Food Aid

What is food aid?

Food aid originated in the agricultural surplus disposal programmes of OECD countries in the post war period. Originally it was the transfer of food commodities to developing countries, but a more modern definition is food-supported interventions aimed at improving the food security of poor people.Three categories of food aid can be distinguished:

• Emergency food aid – Food aid used for humanitarian purposes in the aftermath of crises caused by natural disasters or conflict.
• Project food aid – Often disbursed through NGOs and used to support school feeding programmes or food for work schemes
• Programme food aid – Usually provided to governments who then sell it on local markets (a process called ‘monetising’ food aid) and use the proceeds for development projects. As the graph shows, programme food aid has almost disappeared and is now provided by only one donor, Japan.

Food aid constituted over 20% of global aid flows in the 1960s, but is now less than 5%. Global food aid deliveries of 5.7 million mt in 2009 were the lowest since 1961. However, it is still important because of the prevalence of world hunger and the increase in food emergencies in the past decade.

The debate about food aid

There is little controversy about the principle of providing food aid in response to humanitarian and emergency situations. However, even emergency food aid needs to be managed carefully to avoid unintended adverse side effects in the recipient country. The debate centres around the usefulness of long-term food aid and whether it has negative impacts either for the recipient country or other commercial exporters.

From the donor perspective…

Food aid supplied from surplus production has been seen as a development resource with a low opportunity cost because disposing of the surpluses in other ways would also be costly. It also attracts political support from constituencies such as farm interests which might not otherwise be interested in increasing development assistance. For both reasons, food aid can be seen as an additional resource for development which would not easily be substituted by monetary aid.

However, if food aid is linked to surplus disposal, it may not be available in times of high prices and shortages which is when it is most useful to recipient countries. Nor are surplus commodities those demanded in recipient countries. For these reasons, the EU has completely cut the link between its food aid donations and surplus disposal.

From the recipient perspective…

Food aid can play an important role in maintaining food security. But critics blame it for lowering food prices to the detriment of local producers, and the easy availability of food aid may act as a disincentive to policy makers to give the necessary priority to encouraging domestic food productions.

Whether food aid depresses local market prices depends on whether it can stimulate additional consumption (for example, by targeting people who would otherwise not have enough to eat) but also on whether it displaces commercial imports. This is the point which most concerns the third group affected by food aid: competing agricultural exporters, which may see potential, export markets supplied by food aid.

Food Aid in the Doha Round Negotiations

The FAO for years has had a Consultative Subcommittee on Surplus Disposal (CSSD), which is meant to monitor food aid shipments to ensure they do not displace commercial imports but its operation has not been very effective. Thus exporters have called for a better definition of what is legitimate food aid and for additional food aid disciplines in the Doha Round agricultural negotiations as a quid pro quo for disciplines on other forms of export subsidy.

Oxfam, for example, has argued that food aid should be provided largely in the form of cash (PDF), and that there should be restrictions on the monetisation of food aid because of its disincentive effect for local producers. Other proposals would prevent agricultural stocks being used as food aid, or even eliminate programme food aid entirely.

The danger is that an exclusive focus on protecting the rights of commercial exporters in the Doha Round negotiations could damage the potentially useful development contribution which food aid can make to development.

Links:

World Food Programme, Food Aid Information System
Provides data on food aid flows with some nice visualisation tools

Resources:

World Food Programme, Food Aid Flows 2009
This is the latest annual report from the WFP documenting trends in food aid flows drawing on the FAIS database

Clay, E. Back to basics: a commentary on the proposals for food aid circulated by the Chair of the WTO Agriculture Negotiating Committee on 7 November 2007 (PDF), ODI, 2007
A detailed critique of the WTO draft modalities proposals for food aid disciplines

OECD, The Development Effectiveness of Food Aid: Does Tying Matter?, 2007
This study provides a detailed look into two food aid issues: first, a comparison of the relative costs of providing in-kind with cash contributions; second, the inherent costs involved in tying food aid. The findings of this study show that, in most circumstances, financial aid rather than food aid in-kind is the preferable option, not only providing project assistance or budgetary support for general development, but even for the distribution of food.

The Oakland Institute, Food Aid or Food Sovereignty? Ending World Hunger In Our Time (PDF), 2005
This paper provides a critique of food aid as it exists today and offers analysis and recommendations to help shift the terms of debate around hunger and food aid. Recommending food soverignity as a policy tool, the reort advocates for food self-sufficiency as the means to eradicate world hunger.
 
FAO, Food Aid in the Context of International and Domestic Markets and the Doha Round - Trade Policy Note, 2005
Reviews major developments in the international food aid system and different positions on the effectiveness and impact of food aid. Argues that giving a central role to the CSSD in new WTO disciplines will facilitate legitimate food aid and restrict its abuses.