Sept. 25 (Bloomberg) -- President George W. Bush called for overhauling the way the U.S. provides food aid to the world's poorest nations by purchasing products from farmers in those countries, not just from American producers.

The change, which Bush backed in a speech to the United Nations today, expands on previous budget proposals by the administration that were rejected by Congress. It faces similar opposition now.

``The entrenched interests are still very strong,'' said Christopher Barrett, a Cornell University economist and author of a book on the politics of food aid. ``Nevertheless, it's an overdue reform.''

The five-decade-old food aid and famine-relief program has maintained its political support in Washington because Congress mandates that all food and grain be bought from U.S. farmers, packaged by U.S. exporters such as Cargill Inc. and shipped on U.S.-flagged vessels, Barrett said. That process means much of the aid gets lost in transportation and handling costs and doesn't make it to the poor in Africa, critics say.

``I propose an innovative initiative to alleviate hunger under which America would purchase the crops of local farmers in Africa and elsewhere, rather than shipping in food from the developed world,'' Bush told the UN in New York. ``This would help build up local agriculture and break the cycle of famine in the developing world.''

Barrett and other analysts said this is the first time Bush has personally mentioned overhauling food aid, and it comes just before the U.S. Senate is set to consider legislation governing agriculture, which includes details on the food aid program.

Harkin Measure

The administration again this year proposed to allow one- quarter of the more than $1.2 billion a year in food aid be purchased in developing countries. For example, if the administration decides to give aid to Kenya, the U.S. would send money there, and then the food could be bought at markets in Kenya, which could be cheaper. In cases of famine, when not enough food is available locally, the food could be shipped from the U.S. or Europe.

Bush didn't specify today how much of the food aid could be used to buy local food.

Congress may adopt a measure from Senator Tom Harkin of Iowa, a Democrat and chairman of the Senate Agriculture Committee, who will propose in coming weeks a new pilot program to spend $25 million a year to test the effects of local purchase on markets in poor nations.

``We support this pilot,'' but not Bush's broad plan, said Ellen Levinson, who runs the Alliance for Food Aid, which represents charities that distribute the aid and supports the current requirements. ``There's no way you can buy the level of commodities needed in developing countries.''

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

Last Updated: September 25, 2007 16:40 EDT