Reforms to US Food Aid Programs

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With fairly minor reforms to US food aid programs to other countries, hundreds of millions of dollars of efficiencies could be realized while also saving more lives abroad. Common-sense reforms with bipartisan support are currently being considered by the Obama administration but face opposition from lobbyists.

The US food aid programs are by far the largest in the world and doubtlessly do a lot of good. The Food for Peace program alone has a budget of $1.45 billion and plays an important role in supporting emergency food aid during crises as well as funding NGOs involved in development work. For example, last year this program helped over half a million internally displaced people in Yemen.

However, due to the influence of corporate lobbies, there are several inefficiencies in the delivery of American food aid. Two areas in particular could be improved. The first relates to transportation costs, and the second relates to the practice of providing monetized aid.

With regard to transportation, a law passed in the 1950s mandates that 75% of all food aid in the Food for Peace program be shipped on US vessels.  At the time, there was a military justification for this, as these cargo ships could ostensibly serve as support for the US navy during times of war. However, this justification is no longer applicable (for example, many US-flagged ships do not belong to American companies), and the fact that this law remains in place simply adds to the cost and time needed to deliver food aid.

Right now, US food aid is often purchased from places like Iowa or Kansas, is transported over land to an American port, is placed on a US-flagged ship that may or may not belong to an American company, makes a long journey to another port in a place like Tanzania, and is then transported over land to its final destination.  By one estimate, these practices lead to $200 million in unnecessary transport costs; furthermore, USAID estimates that half of its budget is spent on transportation.

A less costly and more efficient approach would be to follow the example of nearly all other countries and simply buy food that is located close to the humanitarian crisis in question. This would entail finding the local market nearest to the targeted area where appropriate food is available, purchasing it directly and moving it over land at a much lower transportation cost. This would be both faster and cheaper, allowing more people to receive assistance. This is not a new idea and has received support from both Republican and Democratic policy makers.

Another inefficient practice is that of providing monetized aid to NGOs in other countries. This involves a similar supply chain, taking agricultural commodities from the US Midwest and shipping it to the NGOs location. The products are then sold by the NGO on the local market, with the NGO using the proceeds to fulfill its mission. This type of aid generates $200-$280 million of revenues for the NGOs while costing the US $400 million, so there could be significant savings for the US government if it simply donated the money directly to the NGOs.

The Obama administration is currently considering implementing reforms to US food aid programs such as Food for Peace. If reforms were implemented in relation to these practices, which act as a form of corporate welfare, the delivery of food aid would become more efficient in several ways, allowing the US to spend less money to help more people. This represents a win-win situation that should garner bipartisan support. Indeed, the only opponents to common-sense reforms are those that have vested interests in the current system, represented by corporate lobbyists. Let’s hope that the administration and Congress are able to stand up to these interests in the name of both saving money for US taxpayers and helping more people benefit from US food aid programs.

– Caroline Poterio Martinez

Source: Foreign Policy
Photo: Oxfam America

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