Published by Global Banking and Finance Review
Posted on February 5, 2025
By Lisa Baertlein, Leah Douglas and Tom Polansek
(Reuters) - The U.S. has stopped purchases for foreign food aid programs since the Trump administration began a sweeping review of federal aid spending, despite a waiver issued nearly two weeks ago for food assistance, according to nine sources.
The freeze in purchases of wheat, soybeans and other commodities produced by U.S. farmers could hinder or halt the operations of organizations that provide millions of tons of food each year to help alleviate poverty in countries such as Madagascar, Tanzania and Honduras, the sources said.
It also means added pain for U.S. farmers, already facing low commodity prices and uncertainty from potential tariffs in an emerging trade war, and who see foreign aid programs as opportunities to promote their farm products abroad, four of the sources said.
The sources requested anonymity for fear of retribution.
"Down the road it could definitely lead to more vulnerable populations not being able to access food," said Virginia Houston, director of government affairs for the American Soybean Association. "It also hurts our supply chains," she said.
Commodity purchases and shipments for the Food for Progress, Food for Peace, and McGovern-Dole Food for Education programs were frozen after Trump signed a Jan. 20 executive order - shortly after his inauguration - pausing U.S. foreign aid for 90 days, two sources told Reuters.
It was unclear why the food purchases remained halted into February, however, after Secretary of State Marco Rubio on Jan. 24 issued a waiver to the aid freeze for food assistance. That waiver applies to "core life-saving medicine, medical services, food, shelter, and subsistence assistance".
"This one just kind of got thrown out with the bathwater," said one source who works to implement U.S. government food aid contracts.
The U.S. Department of Agriculture and State Department did not respond to requests for comment.
The USDA administers Food for Progress and Food for Education, while USAID, a State Department agency that has been functionally shuttered by the Trump administration, administers Food for Peace.
In 2024, USDA purchased more than a million metric tons of U.S. crops, including soybeans, rice, and wheat, for a total of more than $510 million across the three programs, according to agency data.
Planned grain sales for Food for Progress alone in January and February totaled about 315,000 metric tons, worth $150 million, said one source familiar with the program contracts.
Food for Peace, meanwhile, provided nearly 4 billion pounds of American-grown food to 58 million people globally in 2022, according to the U.N. World Food Programme, which counts the U.S. as its largest single donor.
Seven sources said the USDA has not issued any communication about the pause in purchases.
One organization that received an award from Food for Progress in 2024 told Reuters it expected a $1.5 million installment of their grant this week but has not heard anything from the agency.
"COULD BE DEVASTATING"
About 60,000 metric tons of soy products worth $23 million, bought under the Food for Progress program, cannot be delivered, American Soybean Association's Houston said.
Grants to purchase 235,000 metric tons of U.S. wheat under Food for Progress have also been paused, said Dalton Henry, vice president of policy for U.S. Wheat Associates, a trade group that promotes exports.
"We hope to see that pause lifted," Henry said. "It is an important program that uses U.S.-grown wheat to support development projects and, in the process, gives us a chance to showcase the quality and value of U.S. wheat in local markets."
Purchases of U.S. wheat for aid programs have recently ranged from about 250,000 metric tons up to about 1 million metric tons per year, the group said.
Other deals for 25,000 metric tons of rice and 20,000 metric tons of soybean meal are "circling the drain" due to the freeze, according to the source that works to implement aid contracts. Those deals were in the works before Trump was inaugurated.
For farmers, the loss of sales to food aid programs could be devastating, said Gordon Stoner, a retired farmer in Montana who sold peas for food aid in 2021.
"They're a large buyer and suddenly if this U.S. aid program remains suspended, or terminated, or whatever the administration is doing, that market goes away for us," Stoner said.
(Reporting by Lisa Baertlein in Los Angeles, Leah Douglas in Washington and Tom Polansek in Chicago; additional reporting PJ Huffstutter and Renee Hickman in Chicago; editing by Richard Valdmanis and Lincoln Feast.)
