Posted August 6, 2012 by Karen Hansen-Kuhn
The reports of drought across the United States continue to worsen. Just this week, USDA decreased its estimates of corn harvests in “good to excellent” conditions to 24 percent. Corn futures are hovering near $8 a bushel, and wheat futures have started to rise as well. We won’t know for sure how much of the crop is affected for several weeks, but what seems clear is that the harvest will be down, perhaps 30 percent or more, and prices will be up substantially.
This kind of weather extremes have become increasing common around the world. The number of recorded natural disasters has doubled in the last 20 years, and the U.N. estimates that nine out of ten of those disasters are linked to climate change. All projections are that these problems will only increase with growing climate chaos. At the same time, a crop failure here doesn’t mean that crops have failed everywhere. Argentina, for example, is expecting a record corn and wheat harvest. So food crises and famines will likely rise, but where the supplies are located will become more and more variable.
Unfortunately, U.S. international food aid policy is still stuck in the past, in a time when huge grain surpluses were shipped overseas to ease famines, promote U.S. foreign policy or build markets for U.S. grains. By law, at least 75 percent of U.S. food aid is in-kind—purchased from U.S. companies, shipped by U.S. carriers, and distributed by U.S. NGOs overseas. A study published in The Guardian estimated that two-thirds of U.S. food aid purchases were made by just three companies: ADM, Cargill and Bunge. This practice is scandalously inefficient. A GAO study estimated that 65 percent of food aid dollars are absorbed by shipping costs. This, at a time when budgets are under threat and the cost of buying U.S. grains is skyrocketing.
The last Farm Bill included a few steps in the right direction. It launched a small pilot program to test local and regional purchases of food aid in developing countries. Early results indicate that those experiments have meant that food aid dollars went a lot further—more grain was purchased, it arrived more quickly, and, when done right, it strengthened local markets in developing countries.
The Senate version of the new Farm Bill made the pilot a permanent program and increased the funding slightly, to $40 million. The House Agriculture Committee version, on the other hand, retreated into the past, eliminating the pilot program and cutting the budget for food aid. So, at a time when the need for food aid to respond to crises will only continue to increase, and the evidence base for the common sense approach of buying food where it’s cheapest becomes even more solid, U.S. policy could be on the road to spending scarce dollars on even scarcer U.S. grains.
Food aid is not the answer to food security. It is a safety net to be used when all else fails, but it is an important last resort. The U.S. drought highlights a lot of important issues at the global level: the need for food reserves, the increasing impacts of climate change, competing uses for grains for food and fuel, and the importance of providing stable public support for a transition to more resilient farming systems. These are all important questions that deserve in-depth discussions. In the meantime, the simple fix of ensuring cheaper, more stable food aid supplies by implementing common sense reforms, should be back on the table in the Farm Bill.
Watch IATP's Jim Kleinschmit talk about his experience with the drought on a recent trip to Nebraska, below: