Authors: Michael Maren
This worked as long as there were restrictions on imports. If grain companies such as Bunge and Cargill and Archer Daniels Midland were allowed to buy wheat from Argentina or Canada at 75¢ a bushel (or sugar from Haiti or peanuts from Senegal), the system would collapse. It required tariffs and quotas to keep foreign commodities out.
By the 1950s, technology was adding to America's surpluses, food stores were bulging, and the country was buried in its own abundance. The cost of storing the grain began to outstrip the value of the grain being stored. The storage cost was $6.5 million a month in 1952, increasing to almost $29 million monthly in 1957. Beyond that, there was a problem of deterioration, shrinkage, and spoilage, which in 1953 cost the government an estimated $20 million. The price was going to keep climbing.
The farm sector began to demand that the government take action to prop up prices, dispose of surplus, and bring back export markets. Having created a massive and wildly expanding supply, the federal government now had to create demand. With Europe's markets satisfied by their own domestic production, there was only one place to go: U.S. grain would have to be sent to the Third Worldâto Latin America, Asia, the Middle East, and Africaâwhere new states were emerging from colonialism.
The only problem was that these countries were broke. They had very little foreign exchange, only their own soft currencies, which American grain-trading companies had no use for. In the eyes of the grain exporters, the Third World needed a benefactor, someone to buy the food for them, or at least accept their rupees, cidis, and shillings while paying the exporters in dollars. The answer was obvious: The U.S. government would have to be the middleman and absorb the foreign currencies.
The mechanism that Congress finally adopted was Public Law-480, the
Agricultural Trade Development and Assistance Act of 1954, signed into law by President Dwight D. Eisenhower on July 10. The language in PL-480 clearly explained its purpose:
to make maximum efficient use of surplus agricultural commodities in furtherance of the foreign policy of the United States, and to stimulate and facilitate the expansion of foreign trade in agricultural commodities produced in the United States by providing a means whereby surplus agricultural commodities in excess of the usual marketing of such commodities may be sold through private trade channels, and foreign currencies accepted in payment therefor.
The prime sponsor of this bill was the senator from the agricultural state of Minnesota, Hubert Horatio Humphrey. The bill seemed the perfect liberal panacea: On the surface, at least, it looked after the needs of the American farmer while spreading the benefits of American abundance to the impoverished masses of the Third World.
An early food aid prototype program was instituted in Vietnam during the 1950s. Testifying before Congress about that program, Eileen Egan from the American Council of Voluntary Agencies for Foreign Service testified to the success of the program there: “So here we have the use of American surplus to bring stability to people, and to give them a chance to produce for themselves. The area of South Vietnam was one of the least stable in Asia. It was torn by strife, and was the victim of an 8-year war; there were brigands roving the countryside. At this point, partly because of the use of American surplus foods, it is one of the most stable areas in Asia.”
Ms. Egan's optimistic assessment of the stabilizing effects of food aid in Vietnam would be echoed again and again by other food-aid advocates in the coming decades. In the same hearing, Richard Reuter, executive director of CARE, boasted that his agency was feeding 7 million people worldwide and was planning to up that to 11 million people shortly. Reuter mentioned that CARE was supplying dairy products and added, “I think one of the school feeding programs is going to develop a market for milk, cheese, and some of the other items on an on-going basis.”
“Mr. Chairman,” one senator chimed in, “I might add that the use of powdered milk in these programs goes a long way toward stabilizing the dairy industry in this country.”
Yes, Humphrey agreed. “You also develop eating habits which are very good for long-term American agriculture. Cheddar cheese, for instance, was not the most desirable product in some parts of the world, but now they are beginning to like it.”
Responsibility for administering the program was spread over two congressional committees and nine federal government agencies. Among them was the Interagency Committee on Agricultural Surplus Disposal chaired by Charles Francis, chairman of General Foods. Despite the bureaucratic morass, the program was a huge success. In 1956, PL-480 accounted for 32 percent of total agricultural exports. Income to farmers increased by over $600 million in the first three years of the program as prices for food rose. And then there were the intangible benefits of the program as outlined by Senator Humphrey in his 1958 report entitled
Food and Fiber as a Force for Freedom
.
A child in India could put his finger into the butter oil and taste it and say with a very loving sound in his voiceâAmerica, That is how they know America.
Housewives in West Germany have been exposed to the idea that turkey is a good food at any time and not just during the Christmas season. The German government recently agreed to additional imports of turkey for United States dollars.
A new brand of cigarettes containing a larger proportion of United States leaf has been put on the market in Japan. Estimated consumption of United States leaf last year increased by 1.6 million pounds above 1955.
Schoolchildren in Yugoslavia have grown to like the taste of powdered milk so well they prefer it to the taste of fresh milk.
Still, it wasn't enough, pood surplus is continued to grow as farmers were paid for producing more food than the markets demanded. Swimming in waves of grain that threatened to wash away their profit margins, agricultural marketers prescribed their surpluses as a cure for all the world's ills.
The report began, “America's abundance of food and fiber is a tremendous asset in the world's struggle for peace and freedomâan asset still awaiting to be fully utilized with greater boldness and compassion.”
In 1957, the Soviet Union had launched Sputnik I and the United States began gearing up for a crash program to launch itself ahead of the Soviet space program. The communists were ahead in the conquest of space and seemingly gaining in the conquest of the earth. To a rattled nation, Humphrey's report delivered these comforting words:
In areas of Africa and Asia, as well as in other parts of the world, food means far more to vast millions of people today than any space satellite in the sky. Bread, not guns, may well decide mankind's future destiny. Thanks to our farm people, the United States is in a far better position than Russia to lead
the world toward the conquest of hunger and want. At a time when we are trying to catch up with the Soviet Union in other areas of competition, agriculture is one segment of our economy already geared to meet any emergency challenge, already offering us fully productive resources to meet any Soviet threat of economic warfare throughout the world. No crash program is needed in food and fiber production.
Humphrey had masterfully couched his argument in terms of the contemporary American obsession. He created the food race and made it seem as important as the arms race and the space race. “Khrushchev has served notice publicly that he intends to make Russia the world's leading supplier of food.” Humphrey threw down his own challenge. “While it has proven a valuable and successful adjunct to national farm policy, the Public Law-480 program has far outgrown the narrow concept of serving primarily for the disposal of farm surpluses. It has become, as it should be, an important tool in foreign economic policy.”
F
ixation on the Soviet Union and patronizing attitudes about Africa and the Third World were such in the 1950s, that there was no taboo against proclaiming that America's bounty should be used to achieve political ends. No thought was given to the idea that recipient countries might be insulted by the food-for-loyalty exchange. “There needs to be greater recognition and acceptance of Public Law-480 as a government-wide instrument of international economic policy in support of our foreign policy objectives, rather than the narrower concept of it being merely an agricultural surplus disposal program,” Humphrey wrote.
In 1959, Humphrey introduced the International Food for Peace Act as a response to his own study. While essentially similar in mechanics to the existing legislation, Humphrey's bill shifted the rhetorical emphasis away from commodity disposal and emphasized, instead, humanitarian and foreign policy objectives. There were some objections, most colorfully from Harold Cooley, Democrat from South Carolina and chairman of the Agriculture and Forestry Committee: “We are primarily interested in getting rid of these surpluses and we don't care how you do it and under what authority. We have told you we want the commodities sold for dollars first and then for foreign currencies, or then donate them.”
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After some revisions and compromises, Humphrey's bill passed, the cosmetic changes were in place, and Food for Peace was institutionalized as part of America's foreign assistance program. John F. Kennedy's second act after his inauguration was to establish the Office of Food for Peace. At the head of the new office was a former congressman from South Dakota, George S. McGovern. When McGovern resigned to run for the Senate in 1962, he was replaced by CARE executive director, Richard Reuter, and the link between NGOs and Food for Peace was set.
Under Kennedy, food poured into Vietnam, where it was sold for local currency, which was used to pay for the growing American military presence there. The irony of using Food for Peace to wage a war wasn't lost on anyone, particularly not on Humphrey and McGovern, who were still championing the “Peace.” Lyndon Johnson's response was to shift the Food for Peace office to USAID, where it continued to be a battleground of competing interests.
Food for Peace would be all things to all people, its image fluid and dependent on those to whom its virtues were being promoted. Advertised outside of America and by NGOs as humanitarian sacrifice, Food for Peace was always sold domestically as a program to aid American farmers.
In reality, however, it was neither.
The real beneficiaries of the aid program were, and are, the American equivalent of Siyaad Barre's inner circle. They are a small group of men with connections and money and influence. They are America's merchants of grain.
W
hile Hubert Humphrey was touting the benefits of PL-480 in the 1950s, he breezed over one significant fact: Although total income was up, and the price per commodity was up, farm income actually fell, and the total number of farms in America was beginning to drop by 1 or 2 percent per year. The extra profits were being made by a group of middlemen, the very same grain-buying middlemen the original farm legislation was designed to circumvent.
America's largest grain-trading companies have something important in common with the grain merchants of Somalia: their franchise rests largely on the pleasure of the government in power. In Somalia corrupt officials gained control of the country's grain trade by cozying up to the government; in America they do it with massive political contributions. In the 1996 election year, as in every year since the beginning of the U.S. food-aid program, the list of the biggest campaign contributors to both political parties
includes America's largest grain-trading companies. And at the very top of that list is the master of grain, Dwayne Andreas, CEO of the Archer Daniels Midland Company, the world's largest grain-trading company.
As Humphrey traveled the globe promoting American exports and American aid, he took with him an entourage of agribusiness giants, among them his close friend and regular travel companion Dwayne Andreas, who at that time was a vice president at Cargill, the massive, privately held grain-trading company based in Minneapolis. Andreas credits himself with educating his good friend Humphrey about the world. (His friendship with Humphrey never stopped him from contributing to Richard Nixon's presidential campaigns.) In a fawning authorized biography, Andreas recalls: “When Hubert was new to the Senate I would take him to places like Switzerland and Germany and London, and educate him about things like foreign exchange and the interlocking relationships of currencies. But then he became a senior senator, and afterward
he
took
me
.”
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In 1977, ADM invested $80 million in plant and equipment to produce fructose, an artificial sweetener that would be profitable only if it could be sold more cheaply than sugar. Shortly thereafter, Senator Humphrey pushed through legislation that maintained an artificially high price for domestically produced sugar.
But it wasn't all that blatant. Under Humphrey's guidance, agribusiness interests became allied with the liberal agenda, government intervention, and food stamps. Giving food away suited the needs of the grain traders and could be easily camouflaged under the cloak of fighting poverty. Agribusiness became one of the leading advocates of the War on Poverty. What they wanted was simple: move the food without giving it away. The answer was food stamps. If you gave cash to poor people, they could do what they wished with it. They could buy alcohol, or they could invest it in a business. Food stamps ensured that the money would make its way back into the agribusiness food chain. In essence, the corporations got the government to buy their food.
In the 1980s, Humphrey was replaced by Senator Bob Dole as ADM's main man in Congress. And Dole became the most forceful advocate or what was one of the largest corporate subsidies in history: Archer Daniels Midland's ethanol project.
By adopting the popular causes of environmentalism and American fuel
self-sufficiency, Andreas and ADM were able to get taxpayers to fund a risky, and self-serving project to produce ethanol, a gasoline additiver No senator from Kansas was willing to raise the obvious questions about a program that resulted in $1.2 billion in annual net income for corn growers, even if it cost taxpayers more than $700 million a year.