The U.S. provision of foreign aid serves two key purposes: to demonstrate the compassion of the American people and their commitment to lessening the burden of poverty and to promote American security.  When aid is ineffective, it accomplishes neither goal. 

In 2005, the United States joined other major donor and recipient nations in signing onto the Paris Declaration on Aid Effectiveness, an attempt to promote aid effectiveness and better coordination.  In so doing, the United States committed to reforming aid policies so that they provide ownership of development programming and cost-effective aid.  One of the key tenets of the declaration is for donor countries to assist in the development strategies of each recipient country and to utilize existing framework within the country for procurement, distribution, monitoring, etc.  Section 31 specifically mentions the need to "untie" aid in order to get better value for the money and to allow for ownership of the results.

What does "tied aid" mean?

When aid is "tied" provisions exist dictating where the food may be purchased, in other words, the money most be spent in the donor country.  In the United States, food aid is tightly intertwined with U.S. agricultural policies and the agriculture lobby.  The dumping of excess U.S. agricultural products overseas is, sometimes, little more than a method for protecting domestic farmers by keeping the food prices high by restricting the level of supply in the market.  Also, U.S. shipping firms and agribusiness reap the rewards of these policies as more money is funneled back to the U.S. in shipping the food aid to the recipient country.  May 2008 brought news of a shift in Canada’s food aid policies; they decided to "untie" their food aid, a move which left the United States as the last developed country still providing tied food aid.[1]

The Global Food Crisis and Tied Aid

The current food crisis is a result of many different stimuli, though two specific issues are at the heart of the problem: the rise in the price of food and the rise in the price of fuel.  Both of these factors are closely linked to the problem of promoting tied aid. 

The Government Accountability Office (GAO) released a report on International Food Security in May of 2008 and further highlighted the difficulties in the rise of prices and the wide scope of the problem in stating that "USAID has reported that commodity costs increased by 41 percent and transportation costs increased by 26 percent in the first half of fiscal year 2008.  As a result, USAID projects a $265 million shortfall in this year’s food aid budget…$265 million could provide enough food aid to reach about 4.5 million vulnerable people in sub-Saharan Africa during a typical peak hungry season lasting 3 months."[2]

The World Food Programme (WFP) is the last resort for countries once the food stocks have been drawn down and aggressive price increases inhibit the purchase of food on a large scale.  The countries without resilience turn to the WFP for support in these situations.  Currently the WFP is supporting 80 recipient countries.[3]  The WFP, in turn, depends upon the donations from donor countries as it is strictly voluntarily funded.  The rising price of food allows for less food to be purchased for the same amount of money.  This is compounded by the rising price of fuel.  The additional shipping costs erode the overall amount of aid that may be shipped to a country in need.  When donations of food aid are made to the WFP instead of donations of money that can be used to purchase locally within recipient countries the result is less food to feed the hungry.

Why Should the U.S. Untie Food Aid?

The U.S. policy of tied food aid is particularly inefficient, as it takes as much as 4 to 6 months before the aid reaches the recipients and, according to Cornell University professor Christopher Barrett, "it costs more than $2 of U.S. taxpayer’s money to deliver one dollar’s worth of food procured as in-kind food aid."[4]  Additionally, the flood of grains into the recipient market dampens prices for local farmers.

Better than pawning off unwanted U.S. food, the United States could provide a larger quantity of food in a much shorter time frame by buying from local farmers and investing in sustainable development projects that provide ownership and assist in building local agricultural production so as to stave off future food crises.  The extremely high cost of shipping food can be diverted to investment in sustainable solutions that complement each recipient country’s development goals, including investment in infrastructure so that farmers may bring their crops to market. 

How does this affect OVC?

The Center for Strategic and International Studies (CSIS) recently released a Task Force report on the global food crisis and stated that the crisis that began in June 2007 has already pushed "an additional 100 million people into poverty and deepening global hunger and chronic malnutrition, with the gravest impact among poor pregnant women and children."[5]  Children are the most vulnerable population and least equipped to cope with such crises.  According to World Bank estimates, world food prices will continue to rise until 2012.  A U.S. policy adjustment is needed immediately to effectively react.  Reform of aid isn’t merely a practice in technical linguistics, it is necessary so that needy children receive the life-saving aid they so desperately need.  According to the World Food Programme (WFP), a mere $3 billion a year would ensure that all of the world’s school children will not go hungry.  $3 billion per year, or the cost of one week at war for the U.S., would provide enough funding to provide a cup of porridge for every school-aged child, the bear minimum of sustenance each day. 

 

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[1] IRIN News, http://www.irinnews.org/Report.aspx?ReportId=78053

[2] GAO, http://www.gao.gov/new.items/d08680.pdf

[3] Josette Sheeran, "A Call for a Strategic U.S. Approach to the Global Food Crisis," CSIS Report Launch, July 29, 2008.

[4]IRIN News, http://www.irinnews.org/Report.aspx?ReportId=78053

[5] CSIS Task Force, http://www.csis.org/component/option,com_csis_pubs/task,view/id,4708/