Here’s a short article I wrote on ‘food dumping’ that is cross-posted from Eco-Age, an online UK magazine which covers a wide range of areas including ecological analysis, socially responsible shopping and sustainable fashion. It looks at how food aid doesn’t always do what it is supposed to, with often very negative consequences for developing economies.
Today, 925 million people do not have enough to eat. One in seven people in the world go to bed hungry every night and hunger kills more people every year than malaria, HIV and AIDS and tuberculosis put together. With realities such as this in our world, food aid is a necessary and sometimes crucial lifeline for people who are hungry. It is an essential humanitarian response in emergency situations. However food aid doesn’t always do what it says on the tin…
In many instances, especially non-emergency situations, food aid is not an appropriate or efficient tool and can, in fact, be very destructive on the recipient country’s economy. This is also known as ‘Food dumping’: the process of rich countries subsidising their farmers to produce surplus goods which is then ‘dumped’ on poorer countries at a price which undercuts locally grown produce. The ‘dumping’ (free, subsidised or cheap food, sold below market prices) of food on poorer countries severely undercuts local businesses and farmers, thus driving them further into poverty by favouring the larger producers (i.e. the richer countries/economies).
Taken from the Oxfam report on food dumping, here is an excellent illustration of food dumping in action:
The USA produces only about 1.5 per cent of the world’s rice, but is the fourth largest exporter. Between 50 and 60 per cent of all US rice production is exported. As domestic consumption of rice has stagnated over the past decade, US rice producers have increasingly relied on export markets to dispose of rising production yields. When those markets have not been available, the US rice industry has frequently turned to food aid programs as a buyer for surplus rice production.
From 1997/8 to 2004/5, rice exports under food aid programs have accounted for an average of 10 per cent of US rice exports. In years when prices are low, food aid represents as much as 20 per cent of rice exports.
In 2001, US government efforts to reduce food aid purchases of rice were perceived as a crisis by the US rice industry. According to one Louisiana rice producer, ‘The sharp decline in rice food aid allocations has had a devastating impact on the rice industry… Many mills, especially in the south, are running at just 20 to 30 per cent of capacity.’ (Delta Farm Press, July 20, 2001)
In response to this crisis, Congressional leaders swung into action, with senators from the 16 rice-producing states urgently calling upon President Bush to provide immediate relief in the form of food aid and other export assistance programs. Ultimately, they were successful, and US food aid programs purchased more rice.
In light of evidence that the USA sometimes uses food aid to ‘dump’ their surplus produce, agricultural exporting countries have called for new disciplines on food aid, as part of the Doha Round of trade negotiations – which have been on-going for the last 10 years. It is also important to state that it is not only the USA who are guilty of food dumping. Subsidies, tariffs and other trade policies (such as the Common Agricultural Policy in Europe) eliminate the comparative advantage of other regions to maintain healthy economies in the developed world. The result: ‘First World’ subsidies severely undermine Third World economies.
As a result of discussions in the Doha Round, new disciplines were proposed on food aid to protect against trade distortions and ultimately, protecting local farmers and businesses. It was proposed that:
1) Food aid should be provided in grant form only
2) Food aid should not be linked to commercial transactions
3) Food aid (in emergency situations) should be provided in cash forms to buy food grown locally or regionally
4) Food aid should only be provided in response to calls from the national governments or specialised UN agencies.
For the fully detailed list, see the Oxfam report.
It is unfortunate that the Doha Round has been marred by the current global financial crisis. The challenge of the eradication of food dumping is a long term one, needing constant and vigilant monitoring from all involved. How successful these new disciplines will be (if at all), only time will tell.
Devinder Sharma, in his article Africa’s Tragedy; Famine as Commerce in 2002, remembers a speech given at the International Famine Centre in Cork, Ireland describing how maize was loaded onto ships bound for Britain at the height of the Great Irish Famine that killed more than one million people in the 1840’s. The keynote speaker paused, lamenting:
I wonder what kind of people lived at the time who were not even remotely offended at the sight of millions dying of hunger in the same village where the ships were being loaded.
It is at this point that must ask ourselves, are we still those people? Are we offended? And if we are, what are we going to do about it?