The cynical business of food aid

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

4 thoughts on “The cynical business of food aid”

  1. I think it’s worth noting something else from that NYT piece.
    It’s actually the Bush Administration that proposed the rule changes, to move to locally bought rather than US grown food, and to stop the requirement to use US shipping.They may not (in many people’s eyes) do very much right but let’s at least applaud when they do.

    It’s the corporate lobbyists who have shot it down.

    A Bush administration proposal that sought to deliver a portion of American food aid more quickly and at lower cost to starving people around the world appears headed for defeat in Congress, though there is still a narrow chance a scaled-down version will survive in the Senate.

    The administration asked for authority to use a quarter of the $1.2 billion food aid budget provided to the Agency for International Development to buy corn, wheat and other commodities in the developing countries facing hunger crises, or in neighboring countries, rather than from American producers.

    Now, the government must buy the food in American markets and send most of it on American-flagged ships.

    Officials at the Agency for International Development said that having the flexibility to buy the food for an African crisis in Africa would make it possible to respond in some cases in weeks instead of months, feed more people with the same amount of money and potentially save thousands of lives.

    Andrew S. Natsios, administrator of the agency, said the government would be able to buy twice as much food for the same money in some situations because of the savings on transportation. “You can’t eat transportation,” he said.

    But the change was dropped from the Senate’s version of the agriculture appropriations bill expected to be voted on this week, though there is a chance part of the proposal will be restored. The provision was not in the House version, passed in June.

    The measure ran into fierce opposition from an array of agricultural and shipping interests with stakes in the program.

  2. Absolutely. Both Congress and the Administration should have more spine. This policy does more than reduce the value of American aid, it breaches the first fundamental rule of development assistance: “do no harm”.

  3. Pingback: The Backbencher – Financial Transaction Tax – Yet another nail in the Eurozones coffin

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