The famine in the Horn of Africa has shed light not only on the scale of the human disaster, but the urgent need for long-term agricultural policy reform and an overhaul of the global food aid system.
Tonight, some 1 billion people will go to bed hungry. This year, according to the US Department of Agriculture, 3.5 million children will likely die of malnutrition. The famine in the Horn of Africa – Somalia, Ethiopia and Djibouti – is said to be the worst in the African continent’s history. In Somalia – the most badly hit – about 15 million people are reported to be affected by drought and famine, almost half of the country’s population. Clearly, this alarming situation has many causes. Africa, which was a net-food exporting continent in the 1970s, became a net-food importer in the 1990s. It is a continent in need of a radical overhaul of its agricultural policies, especially since it also happens to be the continent with the greatest amount of arable land that is left fallow. The sheer numbers of people afflicted by famine in the African continent and elsewhere force us to think not only about long-term agricultural policy reform, but also about the urgent need to come to the aid of those now hungry; hence the question of more immediate food assistance.
Today, most countries commit funds solely for food aid either through the Food Aid Convention, under which they have certain minimum commitments to meet, or through the World Food Programme to support its multilateral activities. Cereals represent the bulk of the aid, followed by edible oils, skimmed milk powder, sugar and seeds. Globally, there are several types of food aid. Emergency aid given in
response to life-threatening situations represents three-quarters of global food aid. But there are other types of food aid, such as ‘programme and project food aid’, which can be a resource transfer mechanism, allowing food to be monetized, or sold, to generate funds for the recipient.
Food can be delivered through one of three avenues: direct transfers, under which all food must originate in the donor country; triangular purchases, where food aid is purchased or exchanged in one developing country for use as food aid in another; or local purchases, where food is procured in the same country as it is used. Triangular purchases are considered to be the closest approximation to an unrestricted commercial transaction or an internationally competitive tender. Today, several large donors provide the vast majority of their food aid in direct transfer form.
Sadly, the global food aid system is not properly responding to the plight of the millions of hungry across the globe. Perhaps its biggest flaw is that countries tend to provide the most food aid when food prices are low and stocks are high, and not the reverse. In other words, generous food aid tends to be given when it is not needed, and to be withheld when famines beckon.
In addition, much of the world’s food aid is ‘tied’ – i.e. linked to purchases being made in the donor country (or is directly transferred). Tied food aid costs, on average, 50% more than purchasing the same food locally and 30% more than buying it from third countries. In general, donors who have untied their food aid and are free to buy from the cheapest suppliers are the most cost-effective. In fact, study after study has shown that there is scope for considerable efficiency gains in switching to less restricted sourcing, which could benefit agricultural development in many low-income countries. The United States is the world’s greatest supplier of tied food aid today, providing almost all its aid in tied form, followed by Australia and Canada, while the European Union ties around 75%.
A related issue is that of the monetization of food: the sale of food to provide cash for recipients or cash for other humanitarian purposes. The use of food as development aid has been questioned by many agricultural policy experts on the grounds of its ability to destroy local food production systems. The systematic sale of low-cost food (often highly subsidized by developed countries) in developing country markets can crowd out local farmers, creating shortages in local production and eventually endangering the longer term food security of the recipient country.
During the World Trade Organization’s Doha Round, negotiators have decided to take a long and hard look at the world’s food aid situation from a trade policy angle. At issue has been the claim by several food exporting countries (in particular the Cairns Group – a coalition of 19 agricultural exporting countries that brings together developed and developing countries from Latin America, Africa and the Asia-Pacific region) that the twin practices of tied food aid and monetization have been acting as an export subsidy to the producers of the donor country. In the recipient country, these practices have not only been harming local production systems, but also displacing third-country exports.
While food aid constitutes only 5% of development assistance from Organisation for Economic Co-operation and Development (OECD) countries, and less than 2% of developing world imports, these figures become more significant when disaggregated at the country level. In some African countries, food aid is an extremely significant proportion of total imports. A particularly large food aid donor is often cited in the corridors of the WTO, with exports of 7–20% of its wheat and 50% of its skimmed milk as food aid, depending on the year.
After tough negotiations at the WTO, a draft text on food aid emerged in the context of the Doha Round’s agricultural chapter. The text sets out general principles that all types of food aid must respect, and then proceeds to break down food aid into two categories: emergency and non-emergency aid, for which specific conditions were set. Most notable in the general conditions are the following principles: that food must be needs-driven, must not be tied to commercial exports, and must not be linked to market development objectives. Furthermore, the text states that ‘members are encouraged to procure food aid from local and regional sources.’
For emergency aid, the text created a ‘Safe Box’ defining by whom and how food emergencies could be declared, necessitating needs assessments for these emergencies, and prohibiting monetization altogether. For non-emergency aid, a needs assessment would also be required, the aid would have to ‘minimize commercial displacement’, and monetization would also be prohibited, but with certain exceptions. This includes monetization for the financing of the internal transportation and delivery of food.
Unfortunately, the draft text on food aid has been held hostage by the rest of the Doha Round, on which WTO members are failing to agree, and which subsequently has not seen the light of day. Had it been adopted, the text would have brought much needed reform to the global food aid system. It would have weeded out the aid that is intended to act as a hidden export subsidy to the donor country from the aid that is genuinely intended to help people in need. And, in so doing, it would have prevented the types of practices that destroy the agricultural systems of the recipients and which do not help their long-term food security. At times of global food surpluses, it would have prevented food aid from becoming the vehicle through which developed world farmers can simply channel their excess production abroad.
But within the food aid battle at the WTO, a number of countries resisted until the last minute, most notably those that engage in monetization the widest. As monetization is a practice in which mostly United States-based non-governmental organizations (NGOs) engage, many WTO members are concerned about the direction that any future United States Farm Bill would take. In 1987, Congress had required that a minimum of 5% of the total value of non-emergency commodities aid be monetized. After strong lobbying by NGOs, this was raised to 10% in 1988 and to 15% in 1996. But in a recent Congressional hearing on Foreign Agriculture and Food Aid Programs (13 July 2011), the United States Agency for International Development (USAID) argued that ‘the multiple legislative mandates for Title II in the Food for Peace Act create a number of operational difficulties and hinder the effectiveness’ of the programme. These included the mandate instructing USAID to ‘monetize at least 15% of development aid.’ It remains to be seen, however, whether USAID or the NGOs operating in the food aid field will prevail in the write-up of the 2012 Farm Bill.
If the Doha Round eventually succeeds, the Food Aid text will undoubtedly represent substantial progress in the reform of the global food aid system. But what if it were to fail? Should this reform too die along with it? And would not the world have missed a significant and important opportunity for reform? The draft text on food aid already exists in the WTO; it is a low-hanging fruit. Somebody should just pick it and go.
This article is written in Doaa Abdel Motaal’s personal capacity and does not necessarily reflect the views of the organization.