"CARE Turns Down U.S. Food Aid"

Read the full article by EBEN HARRELL in Time magazine, August 15, 2007.

While the U.S. is responsible for almost half of all food donations to the developing world, it is the only country to utilize "monetized food aid," a method by which grain is shipped to charities in the developing world, which then sell the grain in the local market and invest the proceeds for their own programs.

"CARE has decided to phase out all such monetized food aid by 2009, turning its back on $46 million a year in U.S. federal funding. The charity said selling food to fund its programs is inefficient and often delivers life-sustaining grain not to the hungry but to those who can afford it.....European countries all but phased out monetized food aid in the 1990s and the world's largest food aid distributor—the U.N.'s World Food Program—does not allow any of its grain to be sold by NGOs.

" Food aid was a sticking point at the 2001 Doha trade talks, amid complaints that the U.S.'s insistence that its food aid be grown at home amounts to a subsidy. Many European NGOs argue that this policy, coupled with the U.S. law that 75% of food aid be carried by U.S. ships, means food often arrives too late, floods local markets and damages indigenous farming.

"They argue that food aid should come, when possible, from the closest producer to the needy area. E.U. policy reflects this sentiment; less than 10% of its food-aid budget is now reserved for European-grown food. (Led by the British-based international charity Oxfam, many NGOs go further, arguing that cash injections into local economies is the best way to fight hunger)."

Comment: I see the argument that as the United States currently runs Food for Peace, it is a subsidy for American food producers and shipping companies. It has long been recognized that long term food assistance to a country can be damaging to its own farmers, who are facing competition from free food. Giving people money to buy food, to the contrary, increases the effective demand for food which can then be brought to where the demand exists by the cheapest means possible -- usually grown nearby.

There is of course a place for emergency shipments of food, such as when a natural disaster disrupts transportation systems. There is also, I think, a place for "food for work". If you take subsistence farmers off their land build some capital project, say a road or an irrigation canal that will eventually increase their income, it might be reasonable to pay them with the food that they would otherwise have grown.

Still, I would guess that the Bush administration is reluctant to give up this farm subsidy. The red states are after all among the most agricultural in the United States. JAD