Food Aid in Perspective

Reuters is reporting from Hong Kong that a food aid fight between the U.S. and the Europeans has darkened the mood as trade talks get underway in Hong Kong.

Tension between the United States and the 25-nation European Union burst into the open as the meeting got under way, with European Trade Commissioner Peter Mandelson calling for "radical reform" to the U.S. system of food aid for developing nations.Washington sends aid donations in the form of domestic corn, wheat and other commodities, but Brussels says cash is quicker and less likely to affect the delicate balance of local trade."Food aid for poor countries and emergency relief can be a tool to advance development and for humanitarian relief," Mandelson told a news conference. "But the U.S. programme is designed to give support to U.S. agricultural producers."

This is so sad. The Americans have allowed the Europeans to take the offensive over what is ultimately an insignificant part of the development business. I am in favor of food aid in the right circumstances, but let’s keep things in perspective. Food aid shipments from the United States are less than one tenth of one percent of the value of US food sales.Globally, food aid is less than five percent of ODA and less than two percent of commercial trade internationally in food. Because ODA is itself a small part of international financial flows and an even smaller component of the total inputs needed to reduce poverty--most of which come from poor countries themselves--it is virtually impossible for food aid to be a significant component in the development process in any but the most extreme of cases. So it would be a great tragedy if the “Development Round” of trade negotiations is scuttled over this spat with the Europeans on food aid, because trade liberalization really will matter for economic growth and poverty reduction.