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Food aid or export assistance?

Food aid or export assistance?
Dr. Wilma Salgado
Universidad Andina Simón Bolívar

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
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."
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.

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

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.

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.
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.

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

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.
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
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 the”shiny” bureaucracy, linked with those intermediary agencies involve with "food assistance", adds up to the interests of the countries where the assistance originates.

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
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

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.

"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.

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.
"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,

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

"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

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