The Economics of Food Aid
Very interesting story in the NYT about how the international charitable organization CARE is turning down $45 million in food aid from the U.S. government. They are concerned that sales of the food overseas–which charitable groups use to finance their activities–may undermine 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….
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.
Grist for the mill in the ongoing debate about whether nations in African need more aid or more business development–and how, if aid is to be part of the picture (as it surely must be), what the best way to provide it is.