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Critics Call for Changes to U.S. Food Aid Policy

posted on July 8, 2005

Not every discussion at the summit ended in disagreement. The leaders pledged to back an agreement to wipe out some $40 billion in debt owed by 18 of the world's poorest nations. Fourteen of those countries are found in Africa.

The pledge continued a long history of charitable gestures from the world's richest nations. Fifty years ago, the U.S. government created Public Law 480 ... which was intended to boost U.S. farm exports and, at the same time, benefit hungry people in other lands.

Since its inception, the program, later renamed "Food For Peace," has posted some impressive numbers. Billions of people have benefited from food given by the people of the United States. But "Food for Peace" is not without its problems ... and critics are calling for change. John Nichols explains.

Critics Call for Changes to U.S. Food Aid Policy An estimated 3 billion people in 150 countries have benefited directly from U.S. food aid over the past 50 years. And often the "Food for Peace" program literally has been the difference between life and death for hundreds of millions of people.

But for all its successes, the current system is not without its problems. And critics say U.S. food aid no longer is about feeding the hungry.

Chris Barrett, Cornell University Economist: "American food aid was started to try to promote trade, to dump surpluses and to help the maritime industry. All of these objectives are caught up in food aid; it's not just about feeding the hungry. It's not even primarily about feeding the hungry. That is just the way it's sold."

Economist Chris Barrett of Cornell University has spent the past decade working on food aid issues and is the co-author of a forthcoming book which examines the past 50 years of food aid. Barrett claims about 50 cents of every dollar the government spends on food aid isn't spent on food -- instead, the money is spent on shipping, processing and other costs.

Chris Barrett, Cornell University Economist: "Although food aid has been invaluable over the last 50 years it has literally saved or helped hundreds of millions of lives, it underperforms its potential by a great deal. And it does so largely because it's trying to serve too many different objectives, objectives which are largely outdated."

More than 60 percent of international emergency food aid comes from the United States. But non- governmental agencies, like the U.N.'s World Food Programme also play a vital role -- especially in transporting the food. Nevertheless, critics claim it takes too long to move the commodities from the farmer to the famished.

Chris Barrett, Cornell University Economist: "The sad reality is that U.S. food aid shipments in emergencies are very slow. The average time to delivery from the date a formal request for food aid is filed to the day that a shipment arrives at a port is almost five months. That doesn't help much when you are responding to a hurricane, to an earthquake, to a drought, to a tsunami. So, these delays cost lives."

A proposal in President Bush's 2006 budget is intended to ensure more of taxpayers' money actually is spent on food and that the goods reach their destination faster.

The President wants to transfer $300 million from the "Food for Peace" program to the U.S. Agency for International Development. Rather than being earmarked for U.S. commodities, the money would then be used to purchase food closer to where it is needed.

The $300 million represents about 20 percent of this year's spending under Food for Peace. While being praised in some humanitarian circles, the proposal has raised more than a few eyebrows of farm-state lawmakers.

Sen. Charles Grassley, R - Iowa: "We farmers would like to keep the money in the Food for Peace program because it directly involves the moving of American grain to places where there are needs..."

Senate Agriculture Committee member Charles Grassley of Iowa, himself a farmer, says he understands why the Bush administration wants to respond more quickly to natural disasters and other emergencies. And while he acknowledges current food aid programs have little impact on domestic commodity prices, Grassley claims there are other reasons to ship American grain.

Sen. Charles Grassley, R - Iowa: "I wouldn't argue that Food for Peace is going to bring profitability to the American farmers. It helps a little bit to get rid of surplus but most of that is to meet humanitarian needs around the world. And I think you can't argue with the success of that. Could the dollar be better spent? Maybe so, but with a certainty that a granary like the U.S. family farm is for the world I don't think you can beat that."

Grassley isn't the only Republican lawmaker sounding the alarm on the President's proposal. House Agriculture Committee Chairman Robert Goodlatte of Virginia sharply criticized the plan saying it would pull $300 million out of taxpayers' pockets and drop it into foreign markets. Goodlatte claims the current program helps U.S. farmers since the money is used to purchase American grain. But Barrett claims that's a myth.

Chris Barrett, Cornell University Economist: "Only about half of the food aid budget is actually buying up food. The rest is for freight and processing and bagging costs, none of which benefits farmers. So, we're really talking about something like 400-600 million dollars in food costs. This is a drop in the ocean. It just doesn't move prices."

Barrett claims the real beneficiaries of the current system are known to insiders as the "Iron Triangle." They are:

Processors that handle the commodities, 75 percent of which, must be bagged rather than shipped in bulk.

A few aid organizations that are allowed to sell some of the food to finance other projects.

And shipping companies that transport the food at rates inflated as much as 80 percent over the open market.

Chris Barrett, Cornell University Economist: "We've got a problem with spending far too much on non-food costs, freight costs in particular. We pay on average something like 70-80% more for freight costs for grains than we would on the open market because U.S. law under something called the Cargo Preference Act restricts food aid shipment. 75% of those shipments have to go on U.S.-flagged carriers. And when you restrict this number of suppliers prices go up. That is basic economics."

Sen. Charles Grassley, R - Iowa: "It's too bad we can't reform Cargo Preference but the maritime union and industry is so powerful in Congress that I usually get about 40 votes for doing that. I've tried several times."

Despite opposition to food aid policy reforms, Barrett believes the Bush administration proposal to purchase a portion of food closer to its destination is a sign that things are beginning to change. He's optimistic about the future and claims the reforms might be implemented by the next decade.

Chris Barrett, Cornell University Economist: "Five to ten years from now I think we'll see food aid that is a bit more efficient, and that is every bit as effective at projecting an appropriate view of American farmers as very responsive, as very productive and as concerned about hungry people around the world."

For Market to Market, I'm John Nichols.

Tags: agriculture charity foreign relations government hunger news poverty USDA