Food Aid Lecture

1
Towards A Global Food Aid Compact
Chris Barrett Cornell University  
2

Food aid is suddenly a lively issue again

• WTO negotiations
• Some Members view food aid as an export subsidy.
  
• Dec 2005 Hong Kong ministerial declaration a step
  towards a GFAC
• GMO disputes
• India, Zambia, Zimbabwe
• Recent crises/near-crises food aid plainly
  important beyond its scale
• Niger 2005 (32 mn appeal in Nov 04 draws no
  response before summer 2005, as crisis sets in)
• Ethiopia 2003 (500 mn US food aid 5 mn ag
  devt assistance)
• Southern Africa 2002-3 (HIV and drought and
  Zim/Angola)
• Food aid tying disputes
• Controversial 2004/5 OECD report and embargoed
  2001 report
• US Congressional battles over FY06 budget (stay
  tuned for FY07!)
• Canadian policy change
• FAC is presently on short-term extensions
• Some signatories prepared to scrap it entirely.
  
• CSSD increasingly recognized as dysfunctional
• Less than 5 reported through CSSD in 2000-3.
• UMR concept violates basic economic laws

3

Controversies arise because

• System dominated by US food aid (60)
• Donors have multiple objectives behind food aid
  humanitarian, commercial, geopolitical, domestic
  agricultural constituencies
• Debates muddied by longstanding, pervasive myths
  dependency, additionality, effective support for
  donor country farmers, etc.
• No effective international governance mechanisms

4
Need to 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, only 41
members - based on economic illogic of UMRs -
reporting has fallen to lt5 food aid flows,
2000-3. 2. Food Aid Convention (1967) -
donors-only club (7 countries EU) run from the
International Grains Council - signatories
breaching treaty routinely now 3. Uruguay Round
Agreement on Agriculture Article 10 (1994) -
definition of tying differs from OECD/DAC
(2001) - endorses UMR illogic, inconsistent with
tying ban - ratifies FAC shipment minima without
bolstering it 4. Self-regulation (e.g., Bellmon
Analyses) - conflict of interest problems in
quality control
5
So how to proceed?

• Element 1 Use next WTO Agreement on Agriculture
  to add rules and enforcement capacity lacking to
  date
• - define and convert towards bona fide food aid
  (green/blue/amber food aid boxes)
• - member reporting requirements
• - maintain resource commitments
  (commodities/cash)
• - effective dispute resolution mechanism
• Then
• Element 2 Reform the multilateral institutional
  arrangements that govern food aid to fit the
  rules.
• (Form must follow function, not vice versa)
• The package comprises a new
• Global Food Aid Compact (GFAC)

6
A Global Food Aid Compact
Implementing a GFAC requires key
innovations Inclusiveness Need all recipient
countries and operational agencies, enabling a
universal code of conduct and broad-based
ownership. Donor commitments Move beyond
tonnage minima, extending coverage to
complementary financial resources and commitments
to flexible procurement (in accord with OECD/DAC
convention on aid tying) Monitoring and
enforcement mechanisms embed within DRAA to
secure access to the WTO DRM so as to credibly
prevent misuse of food aid, especially if some
existing export promotion tools limited by DRAA.
Recognize that food security, like food safety,
has equal standing to free and fair trade
Codex-like commission to provide technical
support in evaluating credibility of programs
with possible trade impact. All parties code of
conduct for donors, recipients and operational
agencies.
7
GFAC Code of Conduct
Key principles Need, vulnerability and
impartiality Food provided on basis of assessed
need and vulnerability only, at all levels.
Appropriate analysis Needs assessments, early
warning systems, and market impacts of
distribution or local/regional purchases.
Appropriate utilization and management follow
best practices in targeting (who, what, where,
when, how much, how long), and assure provision
of complementary services/inputs (water, medical
care, shelter), with full transparency and
accountability for all resources. Obligations
of all parties Recipients physical security of
commodities and staff, renounce use of food as
weapon, independent OA functioning. OAs
Sphere standards plus. Donors timely
reporting, ind. OA functioning, informed consent.
8
GFAC The WTO portion

• Green food aid box (record, but no
  monitoring/limits)
• Untied aid unambiguously good for trade,
  development and humanitarian objectives
• Emergency aid flows imperative minimal trade
  displacement and maximal development/humanitarian
  gains
• Blue food aid box (record and monitor through
  GFAC)
• Tied aid often leads to delays and
  inefficiencies and can function as a de facto
  export subsidy need monitoring
• But when effectively targeted, minimal market
  effects and significant development/humanitarian
  impact so allow
• Amber food aid box (convert to cash programming)
• - Tied, non-emergency, poorly (un)targeted food
  aid has least development gains and most
  market-disrupting effects

Bona fide food aid
9
GFAC The WTO portion
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 maintain value of flows, but shift the
shares towards food aid forms with greatest
development benefits and least trade distorting.
10
A Global Food Aid Compact

• This builds on and blends the strengths of
  existing institutions, while overcoming their
  weaknesses
• Legally binding minimum commodity and/or cash
  commitments (à la FAC)
• Ex ante notification and monitoring mechanism (à
  la CSSD)
• Predictable, fair rules with clear dispute
  resolution and enforcement mechanisms (à la WTO
  DRM)
• technical expertise on tying (à la OECD/DAC),
  emergencies (WFP/FAO) and targeting (WFP/FAO).
• Like Codex Alimentarius, advance 2 goals fair
  trade and food security while coordinating work
  on best practices by international governmental
  and non-governmental bodies.

11
A Global Food Aid Compact
Implementation by a Global Food Aid
Commission Co-chaired by FAO (CSSD), OECD/DAC
and WFP Interagency coordination among bodies
with technical expertise to advise WTO CoA and to
coordinate among governments/NGOs. Quite similar
to Codex Alimentarius Commission. The
Commissionwould - build on and coordinate
existing technical capacity - improve
monitoring and enforcement - include all
recipients and operational agencies as
signatories - incorporate a universal code of
conduct for recipients, donors and operational
agencies - prevent food aid from becoming
vent for surpluses redirected by new
WTO disciplines (e.g., on STEs, export credits,
etc.). While maintaining past benefits of FAC
and CSSD.
12
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. 4. Need to consolidate existing
technical expertise and set clear, enforceable
rules to balance fair trade and food security
objectives by recasting food aid in support of a
single primary objective to advance MDG 1. 5.
Need a new framework, a Global Food Aid Compact,
to improve food aid governance and convert
awkward resource flows with sometimes-adverse
trade and market effects into more flexible,
efficient means of advancing MDG 1.
13
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) and Towards A Global Food Aid
Compact, Food Policy (April 2006) in press.