G8's New Approach To Hunger : Planet Money The G8 today pledged $20 billion dollars in aid for the hungry -- we look at how they can spend it.
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G8's New Approach To Hunger

Farms in Africa are set to get a boost. youngrobv/flickr hide caption

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Today's G8 announcement of $20 billion for food aid actually takes a fairly revolutionary step. Instead of just delivering food, G8 countries are going to help poor countries develop their agriculture industries. It's almost like a farming stimulus, only provided by outside countries rather than local governments. The American share of that pledge is about $3.5 billion, which would be a doubling of previous hunger spending.

It's the sort of shift that NYU economist William Easterly (he's in today's podcast) has been wanting for years. He's long been opposed to traditional foreign aid models of giving money or food to foreign governments -- he says it leads to dependence on the West, rather than strengthening poor countries.

But what does this money actually mean to the world's hungry? David Kauck of CARE says there are a bunch different ways the money can be spent.

Kauck says that the American share of the money will likely be distributed by USAID, and may follow the strategy of a food security bill currently bouncing around the Senate. The bill calls for a strong increase in funding for agricultural development, research and training.

Money spent on research, Kauck says, would likely go to CGIAR, an internationally funded set of agricultural centers that runs programs to breed stronger plants. Kauck says the stronger seeds are often directed to fertile farms that already have high productivity. He argues there's another group of farmers with a greater need.

"The largest single group [of the world's hungry] are members of small farm households -- farm families that live on tiny plots, far from markets, with marginal land," says Kauck. "They're dirt poor, with little productive assets, and completely uninsured."

So, according to Kauck, the money should reach these people. And those farmers have the needs of your average business -- they need capital, access to information about prices and technology, and improved access to nearby markets. To help them, he says, the G8 could invest in transportation infrastructure.

But there's one other approach that could really help foster innovation: insurance. Farming is a risky business, and many of these poor farmers have sore memories of devastating droughts of the 1970s and 1980s, which destroyed thousands of crops across the continent and lead to widespread famine.

Kauck says poor farmers are scared to take the sort of basic risks that could improve their yields -- things like investing in improved technologies, seeds or new business models. The G8 money could also provide farmers with insurance that would protect them if such an investment goes bad and their crops (and livelihood) are devastated.

What matters most, say Easterly and Kauck, is that world's hungry gain the ability to help themselves.