Moving a little north for this African posting, it was pleasing to see this article in the New York Times last week. One of the most dangerous ideas in international development is the notion that food aid is designed to help the poor. In fact (and I go into this at some length in the book), it was invented to find a home for a domestic crop surplus, as part of the war on communism. Under this rubric, it didn’t much matter that food aid, dumped into a country where the poorest people are farmers, and struggling to survive an already parlous situation, had the effect of wiping out any possibility of earning money for the ‘beneficiaries’. Instead, they were reduced to penury, hooked on the largesse of food aid. Mission accomplished.
The article’s also interesting for the implicit critique of aid agencies. A full investigation of that in a future post, though. In the meantime, here’s the piece from the Grey Lady.
CARE Turns Down Federal Funds for Food Aid
August 16, 2007
By CELIA W. DUGGER
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.
The charity says it will phase out its use of the practice by 2009. But it has already deeply divided the world of food aid and has spurred growing criticism of the practice as Congress considers a new farm bill.
“If someone wants to help you, they shouldn’t do it by destroying the very thing that they’re trying to promote,” said George Odo, a CARE official who grew disillusioned with the practice while supervising the sale of American wheat and vegetable oil in Nairobi, Kenya’s capital.
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.”
Some charities that champion the system bristle at such suggestions. Their allies in Congress say that maritime and agribusiness interests are essential allies for programs to aid the hungry.
“Sure it’s self-interest if staying in business to help the hungry is self-interested,” said Avram E. Guroff, a senior official at ACDI/VOCA, which ranked sixth in such sales last year. “We’re not lining our pockets.”
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 Government Accountability Office, the nonpartisan, investigative arm of Congress, also concluded this year that the system was “inherently inefficient.” CARE and Catholic Relief Services -who rank first and second in money raised through the current system -say they recover only 70 to 80 percent of what the United States paid for the commodities and shipping.
But while Catholic Relief Services and Save the Children, which ranked fifth last year in such sales, agree with CARE that the system is inefficient, they also say they will not stop converting American food into money unless Congress replaces the lost revenues with cash. They help poor people with the money, they say.
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.
In 2003, Bidco bought almost 9,000 metric tons of crude soybean oil sold to the United States by Bunge, the agribusiness giant. Altogether that year, Bunge sold the United States 15,180 metric tons of oil for resale by the nonprofits in Kenya. A metric ton equals 1,000 kilograms, or 2,204.62 pounds.
American law requires aid groups to establish that such sales will not discourage production by local farmers, but some critics say it is a conflict of interest to ask the nonprofits to select experts to make this determination.
In this case, the nonprofits hired a consultant who advised them in 2003 that they could safely sell up to 38,000 metric tons of vegetable oil in Kenya, which mostly depends on imports. That amount, about 10 percent of the country’s consumption, was “negligible,” he said.
But Mr. Odo of CARE disagreed, saying in a memo that the importation from the United States “reduces the growth in the local market.”
Ultimately, CARE’s decision to phase out such sales evolved from a senior manager’s change of heart. Daniel G. Maxwell, a professor of nutrition at Tufts University, was a food security adviser for CARE in Nairobi who saw sales of American food as an imperfect, but useful way to raise money.
He knew firsthand, however, how risky it was to manage projects financed in fluctuating commodities markets. When prices sank, CARE had too little money and was sometimes forced to lay off workers. Mr. Maxwell said he also strongly suspected that buyers had offered too little for the farm goods, knowing they were dealing with aid workers who were novices in commodities trading.
As he and Christopher B. Barrett, an agricultural economist at Cornell University, researched a book, “Food Aid After Fifty Years,” his doubts deepened.
“Not only was it a pain the neck,” he said, but there were possible serious effects “that would be damaging to farmers and trade.”
In 2004, Mr. Maxwell and Mr. Barrett made the case against the practice at CARE headquarters in Atlanta. They recalled that the senior vice president, Patrick Carey, who has since died, cautioned them that leaving the system would be like “an act of partial suicide” for the nonprofits. Nonetheless, CARE committed to the shift the following year.
CARE says it will try to raise money to replace the lost revenues from philanthropies and other donors, and by making its own aid programs profitable.
One of those programs could be seen in action one recent afternoon in the Kenyan village of Poche. CARE has helped local women bypass local middlemen to sell pineapples at better prices in Nairobi’s big supermarkets, 10 hours away by road.
One woman, Doreen Amimo, a 52-year-old grandmother, has seen her weekly earnings rise to $18 from $11. She can now afford to feed and clothe an orphaned niece and nephew.
“And I never lack sugar in the house,” she said, “and we can have tea and milk every morning!”
These farmers are selling their fruit to a small company, Vegcare, that CARE and a Kenyan company started with an investment of $170,000 in 2005. Vegcare advises farmers on how to grow pineapples that meet supermarket standards, buys them and trucks them to a wholesaler in Nairobi that supplies Nakumatt, a Kenyan supermarket chain.
CARE’s idea is that a profitable business is more likely than a charitable venture to survive when foreign aid runs out.
“What’s happened to humanitarian organizations over the years is that a lot of us have become contractors on behalf of the government,” said Mr. Odo of CARE. “That’s sad but true. It compromised our ability to speak up when things went wrong.”