Boom challenge for food aid policy
Friday, 8 February 2008
FT Syndication Service
The global commodities boom has done more than enrich a few farmers. It has pushed hunger and malnutrition back up the agenda of aid donors and intensified the challenge to the United Nations World Food Programme (UNWFP), the biggest food aid agency, of feeding poor countries devastated by natural disaster or war.
It has also given fresh urgency to a debate in the US, the world's largest donor of food aid, about Washington's practice of giving commodities direct rather than providing cash to buy them on the open market.
The sustained rise in commodity prices has put huge strain on the budgets both of poor people in developing countries and the agencies trying to feed them in emergencies. The WFP's food costs have increased by 70 per cent in five years, with 20 percentage points of that in the past six months.
Wheat, rice and soyabean prices Wednesday hit all-time highs in Chicago while corn reached a 12-year high. Grain prices have doubled in the past year.
Josette Sheeran, head of the WFP and a former official in the administration of George W Bush, US president, has surprised development economists with her willingness to reform the agency away from being an organisation that simply handed out the rich world's surpluses. In an effort to save money and spread the benefits of the commodity price boom to poor farmers, the WFP has been trying to purchase more food from developing countries close to the locus of each emergency.
"We have been talking in the (executive) board about moving from being a food aid agency to a food assistance agency," she told The Financial Times in an interview. "We are suggesting we expand our toolbox so we have a more nuanced response as appropriate."
Of the food it bought on the open market last year, amounting to about $760m (€518m, £387m), a record 80 per cent came from developing countries, with Uganda the biggest supplier. The WFP has begun programmes to contract local farmers to produce commodities to order. In Laos it has encouraged farmers to supply a corn-soya blend it uses for high-energy porridge - more usually sourced from rich countries such as Belgium.
Along with some charities, such as Oxfam, and development ministries, including the UK's department for international development, the WFP has also piloted giving cash or vouchers directly to people in poor countries to stimulate local demand.
"We need to make sure we are capturing this new face of hunger," Ms Sheeran said. "Typically our needs analysis has not. We had to look at situations where the shelves are full of food but people are unable to afford it."
The WFP is dependent on rich donors and the strain on budgets has increased attention on the US practice of donating only food bought from its farmers and mainly shipped in US-flagged vessels. Other countries claim this is a thinly disguised agricultural subsidy that wastes money and often results in aid arriving too late in an emergency, distorting local food markets just as they are recovering from shortages. The Government Accountability Office, a US watchdog agency, estimates logistical expenses are 65 per cent of total costs for US emergency food aid.
The US food aid programme dates from the 1950s, a time of agricultural surplus. Grain mountains piling up in US warehouses were shipped to India or Africa as humanitarian aid, though also with the aim of helping US farmers and as a tool of foreign policy: not for nothing did President John F.?Kennedy relabel the programme "Food for Peace".
As part of its drive to reform US farm programmes, a campaign that has put it at loggerheads with Congress, the Bush presidency has called for up to a quarter of its main food aid programme to involve cash purchases in developing countries. It cites Iraq in 2003 and the Lebanon humanitarian crisis in 2006 as examples when US food aid either could not arrive or arrived too late.
There are some signs of shift in the US debate: CARE, one of the leading US relief organisations, last year announced it would cease selling US-donated food in developing countries to fund itself, a practice still carried out by many US non-governmental organisations.
But Congress has so far refused to contemplate significant change in food aid and experts say any big reform will probably have to wait for a new president. "The legislature has not caught up with the way the world has changed," says Bob Bell, head of CARE's food resource team. "With rising commodity prices, people are only just realising that you can't ship food aid the way you used to."
The global commodities boom has done more than enrich a few farmers. It has pushed hunger and malnutrition back up the agenda of aid donors and intensified the challenge to the United Nations World Food Programme (UNWFP), the biggest food aid agency, of feeding poor countries devastated by natural disaster or war.
It has also given fresh urgency to a debate in the US, the world's largest donor of food aid, about Washington's practice of giving commodities direct rather than providing cash to buy them on the open market.
The sustained rise in commodity prices has put huge strain on the budgets both of poor people in developing countries and the agencies trying to feed them in emergencies. The WFP's food costs have increased by 70 per cent in five years, with 20 percentage points of that in the past six months.
Wheat, rice and soyabean prices Wednesday hit all-time highs in Chicago while corn reached a 12-year high. Grain prices have doubled in the past year.
Josette Sheeran, head of the WFP and a former official in the administration of George W Bush, US president, has surprised development economists with her willingness to reform the agency away from being an organisation that simply handed out the rich world's surpluses. In an effort to save money and spread the benefits of the commodity price boom to poor farmers, the WFP has been trying to purchase more food from developing countries close to the locus of each emergency.
"We have been talking in the (executive) board about moving from being a food aid agency to a food assistance agency," she told The Financial Times in an interview. "We are suggesting we expand our toolbox so we have a more nuanced response as appropriate."
Of the food it bought on the open market last year, amounting to about $760m (€518m, £387m), a record 80 per cent came from developing countries, with Uganda the biggest supplier. The WFP has begun programmes to contract local farmers to produce commodities to order. In Laos it has encouraged farmers to supply a corn-soya blend it uses for high-energy porridge - more usually sourced from rich countries such as Belgium.
Along with some charities, such as Oxfam, and development ministries, including the UK's department for international development, the WFP has also piloted giving cash or vouchers directly to people in poor countries to stimulate local demand.
"We need to make sure we are capturing this new face of hunger," Ms Sheeran said. "Typically our needs analysis has not. We had to look at situations where the shelves are full of food but people are unable to afford it."
The WFP is dependent on rich donors and the strain on budgets has increased attention on the US practice of donating only food bought from its farmers and mainly shipped in US-flagged vessels. Other countries claim this is a thinly disguised agricultural subsidy that wastes money and often results in aid arriving too late in an emergency, distorting local food markets just as they are recovering from shortages. The Government Accountability Office, a US watchdog agency, estimates logistical expenses are 65 per cent of total costs for US emergency food aid.
The US food aid programme dates from the 1950s, a time of agricultural surplus. Grain mountains piling up in US warehouses were shipped to India or Africa as humanitarian aid, though also with the aim of helping US farmers and as a tool of foreign policy: not for nothing did President John F.?Kennedy relabel the programme "Food for Peace".
As part of its drive to reform US farm programmes, a campaign that has put it at loggerheads with Congress, the Bush presidency has called for up to a quarter of its main food aid programme to involve cash purchases in developing countries. It cites Iraq in 2003 and the Lebanon humanitarian crisis in 2006 as examples when US food aid either could not arrive or arrived too late.
There are some signs of shift in the US debate: CARE, one of the leading US relief organisations, last year announced it would cease selling US-donated food in developing countries to fund itself, a practice still carried out by many US non-governmental organisations.
But Congress has so far refused to contemplate significant change in food aid and experts say any big reform will probably have to wait for a new president. "The legislature has not caught up with the way the world has changed," says Bob Bell, head of CARE's food resource team. "With rising commodity prices, people are only just realising that you can't ship food aid the way you used to."