International charities that dispense food relief to the stricken and the poor have just awoken to the fact that the coming WTO round in Doha might abolish food aid as we know it, as a by-product of reducing agricultural subsidies. During the cold war, following a deal between the US department of agriculture (USDA), the state department and other agencies of the US government, large-scale food assistance was given to friendly states and client regimes, such as India, South Vietnam, Egypt and some central American countries. The deal was that a minor but reliable portion of America's subsidised grain surplus would be shipped off as food aid to emergency relief, infant and school feeding and for "food for work" projects such as road-building in poor countries. Later, the UN world food programme (WFP) was conceived as a further international channel for these surpluses.
Fifty years on, much has changed. We know far more about how agricultural markets work in rich and poor countries, we are much more sceptical about the reasons for and impact of food aid, and more selective in where we send it (much more to emergencies, rather less to development projects). Now, after the cold war, little is left of government-to-government food shipments except modest aid to the likes of Uzbekistan. But the producer-NGO deal is still there, and it looks like an increasingly outdated subsidised niche, which assures US millers of a profitable market while the development NGOs lobby for public money to keep them milling. But now it seems that this steady flow of food for aid may be about to evaporate, and the emergency relief agencies are in a fret.
They shouldn't be. For years, agencies like Oxfam have been campaigning for reform on the grounds that agricultural subsidies and trade preferences in the rich world have been harming poor-country producers. There is a host of examples of how cotton growers in Zambia, cattle herders in Mali and others have been left destitute because they simply can't compete with subsidised rich country agriculture. Now the anomaly—whereby one part of the international charity industry advocates stopping agricultural subsidies, while another part depends on them for its business—may soon be over. In Europe, the link between food aid and surplus disposal has already been broken. The changes in North America will—if they occur—be phased in over several years, but will be momentous nonetheless.
There are two reasons to celebrate the coming change and one note of caution. First, the dependence of NGOs on food aid has distorted their operations and incentives. Food relief can be essential in emergencies, but typically it is overplayed relative to other forms of assistance that are just as important in saving lives—such as primary healthcare, clean water and the protection of poor people's assets, such as livestock. Flooding the market with food aid after an emergency creates problems for the recovery phase, such as disincentives for local farmers to produce and displacing local traders from the market.
And second, the alternative—decoupling aid from surpluses—may be better in addressing the real needs of the poor. The end of tied food aid doesn't mean the end of food aid. It just means that when there's an emergency, agencies such as the Canadian international development agency and USAid will buy the food they need on the open market. They will have more options—buying food aid for Ethiopia in-country, when appropriate, or perhaps in Kenya or India—and it should be cheaper, as the global food aid business becomes more competitive.
The caveat is: can such a market-based mechanism respond in time? One advantage of the current system is that the major aid agencies, especially the Americans, have ships loaded with grain on the oceans all the time. If there's an emergency—either a natural disaster somewhere or an unexpected interruption in the food aid pipeline—a ship can be turned around and sent where it's most needed. In May, USAid did exactly this, diverting a regular food aid shipment to Sudan where the camps for Darfur's displaced were running low on stocks. In January, the WFP re-routed rice for post-flood rehabilitation in Bangladesh to tsunami victims in Indonesia. But is depriving Peter to feed Paul really the answer? The global food market isn't set up to respond in time to sudden emergencies. A market-based food aid system will also require a standby rapid response system funded by governments. This is how the WFP and some of America's food aid charities should focus on making the future work for the poor, and the victims of war and disasters.
