GLOBAL: US farm bill "too little, too late" for developing world
A farmer in southern Cameroon. Kauck of CARE said African farmers have to compete with American and European farmers on very disadvantageous terms
NEW YORK, 1 July 2008 (IRIN) - New ground was broken in US attempts to break the link between foreign food aid and supporting its own farmers in a new farm bill, but for many, including the Bush-led administration, it was too little, too late. [See IRIN in-depth on global food crisis]
For the first time, the legislation freed some of the money to be used in cash for food purchases locally or regionally in recipient countries instead of in-kind produce shipped from the US, the world’s largest food aid donor.
The farm bill governs food aid and is updated every five years.
But the amount - US$60 million over four years – was a fraction of the $300 million President George Bush had sought for one fiscal year and will be spent on a pilot programme.
Congress’s decision was rued by Bush, who noted that the farm bill, “… restricts our ability to redirect food aid dollars for emergency use at a time of great need globally … The bill does not include the requested authority to buy food in the developing world to save lives.”
The bill authorises $1.2 billion for food aid. As this often amounts to $2 billion or more in the appropriations phase and Bush asked for 25 percent for cash payments, this could have reached $500 million.
Photo: Abdullah Shaheen/IRIN
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The issue – and the lack of bolder Congressional action – goes to the very heart of the food price crisis and reforms that the UN, governments and NGOs say are needed to avoid plunging up to 130 million more people around the world into hunger, in addition to 850 million already suffering.
In the short term, local purchasing provides much more food for aid since it frees up money used on expensive freight and reduces delivery delays that can reach four months. In the longer term it could help stimulate agricultural production in the developing world as part of a global solution to the crisis.
Almost all food aid donated by the US is tied to domestic requirements for procurement, processing and shipping. Mixed reactions
“We are happy to see at least a new precedent for some funding for local purchase. They never got anything in the past,” David Kauck, senior policy analyst at CARE, told IRIN.
However, UN Special Rapporteur on the right to food, Olivier de Schutter, said: “I deplore the fact that the US have not learned the lessons from the past distortive impacts on local markets in recipient countries of food aid distributed in kind, especially in a context where, due to the increase in the prices of oil, the transport of food by US ships will significantly raise the costs of providing aid and thus the net benefits for the end beneficiaries.”
Oxfam policy director Gawain Kripke agreed: “The farm bill itself doesn’t demonstrate a lot of leadership or vision about how agriculture should operate and it’s pretty much a validation of the status quo.”
And International Food Policy Research Institute (IFPRI) research fellow Marc Cohen said the US was still using approaches that were 50 years old. “Not only the European Union but also Canada and Australia have moved towards providing more of their food aid locally and regionally,” he told IRIN. “The US is lagging behind even though it’s the leading source of food aid.” Costs of transporting food
The US Government Accounting Office (GAO), the Congressional investigative agency that examines the use of public funds and evaluates federal programmes, estimated last year that transportation costs totalled 65 percent of overall aid, with only 35 percent going to actual food.
Photo: Judith de Jong/IRIN
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Since then, skyrocketing commodity prices that translate into fewer tonnes and higher transportation costs due to soaring oil prices, have further upset even the previous adverse ratio.
NGO officials are loath to put a figure on lives potentially saved or additional people helped if the money spent on transportation went to food instead, but one analyst said it could roughly double the number of beneficiaries based on the assumption that 70-80 million people now receive US food aid annually.
A supplemental appropriations bill for another $1.2 billion for the fiscal years 2008 and 2009 is winding its way through Congress, but that too would be subject to the in-kind strictures of the farm bill unless otherwise directed by the legislators. At present it would provide some $50 million more for cash purchases. Subsidies
The huge subsidies for US agriculture are seen as putting farmers in poor and developing countries at a great disadvantage.
“When commodity prices are at record highs, it is irresponsible to increase government subsidy rates for 15 crops, subsidise additional crops, and provide payments that further distort markets,” Bush said in his veto message.
Kauck of CARE said African farmers had to compete with American and European farmers on very disadvantageous terms but stressed that if subsidies were to be dramatically reduced or eliminated, agricultural prices would go up.
“This would provide development opportunities for farmers and traders in many places, so it could provide a stimulus for development in many developing countries, but it would at the same time put poor people who are net purchasers of food and food deficit countries at an even greater disadvantage,” he told IRIN. “So it would essentially contribute to the kind of price rise that you are seeing now.”
Photo: Lynn Maung/IRIN
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In a report in April 2007, the GAO noted that multiple challenges hindered the efficiency of US food aid programmes by reducing the amount, timeliness, and quality of food provided.
“Specific factors that cause inefficiencies include (1) funding and planning processes that increase delivery costs and lengthen time frames; (2) ocean transportation and contracting practices that create high levels of risk for ocean carriers, resulting in increased rates; (3) legal requirements that result in awarding of food aid contracts to more expensive service providers; and (4) inadequate coordination between US agencies and food aid stakeholders to track and respond to food and delivery problems.”
Indeed, Concern Worldwide chief executive Tom Arnold told IRIN: “[The farm bill] is not going to help the situation on food aid nor will it help to make any deal in the World Trade Organization talks more likely. Overall, from a development viewpoint, it would have to be seen as a setback.”