The Better Aid Blog

The World Food Program ‘s new report on 2007 food aid flows not surprisingly focuses on the current food price crisis. But more of a surprise from the WFP is a frank recognition that chucking thousands of tonnes of food into developing countries can ravage its agriculture. Last year, one of the world’s biggest charities, CARE, refused to administer US$45m in US food aid on the grounds that it undermines rather than support poor livelihoods in Africa.

Despite being the lowest volume since records started back in the 1960s, last year over 5.5bn tonnes of food aid were distributed. This figure can have a significant impact on local and regional markets and hence delivery methods should be carefully picked. Food aid, for instance, has helped Ethiopia to survive for 30 years, but is has also marred local farmers and as a result agricultural production has declined in the last 10 years. The Food Aid Convention, signed in 1999 in London, makes triangular transfers (buying food from a third country and then transferring it to a recipient country) and local purchases the option of choice against direct transfer. The Convention argues this on the basis of promoting local agricultural development, strengthening regional and local markets and enhancing the longer-term food security of recipient countries.

It is hard to conceive how pouring food from donor countries in developing countries can help to develop local markets and agriculture. This leaves direct transfer advocates with only one argument: helping the poor and avoiding famine. However, this practice can be so harmful that some voices, such as the WTO have even considered it to be dumping under certain circumstances.

The WFP report shows that donor countries approach food aid delivery from different angles. One group of countries, such as the USA and China have chosen to make fellow citizens farmers very happy by using almost exclusively home grown food to provide food aid (>99% of aid is direct transfer). As a matter of fact, the US Food for Peace Law requires food supplies for foreign aid to originate in the US. Sadly, the problems with the US food aid system do not end with the interest of the mighty farm lobby; the US also monetizes food aid, “a method by which grain is shipped from America to charities in the developing world, who then sell the grain in the local market and invest the proceeds for its own programs”. These issues triggered the refusal of CARE as well as strong reactions from different actors, including other US NGOs, who saw endangered one of their main sources of funding. Following the turmoil, President Bush tried to push for reform, but apparently his proposal fell on deaf ears and has been decaffeinated to a good will statement, according to which aid food should be provided “in a manner that avoids disincentives to local agricultural production and marketing and with minimal potential for disruption of commercial markets”.

Unfortunately, food aid practices cannot capture the whole picture. Many of the ‘Good food aid donors’ such as the EC, Germany, Sweden, UK, Australia and the Netherlands make none or very little use of direct transfer, seem to suffer from identity disorder when it comes to trade practices. Every year many of the European countries previously mentioned –as well as many other countries around the world-, sell tonnes of sugar, wheat, milk and chicken in international markets at very low prices as a result of current agricultural policies. This phenomenon is known as dumping and hurt poor farmers who cannot compete with low prices and end up winding up their businesses. In Cameroon for instance, a survey among 100 poultry farmers who bought chicks in 1996 showed that only 8 of them continued in the business 6 years later.

These days food security is in front pages all over the World, together with several calls for food aid. Donors should meet their calls –the EC, for instance, has already made fairly significant pledges-, but also remain vigilant their decisions do not contribute to further undermine agriculture in developing countries. As for trade, well that reminds me of a Michael Ende novel.

This entry was posted on Wednesday, June 25th, 2008 at 3:37 pm and is filed under Aid Allocation, Developing country activities, Donor activities, Tied aid. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.