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Cash Vs. Food? The Foreign Aid Question

Sending food aid to developing countries has fed hungry people while building a new market for American products. Sending cash is cheaper.

A pile of 50 kg bags of soy-fortified bulgur being prepared for distribution.

Photo: USAID (Flickr)

For the past half-century, most American food aid has been delivered in the form of American-grown food products. In this picture, people are preparing to distribute a USAID shipment of soy-fortified bulgur to struggling families in Haiti.

Less Cash Buys More Food

The federal government is contemplating a change to its long-standing food-aid program by substituting donations of cash for donations of actual food. Cash donations are already favored by most aid-giving countries because they are faster and more efficient to execute than food donations.

Sending food aid instead of financial aid has served the dual effects of feeding hungry people and creating a new demand and market for American foodstuffs.

A 2012 study from Cornell University indicates that the American financial investment in foreign aid can be put to more efficient use by sending cash to be used to purchase grain locally, says Reuters. That can cut costs by close to 50 percent while supporting the economies of that area.

Under the current food aid program, the federal government buys food from American suppliers and distributes it overseas.

History Of Food For Peace

In 1949, the United States sent thousands of shipments of food to Western Europe under the Marshall Plan, laying the foundation for the country’s food aid program.

President Eisenhower then signed the Agricultural Trade Development Assistance Act into law in 1954 which established Food For Peace, the U.S.’s primary overseas food aid organization. The purpose of the policy was to “lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and to people of other lands,” said the president, as reprinted by USAID.

Farmers Opposed

Several agricultural trade organizations, including, most prominently, the American Soybean Association, are displeased with the proposed shift.

“Growing, manufacturing, bagging, shipping, and transporting nutritious U.S. food creates jobs and economic activity here at home, provides support for our U.S. Merchant Marine, essential to our national defense sealift capability, and sustains a robust domestic constituency for these programs not easily replicated in alternative foreign aid programs,” these groups wrote in a letter to President Obama and Senate leaders, says Farm Futures.

Senators Debbie Stabenow (D-MI), Thad Chochran (R-MS), and Mark Pryor (D-AR) have also signed a letter to President Obama in opposition to the proposed changes.

The senators argue that if the United States substitutes cash aid for food aid, a significant part of Eisenhower’s original purpose for the Food For Peace program — to create new markets for American agricultural exports — would be lost.

The White House has not yet issued a statement about the proposal.

Read More:

  • Foreign Food Aid Becomes Point Of Budget Contention (Farm Futures)
  • White House Mulls New Foreign Food Aid Approach: Send Cash (Reuters)
Sarah Gordon

Sarah Gordon has been interested in food ethics since she was 15, learned about industrial slaughter, and launched into 10 years of vegetarianism. These days, she strives to be a conscientious omnivore. Now a PhD candidate in folklore, her research has caused her to spend a lot of time in the remote Canadian sub-arctic, where the lake trout (sustainably harvested) tastes amazing.

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