CARE declines to accept millions of dollars in U.S. food aid

You can tell U.S. food aid policy needs reform when it comes to this (on the front page of the New York Times last week):

CARE, one of the world’s biggest charities, is walking away from some $45 million a year in federal financing, saying American food aid is not only plagued with inefficiencies, but also may hurt some of the very poor people it aims to help.

CARE’s decision is focused on the practice of selling tons of often heavily subsidized American farm products in African countries that in some cases, it says, compete with the crops of struggling local farmers.

The charity says it will phase out its use of the practice by 2009. But it has already deeply divided the world of food aid and has spurred growing criticism of the practice as Congress considers a new farm bill.

NYT reporter Celia Dugger has been on the trail of this story for many months. Last week's article quotes Daniel Maxwell, formerly of CARE and now at the Friedman School of Nutrition at Tufts, who co-authored an important book on food aid with Chris Barrett in 2005 and has continued to write on the topic.

Ultimately, CARE’s decision to phase out such sales evolved from a senior manager’s change of heart. Daniel G. Maxwell, a professor of nutrition at Tufts University, was a food security adviser for CARE in Nairobi who saw sales of American food as an imperfect, but useful way to raise money.

He knew firsthand, however, how risky it was to manage projects financed in fluctuating commodities markets. When prices sank, CARE had too little money and was sometimes forced to lay off workers. Mr. Maxwell said he also strongly suspected that buyers had offered too little for the farm goods, knowing they were dealing with aid workers who were novices in commodities trading.

Food aid gets a free ride, politically, because of a "halo effect." How could a gift of food be a bad thing? But some poor farmers around the world don't want our gifts. They want to earn a fair price selling us their products. And even non-farmers in poor communities around the world may be harmed by food aid in some circumstances. In food aid's favor, one must consider the depth and urgency of the need for assistance; on the other side of the ledger, one must consider that food aid may suppress demand for local farm production, and the local production may increase demand for the goods and services of other local families even if they are not farmers.

Here is more information about CARE.

[Updated slightly, following a conversation with colleagues here, to narrow the critique of food aid in general.]