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Food Aid And Commercial International Food Trade

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  • Barrett, Christopher B.

Abstract

1. This paper was commissioned by the Trade and Markets Division of the Organisation for Economic Co-operation and Development (OECD) to address the relationship between food aid and commercial international food trade as background to an anticipated OECD study on the export competition aspects of food aid. The terms of reference for this study call for "a critical review of the existing literature on the potential use of food aid as an export support policy or, alternatively, the potential that food aid bears implications similar to those of export supporting policies." 2. This paper can be summarized as follows. Food aid has multiple objectives, modalities and effects and there has been significant movement over time in each of these areas. Concerns about the use of food aid as an export support policy are founded in both the history of bilateral food aid, in the political economy of food aid support in major donor countries, and in some current uses. The effects of food aid on commercial international food trade turn on several key factors, chief among which is its targeting, of which timing of deliveries is an important subfactor. Due to inevitably imperfect targeting at both macro and micro levels, food aid clearly displaces commercial sales of food contemporaneously in recipient economies. The evidence is unclear as to the distribution of these short-term losses across domestic and foreign suppliers in recipient countries, but the evidence somewhat favors the conclusion that most of the displacement comes out of commercial imports. Whether this displacement adversely effects international food markets depends on the manner in which the food aid is obtained, how well integrated the recipient economy market is with the global market, and recipient demand for variety. The longer-term effects of food aid turn on the dynamic income effects of food aid receipt and the extent to which these stimulate future food demand. The crucial questions then are how the short-term losses due to contemporaneous displacement of commercial imports, the global market effects of alternative food aid procurement modalities, and the long-term gains from any derivative income stimulus balance out over time and how these costs and benefits are distributed among donors and third party exporters. Research on these topics has been surprisingly scarce and, largely as a consequence, premature conclusions are too often drawn on the basis of quite limited evidence on the contemporaneous displacement effects of food aid on recipient country markets. Finally, because food aid's effects on trade stem directly from the efficacy of targeting, policymakers exploring the effects of food aid on commercial international food trade must consider explicitly the trade-off between higher expected displacement of commercial trade and higher expected targeting errors of exclusion of intended beneficiaries through restrictive distribution rules.

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Bibliographic Info

Paper provided by Cornell University, Department of Applied Economics and Management in its series Working Papers with number 14742.

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Date of creation: 2002
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Handle: RePEc:ags:cudawp:14742

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Related research

Keywords: International Relations/Trade; O1; Q17; F1; Q18;

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References

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  1. Pinstrup-Andersen, Per & Pandya-Lorch, Rajul & Rosegrant, Mark W., 1997. "The world food situation," Food policy reports 7, International Food Policy Research Institute (IFPRI).
  2. Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024 Elsevier.
  3. Jayne, Thomas S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2000. "Targeting Of Food Aid in Rural Ethiopia: Chronic Need or Inertia?," Food Security International Development Papers 54048, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  4. Barrett, Christopher B. & Bezuneh, Mesfin & Aboud, Abdillahi, 2001. "Income diversification, poverty traps and policy shocks in Cote d'Ivoire and Kenya," Food Policy, Elsevier, vol. 26(4), pages 367-384, August.
  5. Daphne Taylor & Derek Byerlee, 1991. "Food Aid and Food Security: A Cautionary Note," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(2), pages 163-175, 07.
  6. Amha, Wolday & Stepanek, Julie & Jayne, Thomas S. & Negassa, Asfaw, 1997. "Meeting Food Aid and Price Stabilization Objectives through Local Grain Purchase: A Review of the 1996 Experience," Food Security Collaborative Working Papers 55596, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  7. Mohapatra, Sandeep & Barrett, Christopher B. & Snyder, Donald L. & Biswas, Basudeb, 1998. "Does Food Aid Really Discourage Food Production?," Economics Research Institute, ERI Study Papers 28369, Utah State University, Economics Department.
  8. Lavy, Victor, 1990. "Does food aid depress food production? The disincentive dilemma in the African context," Policy Research Working Paper Series 460, The World Bank.
  9. Barrett, Christopher B. & Holden, Stein & Clay, Daniel C., 2002. "Can Food-for-Work Programmes Reduce Vulnerability?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Leon, Javier & Soto, Raimundo, 1995. "Structural breaks and long-run trends in commodity prices," Policy Research Working Paper Series 1406, The World Bank.
  11. Barrett, Christopher B., 1999. "Does Food Aid Stabilize Food Availability?," Working Papers 14757, Cornell University, Department of Applied Economics and Management.
  12. Maizels, Alfred & Nissanke, Machiko K., 1984. "Motivations for aid to developing countries," World Development, Elsevier, vol. 12(9), pages 879-900, September.
  13. Srinivasan, T N, 1989. "Food Aid: A Cause of Development Failure or an Instrument for Success?," World Bank Economic Review, World Bank Group, vol. 3(1), pages 39-65, January.
  14. Behrman, Jere R & Deolalikar, Anil B, 1989. "Is Variety the Spice of Life? Implications for Calorie Intake," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 666-72, November.
  15. Maxwell, S. J. & Singer, H. W., 1979. "Food aid to developing countries: A survey," World Development, Elsevier, vol. 7(3), pages 225-246, March.
  16. Dorosh, Paul & Ninno, Carlo del & Sahn, David E., 1995. "Poverty alleviation in Mozambique: a multi-market analysis of the role of food aid," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 13(2), November.
  17. Barrett, Christopher B & Mohapatra, Sandeep & Snyder, Donald L, 1999. "The Dynamic Effects of U.S. Food Aid," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 647-56, October.
  18. Christopher L. Gilbert, 1996. "A Model Of Us Cereals Food Aid Flows With An Application To Trade Liberalisation," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 143-157.
  19. Shapouri, Shahla, 1990. "Food Aid: Motivation and Allocation Criteria," Foreign Agricultural Economic Report (FAER) 147994, United States Department of Agriculture, Economic Research Service.
  20. Christensen, Cheryl, 2000. "The new policy environment for food aid: the challenge of sub-Saharan Africa," Food Policy, Elsevier, vol. 25(3), pages 255-268, June.
  21. Benson, Charlotte & Clay, Edward J., 1998. "Additionality or diversion? food aid to Eastern Europe and the former Soviet Republics and the implications for developing countries," World Development, Elsevier, vol. 26(1), pages 31-44, January.
  22. Hoffman, Wendy & Gardner, Bruce & Otto, Daniel, 1994. "The Impact of Food Aid on Food Subsidies in Recipient Countries," Staff General Research Papers 11026, Iowa State University, Department of Economics.
  23. Jayne, T. S. & Strauss, John & Yamano, Takashi & Molla, Daniel, 2001. "Giving to the Poor? Targeting of Food Aid in Rural Ethiopia," World Development, Elsevier, vol. 29(5), pages 887-910, May.
  24. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023 Elsevier.
  25. Barrett, C. B. & Heisey, K. C., 2002. "How effectively does multilateral food aid respond to fluctuating needs?," Food Policy, Elsevier, vol. 27(5-6), pages 477-491.
  26. Colding, Bjorg & Pinstrup-Andersen, Per, 1999. "Denmark's contribution to the world food programme: a success story," Food Policy, Elsevier, vol. 24(1), pages 93-108, February.
  27. Barrett, Christopher B., 1997. "Liberalization and food price distributions: ARCH-M evidence from Madagascar," Food Policy, Elsevier, vol. 22(2), pages 155-173, April.
  28. Dearden, P. J. & Ackroyd, P. J., 1989. "Reassessing the role of food aid," Food Policy, Elsevier, vol. 14(3), pages 218-231, August.
  29. Christopher B. Barrett, 1998. "Food Aid: Is It Development Assistance, Trade Promotion, Both, or Neither?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 566-571.
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Citations

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Cited by:
  1. Barrett, C. B. & Heisey, K. C., 2002. "How effectively does multilateral food aid respond to fluctuating needs?," Food Policy, Elsevier, vol. 27(5-6), pages 477-491.
  2. Barrett, Christopher B., 2002. "Food Aid Effectiveness: "It'S The Targeting, Stupid!"," Working Papers 14754, Cornell University, Department of Applied Economics and Management.
  3. Hitzhusen, Frederick J. & Jeanty, Pierre Wilner, 2006. "Analyzing the Effects of Conflicts on Food Security in Developing Countries: An Instrumental Variable Panel Data Approach," 2006 Annual meeting, July 23-26, Long Beach, CA 21483, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Lowder, Sarah K. & Southgate, Douglas & Rodriguez-Meza, Jorge, 2004. "A Post Schultzian View Of Food Aid, Trade And Developing Country Cereal Production: Results Of A Vector Autoregression On Panel Data Using Fixed Effects," 2004 Annual meeting, August 1-4, Denver, CO 19919, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Nouve, Kofi & Staatz, John M., 2003. "The Food Security Debate In West Africa Following The Wto Agreements On Agriculture," Staff Papers 11746, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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