American food aid to countries in need is one of those broken policies that seem like such a no-brainer to fix. Yet despite well-intentioned efforts to do so, vested interests insist on maintaining the status quo, with ill effects. The Obama Administration, like the Bush Administration before it, is again trying to bring some sense to food aid, but prospects for reform are low.
At the time of its founding during the Cold War, the Food for Peace program was designed to put American agricultural surpluses to use while contributing to positive perceptions of the U.S. overseas. Now, as USAID administrator Rajiv Shah points out, what used to be a win-win program to help the U.S. and feed the hungry is no longer so. “As more efficient tools surfaced and best practices evolved, we’ve learned that the current approach to food aid can become—at times—an impediment to its very own mission.” Indeed.
Currently, most food aid that the U.S. gives to other countries must be purchased from the U.S. and three-quarters of it must be transported on private American ships. This results in food that is more costly than necessary and takes longer to reach critical destinations. Through a practice called monetization, the US government also gives food to nonprofits to sell locally to fund their activities, a practice that not only distorts local economies, but also results in a loss of about 25 cents on the dollar.
The FY 2014 budget tries to chip away at this nonsense by allowing 45 percent of the food aid budget be used more flexibly. For example, agencies could distribute cash or vouchers to buy locally-produced food instead of being forced to buy U.S. farm commodities. Moreover, monetization would end entirely, and the resulting savings would be put into a fund for the kinds of programs previously paid for by monetization. The administration estimates that the upshot of all these changes is some four million more people could receive food aid—for basically the same cost—and that responses would be more rapid. A 2010 interview with former USAID administrator Andrew Natsios serves as a sobering reminder of what’s at stake. “I’ve seen children starve to death when there was a surplus of food in their local markets, but there was no one to buy the food because we didn’t have the money to do that, so people died.”
Important relief organizations, including CARE, ONE, and Oxfam America praised these changes in a statement as a “solid step in the right direction,” and as “reflect[ing] a strong commitment to helping the hungry in times of crisis as well as securing long-term food security for the world’s most vulnerable.”
Not surprisingly, the proposed changes to food aid have made some special interests very unhappy, and numerous senators are already lobbying the administration on their behalf. Those vested interests include food producers, shipping interests, and many NGOs who depend heavily on monetization of food aid to fund their activities. During the George W. Bush administration, this troika sank the last big effort to reform food aid when Andrew Natsios pushed to let USAID spend up to 25 percent of its food budget locally in countries in need. At the time, the relief organization CARE took the courageous step of announcing that it would gradually eliminate its dependence on monetization by 2009, even though monetization provided the organization with $46 million. Too few other big NGOs have followed suit.
This time around, there doesn’t appear to be any groundswell on Capitol Hill for changing food aid, despite the obvious drawbacks and inefficiencies of the current system–particularly around monetization, which cost the program nearly $220 million in just three years, according to a 2011 report from the Government Accountability Office. Reform of food aid will undoubtedly continue to be an uphill battle, but one worth fighting.