The Problem With Food Aid

Planet Money and Frontline report on the distorting effects of foreign food aid on local food economies, particularly in Haiti. People don’t buy rice when they can get it for free, which squeezes out local vendors and small wholesalers and, over the long-run, can destroy a country’s local food supply chain for years. Many NGO’s now provide food vouchers or money instead of food, although this can lead to inflation.[%comments]

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  1. Steven F. says:

    To paraphrase what a famous economist had said: hunger is not a consequence due to a lack of food, but a lack of money.

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  2. Caca Fuego says:

    There are similar unintended consequences when we send blankets or other goods to impoverished countries — it actually hurts them in the long run. Compare the book When Helping Hurts (http://www.whenhelpinghurts.org), which is aimed at religious folk but has broader implications for all charity work.

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  3. Gary says:

    Yet, in places like Haiti where starvation is frequently just a couple of meals away, without food aid there shortly would be insufficient customers to create a thriving market. The problem in such cases is not consumers, producers, or middlemen; it is the political, historical, and cultural impediments that are distorting the economic incentives. Haiti’s over-population, corruption, and diminished opportunities severely hamper the creation of a robust economy.

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  4. Julien Couvreur says:

    I think the solution may be private investment. This builds business, brings capital and productive goods, and builds productive capacity.

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  5. Jack Walsh says:

    Not what happened. There was a deliberate, US approved policy to develop the manufacturing economy in Haiti; in return for foreign investment, the economy would lurch toward a more pure market — meaning, looted by the US. Local rice subsidies were abandoned, peasant farmers were left without a cash crop as incredibly cheap US rice flooded the market, and the farmers moved to the cities, as was intended.

    The complete lack of foreign investment was not intended. So, what we ended up with: a huge starving urban population, no native rice crop, sensational sales for US rice producers, most of it paid for by “aid” from the US gov’t. In short, a way to transfer money from the US gov’t to the rice producing states, which are mostly in the South.

    Another free market, free trade success story. Another set of cities teeming with folks with no source of income. The incredible arrogance of those people has no end. Despite it all, they still think they were right. Now, they are having a go at the US economy, with all the deficit panic. The same will happen here.

    Don’t give me this “political, historical, and cultural” stuff. This was a deliberate looting of Haiti by the good-hearted US. Shame, shame, shame. Another transfer of income from the poorest to the richest.

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  6. sourcreamus says:

    The point of the rice trade is to provide Haitians with rice. If they can get rice for free, those involved in the rice trade can do something else. Haiti has many problems and subsidizing people to sell rice when there are so many other needs seems pointless.

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