Posted on April 8, 2013 by Terrence Isert

An interesting change to food aid to be proposed by the Obama Administration in its 2014 budget  involves a restructuring of a 60-year practice in food aid for developing countries.  Instead of distributing food from the US, the change would permit food to be purchased locally or provide grants directly to charitable agencies for their humanitarian programs. An interesting debate that has been brewing around this issue for many years centers on US-agriculture global competitiveness versus the crowding out of local farmers. It is no doubt that food aid is a big business and that food is desperately needed. In 2012, the USDA  alone estimated that its food aid programs would benefit approximately 9.7 million people worldwide.   From 2006-10, the US shipped an average of 2.7 million metric tons of food at an average cost of $2.4 billion/fiscal year, largely (73%) to respond to emergency and relief needs. The GAO  issued findings on food aid effectiveness in a  2011 report that stated food aid cost the US government an additional $219 million over a 3 year period (2007- 2010). This was due in part to inefficient monetization, the term used to describe how aid agencies sell US food commodities overseas to get funding for their programs. The GAO study recommended closer market price monitoring by USAID and USDA and reducing maritime shipping costs (a third of overall food aid costs) by increasing competition to reduce this loss. What will be interesting to watch as this debate unfolds is whether the US government, private sector, and the humanitarian community can reform food aid in a meaningful way to more effectively address poverty and other root causes to world hunger. Watch this space for more news.