Does the U.S. Food Aid Regime Really Help Developing Nations?
THE EFFECT OF THE AMERICAN FOOD AID REGIME ON FOOD SECURITY AND DEVELOPMENT IN THE THIRD WORLD
Since the advent of television and global news networks, images of starving children in Ethiopia and across the globe have been broadcasted back to the homes of millions of Americans. People see that there is a dire need for help in these foreign lands and the United States, with all its affluence and economic might, can do a great deal to lift these people out of poverty and alleviate their suffering. These are the principles on which the concept of food aid is founded and has been sold to the public’s heart. The American food aid regime at a superficial level stands as a beacon of generosity and good will for all of humanity. However if we delve more deeply into the issue, it becomes more apparent that the underlying motives in this initiative are not simply altruistic and good willed, but are in fact in the protection and pursuit of greater structural and relational power for the United States over its impoverished third world counterparts. If we further examine the impact of the food aid regime on these nations, does food aid actually benefit them in the long-term? In this paper I intend to argue that food aid is ultimately detrimental to the host nation’s sustainable development and food security when it is administered on the U.S.’s agenda.
Relational power can be seen as a nations ability to force another nation into doing an action that would otherwise not have been done without an outside power being imposed upon them.1 It is fairly clear to see how the dispersal of food aid from the United States to a desperate developing nation can result in a great deal of such bargaining power in the scope of political economy. Structural power on the other hand cannot be so simply explained. A nation derives its structural power from four interrelated pillars within the facet of its enterprise: security, finance, production, and knowledge.1 This kind of power allows a nation to impose its way of doing things on other nations and set the agenda for discussion over international relations through a more indirect route than relational power.1 Structural power can have a much more profound and lasting effect on the interaction between the nations, resulting in the nation with more power having greater leverage over the other.
By examining these pillars of structural power and how they relate to food aid, we can better understand how the U.S. acquires a great deal of power over the host nations in ways that are not so apparent. First we look to the security structure held by the U.S. in its massive global military complex. Its military might allows the U.S. to resume its production stably and reliably, as well as maintain its financial and knowledge structures against outside threats. The United State’s status as one of the primary martial protectors of the organization of world relations gives it a great deal of influence over the management of the system. To delve into the realm of our security structure would be an entire paper in itself, therefore my focus will be on the latter three structures’ relation to the development of the American food aid regime.
The financial structure of a nation is its ability to create and allow or refuse access to credit.1 The U.S. is the world’s largest borrower of capital resulting in the U.S. holding a great deal of influence over the structure of the system. Specifically looking at the food aid regime, the industrial agriculture scheme of the United States that fuels the food aid system is largely run off of this structure. Many farmers take out substantial loans to purchase expensive fertilizers, pesticides, herbicides, and genetically modified seeds every year. These huge inputs result in a huge crop yield, but also a small margin of profit. To combat the small profit gained per acre of cropland, farmers are forced to plant massive acreages to make a large enough profit to support themselves and their operation. The financial structure of the U.S. allows its farmers to take out these yearly loans and forces them to produce on a massive scale. The driving force in this cycle lies in the U.S. firms like Monsanto and Conagra that have developed this industrial agriculture approach to food production. With their financial backing and ability to generate capital they were able to develop the costly inputs and use their capital and control over the industry to push for their implementation. In order to continue on this status quo they use their mass of capital to lobby for their interests, resulting in laws that protect the industrial agriculture model.
The production structure encompasses all of the factors that contribute to what is being produced, who it is produced by, and for whom to consume.1 The food aid regime is the result of our greater capacity for food production in the United States and our capacity to produce a surplus of food. We hold the technological and mechanical know-how to produce at a massive scale. As a result of our structural power in production we can undercut small-scale farmers in other countries and force them to rely on our own food production.2 This means U.S. farmers are producing food and not the poor of the third world. In a final step of protection for this production scheme, subsidies are given to farmers allowing them to continue producing food even if it costs more to produce than the value of the food itself. Food aid comes about as an outlet for our massive surplus and it is given to many of the very people that we have undercut.
The final component of structural power is in the knowledge structure, which is largely the control of, access to, and generation of knowledge.1 The U.S. firms like Monsanto and Conagra are the patent holders of the technology and intellectual property involved in our massive food production. The firm’s control over the knowledge of industrial food production prevents other nations from matching our production yields because they hold the technology at a high price. While these firms are willing to extend their production scheme to third world nations, these poorer nations lack the financial power to purchase the heavy inputs. By being the home state of such firms the U.S. ultimately holds onto its structural power in the agricultural sector because this production scheme has been deeply imbedded into our society and we have the capacity to generate enough capital to support it.
By looking at this framework we can further examine the network of bargains that has resulted in the food aid regime. The cycle began with the rise of transnational corporations in farming. Food production had increased by 50 percent between 1940 and 1958 spurred by an agricultural revolution utilizing both new technology and increased inputs (Ruttan 39,40). The increased knowledge of agriculture during the time reflected a new trend where farm research was not only conducted by the land-grant colleges, but to an increasing degree by the private sector (Ruttan 42). During this same timeframe agricultural inputs increased by 10 percent, while labor input greatly decreased (by more than 35 percent from 1940 to present)(Ruttan 41). As outlined before, farmers had to get big or get out to keep up with market trends. The result was a mass disappearance of small farms and the beginning of large-scale production schemes. With industrial agricultural practices increasing in the U.S, a flood of agricultural commodities hit the market creating a massive surplus that threatened the stability of prices. The emerging agricultural firms of the day allied with the demands of farmers called for the disposal of this surplus to support their interests. To achieve this end, the U.S. had to open up third world markets to accepting its surplus of food.
As a result Public Law 480, known as the Agricultural Trade Development and Assistance Act, was instituted. It was passed in 1954 and committed the United States to providing food assistance to poor nations around the world (Ruttan, 3). While there were earlier laws and initiatives in which the U.S. dispersed food aid, these were largely in response to acute disasters or utilized only private voluntary agencies to disperse aid, this law intended to create a state run program aimed at chronic poverty (Ruttan 4). PL 480 came about in lieu of these earlier efforts, utilizing their experiences, and in response to the crisis in agricultural commodities following the Korean War (Ruttan 5) The law contained three major initiatives, Title I referred to the sale of food to friendly nations in exchange for foreign currency, Title II to the government to government donation of food to friendly populations in dire need (regardless of how friendly their government may be), and Title III to the authority to disperse donations abroad by non-profit voluntary organizations and to barter surplus food for important raw materials (Ruttan, 7). It also made provisions for domestic allocation of surplus foods through school lunch programs and disaster relief (Ruttan, 7). While financial aid or the sharing of agricultural knowledge may have been more useful to a developing country, these measures did not aid in the disposal of the surplus commodities that the U.S. needed. Furthermore the impulses for America to share its agricultural know-how around the world were outweighed by a fear of foreign production resulting in the reduction of the American exports that were already secured (Ruttan 5).
The fledgling program held its primary objective in simply disposing of the nations agricultural surplus, but in the 1950’s it became more apparent that the U.S. could use this aid to dictate foreign policy. Efforts immerged to utilize food aid to promote world peace and as resistance to soviet expansion (Ruttan, 9, 18). The promotion of world peace however was not taken in literal terms, many Food for Peace programs have been in fact used to entice wars by increasing support for the pro-U.S. group (Garst and Barry, 148). In this way the U.S. could ensure its interests in the regions receiving aid were upheld without its direct military involvement. With the establishment of PL 480, the U.S. now had both a means to dispose of its domestic surplus and a bargaining chip in the world community.
For the countries receiving this food aid it was in many ways a good thing. With the occurrence of natural disasters, wars, and other acute food shortages the administration of aid was and still is vital to a country’s ability to recover. But when we examine the impacts of prolonged food aid, the advantages are not as clear. Food aid on a superficial level can be seen as a means by which the vital resource of food can be obtained by the poor that could not otherwise afford it in the normal market economy (Ruttan, 99). However is food aid truly the most sustainable solution to the problem when it is a chronic occurrence? An audit by the U.S. Agency for Development found that despite Title II aid being given to Indian schools and programs for children, there was no evidence of increased school attendance or improved nutrition (Ruttan, 95). With such studies in mind is food aid even affective at alleviating acute suffering? A more long-term approach may lie in expanding food production within the host country itself and increasing employment so people can simply buy food for themselves (Ruttan, 99). Considering that our ultimate goal is the sustainable development of these impoverished nations so they can feed themselves, food aid may in fact be a hindrance to achieving food security in these places. The disincentive argument against food aid states that the increased food supplies caused by food aid deflate the prices local farmers receive, making domestic food production less profitable (Ruttan, 99). The aid may also result in or contribute to government agricultural policies that do not support domestic food production (Ruttan, 99). The combined affect of these factors results in decreased food production in these already food deficient nations (Ruttan 99). To look at this theory empirically we can examine the effects of food aid on India. An early study on the subject by Mann found that food aid to India resulted in a reduction in domestic food production by a third of the amount of aid received (Ruttan, 119). However looking at these results, Mann concluded that the reduction in food production did not outweigh the net gain in food because having food was better than not having food at all (Ruttan, 119). This study however neglects the capacity for growth within the domestic agricultural production scheme that could have resulted in greater employment and output (Ruttan, 119). Furthermore it ignores the affects aid had on government policies that resulted in the reduction of expenditures towards food production (Ruttan, 119). Another study in Egypt by the U.S. Agency for International Development found that U.S. food aid led to policies within the Egyptian government that had a negative influence on domestically produced wheat (Ruttan, 95). Finally a report by the Kansas City Times contained Peru’s agricultural minister pleading for the halt of rice aid from the U.S. because it was driving the price of domestic rice down (Ruttan, 95).
Ironically many of the countries that have become entrapped by food aid are food insecure not because of a lack of agricultural effort, but because they are producing the wrong things. Looking at Central America, many of these nations are huge exporters of cash crops to U.S. markets, while the majority of the people there still lack land or a steady income and remain malnourished (Garst and Berry, 71). Central American nations continue to increase their export of agricultural luxuries like coffee and bananas, while still receiving U.S. aid and relying on imports (Garst and Berry, 42). These examples are but a handful of the evidence showing how food aid depresses domestic food production, but what are the consequences of a system that disincentives production and relies on charity to maintain itself? Many argue dependency is the eventual result of food aid when receiving nations come to rely on continued support from a solitary supporting nation, which in many senses can be seen as a kind of neocolonialism.
Advocates for the dependency viewpoint argue that food aid acts as a hindrance to development and only serves to prolong the dominance of donor nations (Singer et al, 183). In theory this case is clear, but in practice it is not quite as apparent. In the past, it was likely that much of the food aid administered did result in dependency because nations were dependant on the sole contribution of the United States to the aid they receive (Singer et al, 185). The aid of the past was almost entirely derived from the U.S. surplus and if it were to cease, the dependant nations would face a food crisis. Modern food aid however is no longer based on the surplus food model and instead has been replaced by the programme and project model where there is a clearly defined agreement between donor and host nations (Singer et al, 185). The game has become increasingly complex resulting in the United States no longer being in a position of total dominance with other nations contributing to a host nations food aid (Singer et al, 185). While the U.S. may have directly gained structural power in the past because the host nations were entirely dependent on it’s food aid, it no longer seems to be the case. There are many examples where aid recipients are able to develop into productive societies, with little ill effects from aid (Singer et al, 183). However the effects of food aid may have had a deeper cultural impact on the developing world that have outlasted the initial economic dependency that was created. The final impact of food aid lays in the alteration of native food habits and traditions to more of a European diet (Singer et al, 189). When the U.S. donates wheat to countries that traditionally grow rice for example, they become accustomed to eating bread instead of rice. While it is not a problem in nations that are located in a climate that allows for the domestic production of wheat, those that are simply not suited to grow wheat now find themselves in a position of wanting continued access to wheat without the capacity to produce it (Singer et al, 189). They are no longer a recipient of food aid, but are now instead a full-fledged importer of food still reliant on the grain belt of the United States. Here in lies the final bargain of the food aid regime, firms like Monsanto are able to continue developing and profiting off new agricultural technologies that result in a national surplus that now can be marketed to the third world. Our overproduction can continue and the firms can maintain control over the industry.
This trade structure may seem fine to a liberal economist because people are at least being fed and if food is being imported, it must be due to the comparative advantage of the U.S. over the former recipients of aid. Liberal trade theory states that the generation of wealth should be the primary goal of a society and that the most efficient combination of the factors of production will be the most beneficial directive.1 By allowing a model based on the importation of food to occur, the developing countries can better focus their production efforts on what they can most efficiently produce, creating wealth in the most rapid way possible.
The liberal theory may hold true in a static world where conflicts and disasters play no role in the market or with a commodity that can be done without, but food is a vital part of any society and we live in a truly dynamic world. Without food, a society cannot exist, therefore shouldn’t securing a steady supply of it be a nations highest priority? Following this premise, a country should adhere to a mercantilist trade theory in reference to food where security is the primary concern of the economy.1 While it may be more costly to finance the production of food domestically, it is crucial for the security of the state that it is done. One of the most famous political economists arguing for such a mercantilist theory is Friedrich List. His central argument was that the only way for a developing country to achieve an equal status in the global economy is through the exportation of manufactured goods and not through the export of raw materials (including agricultural goods). He further argued that developing countries must secure and protect their own industries from foreign manufacturers until they can fully develop in order to compete with them in a world market. To protect domestic production a developing nation must instate tariffs on foreign manufactured goods. Foreign goods can be produced cheaper by the developed nations because they have a greater capital backing, but by placing a tariff on foreign goods, domestic goods become the cheaper option to consumers. In this way an industry can gain a footing in the domestic market and eventually accumulate enough wealth to be able to compete abroad. To achieve this end, he believed that a steady flow of cheap raw materials, including food, must be provided to industry. To ensure a flow of food into the nation, land-poor countries might need to import food in order to develop their economy. However it is in the best interest of the nations able to produce their own food to do so in support of their developing economy. Again looking at Central America, many of these nations have a great deal of agricultural land at their disposal yet because of the food aid regime this land is utilized for the production of cash crops for export and not to fuel the industry that can actually aid in their development. Additionally, the importation of grains jeopardizes the very security of industry in these nations. While affluent nations like Japan can import food because of relatively stable foreign exchange earnings, developing nations that are dependant on unstable commodity exports cannot rely on such imports without undermining their food security (Garst and Barry, 42).
Even from the perspective of one of the foremost liberal voices of the 20th century, F.A. Hayek, the food aid regime has been an unsuccessful program. He would contend that intervention in the free market by the U.S. government has resulted in a monopoly over the U.S. agricultural sector by a regime of transnational corporations including Conagra and Monsanto. As a result these corporation have gained an unfair advantage in the market and have created an uncompetitive industry. When the agricultural crisis arose in the early 1950s due to the massive surplus, U.S. farmers should have reduced their inputs, thus decreasing their costs in response to low sale prices. With less inputs, yields would fall allowing the supply to level out with demand, alleviated the food surplus. Instead the U.S. Congress intervened in the passing of PL480, creating an artificial demand and an outlet for surplus goods. As a result, a broken system was propitiated and the U.S. firms could continue to produce the goods (fertilizers, pesticides, hybrid seeds) that created the surplus, while other models for production, such as organic farming, were dismissed in pursuit of an ever increasing industrial model.
Furthermore intervention in the markets of Third World countries by Government policies dictated through the structural power of the U.S., has resulted in an uncompetitive trade structure between the two nations. Hayek would argue for the discontinuation of government intervention in the markets of developing nations and allow the market to correct itself. However, the production capacity of U.S. agriculture has been thoroughly established and backed by U.S. trade policies, the only way developing nations will ever reach a trade balance is to adhere to the mercantilist trade model advocated by List. Tariffs should be initiated to incentivise domestic production. Following the example laid out by Alexander Hamilton in the U.S., land rich countries should create similar land-grant institutions to support their domestic food production. These institutions can produce the knowledge necessary to compete with the knowledge structure held by the U.S. land-grants and firms.
For a final assessment of the food aid regime we will examine the development structure of Tanzania, which has received much praise for its self-reliance. It has avoided many of the problems facing other developing nations through its application of many socialist doctrines. There is virtually no landless or tenant farmer class and government set minimum wages have allowed the country to largely escape the horrors of corporate exploitation (Lea and Chaudri, 241). Social services comprise 20 percent of most peasants’ incomes, free medical services are relatively accessible to all people, and piped water reaches 39 percent of the population (Lea and Chaudri, 241). Furthermore a universal primary education program has achieved almost complete enrollment and the country’s literacy rate was at 59 percent for all adults in 1975 and has certainly risen since then (Lea and Chaudri, 241). The countries overall GDP has been steadily rising since its independence encouraging development. Despite these successes, not all of the development indicators were positive. For example the agricultural sector showed little promise of increased production and periodic droughts have forced the nation to import food, often being in the form of aid when exchange reserves have been depleted (243). As a result, Tanzania in the 1970s received 65 percent of its development budget from foreign aid (). However they were able to change much of the aid they received in the form of loans into grants (245). In doing so, both urban and rural Tanzanian development largely only involve the state and the peasantry and not outside lenders of capital. Because of this, the state is able to create more of a socialist system that actually supports the peasant class and strengthens their position as the primary producers (246). Since independence there has been little support for private investments in industry or commerce, which is against the typical development doctrine advocated by the World Bank (247). One World Bank initiative that was implemented was a village settlement program in rural areas. Workers were paid an incentive wage and there was heavy investment in agricultural machinery and social services to support the new villagers. However the program failed because the villagers became dependant on government support and expected continued subsidies instead of developing self-sufficiency as was hoped. Dependency coupled with poor accounting and maintenance of equipment resulted in the discontinuation of the programs after four years.
In regard to agricultural production the state has maintained an interventionist position propping up the peasantry class (255). It has maintained control over the distribution of inputs available to farmers including fertilizers, seeds, and insecticides that are subsidized and purchased on credit. In the face of little increases in production, the state increased its supervision and authority over agricultural production (256). In the production of tobacco for example, the state allocated land to each family of a planned village who were obligated to follow a set of husbandry measures to maintain the land and maximize production. Initial high capital returns were phased out to lower less profitable ones. Such programs have received a great deal of support foreign aid donors including the World Bank (256). The programs while initially only involving cash crops for export, eventually penetrated into food crop production. In 1979 the programs transitioned into the National Food Credit Program (NFCP). The NFCP was partially funded by USAID and emphasized the use of credit for purchase of inputs to follow a more commercial doctrine. The provision of such credit was a crucial step in bringing the farmers into the world market (256). Many commodities proved to constrain farmers in their need for credit to purchase inputs and technical equipment and as a result they come into a debt trap where they are forced into more commodity production that results in greater impoverishment. They are strained to produce more labor-intensive cash crops that divert labor away from food crops.
The final layer of state involvement in agricultural production has been its strategies for direct production through a proletarianized workforce. After independence the government obtained controlling shares of large-scale farms and plantations to achieve this purpose. Many of these government plantations are largely operated for the production of commodity crops and not subsistence crops such as maize. Many also receive foreign aid, contracts for imported machinery, and utilize foreign management. A growing number of rural workers are being employed on such farms as migrant labor, which leaves them better off when compared to peasants in other regions of the nation.
The overall result of state intervention in agricultural has been an increased dependence on foreign aid that forces international monetary pressures on the nation from the aid donors. The aid the nation receives only serves to strengthen the existing system in place (265). While the donor countries may suffer from a degree of idealism and remote management, their practices are largely put in place to increase commodity production in these host nations, increase markets for manufacturing, and advance labor as a commodity (265). As a result we see that democratic self sufficiency is not possible with the administration of most foreign aid programs (266).
Tanzania has found some success in its development program because it has acted as a mediator between foreign donors and its peasantry class continuing to support its rural people through a socialist authoritarian approach. Where it has failed to increase production, it has succeeded in bringing popular services to its people. The failures in production have stemmed from the penetration of foreign interests and the implementation of unsound policies. For example government propaganda called for the blanket use of fertilizers and pesticides that were in fact an unsound economic investment for the farmers (and perhaps evidence of U.S. firms influence on the countries market because they produce the inputs). By allowing foreign intervention in domestic markets through food aid, Tanzania has undermined its own food security. However by importing food from world surpluses the nation has still seen relative success in its development. This dogma has been allowed by many developing nations and thus far these nations have endured such a trade structure without crisis.
However emerging threats from energy shortages and environmental problems could undermine the stability of the system and further decrease their food security. The industrial agriculture model of the U.S. that supplies food for the aid receiving and import reliant nations is based on the use of heavy inputs and mechanization as stated before. These inputs and the fuel supply of the tractors that spread them are primarily oil based and their implementation has largely coincided with the availability of cheap oil. Furthermore the global shipment of this produce relies on a supply of inexpensive oil to fuel the trucks that travel across continents and the cargo ships that cross the oceans to bring food to host nations. As oil production reaches a peak (which many advocates of this position believe has already occurred) and begins to plummet as the available supply of oil in the ground is depleted and reduced to highly costly stores to refine, the price of oil will steadily increase. Without cheap oil to keep the motor running in American food production, the food aid regime will collapse along with all of its dependants. With such considerations in mind, nations that are able to, should make it a primary policy to ensure some degree of food security.
Oscar Arias president of Costa Rica, best sums up the food aid regime in a letter saying “it is designed to subject us to food dependency and to implement what are clearly political/economic objectives- yet it has been presented in our country as an ‘assistance program’” (Garst and Barry, 73). While there are many negative effects of food aid, under the correct circumstances its implementation can be quite beneficial. Each case must be examined individually and it must be approached in a controlled manner to prevent it from becoming part of the problem. Food aid needs to become a tool helping nations recover from a disaster and propel it forward as an equal to the United States not a subsidiary. The receiving countries furthermore need to take steps to insure their domestic production is secured to the capacity that their land can produce. Perhaps then the dream televised across the nation can finally come to fruition.
Hayek, F. A. The Road To Serfdom . London: University of Chicago Press, 2007.
Lea, David, and D. P. Chaudhri, eds. Rural Development and the State . London: Methuen, 1983.
Singer, Hans, John Wood, and Tony Jennings. Food Aid: The Challenge and the Opportunity . Oxford: Clarendon Press, 1987.
Ruttan, Vernon W, ed. Why Food Aid? . Baltimore: The John Hopkins University Press, 1993.
Garst, Rachel, and Tom Barry. Feeding the Crisis: U.S. Food Aid and Farm Policy in Central America . London: University of Nebraska Press, 1990.
Kunstler, James H. "Making Other Arrangements." Orion Jan/Feb (2007): 22-29.
Kimbrell, Andrew. The Fatal Harvest: The tragedy of Industrial Agriculture . Washington: Island Press, 2002.
Polyani, Karl. The Great Transformation: The Political and Economic Origins of Our Time . Boston: Beacon Press, 2001.
Heinberg, Richard. The Party’s Over: Oil, War, and the Fate of Industrial Societies . Gabriola Island: New Society Publishers, 2005
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