Mutiny Shakes US Food Aid Industry

WASHINGTON -- One of the largest international aid organizations in the world turned the food aid industry on its head recently by declaring that they will turn down 46 million dollars in food subsidies from the U.S. government.The United States budgets 2 billion dollars a year in food aid, which buys U.S. crops to feed populations facing starvation amidst crisis or those that endure chronic hunger.

But the U.S.-based CARE International has forfeited its substantial slice of the food aid pie that is the U.S. "Food for Peace" program, claiming that the way the U.S. government distributes food hurts small poor farmers in the very communities and countries the program is supposed to help.

CARE has been one of the largest suppliers of food aid around the world for the past 50 years so its shift in policy could have a dramatic effect on the food aid industry.

The reasoning behind CARE's decision is part of a years-long debate that has influenced everything from U.S. trade and domestic legislation to the Doha Round of the World Trade Organization talks.

The objection to the current system is that the donation and sale of U.S.-subsidized crops in developing countries where people regularly go hungry actually weakens local farming. "We are not against emergency food aid for things like drought and famine," CARE spokeswoman Alina Labrada said last week, but local farmers are "being hurt instead of helped by this mechanism".

Though the policy to phase out U.S. government subsidies has been in place for more than a year, CARE's rejection of the status quo has been catapulted into the spotlight as the U.S. Congress debates the Farm Bill, a massive 25-billion-dollar piece of legislation that establishes the funding structures for agricultural research, rural development, government subsidies and food aid policy.

The U.S. food aid program was established in the 1950s and designed to use some of the crop surpluses generated by government subsidies. Therefore, U.S. laws place strict limits on how that money can be used. All of the food the U.S. sends to food crisis areas must be grown in the U.S. and 75 percent of that food must be transported by U.S shipping lines.

Many aid organizations have called attention to the fact that this often means that the food aid doesn't get to where it's needed in time to help.

A year-long investigation by the Government Accountability Office, the investigative arm of Congress, also found that the ballooning costs of logistics and shipping food overseas to where it is needed most have nearly halved the amount of U.S. food that is delivered to the hungry around the world in the past five years.

The U.S. policy implements the practice of monetization, a food aid policy in which the U.S. government buys crops from U.S. farms and ships it to aid organizations working around the world. The aid organizations then sell the U.S.-grown crops to local populations, often at a dramatically reduced cost.

The aid organizations use proceeds from these sales to fund their development and anti-poverty programmes. But several groups, with CARE at the forefront, have pointed out that this policy often has the effect of undermining local farmers and destabilizing the very system that aid organizations are working to strengthen.

However, this is point of view is not universally accepted, and CARE's public rejection of the current system has created a rift in the aid community.

Last year, CARE, along with Catholic Relief Services, Save the Children and several British, French and Canadian aid groups, signed a statement that called the practice of monetization inefficient and said that such sales divert food from the direct transfers to the people that need it.

The European Union has also been critical of the U.S. food aid program. In addition to their suspicions that the U.S. uses these programs to avoid limits on farm subsidies, in the 1990s European countries all but phased out the practice of monetization and only 10 percent of their budgeted food aid is reserved for crops grown in Europe.

The U.N. World Food Program, the largest distributor of food aid in the world, has rejected the practice of monetization and doesn't allow its grain to be sold by NGOs

But a coalition of 15 other aid organizations, called the Alliance for Food Aid, is opposing CARE's tactics and defends the sale of U.S. produce and use of the proceeds as a way of addressing chronic hunger through development programs.

The organizations, including World Vision and the American Red Cross, defend the effectiveness and influence of the development programs that the current system supports.

Opponents of monetization are not calling for an end to those programs, but CARE is looking to shift direct cash contributions to their aid efforts instead of relying on the indirect fundraising that food donations provide.

The fear for many charities though is that they couldn't win Congressional support for the food aid funding without the backing of the U.S. farm and shipping industries.

Steve Radelet, a senior fellow at the Center for Global Development, noted in an article that the problems with the system, and the risks involved in fixing them, need to be weighed against the value of the political support for foreign assistance that this system generates.

The limits of that political support have been tested before. The past two farm bills attempted to shift a portion of the food aid budget from grain to cash donations. Both attempts were voted down.

In this year's debate, the George W. Bush administration is once again proposing that 25 percent of the food aid be cash, available to buy crops locally for the people who need it.

While the rift between the two sides of the food aid debate remains deep, CARE's move and the report by the Government Accountability Office may be a sign that changes to the system, and the millions of people it feeds, lie ahead.

(c) 2007 Inter Press Service