Fuel Costs Cut Deeply Into Food Aid

Shipping costs rise 30 percent, adding to inefficiencies.

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The ability of the United States to supply food aid to foreign countries is being sharply affected by rising food and oil prices, new numbers show.

In the past three to four months, as fuel prices have soared, the cost of shipping food aid across the ocean has climbed by about $30 per ton, and about $50 per ton since 2007—a total of nearly 30 percent, says an official from the United States Agency for International Development, which administers government food assistance.

Coupled with record-high grain prices, such increases have begun to measurably constrain deliveries of food aid around the globe. Earlier this month, the United Nations World Food Program released a sobering report in which it found that food aid deliveries in 2007 fell to their lowest levels since 1961, down 15 percent from the year before. Food aid from the United States, the world's largest donor, was down nearly 1 million tons, a 26 percent drop from 2006. And yet, because of rapidly rising food prices, hundreds of millions of people are now newly in need of assistance.

The recent spike in transportation costs is particularly troubling because U.S. food aid programs heavily rely upon long-distance shipping. In recent years, upwards of 60 percent of the U.S. food aid budget—roughly $2 billion annually—has been spent on transportation and administration costs, a Government Accountability Office report found last year. The main reason: Congress requires the vast majority of U.S. food aid to be purchased from U.S. farmers and sent on U.S.-flagged ships to its final destination.

In response to the declines, many humanitarian food agencies, including the World Food Program, have begun to advocate a shift in thinking about the way the United States administers food aid. Rather than spending money to ship food thousands of miles to its final destination, they argue, the United States (and other donors) could give money directly to an agency that is already on the ground in the region where food aid is needed; the agency could then use the money to buy food locally, a practice that proponents say saves time, reduces transportation costs, and boosts local markets. "In general, we think this is a great idea in the sense of increasing the set of tools humanitarian groups have to respond to emergencies, conflicts, and disasters," said Catholic Relief Services Director of Policy and Advocacy Bill O'Keefe.

Some large donors, notably Canada and the European Union, have recently switched to a cash-based approach. Similar efforts in the United States, however, have been largely stymied by congressional politics, since farmers and agribusiness—and therefore midwestern politicians—benefit from the current policies.

During heated negotiations over the farm bill this past spring, the Bush administration and USAID asked Congress to relax existing rules and allow, for the first time, up to 25 percent of U.S. emergency food aid to be purchased in the recipient country or in a nearby region. Despite significant bipartisan support, Congress rejected the proposal. Instead, it approved only a small pilot program to investigate the idea.

As many relief organizations point out, local purchases aren't appropriate in all locations or situations and can carry certain risks. In some cases, for example, a food deficit in one region—in parts of sub-Saharan Africa, for example—make local purchases impractical. But in general, they give relief organizations more flexibility and control and make for more efficient use of food aid money.

Such arguments, in light of the global food crisis, are beginning to garner more discussion in Congress but as yet no overwhelming endorsements. Congress recently approved a $186 billion supplemental spending package, including $1.8 billion in emergency food aid and disaster relief assistance. The majority of that aid, as usual, will go toward programs that require it to be spent on U.S.-grown food.

Despite the restrictions, USAID says it has tried to make its operations more efficient in the past year, for instance, by trying to store more food closer to regions where emergencies are likely to break out. But advocates for reform say deeper congressional reforms are necessary. "Food aid started as a means of getting rid of surplus crops," said Laura Rusu of Oxfam America. "The initial intent was very much that rather than feeding the hungry. From that point, right away stem inefficiencies."