In the early 1950s, when the united state’s agricultural sector began to experience bountiful harvest, and demand for US agricultural export wasn’t doing well either, dumping became the common practice in farming so as to keep price and farmers’ income high. The government often will bought this excess supply and literarily dumps them in the ocean. The government suddenly realized that they could actually use their excess produce as international aids to nations and regions where there is lack of food. This gave birth to PL-480.

PL-480 is an acronym for Public Law 480. The full official name is agricultural trade assistance act. It was signed into law by president Dwight D. Eisenhower July 10, 1954. however in 1961 President John F. Kennedy renamed it to “food for peace” . Pl-480 was later reauthorizing through the  Federal Agriculture Improvement and Reform Act of 1996 (FAIR), commonly known as 1996 Farm Bill.[1] Pl-480 . the formal purposes of PL-480 are to:

·       Combat world hunger and malnutrition

·       Promote sustainable development including agriculture development

·       Expand international trade

·       Develop and expand export market for US agricultural commodities and products

·       Foster private enterprise and democratic participation

·       Profitably supply surplus US commodities to foreign countries.

To achieve ths goal, it approach is divided into  4 titles.

The four Titles.

Title 1, Trade and Development Assistance is managed by United State Department of Agriculture (USDA).  As the name implies, tagricultural produce are concessionally sold to friendly nations on the aggreement that the produce will be monetized and used for the objective which is aggreed upon by giovernment of both countries. Priority is given to countries with food security problem, countries with low foreign exchange, countries with agricultural development needs and porgrame focused on poverty alleviation.

Title 2, Emergency & Development Assistance Program, managed by the United State Agency for      International Development (USAID). It is said to be the largest of all the titles. This allows US to give agriculktural produce as donation to meet humanitarian food needs. These donations will US  response to food emergencies in countries with food shortage.

Title 3, Also known as Food for Development, is a government-to-government grant to the developing countries. This will check food and nutrition problems, and provide food to countries who are in dare need of it  to enhance long term food security. Any program focusing on increasing  food production and consumption will have the most  priority.

Title 5, is also known  as Farmer to Farmer, established in 1986, re-authorised by the 1996 Farm Bill Act. It is not a food aid programme, but a short term technical assistance by linking American volunteer farmers with farmers in developing countries, whereby the US farmer will spend time in the developing country working with the developing country farmers to improve food production, marketing and distribution.[2]

Political economy of PL-480

As Just like the inevitable inclusion of politics in other economic programs initiated and / or implemented by most developed nation, PL-480 also operates under a strong political economic nexus. We shall analyze the political economy of US PL-480 program using  the four global power structure. Food aid distribution under US PL-480 has been used to pursue multiple, sometimes mutually inconsistent objectives. A web of government agencies has been involved in the administration of the American food aid program.[3]

Security structure:

IN 1961, president John F. Kennedy said that “Food is strength, and food is peace, and food is freedom, and food is a helping to people around the world whose good will and friendship we want”[4] this became the bedrock for on which the program operates. Food has been used as baits to cajole developing countries into pledging a long-term allegiance to the united stated and been subjected to imperialism or better put, neo colonialism.

US used money earned from PL 480 trade program to increase it military facilities and strength. In 1975, about $6 billion of Title I sales proceeds went to military purposes regardless of 1973 congressional ban to use of PL 480 funds.

CHILE’S EXPERIENCE

 

PL 480 played a central role in U.S. foreign policy tactics for Chile.

 In 1970, U.S. government launched an economic blockade to oppose potential risk of a socialist regime headed by President Salvador Allende. US suspended aids to Chile in protest against the socialist government, though they (Chilean) begged for more food. Importation of food doubled in 1971 to $261 million; in 1972 it increased to $383 million. Chile offered to pay for US food but was denied. US decided to end Salvadors regime by supporting a military coup to overthrow the Allende government in 1973. The coup was successful. Afterwards, Chile immediately received the largest PL 480 credit for Latin America of $35 million (out of a total of $50 million) to boost the new regime headed by General Augusto  Pinochet . Chileans and other nations protests against the Pinochet regime because of the U.S. role in disassembling the Allende government but Congress still wanted to t support the General Augusto  Pinochet.. Instead of the programmed $35 million in 1975, Chile received $52 million in food aid credits (Making the Pinochet regime the 6th largest recipient for the year). This was done to boost Chile’s economy so that General Augusto Pinochet will be praised and thus accepted. However, Steady flow of food fund bred dictatorship by alleviating shortage of foreign exchange. This is because saving on food imports left more to spend on military equipments. Food aid did not alleviate plight of working class after the coup. Majority of Chileans could not afford the food available under Title I and Infant mortality increased (18%) during the first year[5]

Production structure:

While signing the PL-480 act into law, president  Eisenhower stated in his speech that the  purpose was to "lay the basis for a permanent expansion of our exports of agricultural products with lasting benefits to ourselves and peoples of other lands."[6] Apperantly the chief motivation for the innuaguration and execution of pl-480 and it’s  titles wasn’t absolutely a desire to perfome a humanitarian political deed rather  it is a strong and urgent need to increase the security for US  agricultural export demand.

PL-480 was used as a  trade tatics. The ultimate goal, as mentioned by the  Eisenhower, was to creat “a permenent basis” for export expansion. Under the title one, aid was only given to recipients’ countries who could  demonstrate potential to become commercial markets for US agricultural products[7]

Some of the countries who accepted these aids faced greater chalenge in their agricultural sector. A good instance is that of India. India received massive food aid from the US under PL 480 and 665. But a study of the food aid program indicates its adverse effects upon the agrarian economy of the recipient country in three ways. First, it depresses the domestic price condition of agricultural commodities by creating additional supply from outside; second, it creates conditions for the decline in output by price effect and third, it affects cultivation habits and shifts cropping pattern. The price of wheat in India was at its normal equilibrium between rice and jawar in the pre-PL-480 period (1952 through 1953). However, with the inflow of PL 480 wheat, there was a decline in its price. This decline in price was noticed when there was an inflationary trend in general commodity price. This situation continued till 1962 through 1963 when wheat import constituted, on an average 103 per cent of the domestic marketable surplus. However, from 1967 onwards, when PL 480 assistance declined, the share of wheat imports dropped sharply from 230 per cent to 170 per cent and later to merely 50 per cent of the total domestic marketable surplus. Correspondingly, the wheat price moved upward and in just a few years it reached the normal it initial equilibrium between rice and jawar (ibid.). The fact that during the period of food aid, other crops substituted wheat cropping is demonstrated by the following figures: In 1956 through 1957, Indian farmers produced 74 per cent of the total supply of wheat. This declined to 62 per cent in 1964 to 1965 and further to 54 per cent in 1965 to 1966.the peak of food aid under PL 480 (ibid.).[8] at 6the peack of PL 480 in India, the wheat marke was inbalnce and the dependancy of India on wheat from US aid grew massively. Thus, for a time, india loss it wheat production independence to US. Wheat farmers in the US became far well off compared to wheat farmers in India. Brazil on the other hand benefited from the PL480 due to government intervention and control of price and distribution of wheat from aids.

Financial structure:

Instead of initially wasting the excess supply in other to control market price. The US decided to make money out of it. For example in India, according to Professor S.R Sen, during his speech at the planning commission conference in New Delhi, India, when American surplus disposal program (pl-480) first came to India, the picture that was given by some American spokesman in their public statements often varied from that given by the American official representatives at the conference table. The former tended to create the impression that since that surplus was a burden for the US; it could be taken away as a free gift by needy countries and be used for giving relief to the poorer sections of their populations. The latter often worked on the assumption that although these commodities were surplus in the USA, they were a scarce resource for the rest of the world, and that the underdeveloped countries would vie with one another for getting these surpluses. Therefore they considered it to be their duty to impose a number of condition so that no one took more than minimum required or misused whatever given. They also possibly felt that the surpluses could prove useful for inducing the recipient countries to follow a certain line in their social and economic policies. Thus the face that USA presented to the developing country was a combination of that of a kind-hearted humanitarian, and anxious salesman and hardheaded negotiator.

In the case of India, in PL 480 food aid, the payment out of the counterpart fund had to be made in Indian currency. This fund was to be spent at the US Embassy in India. But the proceeds from the sale of wheat were inadequate to reimburse the total cost of wheat import. This was due to the sale of wheat at a subsidized rate through the public distribution system. To meet the resultant deficit in payment to the US the Indian Government resorted to borrowing money from the Reserve Bank of India (RBI) that created extra liquidity in the market. This additional liquidity triggered an inflationary situation in the country.

Knowledge structure:

 Title 5 of PL 480 was designed to provide a nexus for knowledge sharing between USA farmers and farmers of aid receiving countries, mostly the developing nations. Not much was done to implement these. However, farmer from the US have visited and are still visiting sub-Saharan Africa. Helping farmers to learn new techniques for cultivating land and increasing. A good example is when the Oxfam America program took several American farmers to Mali and Senegal. In the process of this knowledge exchange, machineries and agricultural chemicals like pesticides and fertilizers are introduced to farmers. Thus, creating market for US manufactured product.