America’s Food Aid Policy is the Worst

America’s food aid program, Food for Peace, is “by far the most inefficient and expensive food assistance delivery system in the world, and one that delays or deprives sustenance to potentially millions of people who desperately need it,” according to a Medill School of Journalism/USA Today investigation.

The entire article is worth reading (as is the whole series), but here’s the kicker:

Of the total of $17.9 billion that USAID spent in the decade from 2003 to 2012, $9.2 billion of it went toward transportation costs, including shipping, handling and storage, or 22 percent more than the $7.4 billion spent on actual food, according to the data analysis and information provided by USAID. And more than a third of the transport costs – $3.3 billion – went just for ocean freight costs. That’s more than 16 percent of the entire Food for Peace budget.

I’ve written about American food aid policy before, so won’t get too far into the weeds, but the overarching issue is that a small group of people and organizations – large farmers and American-flagged ships – are receiving a significant subsidy while everyone else – other American citizens, small farmers in low-income countries, etc. – each only pay a little.

In economics parlance, this is the “concentrated benefits, diffuse costs” problem. It leads to interest groups pressuring Congress to create and pass rent-seeking legislation, which Congress does because a) Congress; and b) Congress feels no backlash from other American citizens or the small farmers in low-income countries that are hurt by the legislation.

There’s a lot more to be said, but I want to read through all of the Medill/USA Today articles before getting to it. In the meantime, you should too.

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