CHRIS BARRETT: There are a number of myths that Dan Maxwell and I try to explode in our recent book, Food Aid After Fifty Years. And at this point, I'd just like to emphasize six of those myths as we come to a close in talking about donor-directed or donor-driven food aid. The first myth is that American food aid is primarily about feeding the hungry. As I've already emphasized, food aid from its very inception really had multiple objectives and feeding the hungry was at best a second order objective behind concerns such as surplus disposal or trade promotion.
A second myth that one needs to think about is that American food aid really is no longer driven by self-interest. As we have already seen, food aid flows remain very closely tied to privately-held wheat stocks and wheat prices because food aid is very much still a response to private sector interests in the American agricultural sector. It's also driven heavily by concerns surrounding payments for Emerson Trust stocks and concerns for shippers-- profitability under the Cargo Preference Act.
The third myth-- and perhaps the most important myth-- is that food aid is an effective form of support for American farmers. As I have already mentioned, food aid represents less than a billion dollars a year of procurement in a food economy of something on the order of a trillion dollars a year. At that order of magnitude, food aid simply can't move markets. It can't affect the prices that American farmers get for the food that they grow just as it doesn't affect the prices received by Canadian or European farmers. Food aid, therefore, isn't benefiting farmers directly. And yet, it's the idea that we're supporting the American farmer that provides an awful lot of the political sustenance today for food aid programs as we know them.
The fourth myth is that food aid is an effective means by which a donor can build future commercial export markets for its agricultural products. In testimony before Congress, for instance, proponents of food aid programs today often cite statistics such as 43 out of the 50 largest commercial importers of American food products around the world were once food aid recipients. This is a true claim, but it is also true that more than 86% of the world's nations were once food aid recipients. So the idea that food aid is somehow causing countries to become commercial importers is not true in the data, and it's slid over a bit by claims such as that 43 out of 50 importer statistic.
In fact, when one does careful statistical analysis, one finds that food aid not only does not create commercial markets on average over time. Food aid, in fact, displaces commercial exports by the donor and continues to displace commercial exports by the donor country for many years. The simple reason is food aid isn't like a buy one, get one free coupon, or it's not like a coupon that one might get in the mail-- come try our product this one time, but thereafter, you have to buy it. Because food aid vendors-- the companies that sell food into the food aid system-- don't much care who writes the check, they have an incentive to continue food aid procurement programs and food aid distribution programs into recipient countries. So there's a great deal of persistence in food aid flows.
For instance, Peru has received food aid every year since the 1954 enactment of Public Law 480. Food aid programs into Peru have been extremely persistent. It's not building a market. It's just an ongoing process of shipping US-paid food from the US to Peru.
The fifth important myth is that Cargo Preference laws that drive up the cost of food aid freight to developing countries effectively support the US maritime industry. It's important to keep in mind that those original provisions for Cargo Preference were intended in a different military era, an era in which we moved troops and material through very different means-- almost entirely over sea. Today, the military operates differently. Indeed, the Department of Defense and internal negotiations within the present administration has favored curtailing Cargo Preference. It no longer sees Cargo Preference as central to maintaining a viable sealift capacity for defense purposes.
Meanwhile, Cargo Preference profits have not sustained an American shipping industry. The shipping industry has shrunk by half in the last decade. We're now considerably smaller than the shipping industries of Green, Norway, China-- many other countries. So it simply doesn't seem true that Cargo Preference is either serving much of a national security objective today nor that it is very effective at keeping our shipping industries viable.
The sixth myth is that NGOs are a force for progressive change in food aid. Because NGOs have been so actively involved in very creative, effective solutions to combating long-term poverty and food insecurity in the poorest corners of the globe, it's often perceived that food aid NGOs must also be a progressive force for change within that environment. But keep in mind how dependent most of the large US-based NGOs are on food aid today.
As a result of their budgetary dependence upon food aid, both direct distribution and, in a few cases, heavy dependence on monetized food aid is a cash resource. This makes them very reticent to take on the challenge of rethinking how best to use food resources in support of development objectives today and in support of humanitarian objectives in time of emergency. So these six myths are very important to think through as one considers how best to structure or to restructure the global food aid system so as to serve the new objectives we have under the United Nations' Millennium Development Goals, that we will have hunger and poverty by the year 2015. Food aid can be a valuable resource in that pursuit. My claim is that, as presently designed, we fall short of what we could accomplish with food as a resource in part because people hold onto these myths.
So just to wrap up this section, modern food aid began primarily as a means for advancing donor country objectives for surplus disposal, trade promotion, Cargo Preference in support of maritime industries, et cetera. And in spite of important changes in rhetoric and in policy over time, those really remain the key drivers of food aid today-- especially the main US food aid programs. There has, nonetheless, been progress-- important progress-- towards a recipient-oriented food aid system, especially among the smaller donors. This progress underscores the potential of food aid as an instrument for reducing hunger, malnutrition, and poverty and points to the key issues to which operational agencies-- like the NGOs or like the WFP-- need to attend and the key issues to which policymakers need to attend as we move forward.
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The US, Canada, and other developed countries have a decades-long tradition of sending food abroad to less-fortunate people. We think of this primarily as a humanitarian practice. But it originated with and has evolved to serve other economic, political and strategic aims as well. Professor Barrett examines how food aid has evolved, to what extent it fulfills its humanitarian and economic development and other, donor-oriented objectives today, and what challenges it now faces.
This video is part 4 of 6 in the International Food Aid After 50 Years series.