Africa famine crisis – Malawi today MALAWI - VIDEO Estimated population: 12.88m Projected number needing food aid: 4.9m Key underlying reasons: Drought in parts High food prices Aids: about 20% infected with HIV Sale of grain reserves High population density, shortage of land Aid dependence (Oakland institute 2005) Source: BBC 2006 1/16/2019 Copyright 2006 Tim Feddersen

Final Project: Famine Relief* More than 850 million people are chronically undernourished around the world. The chances of saving lives at the outset of a [relief] operation are greatly reduced when food is imported. *from speech by USAid director Natsios in May 2005 1/16/2019 Copyright 2006 Tim Feddersen

Is there a relationship between aid and famine? Is there a causal relationship? If so, which factor is driving which? US is largest donor of food aid 1/16/2019 Copyright 2006 Tim Feddersen

Copyright 2006 Tim Feddersen Cost of US Food aid Cost of delivered food aid Data from US Department of Agriculture, General Accounting Office, and Bureau of Economic Analysis. 1/16/2019 Copyright 2006 Tim Feddersen

Copyright 2006 Tim Feddersen Food aid addiction? “While vast sums of international support are needed to save lives, that help carelessly applied can make things worse rather than better over the long term.” … “Any large-scale intervention by definition distorts local economics…When foreign aid lands, local prices collapse, and farmers who have managed to produce a surplus find their crop is virtually worthless.” - BBC 2006 “Damage to local production in recipient countries: in 2002/2003 food aid donors over-reacted to a projected 600,000 metric ton food deficit in Malawi, causing a severe decline in cereal prices and hurting local producers” – World Food Program 2004 1/16/2019 Copyright 2006 Tim Feddersen

The White House’s Proposal* “Starting next year, the White House wants to spend one-quarter of its food-aid budget to buy overseas goods to feed starving foreigners. Currently, it's required to buy that produce from American farmers. The administration says the change will cut the cost of buying and shipping commodities and save 50,000 more lives a year.” “American agriculture prizes the income it earns from food aid and is a powerful constituency lobbying Congress to maintain the $1.2 billion program. Charities fear that slashing funds spent on U.S. commodities would erode the farm sector's interest in food aid. They doubt they could win as much congressional support for their efforts solely on the principle that fighting famines is important.” * Wall Street Journal. Oct 26, 2005. 1/16/2019 Copyright 2006 Tim Feddersen

An argument against direct purchases Bush administration has already reduced food aid budget by 40% for 2006 budget, with an increasing percentage of the remaining funds to be dedicated to emergency response Local purchase of food can have unintended consequences: Even relatively small transactions can distort the local economy, driving up commodity prices beyond the reach of locals who were formally able to buy Creates expectations among farmers for future purchases, leading to a drop in prices the following year due to oversupply 1/16/2019 Copyright 2006 Tim Feddersen

Copyright 2006 Tim Feddersen Final Project Your study group will be assigned the role of developing a strategic response to the Bush administration proposal. You will: write a 10-12 page memo to the executive director or head of a stakeholder group. Produce a 30 minute presentation to be given outside of class to detailing your strategy and going over… A 15 minute presentation you will make in class to the other groups in an attempt to persuade them to take your position. USAid, OXFAM America, Raymond Offenheiser, President Cargill, William Staley, CEO Catholic Relief Services, Kenneth Hackett 1/16/2019 Copyright 2006 Tim Feddersen