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US food aid policies create 561 jobs in Kansas, risk millions of lives around the world

I read recently the First Law of Policy Economics: Every inefficiency is someone’s income.

US food aid policy is definitely no exception, and it is riddled with inefficiencies.

Click for larger image

Exhibit A: This invitation from a coalition of big US shipping interests to an event in Washington today. At this event, USA Maritime will have tried to convince lawmakers and their staff that ancient and outdated US food aid legislation, which requires virtually all US food aid to be bought in-kind from the US, processed and bagged in the US, and shipped on US-flag ships to even the most far-flung destinations, should not be altered.

Let us leave aside for a moment that the report recommending favorable policies for the US shipping industry was bought and paid for by the US shipping industry and may not be the most objective or trustworthy source on the subject.

The main thrust of the shipping industry’s argument is that handling, processing and shipping food aid creates US jobs—13,127 of them to be exact—and boosts US industry, leading to this actual headline: “Food For Peace Program Produces More Than 870 Iowa Jobs.” If these policies were removed, they argue, it would be less profitable to operate a ship under the US flag, the US-flag fleet would shrink, and American jobs would be lost.

“Did you know,” reads the invitation, “that these programs have positive economic consequences for our economy at home?” The report tries to quantify one benefit of current US food aid policies, but (obviously) does not discuss the considerable costs of these policies to US tax payers, to the US’s reputation and credibility abroad, and most importantly to programs’ intended recipients—the millions of hungry and malnourished people fed by the world’s largest food aid donor every year.

The shipping industry’s arguments don’t hold water for many reasons. Here are two of the big ones:

First, assuming that you did want to subsidize the US Maritime industry, US food aid policies that create an overpriced, uncompetitive oligopoly are NOT a good way to do it. There are much cleaner, simpler and more effective ways to support US Maritime, such as direct payments to vessel owners. There is no reason to bundle shipping subsidies in with humanitarian aid other than the deeply cynical logic that it’s easier to rally public and Congressional support around money for starving children than around padding to the bottom line of multinational shipping conglomerates.

Second, current US food aid policies are NOT an effective or efficient way for the US to achieve what should rightly be the primary objective for food aid. According to the government’s own accountability office, buying food locally in sub-Saharan Africa (which is where the majority of US food aid goes) costs 34 percent less than shipping it from the US, AND gets there on average more than 100 days more quickly, AND is more likely to be the kind of food people are used to eating. I am not arguing that cash aid is ALWAYS better than food aid, only that any reasonable food aid policy would allow aid agencies the flexibility to determine what kind of assistance works best in each situation.

Despite resistance from all three sides of the iron triangle holding this legislation in place, innovators have managed to break loose about $400 million for pilot and supplemental programs over the last two years to buy food locally or regionally. This is still a small sum compared to the roughly $2 billion that the US spends annually, but it is progress.

With today’s lame report, the big shipping companies behind USA Maritime are asking us to value a few thousand American jobs in a declining and uncompetitive industry over America’s humanitarian reputation abroad AND the lives of the millions more people around the world who would benefit from reform to US food aid policy.

Do we even have to say it? This is NOT a fair trade.

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11 Comments

  1. Quiet Griot wrote:

    “There is no reason to bundle shipping subsidies in with humanitarian aid other than the deeply cynical logic that it’s easier to rally public and Congressional support around money for starving children than around padding to the bottom line of multinational shipping conglomerates.”

    I wonder though, isn’t this “deeply cynical” logic probably true, at least to some extent? Food aid is an easier sell to Iowans if it also involves creating jobs in Iowa. First-best policies are often not politically feasible in democracies, especially when we’re talking about issues that most people don’t care very much about, like foreign aid. I think it’s important to ask what the impact of untying food aid would be on pollitical support for food aid- we can be sure that tied aid isn’t a first best policy, but can we be so sure that untying it is ultimately going to be worth it?

    Posted June 24, 2010 at 7:51 pm | Permalink
  2. Adam wrote:

    Quiet griot – the point is that, with the exception of a very few emergency areas, nobody should be sending food aid anywhere and particularly not 1,000s of miles. It’s ridiculous.

    Posted June 24, 2010 at 11:19 pm | Permalink
  3. Emily wrote:

    “Despite resistance from all three sides of the iron triangle holding this legislation in place, innovators have managed to break loose about $400 million for pilot and supplemental programs over the last two years to buy food locally or regionally.”

    I hate to say this, but considering the resistance, that sounds like a rather hefty sum to me. Any data/information on how effective those pilot and supplemental programs have been?

    Posted June 25, 2010 at 12:55 am | Permalink
  4. Matt wrote:

    Reminds me of this Bloomberg article from 2008, which reported the six-month journey of a bag of dried peas from North Dakota to Ethiopia. While the food made its way from a U.S. storage facility to a port city in Africa, hundreds of people starve to death, victims of a famine foreseen for months.

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aU7BLQWMss2k

    I suppose that’s what happens when we continue to apply outdated policies created in the 1950s to modern day challenges.

    Posted June 25, 2010 at 2:56 am | Permalink
  5. Raphael wrote:

    Great post!

    I would add that many other countries have untied their food aid (mostly in Europe and recently in Canada) and there has NOT been an adverse effect on food security budgets disbursed by these countries. I myself was skeptical that any country could rally enough support for food aid when there wasn’t a domestic motive or interest group (shippers, millers, farmers, etc). But it seems the experience in Europe is showing that untied food aid does NOT lead to decreased aid.

    Posted June 25, 2010 at 11:30 am | Permalink
  6. Homira Nassery wrote:

    Good post. Hope everyone knows that CARE, which receives/d(?) a LOT of U.S. $ stopped this practice a couple of years ago at great risk to its resource base and main activity. It only buys local food for its projects now. They should be recognized for their principled and evidence-based stance.

    Posted June 25, 2010 at 12:29 pm | Permalink
  7. Sam Gardner wrote:

    Is the Food Aid Convention not to be renegotiated or, if possible, scrapped?

    Scrapping this convention would free up the aid that now is tied in this system for actually being allocated where most needed. How much would this increase efficiency?

    Posted June 26, 2010 at 8:35 am | Permalink
  8. doubleBubble tripleDip wrote:


    simpler and more effective ways to support US Maritime, such as direct payments to vessel owners. There is no reason to bundle shipping subsidies in with humanitarian aid other than the deeply cynical logic that it’s easier to rally public and Congressional support around money for starving children

    Better yet simply drop the tax on the transportation industry. Transport is the very heart of industry. Drop the tariffs, import duties, and tax on imported fuel for transport. Better yet drop all tax and restrictions on imported oil. Lets burn Arabian Oil first so long as there is enough Mid-Eastern Tranquility to get away with it. Burn theirs first and save ours for military emergencies.

    Starving children? Are you kidding? If those foreigners were starving they would not be able to get it up long enough to procreate. You want to stop the reports of starvation? Send them birth control things. For that matter why our government does not give to us all the free birth control things that we need. Cheaper than giving to us food stamps and food credit cards — right? They should at least remove taxes from all dedicated birth control companies. Larger companies could spin off the birth control element for tax purposes.

    Look! We have no Coherent National Policy. Capitol Hill is a Zoo. It is a menagerie of a thousand minds in cacophonous schizophrenic uproar. What we need is a Zoo-Keeper.

    Grazia

    Posted June 26, 2010 at 8:19 pm | Permalink
  9. Gary wrote:

    OK, so America should apologize for sending food to starving people through American modes of transport? Gimme a break. Also, if the food was so easily grown in Africa, then why not just grow it there? Accusing American shippers of starving people is the dumbest thing I have ever read. Why not lay the blame on the corrupt governments that don’t do anything to help their own people? You really think if we switched modes of transport millions of people in Africa would have more to eat?

    Posted June 28, 2010 at 11:11 am | Permalink
  10. Stan Wright wrote:

    Buying local food, however, fails to increase the local supply of food, which means that the primarly effect of aid is to drive up the price of food in the surrounding region. This may or may not be desirable.

    If the shortage is caused caused by surmountable issues – low prices for crops, high prices for seed or fertilizers, etc – then higher prices for farmers is exactly the solution, as long as the subsidy doesn’t end as soon as the crisis does. On the other hand, if the problem is one, like drought, which is not readily surmounted by economic factors, then buying up local crops merely trades the acute starvation of a few for the malnutrition of many.

    Posted June 28, 2010 at 5:37 pm | Permalink
  11. Charlotte wrote:

    I work with food security, and am really glad to see these issues discussed. A couple responses. Gary and Stan: yes, increasing local production in places like Africa (especially among smallholder farmers) is one of the main strategies of food security programs. Often this is not hard to do: many farmers are using poor quality inputs (seeds, tools, fertilizer, etc). But when we have to pay for US ships to carry food aid, the amount of money we have to spend on such production programs goes down. That transport money comes directly from our bottom line. The USG tells us how much money is available for a program, we figure out how much the commodity and freight will cost, and then we can figure out how to fund program activities with what is left over. Thank goodness for local/regional procurement.

    And Homira, while CARE stopped requesting food aid for monetization (selling US commodities overseas for program income), they still take US food commodities for distribution. Although they, along with several other NGOs, are pushing for increased local/regional procurement and other reforms.

    Posted June 28, 2010 at 6:57 pm | Permalink

7 Trackbacks

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  7. By What I’m reading « The Hermitage 3.0 (Beta) on July 5, 2010 at 10:24 pm

    [...] US Food Aid policies create 561 jobs in Kansas, risk millions of lives around the world I read recently the First Law of Policy Economics: Every inefficiency is someone’s income. … Second, current US food aid policies are NOT an effective or efficient way for the US to achieve what should rightly be the primary objective for food aid. According to the government’s own accountability office, buying food locally in sub-Saharan Africa (which is where the majority of US food aid goes) costs 34 percent less than shipping it from the US, AND gets there on average more than 100 days more quickly, AND is more likely to be the kind of food people are used to eating. I am not arguing that cash aid is ALWAYS better than food aid, only that any reasonable food aid policy would allow aid agencies the flexibility to determine what kind of assistance works best in each situation. [...]