BILATERAL DONORSMichela Broseghini

Erika ChavezYulia MikhaylovaMaria Nella Lippi

IntroductionIntroductionBilateral Food Aid: 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.

IntroductionIntroductionHistory1951: 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

FOOD AID DONORSFOOD AID DONORS

US:Development Agencies and National Concerns

A.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

•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

MYTHSMYTHS1. “Food aid is primarily about feeding Food aid is primarily about feeding

the hungry”the hungry”

2.2. ““Food aid is an effective form of Food aid is an effective form of support for farmers”support for farmers”

3.3. ““Food aid is no longer driven by Food aid is no longer driven by short-term self-interest”.short-term self-interest”.

We are going to 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:The Reasons Behind:1. Surplus Disposal and 1. Surplus Disposal and

Food AidFood 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 Promotion2. Export PromotionSupport 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. 3. Geopolitical Geopolitical LeverageLeverageUntill 1970s: f.a. concentrated in South-east AsiaMid 1970s: Due to droughts & food emorgencies

concentrated in Africa1990s: To ex-URSS countries2000s: Back to Asia & Sub-Saharian AfricaToday:

-Peace in Middle East-Mantain domestic stability in Russia-Accompanying military action in the Balkans -National security interests in Afghanistan, North Korea,

Sudan

Programmed US Food Aid for a FY 2007 (commody Programmed US Food Aid for a FY 2007 (commody values and metric tons) (values and metric tons) (data source: USDA)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 Other Bilateral Donors:1990-2000 (WFP)(WFP)

Other Bilateral Donors: EuropeOther Bilateral Donors: EuropeThe 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 %)

•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: CanadaOther Bilateral Donors: CanadaOrigin: 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:Othe Bilateral Donors:JAPAN: Majority F. A. >bilateral up to mid ‘80sReoriented toward Multilateral > Cash to WFPOnly 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 foodMore focused on recipient countries’ needs

CHINA & SOUTH COREA to North Corea: Use of food aid for strategic geo-political purposes

Myths Must be Myths Must be DebunkedDebunked

“Food aid is primarily about feeding Food aid is primarily about feeding the hungry”the hungry”

1. 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 Food aid is an effective form of support for farmers”support for farmers”

2. 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.

Myths Must be Myths Must be DebunkedDebunked

““Food aid is no longer driven by short-Food aid is no longer driven by short-term self-interest”.term self-interest”.

3.Longer-term interest in using food aid for humanitarian assistance and economic development remains a residual claimant on left over resources.

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.