Much ado about food aid

Paper delivered as part of panel discussion at a meeting convened by the Overseas Development Institute on “Cash and Emergency Response,”
January 19, 2006, London, England.

Written and delived by James Lutzweiler, Food Security and Food programming Advisor

Developing a case for either side of this debate is complicated for several reasons. It is virtually impossible to disentangle the cacophony of variables in a country’s food security equation and singularly attribute a specific outcome or impact to only one. Scientists might attempt to model a theory based on straight, predictable, and directable lines, assuming all things are as they appear to be—therefore completely missing the dynamism and unpredictability of reality. Development practitioners might attempt to argue purely on the reality of their local context—therefore completely ignoring the fact that policies and political structures are the root cause of many of the symptoms foreign aid perpetually addresses. What can be done to seriously consider how to best meet the food and nutritional needs of the hundreds of millions of the world’s hungry and not degenerate merely into a sideshow for politicians?

Before entering the discussion, however, the parameters need to be established. Is a discussion about foreign aid going to be from a recipient-based problem analysis perspective or is it going to be focused on the politics of donors? The food aid histrionics at last month’s World Trade Organization meeting was both deplorably farcical and hypocritical. Food aid has always been political, but politicians have roundly misplaced the weight of their responsibility to address the root causes of poverty and hunger onto a symptom of their own perpetuation. The debate, then, between the perspectives of the most justified form of food aid entirely begs a larger question. Why is food aid, in any form, necessary in the first place?

The real challenge for NGOs is to continually remind both developed and developing nation policymakers that we continually have a discussion on food aid because of perpetuated structural injustice. We must ensure that the secondary issue of what type of aid is best does not overshadow the primary issue of the causes of hunger in the first place. Having acknowledged that food aid is not an end in itself but rather a means to an end, it seems appropriate, then, to discuss what form of food aid would be most appropriate for a given situation. What can be done to seriously consider how best to meet the food and nutritional needs of the hundreds of millions of the world’s hungry and not degenerate merely into a sideshow for politicians?

Experience and common sense dictate that pitting the two cases against one other is merely internecine. Hunger is a disease that has many causes. So arguing one cure would be short-sighted and illogical. Experience proves that multiple tools in the fight against hunger are required. So, to create the false dichotomy of an either-or for cash or food is a nonstarter. Local purchase, cash, vouchers, and in-kind are tools to be used in the work against hunger, as are agricultural research, trade policy reform advocacy, and campaigns for debt relief. Why should one tool replace any or all of the others?

If both cash and food are legitimate responses, how is it possible to determine when one or the other should be used? Over the past five years, an increasing percentage of food aid has been used in emergencies. The fragile margin of life resulting from chronic malnutrition and poverty is thrown into a critical emergency by a mere hiccup (either natural or manmade) in many developing nations’ food systems. Using food aid in emergencies then has two central criteria:
1) what defines an emergency and,
2) given the conditions and stage of the response what type and quantity of food is required.

The argument that any food can be used is wrong.

Practical considerations of local purchase

Nutrition: Nutritionists plainly make the case that specialized or fortified food is required for many types of interventions. Increasingly the breadth and nature of cyclical emergencies demand a specialized type of food not typically produced in developing countries. There are cases in Mozambique and elsewhere where fortification is being transferred domestically, but the flow of food must still usually be guaranteed externally. The traditional corn-soya blend of U.S. Title II food programming has always been a critical component of an appropriate response. Further, this food (and food aid in general) is not used in isolation. Food is only one input among many required to shape a holistic program, and a significant amount of funding goes toward these specialized foods.

There is also a range of issues that need to be considered when discussing the less specialized staples used in a variety of programming as seen in Southern Africa, Sudan, and Asia. All food is not the same, and perceiving food merely in terms of an economic unit or something to be traded, will obscure important facts.

The fact that appropriate food, not just any food will do, has already been made. When considering local purchase, the factor of additional costs for fortifying blended micronutients must be taken into account. There are some examples of locally produced nutritionally appropriate foods such as HEPS in Zambia, but acquiring the scale and quality of the amount required is problematic.
Economics

While considering this option, experience has challenged us to examine more closely the facts and circumstances, in which other things are far from equal. Surprisingly, little can be concluded from the current literature attempting to understand the economic impact of in-kind food aid, and even less for local purchase. Arguments supporting cash tend to be focused on the efficiency of its delivery and stating that x amount of aid could be maximized and—all things being equal—more food could be purchased.

While considering this option, experience has challenged us to examine the facts more closely. Here are several to consider:

One striking fact that can be manipulated is the apparent “surpluses,” either domestic or regional. Aggregate agricultural production figures for a given country do not reflect the varied geography of the food insecurity problem within the country. For example, in Zambia in 2003-2004, there were surpluses purchased by World Food Programme for regional distribution. 60,000 MT was used in Angola and Zimbabwe, as well as within Zambia. Zambia still had a significant food insecurity problem in the south of the country as the “over-production” was in the North, and the foreign exchange gained through the sale paid government salaries instead of being funneled back into the agriculture sector.

Another important factor in this equation is the additional cost of local transport. Whether commodities are purchased locally or shipped internationally, transport is a significant cost of the overall program. Inland transport and storage can, at times, account for up to 35 – 40 percent of the overall program budget. When comparing a dollar for dollar exchange between international food aid and local purchase, the additional costs are not always included in the analysis. For appropriate program implementation, proper storage and handling of the commodity are essential for success.

Interpreting dysfunctional markets that do not send clear price signals is also a critical factor. Rainfed, smallholder agricultural systems are not very price elastic. This means that smallholder farmers do not alter their output in response to changes in market prices. They simply don’t have a lot of control over output. How many farmers in Africa, for example, would decide to lower output next year because they perceive markets as oversupplied?

Furthermore, a large influx of cash for local purchase might bid up prices, top the detriment of poor local consumers.


Practice

Moving from theory to practice highlights some real threats to using cash in the field. First, there is the obvious danger of carrying large amount of cash. Catholic Relief Services and World Vision have both experienced armed attackers searching for cash. Most recently in Afghanistan, counterparts were shot, vehicles burned, and staff abused even after significant safeguards were put in place. Using the informal havale banking system, irregular payments, and working with local counterparts did not deter the attacks. Cash programs take many different forms, but the reality remains that cash is tempting and near impossible to hide. Leakage is sometimes a problem with in-kind food aid; flooding can happen with cash.

Management and issues of transparency are yet other questions. A recent 2005 review of WFP’s local purchase program in Uganda has revealed that a small group of bidders has formed to set prices for specific commodity tenders. Since there are a finite number of commercial interests that have the capacity to deliver the quantities of food required, this small group has influenced the price of staples putting them out of reach of potential consumers. Further, because of the higher prices available for local purchase, maize has been grown for export in lieu of traditional subsistence crops. There is also evidence that the necessary quality controls (to control for food safety and moisture content) are not adequate. Large agricultural commercial interests alone often have the ability to deliver the quantity of food required, therefore potentially marginalizing the subsistence farmer as this new market evolves. The idea that enough subsistence farmers can combine to produce enough export grade commodity to bid on local purchase tenders is a noble misconception here and in many other countries.

Politics

The food aid histrionics at last month’s World Trade Organization (WTO) meeting was both deplorably farcical and hypocritical. Food aid has always been political, but politicians have roundly misplaced the weight of their responsibility to address the root causes of poverty and hunger onto a symptom of their own perpetuation. The debate, then, between the perspectives of the most justified form of food aid entirely begs a larger question. Why is food aid, in any form, necessary in the first place?

Instead of addressing this question head-on, one developed country delegation pressured several developing country delegations to not support the US food aid proposal. Used as a red herring at the WTO, food aid was used as a bargaining chip and not based on the merits of what was appropriate or right.

As a secondary political action, an official delegation of representatives was sent to Rome informing WFP that their contributions would be significantly reduced as a result of an ad that ran in the Financial Times (December 9 –13, 2005) warning that trade negotiations should not be to the detriment of in-kind food aid.

The EU has already demonstrated a cut in aid to any type of food aid program. Since shifting to a cash-based concept of food security, the EU’s contribution to global food aid has decreased by 40 percent. Is there a correlation between cash-based aid and a reduction in food aid? The volume of food aid worldwide has plummeted from 15 million metric tons in 1999 to 7.5 million metric tons last year, and the portion of aid dedicated to agricultural development has dropped sharply from 12 percent in the early 1980’s to roughly 4 percent today. Ironically, this has happened despite a dramatic increase in Overseas Development Assistance to nearly $80 billion annually.(1) With 75 percent of the world’s poor people living in rural areas, agricultural and rural development are the most viable route to meeting the Millennium Development Goals.


Applying the local purchase model

Current local purchase and cash based program research demonstrates that these options work best in urban or peri-urban areas. This finding seems logical because cash will only be of use in areas where there is at least a minimally functioning market where something can be purchased. Also, because of the intensive oversight and monitoring required to accompany the use of cash, this is easier done in urban areas. In rural areas the use of cash is more problematic. In the wake of the tsunami response, World Vision used cash across its programs and post-implementation evaluations demonstrated this conclusion across various geographic zones.

There are similar findings in recent programs in Zambia. The use of cash, either for food or other programs, presents a unique set of problems. Today, most emergency and transition responses are carried out in coordination or a more formal consortium is formed. This requires organizations to typically cover local government districts of provinces to allow for continuity and preserve the on-going development programming in each respective area. If one organization wants to work only in urban areas and not in the entire district, this can disrupt the logistics and implementation of a widely coordinated response. Currently, organizations take responsibility for covering beneficiaries outside of their traditional counterpart programs, but when a specific resource is not appropriate for a portion of the district implementation becomes complicated.

Conclusion

Even upon cursory review, it is evident that there are problems associated with cash programs, even at the current levels of funding. But this is not reason to discard the use of cash as a tool in the fight against poverty and hunger. Similarly, food aid is not meant to be the continued solution to food insecurity around the world. Both these aid instruments encounter the same problem in the sense that neither is going to eliminate poverty or hunger. They are meant to be used in conjunction with various inputs to offer a more holistic program that links relief, transition, and development.

What is more troubling is that a debate is raging between the US and EU on a front that tends to care little about those we serve, and it is incumbent upon us to remind policymakers that any changes to the global trading system should not harm vulnerable populations in the process. We should be cautious not to allow politics to shift our focus away from understanding that different resources are required at different times, and these resources are not negotiating tools—they are used to save and sustain people’s lives. For them, it is not academic. What impact will elimination of agricultural subsidies have on the poor in 2013? How will this impact the vulnerable groups currently in need of aid to survive?

A lot of attention is being paid to an abstract idea of food aid. Policymakers and development practitioners define this term to mean a host of things while glossing over the nuanced differences that can be the margin of life for millions who receive aid. All aid becomes a variable in the equation of a country. As long as the familiar structural injustices continue to work against the poor, more aid will be required. It is indeed unfortunate that many have been mystified by the facts about the need for food aid, and in the process the waters have been muddied to such a degree that a simple message needs to be sent. And that is, until each country of the world functions to an extent that there is no need for aid, we must remain vigilant to ensure our ability to maintain a minimal level of food security for the millions who continue to suffer, using whatever instruments make the most sense in a particular situation.



1. Jim Morris, May 9, 2005 speech, World Food Programme

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James Lutzweiler is currently the Food Security and Food programming Advisor for World Vision United States based in Washington, D.C. He has over 10 years of field experience in relief and development programming across 35 countries in Africa and Asia.