Thursday, December 13, 2012

Reforming the Aid Industry


In 2006 I was working on developing a new product line in a flour mill owned by the largest American food company. Testing the system would produce at least 200 metric tons of flour that would technically meet government specifications for edibility, but would be unmarketable because of contamination and variable quality. When presented with this information the project manager just laughed, “We don’t throw anything away; Animals or Africans.” My puzzled look elicited an explanation, “If it’s too bad it’ll go to cattle feed; if it still tests as flour, it’s bagged for aid. We even get paid for our trash!”

            The problems with traditional food aid start at the source and continue through to the recipient. It provides a convenient dumping ground for surplus and substandard food stocks, leads to long delays in aid arrival (up to 90 days for U.S. sourced aid to reach the African interior), and distorts local economies with a sudden influx of cheap or free staples driving local producers out of the market. This last effect can make a region permanently dependent on foreign assistance as the initial aid puts local farmers out of work, and first world subsidies allow foods to be sold below market cost ensuring continued dependence on the foreign product.

            There is a certain absurdity to buying a product on the US market and transporting it half way around the world to a region that may have perfectly functional markets within or close to the affected region. Indeed, for North American aid 40-50% of food-aid budgets are spent on transport and storage. Many organizations have pushed for direct cash grants to purchase food locally through regional markets. Doing so increases the amount of aid that a given dollar can purchase, and can deliver aid in a substantially shorter time. This approach also strengthens local markets, leading to a stable long term food supply.

            The EU has begun to respond by shifting aid towards cash grants, and the USDA has put $60 million towards the Local and Regional Procurement Project, a pilot program aimed at exploring the process of local sourcing. The money spent on US food aid ($2.3 Billion in 2010) currently goes to some constituents with considerable political clout, and they have resisted attempts to transfer to a grant based program. As mentioned in the introduction, this market provides American agricultural companies a lucrative dumping ground for unsellable product, while statute dictates that 75% of aid must be transported by American shipping companies. Even some NGO’s benefit from the current system, as they are allowed to “monetize” some aid by selling it on local markets.           

            If these USDA programs are serious about delivering aid, rather than providing another subsidy to agribusiness, reforms must be made to shift priorities to a grant system. This, along with the elimination of tariffs and other subsidies, could enhance food security throughout the developing world, as well as providing considerable development to the regions served in an efficient, market friendly way.


http://www.guardian.co.uk/global-development/2012/jul/19/us-food-aid-special-interests-reform

http://www.fas.usda.gov/excredits/FoodAid/LRP/LRP.asp

http://www.oxfam.org/sites/www.oxfam.org/files/bp71_food_aid.pdf

6 comments:

  1. This seems like a logical and feasible solution for toning down some of the hidden issues that are associated with aid. Many foreign governments including the US give a substantial amount of aid every year presumably at the expense of domestic issues and thus it would prudent to ensure that it’s benefiting its recipients as best and as efficiently as possible and that the (humanitarian) return on investment is as high as possible.

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  2. The opening story appalled me very much, I cannot somebody would talk like that and do business like that. Its unbelievable that he would allow contaminated flour to be bagged for aid, not only is that unethical and immoral, but your are worsening the problem for Africans when they get sick and die from bad food products. This is why aid is ruining Africa and being counterproductive, I have known for so long that they give Africa the worst food and supplies we have left over which is so wrong. And because all of this is free or cheap, it hurts jobs in those countries along with bad food and products hurting the people. We might as well not even give aid even though that sounds bad to say our aid along with Chinese aid is selfish and destructive. I agree completely with ending message of your post, if the United States and the EU want to effectively and correctly give aid to African countries, let us just give them the money directly so they can purchase food in their own countries and not get half the money swindled away by hidden and unnecessary costs. Since a dollar is worth much more over in Africa than it is here in the US, we should be sending them the money because anything else we send them is not helpful and destructive.

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  3. Food aid is so sad to me because I think it's one of the few cases in Western aid where the intentions were just, for lack of a better term, good. There were posters of hungry people and the so the West wanted to feed them. But it's like we talked about how aid is so much more than it seems, food aid is harmful as it assumes we can solve the problem as the White Saviors, while failing to invest in solutions and removing African's agency. It's interesting though because we do this to Native Americans too, the food aid we give is absolutely disgusting.

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  4. Food aid is so sad to me because I think it's one of the few cases in Western aid where the intentions were just, for lack of a better term, good. There were posters of hungry people and the so the West wanted to feed them. But it's like we talked about how aid is so much more than it seems, food aid is harmful as it assumes we can solve the problem as the White Saviors, while failing to invest in solutions and removing African's agency. It's interesting though because we do this to Native Americans too, the food aid we give is absolutely disgusting.

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  5. This post does a good job highlighting how aid has become a self-interest thing for corporations. As we discussed in class, aid takes away from the local economies of African countries. So why is it that we keep funneling money into buying western food and clothing aid and shipping it over? The main beneficiaries from this type of aid are the western corporations that get paid. There should be more of an emphasis on building local markets, like through the cash grants mentioned in this post.

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