At first glance the U.S. government’s food aid program might appear to be an extraordinarily generous gift, with a resource-rich country offering assistance to combat hunger in poverty-stricken countries around the world. But a recent study by the British newspaper The Guardian, showing that three powerful agribusiness corporations, ADM, Cargill and Bunge, are major beneficiaries of the program, calls that image into question. The Guardian study offers support to critics’ charges that the program is actually a form of corporate welfare.
The Guardian study, which examined hundreds of contracts awarded by the U.S. Department of Agriculture in 2010 and 2011, found that ADM was paid nearly $300 million for food it supplied to the program. Cargill received $96 million, and Bunge received $75 million.
ADM is incorporated in Delaware, a state with minimal regulations that is used as a tax haven by major corporations. Bunge, though headquartered in the U.S., is incorporated in Bermuda for similar reasons. Cargill, often ranked as the largest private company in the world, is majority owned by members of the Cargill family.
An article in The Guardian quoted Eric Munoz, an agriculture policy analyst for Oxfam American, who noted: “This new information makes it abundantly clear that it is massive multinational firms—not rural America and not farmers—that are the direct beneficiaries of the rigged rules governing the U.S. food aid program.”
In 1996, the European Union revised its policies for food aid programs, allowing for direct cash donations to more effectively assist hunger relief efforts. The U.S. policy benefiting major corporations is a result of legislation passed in the 1950s governing food aid to foreign countries. The regulations mandate that food delivered in aid programs be purchased, processed and shipped by U.S. companies, even if cheaper alternatives could more effectively alleviate hunger.
Rob Bailey, a Fellow at Chatham House, a British think tank , described the program as “uncompetitive.” He noted: “We know only forty cents of every taxpayer dollar goes on food itself. The rest goes into the pockets of agribusiness and the cost of freighting.”
