Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Developments in U.S. Food Aid Reform

by Isobel Coleman
April 18, 2013

A worker loads humanitarian aid onto a truck before it is sent to Lebanon from Amman, Jordan on August 31, 2006 (Muhammad Hamed/Courtesy Reuters). A worker loads humanitarian aid onto a truck before it is sent to Lebanon from Amman, Jordan on August 31, 2006 (Muhammad Hamed/Courtesy Reuters).

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.

Post a Comment 3 Comments

  • Posted by Anthony Margan

    After US AID hands out of US dollars (hard currency) in these third world countries, most of which are extremely corrupt, what is to stop these funds from ending up in private Zurich and Geneva bank accounts? NOTHING. While well intentioned, this proposal is foolish and will only increase starvation, not prevent it. More importantly, nothing can beat the positive and beneficial “US soft diplomacy” of a bag of rice or flower with a large US flag on it, with large words that state: “A gift from the people of the United States.” Congress should reject this idiotic proposal, with due haste.

  • Posted by Bob Dickerson

    This is a very important subject. There should be more of a discussion of this wasteful practice by the U.S. Though we claim food aid is to benefit the poor, the reality is that the number one priority seems to be to benefit US food producers, shippers, and NGOs. Thank God for CARE, willing to buck the trend. How hypocritical for NGOs to accept food aid that is to benefit the poor, and then turn around and sell it, even if it means the poor will starve, so that the NGOs can raise cash to pay its salaries and cover its rent and other costs. Ridiculous. IF we cared to save the lives of those struggling to survive, we would stop paying Big Ag for US food (which encourages them to over produce), and shippers flying US flags. Requiring the purchase of US food on US flagged ships means that a lot more money is spent on purchasing food, and a lot more money is spent shipping it overseas. Instead of buying this food, and running farmers out of business overseas, we should be buying the food in the areas where people are starving. This would be a double win for those areas, instead of making things worse, to benefit big Ag and shippers in the US. And we should stop this rip of of the poor, giving food to NGOs that they can sell, and deprive the locals of.

  • Posted by Caroline Kirby

    Great post! If monetization is costing the hungry, can US food aid reform instead include partnering with local governments to support their own food security efforts? (i.e. regional emergency food storage, strengthening institutions).

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