* US should study how it could buy more food locally - GAO

* Cheaper, faster to buy food aid locally for Africa, Asia

* US aid is mainly US-grown food sent on US ships

* But buying locally can create shortages, drive up prices (Adds background, and information, quotes from hearing)

By Roberta Rampton

WASHINGTON, June 4 (Reuters) - Buying food aid closer to where it's needed is usually cheaper and faster, a U.S. government watchdog said on Thursday, but aid donors must be careful not to overwhelm local markets with demand.

The United States, the world's largest food aid donor, should study how to avoid some of the constraints of buying aid locally and regionally and use that to improve its food aid, the Government Accountability Office said in a report.

Local and regional purchases of aid can "better meet the needs of hungry people by providing food aid in both a more timely and less costly manner," said Thomas Melito, director of the GAO's international affairs and trade team, in remarks for a Congressional hearing on food aid.

Most food aid donors from other parts of the world have stopped shipping domestically grown food to countries facing food shortages, instead giving cash to the United Nations' World Food Program to buy food.

But the bulk of U.S. food aid is bought from American farmers and shipped on American ships, which adds cost and delays, Melito told the House Foreign Affairs Subcommittee on Africa and Global Health.

More than 1 billion people will be chronically hungry this year, the UNs' World Food Program (WFP) estimates, up from 963 million in 2008 when food prices spiked, causing hoarding and riots over food in some nations.

The global economic crisis has put food out of reach for more people, said Allan Jury, a U.S. official with the WFP.

"Hunger is on the march," Jury told the subcommittee.

In 2008, the United States gave $2.1 billion in commodities to the World Food Program.

The GAO found the WFP spent 34 percent less on average in buying aid for Africa locally and regionally from 2001 to 2008, compared to the cost of comparable food aid shipped from the United States.

It took a little more than a month to deliver food aid sourced nearby, but traditional internationally sourced food aid averaged 147 days to deliver, the GAO said.

For Asia, the WFP's costs were 29 percent less. But for Latin America, the costs were comparable, the report said.

The GAO noted its comparison should not be interpreted to suggest that the United States could have achieved the same costs if it had bought its aid locally, noting the extra demand may have created shortages or pushed up prices.

Traditional food aid has often drawn criticism for flooding local markets, depressing prices. But buying too much aid locally and regionally can create shortages, Melito said.

"The most significant challenge to avoiding potential adverse market impacts ... is unreliable market intelligence," he said.

In 2007, the Malawi government found itself short of food after it exported maize to Zimbabwe and sold some to the WFP for aid in African nations based on crop production estimates that were too high, the GAO said.

The WFP keeps its local purchases small and spread out to avoid driving up local prices, its chief operating officer said in a response to the GAO report.

"There is no systematic evidence to suggest that current (local buying) practices actually are careless or actually do adversely impact host markets," wrote Amir Muhmoud Abdulla.

Congress resisted a push by the Bush administration to divert more U.S. food aid to local sources. Farm and shipping groups have also opposed efforts to overhaul food aid.

But the chair of the subcommittee said new strategies are needed to feed the hungry.

"It is my believe that we must begin to think more creatively about our food aid programs," said Representative Donald Payne. (Reporting by Roberta Rampton; Editing by Lisa Shumaker)

AlertNet news is provided by