Millions of people around the world have been negatively affected by the U.S. government’s decision to freeze foreign aid through the United States Agency for International Development (USAID).
While most of those affected live in the developing world, it is also hurting another group: American farmers.
The agency, which has an annual budget of about $40 billion USD, typically spends about $2 billion of that total buying crops from U.S. farmers for aid through its Food for Peace program.
Republican officials in states such as Kansas, North Dakota and Arkansas are asking President Donald Trump for an exemption to the cuts, saying they will affect farmers in their states — many of which voted for Trump in the election.
As Kansas senator Jerry Moran said in a Feb. 18 speech, the Food for Peace program “provides a reliable market for Kansas farmers by shipping food surpluses produced in Kansas and across the nation to countries in need.”
In Canada, farmers do not face a similar worry, even if a future federal government were to cut foreign aid spending, as Conservative Party Leader Pierre Poilievre has pledged to do.
Canadian foreign aid is not used to purchase food from Canadian farmers, says Paul Hagerman, who directs public policy for Canadian Foodgrains Bank, the largest private supplier of food aid in Canada.
The U.S., he says, practices what is called “tied” aid, which requires food provided through USAID to be purchased from American farmers, processed by American mills and shipped on American ships.
In Canada, federal funds can be used by aid groups to buy food in the developing world.
However, it was not always that way. Prior to 2008, Canada also saw food aid as a way to support Canadian farmers while helping to feed the world. Canadian aid groups were required to spend 90 per cent of government funds to buy food from farmers in Canada.
While the system may have benefitted Canadian farmers, it was not very effective at addressing hunger needs around the world, Hagerman says.
One reason is it took time for food from Canada to reach hungry people. “Shipping food from Canada took three to four months, by which time, acute hunger had worsened, and with this, the potential for long-term effects of hunger from malnutrition and poor health,” Hagerman said.
It is also expensive to ship food, increasing the cost of providing aid.
And the food Canada shipped — usually wheat — was often not part of local diets. “People in the developing world often traded it for familiar foods, losing value in the exchange,” Hagerman says.
Free food also disrupted markets in the developing world, undercutting prices of food produced locally.
At the same time, research showed that tied aid did not significantly impact Canadian farmers’ incomes. “If it wasn’t helping Canadian farmers anyway, why not reform food aid so it worked better for those who needed it?” Hagerman asks.
In 2002, the Foodgrains Bank led an effort to get Canada to untie its food aid. Fearful of a backlash from farmers, politicians initially agreed to a partial measure, permitting aid groups to use half of government funds to purchase food overseas.
Then the Southeast Asian tsunami hit Indonesia and other countries in 2004, destroying villages and crops on the coast — but leaving inland fields untouched.
“It was a situation that demonstrated exactly why local purchase of food aid made more sense than shipping wheat across the ocean,” said Hagerman. That experience paved the way for Canadian food aid to be completely untied in 2008.
Canada is not alone in untying its aid. European Union countries have also done so, as has Australia.
While the move toward untied aid means Canada’s food aid is more responsive and cost effective, it does have one drawback compared to the U.S., Hagerman notes.
“In the U.S., farmers are willing to speak up to protect foreign aid since their economic fortunes are tied to it,” he said. “It’s a built-in lobby group.”
Even so, the Foodgrains Bank has no interest in going back to the old way of providing food aid.
“The savings in money and time and supporting farmers in the developing world outweigh the way it is done by the U.S.,” he says.
Uncertainty about the future of USAID, and how cuts to it will affect American farmers, has prompted Republicans in five states to bring a new bill to Congress recommending the Food for Peace program be moved from USAID to the Department of Agriculture.
According to the Wall Street Journal, the bill would ensure all U.S. food aid money is used to purchase food in that country. It would not allow the program to purchase food aid in other countries, even if doing so is cheaper than shipping the food to distant places and helps achieve economic development in poor countries.
According to the Journal, farm leaders are worried about whether the federal government would stop food aid purchases at a time when U.S. commodity prices have been low.
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