Idiosyncrasies in how the U.S. provides international food aid may cause more harm than good in recipient countries.
In his 2014 budget proposal, the Obama administration is proposing a major overhaul of U.S. food aid, including changes to address the inefficiencies that plague the current system. According to some NGOs, including Oxfam and Care, the proposed reforms of the program could speed up the responses to crises, boost local production and improve the nutritional value of food aid.
While acute food crises regularly reach the headlines, there is another form of hunger that is much less visible: the chronic day-in and day-out hunger that affects an estimated 870 million people in the world, nearly three times the population of the United States. Each year, it kills as many as 30 to 50 million people. Its victims include approximately 6.5 million children who die from hunger each year — one every five seconds.
International food aid is the most well-known and publicized instrument to fight hunger, especially in southern countries where millions of tons of food are shipped each year. The current U.S. food aid system was created in 1954 when America had a great agricultural commodity surplus and shipping it abroad looked like the best approach to feeding hungry people.
But ever since the U.S. began donating surplus wheat, corn meal and other farm commodities to the world’s hungry, the system has been captured by an iron triangle of interests: U.S. agribusiness, shippers and international development industries, often with the benevolent support of Congress, leading to inefficiencies, a waste of resources and mismanagement. Yet, these inefficiencies rarely make headlines.
Bad management rules
The current rules for U.S. food aid require, for example, that all food purchased must be grown and processed in the U.S. This constrains the ability to use electronic transfers and food vouchers to procure locally and regionally, even when these are considered as the best responses to a crisis. According to USAID, local and regional procurement of food and other grant programs could get food to people in need 14 weeks faster and at a savings of 25 to 50 percent. This means the U.S. could save an additional 4 million children with the same resources.
At least half of the commodities must be shipped on U.S. flagged vessels, which limits the number of competitors who can get the job done quickly and efficiently. As a consequence, according to Oxfam America, more than half of the aid money that the U.S. government spends on basic food grains is wasted – caught up in red tape, overhead costs and shipping fees.
“Right now, fifty-three cents out of every dollar we spend on basic grains for food aid ends up in the pockets of middlemen as a result of red tape and regulations. These regulations protect special interests, at the expense of hungry people, and waste up to $471 million in US tax dollars each year,” Oxfam writes in a press communiqué.
Additionally, when charities and non-governmental organizations receive American food products, they “monetize” it, i.e. they sell it on the local markets in developing countries. The idea is to use the proceeds for long-term development programs. But the result is that these food supplies often flood fragile markets, deflate prices and hurt small-holder farmers, many of whom are women.
The Oakland Institute, a research center in California, has in the past accused the U.S. government of using aid to create export markets for American farmers. In a critical report, it says:
“Used as a foreign policy instrument and as a way to expand export markets, US food aid still largely serves US interests … Feeding people will not solve the problem of hunger. The US has not yet acknowledged that the alleviation of hunger in the poorest countries requires a massive effort to promote self-sufficient agriculture in these countries. Moreover, US preference for in-kind food aid makes it the most expensive in the world, with US taxpayers paying twice as much for the food delivered as would be paid for food procured locally.”
The long-overdue reform proposals, designed to help cut red tape, strip away needless regulations and allow humanitarian organizations greater flexibly in emergencies, have been hailed by organizations working on global hunger and poverty. CARE welcomes reforms that, it says, will provide greater flexibility to the program.
For Oxfam, the new system will allow money to be saved on long-term storage, help to reduce transport times from months to days and encourage development of resilient agriculture in countries or regions prone to food emergencies. Additionally, a shift toward high-nutrition foods, such as enriched peanut butter or biscuits, will require fewer shipments for the same amount of calories. And cash transfers will allow for the local sourcing of food, thereby creating markets for local farmers and jobs in distribution.
In other words, the Obama administration’s proposed changes could greatly increase the number of people helped by U.S. food assistance overseas, while also supporting local farmers in recipient countries.
Protecting special interests
It would also bring America’s overseas policy in line with European and Canadian practices of providing cash and other alternatives to bulk shipments. The U.S. spends about $1.4 billion a year on food aid and is the only major donor country that continues to use domestically produced food for its international food aid rather than buying food produced locally. The European Union and Canada have long since ended this practice.
In the 1990s, European countries agreed to move toward a food aid system based on regional food procurement through cash transfers and vouchers rather than bulk food deliveries. Although the change has not replaced the need for food donations – especially during disasters or humanitarian crises – the approach is seen as a way to boost local production while providing fresher, more nutrition-rich foods to needy communities.
The EU has long urged the U.S. to reform its food aid program. Back in 2005, then EU Trade Commissioner Peter Mandelson declared: “The large structured US program of ‘in kind’ food aid is designed in reality to give support to US agricultural producers. It distorts trade and depresses local production.”
The proposed reforms, however, fall short of putting an end to rules tying aid to American interests. They guarantee, for example, that in 2014 no less than 55 percent of the amount for food assistance still will be used for the purchase, transport and related costs of U.S. commodities. As for shippers, they will receive $25 million in aid to help them adjust.
Yet this first step in the right direction seems to be going too far already for some vested interests, who are now trying to block President Obama’s proposals. An intense lobbying campaign has been started by a coalition of shipping companies, agribusiness and some charitable groups who say the change will harm the nation’s economy and hamper efforts to fight global hunger.
In a letter to members of Congress and the Obama administration, more than 70 organizations — like the USA Rice Federation and the American Maritime Congress — defended the way the program is currently run and called on the Obama administration to resist changing it. Not surprisingly, the signatory organizations are comprised almost exclusively by the same iron triangle that benefit from the current system, i.e. the U.S. agribusiness, shipping and international development industries.
Yes, hunger is big business. And the question is: Does the United States really want to help end hunger malnutrition and food insecurity in poor countries or will it continue to put the interests of big agribusinesses, food producers and shipping contractors first? It is now up to Congress to answer that question.