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3-Food: U.S. food aid needs major reform, new report from IATP

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TITLE:  U.S. Food Aid Needs Major Reform, New Report
SOURCE: Institute for Agriculture and Trade Policy, USA
DATE:   27 Jul 2005

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U.S. Food Aid Needs Major Reform, New Report
Current System Not Addressing Long-term Causes of Hunger

Minneapolis - U.S. food aid programs are plagued by inefficiency and are
not addressing the long-term causes of hunger and food insecurity in the
developing world , according to a new report by the Institute for
Agriculture and Trade Policy (IATP).

The report, U.S. Food Aid: Time to Get it Right, points out that the main
beneficiaries of the U.S. food aid system are agribusiness companies
bidding on food aid contracts, U.S. shipping companies that transport the
food internationally, and private voluntary organizations (PVOs) that
rely on sales of food aid in developing countries to generate funds for
their other aid work (a practice called monetization).

The report found that this unusual political alliance blocks urgently
needed reforms of U.S. food aid. The U.S. practice of sending food for
sale or distribution in countries facing hunger is inefficient, expensive
and slow. The U.S. should move towards food aid programs based on cash
for purchasing food in or near the country where food aid is required.
Almost all other major food aid donors have moved away from the donation
of commodities.

The report, authored by IATP Trade Program Director Sophia Murphy, and
Kathleen McAfee, Visiting Scholar in Geography, University of California-
Berkeley, can be read at:

"Food aid is about saving lives--often in desperate situations," said
Murphy. "But food aid also has to be part of a much larger strategy to
build and protect food security. We have to make sure we are not feeding
children now who will still be food aid recipients in 20 years. U.S. food
aid today fails this critical test."

U.S. food aid programs are a hot topic at the World Trade Organization
(WTO), where other countries criticize the two practices that are largely
unique to the U.S. First, the monetization of food aid generates
development dollars for PVOs at enormous expense and often to the
detriment of local producers and traders in developing countries. Second,
taxpayer-funded export credits facilitate food dumping: overseas sales of
program food aid for less than the costs of production. A European Union
proposal at the WTO would require that all food aid be cash-based and
untied from requirements to source commodities in the donor country. Food
aid is expected to be a point of contention at the next WTO Ministerial
in Hong Kong in December.

U.S. food aid also suffers from administrative confusion, according to
the report. Two departments - USAID and the U.S. Department of
Agriculture - oversee six separate programs. The U.S. is the world's
largest food aid donor, funding 57 percent of global food aid deliveries
in 2004. Yet, the U.S. is the only food aid donor, aside from South
Korea, that sells part of its food aid. All other countries donate all
their contributions. And, the U.S. provides less food aid when food
prices are high and aid is most needed.

The report concludes, "in the name of the poor overseas, very large sums
of money are now paid to prop up U.S. shipping firms and to buy food at
higher than market prices from U.S. based food processors and other
agribusinesses." The report found that most food aid is self-interested
and politicized, rather than focused on the needs of the hungry.

While the world has seen increases in food production, food dependency in
many developing countries has grown. Food production per in Africa is 10
percent less than it was in 1960. Sub-Saharan Africa now receives half of
total food aid contributions. More than 200 million people in Africa are
undernourished and of those, about 40 million in any one year face acute
hunger. Countries in parts of Latin America and much of sub-Saharan
Africa that once fed themselves and exported food are now net food importers.

"African farmers are capable of producing a lot more food for their
communities and nearby regions. But policies of the U.S., the WTO, and
the World Bank promote the use of African land and resources for export
crops instead, and many African governments neglect agriculture for
domestic food needs. This must change, or hunger will increase," Dr.
McAfee explains.

Food aid programs must have a two-fold objective: to meet emergency
needs, preventing deaths today, and to help build sustainable and self-
reliant food systems across the world for tomorrow. The report makes a
series of recommendations on how to improve U.S. food aid, including:

- Transition to an untied, cash-based food aid system;
- Phase out sales of food aid;
- Impose strict limits on in-kind food aid;
- Protect and promote people's right to food;
- Protect and promote countries' rights to determine their own food
security strategy;
- Establish strong and enforceable multilateral guidelines.

Contact: Ben Lilliston, 612-870-3416,

The full report can be read at:

The Institute for Agriculture and Trade Policy works globally to promote
resilient family farms, communities and ecosystems through research and
education, science and technology, and advocacy.


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