Today’s Financial Times reports that the US has rejected a plan to replace food aid with cash.
Under questioning from senators, Rob Portman, the US trade representative, said: "We are not going down that road.
"The kinds of radical changes the EU and others are talking about would not be just harmful to our farmers and ranchers, but also terribly damaging to the developing world," he told the Senate agriculture committee. …
The EU, Switzerland, Canada, Australia, New Zealand, Australia and Thailand are all urging the US to stop providing direct shipments of food to developing countries except in genuine emergencies. They argue that food aid displaces commercial sales, distorts agricultural markets in developing countries and is used primarily to dispose of surplus crops encouraged by high domestic subsidies.
The same day, the New York Times reports that food aid threatens the livelihood of farmers in Niger:
after a season of good rains, Niger’s farmers are producing a bumper crop of millet, the national staple. This should be a cause for rejoicing, yet in one of the twists that mark life in the world’s poorest countries, the aid that was intended to save lives could ruin the harvest for many of Niger’s farmers by driving down prices.
The newly harvested millet and the donated food will reach market stalls at the same time, and with prices depressed, poor farming families may be forced to sell crops normally set aside for their own use and use the money to pay off debts. The effect would be a new cycle of hunger and poverty.
This is not rocket science, and many of us predicted exactly this would happen. On August 2nd, I said:
What is striking about these cases is that food aid – that is, buying surplus production from rich countries and shipping it to the places where people are hungry – may do more harm than good. What the poor people need in these circumstances is buying power, to enable them to buy the food that is already being produced but is not available to them. Food aid may depress local food prices, and thereby cause some harm to food producers and perhaps reduce future production. In these circumstances, it would be better to drop dollar bills out of helicopters than sacks of food.
See also Head Heeb