

Global food system is currently skewed too much towards American business interests
US food traders
US law stipulates that food aid should be bought from US sources, and processed and shipped by US companies – a system that benefits US agriculture business and traders, above, dealing in commodities. Photograph: Scott Olson/Getty Images North America

As food prices rise and climate change affects crops in developing countries, the need for emergency food aid is likely to rise. At the G20 meeting later this month, agriculture ministers will look at ways of insulating vulnerable countries from further market shocks.

In a report on the failures of the global food system this week, Oxfam warns that food aid may need to double by 2020, but that budgets for it are already buckling and it is currently skewed too much towards US interests.

By US law, 75% of US food aid must be bought from US sources and processed, bagged and shipped by US companies. Most of the contracts, therefore, go to the big US-based grain traders who bid for them.

Prices have in recent years been, on average, 11% above market rates.

Nearly 40% of total US food aid costs is paid to US shipping companies, where restricted bidding again limits competition, so prices tend to be higher than on the open market, according to Oxfam.

US food aid has long been a mixture of humanitarian response and promotion of US business.

The American Marshall Plan at the end of the second world war was inspired by a humanitarian desire to end the misery of acute food shortages in Allied Europe. By sending financial aid to buy food, the US nipped communist stirrings in the bud. Adequate food supplies in western Europe provided a marked and attractive contrast to the austerity that persisted in the communist-controlled east. Reluctant US farmers in the midwest were won over by the argument that their long-term prosperity depended on Europe buying their exports.

The Marshall Plan also ensured that removing tariff barriers that might hinder US access to foreign markets was made part of the new terms of trade with the non-communist world.

Of the $13bn in financial aid paid under the plan between 1947 and 1952, more than $3bn was spent on imports of US food, animal feed and fertiliser. Soya oil exports to Europe tripled, and American soya became the dominant source of animal feed in Europe.

The US government at the same time offered its farmers subsidies to grow surplus for export, which they did on a grand scale, setting a pattern for grain trading for the decades to come.

The Marshall Plan thus played a key role in internationalising the distribution of food, and part of its legacy is the food system today.

The American exports it delivered created whole new patterns of consumption, and drove the development of markets for the processed products of subsidised US surplus. Today, more than two-thirds of all processed foods contain derivatives of corn and soya in some form.

Once western Europe had recovered sufficiently to be less reliant on transatlantic food imports, the US moved to new ways of using its agricultural surplus. In 1954, it passed an act later known as Public Law 480, which allows friendly developing countries to buy US agricultural products at a huge discount with generously long repayment terms.

Enacting it, President Eisenhower said its aim was to "lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands." Where US food aid has flowed, western-style diets have had a habit of following.

Felicity Lawrence is the author of Eat Your Heart Out: Why the food business is bad for the planet and your health, published by Penguin