Saturday, 18 May 2013

The US Food Aid reforms are a win-win for all

women receiving food aid in Ethiopia. Photo Courtesy:
The East African ran an article “US proposal on African food aid excites crop farmers” in the April 20th -26th Issue. It was quite understandable to note why the news on the US food aid reforms should be received with much enthusiasm among the East African farmers. One of the major demerits of food aid is that if it is not properly regulated, it becomes a significant disincentive to the local production of food in the recipient countries. Nonetheless, the current reforms offer numerous benefits to the three major parties involved i.e. the US government, Private Voluntary Organizations (PVOs) and recipient countries.  

The highlight of the reforms is that the US will procure more food aid outside of its boundaries, what is technically called untied food aid. It is a requirement by US law that 75 % of its food aid is sourced, fortified, processed, and bagged in the US. This means that only 25 % of American food aid can be sourced outside the US.The current food aid reforms propose raising this limit to 45 %. Another requirement of the US law is that 75 % of all tied American food aid must be transported on US flagged vessels. This law still stands.

By increasing local and regional procurement of food in and around recipient countries, the US will save considerable amounts of money. Costs associated with shipment will be greatly reduced. Furthermore, inefficiencies accrued due to the sale of food aid by PVOs to raise additional funds, a process known as monetisation, will be reduced substantially. The cost recovery rate, at or above cost of purchase and shipment, has been set at 70 %. This will deter most PVOs from monetisation of food aid. PVOs get to benefit greatly from more food aid in the form of cash. Initially, PVOs could only source 13% of food aid in the form of cash. The reforms propose that this be raised to 35 %. Thus, more money can be injected into Interventions such as food vouchers or cash transfers that have proven to be more effective than food aid distribution in some situations. This is especially so if the case of acute food insecurity is only in some pockets of a country as is usually the case in East Africa. PVOs can purchase food from areas of abundance and have it available and accessiblein areas of need preferably through market mechanisms. In 2004, cash transfers proved to have more impact in Indonesia when the Tsunami struck. Households that received cash as opposed to aid in the form of rice exhibited a higher dietary diversity score as they accessed more variety of fresh foods. Furthermore, intra-household gender relations were improved as decisions regarding household expenditure were jointly made. Alcohol consumption was also significantly lower in households that received cash over those that received rice. 

Recipient countries stand to benefit in several ways. Firstly, the reforms carry a component of improved nutrition. This is most especially in the ready to eat therapeutic food that is most effective in the management of malnutrition in emergencies. Due to the reforms, it is estimated that 10-12 new products are being developed. These new products will go a long way in the prevention of deaths related to malnutrition that is highest in food related emergencies. Secondly, response to acute food shortages will be much faster. It is estimated that reaching people in need will be 11-14 weeks faster if food aid is purchased locally or cash based interventions adopted. Lastly, food economies in and around recipient countries will grow considerably since the market for their produce will be widened. 

Indeed, the US food aid reforms are a win-win for all parties involved.

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