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New Proposal Highlights Big Business of International Food Aid

Obama adminstration's proposal to overhaul international food aid met with ire by "'iron triangle' of special interests"

Andrea Germanos, staff writer

Backlash following the Obama administration's proposal for an overhaul in international food aid is exposing how the current system is rigged to fill the pockets of big business at the expense of getting aid to those as quickly as possible and supporting local food sovereignty.

The New York Times reported on the proposals:

According to people briefed on the soon-to-be released fiscal year 2014 budget, the administration is expected to propose ending the nearly 60-year practice of buying food from American farmers and then shipping it abroad.

The administration is proposing that the government buy food in developing countries instead of shipping food from American farmers overseas, a process that typically takes months. The proposed change to the international food aid program is expected to save millions in shipping costs and get food more quickly to areas that need it.

The administration is also reportedly considering ending the controversial practice of food aid “monetization,” a process by which Washington gives American-grown grains to international charities. The groups then sell the products on the market in poor countries and use the money to finance their antipoverty programs.

Control of the program would also be directed to USAID instead of th USDA under the current system.

UCLA Professor Jonathan Zasloff pointed out some of what's wrong with the current system of international food aid (h/t Kevin Drum):

If the food needs to be shipped, then that means that the shipping must be paid for.  And it sure is: according to a study done by AJWS and Oxfam, nearly 55% of the cost of American international food aid goes not to food, but to shipping costs. [...]

Recall, of course, that the food that will be shipped to the famine area is subsidized, so in fact, we are spending food aid money not on people who are starving, but on relatively wealthy American farmers. [...]

Once the food finally makes its way to the country in question, not all of it gets to the famine area.  Free food from the United States is simply too attractive to smugglers, who siphon it off and then sell it in markets.  I personally have several instances of markets selling food in bags stating quite clearly: “GIFT OF THE PEOPLE OF THE UNITED STATES OF AMERICA: NOT FOR RESALE.”  You can it in markets throughout Africa.  And what that does is put local farmers out of business because they cannot compete with this illegally dumped food from the United States.  In other words, by this sort of dumping, in many instances, we are actually making the problem worse over the long term because we are undermining other countries’ ability to feed themselves.

Many international aid groups, including CARE, Oxfam and Partners in Health, applauded the new food aid proposals as providing a better way to get food to where it's needed as quickly as possible, as well as "Promoting sustainable solutions that build local food markets and support small producers to become more productive and resilient in countries that struggle to overcome chronic food insecurity."

Andrew Ranallo of the Institute for Trade and Agriculture Policy (IATP), one of the groups welcoming the changes, summed up some of the benefits, writing, "With local and regional purchasing, food aid can get to those who need it faster and cheaper while also building local capacity to deal with an increasingly unstable international food supply."

So who would criticize the proposal to get food aid where it's needed more quickly, more cheaply and with more support of local food systems?  The big groups and corporations that are profiting from the status quo.

The Times reports that over 60 groups including the USA Rice Federation and the American Maritime Congress wrote to Congress and Obama urging no change in the system, and then went on to lobby over 20 senators from farm states to do the same.

The Guardian notes that:

Previous attempts at reform have been blocked by what analysts have called an "iron triangle" of special interests – US shipping firms, food companies and some NGOs – which benefit from the current rules.

A Guardian investigation last year revealed that only three US-based multinationals – ADM, Cargill and Bunge – were the main beneficiaries of the tied aid rules.

And Bloomberg reported Thursday that

Purchases of U.S. corn, soybeans, peas and other crops from U.S. agribusinesses including Archer Daniels Midland Co. (ADM), Cargill Inc. and Bunge Ltd (BG). would see a 21 percent cut next year under the proposal.

Also opposed to the overhaul is the American Soybean Association, which represents farmers of the second most planted crop in the U.S. after corn.  Bloomberg quotes Danny Murphy, president of the association, as saying in a statement:

We remain absolutely opposed to the replacement of in-kind aid with cash, which takes a key market away from American producers and places aid recipients at risk by allowing purchases from suppliers whose safety and quality are unknown.

Is the goal corporate profits or food security?

Referring to the reform proposals as a "welcome change," Karen Hansen-Kuhn of IATP stated:  

For too long, we’ve been sold the idea that U.S. farmers must feed the world. Instead, to build real food security, we need farmers everywhere, whether in Kansas or Kenya, to be able to feed their own communities and nations. Strengthening that capacity through our food security and trade policies should be the priority


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