Aid Groups Cope with High Food Prices

Teaching self-sufficiency and sustainable agriculture, and injecting money instead of just food into local economies are some ways NGOs are adapting

by Mark Scott

A Somali women carries a sack of food aid on her head to her makeshift home on the road along the Juba river in southern Somalia near the village of Jamame STEPHEN MORRISON/AFP/Getty Images

People from Kansas to Kenya are feeling the pinch of rising food prices. No wonder heads of state came to Rome for a three-day summit starting June 3 to figure out how to combat soaring costs for everything from wheat to dairy products.

At the top of the agenda is finding ways to help developing countries feed their citizens at a time when the cost of commodities has skyrocketed. That goal is shared by the food-aid community—a mixture of nongovernmental organizations (NGOs) and international aid agencies that are being forced to change how they operate in response to the food-price crisis.

The impact on aid groups already has been enormous. The U.N. World Food Program (WFP) says global food prices rose by 40% in 2007, while the cost of wheat, a dietary staple in emerging economies, has soared 180% since 2006, according to the World Bank.

Other expenses have jumped, too. Thanks to spiraling fuel prices and capacity shortages, freight costs to ship food to the developing world have almost doubled in the past two years, the World Bank says. All told, that has left organizations like the U.N. WFP scrambling to meet their goals as overall expenses have soared by more than 50%.

Moving from Charity to Self-Sufficiency

In the short term, the squeeze has put agencies and NGOs in an impossible position. Unable to raise their funding as fast as their costs, they've been forced to cut back on the number of people they serve or spread aid more thinly, potentially putting whole communities at risk of malnutrition.

Longer term, aid groups are looking to wean themselves from the unpredictability of budgets and politics, profoundly reevaluating their business models to better serve the world's poorest countries. This transition, which was under way before the current food crisis kicked in but has gained renewed urgency, looks to shift the emphasis of development assistance from charity to self-sufficiency.

Rather than importing costly commodities from the developed world—often grown with farm-support subsidies—agencies now try to source food from domestic or regional producers. There's also a move to teach local communities sustainable agricultural techniques so they are less susceptible to the volatility of the global food markets.

"The rise in food prices has accelerated the push by organizations to alter their strategies," says John Hoddinott, senior research fellow at the International Food Policy Research Institute in Washington. "Sourcing food from developing countries is a welcome step."

Resistance from Farming and Shipping Lobbies

This fundamental change in the decades-old approach to food aid isn't occurring without some resistance. Critics worry certain developing countries, such as conflict-ridden Sudan and Somalia, don't have the resources to produce their own crops. Other interests, especially farming and shipping lobbies in the U.S., continue to push for the status quo. They argue importing food from Western economies is the most stable way for the poorest communities to get food aid.

As the current food crisis heats up, that point of view is losing ground among the most prominent players in the humanitarian community. The U.N. WFP—the world's largest provider of food aid—has embraced the movement to reduce overhead and now sources almost 80% of its supplies from developing countries. The Canadian and European governments have shifted to a "buy local" strategy to offset rising food costs. And even the U.S. government—which has long defended the old model and gives $2 billion annually to food-aid programs—now wants to spend 25% of its budget within emerging economies.

This change in public policy has benefited NGOs that want to squeeze every dollar out of their aid budgets. Leading the way is Ireland's Concern, a humanitarian organization with a $195.4 million annual budget and projects in 28 countries.