In food aid crunch, U.S. reluctant to tap crop trust|
By Missy Ryan - Analysis
Fri Mar 28, 2008 4:18pm EDT
WASHINGTON (Reuters) - As the United States scrambles to prevent soaring food
prices from eating into global food aid programs this year, the Bush
administration appears reluctant to tap a "rainy day" stash of almost a million
tonnes of wheat.
The Bill Emerson Humanitarian Trust, which contains 915,000 tonnes of grain,
mostly wheat, and $117 million in cash, was set up as a fund of last resort when
hunger emergencies erupt in the world's most vulnerable corners.
Several members of Congress, including Kansas Republican Jerry Moran, will
send a letter to President George W. Bush next week, calling for extra funding
for U.S. and U.N. food aid programs, an aide said.
They will also ask the administration to tap the crop trust for the first
time since 2005, when hundreds of thousands of tonnes were used to help staunch
famine in Africa.
Officials at the U.S. Agency for International Development, which runs the
largest food aid program, and the Agriculture Department, which decides when to
release crops from the trust, have not said whether they will tap the trust any
But its wheat -- stored and maintained in silos at a cost of millions of
dollars a year -- takes on new importance as officials struggle with what many
experts predict is a permanent upward shift in global crop and food prices.
USAID, whose flat budget is shrinking relative to soaring food prices, is
bracing itself for reducing food donations unless it receives a last-minute
funding injection from Congress.
After global food prices shot up close to 40 percent in 2007, the U.N. World
Food Program has been sounding the alarm, too, as it seeks an extra $500 million
or more for this year.
Despite a sharp drop in the last two weeks, wheat prices are still more than
double what they were a year ago.
Corn and soybeans have had a record run, too, as investors pour money into
commodity markets now driven by growing biofuel production and rising incomes in
the developing world.
Against that backdrop, some aid groups say the time is right to tap the
trust, a separate vehicle for food aid, especially as the clock ticks on the
Bush administration's request for $350 million in supplemental food aid funding
for fiscal 2008. Congress is not likely to vote on that petition, part of a
larger Iraq spending bill, before late next month.
"It would be timely for the administration to use the trust to fill in the
gap," Ellen Levinson, who heads an umbrella group of more than a dozen aid
groups, said recently.
Sources in the aid community believe there may be resistance within the Bush
administration to using the trust, which would require off-budget costs
associated with shipping crops to distant lands and with replenishing what is
taken from the trust.
ARE THINGS BAD ENOUGH?
There is also debate about whether the current price surge, which has
triggered riots in poor nations and prompted some countries to impose export and
price controls, constitutes a true "emergency."
Some fear tapping the trust would leave little on hand if a cataclysm -- such
as the 2004 tsunami -- were to strike.
"The supplemental request approach makes more sense as a way to compensate
for short-term, unanticipated price rises," said Emmy Simmons, a former senior
official at USAID.
"As a taxpayer, of course, I begin to see an issue when the 'unforeseen --
need a supplemental' approach is used repeatedly," Simmons said.
In recent weeks, the chorus of voices has grown in favor of greater
last-minute spending on food aid, with some suggesting the supplemental funding
be as much as $600 million.
At the same time, many onlookers say deep reforms to U.S. food aid programs
are needed to ensure the current squeeze is not repeated if prices indeed remain
Charles Uphaus, an expert on foreign aid at Bread for the World, says the
time has come to overhaul a program designed in part to manage crop surpluses
after World War Two.
"Higher prices should lead to a new approach to food aid, as it destroys the
tattered remnants of the argument that we should buy U.S. commodities to help
U.S. farmers," he said.
Many onlookers suggest scrapping rules that require shipping U.S. crops to
places in need, rather than buying crops close to crisis zones, which is cheaper
"The parties with the most at stake in the food aid program are the
processors and shippers, and they wield a lot of clout," said Uphaus.
The Senate is proposing some changes to the trust in the 2008 farm bill, now
winding its way through Congress. The Senate bill would permit the use of
futures contracts to hedge against price risks, but it is uncertain if the
provision will be part of a final House-Senate version of the bill.
(Editing by Matthew Lewis)
Original article: Reuters
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