U.S. Official Development Assistance by Sector
2005-2006
1985-1986
Humanitarian
Aid
2%
Other
8%
Commodity Aid
and
Program
Assistance
55%
Social
Administrative
Infrastructure
18%
Economic
Infrastructure
4%
Agriculture
11%
Industry
and Other
Production
2%
Other
23%
Humanitarian
Aid
13%
Social
Administrative
Infrastructure
42%
Commodity Aid and
Economic
Program Assistance
Infrastructure
5%
11%
Industry and
Other Production
3%
Agriculture
3%
Source: OECD Development Assistance Committee 2007 statistical annex.
imposed on developing countries during the 1970s and 1980s as
a condition of financial support restricted poor governments’ expenditures and promoted one-sided trade liberalization. These
were policies driven by rich countries through the World Bank,
International Monetary Fund and other international financial
institutions. During this period, low global prices for cereals
made it easy to argue that developing countries could neglect
agriculture and buy needed food on international markets.
Trade restrictions and subsidies have had two troubling effects. First, maintaining production levels well above those that
would prevail in the absence of restrictions and subsidies—thus
increasing global supplies of staple crops—drove world prices
down and made it difficult for African farmers to compete even
in their own markets. Second, rich countries restricted the markets available to African farmers in order to protect their own
farmers. This unfair market environment gave poor countries
good reasons not to invest much in agriculture. In 2003, the International Food Policy Research Institute estimated that protectionism and subsidies in industrialized nations cost developing countries about $23 billion annually in l ost income.32
U.S. Assistance for Agricultural Development
Among donor countries, the United States has been particularly neglectful of agriculture in developing countries. U.S. foreign assistance has had a proliferation of special initiatives and
earmarks, from both the administration and Congress, that have
tended to squeeze out funding for agriculture.33 The FY2008
budget for agricultural investments in developing countries is
illustrative. While there was a slight increase in overall funding
for development assistance, funding that is not earmarked and
could be used for agriculture has declined significantly. Lack of
funding has forced steep cuts in U.S. support for international
6 Briefing Paper, June 2008
agricultural research centers, where vital work is being done in
how agriculture can adapt to climate change and other topics
crucial for food production.
It’s important to note that when developing countries are
given the opportunity to prioritize their needs, they have consistently asked for more agricultural support than donors have
been giving in recent years. The U.S. Millennium Challenge
Corporation (MCC) funds development assistance “compacts”
in poor countries that are well governed and invest in their people. These compacts are based largely on the country’s own assessment of development priorities. And in fact, more than half
of the funds committed to date by the MCC are for agriculture
and related rural infrastructure.
The low, stable commodity prices that prevailed up until last
year allowed the international community to turn its attention
to education, maternal and child health, water and sanitation,
and global pandemics like HIV/AIDS. These are crucial areas
of work for poverty reduction. But because there are limited
resources available for long-term poverty-focused development
assistance, the effect has been to crowd out funding for agriculture and rural infrastructure. The growing global hunger
crisis—rapidly rising food prices and the inability of poor people
around the world to cope with them—is largely a consequence of
this underinvestment.
Helping to Create the Conditions to Reduce
Hunger and Poverty
What role can developed countries play in addressing the
global hunger crisis and reducing hunger and poverty in the
long term? Food aid can and does go a long way toward meeting the immediate needs of hungry people. In 2006, interna-