* Cash to buy goods locally, would supersede food donations
* Since Cold War, US has sent its food to poor nations
By Charles Abbott
WASHINGTON, Feb 25 (Reuters) - The White House may soon propose the biggest change in U.S. food aid since the programs were created during the Cold War - donating cash for hunger relief instead of shipping American-grown food thousands of miles to global trouble spots, say farm groups and charities.
Reformers have argued for years that cash donations, the method used by most nations, are more efficient and speedier. But food donation has been the favored U.S. approach since the Food for Peace program was enacted in 1954.
Groups on both sides of the issue said on Monday that the Obama administration, when it unveils its budget for the fiscal year opening Oct. 1, may endorse cash donations and propose fewer food donations.
"This is a very serious proposal," said Eric Munoz of Oxfam, the international development group. "We think the intent is there" for reform.
Oxfam and allies such as American Jewish World Service point to a 2012 Cornell University study as support for the idea that cash, used to buy local food near the recipients' area, is more efficient than sending bags of flour or rice, bottles of vegetable oil, dried milk and other aid.
The study said local purchase "can often afford valuable cost and times savings," as much as 50 percent in the cost of grain. Processed foods sometimes cost more locally or offered smaller savings.
As a rule, at least 75 percent of all U.S. food aid must travel on U.S.-flagged vessels, which also drives up the cost.
The White House and U.S. Agriculture Department declined to comment to Reuters about a possible cash proposal.
Farm groups and agribusinesses said they opposed dramatic cuts or the elimination of Food for Peace.
Steep cuts will undermine "one of our most effective, lowest-cost national security tools" that builds good will overseas, they said in a letter last week to senators who oversee food aid programs.
The United States is the world's largest food aid donor, providing nearly $2 billion a year in aid. Food for Peace, devoted to hunger relief and local food security, is the largest of the aid programs with $1.47 billion in funding this year.
Food donation also has strong support on Capitol Hill. The chairwomen of the Senate Appropriations and Agriculture committees were among the 21 signers of a Feb 20 letter calling for continued funding of Food for Peace.
The letter, first reported by The Hagstrom Report, an agricultural newsletter, opened the public scuffle over cash donation vs food donation.
Food aid groups planned to circulate on Tuesday a statement calling for the White House to support "bold reform" that includes local purchase of food and an end to the practice known as monetization. In it, the United States gives food to groups that sell it so they can operate programs to help poor people in targeted nations. (Reporting by Charles Abbott; Editing by Ros Krasny and Bob Burgdorfer)