An American relief organization auctions 4-liter cans of vegetable oil, bought from U.S. companies with federal funds, to local merchants in Kigali, Rwanda’s capital.
The merchants sell to local stores, where Rwandans can purchase the oil and add an otherwise scarce product to their diets, while the relief group’s proceeds go toward development projects.
“You can see our cans sitting in little stalls all around the country,” Avram “Buzz” Guroff, senior vice president at the nonprofit group ACDI/VOCA (Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance), said from the African nation.
The project is a tiny part of more than $2 billion in U.S. overseas food-aid programs. The programs buy U.S.-made commodities such as wheat and soy products at market rates and send them to poor nations, staving off starvation, helping improve nutrition or funding fledgling enterprises in impoverished nations.
But American food aid also can distort trade, displacing local or other foreign-made products with U.S. surpluses, critics said. The European Union, Australia and other nations see some U.S. food-aid programs as a subsidy for American producers and are asking the United States to curtail commodity-based food-aid programs with new rules at the World Trade Organization.
Franz Fischler, EU commissioner for agriculture, this month said his 25-nation bloc is ready to eliminate its own export subsidies, but only with parallel moves by the United States to reform its subsidies, notably food-aid programs.
The European Union’s early WTO proposals to increase export competition said some forms of food aid are “a disgrace,” with the main objective being to reduce surplus stocks in the donor countries and promote market development.
“This is clear abuse of food aid,” one proposal said.
The Bush administration rejects the way U.S. food aid is characterized.
“We think the allegation about market displacement is unfounded and inappropriate,” said Mary Chambliss, spokeswoman for the Agriculture Department’s Foreign Agricultural Service.
A small portion of U.S. food exports — about 3 percent — go into aid, and those programs generally target poor people in poor nations who otherwise would not be fed, she said.
During fiscal 2004, the United States spent about $2.03 billion on all major food-aid programs, including food purchases, transportation and other costs.
The U.S. government during the past half-century has contributed more than $50 billion to feed more than 3.3 billion people in about 150 countries, said the U.S. Agency for International Development.
William Garvelink, a senior official at U.S. AID, this month said “people will die” if commodity-based food-aid programs are stopped.
“Our European Union colleagues are long on talk and short on action,” he told U.S. lawmakers.
Food aid is on the negotiating table at ongoing WTO talks. Allen Johnson, chief agricultural negotiator for the office of the U.S. Trade Representative, said the United States continues to discuss the topic with trade partners but it is being handled delicately.
“I don’t want to mislead you in saying it’s not part of the discussion, but I think it’s fair to say it’s a different sort of discussion than the other components of export competition,” he said.
Proposals from trade partners include shifting aid toward cash assistance, rather than commodity donations. Potential results have U.S. farm groups and legislators worried.
“I am concerned by proposals at the WTO by some of our negotiating partners that would threaten U.S. food-aid programs and the individual projects that result from them,” Sen. Charles E. Grassley, Iowa Republican, said in a June 22 letter to U.S. Trade Representative Robert B. Zoellick.
“While I believe that nothing should be off the table during the ongoing WTO negotiations, the ability of the United States to provide legitimate humanitarian assistance should not be threatened,” Mr. Grassley said.
Some independent observers agree with U.S. trade partners that American programs can distort trade by displacing local or third-country production.
“That’s what happens when U.S. food aid is poorly managed and poorly targeted,” said Chris Barrett, a Cornell University professor who has written extensively on the economics of food aid.
“But there are a range of food-aid programs. One has to be careful painting with too broad a brush. It could be improved but it should not be thrown away,” he said.
Relief groups say they try to account for the broader economic picture with food aid.
Mr. Guroff said ACDI/VOCA’s program does not distort markets.
“They perceive it as dumping, but we go to substantial lengths to ensure that doesn’t happen,” he said.
Jim O’Connor, director of Catholic Relief Services overseas support department, said his group works to ensure that food aid does not hurt local economies where the food is sent.
“By and large, it’s the poorest of the poor, who otherwise would not be eating,” he said of recipients.