Help that hurts
Fixing Food Aid
Corn and wheat from U.S. farms can save lives in countries hit by war, famine, or other disasters, as many Haitians learned after a severe earthquake struck their country in January. But excessive or ill-timed food aid can undermine the local economies of already ravaged countries. And when the aid dries up and the emergency passes, local farms will again have to feed the populace.
While European countries tend to give cash donations to purchase food locally, the U.S. donates homegrown grain and other goods to nonprofits for shipment overseas. The U.S. also allows aid groups to sell off a percentage of the goods they receive overseas to cover transportation costs or fund development programs, a practice known as "monetization." The program not only provides a subsidy to U.S. agribusiness and shipping interests; it undermines local agriculture in the countries receiving aid by temporarily flooding the market with artificially cheap staples.
Some aid groups, including CARE International, have begun speaking out against the practice. CARE had been netting $62 million a year by selling off donated U.S. food but decided the practice did more harm than good.
A February report from the Congressional Research Service urges Congress to take a hard look at monetization, as well as rules requiring the use of American food and U.S.-flagged ships in aid programs. Many of the same recommendations appear in a 2007 Government Accountability Office report on foreign assistance, which called monetization "an inherently inefficient use of resources." The critique had no impact on the policy.