The Obama administration made sweeping changes to US food aid policy as part of the proposed budget for the 2014 fiscal year. Proposed reforms to US food aid include reducing the sale of food in developing countries, with options for cash transfers and local food purchasing instead. For decades, the US has supplied over half of the world’s total food aid through the US Agency for International Development (USAID) and the US Department of Agriculture (USDA).
Changes to the system will not decrease the $1.4 billion the US spends on food aid annually. Rather, it will revamp policies dating from the 1950s, when US food aid programs were established, and reallocate some funds. The proposed reforms call for the creation of a new Emergency Food Assistance Contingency Fund worth about $75 million, which will provide emergency food assistance worldwide.
The proposed reforms to the US food aid system will, hopefully, fix some of the system’s glaring problems without diminishing its effectiveness. Over the course of the US food aid program, monetization and inefficient shipping practices have cost taxpayers billions of dollars and impeded economic growth.
Monetization is the practice of donating US food commodities to aid groups and NGOs, which then sell the food abroad in order to fund development projects in those countries. One problem with monetization, besides its inefficiency, is that the sale of inexpensive US-grown food in foreign markets often puts farmers at an economic disadvantage, causing a disincentive to grow food. In some cases, it can be concluded that monetization contributes to poverty and hunger rather than alleviating them.
Inefficient and costly shipping practices have persisted up to this point as a result of the Agricultural Cargo Preference (ACP). The ACP requires that at least 75 percent of US food aid be shipped overseas on privately owned vessels flying the US flag. This system ultimately supports the for-profit shipping and transportation industries, at a huge cost to US taxpayers. Under the new policies, some of the $140 million per year spent shipping food abroad will go toward feeding more of the world’s hungry.
According to Rajiv Shah, USAID administrator, the reforms will make US food aid programs more efficient, effective, and flexible. The changes will enable US food aid to feed at least four million more people each year. Food aid experts and development NGOs have welcomed the reforms. One food aid expert at Tufts University called them a huge step in the right direction.
But because Obama’s proposed changes to US food aid have been met with stiff resistance from the shipping agribusiness sectors, the budget has allowed for a compromise in order to earn Congressional and popular support. 45 percent of US food aid will be purchased locally or replaced with cash vouchers, while the other 55 percent will continue to be bought in and shipped from the US.
As the world’s largest food donor, the United States has a responsibility to make sure its aid-related actions are economically, environmentally, and socially sound. Obama’s proposed changes to food aid policy bring the country a little closer to achieving that goal.