Problems with food aid

Some core problems identified with international food aid is that it is a donor-driven system, it promotes domestic interests of donor countries, it is a foreign policy tool, international institutions are driven by exporters and development is not necessarily the objective.
International food aid was initiated at a time when a policy of price support for agricultural commodities generated large surpluses of cereals. The disposal of surpluses through food aid made it a crucial instrument to support North American farmers because it reduced storage costs and opened access to new overseas markets. Food aid also rapidly became an instrument of foreign policy in the Cold War era, with food being used to support friendly or strategic countries.
The European Common Agricultural Policy (CAP), created in 1962, is geared towards increasing agricultural productivity and food self-sufficiency. Through a combination of farm price supports and barriers to food imports, the CAP generated massive surpluses, especially wheat and animal products, which made the European Union (EU) and its member states major actors in international food trade and food aid.
EU food aid now accounts for more than half of all European food aid contributions. Through bilateral and multilateral channels, the EU has remained the second largest food aid donor since the 1970s. In the 1950s, the US was open about the fact that food aid was a good way to fight communism and for decades food aid has mostly gone to countries with strategic interests in mind.
The domestic interests have somewhat shifted in recent decades from supporting the whole American agriculture sector to the interests of primarily the following groups: a handful of large agribusiness, crop and food lobbies lobbies (Wheat, rice, soybean oil and milk powder producers and exporters), US shipping companies and NGOs and relief organizations.
The shipping companies, for example, benefit from the US 1985 Farm Bill which requires that at least 75 percent of US food aid be shipped by US vessels. In addition, just four freight forwarders handle 84 percent of the shipments of food aid from the US and that a few shippers rely extensively on US food aid for their existence.
This means that preference given to in-kind food produced in the US and to the US shipping industry makes US food aid the most expensive in the world. The premiums paid to suppliers and shippers combined with the increased cost of food aid due to lengthy international transport raise the cost of food aid by over 100 percent compared to local purchases.
The concept of food aid for development is therefore quite questionable. For most LDCs [Least Developed Countries], food aid was never part of any development policy, other than the one in support of export growth for developed countries. As early as the 1950s, FAO had warned of the potentially harmful effects of food aid on local agriculture. Driving down food prices and encouraging increased consumption of wheat and dairy, often undermines local agricultural production. This, in turn, adversely affects the livelihoods of rural populations and drives the “non-competitive” local farmers out of agriculture.
Unfortunately, Marshall Plans are not always successful, and for many countries, food aid is integrated into policies leading to structural food deficits and increased dependency on food imports. For the poorest countries, such dependency combined with scarce resources to finance imports has resulted in increased poverty and hunger.
The negative correlation between food aid flows and international cereal prices shows that the main driver of food aid remains the domestic support to farmers and agribusiness interests rather than needs of the developing countries. Typically, food aid flow increases in periods of low prices and high level of food stocks in developed countries.
In-kind food aid has been criticized in particular for being expensive. In addition, while it appears to release resources for the recipient government, those resources may not necessarily be used for development; they can be used for military purchases. In addition, such aid can also be tied to harmful conditions, such as Structural Adjustment Policies.
One of the ideas behind policies such as Structural Adjustment for poor countries is to turn their agriculture sector into cash crops for export to earn foreign exchange to import food and help pay off debts. Program Food Aid has helped with this although phrases such as “development” and helping the hungry are what makes media headlines. While these could have been objectives, such policies had another effect: creating new markets for rich countries to export their own products.
Supporting industrialization would certainly be very good for US agricultural exports, because as you help develop them industrially, you will shift their economy to an industrial economy, so that in the end you would create more markets for your agricultural products.
One of the examples was South Korea from one of the largest recipients of US food aid in the 1950s and 1960s to one of the largest buyers of agricultural products today. Another is the Philippines: US food aid may help to expand US exports in the short term and can build the foundation for future US sales. For example, the Philippines received soy meal under the PL 480 program in the early 1990s when its economy was in poor condition and it was difficult to finance the purchase of needed commodities. In 1999, the Philippines became the leading purchaser worldwide of US high-protein soybean meal valued at $212.2 million dollars, with a US import market share exceeding 90 percent.
The process used to achieve this is detailed further on this site’s food dumping and structural adjustment sections, but in summary went something like this: Cheap (highly subsidized) American grain and other foods would be dumped onto the local economy, small domestic producers would be unable to compete fairly, small producers lose/sell their land and become jobless or laborers or move to the big cities, as such economies are encouraged to be exporters of cash crops, and food from food “aid” is so cheap, other work is on the cheap and people struggle to make a living, poverty, food insecurity, and hunger increases
The concerns of program food aid were raised at its inception. For most LDCs, food aid was never part of any development policy, other than the one in support of export growth for developed countries. As early as the 1950s, FAO had warned of the potentially harmful effects of food aid on local agriculture.
So this wasn’t necessarily a mistake with good intentions. Throughout history, powerful countries do what they can to maintain or extend their power, and to compete with other centers of power. This may mean political power play, influencing economic policies to their favor, and, ultimately, war. Parallels can be seen with European colonial powers attempting to undermine Chinese, Indian and others’ markets during the European colonial/imperial age, or the British Empire trying to prevent a new America from being truly independent from Britain. Accompanying those tactics were messages and propaganda back to the home populations that they were civilizing the others, bring them modernization, development and various other benefits.