Debt Relief

Food aid exposes the West’s uncharitable charity

Doug Sanders
The Globe and Mail
January 15, 2005

Amparai, Sri Lanka: If you lived out here in the remote southeast of Sri Lanka and hadn’t heard of the tsunami, you might easily convince yourself that people had been displaced and killed by a giant wave of rice.

Fifty-kilogram sacks of white grain have just about overwhelmed this community. The United Nations has taken over several abandoned buildings and turned them into rice warehouses. A half-dozen aid agencies have done the same. The big truckloads of rice began arriving a week-and-a-half ago, first a handful a day, then a few dozen a day, now scores of them. They are running out of places to put all the rice.

There is a dark irony in this, as the biggest news in the Amparai region, if the giant wave hadn’t come along, would have been this year’s bumper rice crop. In a normal year, harvest would be starting now, and there would be plenty of jobs in threshing, drying, bagging and shipping the rice. Now, however, there are two problems.

The first is that everyone around here is pretty busy dealing with the tens of thousands of deaths and the destruction of the fishing industry, and there may not be people to harvest the local rice.

The second problem, one that should concern us, is what all that free rice is doing to the local economy. It’s worth examining closely, since the strange economies of post-tsunami aid are a vivid exaggeration of one of the world’s more urgent problems.

When millions of tonnes of free food are shipped into your neighbourhood, what happens to the food you were going to sell? Its price plummets, of course. Even non-victims are going to be clamouring to take advantage of all that free food, and here it’s impossible to distinguish the victims (who have all lost their ID) from the non-victims (many of whom are extremely poor anyway). The price farmers can get for their rice, and a whole lot of other local foodstuffs, is going to fall sharply.

This isn’t just a momentary problem. Millions of suddenly homeless people across Asia are going to be depending on food aid for months to come. The end goal, of course, is first to get them houses, clothes and villages, and then to get them back into fishing, farming and other agricultural businesses – the same ones that are being made far less attractive because of the competition from all of the free food.

And where does that free food come from? Just look at the rice markets. On Wednesday, the World Food Organization (a UN branch) put out international tenders for the purchase of 35,000 tonnes of rice for tsunami victims (along with a 15,000-tonne purchase for the Iraqi people). Lots of other governments and agencies are putting out similar tenders.

Much of that rice will probably come from the world’s largest rice exporter, the United States of America, which is currently harvesting the largest rice-export crop in the history of the world.

There is really no good reason why the United States should be a big rice producer: It’s a labour-intensive, low-margin crop whose production shouldn’t be part of any wealthy country’s economy. But the United States produces cheap rice for export because it subsidizes the rice farmers, who are an important political constituency.

When I lived in California, I was continually amazed to see America’s second-largest rice crop (after Arkansas) grown using vast quantities of water brought in from other states through government-funded canals and pipelines, produced by farmers who receive taxpayer subsidies equivalent to more than half the value of the crop. The fruits of this artificial economy are sold to Asian countries that are often criticized for their socialist economies.

So if we are currently witnessing the damaging effects of a whole lot of free food being dumped on a poor economy, it is only an enhancement of what happens all the time – a whole lot of artificially cheap food being dumped on a poor economy. Either way, farmers in these poor countries find it hard to compete.

Some countries, like Canada, have turned this imbalance into law. As my colleague Graeme Smith noted recently, the Canadian International Development Agency is forced by Ottawa to buy all its emergency-aid food from Canadian sources. So a policy designed to help poor countries ends up hurting them, all so Canadian farmers can receive yet another government handout for crops they probably shouldn’t be growing in the first place.

Shortly after the big wave hit, I got a call from my friend Mike, a commodities trader who used to work for a big rice producer. He was looking at the other end of the rice wave.

“When this tsunami happened, it kind of made me sick, thinking about the rice markets,” he told me. “My old office must be buzzing with the glee of rising rice prices. . . . The market was falling recently with the huge U.S. crop, so they are probably happy now that people will be needing rice for a long time. Even if the [agencies] buy Thai or Vietnamese rice, this takes two major exporters off the world market, so the outlook for U.S. rice goes through the roof.”

This bizarre spectacle is merely an enhancement of what happens every day in global food markets.

There will be much talk in the next few weeks about helping the poor farmers of South Asia get back on their feet. The crescent of land that was hit by the tsunami is home to the world’s largest population of very poor people (those who earn less than one dollar a day), 400 million of them. These people have the business know- ledge, the networks of mutual assistance, and the fertile ecology necessary to make a lot more money – if only they could find buyers for their produce.

Almost every world organization, from anti-globalization groups on the left to establishment bodies such as the International Monetary Fund and the World Bank, has come to agree on the best way to help the poor of Asia: It is for countries like ours to stop using handouts and trade restrictions to prevent their farmers and producers from selling us their crops.

In an important study this week, the World Bank concluded that the benefits of all that cut-price food from the wealthy West (making food cheaper for the poor) are vastly outweighed by the detriments (keeping people poor by making their food impossible to export). If nothing else, this disaster should draw attention to that other giant wave damaging Asia’s shores, the one made of all the cut-price food we dump on them.

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