The Dilemma of Food Aid
Introduction
Recently, the 2020 Nobel Peace Prize was awarded to the UN World Food Programme “for its efforts to combat hunger, for its contribution to bettering conditions for peace in conflict-affected areas and for acting as a driving force in efforts to prevent the use of hunger as a weapon of war and conflict” (Nobel Prize). This year, the COVID-19 pandemic has aggravated existing food security in regions facing instability, making food aid more critical than ever. However, does food aid really create a positive impact? Understanding the strengths and shortcomings of food aid is essential for developing policy-recommendations to improve the effectiveness of food aid. There has been much debate regarding how food aid can be improved. Particularly, food aid is often criticized for creating dependency in the recipient country by undercutting the capacity of domestic agricultural production, thus exacerbating rather than alleviating the problem of food security.
The Dilemma of Food Aid
To start, the OECD definition of food aid includes grants and concessional loans of food that conform to Official Development Assistance (ODA). Aside from being a very vague definition, not all food aid meet the OECD criteria of ODA, which is defined as aid with “the promotion of the economic development and welfare of developing countries as its main objective” (OECD). As various authors have indicated, in some cases food aid deters the economic development of recipient developing countries instead.
There are two main categories for the delivery of food aid; tied and untied food aid. Tied food aid comes with many strings attached. These restrictions usually involve “payment in‐kind food aid transfers under the requirements that the food be obtained from the donor's domestic markets and the use of transportation and distributional services of donor country contractors” (Awokuse, 2011). OECD reports have suggested that “the vast majority of food aid transfers (over 80 per cent) fall under the category of tied aid. Tied aid has been heavily criticized for its cost inefficiencies and ineffectiveness in meeting development goals. Studies show that tied food aid could take up to 5 months before reaching recipients and cost up to 40 per cent more than untied locally (or regionally) purchased food aid” (Barnett and Maxwell, 2006).
On the other hand, untied food aid refers to “cash-based funding for food aid” rather than direct shipments of food from donor countries. Untied food aid is seen by many to be a preferable solution to tied food aid. Awokuse writes that “local and regional procurement relative to in‐kind food aid provides significant cost savings to donors” (2011), local procurement also arrives faster in terms of transport time in comparison to food shipments from donor countries, therefore untied food aid improves the effectiveness and timeliness of response to food security needs.
Likewise, Levinsohn suggests that cash transfers (directly giving people money instead of food rations) is a preferred alternative to tied food aid, since “all the welfare effects of cash transfers to the poor would be positive if they led to poor consumers buying up poor farmers’ wheat” (2007). However, Awokuse argues that this approach of untied food aid will only yield positive results in the scenario that local and regional production and procurement of food are well managed (2011). That is to say that if there is no local or regional production of food, or if local procurement of food is corrupt or ill-managed, then untied food aid would not have an advantage over tied food aid.
Another significant issue is policy coherence (or lack thereof) for food aid. Most notably, many countries such as the United States heavily subsidize their agricultural production sectors so that the price of their food products will be able to outcompete others on the international market. On the other hand, these countries also announce that they are funding development aid to support the development of agricultural sectors in the recipient countries. There is clear policy incoherence between the trade policy and aid policy, since these aid donor countries are exporting food to foreign markets – including the countries receiving development aid – thereby benefitting their own agricultural sectors, not the agricultural sectors of the developing countries that they are supposedly trying to help. As Levinsohn points out, historically “most food aid is a by-product of policies designed to aid farmers in rich countries, by disposing of surplus agricultural commodities” (2007). Therefore, contrary to the state goal of helping the poor, “these policies are actually part of the overall agricultural policies of the rich countries” designed for their own economic benefit.
According to Barnett and Maxwell, nowadays food aid is not a direct means of disposing of excess food– most of the time. Nonetheless, Maxwell acknowledges that “while many major donors, including the European Commission and Canada, have ‘untied’ their food aid in recent years [. . .] US food aid remains tied to its own domestic markets” (2006). Therefore, tied US food aid is in fact export subsidies in disguise (Barnett and Maxwell, 2006). Additionally, Clapp’s article illustrates a link between U.S. food aid and food dumping (Clapp, 2009). The practice of food dumping has become a big problem accompanying food aid. Wealthy donor countries like the United States are using tied food aid (food aid with payment-in-kind) to dump excess food to poor recipient countries at below market prices. The corporate interests are making food aid a profitable industry through which excess food from the US can be conveniently disposed of in poor countries (Clapp, 2009).
Food aid does not solve the root causes of hunger in the poor developing countries. A large part of the population in these poor countries are farmers or participate in agricultural production, however hunger and food insecurity still remain stubborn issues in these countries. In order to truly improve food security in poor countries, the underlying causes that impede food security need to be addressed because food aid alone does not and will not solve the problem. In fact, some argue that food aid exacerbates the problem of food security in the receiving countries. Although food aid is intended to reduce food insecurity in the recipient country, Levinsohn writes that “by increasing the supply of food, food aid may actually reduce prices and farmers’ incomes and ultimately discourage domestic production” (2007), creating the disincentive effect of food aid on local production. Food aid is impeding poor countries’ ability to attain food security by making poor countries’ overly dependent on food aid and disincentivizing the improvement of domestic agricultural production to meet domestic demands.
Moreover, “food aid is strongly pro-cyclical: more food aid is available when prices are lower when, globally at least, food assistance is needed less” (Barnett and Maxwell, 2006). This means that when the demand for food is higher, there tends to be a decrease in food aid as opposed to an increase. Therefore, food aid is not always a reliable means of increasing food security and reducing hunger globally.
The U.S. is also by far the largest donor to the WFP. Thus, there are concerns regarding a potential fall in U.S. food aid donations if the requirement of “untied” food aid is enforced. Furthermore, Maxwell writes that although aid actors have agreed for the most part on “a ‘safe box’ for bona fide (goodwill) food aid for emergency response” (2006) through the Hong Kong Declaration in 2005, there continues to be disagreement about who may declare an emergency (Barnett and Maxwell, 2006). There is also no agreement about tied food aid that is not for declared emergencies. Therefore, advocating for appropriate food aid resources – whether it is an emergency or long-term crisis – will continue to be a great challenge for the WFP.
The Path Forward
Finally, despite the many shortcomings of food aid, the World Food Programme has made significant achievements in reducing hunger and mitigate conflict by providing food aid during famines and humanitarian crises in the most conflict-ridden regions of instability in the world. Nonetheless, the literature on food aid provide recommendations on how the world can take steps to improve food aid and sustainable development. There is a great deal of room for progress to be made in food aid, in the hopes that food aid will better reflect the criteria of official development aid set out by the OECD. Increasing the amount of food aid can only be a partial solution to rising hunger and food insecurity due to war and conflict. A more sustainable solution would be to improve the quality and effectiveness of food aid.
The Nobel Peace Prize being awarded to the World Food Programme can be considered as a warning for greater problems to come. It highlights the growing concern regarding increased hunger and food insecurity globally, the food crisis could lead to increased conflict, particularly in regions that are already facing political, economic, or social instability. Thus, now is the time not only for increased attention to addressing the problem of food insecurity, but also for progress to be made regarding the improvement of food aid.
