Food Aid: Past, Present and Future*

1. Food Aid: Past, Present and Future* Chris Barrett Department of Applied Economics & Management African Food Security & Natural Resources Management Program Cornell University * Based on book w/ Dan Maxwell, Food Aid After Fifty Years: Recasting Its Role

2. A Key Distinction Food Assistance (also “food-related transfers”): - any intervention to address hunger and undernutrition (e.g., food stamps, WIC, food subsidies, food price stabilization, etc.). Food Aid: - international aid flows in the form of food or of cash to purchase food in support of food assistance programs. Key distinction: international sourcing of concessional resources in the form of or for the provision of food. Issue is thus procurement as much as distribution. Food aid was once a major foreign assistance tool (15-20% of total flows in the late 1960s - early 1970s), but now <2% of flows

3. Food aid accounts for little in the way of annual flows of food … … and the share is declining, especially relative to commercial trade.

4. 3 Types of Food Aid: Program : subsidized deliveries of food to a central government that subsequently sells the food and uses the proceeds for whatever purpose (not necessarily food assistance). Program food aid provides budgetary and balance of payments relief for recipient governments. Project : deliveries of food (usually free) to a government or NGO that sells (“monetizes”) part of the shipment to generate cash and uses the remainder for direct distribution to beneficiaries (e.g., FFW employees, MCH feeding, school feeding). Project food aid provides support to field-based projects in areas of chronic need. Emergency/Humanitarian: deliveries of free food to GO/NGO agencies responding to crisis due to natural disaster or civil strife.

5. There remain many countries with insufficient food availability to provide for their populations Minima: 55 g protein, 2350 kcal per person per day

6. The geography of food aid flows has changed over time, although US remains dominant.

7. A Quick History of Modern Food Aid • Began in 1954 with Public Law 480 (PL480) in the U.S. The U.S. and Canada accounted for >90% of global flows through early 1970s, when the UN’s World Food Programme became a major player.  • Food Aid Convention agreed 1967, guides policies of 22 nations and EU, monitored through the Consultative Sub-Committee on Surplus Disposal. • - Rise of WFP since mid-1970s, decline of US PL 480. Move to multilateralism. EU/Canada move to cut program food aid and to decouple from domestic farm programs. • - Emergence of SSA and CEE/FSU as focal points and of CHEs and emergency food aid in 1980s/90s • - Rise of triangular transactions/local purchases since 1984.

8. Program P.L. 480 Title 1 P.L. 480 Title II P.L. 480 Title III Food for Progress Section 416 (b) Bill Emerson Humanitarian Trust International Food for Education and Child Nutrition Year Begun 1954 1954 1954 1985 1949 1980 2003 Managing agency USDA USAID USAID USDA USDA USDA USDA Cumulative 1992-2002 budget (US $ billion) $4.38 $9.62 $1.34 $1.33 $2.41 N/A N/A US Food Programs, 1992 – 2002 N/A = not available or not applicable

9. US food aid remains largely driven by domestic farm and foreign policy concerns … Yet, it is a myth that food aid provides effective support of US farmers, creates overseas markets or proves influential in foreign policy matters.

10. The Key Issues: 1. Additionality/ Efficacy - what=s the metric we’re worried about? welfarist vs. non-welfarist criteria - substitution of free or subsidized for purchased food (income elasticity of demand) - ALeakage@ to nonnutritional uses (e.g., labor supply effects) - food aid is typically concentrated on only a few commodities, esp. wheat. Micronutrient fortification limited, which may lead to problems in some refugee feeding situations where diets are limited (e.g., rickets). - health effects of food transfers depends on complementary inputs: sanitation, preventive and curative care, maternal education, etc.

11. The Key Issues: 2. Targeting - “Leakage” to nontargeted individuals in the household, region (errors of inclusion)  - Missing intended beneficiaries (errors of exclusion)  - Tough question: Is food assistance curative or preventive?  - Does food aid respond to need or bureaucratic inertia?

12. The Key Issues: 3. Intertemporal Variability - Aid should flow countercyclically to stabilize food availability: * it doesn’t, response is small - Food aid flows budgeted on monetary not physical basis  - Delivery lags

13. The Key Issues: 4. Direct and Indirect Costs Direct costs - procurement costs, incl. ~11% premia - shipping costs (incl. ~78% premium!, delays and uncompensated labor) - admin costs (incl. targeting and monetization) Indirect costs   - fungibility premia (preference for liquid transfers)  - opportunity cost (could resources be used more effectively in other ways, e.g., on women=s education on health?)  - induced distortions in behavior (e.g., moving to distribution)

14. The Key Issues: 5. Incentive Effects • - Food production and marketing (depends on additionality), including induced change in consumer preferences and relaxation of liquidity constraints faced by small producers and traders. •  - Government policy reforms (food aid more often consequence of poor policy than either its cause or its cure) •  - Labor supply • NGOs: are the humanitarians being bought off?

15. Is food aid an appropriate form of food assistance? 1) What is opportunity cost? - Are alternatives an option given surplus disposal, nonwelfarist objectives? - How effective are other food assistance efforts in this setting? 2) Is food availability sufficient locally? - Can local food production and marketing systems respond to a demand increase fuelled by transfers? 3) What are proximate causes of nutritional problems? - Low income? High or unstable food prices? - Poor inter- or intra-household distribution? - Food choices (taste, preparation time, storage)? 4) Targeting capabilities: administrative, indicator, or self - errors of inclusion or exclusion, cost of administration 5) Are there positive or negative externalities? - Does it induce other, desirable behaviors by recipients at household- or state-level? (“food-for-talk”, school feeding and girls’ education) - Can it resolve other structural bottlenecks (e.g., backhaul, rural finance) - Production/marketing disincentives?

16. Ultimately, the only justification for food aid lies in two key roles. (1) Short-term humanitarian assistance to food-insecure populations if and only if a problem of food availability underlies lack of access to food (especially where market failures prevent the usefulness of other forms of humanitarian assistance). (2) Provision of longer-term safety nets, albeit under restricted circumstances. Other (non-food) forms of assistance are likely to be better placed to respond in cases where there is not an underlying food availability shortfall and market failure, or when food insecurity is chronic.

17. Thank you for your time, attention and comments!