U.S. Food Aid: To Ship Food or Send Cash—the Obama Administration Weighs In

Obama plans to overturn six decades of U.S. food aid policy. What’s it mean and will it survive a political dust-up?
ACF fresh food voucher program, Haiti.
ACF staff work with participants in a fresh food voucher program, Haiti.

Action Against Hunger welcomes the news that the Obama Administration may upend 60 years of U.S. food aid policy with proposed changes to the long-standing practice of purchasing U.S. commodities to ship overseas in the name of international food aid, opting for local and regional procurement instead.

The existing policy has long been criticized as wasteful. The New York Times recently reported that an estimated $300 million was squandered in 2010 alone to purchase and ship a half a million tons of foodstuffs overseas—funds that could have had far great impact if used for local or regional purchases.

“We are absolutely in support of the Administration’s proposed changes. If they make it through Congress, it’ll be good news for small farmers around the world, not to mention the health of local economies, which are so critical to recovering after a humanitarian crisis. Such a shift would ensure greater efficiencies, quicker interventions, and significant savings for U.S. taxpayers.”

–Silke Pietzsch, Technical Director, Action Against Hunger

But just as problematic are the well documented repercussions that traditional U.S. food aid can have on local economies: shipping U.S. food to emergency zones can flood local markets with free or cheap product, potentially increasing prices or “crowding out” local foodstuffs—punishing the very small farmers we’re seeking to support and exposing all households to greater price volatility.

“This shift to local or regional procurement will need to be supported by robust market and response analysis if we’re to anticipate any potential negative impacts, such as price increases or volatility in the markets where procurement takes place. Such analysis allows us to adjust delivery mechanisms—i.e., in-kind, vouchers, grants, etc.—and volumes to local market conditions.”

–Muriel Calo, Senior Advisor, Food Security & Livelihoods, Action Against Hunger

From Commodity to Cash Assistance? Not so Fast

The proposed changes are a welcome development, but for many in the humanitarian community they could go even further. Action Against Hunger has long advocated for the use of cash over commodities to help vulnerable households recover—see our work with the Cash Learning Partnership—as cash lets people address their food needs through local markets, not handouts. 

But the budget changes will likely to stay focused on in-kind food aid, not cash:

“The Obama Administration’s budget includes major changes in U.S. food aid policy, basically taking the food aid budget out of agriculture appropriations and putting it into foreign assistance, meaning that it would be cash and not in-kind assistance at source. The bulk of this money would be for in-kind food assistance—but it would be purchased in the affected country or in a neighboring county rather than shipped from the US.”

–Daniel Maxwell, Feinstein International Center, Tufts University

To help crisis-stricken communities recover and rebuild requires focusing on more than just immediate food needs—everything must contribute to the health of local supply and demand if a recovery is to be sustained. As such, Action Against Hunger will continue to advocate for a truly holistic approach to food and livelihood security, as exemplified by our work with a diverse range of actors—from small farmers to traders to policymakers—to facilitate responses that address hunger today with a view towards long-term change.

Nonetheless, the proposed legislative changes can only have a positive impact on the communities we serve, if they come to fruition—but that’s an open question as groups opposed to food aid reform have already made clear they’ll work to block these changes.

So stay tuned to see if this really is a historic moment for U.S. food aid.

Tell Us What You Think

Sound off, U.S. taxpayers! Should our foreign assistance do more good by providing cash assistance or purchasing product overseas, or is it acceptable to do some good as long as we support domestic business in the process?

About James Phelan

James is Action Against Hunger's Deputy Director for External Relations, keeping an eye on global events and program developments.