August 16, 2007

CARE Says U.S. Food Aid Hurts World's Poor

Link: CARE Turns Down Federal Funds for Food Aid - New York Times.

MALELA, Kenya — CARE, one of the world’s biggest charities, is walking away from some $45 million a year in federal financing, saying American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help.

CARE’s decision is focused on the practice of selling tons of often heavily subsidized American farm products in African countries that in some cases, it says, compete with the crops of struggling local farmers.

... Under the system, the United States government buys the goods from American agribusinesses, ships them overseas, mostly on American-flagged carriers, and then donates them to the aid groups as an indirect form of financing. The groups sell the products on the market in poor countries and use the money to finance their antipoverty programs. It amounts to about $180 million a year.

Neither the Bush administration nor members of Congress are looking to undo the practice, which has gone on for more than a decade. In fact, some of the nonprofit groups say it has worked well and are pressing for sharp increases in the amount of American food shipped for sale and distribution to support development programs.

The Christian charity World Vision and 14 other groups, which call themselves the Alliance for Food Aid, say that CARE is mistaken; they say the system works because it keeps hard currency in poor countries, can help prevent food price spikes in those countries and does not hurt their farmers. Not least, they argue, it also pays for their antipoverty programs.

But some people active in trying to help Africa’s farmers are critical of the practice. Former President Jimmy Carter, whose Atlanta-based Carter Center uses private money to help African farmers be more productive, said in an interview that it was a flawed system that had survived partly because the charities that received money from it defended it.

Agribusiness and shipping interest groups have tremendous political influence, but charitable groups are influential, too, Mr. Carter said, because “they speak from the standpoint of angels.”

... But Peter J. Matlon, a Nairobi-based agricultural economist and a managing director of the Rockefeller Foundation, said in an interview that converting American commodities into cash for development was a case of “the tail wagging the dog,” with domestic farm policies in the United States shaping hunger-fighting methods abroad.

The nongovernmental organizations “have been ignoring this evidence for years that there’s a negative impact on the prices farmers receive,” Mr. Matlon said.. He is involved in an effort by the Rockefeller Foundation and the Bill and Melinda Gates Foundation, financed with an initial $150 million, to increase the productivity of Africa’s farmers.

... The experiences of Walter Otieno, a grizzled Kenyan farmer in mud-stained pants, illustrate the paradoxes of paying for rural development through sales of American farm goods.

Over the years, he had watched 4 of his 12 children die of measles, which is more often fatal for the malnourished. He has had difficulty growing enough to feed his family. “My children were skinny, and their skin was dull,” he said.

Then last year he began growing a small patch of sunflowers on a hill sloping down to Lake Victoria in the village of Malela, with help from a program that CARE finances through the sale of American farm goods here.

A CARE extension worker, Rosemary Ogala, taught him and dozens of farmers in his group where to buy sunflower seed, when to plant it, how to space the rows and when to harvest.

CARE has also connected them to a ready market: the Kenyan company Bidco Oil Refineries, whose managers say they could more than quintuple the amount of sunflower seed they buy from Kenyan farmers to process into vegetable oil.

The profit Mr. Otieno earned from the crop rescued his family from dire poverty. Now, with his new earnings, he is able to play with his sons and daughters, who are plump on eggs and milk, at the family’s general store, a tiny shack stocked with goods financed by the sunflower sales.

The question is whether small-scale sunflower farmers like Mr. Otieno would have done better if nonprofit groups had not sold tons of American crude soybean oil, a competing product, to the same Kenyan company that purchased Mr. Otieno’s meager crop. CARE and some other experts say the answer is a clear yes.

Posted by Anupam Chander on August 16, 2007 at 09:22 AM in Globalization | Permalink