Food aid or export assistance

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Food aid or export assistance?

• Dr. Wilma Salgado
• Universidad Andina Simón Bolívar

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USA FOOD AID

• Food assistance differs from other forms of
  official development assistance
• from its conception, from its origins, it was
  perceived by its proponents as mechanism to
  opening and/or to allocate agricultural
  production surpluses, especially produced by the
  United States farmers, and at the same time,
  serving as a tool to pressure in favour of the
  objectives of US foreign policies

3
FOOD AID INCREASE US EXPORTS

• In an evaluation carried out by North American
  Congress Research Services and presented as a
  report to the Congress, in April 1994, it was
  acknowledged that "Food assistance has enabled
  the allocation of products which could not have
  been exported in the absence of concessional
  financing and subsequently has allowed the
  increase of North American net exports."

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FOOD AID AND FREE MARKET REFORMS

• From the mid 80's, with the publication of the
  Food Security Act in 1985, the US is linking food
  assistance with the application of free market
  reforms in the agricultural sector in the
  recipient countries. The aim of the so called
  "Food For Progress" is to stimulate recipient
  countries to "Develop more open economic
  systems", and therefore, influencing internal
  economic policies and frustrating the
  implementation of agricultural policies that
  would help to increase the living standards of
  the majority of farmers that live in poverty.

5
PLAN COLOMBIA

• Since the implementation of the Colombia Plan,
  the US has increased its level of "food
  assistance" to Ecuador.

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FOOD AID AND LOCAL PRODUCTION

• The food products received as donations, or
  through concessionary credits, are sold on the
  local market of the recipient country, impacting
  in a negative way the capacity of local
  production.

7
WHEAT IN ECUADOR

• This has been the history of wheat in Ecuador, a
  product for which Ecuador was self-sufficient a
  few decades ago, and of which 96 is now
  imported. A similar situation is now occurring
  with soybean, a product that is coming in as
  "food assistance" for "social" programme managed
  by "humanitarian" agencies.

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FOOD AID AND FOOD DEPENDENCE

• Food dependence and increasing rural
  marginalization, which are the results of "food
  assistance", are to be partly blamed on the
  governments of recipient countries of such
  assistance. They accept and apply the
  conditionalities without questioning the impact
  on food security and food dependence.

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• The case of wheat in Ecuador shows that the USA
  interest for market expansion of their surplus
  production, overlap the interests of local
  producing wheat flour groups, since they prefer
  to buy a highly subsidized wheat, but also they
  claim subsidies to import wheat, claiming a
  better quality.

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FOOD AID AND FOOD DEPENDENCE

• Hence, while in industrialized countries the
  export of wheat is subsidized (a product that was
  part of "food assistance" in Ecuador from 1971 to
  1983), the government of Ecuador also subsidizes
  the import of wheat, with the argument that the
  imported wheat has a better quality and lower
  price, and therefore is in the interest of
  consumers.
• This is how Ecuador lost its self-sufficiency in
  wheat production and how the farmers which used
  to grow wheat lost their source of income.

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• Additionally, food aid generates negative impacts
  in the capacity of the local producers, since the
  offer of the products increase, and an automatic
  decrease of the size of the internal market for
  the local producers take place

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Food aid and local production

• In the other hand, while the offer increase, the
  prices of the product decrease, discouraging the
  local farmers to continuo growing that crop.
• The consequence is that the local production of
  that crop disappears. In short time, the product
  is replaced by donated food and later by imports,
  when the donation finishes.

13
The intermediary agencies

• The products that come into the recipient country
  as a donation, or concessional credits, are sold
  in the domestic market of that country, creating
  a fund for food assistance
• The financial resources obtained from the sales
  of these products are managed by very expensive
  intermediary agencies

14
The intermediary agencies

• They international consultans that create
  employment for citizens of the countries where
  the assistance originates
• The result is that only a small fraction of the
  monetized resources really reach the
  beneficiaries of the programmes.
• The interests of theshiny bureaucracy, linked
  with those intermediary agencies involve with
  "food assistance", adds up to the interests of
  the countries where the assistance originates.

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Who get beneficies from food aid

• The interests of the small, medium and even large
  farmers which grow the products which are object
  of "food aid", and the supposed humanitarian
  principles that justify the assistance, remain
  marginal when they are compared with the combined
  interests of other sectors

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Who get beneficies from food aid

• the international agencies that manage the
  financial resources from the sales of the
  products of the "assistance" on the local market
• the country which provide the "assistance" to
  expand their market
• The transnational corporations which acquire the
  products from local groups to process and market
  them locally

17

• The injustice called "food aid" in only another
  example of the so common double language used by
  the United States to hidden its economic
  interests.

18

• "Food assistance" is fact, an assistance to its
  own farmers to expand their market
• Just as the strongly promoted "free trade" in
  third countries has enabled US farmers to expand
  their market, while the US has increased its
  non-tariff barriers, or neoprotectionism, to
  limit the import of products that could compete
  on the US market through anti dumping measures or
  phytosanitarian rules.

19

• The free move of capital has enabled US
  speculators to broaden their markets for their
  speculative investments, enabling capital flux,
  resulting in truly financial piracy. The gains
  are with the speculators, mostly from
  industrialized countries and also with local
  financial intermediaries. The losses fall on the
  local population, especially on the poorest.

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CONCLUSIONS

• "Food Aid", particularly the one granted by
  United States, has allowed that country to
  achieve the following benefits
• To extend markets in the countries that are bound
  for "aid"
• To limit the possible competition of the
  receiving countries in mediator markets,
  prohibiting the exportation of similar products
  to the ones that are subject to the aid,

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CONCLUSION

• To generate income for American marine
  transportation companies
• To generate employment resources for American
  consultants
• To influence in the leading of internal
  economical policies of the recipient country, by
  eliminating it from the market aid subjects
  products competition, or at least, diminishing
  severely its competing capacity,
• To have an additional influencing mechanism to
  obtain its external political objective

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CONCLUSION

• "Food Aid" recipient countries, have suffered
  the following effects
• They have increased the import of agrarian
  products which were subject of aid
• They have become dependant of
• They have lost labour resources due to the
  shifting of its own internal market local
  producer

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CONCLUSION

• They have lost productive capability
• Consequently, Food Aid has contributed in the
  poverty and indigence increase. It has deepened
  the dependency towards receiving countries
  imports, affecting even more the food situation
  both in rural areas and in cities