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8/10/2019 Gillian Pezdzisai Chigumira 2012 Research Report CSID the Impacts of Program and Project Food Aid on Third World Economies.

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Declaration

I declare this research report is my unaided work. It is submitted in partial fulfillment of the

requirement of the degree of Honours in Development Theory and Policy, Faculty of CommerceLaw and Management at the University of the Witwatersrand, Johannesburg. It has never been

submitted before for any degree or examination in any other University. This research report is

8300 words excluding the references and all cover pages.

Gillian Pedzisai Chigumira

Student Number: 334479

0ctober 2012



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Acknowledgements

My heartfelt thanks, appreciation and gratitude go to the following:

All members of the Corporate Strategy Industrial Development Unit.



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Table of Contents

Chapter 1 ....................................................................................................................................................... 7

Research Proposal ......................................................................................................................................... 7

Chapter Two................................................................................................................................................ 13

Misconceptions and debates against Food Aid in Third World Countries-Evidence and Arguments ........ 14

Chapter Three .............................................................................................................................................. 19

Evidence and Arguments’ in support of Food Aid to Third World Countries. ................ ................. .......... 19

Chapter Four ............................................................................................................................................... 23

Should Third World Countries continue to receive Food Aid? .................................................................. 23

Chapter Five ................................................................................................................................................ 26

How best can we make Food Aid a useful Developmental Tool? .............................................................. 26



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List of Acronyms

DAC Development Assistance Committee

FFW Food For Work

EEC European Economic Community

GFAC Global Food Aid Compact

OECD Organization for Economic Co-operation and Development

OPEC Organization of the Petroleum Exporting Countries

PL480 Public Law 480

USDA United States Department of Agriculture

USAID United States Agency for International Development

WPF World Food Program

WVI World Vision International



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List of figures

Figure 1: Donor Distribution in Recent Decades ....................................................................................... 13

Figure 2: Donor Distribution in Recent Decades ....................................................................................... 13



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Chapter 1

Research Proposal

I ntroduction - Over the last six decades, Food Aid has been used as part of development

assistance to the Third World. The ‘Cartel of Good Intentions’ has certainly served a virtuous

purpose when it comes to Humanitarian concerns. One can think of the vulnerable globally, who

have benefited from Food Aid during drought and natural disasters. Despite the above,

questions’ have emerged from Scholars, economists, development practi tioners and policy

makers, whether the invisible hand of program and project Food Aid, has influenced positively

or negatively the economies of its recipients. In 2010 the World Food Program reported that 5, 7

million metric ton of Food Aid was distributed globally, a drastic decline from previous years. In

addition it was discovered that “Cou ntries in sub-Saharan Africa suffered the largest decline infood aid, receiving12 percent or 450,000 mt less than in 2009” (WFP,2011:3). Although a

myriad of reasons can account for such declines, the widely perceived disincentive effects of

Food Aid may play a role. It is the objective of this research report, to explore and examine

whether Food Aid, is still an essential development mechanism. To accomplish this, this paper

will be divided into four main sections: chapter two will provide deliberations on the disincentive

effects of Food Aid, the third will concentrate on arguments in support of Food Aid, the fourth

section will attempt to answer whether Third World countries should continue receiving Food

Aid and the last chapter will provide suggestions of making Food Aid a useful developmental

tool.

Some of the contestations of Food Aid which will be discussed include: effects of dampened

prices, labor disincentives, production disincentives at the micro and macro level, dependency

issues as well as donor strategies to create markets. Arguments in support will explore the

ability of Food Aid to ease foreign exchange constraints, ameliorate balance of payments,

improve agricultural productions and provide essential skills such as practicing crop

diversification. Several of the suggestions will embrace: efficient timing of aid, triangular provision, correct pricing and improving recipient states policies on Food Aid.

Rationale - Since the Second World War, Food Aid has been transferred from more

economically developed countries to the Third World. In recent decades, Food Aid to Third



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multilateral development agency, recipient government, or to international and local non-

governmental organizations (NGOs) (Owokuse 2006).

The foundations of modern Food Aid began in the USA in 1954. The US congress in that year

under President Dwight Eisenhower passed the Agricultural Trade Development and Assistance

Act, often referred to as the Public Law 480(PL480) or ‘Food for Peace’. The PL480 became the

first law globally institutionalizing international Food Aid. The PL480 was divided into four

main sections Uvin (1992).The first section known as Title One presents concessional sales to

governments of low developed countries, for resale back in their local markets. The earnings or

rather counter funds, are to be used for agricultural development or in a manner thought best by

the United States Department of Agriculture (USDA). Title Two, often run by USAID-US

Agency For International Development, contributes aid in the form of food to the United Nations World Food Program (WPF) and many US non-governmental organizations. Title Two

chiefly targets aid needed for humanitarian purposes. The third section of the PL480,Title Three

aims to meet the food security needs of poor countries. The last part Title Four ‘farmer to farmer

aid’ links farmers in the Third World with farmers in the US for advic e and technical assistance.

In the late 1960s, the European Economic Community (EEC) began to provide assistance to

other countries. The Directorate General of Development of the Commission controlled

allocations. It can be observed that after the 1960s there was a proliferation of Food Aid as other

Organization for Economic Co-operation and Development (OECD) countries began providing

Food Aid. In the 1980s Organization of the Petroleum Exporting Countries (OPEC)- countries

along with China donated Food Aid too. In recent decades global Food Aid has declined.

Literature on Food Aid as written by Fitzpatrick and Storey (1989), Tschirley, Donovan and

Weber(1996), Abdulai, Barret and Hoddinot (2005) notes that Food Aid distributed for

emergency purposes is by large uncontroversial. The above authors all agree that when hunger or

starvation becomes a reality, due to disasters or conflict, such threats will always warrant people,organizations and states to act, through providing Food Aid. Even all the members in the World

Trade Organization, Doha Work Program, Draft Ministerial Declaration, and Ministerial

Conference in 2005 acknowledge in a general consensus, that emergency Food Aid is essential,

and its provision should not be deterred by any state Clay (2006). Although Food Aid for



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ideologies relating to the disadvantages of Food Aid and bringing to light evidence and research

supporting Food Aid in the current global era is one aspect which needs to be continuously

written upon for future policy making in both donor and recipient countries.

The literature on Food Aid, this paper believes has not been acknowledged fully, that the

percentage of Food Aid flowing to Third World Countries is decreasing globally especially that

for Program and Project Food Aid. This could have detrimental effects on development. The fact

that worldwide development global initiatives are being embraced to meet the Third World

countries, the literature on Food Aid should try as much as it can to focus on the truth and

evidence of disincentives , the positive aspects of Food Aid and by large the how best Food Aid

can be made a useful developmental tool.

This paper made use of qualitative and quantitative methods. Qualitatively it used a smallnumber (small n) of cases. Using a small number of cases allowed for the measurement of

causality, George and Bennett, (2005). The cases selected were states and regions that received

program or project Food Aid. Most of the cases or evidence used was drawn from Third World

countries such as Ethiopia, Kenya, Mozambique and India. Cases were chosen because they were

instrumental (give an insight into important issues affecting the global village).

The methodology which was employed by this paper sought to establish a causal relationship

between program (Food Aid in its monetary form) and project (Food Aid in the form of projects

such as Food For Work or Cash For Work) Food Aid, and its impact on government policies

towards agriculture, incentives upon farmers to produce, dependency upon aid, food prices,

liquidity constraints, balance of payments constraints etc. Qualitative methods were utilized

because they allowed for the simple understanding of concepts and ideas, thorough engagement

with the interested phenomena.

This paper made use of Document analysis was utilized. Secondary, official documents, media

reports, scholarly articles, journals and books were used. Data was collected from existing

knowledge on all cases, no primary information was collected.

Limitations; Due to time constraints and finance, interviews with donor states and communities

which received program and project Food Aid could not be carried out, to corroborate



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Figure 1: Donor Distribution in Recent Decades

Figure 2: Donor Distribution in Recent Decades



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2000 dampened prices were observed on sorghum, (Barret and Maxwell 2005). In both cases the

FAO (2006) asserts that timing of aid was the main factor behind the disincentives as it came

near harvest times, in a number of cases the FAO has reported that Food Aid is in itself not a

necessary evil but other human errors.

The founder for price disincentives effects of Food Aid was Schultz in the early 1960s. Some of

his major original propositions and assumptions were that: i. the recipient state is based in a close

market economy and prices are determined domestically without any influence from either

international trade or local government , ii the Food Aid ‘basket’ is identical to the domestically

produced food basket, iii food aid is non targeted to the most food insecure and poor segment of

the population and Food aid is also assumed to be additional to regular food imports (i.e., no

commercial food import displacement) (Owokuse 2006:19 ). As Owokuse (2006) states, if all theabove assumptions hold, the production and price disincentive would certainly be expected.

However, Owokuse (2006) articulates that the sum of Schultz propositions are unrealistic,

making his arguments on disincentives frail. He notes that in the current global era, it would be

unrealistic to assume closed economies for recipient states, for the reason that a good number of

Food Aid recipients partake in international trade and certainly experience in one form or the

other, government interventions in the food market. Mohapatra et al (1999) in Owokuse (2006)

found Schultz propositions were unclear, “in that net effect of food aid on the recipient’s

economy is analytically ambiguous because the outcome depends upon diversity in the recipient

countries investigated and specific food aid program characteristics”.

Labor Disincentive- In conjunction with the above argument on price disincentives, policy

makers and development practitioners alike often blame Food Aid for decreasing agricultural

output. Many Third World countries and particularly those in Sub Saharan Africa, subsistence

farming is a common practice. Project Food Aid, predominantly FFW has been held responsible

for labor disincentives. Labour disincentives, are believed to be initiated through : leisure from

‘free food’ or labor being diverted to other FFW projects such as building roads and insufficient

investment in farming machinery in the long run, Barret, Abdulai and Hoddinot (2005). In a

large empirical study of Sub Saharan Africa, Barret, Abdulai and Hoddinot (2005) found that



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labor disincentives indeed occurred, but it was among the disabled who received free food.

Barret, Abdulai and Hoddinot (2005), stress that at times distinctions linking causality and

correlation is critically important. Abdulai et al. (2005) in Bezu and Holden (2008) traversed

that in a household survey in Ethiopia, the labor disincentive effect was not plausible owing to

the fact that production levels were not disturbed.

Government Policies- At a macroeconomic level, advocates against Food Aid assert that it

discourages or reduces the incentive for recipient governments to invest in agriculture, hence

undermining overall production of that state. Agricultural policies such as investment in inputs is

said to suffer in the presence of Food Aid. Owing to the fact that much of the disincentive effects

are reported to occur in Africa, it is only fair for this paper to argue using evidences from the

continent. Barret, Abdulai and Hoddinot (2005) studied a sum of forty -two 42 sub-SaharanAfrican countries that received Food Aid. They used data from the FAO, WFP and many other

data sets from organizations both local and international including their own findings, they

observed that food production in the presence of aid, saw a “one kilogram per capita increase in

food aid shipments yield[ing] an expected net increase of about a one-third of a kilogram per

capita in the subsequent year ’s food production” (Barret, Abdulai and Hoddinot 2005 : 20). In

their paper entitled ‘ Does food aid really have disincentive effects? New evidence from sub-

Saharan Africa*’ Barret, Abdulai and Hoddinot (2005:23) are quoted saying “If anything, food

aid appears to have been mildly stimulative to, rather than a drag on, African agricultural

productivity”. The stimulative effect has been attributed to Food Aid’s ability to ameliorate

financial constraints. More will be discussed in chapter three on this aspect. Lowder (2004) using

a cross country panel data analysis found that irrespective of program or targeted aid, no

significant disincentive effect was found upon local agricultural production in recipient state

economies. His hypothesis of lack of disincentives, came to the same conclusion as that of

(Maxwell, 1991; Arndt and Tarp, 2001).

In 2007 the United Nations Economic Commission for Africa in Ethiopia, ECA published a

paper entitled ‘Impact of Food Aid and Developing Countries’ Agricultural Subsidie s on Long-



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term Sustainability of Food Security in Southern Africa’ . The paper was based on a

comprehensive region-wide econometric model. It included eight Southern African countries

namely Zimbabwe, Zambia, Swaziland and Malawi with data drawn over 25 years from the

period of (1980 to 2005). The Economic Commission for Africa (2007) found and reported that

in their overall case analysis, that there was not enough convincing evidence showing Food Aid

used in emergency , program or project affected food production in a negative manner. The

ECA, boldly highlighted that “ food aid [was] not a major cause of agricultural stagnation or the

governments’ inadequate investment in agriculture in the sub region” (ECA 2007:42). Levy and

Barahona (2002) in ECA (2007), aver that in Malawi, production levels were not really disturbed

by Food Aid and price disincentives, but rather by weather conditions.

Donor market creation – Another held belief of Food Aid, is that it has the ability to selfishly

create market for the donor country due to newly acquired tastes. In essence it is believed that,

the recipient state will neglect local production as people stop buying local produce and import

more foreign food in the future. Uvin (1992) asserts that some of the hefty commercial food

imports of several of the purported triumphant stories of early food aid, South Korea ,West

Germany Japan, Portugal and Taiwan, were due to their sharp rises in incomes ,than that of the

PL480 Aid. More evidence, Uvin (1992) notes, shows that some of the top recipients of US Food

Aid from the 1960s to 1980s: Spain, India, Vietnam and Poland are not even significant

importers of cereal grains from America. In fact he notes that most the above became strong

competitors on the global market. Barrett et al (1999) in a decisive empirical study, used data

from 18 recipient states. They tested the hypothesis that a J-curve effect existed between US PL

480 food aid consignments and commercial food trade volumes. Barrett et al (1999) found

backing for the J-curve effect. He noted commercial imports fell in the short run as it is primarily

displaced by food aid, in conjunction it was observed that commercial food imports by recipients

increased in the long run due to the dynamic income multiplier effect.

Dependency and the poor- Advocates against Food Aid, often complain that assistance provided

in the form of cash to recipients may have negative effects. Cash transfers it is said, expands or

increases local food demand. Demand in turn either initiates more commercial purchases abroad



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or the need for food Aid. According to FAO (2006) the result of increased demand compared to

supply leads to higher prices of food. Higher food prices often affect the poor, who are net

buyers. In another negative consequence, dependency is always mentioned. Advocates against

Food Aid, believe that when dependency occurs when intervention mearnt to meet existing needs

decrease or diminish the capacity of recipients to meet their own needs in the future. Often when

Food Aid it is noted discourages self support or self reliant behaviors such one getting a job, or

farming. Dependency at the micro level, (Bennett, 2001; Harvey and Lind,2005) in FAO (2006)

argue is not always possible, reasons being that individuals are never certain who is being

targeted and the quantity of Food Aid available for projects or handouts, hence they would not

entirely rely on aid for economic safety because it does not provide reliable insurance. Bennett,

2001; Harvey and Lind, 2005 in FAO (2006) also assert that quantities of food given to

households, i.e. in FFW are usually too small to encourage long term reliance.



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Chapter Three

Evidence and Arguments’ in support of Food Aid to Third World Countries.

Balance of payments/ relief of foreign exchange constraint - According to Barret (1998) Food

Aid is one mechanism that can be used to meet some of the macroeconomic goals of developingcountries. Program Food Aid in this regard, has been shown to alleviate binding foreign

exchange constraints. Owing to the fact that program Food Aid grants, have a propensity to

replace various commercial i mports, Owokuse (2006:17) articulates that “it could serve as a form

of balance of payments support when some of the foreign exchange that would have been spent

on food imports is saved”. Since program Food Aid is generally monetized through its sale at

market prices, counterpart funds generated by the state can be utilized to invest in and provide

essential public goods, such as agricultural research and extension of physical infrastructure,

rural health and education Barret (1998). The foreign exchange concept has been thoroughly

examined through the Slutsky equation analysis in Tunisia, Bezuneh and Deaton (1997).

Revenues from Program Food Aid in Tunisia were instrumental in promoting national

agricultural production.

Ease liquidity constraints- Food For Work (FFW) projects according to Bezu and Holden (2008)

have been considered to be significant and important especially at the micro level. FFW projects

are commonly ‘public work projects’ in which a community or individuals supply their labor in

exchange for Food Aid. Either than providing an increase in overall food availability, FFW has

been praised for its effect on relaxing liquidity constraints. It has been widely accepted or agreed

upon that “rural economies of developing countries are affected by pervasive market

imperfections” (Bezu and Holden, 2008: 541). The lack of credit or insurance markets has been

noted globally, as disabling already liquid constrained individuals and families from investing in

agriculture. Bezu and Holden (2008: 541) assert that a FFW job has the possibility of easing the

liquidity constraint henceforth allowing “farm households, who are both producers andconsumers, to purchase more inputs”.

In depth studies by Abdulai et al (2005) in Bezu and Holden (2008), provides evidence, that

easing of the liquidity constraint, can actually increase agricultural development. The study of 42



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countries in Sub Saharan Africa done,, by Abdulai (2005) in Bezu and Holden (2008) through a

vector autoregressive model, illustrated that Food Aid had constructive effects on food

production with up to two years of lag. Agricultural development it was noted was boosted by

the contribution of income emanating from Food Aid, in easing factor market constraints

precisely that of the financial liquidity constraint, which has often plagued production in Africa.

Another study done by Barret et al (2001) in Bezu and Holden (2008), involved evaluating

mean incomes, from diverse activities for people participating and not participating in FFW

programs. The results of this study in the Baringo District of Kenya, suggested positively that

participants in the lower half of the income distribution who participated in FFW, did not have to

sell their livestock or any other assets they owned to an extent as those not involved in the

program. In addition, those in the lower income distribution also saw an increase in both crop

income and non-farm income. In an earlier research in Baringo Kenya, Bezuneh and Deaton(1997) found that participants in FFW had increased capital investments, which helped eradicate

financial constraints in the opening year of production. Overall, a 52% rise in net farm income

was achieved. Even more welcoming, Bezuneh and Deaton (1997) observed that net incomes,

managed to create employment as local households hired more labor to aid in their productions.

Supports Agricultural Production - One of the most comprehensive studies done on Food Aid

and its effect on agricultural production and individual welfare was that done by Holden et al in

the four zones of Tigray Ethiopia in 2001, covering 16 villages. Ethiopia, in the last few years

and even up to now, sits as one of the top countries, receiving Food Aid. Around 2006 to 2007,

the state received at least 24% of Food Aid from the World Food Programs in conjunction to

roughly 27% of other global Food Aid directly to Sub Saharan Africa. A large percentage of this

aid was disseminated through FFW projects, Bezu and Holden (2008). The study had a sample

size of 400 including 234 households who participated in FFW projects. The results showed that

at least 60% of households in Tigray made use of fertilizer, which encouraged better agricultural

production. Of the 60% it was noted that two thirds were participants in FFW programs. Either

than an increase in the use of fertilizer, most households were able to buy farm equipment

necessary for production. In a market with poor credit, Food Aid proved to encourage

agricultural production. What is more credible about the study, was that the weaknesses of



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econometric testing using the Heckman model was bolstered by the same results when

interviews were conducted upon the same households Bezu and Holden (2008). Singer ( 1987)

writes that Food Aid, was one of the mechanisms that helped India finance the Green

Revolution. Singer (1987) notes that even in the days when most European countries received

aid from the Marshall Plan, their agricultural output and domestic production of food was not

deterred but actually improved drastically.

Skills development - Referring to an earlier case study, which was conducted by the ECA (2007)

in Southern Africa, Food Aid in the form of project aid, was responsible for a number of benefits

both to the people and environment. Project Food Aid, advocates note, has the ability to create

platforms in which skills and expertise can be shared. In Zambia, through the through World

Vision International (WVI) , CARE and Catholic Reserve Services – CRS, Consortium forSouthern Africa Food Security Emergency C-SAFE, Food For Work programs, beneficiaries

and participants developed skills on vegetable gardening, conservation farming, crop

diversification, water harvesting and grain storage. All of the above skills which were developed

are extremely essential for improved agricultural production which will ensure the future food

security, ECA (2007).

The FAO (2006) illustrated that Food Aid can be a good tool in promoting local market

development. The promotion it was observed was that Food Aid helped to cultivate competitive

efficient channels by which food could drift from producers to consumers. The (FAO 2006: 43)

suggested that “Market -mediated food-aid operations – whether on the supply side through

monetization of in-kind food aid, or on the demand side through local and regional purchases

using donor cash resources – sometimes have an explicit goal of helping to develop food

marketing channels in low- income areas where markets perform rather poorly.” In an example

from (Abdulai, Barrett and Hazell, 2004; USDA, 2001) in FAO (2006), market stimulation could

be brought forth is Food Aid was put up for sale through small village or community based

processors and traders. One of the most frequently cited example by many economists and

advocates is the Indian experience. Operation Flood which was initiated from 1970 to 1995,



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helped create milk producers’ cooperatives and endorsed current dairy production along with

processing technologies in many Indian rural villages, (Candler and Kumar, 1998; Doornbos

et al ., 1990) in FAO (2006). Further monitoring of the operation revealed that instead of the

program linking 18 milk sheds with milk markets of Mumbai, Delhi, Madras and Calcutta, by

1985, 136 milk sheds had been linked to more than 290 markets in urban areas around the four

major cities. In Southern Africa, Mozambique’ Food Aid program since its operation in 1992,

helped create and facilitate the expansion of informal marketing systems and small scale

milling industries, Tschirley, Donavan and Weber(1996). (Tschirley, Donavan and

Weber1996:206) indicated that “[informal markets and milling industries] play[ed] key roles in

linking Mozambican producers and consumers and providing consumers with affordable maize

prices”.



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Chapter Four

Should Third World Countries continue to receive Food Aid?

In order for scholars, policy makers, economists, and development practitioners to reach a

decision as to whether or not Third World countries should continue receiving Food Aid(program or project), evidence of its impacts is essential. According to Owokuse (2006) whether

evidence is gathered empirically, molded theoretically or drawn from ethnographies it will

always be questionable. Empirical studies for example may face problems in data collection due

to insufficient socioeconomic institutions or a lack of physical infrastructures such as roads

which are crucial for data collection in a number of the recipient states. At times political unrest

or conflict may deter adequate data collection or even its high costs. The methodology which

researchers use can also be constrained. While qualitative work may be subjective or bias,

quantitative work may fail to quantify certain aspects which are unobservable or suffer from

omitted variables in empirical model specifications. Owing to the fact that evidence to support

impacts of Food Aid will always be riddled with inaccuracies, decisions can only still be made

with research that is available.

One cannot dispute, the need for emergency Food Aid in humanitarian situations or for the

purpose of eradicating food insecurity. Although not necessarily the focus of this paper, it is

worthwhile noting how helpful Food Aid has been in disaster prone areas. One can relate to the

tsunami and earthquakes which devastated Japan in 2011 or the East Asian Tsunami in 2004

which affected over nine countries. Even in non emergency situations, Food Aid is imperative in

improving the well-being of millions of people, especially in the Third World in terms of

livelihoods and meeting both health and nutritional means. According to (Bezuneh and Deaton

1997 : 676 ) “[undertaking] investments today that diminish higher social costs in the future” is

the pathway to better lives.

Chapter Two of this paper, discussed the common disincentive effects of Program and Project

Food Aid. The first disincentive effect of the price mechanism, certainly possess a conundrum to

producers and sellers, as both may face increased losses. Although dampened price effects do

exist and more so soon after an injection of Food Aid, disincentive effects have been attributed

more to a lack of appropriate timing. This illustrates that such negative effects are human errors



25

the last chapter of this paper will discuss ways in which Food Aid can be made a useful

developmental tool.



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Chapter Five

How best can we make Food Aid a useful Developmental Tool?

Supply and Demand - One of Food Aid disincentives discussed earlier was that of prices. Food

Aid has been noted to dampen market prices if supply exceeds demand. According to Fitzpatrickand Storey (1989), there are three main ways in which the price disincentive effect can be either

avoided or lowered. These three revolve around the nature of food markets in Third World

countries, the supply side of Food Aid and the demand side. On the supply side, for as long as

Food Aid does not increase the overall food supply, the problem of dampened prices can be

deterred. If Food Aid simply replaces or substitutes ‘commercial imports’ that a country

receiving Food Aid ought to have purchased in normal circumstances, for example its Usual

Requirement Market (URM), then Food Aid ought not raise the net quantity of food on hand.

The above is commonly known as Import Replacement. Import Replacement, economists and

international organizations such as the World Food Program note, is imperative for development

in many Third World countries especially in Africa ie (saving revenue to pay balance of

payments).

With regard to demand, Fitzpatrick and Storey (1989) explain that an increase in demand may

deter the price disincentive effect. By carefully targeting the populace which would to a greater

extent consume Food Aid, despite existing levels or lower prices, demand may be increased. For

as long as the Food Aid can ensure higher levels of consumption, the price disincentive effect

can be deterred. According to Fitzpatrick and Storey (1989), targeting can be accomplished in

several ways. For starters, a system of food stamps may be introduced. Fair price shops can also

be established, which permit the disadvantaged or poor to get food at subsidized prices.

Secondly, there can be the allotment o f ‘self -targeting’ commodities which particularly, are often

more than not consumed by people in a lower income group. Evidence provided by Fitzpatrick

and Storey (1989:244), shows that subsidized fair price shops were ways which offset“ the

expected detri mental price impact of food aid on Indian agriculture in the 1960s and 1970s.”

It is important to note that Import Replacement, like any other viable solution may create or

exacerbate other problems. For example donors may want to provide Food Aid, solely for the

purpose of increasing the overall food supply. This maybe so, if increasing food supply is meant



27

for nutritional purposes. Another concern mainly originating from trade exporting countries is

that Food Aid may distort trade. If Food Aid is provided to substitute imports, then those who

export maybe at a loss. In order for the above to happen, one would have to prove which imports

would have been seen through, in the presence of Food Aid. Fitzpatrick and Storey (1989).

Correct Pricing- Program Food Aid has been blamed for bringing about the price disincentive

effects which in turn affects production levels domestically. According to Hopkins (1982) Food

Aid, despite the fact that it was donated, linked to a project or even sold concessional, ought to

be sold in the recipient state at a moderate to reasonable price. If it is sold way too much below

the import parity, price disincentives may crop up. On the same token, if it is sold way above

normal prices, its purpose of creating extra revenue maybe deterred.

Triangular procurement - Barret and Maxwell in Clay (2006), note that Food Aid can become auseful developmental tool for Third World countries if donor states change their policies and

legislative rules in its procurement. Clay (2006) writes that members of the Development

Assistance Committee (DAC) of the OECD should reach an agreement or consensus on the

untying of Food Aid. Untying Clay(2006) recommends, means to a greater extent , donors

abolishing policies that Food Aid should be procured in their market only, but that it should and

by large be open to procurement in developing countries globally. Through such acts, Third

World countries not only become active in the development progression or humanitarian

assistance of the fellow peers, but they also increase their market base, allowing for extra

revenue from sales. This idea or recommendation was put forward in 2005 at the Doha Work

Program , in Hong Kong after it was realized that the USA, one of the world’s leading donors in

Food Aid (provides almost 50%), approximately procured 99% of its food from its market.

Canada, Denmark and France have shifted their procurement and buy more food in Third World

states,Clay (2006). Procurement from developing countries is often known as triangular

procurement. Triangular purchasing also has the advantage of cutting down costs. Were as Food

Aid would cost more to ship from the USA to Zambia, the USA could easily cut down such costs

by purchasing from South Africa or Namibia.

Service Provision- Another way, in which program Food Aid can best be used as a developmental

tool, is through donors providing employment opportunities for locals with milling stations.



28

Instead of delivering processed grain, donors could grant Food Aid in the form of cereal which is

unprocessed and pay local milling plants for that particular job. Tschirley, Donovan and Weber

(1996) proposed similar ideas in Mozambique, which used to rank among African states

receiving Food Aid. Tschirley et al (1996) observed that during the years Mozambique received

Program Food Aid, from USAID, small milling plants began to grow because of the nature of the

food which was sometimes delivered unprocessed.

Long term commitments- Hopkins (1984) notes that long term commitments are essential for

program or project Food Aid to accomplish its developmental purpose. If long term flexible

commitments become standard procedures between donors and recipients’, as was proposed by

Hopkins (1984), assessing progress, impacts and improving program or project Aid will be much

easier. One can think of a FFW Project in which Food Aid is exchanged for labor for building a

dam or road beneficial to the community. If the project should suddenly cease or end before the

developmental objective was realized, Food Aid would indeed become a failure or rather a

nuisance. For the success of long term commitments, both donor and recipient, would be

required to extensively map out common objectives and goals, reach a consensus on the timing

each year so as not to disturb or divert labor from agricultural production. More beneficial to

Project Food Aid, would be providing technical assistance and expertise to train local officials to

be effective managers. It is this papers belief that long term commitments allow for communities

to become engaged at a personal level with donors, which boosts morale and assurance. It is

important to note that long term commitments are often plagued with regime changes in many

Third World countries making it difficult to achieve goals. Even with donors, commitments are

often deterred for example Food Aid being diverted to fight the war on terror.

Knowledge- One way of making project or program Food Aid even at times emergency aid work

better to achieve developmental purposes, is for donors to acquire as much knowledge or data

about the area, region or country. Learning from some of the failures of structural adjustment programs, a one size fits all approach could be detrimental. Instead of coming with a set of

policies in a carrot and stick approach, donors may achieve more, learning about the food policy

frameworks already existent, the type of food consumed in different regions, the interplay of

markets, amounts produced in different areas and when they are produced.



30

recipient countries need to coordinate their agricultural food policies with those responsible for

receiving or allowing aid to come into the state. Malawi for example has the National Safety Net

Strategy, which deals with all Food Aid, the extent to which its National Safety Net Strategy

policies are inline with department of agriculture is not known. If a merging were to occur,

knowledge and data concerning issues of capacity absorption or market prices of grain, can be

shared so that project or program aid will not cause disincentive effects such as dampened prices.

Zimbabwe has two sectors dealing with Food Aid, the National Policy on Drought Management

and Policy on the Operations of Non-Governmental Organizations in Humanitarian and

Development Assistance which offer guidance on Food Aid. For as long as both streamline their

efforts and harmonize approaches, disincentive effects again such as dependency can be deterred.

The fact that Swaziland Food Aid management is incorporated into the Ministry of Agriculture

and Cooperatives may be something other states can follow.

Nature of Food Aid- program or project Food Aid can become a useful developmental tool if it

reduces some of its price disincentive effects as noted by many scholars and advocates against it.

One way observed by Tadese and Shively (2010), is providing Food Aid which does not

necessarily displace local staple foods. Tadese and Shively undertook a study in Ethiopia in the

regions of Addis Ababa, Debre-Markos, and Dessie from1994 to 2006. They discovered that

Teff, a highly regarded indigenous cereal rarely faced price disincentives. This was because all

imported cereals were normally viewed as poor substitutes. Maize and wheat it was observed

were the only cereals found to be close substitutes of Teff among the extremely poor. The nature

of food could help local production in that producer’s incentives to produce and se ll would not

be affected. Wherever possible donors could procure food different form the staple food.

Skills-In Zambia, through the Through World Vision International , CARE and Catholic Reserve

Services – CRS, Consortium for Southern African Food Security Emergency (C-SAFE) , andFood For Work programs, beneficiaries and participants developed skills on vegetable

gardening, conservation farming, crop diversification, water harvesting and grain storage. ECA

(2007). As noted before, such skills are essential for improved production and long term food

security initiatives. Project Food Aid, should aim to continue with such specific initiatives. In



31

addition, Food Aid to developing should continue with the USA PL 480 Title Four initiative.

This initiative links US farmers with farmers in developing countries for reasons ranging from

sharing experiences, to sharing information and technical assistance. If other donor countries can

adopt similar schemes, agricultural development can be improved.

Conclusion - in conclusion, it is this papers position that Third World countries should continue

to receive program and project Food Aid. More Food Aid should actually be made available for

Food Aid as a developmental mechanism. Food Aid within itself is not an evil at all. Any

disincentives are by large human errors and can be avoided. From the evaluations on its

misconceptions, its positive and useful impact and ways in which it can be improved; Food Aid

is indeed a useful developmental tool.

This paper in sum, explored the misconceptions of Food Aid. Some of the misconceptionsinclude: the impact of Food Aid on damped prices, is disincentive effect on micro and macro

levels of agricultural production, its dependency effect, its donor market creation tool and is

labor disincentive effect, especially when it come to FFW projects. Arguments in support of

Food Aid assert that: it eases foreign exchange constraints, helps in balance of payments, helps

realize certain development objectives (program aid), offers essential skills such as skills on crop

diversification and grain storage, eases the liquidity constraint, boosts agriculture produce and

though not dealt into much, provides humanitarian relief and food security. Lastly, this research

report provided several ways to make Food Aid a useful developmental tool. They include:

tradeoffs between supply and demand, triangular purchasing, effective timing, and increased

knowledge base of recipient countries by donors, long term commitments by donors, effective

recipient government policies and nature of aid.



32

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