Global factors shaping food aid

Summary of published paper¹

USAID funded vegetable oil being distributed at Kassab IDP camp, North Dafur

A paper in a recent special issue of Disasters on food aid, reviews global trends affecting the future of food aid and food aid programming and possible implications for WFP. Three major factors are deemed to shape the foreseeable future of food aid;

1. the mechanisms for the global governance of food aid are under review and may undergo major changes in the coming years - most notably the renegotiations of the Food Aid Convention (FAC)
2. donor agency trends
3. the extent to which best practices in food aid programming are implemented.

i) Mechanisms for global governance of food aid

According to the authors, the global mechanisms and institutions that govern the allocation, utilisation and reporting of food aid resources are in disarray, outdated and dysfunctional. The World Trade Organisation (WTO) negotiations on a new Agreement on Agriculture broke down in July 2006 and it seems unlikely that serious negotiations on an agreement, and therefore new food aid disciplines, will be restarted any time soon. Major unresolved issues include the form of loans or pure grants and the tying status of food aid. While the European Commission (EC) and Canada have untied their food aid in recent years, the United States (US) remains tied to its own domestic market, which some say is an export subsidy in disguise. However, the view of the US (and some others) is that any attempt to untie contributions would result in the loss of political support from powerful US agribusiness and shipping interests, and hence a substantial reduction in US contributions.

There has been widening agreement that local and regional purchase should be the first option, but disagreement about who may declare an emergency, whether food aid must be wholly in grant form and over the controversial practice of monetisation. Given the stalling of the trade talks, the major arenas for the reform of food aid are likely to be the renegotiation of the FAC and the upcoming US Farm Bill.

The FAC, originally drafted in 1967, was last renewed in 1999 and extended in 2002. It may be renegotiated in the coming years. It has shortcomings. The FAC contains a legal agreement on the minimum tonnage obligations of donors, but, because it has no mechanism for effectively monitoring or enforcing compliance by signatories, these obligations are now routinely ignored. There is currently an effort by non-governmetnal organisations (NGOs) to broaden the membership of the FAC, strengthen its needs-based focus and ensure that minimum commitments are reported in a transparent, timely and consistent manner. How this will play out remains to be seen. With regard to food aid, further efforts to improve its role need to include: allocation on the basis of need, vulnerability and impartiality, operations backed by appropriate analysis, appropriate utilisation and management of resources, and clarity of obligations and accountability of stakeholders.

ii) Donor trends in food aid

At least three key donor trends in food aid can be identified that will shape the nature of future food aid programming. These include declining resource levels and the strong priority given to emergency programming,; a growing preference for local and regional purchasing,; and the need for greater complementarity with cash programming.

Overall, levels of food aid have been declining steadily - from an average of 12-15 million tonnes in the late 1980s and early 1990s, to 8.2 million tonnes in 2005. There has been a much greater focus on emergencies and a marked decline in government-government or programme food aid. This has inevitably led to declining resources for development and a greater concentration of those resources in fewer countries. Competition for food aid resources is likely to increase, particularly in the light of increasing demand for bio-fuels and other demands on world grain supplies. In 2005, despite a slight increase in overall resource availability, there was a substantial shortfall in resources for emergency food assistance. In 2006, there were cuts early in the year in Sudan. Programmatically, between relief and development there is an emergent grey area around social protection and safety nets for the chronically food insecure and around the reduction and mitigation of disaster risk. The safety net category is relatively predictable, permitting donors to allocate resources without waiting for assessment appeals.

Currently, significant cash resources are allocated to local or regional purchase. In 2005, just under half of all food aid was of US origin and virtually all of that was sourced from US markets. About half of the remainder of food aid was purchased in local or regional markets. If well managed, local or regional purchase has a number of advantages. Shorter shipping distances can lead to quicker responses in emergencies, it can be more cost-efficient, and hence partially help to address the resource shortfall issue and it can also be less market-distorting and support market development objectives in developing countries. The authors of the paper argue that it is imperative that operational agencies become more adept at managing local purchasing.

The US administration is proposing (against significant political opposition in Congress) to increase the amount of locally and regionally procured food in the US food aid portfolio - and this is likely to be suggested as part of the US Farm Bill, the authorising legislation behind the US food aid portfolio which is currently being negotiated. For obvious reasons, the practice falls foul of the interest of both the agribusiness companies that procure and supply US food aid, and the shipping industry that is legally mandated to deliver the majority of it. Given the dominance of the US among food aid donors, the outcome of this process may be the single biggest factor affecting the future of food aid.

Amongst some European and private donors there is a recent trend towards more cash-oriented interventions rather than in-kind aid. The tTsunami response, in particular, provided a lot of experience of working with direct cash transfers, partly as there was an unprecedented level of unrestricted cash donations to humanitarian agencies. Deciding what is the appropriate mix of cash and in-kind will be a significant challenge.

iii) Best practice

Local purchase of food commodities by WFP in Zambia

The extent to which WFP and it's implementing partner agencies are able to incorporate best practice into operations constitutes the third major factor determining the future of food aid. Key areas are information systems, emergency analytical imperatives, innovations in programme design and implementation, focusing particularly on improved targeting and improvements in supply chain management.

WFP has been a critical actor in improving information systems, particularly in the area of vulnerability assessment and more recently with the SENAC (Strengthening Emergency Needs Assessment Capacity) initiative. Among practices that still require attention is the guarantee of a separation of information generation and analysis from operations and operational budgets. The Integrated Phase Classification System, developed in Somalia but in widespread use in the drought crisis affecting pastoral area s of the Greater Horn in 2006, is a significant attempt to draw multiple sources of information into a single analysis of food security and humanitarian need. Other important recent work includes the understanding of so-called poverty traps - asset thresholds below which people cannot 'pull themselves up by their bootstraps', but which can be overcome if people acquire a basic portfolio of assets.

Developing tools to estimate the appropriate mix of resources, e.g. cash versus food, is another major challenge. Targeting is a further difficult area where, it is argued, the limited amount of research is not encouraging. There is ample evidence of both exclusion and inclusion error. Furthermore, although early warning and supply chain management innovations have helped to reduce delays and ensure supplies in that interim, as long as food has to be shipped long distances, the timing of deliveries as well as amounts provided and duration of programmes all result in significant inclusion and exclusion targeting errors. A review of the literature on targeting generally shows that there are no universal recommendations with regard to targeting.

Many innovations in supply-chain management have improved the timeliness and management of food aid. Pre-positioning food aid, either in strategic reserve or in local warehouses, now routinely provides resources to cover a gap between when needs are identified and when the requested resources arrive.

The paper concludes by applying these considerations to Sudan, which (according to the authors) is likely to continue to need food assistance for the foreseeable future. It is suggested that advocacy for appropriate types and amounts of resources will probably be an increasing part of 'doing business' in Sudan or in any complex emergency. WFP has been at the forefront of advocating for food resources for emergencies - a role that will, no doubt, continue. It is a major challenge to advocate for the appropriate resources for the context, whether emergency, chronic low-grade crisis or long-term poverty. Increasingly, this will mean not only food resources but also cash for either direct transfer or to fund inputs or activities that are complementary to food. Advocating for more appropriate governance mechanisms is a joint task for WFP and other operational agencies.

Finally, WFP Sudan already has a track record of local purchase for both domestic consumption and emergency operations in neighbouring countries. Building on the lessons learned from this experience to engage more broadly in local purchase is both an important challenge and an opportunity for WFP Sudan.

¹Maxwell. D (2007). Global factors shaping the future of food aid: the implications for WFP. Disasters, 2007, 31 (s1): s25-s39