By Charles Abbott

WASHINGTON (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 October 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. Continued...