FOOD AID BILATERAL DONORS Michela Broseghini Erika Chavez Yulia Mikhaylova Maria Nella Lippi

Introduction Bilateral Food Aid: Delivery Modes Granted and distributed on government-to-government basis Delivery Modes Local purchases account for the food aid procured in a country and used as food aid in the same country. Triangular transactions are the food aid purchases or exchanges in one country for use as food aid in another developing country. - Direct transfers include all food aid originating from a donor country. In 2000, 25% of multilateral food aid was procured through local purchases and triangular transactions vs 10% of bilateral food aid, which is mainly directly distributed.

Introduction History 1951: Canada (surplus disposal) 1954: USA (Marshall Plan + domestic & foreign policy instrument) Mid 1970s: Europe Untill ‘73-’74 (world food crisis): mainly bilateral f.a. by US to pro-US countries (cold war) Late 1980s: from ¼ to 1/3 of tot f.a. by multilateral WFP Today: Only US continues on bilateral basis

CHANNELS OF FOOD AID FLOWS 2000 vs. 2004 (WFP)

Food Aid Delivery by Channel in Percentage (2000-2005 WFP)

FOOD AID DONORS

US:Development Agencies and National Concerns USAID US Agency for International Development It receives overall foreign policy guidance from the Secretary State, supports long-term and equitable economic growth and advances U.S. foreign policy objectives by supporting: Economic growth Agriculture and trade Global health Democracy Conflict prevention Humanitarian assistance. B. USDA US Department of Agriculture Principal concerns focuses on: Domestic Surplus Disposal Export Promotion Objectives Not the interests of recipients in humanitarian relief and economic development

US Departments Governing Food Aid PL 480 Title I : Programme aid in form of loans PL 480 Tile II : Emergency food aid PL 480 Title III : Programme aid in form of grant aid Food for Progress Section 416 (b) Bill Emerson Humanitarian Trust International Food for Education and Child Nutrition

MYTHS “Food aid is an effective form of support for farmers” “Food aid is primarily about feeding the hungry” “Food aid is an effective form of support for farmers” “Food aid is no longer driven by short-term self-interest”. We are going to show how these statements can be debunked through the identification of real motives behind bilateral food aid programmes and their evolution in time.USA will be primarily analysed and other bilateral donors will be mentioned.

The Reasons Behind: 1. Surplus Disposal and Food Aid To reduce the downward pressure on food prices (that would result from the donated commodities entering the domestic or world market) > Surplus (Farm price support Programs) Food Aid has served as vent for domestic farm SURPLUS disposal To limited government expenditure on stocks maintenance during periods when government-held surpluses have been considerable > Food Aid When wheat prices rises > No need for surplus > Food Aid flows fall

2. Export Promotion Support agricultural commodity prices to favour farm exports- priviledging domestic interest groups The commodity composition of Donor Countries’ food aid reflects those items currently in surplus in the donor economy. Producers of those commodities are dependent on food aid: wheat, rice and nonfat dry milk powder. World Initiative for Soy in Human Health, National Corn Growers Association, California raisin producers and Non Fat Dry Milk food aid (NFDM)

3. Geopolitical Leverage Untill 1970s: f.a. concentrated in South-east Asia Mid 1970s: Due to droughts & food emorgencies concentrated in Africa 1990s: To ex-URSS countries 2000s: Back to Asia & Sub-Saharian Africa Today: -Peace in Middle East -Mantain domestic stability in Russia -Accompanying military action in the Balkans -National security interests in Afghanistan, North Korea, Sudan

All programmes/ Total value (000 $) Programmed US Food Aid for a FY 2007 (commody values and metric tons) (data source: USDA) Country /territory All programmes/ Total value (000 $) Afganistan 47008.7 Ethiopia 91931.42 Kenya 46880.69 Sudan 82562.82

Other Bilateral Donors:1990-2000 (WFP)

Other Bilateral Donors: Europe The EU has separate food aid programmes: EU as a whole (multilateral) Individual states (foreign policy, support to farm programmes, surplus disposal, export market, humanitarian & develop. goals) EU under CAP (Common Agricultural Policy) looked like US food aid NOWADAYS... Relatively + progressive than US. Food aid in kind is not an appropriate instrument to create long-term food security + should be sourced locally. EU collective donations in kind, now 1/3 local purchase & triangular transactions. (US < 1%, Canada 10 %)

Europe NL, Sweeden, Swisstherland, UK broke links between domestic agricultural lobbies & food aid disbursement EU has never offered concesional export credits for Food Aid BUT DOES NOT HARM LESS THE GLOBAL FOOD TRADING SYSTEM AND DEVELOPING COUNTRY FARMERS... Agricultural policy (Subsidies under CAP) Import barriers > damaging developing countries’ agriculture

Other Bilateral Donors: Canada Origin: Wheat surplus > South Asia food deficit > concentration on Bangladesh, India,Pakistan & Sri Lanka (Colombo Plan). From ’79: from bilateral to WFP, but little use of triangular transactions & local purchase. In kind rather than cash. ’97 Substantial Reviews: Food Aid to close Food Gap + to complement and reinforce recipients’ agricultural development strategy. Domestic Farm + Foreign Policy interests continue to constrain Canadian Food Aid

Othe Bilateral Donors: JAPAN: Majority F. A. >bilateral up to mid ‘80s Reoriented toward Multilateral > Cash to WFP Only major donor that is net food importer>minimum level of tariff-free food imports for f.a. F.A Donations closely related with Trade Policy (high prices for domestic farmers) AUSTRALIA: Never supported domestic food producers as US Used to ship surplus food More focused on recipient countries’ needs CHINA & SOUTH COREA to North Corea: Use of food aid for strategic geo-political purposes

“Food aid is primarily about feeding the hungry” Myths Must be Debunked “Food aid is primarily about feeding the hungry” Food Aid programs have been mainly driven by Donor-oriented concerns to advance self-serving goals of surplus disposal, export promotion and geopolitical leverage.

“Food aid is an effective form of support for farmers” Myths Must be Debunked “Food aid is an effective form of support for farmers” No solid evidence that food aid has had significant positive effect on domestic farmgate prices. Nevertheless, high prices favour only rich countries’ farmers, while DCs producers are incentivated to sell on the international market instead of the domestic one.

“Food aid is no longer driven by short-term self-interest”. Myths Must be Debunked “Food aid is no longer driven by short-term self-interest”. Longer-term interest in using food aid for humanitarian assistance and economic development remains a residual claimant on left over resources.

"BILATERALIZATION" Contributions to multilateral agencies (flows restricted by a donor for use only in a particular destination) in an effort to: To Increase bilateral donor visibility To exert greater political control over the use of donated resources. Growing concern about the Bilateralization.