Points of criticism with regard to food aid’s effectiveness

One of the main criticisms which has been expressed in the food aid debate has its origins in the 1950s and 1960s, when food aid was often used as a means of disposing of developed nations’ surplus agricultural products, especially grain, in order to increase local farmers’ incomes (Clapp 2012, p. 1; Levinsohn and McMillan 2007, p.

562; Barrett and Maxwell 2005, p. 19). This donor-driven approach to aid has been widely criticised for several reasons. First of all, it is obvious that bilateral food aid flows undertaken by donors to support local agriculture are procyclical with supply and countercyclical with prices. Therefore, food aid flows are particularly high when grain stocks are high and prices low and thus during periods when developing countries might not face severe malnutrition problems (Clapp 2012, p.35).⁸⁹ Conversely, it has been observed that food aid flows were particularly low during food aid crises, for example in 1974 and during the 1990s (Barrett and Maxwell 2005, pp. 27). Looking at the relationship between food aid flows and real wheat prices of the largest food aid donor

— the United States of America⁹⁰ — we find evidence that the criticism is justified.

Figure 5.3 shows that wheat food aid shipments decreased when wheat prices peaked.

During the food crisis in 2007, when food aid would probably have been needed most urgently, food shipments were particularly low.

Barrett and Maxwell (2005, p.32) argue that there is an automatic linkage between food aid shipments from a fixed dollar budget and producer prices, as less food can be purchased from this budget at high price levels. Especially if food aid is tied, that

89 Of course, a bad harvest in the donor country does not imply that recipient countries suffer from bad harvests or natural disasters at the same time. However, the global food prices are strongly influenced by harvests in countries that are major producers of foodstuffs (which are very often also large food aid donors) and thereby affect food availability in developing countries, as well.

90 We use the United States as an example, because real producer prices can be calculated more accurately for a single nation and the United States were most frequently associated with this particular criticism.

However, data for shipments from NGOs and the European Union (data: INTERFAIS) show the same pattern (see Figure A1 and A2 in the appendix).

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Figure 5.3: U.S. wheat food aid shipments and producer prices

Notes: Data on wheat food shipments are from the World Food Programme (WFP) International Food Aid Information System (INTERFAIS). Nominal prices of U.S. wheat are from the U.S. department of agriculture: http://www.usda.gov/wps/portal/usda/usdahome?navid=DATA_STATISTICS. Real prices were calculated by using the GDP deflator of the World Bank.

is, goods and services (such as shipment) must be bought from suppliers of the donor country, the amount of food aid is heavily dependent on prices in the donor country. In case of a severe bottleneck in the production, the donor might not even be able to keep recent budget levels.⁹¹

Time and cost-inefficiency is another topic that has been widely debated. If food aid is given as in-kind assistance – which usually means that foodstuffs (mostly grain) are shipped from the donor to the recipient country – relatively high transport costs and transport times are involved. Particularly in the event of natural disasters, when immediate nutritional support is crucial, the time delay might have devastating implications. Moreover, the financial resources that are spent on transport could have been allocated more efficiently elsewhere. Some donors have tried to respond to these problems by purchasing food locally or in other developing countries that are net food

91 In figure 3, the food aid budget sometimes decreases before wheat prices increase. This probably stems from the fact that — in contrast to the data used in the regressions below — commitments instead of actual disbursements are reported here. Food aid commitments can be adjusted downwards before an actual price increase, for example if a bad harvest is expected.

Chapter 5. Does food aid improve child nutrition? An anthropometric assessment of children’s nutritional status in recipient economies.

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exporters. However, tied aid⁹² still accounts for approximately 80 per cent of total food aid (Awokouse 2011, p. 496). In the case of Ethiopia, only 59,000 tonnes of wheat intended for nutritional support have been purchased locally in contrast to 1,074,000 tonnes of imported wheat in the year 2000 (Levinsohn and McMillan 2007, p. 566).

Poor targeting is another big issue in the food aid debate (OECD 2013;

Awokouse 2011, p. 494, among others). Do donors really give the largest share of food aid to countries with the greatest need or do they link food aid to political interests? And does food aid — once distributed to a recipient country — flow to the poorest households or do people with higher incomes benefit from it? Some studies provide evidence that overall food aid has generally been allocated to the neediest countries, but quantities were not big enough to stabilise consumption (Gupta et al. 2004; Kuhlgatz et al. 2010). Neumayer (2005) has examined donors interests in the allocation of food aid in more detail and finds a preferential treatment of geographically close countries and those countries with the same voting patterns in the UN, while neither military-strategic or export interests nor preferential treatment of former colonies play a major role. On the within-country income level, food-for-work programmes were found to rather benefit households in the middle and upper tail of the consumption distribution, while poor households actually benefit from free distribution (Gilligan and Hoddinott 2007).

Finally, food aid has been criticised for being poor in quality and not containing enough micronutrients to improve the nutritional status of the recipients (Clay et al. 1998).

In consequence of the above-mentioned inflexibility and inefficiency of conventional government-to-government in-kind food aid, many donors have recently switched to cash and voucher distribution or local and regional procurement. However, this kind of nutritional support – that is supposed to be free from donor interest bias and delays in delivery – has been suspected to have certain disadvantages as well. In particular, there is concern about potential effects of local procurement on food prices and increasing market price volatility in procurement countries. Although previous studies were unable to confirm such effects for the recent past (Garg et al. 2013), local

92 Meaning it is given on the condition that it will be used to buy goods or services from a specific country or region (mostly the donor country). Tied food aid is therefore either in-kind aid shipped from the donor country (or another country that is chosen by the donor) or monetary aid that has to be spent on food or services produced by the donor country.

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procurement might become a critical issue once food will be bought by an increasing number of different food assistance actors in the future, as coordination might become more difficult with increasing volumes of purchased food (Lentz et al. 2013). This and the arguments discussed above cast severe doubts on food aid’s effectiveness in improving recipients’ nutritional status and well-being.