Food Aid and Agricultural Subsidies

Administered by the UN's World Food Programme, the U.S. Agency for International
Development (USAID), the European Commission's Humanitarian Aid and Civil Protection
department, and other agencies, humanitarian food aid plays an important role in the effort to
address global hunger and improve food security. Food aid is provided in response to natural
disasters and political crises, when people's regular access to food is threatened. In developing
countries food aid may also be administered in nonemergency situations, such as in the form of
school lunches intended to boost educational outcomes and thereby contribute to a country's
long-term economic development.

In U.S. International Food Assistance Report, Fiscal Year 2013 (September 24, 2014), the most
recent year for which data were available, USAID reports that in fiscal year 2013 the U.S.
government provided $1.7 billion of food assistance (amounting to 1.5 million tons [1.4 million
t] of food) to 46.2 million people in 56 countries. The overwhelming majority (78.9%) of U.S.
food aid is directed to Africa, in keeping with the disproportionate prevalence of food insecurity
in that region.

Although international food aid programs are genuinely intended to alleviate the immediate
suffering and long-term detriments caused by hunger, critics nonetheless charge that the United
States and other wealthy countries simultaneously use these programs to gain advantages in food
export markets and otherwise bolster their own agricultural industries in ways that undermine
local agriculture and economic development in the developing countries that receive the aid.
Specifically, the governments of wealthy countries routinely pay farmers—mostly the owners of
large farms—and agribusinesses billions of dollars each year to produce too much or not enough
of certain crops to control the prices of crops for export or import. In Europe, Japan, and the
United States, these farm subsidies are designed to work in conjunction with trade barriers such
as quotas (limitations of imports) and tariffs. When farmers in developed countries are paid to
overproduce certain foods (e.g., rice and corn), those countries export the surplus to poor
countries for extremely low prices or sometimes without charge as aid (this is sometimes called
food dumping). Meanwhile, trade barriers prevent poor countries from exporting crops and other
goods to wealthy countries (this is sometimes called protectionism).

In some emergencies, such as disasters or wars that disrupt supply chains and destroy crops, the
importation of food from the United States and Europe represents the most sensible food-aid
option. However, in other cases, even in emergency situations, food is available in the country or
region affected, and humanitarian funds could be more effectively spent on these locally or
regionally sourced foods, with the added benefit of bolstering the earnings of those farmers.

Additionally, supplying foreign-grown crops beyond the early stages of an emergency may hurt
local economies by driving prices down to levels that small local farmers cannot match. Once
local farmers are prevented from competing in this way, a country can become perennially
dependent on food aid, and farmers instead use their land to produce crops such as cut flowers or
livestock feed for export to developed countries. These countries thus become more vulnerable to
international economic trends ranging from rising prices in world commodity markets (which
can make food aid less available), to falling prices for the commodities they produce for export,
and to financial meltdowns such as those that touched off the global economic crisis in 2007. A
country that is capable of meeting its own food needs without significant amounts of imported
food is, by contrast, better positioned to reduce poverty and increase its levels of human
development.

International Debt

Lending and debt relief to underdeveloped and developing nations is another controversial issue.
Many low-income countries became heavily indebted to wealthy nations during the 1970s, when
banks around the world began lending money to developing countries that were rich in resources
such as oil. The money, however, was often mismanaged—particularly in the countries of sub-
Saharan Africa—and spent on projects to expand the wealth of the upper classes, rather than
used to build the infrastructure and make the social investments necessary for economic
development. When interest rates on the loans rose and the prices of oil and other resources fell
during the 1980s, the indebted countries were unable to repay the loans. Many of these nations
turned to the World Bank or the International Monetary Fund (IMF) for help. These
organizations underwrote more loans, but required that the poor countries agree to undergo
structural adjustment programs (SAPs).

In essence, the World Bank and the IMF demanded that the poor countries restructure their
economies by cutting spending and revaluing their currency so that they could begin to repay
their loans and emerge from debt. Most low-income countries met the restructuring criteria by
limiting their social spending (e.g., on education, health care, and social services), lowering
wages, cutting jobs, and taking land from subsistence farmers to grow crops for export. This
focus on increasing trade has generated the most severe criticism from opponents of SAPs, who
argue that wealthy countries encourage such measures to improve their own trading
opportunities, which destroys the ability of poor countries to support themselves by encouraging
dependence on imports of food and other basic necessities. However, supporters of SAPs point
out that this economic system allows poor countries to participate more fully in the global market
and that the benefits of restructuring will eventually “trickle down” to the poor.

In 1996 the World Bank and the IMF created the Heavily Indebted Poor Countries (HIPC)
Initiative. The initiative was intended to reduce the debt of the most heavily indebted poor
countries to manageable levels. In 2005 the HIPC Initiative was supplemented by the
Multilateral Debt Relief Initiative (MDRI) to help countries make progress toward the UN
MDGs.

The MDRI cancels the debt of countries that meet the HIPC Initiative criteria, which include
implementing agreed-on reforms and developing a Poverty Reduction Strategy Paper (PRSP; the
paper describes the policies and programs that a country will pursue over several years to
encourage economic growth and reduce poverty). As a country makes progress toward these
goals, a decision point is reached, whereby the International Development Association of the
World Bank and the IMF determine whether the country should receive debt relief. If the country
is granted debt relief, it may begin receiving interim debt relief at the decision point. Once the
PRSP has been adopted and implemented for at least one year, and when other criteria have been
met, the country is said to have reached its completion point, and full debt relief is given.

Reference: https://www.gale.com/open-access/poverty