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Obama Aid Ravages Third World Farmers

by James Bovard

President Obama proclaimed two years ago: “As the wealthiest nation on Earth, I believe the United States has a moral obligation to lead the fight against hunger.”  Obama loves to preen about the U.S. government’s purported generosity to the world’s downtrodden. However, like previous presidents, he has largely ignored  how U.S. aid programs clobber recipients.

Nowhere is this clearer than in the sordid history of U.S. food aid. Food for Peace was devised in 1954 to help dump abroad embarrassingly huge crop surpluses fomented by high federal price supports. The primary purpose of Public Law 480 (in which the program is embodied) has been to hide the evidence of the failure of other farm programs. Although PL-480 sometimes alleviates hunger in the short run, the program disrupts local agricultural markets and makes it harder for poor countries to feed themselves in the long run.

The Agriculture Department (USDA) buys crops grown by American farmers, has them processed or bagged by U.S. companies, and pays lavishly to send them overseas in U.S.-flagged ships. At least 25 percent of food aid must be shipped from Great Lakes ports, per congressional mandate. Once the goods arrive at their destination, the Agency for International Development (AID) often takes charge or bestows the food on private relief organizations.

In the 1950s and 1960s massive U.S. wheat dumping in India disrupted India’s agricultural market and helped bankrupt thousands of Indian farmers. In 1984 George Dunlop, chief of staff of the Senate Agriculture Committee, speculated that American food aid may have been responsible for the starvation of millions of Indians. The Indian government generated fierce hostility from the U.S. government because of its pro-Soviet leanings in the Cold War. In a secret White House tape in 1971, Richard Nixon declared, “The Indians need — what they really need is a mass famine.” The story behind Nixon’s deprecation is told in a new book, The Blood Telegram: Nixon, Kissinger, and a Forgotten Genocide, by Gary Bass.

In 1977 Congress responded to the carnage that Food for Peace wreaked abroad by enacting a requirement (sponsored by Sen. Henry Bellmon of Oklahoma) that compelled AID and the USDA to certify that food aid would not devastate farmers or destabilize markets in recipient countries. But whom does Uncle Sam entrust to ensure that donations won’t pummel local farmers? In most cases, a foreign government or private relief organization hoping to gain a tremendous free-food windfall from Washington. Cornell professor Christopher Barrett, in his book Food Aid after Fifty Years, noted that “recently a senior U.S. government official remarked privately that ‘Bellmon Analyses are sheer fraud…. No one believes them.’”

In the 1980s, famines and hunger in sub-Saharan Africa were continually in the world news. But few people recognized how U.S. aid programs often made the situation worse. In Somalia a report made by a AID inspector general concluded, “Nearly all Title I [Food for Peace] food deliveries to Somalia in 1985 and 1986 arrived at the worst possible time, the harvest months, and none arrived at the best time, the critical hungry period. The consensus of the donor community was that the timing of the deliveries lowered farmers’ prices thereby discouraging domestic production.”

In 2008 AID began tapping an independent consulting firm, Fintrac Inc., to recommend prudent donation levels. Nevertheless, in 2010 AID approved sending almost three times as much rice to Liberia as Fintrac recommended. That same year the agency approved massive wheat shipments for Burundi and Sierra Leone, even though Fintrac recommended against it. The USDA is even more reckless. In 2008 it approved sending 30 times more soybean meal to Armenia than the agency’s own staff experts recommended.

In recent decades AID has permitted recipients to “monetize” U.S. food aid — selling all or part of it in local markets and using the proceeds to bankroll their preferred projects. U.S.-donated food is routinely sold in local markets for much less than prevailing prices. In 2002-03 a deluge of food aid in Malawi caused local corn prices to plunge 60 percent. Mozambique wheat prices nose-dived after AID and the USDA simultaneously “flooded the market,” according to the U.S. Government Accountability Office (GAO). Haitian farmers were similarly whipsawed after the United States and other nations bombarded the island with free food after the 2010 earthquake there.

In a speech last year, AID chief Rajiv Shah called the monetization of food aid “inefficient and sometimes counterproductive,” saying that in some cases “evidence has indicated that this practice actually hurts the communities we seek to help.” Meanwhile, the United Nations Food and Agriculture Organization cautions that monetization often results in “destroying local farm prices” and CARE, one of the world’s largest relief organizations, boycotts all monetization projects. The GAO concluded that “AID and USDA cannot ensure that monetization does not cause adverse market impacts because they program monetization at high volumes, conduct weak market assessments, and do not conduct post-monetization evaluations.”

The Obama administration proposed to end monetization and instead give more cash to foreign governments and private relief organizations to buy and distribute food locally and finance preferred projects. Shah said that the proposed reforms would allow U.S. aid to feed up to four million more people per year. The agency also touted a new program to distribute debit cards to allow refugees and others to shop for meals at local stores — similar to how the food-stamp program operates domestically. But the goal should not be to maximize the number of foreigners eating out of the U.S. government’s hand.

Most Americans have the impression that U.S. food relief goes mainly to foreign areas hit by disasters or emergencies. Actually, only a small percentage does. As one congressional staffer told me in 1984, a AID representative goes into a country, finds an excuse for a project, and then continues it for 15 years, regardless of need or results. Many such programs feed the same people for more than a decade, thereby decreasing permanently the demand for locally produced food and creating an entrenched welfare class. GAO notes that most “emergency food aid funding” is spent on “multiyear feeding programs” that have produced epidemics of scurvy and beriberi because of the limited food choices.

The Obama administration also proposed to slightly reduce the percentage of U.S. crops purchased and shipped overseas on U.S. flagships. Food for Peace’s cargo-preference subsidies are alleged to be justified to preserve U.S. merchant ships in case of a national emergency. But a Senate Agriculture Committee report concluded, “Rather than encouraging the development of improved U.S. vessels, the program encourages the continued use of semi-obsolete and even unsafe vessels which are of little use for commercial or defense purposes.” But regardless of its waste, the cargo preference generates a tidal wave of congressional campaign contributions from the ship owners and the merchant marine union. The Obama administration put little effort behind its reform proposal, which Congress largely scuttled without further ado.

Obama, in a 2009 speech at the Clinton Global Initiative, orated, “The purpose of foreign aid must be to create the conditions where it is no longer needed.” But, despite uplifting rhetoric,  Obama is perpetuating a program that sabotages foreigners’ self-sufficiency. It is time to impose a Hippocratic Oath on foreign-aid programs: First, do no harm.

James Bovard, a policy advisor to the Future of Freedom Foundation, is the author of author of Public Policy Hooligan,Attention Deficit DemocracyThe Bush BetrayalTerrorism and Tyranny, and other books.  More info at www.jimbovard.com; on Twitter @jimbovard

James Bovard is the author of Attention Deficit Democracy, The Bush Betrayal, Terrorism and Tyranny, and other books. Bovard is on the USA Today Board of Contributors. He is on Twitter at @jimbovard. His website is at www.jimbovard.com

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