Ask many Americans what we get in return for our foreign aid investment and they’ll likely point to outcomes like increased social and economic development in low-income countries. These results have been well-demonstrated. But the impact of foreign aid reverberates far beyond the developing world. The big impact this support has right here at home is too often overlooked.
Consider the case of agriculture aid. When the United States invests in building agriculture production capacity abroad, the impact is seen through healthier, more productive, and more stable societies. But a recent report commissioned by the presidentially appointed Board for International Food and Agricultural Development and conducted by the International Food Policy Research Institute shows these results capture just part of the impact. Such foreign aid also sows the seeds of innovation, job creation, and economic growth in the United States.
A significant portion of U.S. aid to low-income countries is aimed at building agricultural capacity. This is because a vibrant agriculture sector is foundational to a successful society, nourishing the populace and fueling economic development.A major component of foreign aid is used to engage U.S. universities and CGIAR, a global partnership conducting research on food and nutrition security, in work to improve agricultural productivity. In most of the developing world, the agricultural sector employs a large share of the population. That means increasing productivity can create broadly shared prosperity and free more workers to focus on advancing other sectors of the economy. In other words, increasing capacity in agriculture often produces dividends outside it.
What’s the payoff for us? For starters, consumers with increased income use their newfound spending power to buy new goods and services on the global marketplace. As the world’s most competitive economy, the United States is well-positioned to serve this burgeoning global middle class. Stronger economies in the developing world support the U.S. economy overall. That’s because consumers with more money look to spend it – and often on higher-value products grown or produced in the United States.
The evidence bears this out. Of all U.S. agricultural exports (totaling $140 billion), those to developing countries ($90 billion) have increased 103 percent in the last 18 years while exports to developed countries increased only 19 percent. In 2018 alone, agriculture export growth to the developing world has generated an estimated $169 billion in additional economic activity in the U.S., which supported an estimated 779,000 full-time jobs in the U.S.
Foreign agricultural aid also creates innovation spillovers. The United States Agency for International Development (USAID) often funds university-based research to study new crop varieties that can increase production abroad. But agriculture production is limited by arable land, meaning innovations aimed at boosting output abroad fuels growth at home too. One study found that USAID-funded university research led to a greenbug aphid-resistant sorghum varieties that saved American farmers $389 million a year. In a single year, the U.S. sorghum research generated nine times its total cumulative cost. We can reasonably expect those benefits to continue for many years to come.
And it’s hardly just sorghum. U.S. farmers received benefits estimated at up to $15.6 billion from new varieties of wheat and rice developed at CGIAR with collaboration with U.S. universities, supported by USAID. Just two cents of investment in increased wheat and rice production helped produce 100 dollars of benefit to the U.S. economy. A recent study estimated that, for wheat alone, the financial impact in the United States of this research is $140 to $180 million annually, representing a benefit-cost ratio of between 32:1 and 40:1. Even if there were no positive impact in the developing world, making these investments would be a no-brainer.
Yet such investments also bolster our global engagement and national security. The array of USAID investments, particularly in agriculture research and education with U.S. universities and CGIAR, helps create more stable, resilient societies: Well-nourished populations. Higher incomes. Faster growth. For many countries in the developing world, this is a stunning transformation. These transformations have the added benefit of advancing private sector engagement in emerging economies and can also aid U.S. efforts to support democratic initiatives across the globe.
Global food demand is only expected rise in the years ahead. The world’s population is expected to swell to 10 billion by the middle of the century, from less than 8 billion today. The population growth will be brisk, as will the rise in food demand. We’re more than capable of meeting that demand. But we have to invest in that future. And only the U.S. has the capacity – and shared interests – to ensure we can meet that challenge.
Peter McPherson is president of the Association of Public and Land-grant Universities. He served as Administrator of the United States Agency for International Development from 1981 and 1987.
Editor's Note: Agri-Pulse and The Chicago Council on Global Affairs are teaming up to host a monthly column to explore how the U.S. agriculture and food sector can maintain its competitive edge and advance food security in an increasingly integrated and dynamic world.