Commodity boom eats into aid for world’s hungry

A report earlier this year from an independent government watchdog found that as much as 65 percent of U.S. emergency food aid funds are spent on transport and overhead.

With prices rocketing in the space of weeks, some major aid groups, like Atlanta-based CARE USA, find themselves in a pinch when they receive crop donations that are significantly smaller than the amount originally approved by the government.

“They come back to us and say, ‘Sorry, we’re not going to give you the full amount,” said Bob Bell, who heads CARE USA’s food resources team. Last year, CARE received 14 percent less wheat aid in Mozambique than it was promised.

The price trend can cut off some needy communities entirely, aid groups say, and only exacerbates budget cuts for longer-term assistance. They also see knock-on problems for the nutrition and agriculture projects they operate and even in paying staff on the ground.

Yet for charities who bank on sales of donated U.S. crops in poor countries to fund their development work, higher prices can be welcome news.

David Evans, a vice president at Food for the Hungry, a U.S.-based charity, said higher prices bring more money for the nutrition, water and sanitation, and other assistance projects the group runs in Bolivia, Rwanda, Mozambique and elsewhere. Soaring shipping prices — which have increased 63 percent per tonne of U.S. aid since 2004 — are particularly troublesome because U.S. law prohibits buying crops abroad.

The European Union shifted to providing its assistance in cash years ago, and other donors, like Canada, allow up to half of food aid funds to buy crops in the developing world. That allows the Canadian Foodgrains Bank, for example, to sidestep the price crunch to a certain degree, Clark said.

Many believe the cycle of famine and hunger will end only when agriculture in fragile countries becomes more productive and competitive. That could, eventually, increase supplies on world markets and help ease prices. “If the U.S. is serious about addressing world hunger, the way to do that is increasing production, not shipping U.S. commodities ... around the world,” Uphaus said.

But agriculture development has fallen off in recent years as aid budgets target HIV/AIDS, education and other new priorities.

Article source: http://www.financialexpress.com/news/commodity-boom-eats-into-aid-for-worlds-hungry/214645/2