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When the Indian Ocean tsunami hit in December 2004, killing more than a quarter-million people, the great global humanitarian machine sprung to life. First on the list of donations, of course, was food — bags of food began arriving by airlift and sea, especially into Aceh, the hardest-hit region.

By strengthening and not undercutting local farmers, cash aid helps countries to avoid hunger later.

But was it the right kind of aid? The Acehnese who lost their livelihoods needed food, but there was actually plenty of food to be bought. Indonesia’s foreign minister told the world not to send rice. The coast had been devastated, but not far inland life was normal— in fact, harvests had been excellent. What was disrupting the food market was not the tsunami, but the sacks of rice that were coming in. So many people were getting rice for free that local markets couldn’t sell it. Farmers were undercut and supply chains fell apart.

“It seemed counterproductive to ship in commodities and undermine local producers,” said Gawain Kripke, director of policy for Oxfam America. “Shipping in food was doing more harm than good.”

So several aid organizations working locally decided to try something different. They bought local food to distribute to the people to whom they would have otherwise donated food. Save the Children and CARE gave those in need cash or vouchers they could use to get food the way they always had: by going to the market and buying it. Mercy Corps paid residents to clear debris. The Swiss Development Corporation provided cash grants to families hosting the displaced.



The idea of providing money instead of food was not new, but it made up a tiny part of world food aid. Aceh seemed like a good place to try the idea on a wider scale. The projects were, for the most part, successful — cheaper than shipped-in food, and more popular with locals. They provided better nutrition; people who got cash ate more fresh foods than those who got rice. In cash households there was a lot of joint decision making about how to spend it, and while increases in alcohol consumption were low for both groups, it was especially low for those who received cash.

Not every emergency is Aceh. In many places, people go hungry because there is no food. But in a lot of places, food is available and the market is working — people are just too poor to buy it. In those places, giving individuals or charitable groups cash to buy food can make food aid cheaper, faster and fairer. By strengthening and not undercutting local farmers, cash aid also helps countries to avoid hunger later.

With the exception of one country, every major supplier of humanitarian food aid enjoys the flexibility to use whatever form of aid works best — they can send food, buy food in the affected region, or just provide cash or vouchers. But the United States, the largest donor, is still tied to sending sacks of grain and legumes from America. Only 15 percent of American humanitarian food aid can be untied — bought outside the United States.

Now the Obama administration proposes giving America more flexibility. In the 2014 budget it just submitted to Congress, it is upping the untied amount from 15 percent to 45 percent. The proposal also modernizes food aid by ending a second great inefficiency: a process known as monetization. And it is planning to ask American companies to provide not just commodities but also super-nutritious foods for the severely malnourished — in general modernizing food aid.

“As more efficient tools surfaced and best practices evolved, we’ve learned that the current approach to food aid can become — at times — an impediment to its very own mission,” the United States Agency for International Development administrator, Rajiv Shah, said in a speech on April 10.

American food aid is slow and inefficient. The Government Accountability Office reported in 2009 that for sub-Saharan Africa, food bought locally by the World Food Program cost 34 percent less and arrived 100 days faster than food sent from the United States. (Ocean shipping accounts for half the cost of American food aid.) Increasing the amount of aid that can be locally procured to 45 percent would allow the United States to feed four million more people for the same cost, Shah said.

Untying food aid can help in other ways as well. Cash can get to people where food cannot. Earlier in Fixes, I reported on how vouchers and cash were allowing the hungry in Somalia to eat even though it was too dangerous for aid workers to go in. (Here is a follow-up Fixes article on cash and voucher feeding programs in Africa.)

Perhaps most damaging of all, sending food creates a cycle of need. One reason Haiti is perpetually hungry is that free or highly subsidized imported rice has destroyed Haiti’s rice farmers, who can’t compete. In March 2010, two months after the earthquake, Haiti’s President Rene Preval asked the United States to “stop sending food aid, so that our economy can recover and create jobs.” (The United States did not stop.) In testimony before the Senate Foreign Relations Committee, former President Clinton actually apologized for his policies that flooded Haiti with subsidized rice. (Here’s a rather startling video.) That was trade, not aid, but the effect was similar.

Shah said in an interview on Monday that for this year, America’s 15 percent in untied aid has been used up in opposition-controlled Syria — where aid workers cannot go — and in refugee camps housing Syrians over the border in Turkey, where aid is dispensed with debit cards. “When we introduced cards in the camp in Kilis, we saw local Turkish vendors able to participate, and more welcoming,” he said. “And operation costs went down 50 percent — so the camp could accept more refugees.”

The bill is being paid elsewhere. Having dispersed its quota of locally procured food aid, the United States had to switch programs in other countries back to bags of American-grown food. The additional cost cut 155,000 people from the program in Somalia and 34,000 in the Democratic Republic of Congo, Shah said.

Any real business that tolerated this level of inefficiency and waste would quickly have gone bankrupt. But they exist because when the program began in 1954, its core purpose was not to feed the hungry but to keep American crop prices high by disposing of surpluses. Its original name was the Agricultural Trade Development and Assistance Act. (It was also designed to fight Communism, but that’s another story.)

Those rules persist. Most aid is still tied, of course, and at least 50 percent of it must be shipped on American flag carriers — at large expense, as these ships often have a monopoly position. The largest company running these carriers is not American at all, but the Danish shipper Maersk.

In the 2008 farm bill, President Bush asked Congress to increase flexibility to 25 percent. That failed, but the bill did include $60 million in pilot programs using local procurement. They were successful. But the current reform proposals have a better chance. What has changed? For one thing, the United States is now alone in requiring tied aid. And our money is buying less and less. The cost of transporting food has tripled in a decade, according to U.S.A.I.D. And food prices are maintaining record or near-record highs. The result is that 10 years ago, the United States shipped about 5.5 million metric tons of food, and now it ships 1.8 million.

Related More From Fixes Read previous contributions to this series.

Nor do shippers or agricultural producers need this program. Farm exports are thriving — in 2013 American crop exports are forecast at $142 billion, and only $1 billion of that will be humanitarian food. The food program was established to deal with commodity surpluses, but there are no more commodity surpluses.

The most surprising pillar of food-aid-as usual is an assortment of charitable groups that work on the ground — groups that are very familiar with the system’s flaws. One reason is monetization. About a fifth of all American food aid goes not to people but to American organizations such as World Vision or Catholic Relief Services. They sell it to raise money for their programs. No one thinks that turning aid workers into commodities brokers is a good way to finance programs — it’s about 25 percent less efficient than cash, and it can have the same malignant effect on local farmers that other food shipments can have.

Some groups have stopped accepting the aid — CARE, for example, stopped in 2009. The organization decided that not only monetization but also giving out food was ineffective, and turned to more long-term development programs. But it’s instructive that CARE lost some $45 million annually in the process.

The administration’s proposal would end monetization, replacing the $400 million in monetizable aid with $330 million in cash instead; that’s equivalent, because cash is so much more efficient.

The third major big idea in the administration’s bill is more speculative, but it is ingenious. The expense of shipping sacks of wheat isn’t the only problem with sending hungry people commodities. Cereals aren’t very nutritious for the malnourished. But American companies make ready-to-use therapeutic foods, like a paste of peanuts with nutrients that has proven miraculous at reviving children suffering from even severe malnutrition. Sealed into what looks like big ketchup packets, the peanut paste doesn’t need to be reconstituted (thus avoiding the perils of dirty water) and keeps forever. Because it’s highly concentrated, it’s efficient to ship. It’s made by several companies in the United States, among them Mana, and Shah says that 10 or 12 other new products are in the pipeline. “During critical times of need, these products are the most lifesaving and have the highest impact,” he said. “It’s a much better way to conduct food assistance.”

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Tina Rosenberg won a Pulitzer Prize for her book “The Haunted Land: Facing Europe’s Ghosts After Communism.” She is a former editorial writer for The Times and the author, most recently, of “Join the Club: How Peer Pressure Can Transform the World” and the World War II spy story e-book “D for Deception.”