Eisenhower Begins the Food for Peace Program

Date July 10, 1954

President Dwight D. Eisenhower signed Public Law 480, allowing the U.S. Department of Agriculture to buy surplus agricultural commodities and use them for donation abroad, for barter, or for sale for native currency.

Also known as Public Law 480, 83d Congress; Agricultural Trade Development and Assistance Act of 1954

Locale Washington, D.C.

Key Figures

• Dwight D. Eisenhower (1890-1969), president of the United States, 1953-1961
• Ezra Taft Benson (1899-1994), U.S. secretary of agriculture, 1953-1961
• Don Paarlberg (1911-2006), U.S. assistant secretary of agriculture
• Clarence Francis (1888-1985), special adviser to President Eisenhower on the disposal of agricultural surpluses
• Clarence Randall (1891-1967), special assistant to President Eisenhower on foreign economic policy
• William S. Hill (1886-1972), U.S. representative from Colorado, 1941-1959

Summary of Event

The Agricultural Trade Development and Assistance Act of 1954, commonly known as Public Law 480 or the “Food for Peace” program, provides for surplus U.S. farm commodities to be sold for foreign currencies and used as donations and barter goods. The objectives of PL 480, as stated by Congress, are to promote economic stability for American agriculture, to expand international trade in agricultural commodities, to encourage the economic development of friendly countries, and to promote the collective strength of the free world.

A variety of factors led to the passage of this legislation. Food and peace have long been closely linked in the minds of Americans. Many times in the aftermath of war, food from U.S. farms has aided in the rehabilitation of ravaged areas. In addition, from a political standpoint food has often been used as a lever to achieve political goals and objectives.

In the 1940’s and 1950’s, a domestic agricultural problem developed. Incomes from food production in the United States did not permit American farmers to live on a scale comparable to that of people in other occupations. In order to boost farm incomes, the government agreed to buy certain products that could not be sold on the open market above a specified price. Between February, 1952, and February, 1956, the stocks of the Commodity Credit Corporation (CCC, the governmental agency charged with stockpiling surplus agricultural goods) in inventory as well as pledged against outstanding loans and purchase agreements increased almost fivefold, from less than $2 billion to $9.1 billion.

Most of this buildup took place during 1952 and 1953, when annual increases in the stockpiles of 70 and 100 percent were registered. This problem of surplus government stocks was exacerbated by scientific technology. Farm productivity during this same period had increased significantly as a result of better products to control weeds, plant diseases, insects, and parasites, combined with developments in plant and livestock genetics and improved farm machinery.

An additional factor was important in the subsequent passage of PL 480. American farm exports had been declining during the early 1950’s. Factors in this decline included a reduction in American economic aid to Western Europe (which had been quite high under the Marshall Plan following World War II), the fact that agricultural production and protectionism were recovering in Western Europe, scarcity of the dollar in importing countries, domestic price supports that set American commodity prices above world levels, and American export controls that limited trade with the Soviet Union and its allies. As the repercussions of the decline in exports and the growth of surplus stocks rolled across the farm economy, farm spokespeople began demanding that the government act to stabilize farm income. President Dwight D. Eisenhower’s administration was faced with the task of dealing with these multiple problems.

In the summer and fall of 1953, three groups began wrestling with program proposals for agricultural policy: the U.S. Department of Agriculture, the Commission on Foreign Economic Policy, and an interdepartmental committee on the surplus. In the summer of 1953, the U.S. Department of Agriculture surveyed three national farm groups—the American Farm Bureau, the Grange, and the National Farmers Union—regarding farm income stability and trade versus aid, among other things. Overwhelming support was shown for a “two-price” plan for agricultural commodities. Such a scheme would support a high domestic price for the percentage of a commodity normally marketed in the United States and would allow the remainder (ostensibly exported) to be sold at the world price. Thus, the mood in the country was to continue farm income support.

The Commission on Foreign Economic Policy was chaired by Clarence Randall, special assistant to President Eisenhower on foreign economic policy. The seventeen-member group was composed of agribusiness representatives, prominent agricultural economists, five U.S. senators, and five U.S. representatives. Agricultural policy was only part of the foreign economic policy reviewed by the commission. The commission issued a report on January 23, 1954, that included a five-page section on agricultural policy. The section on agriculture elicited written dissents from eight of the seventeen members. The report argued that “a dynamic foreign economic policy as it relates to agriculture cannot be built out of a maze of restrictive devices such as inflexible price-support programs which result in fixed prices, open or concealed export subsidies, . . . and state trading.” It recommended the complete “elimination of such devices as a part of, or supplement to, our own agricultural policy.”

This obviously went against the wishes of American farmers. The Department of Agriculture was effective in nullifying the report’s agricultural recommendations by insisting that any inconsistencies between the report and President Eisenhower’s January state of the union message be resolved in favor of the latter, in which Eisenhower had supported price supports on farm commodities.

Meanwhile, the interdepartmental committee on the surplus had been working on legislation. This study group had been Secretary of Agriculture Ezra Taft Benson’s idea. He had persuaded President Eisenhower to establish it at the subcabinet level. After several meetings, on December 14, 1953, this committee had in hand the first draft of an administration surplus disposal bill. Despite President Eisenhower’s call for fast action, the committee could not agree on a final draft bill. Stumbling blocks included disputes concerning which commodities to include, who would have administrative authority, and to what extent the private sector should be involved.

While the administration squabbled, the House of Representatives began considering various surplus disposal bills. As the spring of 1954 wore on, some sixty bills were introduced into Congress. This flurry of activity spurred the interdepartmental committee to compromise. A compromise draft was introduced by Representative William S. Hill of Colorado. It was discussed by the House Committee on Agriculture on June 3, reported out, debated for two days by the House as a Committee of the Whole, and passed on June 16. Following rapid Senate action, the conference committee made some adjustments. The bill was agreed to by both houses, and Eisenhower signed it into law on July 10.

Significance

As passed, Public Law 480 had three titles. Title I authorized sales of surplus agricultural commodities for foreign currency to “friendly” nations, identified as any countries other than the Soviet Union and those under the influence of the world communist movement. Commodities were to move through private channels to the extent possible. Foreign currencies acquired in trade were to be used for market development, stockpile purchases, military procurement, debt payments, educational exchanges, new loans, and aid to friendly countries not part of the trades.

Title II provided for grants of surplus agricultural commodities to friendly nations to meet emergency situations. Title III authorized the donation of surplus food for domestic distribution and for distribution to needy persons overseas through nonprofit relief agencies. In addition, Title III allowed for the barter of surplus agricultural commodities for strategic and other materials produced abroad.

As written, the legislation did not assign administrative responsibility. Thus, President Eisenhower still had to decide which agency or agencies would administer the various titles. After considerable bureaucratic wrangling, Eisenhower issued Executive Order 10560 on September 9, 1954. This order gave the Department of Agriculture Title I authority, the Foreign Operations Administration (FOA) authority for Title II, and the Department of State the function of negotiating and entering into agreements. The budget office received allocation authority for foreign currencies, and the Treasury Department was to regulate the purchase, custody, deposit, transfer, and sale of currencies. The Office of Defense Mobilization received authority for stockpile purchases, the Department of Defense the military procurement authority, and other various agencies authority for other foreign currency uses.

The executive order and accompanying documents also formalized the position of the interdepartmental committee that had been working for nearly a year. Known now as the Interagency Committee on Agricultural Surplus Disposal (ICASD), it was to continue to formulate policy under the chairmanship of Clarence Francis. Francis was brought into this position from the chairmanship of General Foods. Actual direction of the surplus disposal operation was to be handled by an Interagency Staff Committee on Agricultural Surplus Disposal (ISC), composed of one representative from each agency in the ICASD. William Lodwick, a Foreign Agriculture Service (FAS) official, was appointed as both administrator of FAS and chairman of the ISC.

During the first two years of operation, PL 480 was broadened to include feed grains and to authorize the use of federal funds to pay the costs of ocean transportation and consumer packaging. During late 1958, the Department of Agriculture developed a message that the president sent to Congress on January 29, 1959. As part of this communication, Secretary Benson inserted a “Food for Peace” section in which Eisenhower announced that he was setting steps in motion to explore, with other surplus-producing nations, means of utilizing agricultural surpluses in the interest of reinforcing peace and the well-being of friendly peoples throughout the world.

Title IV of PL 480 was enacted on September 21, 1959. It provides for long-term supply of U.S. agricultural commodities and sales on a credit basis to assist in the development of the economies of friendly nations. The program is of particular help countries that “graduate” from Title I foreign currency purchasing to dollar purchasing.

By early 1960, the original PL 480 program had been modified and extended several times. The Eisenhower administration wanted to heighten public awareness of accomplishments under the program. On April 13, 1960, Eisenhower designated Don Paarlberg as the Food for Peace coordinator. Previously, Paarlberg had been an assistant secretary of agriculture and had worked with the PL 480 program as a member of the White House staff.

The first, and least controversial, consequence of PL 480 has been the effect on food consumption in recipient countries. The diets of many thousands of people have been improved as a result of this program. There is some concern that the program has not facilitated economic development to the extent hoped for.

The effect around which there exists the most controversy and the most confusion regards the impact of PL 480 on producers and production in the recipient countries. One view holds that the surplus disposal operations of the United States have generally hurt producers in the recipient countries and, more important, have acted to remove the incentive to increase total production in those countries. In this view, the program has acted to perpetuate food shortages. An opposing view holds that PL 480 shipments have been administered in such a way as not to hurt the producers involved; through the beneficial effects on capital formation, they have acted to increase agricultural production above what it could have been without the program.

Two titles were added to the program, which became known as “Food for Progress.” Title V is the “Farmer to Farmer Program.” It provides for a minimum of 0.2 percent of total PL 480 funds to assist farmers and agribusiness operations in developing countries by transferring knowledge of farming methods from U.S. farmers, agriculturalists, land-grant universities, private agribusinesses, and nonprofit farm organizations to farms and agribusinesses in developing and middle-income countries and emerging democracies. Title VI authorizes certain activities for the reduction of debts of Latin American and Caribbean countries.

Bibliography

Baldwin, David A. Economic Development and American Foreign Policy: 1943-62. Chicago: University of Chicago Press, 1966. Discusses a variety of approaches the United States has taken to economic development in foreign countries. Contains numerous references to PL 480 but no in-depth discussion.

‗‗‗‗‗‗‗. Foreign Aid and American Foreign Policy. New York: Frederick A. Praeger, 1966. Documentary analysis of American foreign policy and aid. Presents the facts in a straightforward manner with little editorializing. Much of the book is dedicated to congressional hearings. One chapter is devoted to agriculture and foreign aid.

National Agricultural Statistics Service. Agricultural Statistics Data Base. Washington, D.C.: Author, 2003. Contains statistics on exports of agricultural commodities under specified government-financed programs, including PL 480. Produced in print and online; updated semi-regularly.

Peterson, Trudy Huskamp. Agricultural Exports, Farm Income, and the Eisenhower Administration. Lincoln: University of Nebraska Press, 1979. This is an excellent source on the background and implementation of PL 480. The author painstakingly researched the subject. Well documented with notes and bibliographic material. Quite detailed.

Tontz, Robert L., ed. Foreign Agricultural Trade: Selected Readings. Ames: Iowa State University Press, 1966. Has an entire section on trade programs, including Food for Peace shipments. The majority of the sections were written by well-known agricultural economists and are short and to the point.