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Food Aid, Food Prices, and Producer Disincentives in Ethiopia

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  • Getaw Tadesse
  • Gerald Shively

Abstract

Although the short-term aims of food aid are well conceived, strong concerns have been voiced regarding the long-term impacts of such aid on incentives for agricultural producers in recipient countries. This article examines the statistical link between food aid shipments and food prices in Ethiopia over the period 1996-2006. Monthly data from three markets and three commodities are used to estimate a system of seemingly unrelated regression models for food prices. Results indicate that previous year food aid shipments reduce prices in all producer and consumer markets. These effects, however, appear to be limited to the set of internationally traded commodities that are domestically marketed. A recursive regression procedure is used to identify the food aid threshold at which a negative aid effect emerges. Food aid shipments that constitute less than 10% of domestic production appear to be benign, but shipments above this level show signs of being disruptive to local markets. We use a simple policy simulation to argue that production-sensitive targeting, e.g., conditioning food aid on local food production, would help to circumvent disincentive effects. Copyright 2009, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2009.01324.x
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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 91 (2009)
Issue (Month): 4 ()
Pages: 942-955

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Handle: RePEc:oup:ajagec:v:91:y:2009:i:4:p:942-955

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Cited by:
  1. Ruerd RUBEN, 2012. "Dimensionner l'aide au développement : ce que nous enseigne l'évaluation. Dimensioning Development Aid: Some Lessons from Evaluation," Revue d’économie du développement, De Boeck Université, vol. 26(4), pages 95-123.
  2. Margolies, Amy & Hoddinott, John, 2012. "Mapping the Impacts of Food Aid: Current Knowledge and Future Directions," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Sumberg, James & Sabates-Wheeler, Rachel, 2011. "Linking agricultural development to school feeding in sub-Saharan Africa: Theoretical perspectives," Food Policy, Elsevier, vol. 36(3), pages 341-349, June.
  4. Kassie, Menale & Jaleta, Moti & Shiferaw, Bekele A. & Mmbando, Frank & Mekuria, Mulugetta, 2012. "Interdependence in Farmer Technology Adoption Decisions in Smallholder Systems: Joint Estimation of Investments in Sustainable Agricultural Practices in Rural Tanzania," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126791, International Association of Agricultural Economists.
  5. Garg, Teevrat & Barrett, Christopher B. & Gómez, Miguel I. & Lentz, Erin C. & Violette, William J., 2013. "Market Prices and Food Aid Local and Regional Procurement and Distribution: A Multi-Country Analysis," World Development, Elsevier, vol. 49(C), pages 19-29.
  6. Zant, Wouter, 2012. "The economics of food aid under subsistence farming with an application to Malawi," Food Policy, Elsevier, vol. 37(1), pages 124-141.
  7. Kassie, Menale & Jaleta, Moti & Shiferaw, Bekele & Mmbando, Frank & Muricho, Geoffrey, 2012. "Plot and Household-Level Determinants of Sustainable Agricultural Practices in Rural Tanzania," Discussion Papers dp-12-02-efd, Resources For the Future.
  8. Kiawu, James AF & Jones, Keithly G, 2013. "Implications of food aid and remittances for West African food import demand," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(1), July.
  9. Harou, Aurélie P. & Upton, Joanna B. & Lentz, Erin C. & Barrett, Christopher B. & Gómez, Miguel I., 2013. "Tradeoffs or Synergies? Assessing Local and Regional Food Aid Procurement through Case Studies in Burkina Faso and Guatemala," World Development, Elsevier, vol. 49(C), pages 44-57.
  10. Minten, Bart & Stifel, David & Tamru, Seneshaw, 2012. "Structural transformation in Ethiopia: Evidence from cereal markets:," ESSP working papers 39, International Food Policy Research Institute (IFPRI).

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