Oxfam Reaction to President's Budget Proposal

Washington, DC--International agency Oxfam America welcomed today's announcement that the President's budget calls for reform of agricultural subsidies and food aid in the Fiscal Year 2007 Budget request, but expressed disappointment over cuts in core foreign aid funding.

"The President's budget calls for stricter agricultural payment caps is an important reform of an outdated agricultural subsidy program -- rife with abuse and loopholes and hurts small farmers here and abroad," said Raymond C. Offenheiser, President of Oxfam America.

"The US government spends billion of dollars each year on farm payments that are heavily concentrated in large-scale commercial operations, distorting international markets and causing controversy and unfairness in global trade."

Although the subsidy program was originally created during the Great Depression as a safety net for farmers, the system has evolved into a program that benefits those already with an advantage, encourages overproduction and leads to export dumping and depressed prices.

"Today's proposal signals the Administration's commitment to reforming trade distorting subsidies," continued Offenheiser. "The ball is squarely in Congress' court to deliver a fair and sustainable farm program, not just for the US but for the world."

Oxfam also welcomed the President's proposal to make food aid funds available as cash contributions to make emergency assistance faster, cheaper and more appropriate. Shipping US commodities can cost a lot more and can take months to reach those in need. In a world where more than 850 million people are chronically hungry, food aid is vitally important to humanitarian activities. However, restricting food aid to in-kind donations limits the effectiveness of the US food aid program.

"Humanitarian responders need to have flexibility to respond to needs on the ground by the fastest and most cost-efficient means possible, be it in-kind or locally purchased food aid," said Offenheiser. "Having cash contributions available for local or regional purchases could increase the speed and volume of food available to address a crisis and would enable us to feed many more people."

The President also requested an additional $18 billion for rebuilding the Gulf Coast through a supplemental to the FY2007 budget. With nearly 200,000 homes damaged in Hurricanes Katrina and Rita, the scale of the devastation dwarfs the resources homeowners and insurance companies have to make it right. To date, the generosity of federal support has not been equal to the severity of the crisis. The federal government must invest in housing solutions if we want to see the return of these vibrant American communities.

"An additional $18 billion for rebuilding the Gulf Coast is welcome news as continued financial support from the federal government is critical if the region is to have hope of recovery," said Offenheiser. "However, the details of the plan for spending these funds will reveal if the Administration is committed to addressing the vast and urgent housing needs on the hurricane-devastated region."

Although the President's budget recommends increases in Refugee and Migration Assistance and the Millennium Challenge Account, it also recommends cuts in core foreign assistance, such as Child Survival, Development Assistance and funding to international organizations.

"Over his presidency, President Bush has made great strides to increase foreign aid, so today's announcement of cuts to core development funding is a big disappointment," said Offenheiser. "Although the US is the largest donor in the world, and US assistance had been on the increase, the US still lags behind other developed countries in that our contributions are small compared to the size of our federal budget and economy."