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August 16, 2011

Food aid: U.S agribusiness, shipping interests vs. local sourcing

In an emergency session in Rome on July 25, the United Nations called for $1.6 billion in aid to stop a famine in Somalia. In next-door Ethiopia, Abebech Toga, was trying to help the Horn of Africa feed itself. Toga, a farmer in her 30s, is a designated trainer for a United Nations program called Purchase for Progress. She teaches fellow farmers to time corn and coffee sales to get better market prices, to reduce moisture in harvested crops so higher- quality products result, and other skills.

Purchase for Progress is the signature program of Josette Sheeran, who served in the U.S. State Department under President George W. Bush before running the UN’s World Food Program, the globe’s biggest food-aid agency. When she joined the WFP in 2007, she looked for new ways to combat famine.

“What we began to ask,” says Sheeran, “is how do we purchase in a way that helps it be a solution to hunger?”

She says the WFP found the answer in what’s called P4P, which uses the agency’s buying power to integrate the world’s poorest farmers into the global food economy. The drawback is that if the model takes off, some Americans could lose their jobs.

For decades, rich countries bought their own farmers’ surplus crops — usually from giant grain traders such as Archer Daniels Midland Co. — and shipped them to countries facing famine and drought. This eased crises while failing to build a sustainable farm economy locally. In the 1990s the WFP began buying food in regions closer to famine-struck areas, mainly from large agribusinesses in Africa and Asia.

Under the P4P experiment, which Sheeran describes as part of a food-aid “revolution,” small farmers get a guaranteed customer as well as a clearly set price — a benefit U.S. growers have enjoyed since the first U.S. crop futures exchange opened 160 years ago in Chicago.

With P4P staffers guiding the transactions, the WFP agrees to buy grain and other crops from these farmers. The contract helps growers become better credit risks so they can take out loans to buy yield-boosting seeds and fertilizers. Specialists train them in how to make their goods appealing to other buyers such as local hospitals and schools.

Ultimately, the goal is for the WFP to exit the stage as farmers find other regular customers. The UN says that the five- year pilot project has given more than 500,000 farmers in 20 countries lessons in boosting yields and securing credit.

In Uganda, farmers received one-third more income when their corn quality improved; in South Sudan, food from small farmers sustained people fleeing attacks by the Lord’s Resistance Army, a paramilitary group.

The program, now undergoing a UN-commissioned midpoint evaluation, says it has put $30 million in the pockets of poor farmers. It’s testing different approaches, working with farmers in some places and small food processors in others.

Although it will never fully replace rich-world donations or handle dire emergencies by itself, P4P adds another element to the “toolbox” of fighting hunger, says Sheeran.

Where things could get sticky for her is in the support she gets from the U.S. government. P4P has received U.S. aid since its start in 2008, when a surge in food prices prompted a search for new solutions to the problem of world hunger.

Most of the more than $35 million the U.S. has committed to P4P goes to buying food from local farmers. Other donors include the Howard G. Buffett Foundation, the Bill and Melinda Gates Foundation, and the governments of Europe and Canada. P4P, says Buffett, is “the best way we can address hunger and poverty.”

The intense pressure to cut U.S. government spending makes American funding for P4P and other local food purchase programs vulnerable, says Gawain Kripke, director of policy and research for Oxfam America, the U.S. arm of the global aid group. Kripke says the traditional players in U.S. food aid aren’t doing enough to help small farmers join the system.

“Commodity and shipping interests are more concerned with using taxpayer dollars to pad their profits than in seeing U.S. assistance used efficiently,” he says. “Congress has been unwilling to break this stranglehold.”

In July the U.S. House subcommittee that controls foreign-aid spending decided to roll back its overseas development account, which includes P4P dollars, by 20 percent.

“This could severely reduce funding available for critical long-term food security and agricultural development programs,” said Rick Leach, chief executive officer of WFP USA, a Washington-based advocate for the World Food Program.

The argument for the traditional approach is that the U.S. government’s practice of buying from ADM and others, then shipping the grain on U.S. ships, generates jobs. Donating U.S. food maintains about 33,000 shipping-related jobs and keeps the domestic merchant marine available for defense needs, according to USA Maritime, a coalition of shipping companies and maritime unions.

Those programs “are a proven and effective approach to getting food to the world’s hungry,” says James Henry, the group’s chairman, via e-mail. If local food purchases really took off, U.S. companies such as ADM and Liberty Maritime Corp., a Lake Success, New York-based shipper, could lose about $1 billion a year in revenue, according to a U.S. Agriculture Department breakdown of commodity-aid contracts.

U.S. support for food aid would wither if the bulk of the funds shifted toward buying directly from farmers in famine- prone regions, says John Gillcrist, former chairman of the North American Millers’ Association. His own company, Bartlett Milling Co., has sold grain to aid programs.

Aid agencies and shippers are cutting delivery times and warehousing more food near famine-prone areas, so there’s no reason to tinker with a successful model, Gillcrist says. ADM referred questions on food aid to the millers’ group.

Sheeran’s supporters say farmers such as Toga deserve the chance to help break the cycle of famine.

“We have relied too much on taking our commodities and responding to emergency after emergency,” says Representative James McGovern, Democrat of Massachusetts. “We should be encouraging local sustainability.”

Sitting in her mud-walled home, Toga puts it simply: “We want to be better farmers.”


Directly related articles:

 Poor farmers no threat to U.S. agribusiness; they will become its customers: Howard Buffet
Howard Buffet mischaracterizes our position on food aid: USA Maritime
Warren Buffett's son is super-wrong about food aid to Africa


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