The US imports food aid to Ethiopia. It is bought from American farmers and shipped by boat to Djibouti, then brought by road to where it is needed in Ethiopia. The cost of all this works out at $568 per metric tonne. Here in Addis Ababa, today’s market price of wheat is $489 per metric tonne. It is cheaper out of the capital. So America’s generosity could buy 16% more wheat if it were bought locally. From that difference alone, another 190,000 people could be given a full ration of food for four months. Furthermore, buying the food locally would increase the incomes of farmers either in Ethiopia or in neighbouring countries and the improve livelihoods of other parts of the economy (e.g. haulage companies) needed to make the agriculture market work. Their livelihoods, which are undermined by imported food aid, would be improved if the food were bought locally. If there is sufficient supply response among local farmers (which there probably would be) so it does not have to be imported, then the generous aid would also provide $50 million of much needed foreign currency for Ethiopia.
This is not possible at the moment because American legislation requires that food aid be bought in the US, that 50 percent of commodities be processed and packed in the US before shipment, and that 75 percent of food aid managed by USAID and 50 percent of the food aid managed by the US Department of Agriculture be transported in “flag-carrying” US-registered vessels. The result is that only 40% of money spent on food aid by the US actually goes towards buying food; the rest goes to US transport companies. . . .
Corporate welfare under the guise of helping the poor Africans? Why not kill two birds with one stone?
Read some of Owen’s suggested alternatives. (See comments too.)