

        ‘(D) eligible organizations for the purpose of providing micro-credit, and

        ‘(E) approved local entrepreneurs.

      ‘(2) TECHNICAL ASSISTANCE- Grants may be awarded under this section to--

        ‘(A) cover in-country costs for farmer-to-farmer program implementors, or

        ‘(B) eligible organizations working in agribusiness development.

      ‘(3) RESEARCH, EDUCATION AND EXTENSION ENDOWMENTS- Research grants, scholarships and sabbaticals may be awarded under this section to individuals working in local agricultural research and education institutions.

      ‘(4) HUMANITARIAN AND INFRASTRUCTURE DEVELOPMENT GRANTS- Grants may be provided under this section to finance--

        ‘(A) infrastructure development projects, and

        ‘(B) humanitarian efforts.

      All grants made under this paragraph shall be from the repayment proceeds for loans under paragraph (1).

    ‘(g) TRANSFER OF PROJECT CONTROL- After a period of 5 years of operation of the project in a recipient country, or such other period of time deemed appropriate by the Secretary, the responsibility for the management and oversight of the investment fund shall be transferred, according to terms established by the Secretary, to the joint commission. Upon the transfer of authority under this subsection, the authority and responsibility of the facilitator with respect to the project shall be terminated.

    ‘(h) GUIDELINES- The Secretary shall develop guidelines and procedures for the establishment and operation of the program under this section and shall provide for the following:

      ‘(1) Application procedures for proposals for projects under this section.

      ‘(2) Criteria for the selection of recipient countries, including--

        ‘(A) demonstrated interest in privatizing a significant percentage of the agricultural sector;

        ‘(B) demonstrated interest in privatizing land ownership;

        ‘(C) legal and judicial structures that allow for private banking;

        ‘(D) tax laws that do not overly inhibit small business development;

        ‘(E) limited or no restriction on foreign investment;

        ‘(F) demonstrated interest in freeing wages and prices from government control;

        ‘(G) economic situation that allows the establishment of profitable tax-exempt foundations and non-prohibitive use of these profits for development purposes;

        ‘(H) judicial infrastructure that allows for legal enforcement of contracts.

      ‘(3) Procedures for the monetization of agricultural commodities provided under this section.

      ‘(4) Establishment and operation of investment fund, including any restrictions on investments deemed necessary by the Secretary.

      ‘(5) Procedures for the eventual transfer of operational control, including oversight of the investment fund and advisory board of the program to the joint commission.

      ‘(6) Procedures for evaluation of the program.

      ‘(7) Procedures for the termination of the project and dissolution of the investment fund in the event the Secretary determines that the project is being mismanaged or otherwise should not be continued.

      ‘(8) Other guidelines deemed appropriate by the Secretary for the operation or oversight of the program.

    ‘(i) REPORT- The facilitator shall submit an annual progress report to the Secretary on the operation of the project in the recipient country.


      ‘(1) EVALUATION OF THE PROGRAM- Not later than 5 years after the establishment of this program and every 4 years thereafter, the Secretary shall evaluate the effectiveness of the program and shall report the findings to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate.

      ‘(2) GAO AUDIT- The Comptroller General of the United States shall conduct periodic audits of the operation of the program.

    ‘(k) DEFINITIONS- For the purpose of this section:

      ‘(1) FACILITATOR- The term ‘facilitator’ means a nonprofit organization or entity with experience or demonstrated capability for the storage, transport, and sale of agricultural commodities in recipient countries.

      ‘(2) ELIGIBLE RECIPIENT COUNTRY- The term ‘eligible recipient country’ means a country that meets one or more of the criteria specified in subsection (h)(2), as determined by the Secretary.

      ‘(3) ELIGIBLE ORGANIZATION- The term ‘eligible organization’ means an international private voluntary organization or a local nongovernmental organization.

    ‘(l) PROGRAM FUNDING- The Secretary shall make available at least 20 percent of the amount of funds made available to carry out this title for the purpose of carrying out this section.’.