It's early May and Malawi seems to be awash with corn. On the roads, trucks heavy with pale yellow maize heads rumble from the fields; in the villages nearly every woman and child is at work stripping the little kernels from their cobs, singing the harvest songs that give a rhythm to their work. Other women are pounding the maize with a giant pestle and mortar into flour to make the national staple dish - nzima - corn mash. (The men mostly seem to be occupied drinking the new season's maize beer.) It has been the best harvest in a dozen years or more. So why - and this is what we've come here to ask - in this time of historic plenty, is the rich world still sending its unwanted food to Malawi?

This little southern-African country has had a rough decade. Staggering under the effects of an Aids epidemic that affects one in five of the population in some districts, there were famines here in 2002, 2003 and one in 2005, when a third of Malawi's 13 million people ran out of food. Until this April, over 300,000 were still being fed emergency rations by the United Nations World Food Programme. Malawi deserved a good year.

But record harvests don't necessarily guarantee good times. 'We have so much maize this year - thanks be to God,' says Felicita Bailoni. 'But we have a problem over where to sell it. It's not just that the price is so low because there is so much maize, there isn't anyone to sell it to. The traders normally visit the village but they haven't come.' Felicita, 59, talks as she rubs the kernels from a cob into a basin before her. Even in the time of plentiful food she's worried. She and her husband Stephen look after her two grandchildren, whose mother died three years ago, and two other orphans.

Most households in their village, Kunthembwe, have taken in the children of those who have died from Aids - which is particularly severe here around Blantyre in southern Malawi. Felicita and her enlarged family have more than enough food for today and for the year ahead - but they need cash to pay the children's school fees, for clothes and other necessities. And maize corn is so plentiful at the moment it fetches only eight Malawian kwacha, or about 3p a kilo - if you can sell it. In 2005, the price went up to 50 kwacha a kilo. The Bailonis are hoping to sell 100 50kg bags of corn ears - the cobs are lying round the back of their two-room house in a vast wooden cradle designed to keep the rats away. 'But if we wait till the price goes up, the weevils will spoil our maize,' says Felicita. 'We can only sit and worry.'

'The price is so low,' says Charles Rethman, a Malawi-based analyst of what the NGOs call 'food security', 'that we have a concern now about next year. Farmers will be put off growing maize, and they won't have the cash to buy the seeds for the next planting. So in 2008 we're looking at the possibility of another food crisis. So it's really important that we do everything we can to get the price up to a level that rewards the farmers.'

With so much cheap corn available Rethman is bemused by a US government deal, announced in April, to ship $19.5 million of American corn and soya to Malawi as food aid. 'It's a nonsense,' he says.

Everywhere I go in the little villages in the shadow of Michiru mountain I hear the same story. Plenty of maize but no market. This affects the very poorest. In one village I meet Lena Butao, a 24-year-old whose mother died last year, her father in 2003. (Aids has brought a collapse in life expectancy in Malawi to just 37 years). She looks after her three brothers and sisters, the youngest only 10. They managed to harvest 18 bags of maize from their parents' field, but it won't see them through this year. Lena needs to raise money to pay for school fees, soap, clothes and for medicine. She's in the middle of a bout of malaria; she shivers in the sunshine as she speaks to us. 'Normally I can earn about 500 kwacha (about £1.80 ) a week working in the fields for my neighbours. But at the moment the farmers don't have any money. Life is very difficult.' Lena had to leave school when her parents first became ill and she thinks now that she'll never achieve her dream of becoming a housemaid. The children ate nzima and stewed pumpkin leaves last night: they haven't eaten meat this year.

There's one good piece of news for Lena: her 10-year-old brother Joshua's primary school has become part of the school-feeding programme run by the Malawian government and various aid agencies. This is a huge undertaking that now reaches over half a million children in the country, 20 per cent of all of those in primary school. It is playing a major part in addressing the awful fact that almost half of Malawian children have had their physical or mental growth damaged by malnutrition. And the half a million mugs of porridge served them each day are a guaranteed outlet for the produce of Malawian maize and soya farmers.

The next day, I travel to the village of Kampala and the sprawling red-brick compound of the Catholic Institute primary school. Built in the 1930s by missionaries, when Malawi was the British colony of Nyasaland, the school looks as though it hasn't been touched since. Most windows are broken and the grounds strewn with rubbish - it's pretty average for a Malawian school, I'm told. In her office, deputy head Annie Nakhouhouma is totting up the attendance figures - today the school is teaching an amazing 6,334 children aged between six and 17. Its 21 classrooms can't hold them all so, despite the cold drizzle that's falling, there are crowds of children under each of the big fig trees that dot the school grounds, in front of each group a blackboard and a teacher. I peer into one shabby classroom, and count 190 small children sitting inside. There's no room for furniture, so they are packed on the floor as close as sardines. The 10-year-olds are learning English: 'Hello, mister, how are you?' they chant at me. It's deafening.

There's a stranger sight - straight out of Oliver Twist - on the rough ground behind the classroom block. Hundreds of excited children, each clutching a large mug, are circulating around a camp of vast cooking stoves - 23 of them. Women in brightly-coloured wraps stir vats of grainy yellow porridge. This is CSB - corn-soya blend - a mix of maize, meal and soya flour, vitamins and sugar widely used in emergency feeding around the world. Locally it's called likuni phala. I taste it - it's sweet and nutty, a sort of gritty Ready Brek. Clouds of steam rise in the damp air as the children gulp the porridge greedily from their mugs - for many of them it's the first meal of the day and for some it will be the only one.

CSB is a wonderful product and the teachers are delighted. 'Look at the children - they are now so energetic. They don't fall asleep in class. They don't fight over each other's food, like they used to. They're fatter!' says Gertrude Sonani, who teaches 13-year-olds. But the effect goes further than just feeding the kids up. Children come to the school because of the meal - class numbers are up by about 7 per cent in every age group since the feeding programme began in January.

In a country where only 70 per cent of the children attend primary school, that's an achievement. At another nearby primary, where an Oxfam partner supplies milk to mix into the free porridge, the head teacher, Annie Jana, told me that she now had 800 eight-year-olds, compared to 500 when the programme started a year ago. 'Absenteeism has fallen, and even children who dropped out are coming back, especially girls.' And in Malawi, getting girls into school has always been difficult - which is why half of all women are illiterate.

The logistics behind feeding 6,300 children a mug of porridge are quite something. This programme is funded by the charity Scottish International Relief (SIR), through its local organisation, Mary's Meals. They show me a school storeroom where the bags of likuni phala tower high above the piles of textbooks and papers. Each day the contents of 46 of these sacks, nearly half a tonne, are mixed with water on the stoves and heated and served by volunteers from among the school's parents. The cost of the CSB comes out at about four kwacha, about 1.5p, per child - SIR feeds 175,000 children daily in Malawi at a cost of about £5.30 per child per year. One of the volunteers, Edina Moussa, told me that now her three children actually want to go to school. 'I'm a widow,' she said, 'and often it is hard to find enough to feed them.' She works as hired labour in her neighbour's fields, earning about 75p a day. 'Before January,' she says, 'they were often too tired to come to school. But now they come every day.'

School feeding is such an obviously good idea that the aid agencies and the Malawian government have been bringing more and more schools into the programme since it began in 1999. Most of the CSB comes free from the World Food Programme (WFP), which uses donated corn and soya - some of it from the Malawian government - and more that it buys locally. At the moment 442,000 children are being fed with CSB by WFP at school, 20 per cent of all Malawi's primary-school children. Malawians are proud of the programme: two weeks ago, some 60,000 of them went on sponsored walks to help raise money for school feeding.

Impressed by all this, in April the US Government announced that it wanted to join in. It would give WFP nearly $20 million over three years to help fund an expansion of the programme so, from 2008, 650,000 Malawian children get a daily mug of porridge at school. At the same time it announced similar schemes for Kenya, Cambodia, Guinea and Pakistan - a total spend of $85.9 million. WFP applauds the deal. 'It's a massive donation and a huge boost to the government of Malawi's school-feeding programme,' the organisation's country director, Dom Scalpelli, told me.

But not everyone in the country was overjoyed. 'It's very short-sighted - it doesn't make any sense. It's going to short-circuit the effort to improve nutrition here, it undermines farmers, households. It's not sustainable and it won't bring about any long-term change to malnutrition rates,' said Charles Rethman, echoing many critics of the plan.

The problem is - though WFP left this detail out of their press release - that the US grant came with a condition: it had to be spent on American CSB to be bought from American farmers and put in American ships to be transported to Malawi. According to WFP, the cost of buying, transporting and packing the annual 8,000 tonnes of US CSB will be $812 a tonne. SIR, which will buy about 3,600 tonnes of Malawian CSB - likuni phala - this year, expects to pay around $320 a tonne (distribution costs add another 5 per cent). Simply, if the American money was spent in Malawi, it could feed nearly two-and-a-half times as many schoolchildren.

Malawians are peaceable and polite people - but there was anger in the voice of one aid worker involved in school feeding when we talked about this. 'This is giving aid with one hand and taking it away with another. It's the Big Man saying: kneel down before I give you the help. These people, they get the food, they are vulnerable, they clap their hands and say, "Thank you Mr Bush". They don't understand what's really going on.'

Someone who does is the World Food Programme's man in Malawi, Dom Scalpelli, an amiable Australian who has spent 17 of his 40 years working for the world's largest humanitarian aid agency. His defence of this particular policy is slick - he and his colleagues have had to make it many times. WFP needs the US: 43 per cent of all the food aid WFP provides comes from America, and 98 per cent of it is 'in kind' - American corn, soya, rice, oil and beans, shipped at considerable expense to where it's needed. America boasts that, through these programmes, it feeds 70 million people a year (it was 100 million during the 1990s). 'Listen,' says Scalpelli, 'the child doesn't care if his porridge is Malawian or American. The important thing is that more of them are going to be getting it. And American CSB is cheaper than Malawian.'

In fact the two cost about the same, but Scalpelli is being disingenuous. The price of shipping and administration - and it is US law that American companies are used for packing and shipping 75 per cent of American food aid - puts the cost of the US-sourced CSB at absurdly high levels. Only a third of the money granted for food aid actually goes on food - the rest is transport and administration. The US Congress's Government Accountability Office has criticised the system, saying that a $10-per-tonne cut in shipping rates would enable the feeding of 850,000 more people. Indeed, Malawi would have done better if the US Government had written WFP a cheque for cost of shipping and administering the grant, and not sent any American food at all.

Surely, I asked Scalpelli, it would be better if the Americans gave cash and you spent it in the Malawian market - you don't just feed the children but you also support Malawian farmers. Isn't it a nonsense, when Malawi has just brought in a record-breaking harvest?

'Yes of course we'd have taken the money and yes, we could have sourced it locally. But the reality of what we're living through is that you take advantage of any grain you can get. The CSB is not displacing the local Malawian CSB - it's going to schools and it's being eaten, it's targeted and it's not going on to the market. The local farmers will still get business from us - and we'll still buy Malawian CSB.'

'It's absurd,' counters Charles Rethman. 'You could feed twice as many children, create jobs, stimulate the maize price and help the farmers. Anything that will increase demand for farmers is a good thing: this flies in the face of the Malawian government's development strategy and its attempts to stand on its own two feet.'

The story of how American corn gets in Malawian children's porridge begins in the great-plains states like Kansas and Iowa, where, as the American food policy critic Michael Pollan puts it, there is 'a plague of cheap corn'. It's a sad tale that begins in 1973, when the Nixon administration started directly subsidising corn (maize) farmers in a way that encouraged them to produce as much as possible. That policy has meant an ever-increasing excess of American corn, which most years costs the US taxpayer some $5-$10 billion to subsidise. As Pollan says, the money, which in 2005 kept the price of corn at around half what it costs to produce, is in effect a subsidy for the big American companies that buy and process the corn - and these companies and their political supporters are the ones that dictate American farm policy. Meanwhile the unwanted corn has to go somewhere - and dumping it abroad has always been one of the answers.

Some 20 per cent of US corn is exported, and at times the proportion going as food aid has matched that. In the 1990s, under the Clinton administration, food aid reached record levels, and the US claimed to feed as many as 100 million people a year in the developing world (some 850 million are said to be chronically malnourished). In 2003 America provided 56 per cent of all the food aid in the world. But an indicator that the richest nation's motives are not entirely charitable is that, throughout those years, America's food aid volumes increased massively at times when prices in the US were depressed - up to 20 per cent of American cereals production goes abroad as food aid when the market is down, but when domestic prices are high this figure falls to just five per cent. In 1993, when global food aid reached an all-time high of 17.3 million tonnes (in 2005, the last year for which there are complete records the figure was 8.25 million tonnes), US prices of staples like corn and rice were at historic lows.

The many critics of American food aid make the point that the buying up of US farmers' surpluses is another way of subsidising them - and, most years, federal payments make up about half the income of the average Iowa corn farmer. Such unprecedented support puts up a wall against farmers from the developing world who want to sell in the markets of the rich. The European Union abandoned food aid in kind in 1999 - all but two per cent now goes as cash - and Peter Mandelson, as Europe's trade commissioner, has called for 'radical reform' from the Americans. 'Food aid for poor countries and emergency relief can be a tool to advance development and for humanitarian relief. But the US programme is designed to give support to US agricultural producers,' he said.

But this was generally seen as pretty hypocritical. Most aid-agency observers reckon the EU has used American intransigence as an excuse to put off reforms of European farm subsidies - like the notorious two euros a day each cow on the continent receives - again, a way of putting up a barrier against the farmers of Africa, South American and Asia. This produces real absurdities - it's often pointed out that the money the rich world gives in aid to poor countries, often to help improve agriculture, is worth less than what those countries could earn if Europe and America simply reformed their subsidies and opened up their markets.

'Sharing our agricultural abundance' is the smug phrase that the US agriculture secretary, Mike Johanns, uses to describe food aid. In most years the US still provides between 55 and 65 per cent of global food aid, 98 per cent of it in the form of food. The price is enormous - up to $2 billion per annum. Even the relatively modest school-feeding programme is worth $200 million this year - 330,000 tonnes of American agricultural products to 17 countries in Africa, Asia and Latin America. Johanns is actually said to be in favour of reforming food aid, but he showed no qualms when he announced plans to flood these countries - many of them with food surpluses - with US-made porridge for school children in February this year. 'These programmes demonstrate America's continued compassion and commitment to improve the lives of people around the world,' he said.

Gawain Kripke, an American who leads Oxfam's lobbying of the US government on the issue of food aid, disagrees. 'The US's food-aid programme is meant to be charitable and helpful in nature but it's been picked apart by private interests so that the majority of the benefit goes to US commerce, rather than to people who need help. There is a debate in Washington over its reform - but the malnourished people of Africa don't have a seat at the table when US budgets are divided.'

It's a stock picture on TV-news reports of wars and disasters - sacks of food tumbling into forests of grasping hands from aid lorries. They often come labelled with a stars and stripes and the words, 'A Gift from the American People'. But the gift often has some unpalatable side effects. 'Emergency food aid in humanitarian situations is of course a good thing, but it can be a terribly blunt instrument,' says Ann Witteveen, Oxfam's food security coordinator for southern Africa. It can and does often do more harm than good. The very promise of free food can cause disaster-hit populations to leave their homes and move to refugee camps. They may become dependent on it, making it harder for them to take up their lives again when the disaster or danger has passed. Farmers leave their fields, prices fall and local traders lose their businesses. Clearly, while food aid saves lives in a disaster, it can hamper the return to normality.

It has done more insidious damage, as detailed by some aid agencies. Food aid can permanently damage the economies of nations it was sent to help. Vast tonnages of rice donated by the USA and Japan to Indonesia after the country's economic collapse in 1997 caused damage to farmers and distributors that has never been repaired: having been one of the world's largest producers, Indonesia is now a net importer of rice.

All the countries, from Sri Lanka to Indonesia, hit by the tsunami of Boxing Day 2004, had good supplies of rice available at low cost - yet the US insisted on sending 30,000 tonnes of US rice and other food after the disaster. In Afghanistan it has been suggested that one of the reasons that Afghan farmers have turned to opium-poppy production is that the market for the wheat they used to farm had become too unreliable since the US-led invasion of 2001 opened the door for massive amounts of food aid.

'A lot of food aid is incredibly silly,' sighs Ann Witteveen. 'Markets in southern Africa aren't terribly efficient and it is hard to prove how food aid affects them. But what farmers and traders need is predictability and stability in the market and food aid is a major destabilising factor.'

Malawi itself has a blatant example of the damage that can be wrought by food aid. In 2002, a crisis was predicted, after a shortfall of 600,000 tonnes in the harvest. Unusually, the international community provided exactly what had been appealed for - but the sums were wrong. Malawi was flooded with cheap grain and the price of maize dropped from $250 a tonne to $100 a tonne during 2003. Malawian farmers suffered: the loss to the Malawian economy was estimated at $15m, and local production of not just maize but also of key crops like cassava and rice dropped massively. All this made it harder for Malawi to return to self-sufficiency when the crisis was over. Even last year, when Malawi had a 250,000 tonne surplus of maize, the US still shipped in over 40,000 tonnes of American food as aid.

Some of this food aid is not even for the hungry: it is passed on to favoured US-based NGOs like Save the Children (US), World Vision and Care to be 'monetised' - sold and used for cash to pay their salaries and costs. In 2004, for example, America donated 22,000 tonnes of white-wheat flour for aid agencies working in Eritrea to sell on the open market and use the funds for their operations. This year the US aid agency Care announced that it was going to phase out this system of funding by the year 2010. But in 2005, 22 per cent of all food aid was sold, not distributed, in the countries it was sent to.

From across the world, there are stories of how, once a dependency on food aid has been established and local production destroyed, the aid stops and commercial supply begins - not so different and hardly more moral than the tactics of a drug pusher. This has happened with American soya beans in the Philippines and Japanese rice in Jamaica. Subsidised dairy produce from Europe has, according to Oxfam, put milk farmers out of business in a number of Caribbean countries.

One senior international-agency official once told me he had a new idea for the business of aid delivery. 'It's called the JGTTM strategy: Just Give Them The Money'. And indeed this is becoming a popular strategy. As Dom Scalpelli says, cash handouts are often a good and efficient strategy for helping the hungry, if local markets have enough supply. 'Local and Regional Procurement' is so much talked about in the world of food aid that it has its own acronym - LRP, and it is the stated preferred option of WFP. Scalpelli is proud that his agency will this year buy some of that Malawian surplus in order to feed the hungry in neighbouring Zambia and Zimbabwe, hit by drought and, in Zimbabwe's case, economic meltdown.

Food aid could be on the way out. Corn prices are high in the US this year, and the futures market is very excited at the prospects of using those great grain mountains for producing ethanol - bio-diesel - and thus addressing another of the rich world's pressing problems. Europe, Canada and Australia have all been persuaded to convert some or all of their food-aid programmes to cash, rather than in kind. Among the major donors only America, Japan and China hold out.

There is mounting pressure in the US for changes in the food-aid system, driven by a damning report from the US Congress about the inefficiencies. It highlighted the $171 a tonne that US carriers charge, compared with the $100 a tonne WFP can normally get from its own contractors. It also found that US food aid frequently is contaminated or infested by insects by the time it arrives in the country that needs it.

The Bush administration's current, modest proposal is that a quarter of the food-aid budget for emergency food (which most years is more than half the total) should be spent in destination countries. This is eminently sensible - emergency food sourced in the US takes more than four months, on average, to arrive, whereas cash spent locally can deliver food within weeks. But the suggestion has twice been knocked back by Congress, driven by a powerful lobby of agribusiness and the shipping industry. The debate will gather steam over the summer as this year's US Farm Bill is debated.

But in any case, as the US department of agriculture told me, school feeding programmes will continue to be supplied with American food - enough for 437,000 children in Malawi this year. Why - with a bumper crop and Malawian corn a fifth the price of American? That's the policy, they said - 'Food aid in kind is valid and effective'.

Increasingly, it seems, the developing world may take matters into its own hands. One government official in Malawi told me that ministries there had not been informed about the latest US grant, and would be very unhappy about it. Last year Eritrea, a food-aid addict for all of the country's brief and tragic history, declared that, for the dignity of its people and in order to end 'a culture of dangerous dependency', it would accept no more food aid.

Back in Malawi, Oxfam's Mary Khozombah works in the countryside around Blantyre helping farmers secure a stable way of life and adequate income. A native of Zimbabwe, she's seen the dire ill effects brought about by ill-advised agricultural policies in Southern Africa. 'People who want to help Malawi need to support agriculture by educating farmers, improving irrigation, helping people find other forms of income. We need empowerment so our farmers can export. Ask us! We might come up with good ideas.

'Food aid,' she says forcefully, 'should be the last resort, in an emergency - and even then it should be bought locally if possible. Of course, if people say we want to give you food, we'll say yes - you can't say no. Poor nations like us too often just accept the charity without looking properly at the effects. But in the long term it really kills our people.'

Just say no how Eritrea refused food aid

In May 2006, at the height of the drought in the Horn and East of Africa, Eritrea declared it wanted no more foreign food aid. The government had already halted the distribution of free food to all but a few thousand people and removed the operating licences of three international aid agencies involved in food handouts. It had locked the warehouses containing 100,000 tonnes of United Nations World Food Programme stocks. No longer, said the government in a lengthy statement posted on its official website, would the people of Eritrea be able to see free food 'as a permanent factor in their life and even as a "right or natural entitlement".'

It was a move that shocked observers. At the end of last year, the UN had predicted that the drought would mean two-thirds of Eritrea's 3.6 million people would need food aid during 2006; 1.3 million people were receiving supplementary food aid in late 2005. But the government of Isaias Afewerki, the charismatic former guerrilla leader who led Eritrea's independence battle with Ethiopia, was adamant. If countries wanted to give aid, then cash would be acceptable. This would be used to pay the poor for work, which would enable them to buy food.

Much of Eritrea has been fed by outsiders for all of the 13 years of the country's existence. Years of free food aid, according to the government, had begun 'to foster a culture of dangerous dependency' in the country. It had 'nurtured lethargy, debilitating idleness and unemployment' and eroded the 'industriousness and hard work ethics of communities'.

Reaction to the Eritrean move was surprisingly muted. A senior UN official flew to Asmara to ask what was happening to the food in the warehouses, and found that the government was considering selling it, and using the cash to pay people who would have received it in return for work. The aid agencies, however, refrained from criticism- chiefly because Afewerki and his ministers were repeating what aid analysts have been saying for years.

Who gives and who gets in the world of food aid

In 2005, 93 countries or territories received a total of 8.25 million tonnes of food aid. More than half of it went to sub-Saharan Africa.

Givers

United States - 49% of the global food aid deliveries

European Union - 18%

China - 7%

Japan and the Republic of Korea - 5% each

Canada - 3%

Australia - 2%

Recipients

The eight main recipients in 2005 shared 50 per cent of the food aid deliveries

Ethiopia - 13%

North Korea - 13%

Sudan - 11%

Uganda - 4%

Eritrea and Bangladesh - 3% each

Top 1960 recipients

India, Poland, Egypt, Pakistan, Brazil

· Does food aid do more harm than good? Join the debate on our new food blog, Word of Mouth

· Alex Renton and Abbie-Trayler Smith travelled to Malawi with Oxfam