According to a Chinese proverb, “Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime.” It turns out that for decades U.S. food aid policies have been based on giving poor countries that fish, or rather giving them food produced in the United States and shipped abroad, because the program has been as much a subsidy for grain producers and shipping companies as an act of charity. A few years ago the Bush Administration, which I agree with about 15% of the time, proposed using some of America’s food aid money to buy food in the countries where the aid was distributed. If American food was the cheapest, then the private sector would get it there, but otherwise American food aid would support, rather than displace, a network of local farmers and food businesses, providing them with the income to recover and develop. It was and is a good idea.
This policy, however, was blocked in Congress for years by an “iron triangle” of U.S. agribusiness interests, shipping interests, and the food aid non-profits that distribute the assistance. And now, in a stunning reversal the The Economist magazine recently called “the end of cheap food,” events have overtaken that debate, putting countries with weakened food production and distribution networks at risk of severe and unmitigated famine for the first time in 30 years.
This under-the-radar issue has been covered extensively by the New York Times, to its credit, which is how I found out about it. I was surprised and disappointed that the mostly religion-inspired food aid agencies fought against this change, on the grounds that without the self-interest of self-interested Americans, political support for preventing people elsewhere from starving would disappear.
Among the opponents was Catholic Relief Services, which prides itself on providing development assistance as well emergency assistance in droughts and other disasters. My family has been a long time donor to this organization, in many years contributing more to it than to any to any other. But according to its 2004 annual report, donations from individuals and foundations accounted for less than 20 percent of the organization’s budget. Cash from the federal government accounted for more than a quarter. And food commodities and ocean freight donated by the federal government accounted for more than half. Responding to the Bush Administration proposal, reported Bloomberg, the CRS CEO said “While some foreign purchases may be acceptable, if they remove too much of the financial benefits for U.S. producers and organizations, support in Washington will be lost…There is the great risk that there is no longer the political support to protect these programs from cuts.”
When I found out about this issue (I believe it was in mid-2006) I wrote to CRS to object to its stance, but had to concede that (sadly) perhaps it knew more about the motivations of American charity than I did. And these quotes from various Times articles on the subject over the past few years indicate that is the case.
“Just four companies and their subsidiaries, led by Archer Daniels Midland and Cargill, sold more than half the $700 million in food commodities provided through the United States Agency for International Development's food aid program in 2004, government records show. Just five shipping companies received over half the more than $300 million spent to ship that food, records show. Members of Congress often applaud the benefits of food aid for American farmers, but that is not really how it works…It's the middlemen who enjoy most of the gains…not the farmers.”
Kind of like all those billions of dollars city dwellers have paid over the year to “save the family farm,” isn’t it? Just as all the extra payroll taxes we have paid since the 1983 deal to “save Social Security” didn’t save Social Security because that money was diverted, so all the farm income stabilization money hasn’t slowed the decline in the number of small family farms.
“Bob Goodlatte, a Virginia Republican who heads the House Agriculture Committee, said even Mr. DeWine's modest compromise ‘would break a coalition that has resulted in one of the most successful food aid programs in world history.’”
“Senator Blanche Lincoln, Democrat of Arkansas, said she was not confident that the government could ensure that it would not buy commodities from America’s competitors in Europe and Australia…If you want to see safe, affordable and abundant food supply in the United States, somebody’s got to stand up for our growers.”
“Representative Tom Lantos, Democrat of California and chairman of the House Foreign Relations Committee, warned last year at a food aid conference in Washington that decoupling food aid from American maritime and agribusiness interests was ‘beyond insane…It is a mistake of gigantic proportions,’ he said, ‘because support for such a program will vanish overnight, overnight.’”
“’It would be at extreme risk of being diminished,’ said Paul B. Green, a consultant to the North American Millers’ Association, a trade group for the milling industry that counts Archer Daniels Midland, Bunge and Horizon Milling, a joint venture of Cargill and CHS Inc. among its members. Gloria Tosi, a lobbyist and immediate past president of the American Maritime Congress, an association of United States-flag ship owners, agreed. ‘There’s no constituency for cash,’ she said.”
Perhaps none of this is surprising in a country where “populist” attacks on “foreign aid” were a political staple 30 years ago, when the economy turned down and resources become scarce. As if foreign aid accounted for more than a few nickels of the federal budget. In the 1990s foreign aid was replaced by U.S. poor people on welfare as the scapegoat for America’s economic problems, and in this downturn immigrants and international trade appear to be the top targets. Ronald Reagan had joined the populist crusade against foreign aid and the United Nations, but he said that “trade not aid” would lift poor countries out of poverty. And for millions of people in many poor countries, he turned out to be right. Thus the new American idea for the developing world – not trade, not aid, and don’t come here.
Despite these headwinds, the Bush Administration seemed to be making headway after years of trying, in part because the many of the food aid organizations, including CRS, began to get religion and switched sides. According to the Times “Catholic Relief Services, which has a million donors and links with 13,000 parishes, has embraced the administration’s proposal. Addressing hundreds of people assembled at the conference, Ken Hackett, president of the agency, which is a major player in food aid, declared, ‘C.R.S. supports the administration’s request for greater flexibility through local purchase.’”
But now everything has changed.
According to The Economist “For as long as most people can remember, food has been getting cheaper and farming has been in decline. In 1974-2005 food prices on world markets fell by three-quarters in real terms. Food today is so cheap that the West is battling gluttony even as it scrapes piles of half-eaten leftovers into the bin.” Which is why food aid was seen as a way to save jobs by, in effect, cutting the price of food sent to developing countries to zero. However, “Since the spring, wheat prices have doubled and almost every crop under the sun—maize, milk, oilseeds, you name it—is at or near a peak in nominal terms. The Economist's food-price index is higher today than at any time since it was created in 1845 (see chart). Even in real terms, prices have jumped by 75% since 2005.”
This is likely the start of a long-term trend, and to understand why you need to think back to issues that haven’t been much talked about since the 1970s, the last time mass starvation stalked the planet. I recall those issues because it is that decade, the decade of my teens, that has shaped many of my views and personal choices.
One factor is the consumption of meat raised on grains rather than pastureland, since “calorie for calorie, you need more grain if you eat it transformed into meat than if you eat it as bread: it takes three kilograms of cereals to produce a kilo of pork, eight for a kilo of beef.” As places such as China and India have become richer, their meat consumption has increased, and given the large populations of these and other rapidly developing countries (China and India alone account for one-third of the world’s people) this has been enough to create a global food shortage. “In 1985 the average Chinese consumer ate 20kg (44lb) of meat a year; now he eats more than 50kg.” (110 lbs) And now, the press reports, there are protests in Italy over the soaring price of pasta. Recall that in the 1970s, rising grain prices led to rising beef prices, and rising meat consumption in the developed world contributed to the shortage of grain. Now the number of people eating more meat is soaring to a far greater extent.
This isn’t, strictly speaking, an argument to become a vegetarian to avoid taking food out of other people’s mouths, since some land is best used for pasture rather than crops (and some meat can be hunted at a reasonable rate in natural environments). But it is an argument for being semi-vegetarian with low meat consumption (health is another reason), which is the way we do it at my house, since the world may not be able to support 6 billion people eating 110 lbs of meat per year. The average American, meanwhile, eats 112 lbs of red mean and 73 lbs of poultry for a total of 185 lbs according to the Statistical Abstract of the United States. There has been a shift from red meat to poultry, and a slight increase in the total (from 179 lbs) over 25 years. (Hunters are limited to one deer per year, which yields an average of 50 lbs of meat).
A second factor is energy prices, which are once again reminiscent of the 1970s, because industrial-scale agriculture, with the extensive use of petrochemical-based fertilizer and shipment over long distances, is energy intensive. So higher energy prices, by raising the cost of producing food, leads to higher food prices. On the energy supply side, the world’s supply of easily accessible oil is both failing to grow and increasingly concentrated in politically dicey countries. On the demand side, as countries such as India and China develop they are using more and more fossil fuels, competing for a limited world supply. Like the increase in meat consumption, increased energy prices are likely here to stay. But while energy prices and food prices soared in tandem in the 1970s, the present situation has added a new twist – the use of food to fuel our SUVs.
Per The Economist “Ethanol is the dominant reason for this year's increase in grain prices. It accounts for the rise in the price of maize because the federal government has in practice waded into the market to mop up about one-third of America's corn harvest. A big expansion of the ethanol programme in 2005 explains why maize prices started rising in the first place. Ethanol accounts for some of the rise in the prices of other crops and foods too. Partly this is because maize is fed to animals, which are now more expensive to rear. Partly it is because America's farmers, eager to take advantage of the biofuels bonanza, went all out to produce maize this year, planting it on land previously devoted to wheat and soyabeans.”
The Economist sees some potential gains to social equity from a rise in the price of food relative to other things, since it would make farmers and rural areas, poorer than their urban counterparts in most of the world, relatively richer, and could slow the decline of rural life. For landless farm workers and the urban poor, however, the rise in food price means severe hardship. Among poorer people in the United States, food price inflation is already said to be eroding the value of food stamps and the capabilities of soup kitchens and food pantries. But among the truly poor of the world starvation, for 30 years caused only by disruptions such as war or localized drought, becomes possible.
“In poor countries,” this source reported, “food accounts for half or more of the consumer-price index (over two-thirds in Bangladesh and Nigeria). Here, higher food prices have had a much bigger impact. Inflation in food prices in emerging markets nearly doubled in the past year, to 11%; meat and egg prices in China have gone up by almost 50% (although that is partly because pork prices have been pushed up by a disease in pigs). This has dragged up headline inflation in emerging markets from around 6% in 2006 to over 8% now. In many countries, inflation is at its highest for a decade.”
All that is needed for a global disaster is a repeat of another factor in the famines of the 1970s – droughts and weather disasters that cut food production in many parts of the world at the same time. Of course global warming makes such a catastrophe more likely from next year onward into the future. More people eating more meat, competing for scarce fossil fuels that warm the planet and contribute to climate-changed induced famines. The price of food is volatile and could plunge next year, but the long-term trend is probably up.
So what has the U.S. response been to this sudden, and perhaps permanent, change in conditions? Will the federal government tax us to take scarce food off our table, and ethanol out of our gas tanks, in order to ensure the survival of those whom in the cheap food era Americans showed little interest in helping to provide food for themselves? Not according to the Times, which reported in October “escalating food and shipping costs have slashed the amount of food the United States can buy to feed the world’s hungry.” So the price doubled, and right when food aid might really be needed, money stayed the same so the amount of food aid fell by half. “Noting the rising food costs, Representative Rosa DeLauro, Democrat of Connecticut, who led the hearing, repeatedly asked the administration officials who testified why they had not asked for a bigger food aid budget for 2008 — and said that Congress had fully financed what they had requested. The officials replied that there were many competing priorities.”
Is it any wonder that I have concluded that while the money I donate to charity hopefully goes to those worse off than I am, the money seized by the federal, local and (especially) state governments generally goes to those better off, but with a greater sense of entitlement?