Letter to the Speaker of the House and the President of the Senate on the Financing of Foreign Agricultural and Rural Development Projects

Dear Mr. Speaker.. (Dear Mr. President:)

In accordance with Section 302(c)(2) of the Agricultural Trade Development and Assistance Act of 1954, as amended (Public Law 480), I have waived the requirement of Section 302(c)(1)(C) that at least 15 percent of the aggregate value of all agreements entered into under Title I in fiscal year 1981 also be entered into under the provisions of Title III of the Act.

The aggregate value of all Title I agreements signed during fiscal year 1981 was $792.8 million. The value of "Food for Development" programs authorized by Title III in these agreements was $92.5 million, 11.7 percent of the aggregate value. Title III agreements were signed and implemented with Senegal ($7 million), Sudan ($20 million), Bangladesh ($50.5 million), and Egypt ($15 million). These values represent the fiscal year 1981 financing of multi-year programs initiated in prior years.

The shortfall of $26.4 million from the 15 percent level of $118.9 million was due to an insufficient number of agricultural and rural development projects meeting the criteria of Title III during the year, and a consequent programming of funds to meet the humanitarian purposes of P.L. 480. In the Title I program plan for 1981 transmitted to the Congress on September 30, 1980, pursuant to Section 408(b) of the Act, a total of $133.2 million was identified as likely to be carried out under Title III authorities. This represented approximately 16.7 percent of all planned Title I programs anticipated at that time. Developments in two countries initially intended to receive Title III programs caused the reduction of $40.7 million in Title III financing to the final $92.5 million level.

First, excellent foodgrain production in Bangladesh significantly reduced that country's need for food assistance, particularly for wheat. While the initial plan was for $72.8 million for Bangladesh under Title III, the agreement finally signed was for $50.5 million, a $22.3 million reduction. When it became apparent that requirements for wheat imports to Bangladesh had decreased greatly, vegetable oil was included in the agreement to keep the level of Title III financing closer to the level initially allocated, but the original target could not be reached.

The second country where there was a change in the planned level of Title III financing was Bolivia. In view of events in Bolivia and the reduced scope of our bilateral relationship, the multi-year Food for Development program was suspended in fiscal year 1981. While the initial allocation for Bolivia was $18.4 million, Congress was notified, in the June 30, 1981 program plan, that the Bolivia Title III program would not be implemented that year.

During the year, efforts were made to help other eligible countries identify appropriate Title III projects. In some cases considerable progress was made, but the process of negotiating agreements and supplying commodities could not be completed in fiscal year 1981.

In one country, a Title III project was being designed when a food crisis required that food be supplied rapidly under a Title I agreement. In another country, the team sent to do a feasibility study reported that although good prospects exist for a Title III program, a considerable amount of time and effort for planning and negotiating the project will be required.

Pursuant to Section 302(c)(2) of the Act, funds allocated but not used for Title III were programmed under Title I to meet humanitarian needs in countries which experienced adverse developments in their domestic food situations. Such countries included Morocco, Madagascar, Kenya, Malawi and Sudan, which together received Title I assistance totaling $42.5 million not included in initial allocations for fiscal year 1981.

U.S. Government representatives will continue to seek ways of promoting greater development through the Title III programs.

Sincerely,

RONALD REAGAN