In a tumultuous period in which the United States Agency for International Development (USAID) has cancelled over 80% of its foreign assistance contracts, Edesia Nutrition, a Rhode Island-based manufacturer of life-saving nutritional paste for severely malnourished infants, has managed to maintain its agreement with the agency. However, despite the active status of their contract, the company has been forced to lay off 10% of its workforce amid financial strain caused by rejected invoices and delayed payments from USAID. Edesia’s founder and CEO, Navyn Salem, has found the layoffs to be a particularly difficult decision given the close-knit nature of her team.
The financial issues arose when Edesia’s invoices to USAID were rejected twice in a week. The delay in promised funds has forced the company to halt its production line and delay payments to its almost entirely American supply chain, which includes farmers who cultivate the ingredients for the nutritional product. The layoffs, Salem states, were “the hardest thing I’ve ever had to do”. She describes the workforce at Edesia as more like a family, having personally attended their weddings and funerals and knowing their extended families well.
The situation at Edesia has unfolded within a broader climate of increasing pressure on USAID and its associated programs. High-profile figures including Elon Musk, the world’s richest person, and others associated with President Trump, have targeted the State Department agency, contributing to widespread instability and disruption in global health non-profits. Despite this, Musk himself intervened to assure Edesia via social media on March 2 that their contract would not be cancelled.
The financial difficulties have arisen because a vital USAID payment system had yet to be restored. While the system was recently restarted, Salem reported that on Tuesday and Wednesday, she was informed by USAID that at least two of her invoices had been rejected. In one case, the shipment of goods had not yet occurred and in the other, the goods had been shipped but the reason for the rejection remained unclear. As a result of these setbacks, bills are mounting for the company. “There’s still payroll and the lights to turn on and the peanut farmers to pay,” Salem stated.
A spokesperson for the State Department responded to queries about the agency’s payment systems, but there was no immediate reply to questions about Edesia’s invoices. The spokesperson mentioned that Secretary of State Marco Rubio’s review of the agency’s grants and programs had unearthed serious problems in USAID’s legacy systems used to approve and issue payments. The spokesperson stated, “This has caused significant unforeseen delays and prompted the Administration to take unprecedented steps to implement more streamlined processes. USAID has 27 payment and finance systems, all of which have been found to be inefficient, broken, and built to intentionally make communication with other systems in the federal government impossible.”
The impact of these delays, Salem asserts, extends beyond Edesia. She describes a chain of American farmers, commodities brokers, manufacturers, shippers and NGOs, all interconnected and vulnerable to disruption. If one link in the chain goes down, she warns, the whole system could grind to a halt.
Edesia’s flagship product, Plumpy’Nut, is a ready-to-use therapeutic food prescribed for the treatment of severe acute malnutrition in children as young as six months old. Before the disruption, the product had been used to feed children in Africa, particularly in South Sudan, a country currently enduring an extreme famine. Salem’s production line has the capacity to create food for 415 infants per hour, yet her warehouse is rapidly filling up in the absence of normal shipments.
In response to the upheaval caused by USAID’s sudden internal changes, Edesia is striving to improve its efficiency. Salem described the company’s shift in approach: “We’ve just changed from a company that’s been here for 16 years to being like a startup, to being more scrappy, we need to change the way we’re doing everything.” Despite the challenges, Salem remains hopeful and committed to her mission. “I am endlessly optimistic and hopeful. I believe in the mission we have. I believe that the majority of Americans believe in feeding children, everywhere.”
The struggle of Edesia Nutrition serves as a stark illustration of the ripple effect caused by the disruption at USAID. It is a company that, despite its contract being spared from cancellation, has had to make significant layoffs due to payment delays and rejected invoices. This has not only had an impact on the company’s internal operations, but also on its supply chain which largely consists of American farmers and other suppliers. The situation also underscores the importance of effective and efficient payment systems within such agencies, as even minor disruptions can have far-reaching consequences. The story of Edesia underscores the human dimension of these bureaucratic inefficiencies, showing how they can affect livelihoods, businesses and, in this case, the fight against child malnutrition.
