If You Want to Help Starving Countries, Don't Send Food
President Donald Trump’s recent tweet in which he promised to give farmers $12 billion, only for them to send their surplus food to developing countries sounds like a two-fer: Help U.S farmers deal with U.S protectionism, while feeding people in developing countries. In fact, it’s a no-fer: It would weaken farmers in developing countries, while increasing dependency among American farmers on government aid.
As anyone who has taken Economics 101 should realize, food aid has undermined the Third World agricultural sector by depressing local markets and thereby discouraging local production. Local consumers are no doubt delighted by the prospect of consuming free food, but local farmers would be completely undercut.
Anything that undercuts local farmers also undermines any attempt at advancing the largest domestic industry - agriculture. By shrinking their potential market, we would just be reducing the opportunity to introduce new agricultural technologies and methods. Since farming is usually the principal industry of a developing country, its economy would be hit especially hard.
Food aid, when the food is sourced in a developing country such as the United States, is really just a form of dumping - an extreme form of it since it makes the product available for free. Just ask yourself: How do Americans and residents of other developed countries react when they believe China or other developing countries of dumping goods on their markets?
The notion of sending $12 billion worth of free food to developing countries also raises all sorts of ancillary questions: How to distribute the food? How to ensure it is distributed fairly - and reduce the potential for corruption? How does one prevent the creation of black markets, identified with aid? Wouldn’t prices be distorted?
What has been the real-world impact of food aid? A good example can be found in Haiti. In the months following the devastating 2010 earthquake, the U.S government understandably spent $140 million on a food aid program. Unfortunately, it undermined thousands of Haitian growers who were already beleaguered by the impact of struggling against imports of Haitian staples such as rice and corn.
Brazil has been receiving large amounts of food aid for decades, with predictable results.
In Bangladesh, reliance on food aid has dampened production of rice - and led to an increase in uncultivated land.
Kenya used to sustain its own agricultural growth, and therefore its economic growth. But after the 1980s, it began relying on external food sources. Now, about 80 percent of its food comes from the EU - driving down local prices, cratering local production, and creating immense levels of poverty.
In Costa Rica, a large surplus of grain from other countries drives many farmers out of business.
The Third World is littered with the negative after-effects of food being distributed there after being sourced in the developed world. The last thing struggling economies need is another $12 billion worth of free food to weaken local farming.