A Tremor for Haiti's Aid Industry

The earthquake was only the latest disaster to capsize the country's already fragile local aid economy. Now outside organizations are threatening to overwhelm it entirely.

BY POOJA BHATIA | JUNE 30, 2010

On the second floor of a modest white house on a rutted road in Cap Haitien, 20 or so workers are busy at their workstations, churning out upwards of 3 tons of peanut butter (mamba in Creole) per month. But this is no ordinary peanut butter. It's Medika Mamba, a thick paste used to combat childhood malnutrition. It requires no cooking, refrigeration, or rehydration, and it can be administered at home. It is homemade Haitian in a way that most products are not these days: It uses local workers and peanuts from local farmers, and it rehabilitates Haitian children. In other words, it was the ideal thing to have around in the aftermath of the Jan. 12 earthquake.
But aid agencies didn't buy it. They had failed for 2½ years to audit the plant, a requisite for procurement, and so instead, they imported their own stuff: a similar supplement called Plumpy'nut. The result? Even before the earthquake, the market for so-called ready-to-use therapeutic foods (RUTFs) was flooded -- and Medika Mamba wasn't able to compete. And while the needy children were still getting fed, it was a major blow to the mamba-producing Meds & Foods for Kids (MFK) factory and its local employees.

Unfortunately, the Medika Mamba tale has been far too common in Haiti for years, emblematic of what has been wrong with foreign aid. Local producers can rarely compete with the influx of food, medicine, and other supplies that aid agencies bring. This is part of the reason why today -- after decades of aid dependence -- Haiti has almost no local economy for these goods.
When RUTFs were first created in 1999, they were seen as a major step up from old malnutrition remedies. In 2007, a consortium of major aid agencies, including the World Health Organization, UNICEF, and the World Food Program, declared it the gold-standard treatment for severe acute malnutrition.
Gold standards can, however, lead to gold rushes. Nutriset, the private French corporation that makes Plumpy'nut, the world's most popular RUTF, saw its shipments rise almost threefold from 2007 to 2008; last year, it sold $72.3 million worth, mostly to UNICEF.
The efficiency with which Nutriset was able to turn out Plumpy'nut, scaling up production to meet demand, would have been unimaginable in Haiti. Most Westerners can't imagine the tangles, snarls, and vexations that characterize any type of production there. Farming practices are ancient, roads are awful, people lack education, and electricity and water are not free. The majority of peanut farmers are smallholders; even if they had tractors, they wouldn't have plots large enough to use them on. Farmers prepare the soil with pickaxes and hoes. So by the time MFK buys peanuts locally from farmers near Cap Haitien, they cost between $1 and $1.50 per kilogram -- five times the U.S. price. And because farmers lack disease-resistant seeds and fungicides, such as those used in the United States, MFK has to throw out about 30 percent of the local peanuts it buys.
Given all this, it was no surprise that MFK struggled to compete when Nutriset established a Plumpy'nut franchise in the Dominican Republic, right next door to Haiti. But the next-door plant was not the real reason why MFK was shut out of the market. The trouble was the audit.

The saga started in 2007, the same year that the aid agencies declared RUTFs the best-available treatment for severe acute malnutrition. Later that year, the consortium established a food-safety audit process and charged Doctors Without Borders and UNICEF with inspecting manufacturers who wanted to supply the stuff. By then, MFK had been making Medika Mamba in Haiti for four years, and it asked UNICEF for an audit.
According to MFK, UNICEF dithered and finally pawned the audit off to Doctors Without Borders at the end of 2008. In the middle of the audit, Doctors Without Borders changed tack, creating a new committee for food-safety inspections; shortly after, the organization's auditor left his position. Unaudited, MFK could not bid on most RUTF contracts, but it continued to supply Medika Mamba to non-consortium agencies, including Catholic Relief Services and World Vision. Then late last year, MFK finally got a seal of approval from Supply Chain Management System, a contractor for the U.S. Agency for International Development, though Doctors Without Borders and UNICEF still didn't recognize the audit.
UNICEF spokesperson Edward Carwardine said in an interview that, while Medika Mamba met quality requirements, UNICEF prefers single-dose sachets to larger bags. Another UNICEF spokesperson told me that the organization had found a sample of Medika Mamba to be poor quality because the oil separates from the paste, like all organic peanut butter. But neither a packaging requirement nor an emulsification requirement is outlined in any published standard. And in fact, some Plumpy'nut comes in multidose servings, which some nutritionists prefer because mothers are less likely to resell it in that form. MFK says UNICEF did not inform it of the emulsification complaint.
A former advisor in UNICEF's supply division, Stephen Jarrett, said via email that UNICEF doesn't inspect RUTF facilities from which it has no intention of procuring. And after the earthquake there was nearly enough Plumpy'nut to satisfy demand; private entities like the Clinton Foundation donated more in the weeks that followed.
Whatever the rationale for not auditing MFK, the result was clear -- MFK became yet another Haitian producer unable to compete in the aid market. It's a contest that, to Haitian producers, often seems rigged: Aid agencies are accustomed to big global suppliers; imports are often cheaper (in some cases because they're subsidized or donated); and exporters encounter none of the headaches of production that occur in Haiti daily.
In recent years, local production has become a pressing matter. The issue ignited after the April 2008 food riots, when President René Préval decried Haiti's vulnerability to global commodity price swings; his reluctance to subsidize the price of imported rice contributed to his government's downfall. After January's earthquake, politicians reiterated the call for national production, with Préval halting food aid in the tent cities. Eighty percent of rice consumed in Haiti is imported, whether as aid or trade, and, according to the government, the country spends most of its foreign exchange on food. That foreign food pushes market prices down. As a result, the 50 percent of Haitians who subsist on agriculture are priced out of the market, condemned to the paltriest subsistence farming imaginable.
If aid groups were to buy locally, it would be a good start. Of course, that's not to say that it would be easy. The World Food Program had boosted its purchases of local rice and other foodstuffs before the earthquake and continues to do so. But Haiti's inefficiencies are never far from view: Haitian rice costs more than Pakistani rice, for example, so the World Food Program must get special clearance to contract with a bidder whose price is not the lowest. So far, it has been able to buy only 1 percent of its rice locally.
MFK's way around this problem has eventually come, at last. It will soon become a part of Nutriset, which will in turn shut down its Dominican factory. MFK founder and director Patricia Wolff says one of the major advantages of joining Nutriset is the credibility it gives MFK with UNICEF, the biggest potential buyer. The MFK facility will probably be audited at last and will be thus able to compete for the kind of large contracts that would make it sustainable. "Our idea was to build a model that was replicable," Wolff told me. "But humanitarian international buyers have never bought from the national producers. So maybe, the lesson is, it's not sustainable."
*******************************************************************************

Interesting-third world firms tend to lose out to modern capital

Haitians lack access to even the basic means of production. There's really no way for them to compete with these big firms, yet none of the aid actually goes to helping people in the third world become productive. Some people these days complain about the inefficiency of humanitarian aid, and the dependency it creates, but this is largely due to the top-down method in which it is done, to supply the food demand without curing the actual cause of the poverty. Instead of building wells and superior irrigation techniques, or subsidizing local farmers for their actual produce, aid agencies tend to just flood the local market with cheap corn.
What's surprising here is that it's not just the local farmers, but local industry that the aid agencies are sidelining. It is funny that UNICEF and DWB of all organizations, would sideline local industry, even if by the means of a bureaucratic messup.