SAN ANTONIO, Texas – American wheat groups are determined to keep the food in food aid.
U.S. policy has come under attack at the World Trade Organization where the European Union, Canada and Australia are lobbying for changes to the way the country delivers humanitarian relief.
They want the United States to give cash instead of food aid, arguing the latter is just a form of grain subsidy.
At the latest round of WTO negotiations in Hong Kong they were successful in getting a clause inserted into the Dec. 18 ministerial declaration calling for “effective disciplines on in-kind food aid.”
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That has angered the U.S. wheat industry, which provides around half of America’s food aid shipments. It claims the EU has ulterior motives for suggesting the switch to a cash-based system.
Tom Mick, who sits on the U.S. Wheat Associates’ food aid committee, pointed out that 57 percent of U.S. food aid goes to Africa. If the U.S. moved to a cash-based system, African countries would likely use the money to buy grain from the EU to save on transportation costs.
“We think there is some real financial interest behind the European Union’s move on this,” said Mick.
He told delegates attending the North American Grain Congress that U.S. food aid has dwindled to fewer than four million tonnes per year from an average of 16 million tonnes in the 1960s.
But it is still a vital source of demand for the wheat industry. In 2001-02 it accounted for 23 percent of all hard white wheat exports and in 2002-03 food aid programs took 17 percent of America’s hard red wheat exports.
Losing those contracts would be the equivalent of losing the entire Japanese market for wheat.
“That would have a major negative impact on prices,” said Mick.
But he emphasized that is not why the wheat industry is pushing for the continuation of commodity-based aid. He said poor people need food, not money.
Mick said one of the advantages to commodity-based aid is that it is hard to do something illegal with it.
“Cash has the tendency to disappear in a lot of third world countries. But when you have 35,000 tonnes of grain coming in, it’s kind of hard to steal that.”
The EU and its allies argue the grain is being sold by third world countries at market distorting prices so they can get cash to fund other pressing needs and that the U.S. is using the programs as a market development tool to secure future markets. American food aid policy is also coming under pressure from domestic forces.
The United States Agency for International Development, which oversees the majority of U.S. food aid, is looking to cut the list of countries that receive relief from 32 to 17.
And the Bill Emerson Humanitarian Trust, a program that allows the U.S. to respond to unanticipated food crises by providing up to four million tonnes of wheat, corn, sorghum and rice, could disappear once the current farm bill expires at the end of 2007.
