Food Aid Lecture

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Food Aid After Fifty Years Recasting Its Role in
Support of MDG1
Chris Barrett, Cornell University Presentation to
Senior Executives of Catholic Relief
Services Baltimore, MD May 19, 2005  
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Food aid in support of MDG 1

• Millenium Development Goal 1
• Reduce by half the proportion of people (i)
  living on less than a dollar a day and (ii) who
  suffer from hunger.
• What role for food aid?
• Save lives
• Fulfill human right to food
• Protect assets (especially human health)
• Facilitate productivity and asset growth where
  food availability and poor market performance are
  limiting.

Food aid is a complement to other resources.
Need to embed food aid in development strategy,
not fit development strategies to food aid
policies.
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Food aid in support of MDG 1

• Yet food aids effectiveness in advancing MDG 1
  depends on
• Whether it is focused on this goal. Given a
  tight budget constraint, need to use resource
  efficiently.
• How it is managed by operational agencies
• Efficacy of targeting and timing
• Whether it creates net disincentive effects that
  trade long-term losses for short-term gains
• Procurement and supply chain management
• Whether food is the right resource for a given
  problem

4

Suddenly food aid is a big issue again

• International level
• WTO negotiations food aid a major point of
  dispute in export competition pillar
• FAC renegotiation stalled presently on
  short-term extensions
• CSSD efficacy has collapsed (less than 5
  reported)
• GMO disputes (India, Zambia, Zimbabwe )
• Recent crises and extraordinary emergency funding
  needs
• Ethiopia 2003 (500 mn US food aid 5 mn ag
  devt assistance)
• S. Africa 2002-3 (HIV and drought)
• Darfur 2003-present (near halving of rations)
• Domestically
• FY2006 budget and 300 million proposal
• Crisis in non-emergency Title II funding
• Renewed battles over monetization, cargo
  preference
• McGovern-Dole GFEI and USDA-USAID turf battles

5
Food aids first fifty yearsA donor-driven
resource

• Modern Food Aids Origins
• Began in 1954 with Public Law 480 (PL480) in the
  U.S. The U.S. and Canada accounted for gt90 of
  global flows through early 1970s.  In EC as well,
  food aid was surplus disposal.
• Governed by CSSD and FAC, designed for a
  different era of food aid with a donor focus.
• Aimed at multiple donor goals govt surplus
  disposal, domestic farm support, export
  promotion, support maritime industry, and
  geopolitical leverage as well as development and
  humanitarian goals this violates the Tinbergen
  Principle (1 instrument/policy goal).

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Food aids first fifty yearsA donor-driven
resource

• Donor-driven food aid is based on a few key
  myths
• Myth Food aid effectively supports donor country
  farmers (0.05 of US food economy,
  bagging/processing requirements, etc.)
• Myth Food aid builds long-term commercial export
  markets (free sample analogy wrong)
• Myth Cargo preference laws effectively support
  the U.S. maritime industry (50 decline/decade)
• Myth Food aid is wholly additional (Engels law,
  MPC of food only 0.3-0.8)
• Myths reduce food aids efficacy in advancing
  MDG1 because encourage resource diversion.
• Must decouple food aid from other donor
  objectives.

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So who benefits?
Food aids first fifty yearsA donor-driven
resource

• i) Very small number of shippers
• (78 cargo preference
• premium, MSP)
• ii) Small number of food vendors
• (11 procurement premium,
• bagging/processing minima,
• BEHT storage fees)
• iii) NGOs (preferential access to
• resources via monetization)

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So how to move food aid further towards a
needs/rights-based system?

• Key NGOs can influence change if act soon
• 1) Use WTO AoA negotiations in coming months to
  
• - define/convert towards best practice food aid
  
• - pin down resource commitments
• Reform the multilateral food aid governance to
  give voice to recipients and operational agencies
  (a Global Food Aid Compact).
• Advocacy for increased flexibility and push for
  wiser use of ODA resources in Farm Bill and
  FY2006 budget process.
• Operations-level improvements in targeting,
  information systems, markets analysis, supply
  chain management, monetization, etc.

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WTO and Global Food Aid Compact
Untied food aid
Tied food aid
Untargeted/ poorly targeted
Non-emergency food aid
Effectively Targeted
Bona fide food aid in support of MDG1
Emergency food aid
Objective like Codex Alimentarius, use existing
institutions technical expertise. But shift food
aid towards food aid forms with greatest benefits
to the poor and least trade distorting while
maintaining value of flows.
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Reform food aid governance
Existing institutions no longer credible or
effective. Its not enough to remake their
rules, location, etc. 1. FAO Consultative
Sub-Committee on Surplus Disposal (1954) - no
legal authority, no enforcement - based on
economic illogic of UMRs - reporting has fallen
to lt5 food aid flows 2. Food Aid Convention
(1967) - donors-only club run from Intl Grains
Council - signatories breaching treaty
routinely now 3. Uruguay Round Agreement on
Agriculture (1994) - definition of tying differs
from OECD/DAC - endorses UMR illogic,
inconsistent with tying ban - ratifies FAC
shipment minima without bolstering it 4.
Self-regulation (e.g., Bellmon and Trade
Analyses) - conflict of interest problems in
quality control
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Advocacy The Changing Face of US Food Aid
Programs
 
Title I has decreased more than 90 since 1980 in
inflation-adjusted terms, while Title II has
increased 35. Isnt it time to consolidate US
food aid under USAID and tighten the focus on
food security?
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Operational-Level Reforms by NGOs/WFP
Recasting Food Aid
Decision Tree For Appropriate Food Aid
Response Are Local Food Markets Functioning
Well?
Yes Provide cash transfers or jobs to targeted
recipients, not food.
No Is There Sufficient Food Available Nearby
To Fill The Gap?
Yes Provide food aid based on local
purchases/ triangular transactions.
No Provide food aid based on intercontinental
shipments.
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Conclusions
1. Food aid is an essential tool for addressing
MDG 1. 2. But, need to decouple it from other,
donor-oriented objectives that impede its
developmental effectiveness. (Moreover, food aid
is ineffective at advancing other goals.) 3.
Existing food aid governance institutions
ineffective. Need reforms to end donors-only
club approach. WTO essential to this goal. GFAC
one viable option. 4. US food aid policy is the
engine that drives global food aid. So long as
US policy continues to mix motives, food aid will
continue to be contentious and to underperform
its considerable potential. 5. NGOs especially
CRS and a few others could make an enormous
difference if they became more active in advocacy
and in making operations-level improvements.
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Thank you for your time, attention and comments!
C.B. Barrett and D.G. Maxwell, Food Aid After
Fifty Years Recasting Its Role (London
Routledge, 2005)