The story behind food aid

In 1996, the World Food Summit set its sights on reducing by half the number of hungry people in the world by 2015. But 10 years after the signing of this declaration, the international community is coming to grips with the fact that it will fall far short of its goal. The food security situation of many developing countries has hardly improved at all in the last decade. Reports from the Food and Agriculture Organization (FAO) of the United Nations tell the same story. The demand for food aid is still on the rise. What is the impact of food aid and the story behind food aid?
According to Martin Rupiya the story of food aid began during the 1940s when US farmers suddenly found themselves with an increased harvest of over 50% against declining domestic consumption, estimated at over 30% at the time. Reasons for this development included the favourable impact of the increased use of fertilizers, pesticides, seed selection, price support that had led to market stability as well as confidence of the farmers and the related demands for agricultural commodities from Europe during the Second World War. At the time, Europe’s agricultural fields had become battlefields.
Combined, these aspects soon resulted in huge surpluses of cotton, wheat, beef, dairy and tobacco amongst many other products in the US. Much of this could not be absorbed locally. This sudden lack of markets affected not only the farmers but agro-business, banking, and commercial and shipping entrepreneurs who had entered the food production and distribution chain.
The thin line between the fields and the agro-commercial interests that is so crucial to food security had also been bridged. Finally, storage of the surpluses was also proving costly, averaging US$1 million a day.
According to Martin Rupiya a decision was taken at the 1952 annual American Farmers’ Bureau Convention to qualify for this, a provision was added requiring countries to commit themselves in the future to purchase from the United States in US dollars. ‘Local currencies’ raised during the initial concessionary phase would be passed to US corporations – mostly those already linked with agro-commercial businesses – at low interest rates, for them to invest in the same countries. Under the provisions of Public Law 480, corporate subsidiaries of US firms were soon established in 31 states.
The range of some of the notable companies set up included: India Wyeth Laboratories; Union Carbide; Otis Elevators; Sylvania Rockwell International; Good Year; CPL International; Sunshine Farms; First National City Bank; Bank of America; and American Express. Through this process the interests of farmers, banking, research, seed, fertilizer, pesticides and commercial agriculture had been cemented. Part of the manifestation of the programme was the opening of 7,000 bakeries established in South Korea at that time. Yet another feature of the use of food aid emerged early in the process – this was use of the facility as a military weapon.
Through the Marshall Aid Plan to Europe, 25% of US contributions were in the form of food aid. Furthermore, huge food quantities were directed towards Italy and France during the mid-1950s, “in order to keep the impoverished working classes from voting against capitalism”. Marshall himself asserted at the time that, “food is a vital factor in our foreign policy”. 7 In pursuance of this policy, quantities of food were directed to states bordering communist countries such as China, North Vietnam and North Korea. In this regard, South Vietnam, Cambodia, South Korea and Taiwan received huge deliveries of food aid. Meanwhile, little was directed towards India, at that time in the grip of a devastating famine that killed over four million people.
The US also began to use locally generated finances through the food aid programme to finance some of the military approach government for assistance towards maintaining market stability and sustaining the profitability of farmers. The leaders approached government partly with a solution, suggesting the consolidation and expansion of the foreign market that had been created by the war demands, as a secondary market. Put differently, the unloading of food surpluses while protecting the interests of farmers now entered the realms of US foreign policy.
Legislation in the form of Public Law No. 480 (PL 480) was passed, creating a food aid facility outside the US. Its main focus was not to tamper with domestic production but to ensure that markets for the surpluses were established outside the US. In the initial stages, the US food aid policy and secondary market strategies operated in Western Europe, as well as in the occupied territories and ‘colonies’ such as the Philippines, South Korea and Taiwan.
In practice, between 1952 and 1957, an average of 28% of annual production was offloaded on the secondary market. In effect, this development partly corrected the domestic withdrawal that we had seen of 30%.
A further consideration at that time was to expand wheat markets by championing changes in foreign staples such as rice. Propaganda from the South Korean government also began to extol the virtues of eating wheat with slogans such as ‘eating wheat is patriotic’, in a move that was to change the staple preferences from rice noodles, most of which was now being exported, to wheat noodles. As shall be shown in the section dealing with the impact of the food aid policy, this soon changed the staple food patterns of large parts of South Asia.
In 1959, external sales averaging US$5 billion were off-loaded; however, the increased production that was not being tackled continued to choke both the domestic and secondary foreign markets. Demand was running far less than the unchecked farm production.
A second feature was added to the Public Law 480 food aid law; namely, to further expand the foreign secondary market through allowing countries concerned to buy the grain and cereals using their own currencies.
In 1975, for example, at least US$6 billion of part of the sums raised in South Korea and Vietnam was used to sustain US troops in the same area of operations. The impact of PL 480 By 1973, 50% of US food aid was going to two states: South Vietnam and Cambodia. The impact of the cheap food import policy in the colonies between 1960 and 1961 turned them from net food exporters to food dependencies. In the case of South Korea, a country that was 92% self-sufficient suddenly had its farmers struggling to barely cover costs of production. Many were soon forced to sell their land, becoming landless and turning to the towns for employment.
So having in mind the above story, are we really rethinking our strategies towards reversing the trend? For more and detailed information, consult Martin Rupiya’s “FOOD AID: The Implications for Food Security in Africa, 2004”