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.

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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.

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