Why U.S. Food Aid Benefits Big Business and Not Starving People

Critics charge that current U.S. food aid policies are inefficient and possibly harmful.

Last month, in a move that shocked observers, CARE, one of the world's largest humanitarian organizations, rejected $45 million in U.S. food aid, shining a spotlight on a practice the group says may hurt starving populations more than help them.

Complaining that U.S. food aid policy is inefficient, unsustainable and perhaps even detrimental to combating food insecurity, CARE belives "enough is enough," according to Bob Bell, director for CARE's Food Resource Coordination Team. The decision comes at a time when other humanitarian and food advocacy organizations are calling on members of Congress to rewrite food aid policy that puts starving populations first when they authorize this month's 2007 Farm Bill.

The United States is the world's largest provider of international food aid, supplying more than half of all food aid designated to alleviate hunger, about four million metric tons of food per year. As currently implemented, U.S. food aid lines the pockets of American agribusiness and the shipping industry. Under existing rules, at least 75 percent of food aid has to be grown and packaged in the United States, and shipped using U.S. flag-bearing vessels. Unlike most countries that donate food, the United States sells a portion of its food aid, either by selling it to recipient governments, or allowing it to be monetized, a process where food aid is sold to generate cash for development projects. And while most donor countries provide cash as food aid, the United States insists on giving in-kind donations.

Back in 2002, Richard Lee, a spokesman for the United Nation's World Food Programme, told Greenpeace that the best way to confront famine is through cash donations, rather than food. "We prefer cash donations as they offer us greater flexibility -- with cash donations we can purchase locally, enjoy greater flexibility and also speed things up," Lee told Greenpeace. "We can get more for the money if we have cash. We can do the job faster as cash lets us buy the right food we need at the right time."

The small-farmer advocacy organization Institute for Agriculture and Trade Policy (IATP) says U.S. food aid policy is fraught with problems. Sophia Murphy, senior advisor for IATP, says that while "all food aid is imperfect," U.S. food aid is "more hamstrung than most [because of] a series of restrictions that serve U.S. domestic interests and not the people in whose name the programs are funded."

Because most of the food aid must originate from the United States, it can take months to reach populations in crisis, sometimes too late, or as Murphy warns, at a time that can "clash with a local harvest instead of bridging a gap between harvests." The ties to U.S. shipping companies also increase the costs of food aid. A recent Government Accountability Office (GAO) report found that rising transportation and business costs have reduced food aid deliveries by almost half. For one food aid program, the GAO noted that shipping costs ate up 65 percent of total expenditures.

While the lack of propitious timing can undermine local economies, so too does monetization. Under this practice, NGOs stepping in to feed starving populations sell U.S.-subsidized food aid, often at prices under the cost of production, which swipes away any local competition. "Unless very carefully managed, [the sold food] then brings down prices in local markets for the local farmers, depressing production when you want to encourage it," Murphy says.

Yifat Susskind, communications director of the human rights group Madre, believes this practice is extremely harmful. "The result, on a very large scale, has been bankruptcies, economic dislocation and physical displacement of literally millions of farmers throughout the world," she says.