In a poll taken earlier this year, “aid to the world’s needy” was the only budget priority that a plurality of Americans said should be cut in the event of sequestration. Part of the problem may be that Americans consistently overestimate, by a massive margin, the amount of money that the United States spends on aid.
Given this, it’s striking that one blatantly obvious idea for both reducing the cost of foreign aid and increasing its effectiveness has proved to be a tough political sell. Under current U.S. law, the vast majority of U.S. food aid much be purchased from U.S. farmers. As you might imagine, the process of getting this food to people in need is both slower and more expensive than buying food locally, as nearly every other major donor country does. In the New York Times today, Ron Nixon examines this issue in the context of the recent disaster in the Philippines:
The United States has contributed $10 million in food aid to the Philippines since the typhoon, and of that about $8 million is being used for local purchases. But antipoverty advocates say that a high percentage of local food is unlikely to continue. Under current law, the aid agency is limited to spending about $300 million each year — or about 20 percent of total American food aid — on local purchases, and right now much of that has already been committed to Syria and the Democratic Republic of Congo and as a reserve to other anticipated humanitarian crises around the world.[…]
According to the agency, rice sent from the United States would take about 12 weeks to reach the Philippines, while rice bought in Thailand or Vietnam might take about eight weeks. Local rice is available immediately.
A 2012 Cornell study comparing local procured food aid from NGOs and U.S. food aid in nine countries found that “procuring food locally or distributing cash or vouchers results in a time savings of nearly fourteen weeks, a 62 percent gain in timeliness.” While the money saved varied by country and commodity, “procuring grains locally resulted in cost savings of over 50 percent, on average.”
Dumping U.S.-grown food on devastated local markets can also have adverse effects on the local economy by undercutting local producers. Critics say this is what happened in Haiti following the 2010 earthquake.
Last June, the House of Representatives rejected an amendment to the farm bill meant to reform the food aid process. The Obama administration wants the amount of food that USAID can procure locally raised to 45 percent, but the change is opposed by lawmakers, mostly from agricultural states or those with large shipping industries, for whom U.S. food aid serves as a valuable subsidy.
If you view the goal of food aid as providing food for as many people as possible for as little money as possible, purchasing locally seems like a no-brainer. If you view it as a way to subsidize U.S. farmers and get rid of surplus, the current system is working just fine.