US warns Congress may aggravate food-aid shortfall

from Reuters

By Missy Ryan

WASHINGTON, March 3 (Reuters) - A proposal in Congress risks pulling food aid out of reach for up to 8 million people, just as soaring commodity prices deplete available assistance and exacerbate poverty, U.S. officials said.

The House of Representatives and the Senate have proposed setting aside up to half of the annual budget for Food for Peace, the largest U.S. food aid program, to channel food aid donations toward development projects aiming to end chronic hunger by bolstering nutrition or farming in poor countries.

It is a laudable goal, said Jonathan Dworken, the program's deputy director, but he warned the set-aside would come at the expense of assistance desperately needed when war or natural disasters, such as the 2004 tsunami, strike.

"It would mean shifting $100 million to $250 million away from emergency programs," potentially making aid unavailable for up to 8 million would-be beneficiaries, Dworken told Reuters in an interview.

The United States has spent about $350 million in recent years on the non-emergency programs within Food for Peace, in which private charities like World Vision sell donations of U.S. crops on local markets in poor countries and use the proceeds to fund their aid work.

The debate over the proposed changes to food aid law in the 2008 farm bill, an omnibus agriculture law working its way through Congress, takes on a new urgency as aid officials fret over how to cope with a dramatic run-up in commodity prices.

Exploding wheat, corn, and soybean prices, driven by biofuel production, economic growth, and paltry harvests, have transformed commodity markets in recent years. At the same time, record oil prices are putting an additional squeeze on aid programs as they nudge up shipping prices.

The World Food Programme, the United Nation's food aid agency, is facing a $500 million shortfall for this year, and is canvassing donors so it doesn't have to curtail aid.

"This is the worst possible time for this to happen," Dworken said.

At last calculation, Food for Peace's costs had jumped 41 percent in the first half of fiscal 2008, forcing the agency to divert funds it was planning on using for future assistance to pay for past donations.

"There is no doubt our tonnage will continue to shrink," he added.

Aid officials are now looking at individual countries to assess how they will allocate donations given rising costs.

"We're looking at magnitude of needs, the severity of needs, the food aid in the pipeline, and how much money we have globally," Dworken said.

The U.S. Agency for International Development, which runs Food for Peace, is trying to save money at the margins, consolidating shipments to save money on cargo costs, but scrimping will get it only so far.

"Fundamentally," Dworken added, "we will see less food aid at the same time there is growing food insecurity."

The tension between emergency and non-emergency funding is not the only food aid controversy that has cropped up in the farm bill, which will set food aid policy for five years.

Administration officials have been pushing Congress for years to loosen procurement rules to allow up to a quarter of Food for Peace donations to be bought in the developing world, rather than requiring the purchase of U.S. crops, which would save money and time in sending assistance to disaster zones.

This year, as in the past, Congress rebuffed them.

President George W. Bush has threatened to veto the farm bill for other reasons, mainly due to the financing proposed by the House and Senate bill, and the bills' failure to rein in generous farm subsidies.