Archer Daniels Midland

Cargill

• Top U.S. company in grain exportation and flour milling.²⁴
• Products and services include: seed, grain, genetically engineered crops, and flour milling.

ADM

• Top U.S. company in ethanol, soybean crushing, and shipping by barge.
• Products and services include: seed, crops, ethanol, biodiesel, flour milling, storage, and shipping food aid.

The United States sends most of its aid in the form of food. By law, 75 percent of U.S. food donations must be produced, processed, and shipped by U.S. companies.⁷ Some of the food is given to organizations or to governments that sell the food to make money for development projects. (This is called “monetization” of food aid.)

In contrast, Europe and almost every other country provide most of their food aid contributions in the form of cash grants. The donor country or the World Food Programme can then purchase food from within the region or country where it will be consumed.⁸ Cash grants allow the donor or WFP to respond quickly to events––such as crop failures or natural disasters––at a lower cost and deliver food where it is needed most.

In recent years, the United States has bought more than half the food for its aid programs from just four agribusinesses and their subsidiaries: Archer Daniels Midland, Cargill, Bunge and Cal Western Packaging, the Agriculture Department said.

Some researchers and advocates said that it was time to rethink the U.S. approach to fighting world hunger.

"Are we committed to eradicating hunger because it's feasible, not terribly expensive and our moral obligation as the richest society in human history?" asked Christopher Barrett, a Cornell University economist and the co-author of "Food Aid After Fifty Years." "Or are we just trying to placate a few agribusiness, shipping and NGO constituencies with a handout?" referring to nongovernmental organizations.

archer daniels and food aid

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But not the United States. We give more than half of the world's nearly $4 billion of annual food aid. Yet by law, the U.S. Agency for International Development and other federal agencies can't simply write checks to feed the hungry. Instead, they must buy American-grown food from American conglomerates; 75 percent of it must be shipped on American-flagged vessels. It's a great deal for domestic businesses, but not for the needy: The Government Accountability Office recently found that 65 percent of federal food aid expenditures are not spent on food. In fact, due to rising transportation and business costs, the amount of actual food delivered by U.S. aid programs has declined by more than 50 percent over the past five years.

Now Congress is considering overhauling this system via a Bush administration proposal that would allow 25 percent of food aid to be distributed as cash grants. That move is opposed by shipping companies and agribusiness giants such as Archer Daniels Midland, as you might expect, but also by prominent congressional Democrats and nongovernmental organizations such as Feed the Children and the American Red Cross. Why would these groups be against helping the poor more efficiently? Turns out that when food shipments finally get to where they're needed, they're often given to NGOS, which turn around and sell them to raise money. In the last three years alone, the groups sold off $500 million of American food aid. (Save the Children has criticized the practice; CARE has pledged to stop it.)

State Department and Office of Management and Budget staffers have been quietly lobbying to convert some of the aid to cash grants for years, and the White House seems to be listening. But Rep. Tom Lantos (D-Calif.), chairman of the House Foreign Affairs Committee--which helps write the rules for international aid programs--says that changing the status quo is "beyond insane" and would cause support for food aid to "vanish overnight."

However, Congress is due to pass a new farm bill this fall, and Senator Tom Harkin (D-Iowa) has proposed a tiny pilot program for $100 million in cash grants over four years. "The change is more like plate tectonics than a revolution," says Gawain Kripke, policy director of Oxfam America. "But everyone sees that what exists now just doesn't make sense."

COPYRIGHT 2007 Foundation for National Progress
COPYRIGHT 2008 Gale, Cengage Learning

Analysts and civil society seem to see FAO as the only remaining “good boy” over time, whereas the World Bank and IMF have continuously been poked as criminals for their continues indirect and under table arm twisting techniques of forcing many countries to implement policies that have with adverse and severe consequences affected food production systems in the developing countries.

The IMF and World Bank will be hard-pressed to agree their supposed sins committed in developing countries over the past two decades with out any regard for the far reaching consequences that are truly hard to correct, in the form of concrete steps to undo the harm caused by its policies that have led to the dismantling of systems put in place to protect farmers, mainly in Africa and the third world.

Let’s also analytically look at the effect caused by the gluttonous profit factor involving the speculative trading in agricultural commodities which has dramatically grown. A number of big investment banks have ambitiously and greedily launched agricultural commodity index funds, as they eagerly anticipate and look for new pastures to make quick profits following the credit crunch.

Archer-Daniels’s troubles come at a particularly awkward moment for the Clinton administration and for Sen. Dole, who have both recently gone to bat for the giant agribusiness company. Indeed, just as news of the investigation broke, the Treasury Department was preparing to expand an existing 54-cent-a-gallon tax subsidy for ethanol, the corn-derived fuel additive; although the expanded tax break was sought principally by Atlantic Richfield Co., it would be a huge windfall for Archer-Daniels, which produces about half of all ethanol in the U.S. The Treasury action, which was to come in a regulation, has been expected since late June and is still pending.

Last year the Clinton administration went to even greater lengths for Archer-Daniels. Largely because of White House prodding, the Environmental Protection Agency [EPA] issued a rule -- later rejected by a federal court -- mandating that roughly one-tenth of all gasoline sold in the U.S. contain ethanol. This action came shortly after Mr. Andreas served as co-chairman of a fund-raising dinner for the Democratic Party and donated $100,000. Both the White House and Mr. Andreas have denied any connection between the two events. Last week the federal appeals court in Washington rejected an administration request for a rehearing on the matter. White House officials declined to comment yesterday.

Sen. Dole’s promotion of the ethanol industry has been even more energetic, and his ties to Mr. Andreas are more personal. The two met some 20 years ago in Bal Harbour, FL. Mr. Dole and his wife, Elizabeth, own an apartment in a complex owned by Mr. Andreas. (Mrs. Dole purchased the apartment from Mr. Andreas in 1982 for $150,000. Archer-Daniels board member and Democratic lawyer Robert Strauss also owns a unit in the same complex.