Food Fight

Posted: Apr 15, 2013 8:01 AM
Food Fight

WASHINGTON -- Since the Eisenhower administration, the United States generally has done food aid in a certain way: grow and pack it in America, ship it across the world on American-flagged ships, then deliver it through American charities, which sell a portion of the food to fund their other programs. Not coincidentally, the system has been popular with American agribusinesses, shipping companies and maritime unions.

But for the last decade, aid reformers have asked: Why couldn't a portion of food aid be purchased regionally -- in Africa, say, rather than the American Midwest -- or given directly to individuals in vouchers so they can buy in (and strengthen) local agriculture markets? This has not, understandably, been popular with American agribusinesses, shipping companies and maritime unions. But Congress granted the George W. Bush administration limited flexibility to experiment with more direct forms of assistance.

The food aid debate is no longer theoretical. In Syria, the delivery of commodities is often impossible. "To get anything into opposition-controlled areas," Rajiv Shah, the administrator of USAID, told me, "you are shot at by helicopter gunships." So the available, cash-based aid is devoted to this crisis. But commodities, by congressional mandate, must still comprise 75 percent of overall American food aid. As a result, cash-based aid in post-famine Somalia -- where commodity delivery is also difficult -- must be cut. About 150,000 Somali children will lose services. "We will literally remove vulnerable kids who have been on the program," says Shah. "That's hard to do."

What American food aid programs need most is not additional money but additional flexibility. "Commodity aid is useful," says Roger Thurow, agriculture fellow at the ONE campaign, "when there is such a broad hunger crisis that there isn't enough local food to be purchased for aid. Also, it helps at the outset of emergencies, when food aid is prepositioned and can move quickly into the hunger zones."

But sending commodities, Thurow warns, "is counterproductive when there is surplus food available locally." It undercuts farmers and destroys their incentives. In "Enough: Why the World's Poorest Starve in an Age of Plenty," co-written with Scott Kilman, Thurow tells the story of the 2003 Ethiopian famine, which had been preceded by two years of good harvests. Local farmers still had some food stored. When American corn and wheat started arriving, the trucks rumbled past warehouses filled with Ethiopian crops. "Why wasn't the U.S. aid flexible enough," asks Thurow, "to buy up the Ethiopian food along with sending U.S.-grown food?"

The only thing more difficult than reforming an unsuccessful program is reforming a relatively successful one. U.S.-grown food aid has saved countless lives. But it can't be accused of efficiency. The commodity mandate delays delivery and raises costs -- more than 16 percent of program expenses go to ocean shipping. So the Obama administration has proposed a major reform of American food aid, which would free up nearly half the program for local and regional purchasing. It would also end the selling, or "monetization," of food by charities -- a practice that wastes about a quarter of every dollar and can depress food prices and crowd out local farmers.

The administration is not proposing to end commodity purchases, just scale them back. But it estimates this shift would allow the program to provide help 11 to 14 weeks faster, with a cost savings of 25 percent to 50 percent. Entirely through efficiency, America could serve 4 million additional people.

There will, no doubt, be considerable political resistance, but perhaps less than there used to be. American farmers -- flush from strong agricultural prices and ethanol demand -- are far less economically dependent on food aid exports than they once were.

The shipping industry is a different matter. The cost to move food aid has tripled over the last few years. Companies running U.S.-flag vessels can charge a premium, since a congressional mandate makes the federal government a captive buyer. But a company doesn't have to be American to run ships under the American flag. By far the largest beneficiary in the current system is a Danish conglomerate.

Efficiency in foreign aid should appeal to all members of Congress, but to Republicans most of all. The current food aid system often undermines agricultural markets and encourages rent-seeking. A Democratic administration is proposing a reform that employs vouchers and is opposed by unions. Even in a farm state, this should be a compelling case.