12/28/06 Authors recommend food aid changes

Farm and Ranch December 28, 2006 The purchasing power of U.S. government based food aid programs simply don't have a real impact on commodities prices in the U.S. That's the view of Cornell University professor Chris Barrett. He says the U.S. program doesn't purchase in large enough quantities. However Barrett says there are those who benefit from the myth that food aid programs help U.S. farmers. Barrett: "Especially the shippers. Again almost half the food aid budget goes to freight costs. And to a small degree some of the larger agribusiness concerns that sell into the system. And they too make money in part because of the shipping restrictions." Barrett, who is co-author of a new book "Food Aid After Fifty Years-Recasting Its Role, says the Cargo Preference Act which requires 75 percent of U.S. food aid be moved on U.S. vessels means costs 60-80 percent more than if non-U.S. flagged carriers were used. Barrett: "That process not only generates big profits for the small number of shipping lines involved but because we have this restriction, the government has to match commodity offers with freight offers. And you often can't get freight offers in the place the commodity is available for the lowest cost. So you often have to overpay for the commodity as well. And some of the larger agribusiness concerns are taking advantage of this process. They are very clever and they make on average about 8%, 10% more than the open market price for the same commodity, the same place and time." Barrett and his co-author advocate a role back in Cargo Preference and support allowing 25 percent of U.S. food aid to be procured outside the U.S. closer to the place of need. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.