Fewer adverse side-effects

[ By Gerhard Schmalbruch and David J. Walker ]

If the Millennium Development Goal of halving absolute poverty and hunger is going to be achieved, food aid will remain necessary. Global policy changes in trade and agriculture are far from being agreed, and the number of man-made and natural disasters is increasing.

One important issue about food aid is the way it is sourced. Commonly it is shipped directly from the donor country, a procedure that requires inter-continental shipping. During recent years there has been a growing trend towards local procurement of food aid, provided there are surpluses in some parts of the country where it is required. A third option is to supply from neighbouring countries within the same region. Where a donor outside the region funds such regional procurement it is sometimes known as triangular procurement. Donor preferences and priorities donor govern the mode of supply. Where food aid is supplied in kind it will normally be shipped from the donor country. In instances where a donor makes a pledge in terms of funds there might be opportunities for local and regional procurement.

Food aid supplied in kind by the donor has been the most common mode of delivery for many decades. It will no doubt continue to be an essential source of supply when no other options are available. There is, however, a growing opinion that, apart from trade and agricultural policy considerations in a globalised world, there are significant practical disadvantages associated with food aid supplied in kind from the agricultural production of donor countries.

The most serious disadvantage is that of timing. Food aid requirements tend to be seasonal if linked to crop failure or otherwise time-bound if linked to conflict or natural disaster. Food aid deliveries have often arrived after the event because of great distances as well as donor country bureaucracy. This can result in food aid not being available when it is most needed. If its arrival, however, coincides with the local harvest it can depress local market prices, become a disincentive to local production, and reduce the income of local producers and traders. Furthermore, the arrival of food aid at ports already busy with imports of other essential goods, such as farm inputs, can exacerbate port congestion. Additionally, deliveries of food aid from donor countries might not always provide the commodity or variety preferred by the beneficiaries. There have been numerous instances where wheat has been supplied because donors do not have surplus stocks of millet or the type of sorghum to which the beneficiaries are accustomed.


Sudan – Ethiopia: regional procurement in practice

Whilst donors such as the USA and Canada remain largely committed to shipping the produce of their own farmers around the world, others like the European Union and its member states are becoming more inclined to finance local or regional procurement. This trend began in the mid 1980s, when aid agencies and especially non-governmental aid organisations started to ask for local or regional solutions for food crises, but only gathered momentum in the mid 1990s. In the past three years shipments of EU commodities accounted for less than 20 percent of total EC funded commodity aid handled by EuronAid. About 80 percent were made up of local or regional purchases. This trend links purchase practice closer to the wider goals of untying aid in the context of global advocacy for fair economic and trade relations. On a global scale, however, the trend is less positive: due to the unchanged US practice local and regional procurement continues to average less than 10 percent (see graph).

Regional procurement is common where there are established food commodity trading routes and transport systems. The absence of these factors is frequently considered to be problematic. However, a recent pioneering example of EuronAid’s procurement activities in the Horn of Africa demonstrates that cross border food aid movement can be achieved even where there are no established trade routes.

External supply of food is normally shipped to Ethiopia via Djibouti. The supply routes to the food deficit areas can be long and expensive. It is not uncommon for the costs of transport and delivery to be five times higher than the original costs of procurement. The logistical and economic arguments for procuring surplus food commodities in neighbouring countries such as Sudan and moving them across the border are compelling. However, for a long time the political, security and logistical situations have not been conducive.

In 2003 the situation appeared to have improved. The Government of Sudan considered that it had adequate stocks of sorghum to permit the movement of limited supplies stored in the east of the country to areas of food shortage in nearby western regions of Ethiopia. The initiative to undertake a cross border supply of food aid was proposed by EuronAid and accepted by the European Commission (EC) delegations in Khartoum and Addis Ababa. The implementation of the activity was the responsibility of EuronAid which has offices in both capital cities. It involved the movement of 1,144 truckloads to transport 24,387 tons of bagged white sorghum from Gedaref in Sudan to Woretta in Ethiopia, a distance of 445 km over very mountainous roads. Transport began on 29 May 2003 and was able to take advantage of a new road under construction from Gedaref to the border with Ethiopia.

The organisation of the delivery meant that beneficiaries did not have to wait months for their food aid. This was because inter-country cooperation, EC support and EuronAid’s direct supervision permitted the required food stocks to be drawn as necessary and without delay from Ethiopian national reserves in Woretta. These stocks were then replaced over the following months by trucks from the Sudanese national reserves in Gedaref. In turn, the stocks withdrawn from the Gedaref reserves were replaced by local procurement funded by the EC/NGO Food Aid Programme.


Advantages of local procurement

The advantages of this example of regional and local procurement included:

– The type of white sorghum produced in eastern Sudan is the preferred food of beneficiaries in western Ethiopia. It is not always available on the world commodity market.

– The cost of supply and transport were much less than for a comparable supply of food aid grain in kind.

– The quality of grain delivered to the beneficiaries was excellent because of the effective quality control systems operated by the Ethiopian Food Security Reserve Administration.

– EC food security staff in Sudan confirmed that this transaction had no negative effects on the sorghum market in Gedaref, and in fact stabilised market prices over the last two months of the movement.

– The pioneering use of this route by trucks carrying sorghum from Sudan generated new trade in commodities being transported from Ethiopia to Sudan as back-loads – thereby engendering trade in cement and coffee. Some Sudanese transporters asked their drivers to travel as far as Addis Ababa to estimate trade potential. Ethiopian truck companies also played an important role and became aware of the trade opportunities.

This cross border food aid operation was possible because the Governments of Ethiopia and Sudan extended full support and assistance, which is a demonstration of their commitment to the movement of food from regions of surplus to regions of deficit – an approach, which until now had been limited within their borders.

The example shows that local or regional procurement can lead to reduced response time resulting from a shorter supply lead time. The delivery can be cheaper because of reduced shipping and handling costs. Regional procurement also increases the likelihood of delivering a commodity which meets the culinary practices and dietary preferences of the beneficiaries. It supports local and regional agricultural economies because expenditure goes to local producers and traders. In addition, local procurement provides hard currency for developing countries. Overall, it has the potential to further development by contributing to the rehabilitation of local agricultural production.

To avoid the most common drawbacks in local or regional procurement – distortion of local markets and supply of poor quality commodities – two conditions must be met. On the one hand, to avoid market distortions procurement must be appropriate in terms of quantity, pricing and timing. Markets must continuously be monitored to control possible impacts of food aid purchases, which are as much a market intervention as the distribution of food aid. Where, on the other hand, post-harvest management is poor, local or regional procurement is not an alternative. To fulfil international food safety and quality assurance requirements, there have to be adequate monitoring facilities, such as those provided by the Ethiopian Food Security Reserve Administration and the Sudanese Strategic Reserve Authority.


From food aid to food security

Proponents of local and regional procurement believe the advantages can contribute significantly to increased food security and sustainable rural development, thereby contributing to the transition from receiving food aid to long-term sustainable food security. Today many European donors and the European Commission are strong supporters of local and regional procurement of food aid. This position is endorsed by EU Council Regulation No. 1292/96 of 27 June 1996 on food aid policy and management, and special operations in support of food security. This policy statement supports local and regional procurement and cautions against practices that have a negative impact on markets or food supply.

Local and regional purchases create opportunities for sustainable solutions that stimulate local potentials instead of dependency on world markets. They are a step in the right direction, but need to be accompanied by consistent global policies giving poor and food insecure populations the chance to achieve not only self-sufficiency but also market access with equal opportunities.

Food aid will remain necessary in the future. Considering the ongoing policy discussions on the Food Aid Convention, there is a danger of replacing, with very good intentions, the physical commitment to food aid with a political code of conduct which nobody can eat or plant. It is necessary to do both: to assist hungry people with food and other inputs to support them in their local environment, as well as providing donors with a code of conduct which helps to free food aid from its negative image of being a tool for rich countries to dump subsidised surplus products. Food security is at the heart of poverty reduction, and food aid is a part of it.

David J. Walker
is Principal Food Security Technical Adviser at the Natural Resources Institute, University of Greenwich. He has 25 years experience of working with international food aid systems. D.J.Walker@greenwich.ac.uk