Future of U.S. Food Aid Programs in Peril

WASHINGTON, Mar. 1, 2008— -- The amount of emergency food aid the U.S. gives to poor countries is likely to be sharply reduced in coming months because of a steep jump in the price of basic commodities such as wheat and corn.

The U.S. Agency for International Development said that prices have increased 41 percent over the past six months, compared to a 34 percent increase in all of 2007 -- a hike that the agency estimates will cost it an additional $120 million, or roughly 10 percent of its total budget for food aid.

"It will hurt," said Jeff Borns, director of USAID's Food for Peace program. "That's $120 million that we no longer have."

Much of the aid is distributed through the United Nation's World Food Program, which gets roughly 40 percent of its food aid from the U.S., and is facing a $500 million shortfall of its own. Overall, the U.S. supplies roughly half the world's food aid.

Analysts say the skyrocketing cost of commodities is the result of a combination of factors, such as fast-growing economies in countries like China and India, and the growth in biofuel production.

"The real problem is that this isn't going to be a one year or two year surge," said Dennis Avery, a senior fellow at the Hudson Institute.

The bottom line is that the agencies, and the countries they serve, will likely have to do more with less. USAID is currently reviewing its emergency aid programs, trying to evaluate which countries have the greatest need. It currently supplies nearly 40 countries and hot spots, including many parts of Africa, Central Asia, and Latin America.

Complicating the prioritizing is the fact that demand for aid is expected to grow, and may crop up in unexpected places. While most food aid typically goes to rural populations, USAID is bracing for the possibility that the rising commodity prices could make other areas increasingly vulnerable -- a scenario that is already playing out in Afghanistan, for example, which recently requested $77 million in emergency food aid as a result of price hikes.