Does food aid have disincentive effects on local production? A general equilibrium perspective on food aid in Ethiopia

This paper examined impacts of food aid on domestic food production employing a computable general equilibrium modelling technique and using data from Ethiopia. The simulation experiments have shown that food aid has unambiguous disincentive effects on domestic food production. The removal of food aid caused a modest increase in food prices but this stimulated food production. Employment and income generation effects of the latter outweighed the adverse effect of the former. Consequently, the removal of food aid led to improvements in aggregate household welfare. Contrary to some concerns in the food aid literature that any reduction in food aid would hurt the poor, the simulation experiments suggested that actually poor rural households and urban wage earners are the ones who benefit most in absence of food aid but entrepreneurs are more likely to encounter a marginal welfare decline. We have distinguished between in-kind food aid and cash equivalent transfers in order to isolate the disincentives that in-kind transfers would make to domestic production from those that are related to household purchasing power problem. The expansionary effect of removing food aid becomes significantly larger when it is accompanied by cash equivalent payments because the latter would provide demand side stimulus to agriculture while the removal of in-kind transfers would stimulate supply side, with the supply and demand side effects reinforcing each other. In our modelling framework, the only adverse effect would be a modest deterioration in the external current account, because the expansionary effects of food aid would cause imports to rise but exports to fall.     

Egypt: Food security and food aid

This article examines the multifaceted notions of food security and food aid through a case-study of a rather exceptional country in political terms - Egypt. Egypt has achieved a high degree of food security with lessened reliance on domestic production and has become one of the largest recipients of cereal food aid. The analysis considers significant questions about the interdependence of food security and food aid, the maintainability of an externally dependent food system, its implicit resource costs and its internal distribution and equity impact.     

Towards a global food aid compact

Existing international mechanisms governing food aid are dysfunctional and outdated. A reasonably straightforward alternative could readily rectify the problem of an ineffective global food aid governance system. In this paper, we outline the basic design of such a Global Food Aid Compact.     

Mauritania: The cost-effectiveness of EEC food aid

The value of EEC food aid to Mauritania is assessed. Given such factors as poor record keeping, political instability as a unique import/export situation, the authors conclude that only one of the three commodities supplied under the 1978 EEC programme could be considered cost effective.     

Wheat markets,food aid and food security in Afghanistan

In Afghanistan, after two decades of civil strife and successive droughts from 1998 to 2002, large inflows of food aid, distributed mainly to returning refugees and through food for work programs, have helped offset production shortfalls of wheat, the country’s major staple. At the same time, private international trade from neighboring countries, especially Pakistan, has also played a major role in augmenting wheat supply and stabilizing prices.     

Food aid and food policy in Bangladesh

Bangladesh has now replaced India as the most publicized large scale recipient of food aid, importing 1.67 million tons of food grains, four fifths of which were on concessional terms, in 1977/78 (July to June). Some analysts, extrapolating from the poor performance of the agricultural sector up to the mid 1970s, also project that Bangladesh will be one of the largest importers of foodgrains in a decade's time merely in order to maintain current pitifully inadequate levels of nutrition.¹ Yet so far there has been no open debate or systematic attempt to analyse the impact of food aid on the Bangladesh economy, compared with the controversy and intensive analysis of food aid to India. This article² is intended to demonstrate the seriousness of this gap in the literature. It includes a review of provisional evidence on the role of food aid in the Bangladesh economy during the first quinquennium of ‘planned’ development, 1972/3–1977/8.     

The impact of food aid — Peru,a case study

Peru was selected for study as a country which has been in receipt of substantial donations of food aid, both multilateral and bilateral, over a long period, and which possessed sufficient resources to build up a relatively adequate infrastructure for receiving the aid — and did so. While many features are necessarily peculiar to Peru it does appear that a number of interesting and generally applicable guidelines emerge from the problems encountered and the benefits derived from Peru's experience.The author¹ visited Peru in 1976 as leader of a UN team evaluating WFP projects, and returned there in 1977 for the OECD Development Centre to study the impact of food aid on the country. The following article is based on a report which the author prepared for the Development Centre, as a result of the latter visit.     

The domestic determinants of US food aid policy

This study presents empirical analysis of US food aid flows as evidence of the strong and stable relationship between commodity producer interests and policy-makers during a 35 yr period. Whereas most foreign aid research centers on the distribution of aid among recipient countries, this study focuses on the determinants of the supply of food aid made available by the donor country. I conduct time series regression analysis of total US food aid shipments, as well as separate analyses of two key commodities, wheat and rice. Several key findings emerge: (1) There is a consistent relationship between commodity producer interests and US food aid policy. (2) There is a strong relationship between commodity stocks and food aid shipments, especially during the years when stocks were the greatest. (3) US food aid policy-making is highly incremental. These findings, taken together with the lack of a strong relationship between grain production in poor countries and US food aid shipments, belie official rhetoric emphasizing the growing humanitarian objectives of the program over time. In the case of rice, I find a strong relationship between aid flows and US involvement in the Vietnam War.     

Improving bid efficiency for humanitarian food aid procurement

The competitive bid process used by the US Department of Agriculture (USDA) to procure food supplies and transportation services for humanitarian food aid is subject to bidder gaming that can increase prices and deter competition. Additionally, suppliers and carriers are matched after bid submission, preventing synergies from coordinated planning. Given these concerns, we determine the optimal auction mechanism to minimize gaming then justify pre-bid planning between suppliers and carriers using properties of the cost distribution functions. We operationalize these changes with a uniform price auction. The improved mechanism should deter gaming, enhance bid participation, and increase delivered food aid volumes.     

Indigenous peoples’ nutrition transition in a right to food perspective

In indigenous communities the nutrition transition characterized by a rapid westernization of diet and lifestyle is associated with rising prevalence of chronic disease. Field work and literature reviews from two different policy environments, Argentina (Jujuy) and Canada (Nunavut), identified factors that add to indigenous peoples’ disease risk. The analytical framework was the emerging human right to adequate food approach to policies and programmes. Indigenous peoples’ chronic disease risk tends to increase as a result of government policies that infringe on indigenous peoples’ livelihoods and territories, undermining their economic system, values and solidarity networks. Policies intended to increase food security, including food aid, may also fuel the nutrition transition. There is a need to explore further the connection between well-intended policies towards indigenous peoples and the development of chronic diseases, and to broaden the understanding of the role that different forms of discrimination play in the westernization of their lifestyles, values and food habits. Food policies that take due account of indigenous peoples’ human rights, including their right to enjoy their culture, may counteract the growth of chronic disease in these communities.     

Private voluntary standards in the food system: The perspective of major food retailers in OECD countries

The paper examines the main economic and institutional incentives which have driven major OECD food retailers in their use of private voluntary standards and discusses their growing role in shaping the agri-food system. It is based on interviews with quality and safety directors of major OECD retailers and a brief survey of retailers’ actual buyer practices. Though not all retailers are included, these firms account for over 70% of retail food sales in OECD countries. We find that the growing voice of civil society, changing legal and institutional frameworks, increased market concentration and buying power as well as their integration with financial markets has provided the setting for development of private standards. While food safety and quality standards are seen as key to maintaining and improving reputation as well as against legal liabilities, additional standards such as labour, environmental and animal welfare are also gaining ground as strategies for customer loyalty and market shares. The grass-roots retailer move in the harmonization of food safety standards is seen as an initial step towards a global approach to managing the food system, with harmonization of other standards likely in the future. Given their buyer power, these developments can be viewed as a way of governing the food system and will be important for both OECD and non-OECD food and agricultural sector evolution in the coming years.     

US food aid to South-east Asia, 1975–1983

According to food aid policy analysts, President Ford emphasized fiscal restraint, President Carter stressed ‘food for development’ and President Reagan used food as a ‘weapon’. However, a political bias has characterized food aid to South-east Asia, cutting across administrations. Public Law 480 supported American efforts in Indochina, boistered ‘friendly’ Indonesian and Phillippine regimes and helped secure geopolitical objectives. Humanitarian and developmental goals played the weakest role in shaping programmes. When conflict occurred, foreign policy aims overrode budgetary and commodity objectives.     

Food aid,domestic policy and food security: Contrasting experiences from South Asia and sub-Saharan Africa

Food aid, both for short-term emergency relief and as program food aid that helps address medium-term food “deficits”, is often a major component of food security strategies in developing countries. This study reviews the experience with food aid of four major recipients of food aid (India, Bangladesh, Ethiopia and Zambia) regarding food production, trade, markets, consumption and safety nets, as well as the policy responses to food emergencies. The widely varying experiences of the study countries suggest that food aid that supports building of production and market enhancing infrastructure, is timed to avoid adverse price effects on producers, and is targeted to food insecure households can play a positive role in enhancing food security. However, food aid is not the only, or in many cases, the most efficient means of addressing food insecurity. In many cases private markets can more effectively address shortfalls in food availability and cash transfers may be a viable alternative to food transfers in-kind.     

The European Community's food aid programme : An integration of ideology, strategy, technology and surpluses

The European Community's food aid programme has come to be an unanticipated spillover from its Common Agricultural Policy (CAP). Policy-making within the institutions of the EEC consistently takes place in an environment of ideological differences, characterized by the ‘Europeans’ and the ‘nationalists’; the CAP is a front-line example. Its price-support features have enabled the Community's agriculture to be gradually and safely modernized. In turn, food surpluses, especially of dairy products, have become evident and costly. This mixture of ideology (including a strong dose of humanitarianism), strategy, technology and surpluses have played a major role in the development and construction of an EEC food aid policy, which has grown incrementally into a programme of significant proportions.     

Somalia: Food aid in a long-term emergency

From the mid-1970s onwards Somalia has suffered from a number of emergencies — drought, population disruptions, political conflict and minor climatic problems. This article examines the impact of such continuous flows of food aid as a response to such emergencies, both in terms of the recipient government's attempts to stabilize the domestic economy and of donor governments' activities.     

The economics of food aid under subsistence farming with an application to Malawi

We investigate how food-aid affects price and production of staple food, with a partial equilibrium model with non-separable production and consumption. The model captures the key characteristics of sub-Saharan Africa subsistence economies. Simulations generate negative but also positive food-aid elasticities of production. Conditions are identified which mitigate the negative impact and support a positive impact. The share of domestic food production in total staple food demand (+) and the share of income from staple food production in total household income (−) are key determinants. Price and production equations, estimated with a panel of district data of the Malawi maize market for the period 1999–2010, show a small positive impact of food-aid. Large negative impacts of food-aid are not likely given production and income shares and behavioural responses.