President Barack Obama wants to revamp Washington’s global food aid system. His 2014 budget request would transfer much of the program from the Department of Agriculture to the Agency for International Development and make other changes that the White House predicts would save taxpayers $500 million over the next decade.
Unsurprisingly, the existing system’s boosters are outraged. The surprise is who those boosters are. It’s not the non-governmental organizations devoted to combating world hunger. Many of them support the reform. No, it’s the agribusiness organizations and the shipping industry that are crying foul. And that helps illuminate the system’s problems.
For the last several decades, the government provided other countries with food aid by purchasing commodities and paying to have them shipped overseas — predominantly on American ships. This practice cost taxpayers roughly $1.5 billion per year. There is even a system of “monetization,” that lets aid groups receive the food, sell it on the market, and use the proceeds for other development projects in the target countries.
Supporters tout this system as being good for farmers, good for shippers, and even good for the aid groups. But it’s horribly inefficient.
Without an overhaul, Uncle Sam will keep on buying commodities here, shipping them around the globe, and then converting them back into cash to fund development projects. In 2011, the Government Accountability Office estimated that over a three year period the $722 million provided for this monetization scheme resulted in just $503 million going to development. That’s more than $200 million wasted, a loss of 30 percent.
Furthermore, in some cases this dumping of agricultural commodities in foreign markets depresses local food prices, which can in turn discourage local food production. That’s hardly a viable development strategy.
In some cases time is of the essence, like after a tsunami struck Indonesia in 2004. But instead of sending cash to buy food aid locally and quickly (agriculture areas miles inland were unaffected by the disaster) our government loaded rice and other commodities on the proverbial slow boat to China (well, Indonesia).
Under some of the food aid programs, millions of dollars have been directed to large companies like Land O’Lakes, and big agricultural interests like the American Soybean Association. Whether you favor or oppose sending food aid, it’s an inefficient way to help the hungry in other countries.
The Obama administration’s plan isn’t radical. According to USDA Secretary Vilsack, more than half of food aid would still come from American producers. And the proposal directs $25 million to bolster the U.S. shipping fleet (which becomes very important for moving equipment in times of war). The proposal represents a common-sense step in the right direction.
Last year, farm profits stood near record levels, only surpassed by the year before. Clearly, American agribusiness doesn’t need the international food aid subsidy. With cheaper competition from foreign shipbuilding and shipping lines, the problems facing the U.S. shipping industry are more structural and fundamental than any food aid program can patch over.
If we as a nation decide that for humanitarian, diplomatic, and strategic reasons we’ll keep providing food aid, then we should do it in a cost-effective manner that gets the most bang for our buck. That means not lining the pockets of U.S. agribusiness and shipping interests along the way.