CARE Turns Down Federal Funds for Food Aid
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CARE Turns Down Federal Funds for Food Aid
By CELIA W. DUGGER
MALELA, Kenya - CARE, one of the world's biggest charities, is walking
away from some $45 million a year in federal financing, saying
American food aid is not only plagued with inefficiencies, but also
may hurt some of the very poor people it aims to help.
CARE's decision is focused on the practice of selling tons of often
heavily subsidized American farm products in African countries that in
some cases, it says, compete with the crops of struggling local
farmers.
The charity says it will phase out its use of the practice by 2009.
But it has already deeply divided the world of food aid and has
spurred growing criticism of the practice as Congress considers a new
farm bill.
"If someone wants to help you, they shouldn't do it by destroying the
very thing that they're trying to promote," said George Odo, a CARE
official who grew disillusioned with the practice while supervising
the sale of American wheat and vegetable oil in Nairobi, Kenya's
capital.
Under the system, the United States government buys the goods from
American agribusinesses, ships them overseas, mostly on American-
flagged carriers, and then donates them to the aid groups as an
indirect form of financing. The groups sell the products on the market
in poor countries and use the money to finance their antipoverty
programs. It amounts to about $180 million a year.
Neither the Bush administration nor members of Congress are looking to
undo the practice, which has gone on for more than a decade. In fact,
some of the nonprofit groups say it has worked well and are pressing
for sharp increases in the amount of American food shipped for sale
and distribution to support development programs.
The Christian charity World Vision and 14 other groups, which call
themselves the Alliance for Food Aid, say that CARE is mistaken; they
say the system works because it keeps hard currency in poor countries,
can help prevent food price spikes in those countries and does not
hurt their farmers. Not least, they argue, it also pays for their
antipoverty programs.
But some people active in trying to help Africa's farmers are critical
of the practice. Former President Jimmy Carter, whose Atlanta-based
Carter Center uses private money to help African farmers be more
productive, said in an interview that it was a flawed system that had
survived partly because the charities that received money from it
defended it.
Agribusiness and shipping interest groups have tremendous political
influence, but charitable groups are influential, too, Mr. Carter
said, because "they speak from the standpoint of angels."
Some charities that champion the system bristle at such suggestions.
Their allies in Congress say that maritime and agribusiness interests
are essential allies for programs to aid the hungry.
"Sure it's self-interest if staying in business to help the hungry is
self-interested," said Avram E. Guroff, a senior official at ACDI/
VOCA, which ranked sixth in such sales last year. "We're not lining
our pockets."
But Peter J. Matlon, a Nairobi-based agricultural economist and a
managing director of the Rockefeller Foundation, said in an interview
that converting American commodities into cash for development was a
case of "the tail wagging the dog," with domestic farm policies in the
United States shaping hunger-fighting methods abroad.
The nongovernmental organizations "have been ignoring this evidence
for years that there's a negative impact on the prices farmers
receive," Mr. Matlon said.. He is involved in an effort by the
Rockefeller Foundation and the Bill and Melinda Gates Foundation,
financed with an initial $150 million, to increase the productivity of
Africa's farmers.
The Government Accountability Office, the nonpartisan, investigative
arm of Congress, also concluded this year that the system was
"inherently inefficient." CARE and Catholic Relief Services - who rank
first and second in money raised through the current system - say they
recover only 70 to 80 percent of what the United States paid for the
commodities and shipping.
But while Catholic Relief Services and Save the Children, which ranked
fifth last year in such sales, agree with CARE that the system is
inefficient, they also say they will not stop converting American food
into money unless Congress replaces the lost revenues with cash. They
help poor people with the money, they say.
The experiences of Walter Otieno, a grizzled Kenyan farmer in mud-
stained pants, illustrate the paradoxes of paying for rural
development through sales of American farm goods.
Over the years, he had watched 4 of his 12 children die of measles,
which is more often fatal for the malnourished. He has had difficulty
growing enough to feed his family. "My children were skinny, and their
skin was dull," he said.
Then last year he began growing a small patch of sunflowers on a hill
sloping down to Lake Victoria in the village of Malela, with help from
a program that CARE finances through the sale of American farm goods
here.
A CARE extension worker, Rosemary Ogala, taught him and dozens of
farmers in his group where to buy sunflower seed, when to plant it,
how to space the rows and when to harvest.
CARE has also connected them to a ready market: the Kenyan company
Bidco Oil Refineries, whose managers say they could more than
quintuple the amount of sunflower seed they buy from Kenyan farmers to
process into vegetable oil.
The profit Mr. Otieno earned from the crop rescued his family from
dire poverty. Now, with his new earnings, he is able to play with his
sons and daughters, who are plump on eggs and milk, at the family's
general store, a tiny shack stocked with goods financed by the
sunflower sales.
The question is whether small-scale sunflower farmers like Mr. Otieno
would have done better if nonprofit groups had not sold tons of
American crude soybean oil, a competing product, to the same Kenyan
company that purchased Mr. Otieno's meager crop. CARE and some other
experts say the answer is a clear yes.
In 2003, Bidco bought almost 9,000 metric tons of crude soybean oil
sold to the United States by Bunge, the agribusiness giant. Altogether
that year, Bunge sold the United States 15,180 metric tons of oil for
resale by the nonprofits in Kenya. A metric ton equals 1,000
kilograms, or 2,204.62 pounds.
American law requires aid groups to establish that such sales will not
discourage production by local farmers, but some critics say it is a
conflict of interest to ask the nonprofits to select experts to make
this determination.
In this case, the nonprofits hired a consultant who advised them in
2003 that they could safely sell up to 38,000 metric tons of vegetable
oil in Kenya, which mostly depends on imports. That amount, about 10
percent of the country's consumption, was "negligible," he said.
But Mr. Odo of CARE disagreed, saying in a memo that the importation
from the United States "reduces the growth in the local market."
Ultimately, CARE's decision to phase out such sales evolved from a
senior manager's change of heart. Daniel G. Maxwell, a professor of
nutrition at Tufts University, was a food security adviser for CARE in
Nairobi who saw sales of American food as an imperfect, but useful way
to raise money.
He knew firsthand, however, how risky it was to manage projects
financed in fluctuating commodities markets. When prices sank, CARE
had too little money and was sometimes forced to lay off workers. Mr.
Maxwell said he also strongly suspected that buyers had offered too
little for the farm goods, knowing they were dealing with aid workers
who were novices in commodities trading.
As he and Christopher B. Barrett, an agricultural economist at Cornell
University, researched a book, "Food Aid After Fifty Years," his
doubts deepened.
"Not only was it a pain the neck," he said, but there were possible
serious effects "that would be damaging to farmers and trade."
In 2004, Mr. Maxwell and Mr. Barrett made the case against the
practice at CARE headquarters in Atlanta. They recalled that the
senior vice president, Patrick Carey, who has since died, cautioned
them that leaving the system would be like "an act of partial suicide"
for the nonprofits. Nonetheless, CARE committed to the shift the
following year.
CARE says it will try to raise money to replace the lost revenues from
philanthropies and other donors, and by making its own aid programs
profitable.
One of those programs could be seen in action one recent afternoon in
the Kenyan village of Poche. CARE has helped local women bypass local
middlemen to sell pineapples at better prices in Nairobi's big
supermarkets, 10 hours away by road.
One woman, Doreen Amimo, a 52-year-old grandmother, has seen her
weekly earnings rise to $18 from $11. She can now afford to feed and
clothe an orphaned niece and nephew.
"And I never lack sugar in the house," she said, "and we can have tea
and milk every morning!"
These farmers are selling their fruit to a small company, Vegcare,
that CARE and a Kenyan company started with an investment of $170,000
in 2005. Vegcare advises farmers on how to grow pineapples that meet
supermarket standards, buys them and trucks them to a wholesaler in
Nairobi that supplies Nakumatt, a Kenyan supermarket chain.
CARE's idea is that a profitable business is more likely than a
charitable venture to survive when foreign aid runs out.
"What's happened to humanitarian organizations over the years is that
a lot of us have become contractors on behalf of the government," said
Mr. Odo of CARE. "That's sad but true. It compromised our ability to
speak up when things went wrong."
http://www.nytimes.com/2007/08/16/world/africa/16food.html