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A Haitian woman carries a bag of rice donated by USAID.
Associated Press/Photo by Lynne Sladky
A Haitian woman carries a bag of rice donated by USAID.

Spending habits

International Aid | A bold Obama plan to reform food aid runs into predictable special interests

Issue: "Boston Terrorthon," May 4, 2013

The budget President Barack Obama delivered to Capitol Hill April 10 contained the predictable mix of the latest government spending programs masquerading as “investments” and the latest “revenue enhancers” to make the other guy pay for them.

Lost in much of the analysis was a startling bit of cost-cutting: The president proposes to end food aid overseas as we know it with a program the administration claims would save money and feed 4 million more needy people each year.

Finally! But not so easy, budget cutting. The plan would end a 60-year program called Food for Peace, where the U.S. government buys food from U.S. farmers and ships it to food-deprived locales overseas, using U.S.-based international NGOs to funnel it to those in need. The United States spends $1.4 billion a year on food aid and is the only major donor country that sends all its own food to hunger hot spots. With the new plan the government would instead buy food in countries closer to need—saving on transportation, aiding local farmers and haulers, and getting food to where it’s needed faster. For example, when the UN issues a famine warning for Sudan or northern Somalia, the United States would respond by buying grain first from farmers in Kenya rather than Kansas. 

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It’s not a perfect fix but is a needed new direction for a calcified government program. But it’s running into resistance from a coalition of U.S. agribusinesses, freight companies, and Christian aid groups—non-governmental organizations (NGOs) like World Vision and Food for the Hungry. One reason for the resistance: In a practice called “food monetization,” NGOs also get grain from the government for free, but they are allowed to sell it. The NGOs then use grain proceeds to finance local development projects.

You don’t need an MBA to see the problems. Selling imported U.S. grain, especially in the poorest settings, distorts local market values and undermines local production. It’s a subsidy for U.S. farmers since Washington buys the “surplus” grain to ship overseas, and for U.S. freight companies, since they by law must ship the food. And it’s an artificial boost to the bottom line of food aid groups, since the value of U.S. commodities donated to these NGOs is almost always higher than expenses for projects they pay for.

Consider too that U.S. wheat, corn, soybean, and rice producers already receive Farm Bill subsidies—subsidies that increase as the size of production and acreage goes up. While other Americans have seen drops in income, average household farm income in the United States rose 2.1 percent in 2012, to $89,099.

Taken together it’s easy to see why free-market analysts have long called the Farm Bill food programs “the largest corporate welfare program in America.” So it’s no surprise that an otherwise unlikely coalition of about 70 farm lobbyists, shippers, and charities, including a handful of faith-based NGOs, have banded together to oppose changing the system. What’s disappointing: Congress, including some budget-minded Republicans, will probably listen to them.

Dave Evans, the U.S. president of Food for the Hungry, makes a compelling case for keeping Food for Peace while acknowledging that “reform is needed.” The United States is the most dependable grain supplier in the world, he maintains, and food aid should promote U.S. interests abroad. 

That was the intent of Presidents Eisenhower and Kennedy when the program started. But that was before global markets made new efficiencies possible, and under a Cold War calculus different from multilateral threats we face today. 

Evans says he and others in the coalition don’t want to see any reductions in spending on food aid—overseas or to U.S. agribusiness or related interests. Evans is so good at explaining how the current Food for Peace system supports American businesses and U.S. interests he could moonlight for the Chamber of Commerce. That makes it hard to remember who’s being hurt: U.S. taxpayers and the people we are trying to help. It’s hard to imagine Congress going along with the president, given the special interests—and it’s a cautionary tale for launching new and expansive federal programs.


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