As Prices Soar, U.S. Food Aid Buys Less

By CELIA W. DUGGER

Soaring food prices, driven in part by demand for ethanol made from corn, have helped slash the amount of food aid the government buys to its lowest level in a decade, possibly resulting in more hungry people around the world this year.

The United States, the world’s dominant donor, has purchased less than half the amount of food aid this year that it did in 2000, according to new data from the Department of Agriculture.

“The people who are starving and have to rely on food aid, they will suffer,” Jean Ziegler, who reports to the United Nations on hunger and food issues, said in an interview this week.

Corn prices have fallen in recent months, but are still far higher than they were a year ago. Demand for ethanol has also indirectly driven the rising price of soybeans, as land that had been planted with soybeans shifted to corn. And wheat prices have skyrocketed, in large part because drought hurt production in Australia, a major producer, economists say.

The higher food prices have not only reduced the amount of American food aid for the hungry, but are also making it harder for the poorest people to buy food for themselves, economists and advocates for the hungry say.

“We fear the steady rise of food prices will hit those on the front lines of hunger the hardest,” said Josette Sheeran, executive director of the United Nations World Food Program. The United States is the biggest contributor to the agency.

She warned that food aid spending would have to rise just to keep feeding the same number of people. But the appropriations bill for the coming year now moving through Congress does not promise any significant increases in the food aid budget.

The impact of rising food prices on food aid is part of a broader debate about the long-term impact on the world’s poorest people of using food crops to make ethanol and other biofuels, a strategy that rich countries like the United States hope will eventually reduce dependence on Middle Eastern oil.

Some advocates for the poor say rising food prices could benefit poor farmers in developing countries, providing them with markets and decent prices for their crops. But others warn that the growing use of food crops to make fuel, especially if stoked by large subsidies in rich countries, could substantially increase food prices. That could push hundreds of millions more poor people into hunger, especially landless laborers and subsistence farmers, according to a recent article in Foreign Affairs magazine. The authors were Benjamin Senauer and C. Ford Runge, food policy analysts and professors at the University of Minnesota.

Production of food crops to make biofuels will also tend to favor growers with plenty of capital and large land holdings, they say, rather than small-scale, impoverished farmers lacking modern grain storage facilities in poor countries. “The policies put in place are going to be crucial to whether the small producer and the people who live where hunger is concentrated can benefit,” Mr. Senauer said.

But for now food aid is suffering, as are poor people in poor countries, economists say. And their situation may get even tougher next year, relief agencies warn. The United Nations Food and Agriculture Organization is projecting that low-income countries reliant on food imports, including most of sub-Saharan Africa, will see the amount they pay to import cereals rise 14 percent.

The world’s ability to absorb fresh price shocks has shrunk along with food stocks. “We’re very worried,” said Henri Josserand, who heads the organization’s global information and early warning system. “World food stocks are much smaller than they used to be.”

The food aid declines may also continue. Catholic Relief Services, a major distributor of American food aid, has projected substantial increases in what the federal government pays for food aid next year, based on an analysis of the futures market for the wheat, corn and soybean products that are mainstays of aid. “It’s bad news and it’s not just going to affect U.S. food aid, but food aid from every source,” said Frank Orzechowski, a retired commodity trader who now advises Catholic Relief Services.

This year’s decline in food aid follows a period when the sharply escalating costs of shipping American-grown food aid to Africa and Asia already reduced the tonnage supplied. The United States Government Accountability Officementnd this year that the number of people being fed by American food aid had declined to 70 million in 2006 from 105 million in 2002, mainly because of rising transportation and logistical costs.

Now food prices are also playing a role. New data from the Department of Agriculture show that the cost of food for the federal government’s main food aid program, Food for Peace, rose 35 percent over the past two years.

The amount of food bought for American food aid programs has fallen to 2.4 million metric tons this year from 4 million metric tons in 2005 and 5.3 million metric tons in 2000. Thomas Melito, who supervised the Government Accountability Office’s food aid investigation this year, called the escalating costs of food aid “frightening.”

“In a situation where there are 850 million hungry people in the world and the program was only providing enough for 70 million people in 2006, the new totals will be even lower,” he said.

Congress is considering changes to the food aid program as part of the omnibus farm bill that some economists and advocates for the hungry say would improve the efficiency of the program and allow it to feed more people. They point to a Bush administration proposal that would allow the government to use up to $300 million of the food aid budget to buy food in African countries close to hunger emergencies rather than shipping it from the United States on mainly American-flagged vessels as current law requires.

In his speech to the United Nations this week, President Bush said the proposal would speed delivery and help provide a market for poor farmers in developing countries.

The House version of the farm bill includes no such provision. The Senate Agriculture Committee has not produced a farm bill.

“To my mind, that’s the way out of this pincer,” said Emmy Simmons, an agricultural economist and retired senior manager at the United States Agency for International Development.

“But the shipping guys are hanging tough,” she added. “They’re defending that little chunk of revenue. They aren’t super concerned whether you feed less people.”

Groups representing shipping companies and agribusiness interests have opposed using the budget of the main food aid program to buy food in developing countries instead of relying on American food shipped overseas.

Gloria Tosi, who represents most of the American ship owners involved in the food aid system, said buying commodities abroad would erode domestic political support for the program and lead to lower food aid budgets from Congress. She said it was “politically naïve” to think the food commodity groups and ship owners that have for decades supported food aid in Congress would favor buying commodities abroad.

“None of us will be working toward that,” she said.