Congress Rejects Food Aid for Local Development

International Relations Center
October 21, 2005

Both House and Senate leaders recently rejected an administration-backed recommendation by the U.S. Agency for International Development (USAID) to allot $300 million of its food aid budget to purchase food grown by local or regional producers. Once again congressional members bowed to special interests, including agroexporters, shipping firms, and nonprofits that deliver U.S. food aid.

What's more, the U.S. government, led by the U.S. Trade Representative, is rejecting demands by the EU, Switzerland, Australia, and other members of the World Trade Organization (WTO) that the dumping of surplus commodities in the form of food aid be judged a violation of international trade rules.

The United States provides nearly 60 percent of the world's food aid. Although it has spent over $8 billion on food aid over the past five years, the aid has done little if nothing to resolve long-term problems of hunger and food production in developing countries. In fact, the main objective of the U.S. food assistance program is to purchase surplus commodities from subsidized agribusiness. Until last month, Canada 's large food aid program has also functioned mostly to support the country's agroexport sector. But in an act that implicitly reversed this policy and recognized the need to behave as a global good neighbor, Canada 's minister of international cooperation announced that the country will dedicate half of its food aid budget to buy food in developing countries in order "to get more food to more people more quickly."

The international relief and development organization Oxfam says that emergency food aid can sometimes be a crucial lifeline but too often "food aid has been used for less noble aims, including dumping surplus production and promoting donor country exports. This type of food aid hurts poor farmers and distorts international trade." As U.S. groups such as Oxfam, Food First, and the Institute for Agricultural and Trade Policy have long noted, this type of food aid policy undermines real agricultural development and contributes to unsustainable development.

A September 2005 report, The Development Effectiveness of Food Aid , produced by the Paris-based Organization for Economic Cooperation and Development concluded that foreign assistance shipped in the form of food often arrives late, disrupts local markets, and costs up to 50% more to deliver than cash. According to the OECD report, commodity shipments often arrive too late and are more expensive than local purchases. Edward Clay, author of the report and a fellow at the Overseas Development Institute, points out that U.S. food aid being shipped to famine-struck Niger will likely coincide with the a bumper harvest in the region, thereby competing directly with area farmers.

European nations contend that the $2 billion-a-year food aid program is actually a dumping program, but the U.S. Trade Representative rejects that assertion, including the issue of U.S. food aid in WTO negotiations, arguing that, "The kinds of radical changes the EU and others are talking about would not just be harmful to our farmers and ranchers, but also terribly damaging to the developing world." However, many developing nations have joined in the call for the United States to stop dumping its commodities in the form of injurious food aid.

It's time to end the five-decade policy of U.S. food aid that has aimed to boost the profits of large agroexporters and flood the world market with U.S. agricultural surpluses. The European Union, and now Canada, have already adopted policies to provide cash to buy regionally produced foods for hunger-stricken populations. The U.S. government could start shedding its bad neighbor image by following suit.

A good time to make a fresh start with a new food aid policy will be the next World Trade Organization ministerial meeting in Hong Kong in December, when U.S. trade negotiators would do well to accede to the widespread demands that our government terminate agroexport subsidies and nonemergency commodity food aid.

U.S. food aid is a bad neighbor policy. Agroexporters such as Cargill and Archer-Daniels Midland, which provide one-third of U.S. food aid, and U.S. charity organizations such as CARE, World Vision, and Catholic Relief Services, which account for four-fifths of food aid delivery, directly collaborate with and benefit from this bad neighbor policy. The members of Congress who rejected ending this agricultural dumping program, and U.S. Trade Representative Rob Portman, who continues to defend in-kind food aid as a fair trade practice under WTO rules and as an efficient relief program, demonstrate by their actions and statements they too are bad global neighbors.

A global good neighbor policy for food aid should consider government-supported agroexports in the form of food aid to be illegal dumping on the international market. A new U.S. food aid policy would convert all but limited emergency food aid into cash donations to buy locally grown food to feed the hungry while at the same time supporting the development of sustainable agriculture in recipient nations. Such a policy would benefit U.S. taxpayers by eliminating existing inefficiencies and subsidies while benefiting the poor and farm communities of the developing world.

As currently structured, U.S. food aid programs violate the ethic of a global good neighbor, particularly the principle that: "The U.S. government should support sustainable development, first at home and then abroad, through its macroeconomic, trade, investment, and aid policies."

More Information on Social and Economic Policy
More Information on Lack of Hunger Relief and Other Food Aid Challenges
More Information on World Hunger
More Information on Agricultural Subsidies

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