Transcript Food Aid Lecture

US Food Aid:
Background Trends and Key Policy
Issues on the Cusp of a Farm Bill
Chris Barrett
C.H. Dyson School of Applied Economics & Management and
Department of Economics, Cornell University
November 19, 2012
Community and International Nutrition Seminar Series
Cornell University
Background trends
1. Increasing emergency-affected populations
- Natural disasters and affected persons have increased
significantly over the past two generations.
- The global number of internally displaced persons (IDPs)
has grown from 20 to 27 mn/yr, 1989-91 to 2009-11.
Developing World Natural Disasters
(5 year lagged moving averages)
400
Number of Disasters
350
300
250
200
150
Millions of Persons Affected
100
50
0
1974
1979
1984
1989
1994
1999
2004
2009
Data source: EM-DAT: The OFDA/CRED International Disaster Database
Background trends
2. Globalization of food markets
- Food aid was originally a surplus disposal program. Take
gov’t-held surpluses generated by farm price support
programs and give them away beyond the US marketshed.
- But virtually no place lies outside the marketshed today.
Even in land-locked developing countries, commercial
food imports have grown > 10-fold in the past 20 years!
- This has led to a rapid transition towards cash-/marketbased food assistance, especially since 2004 tsunami.
Background trends
200
FAO Real Food Price Index
150
100
50
1/1990
1/1991
1/1992
1/1993
1/1994
1/1995
1/1996
1/1997
1/1998
1/1999
1/2000
1/2001
1/2002
1/2003
1/2004
1/2005
1/2006
1/2007
1/2008
1/2009
1/2010
1/2011
1/2012
FAO Real Food Price Index (2002-4 = 100)
3. We have entered a high food price regime
- For a variety of reasons, food demand growth has
outpaced supply growth for the past decade. The result is
historically high (inflation-adjusted) food prices for the
indefinite future.
- This makes food aid expensive.
Background trends
4. More attention to micronutrient deficiencies
- The Green Revolution and globalizing food markets have
steadily reduced undernutrition.
- But low micronutrient (mineral/vitamin) intake
increasingly recognized as equally serious, especially for
children due to irreversible effects
- Hence growing attention to food aid quality (2011 GAO
and Tufts/USAID studies).
Developing world prevalence (%) of insufficient
Dietary energy
Vitamin A (under 5 serum retinol < 20 g/dl)
Iodine (urinary iodine < 100 g/dl)
Iron ( under 5 anemia)
Source: FAO SOFA 2013 (internal data)
1990-94
20
36
N/A
49
1995-99
17
35
37
49
2000-04
17
33
33
51
2005-09
15
31
33
61
US Food Aid
Much Has Changed In US Food Aid Already
Huge reorientation from monetized
program food aid (Title I) to emergency
and project (Title II) food aid, again in
response to the trends described.
Since 1999, global shipments down 64%,
US shipments down 68%.
14
Millions of metric tons
Food aid volumes have fallen sharply over
the past decade-plus, from the US and
globally due to trends described already.
16
12
10
8
6
Non-US shipments
4
US shipments
2
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
U.S. Food Aid Programs, FY1990-2010
3000
$ millions (real, base year 2000)
For nearly 60 years, the USG has been the
world’s largest donor of food aid for
strategic, economic and moral purposes.
Still 50-60% of global flows each year.
2500
2000
Other
1500
1000
Title II
500
Title I
0
1990
1995
2000
2005
2010
Key policy issues
-
-
-
7. Timeliness (Golden Hour principle)
Delays are expensive and deadly (2004-5 Niger example).
Most losses from disasters are ‘post-exposure’. Rapid,
appropriate response matters enormously to recovery.
Farm Bill still sharply limits local and regional
purchases (LRP) in US food aid programs although they
account for 82% of non-US food aid today.
Prepositioning the best feasible Title II option now. But
25-40% more expensive than regular shipments (GAO ‘07).
Big gains from LRP: USDA LRPP and USAID EFSP
projects delivered 62% (14 weeks) faster, on average,
than shipments from US.
Hard earmark on non-emergency funds ties FFP’s hands:
big risks of 4th quarter emergency response interruptions.
Key policy issues
-
-
-
7. Cost-effectiveness
Increasing need with decreasing resources. Need to “do
more with less”.
Need to reduce unnecessary (non-commodity) costs:
transport is huge (especially with cargo preference rules …
adds ~$150mn/year to costs … but rolled back in July).
USDA LRPPP/USAID EFSP reduced cost of delivered grains
by >50% on average.
Monetization: just 58-76% cost recovery … hugely wasteful
(GAO). The rest of the world abandoned monetization years
ago and OMB recommended ending it back in 2002. Yet
non-emergency Title II monetization has grown from 28% in
1996 to 74% in 2010. Better options exist: community
development funds (Foreign Ops), 202e, Title I buybacks.
Key policy issues
7. Food Aid Quality
- Need to address more varied nutritional needs than simply
filling a dietary energy supply shortfall.
- Especially important in light of the First 1000 Days Initiative
- Need to match commodity choices to assessed needs to
achieve cost-effective delivery of needed nutrients (what is
cheap in $/MT terms not always cheap in $/nutrient terms)
- Increased attention to food aid quality … LRP has proved
equal to shipments from US in food quality w/much greater
capacity to resolve quality problems at delivery than with
shipments from the US.
Key policy issues
7. Flexibility
- With greater food market access and superior timeliness and
cost-effectiveness of commercial channels, cash/vouchers
often preferred to food.
- Need “response analysis” (i) to identify appropriate form/
source of assistance, (ii) to ensure assistance doesn’t disrupt
markets on which the poor – and dev’t – most depend.
- But need options: LRP just 2% of US food aid vs. 82% for
ROW. Mainstream LRP not make it a separate program.
- Slow/awkward movement toward budget integration
already achieved in Canada, EU and other key donor
countries, moving food aid into international development
budgets and out of farm policy and agriculture budgets.
Farm Bill 2012
7. Senate
- Senate passed a bipartisan Farm Bill capping monetization,
making LRP permanent and slightly reducing the ‘hard
earmark’ for non-emergency food aid.
- Far from ideal, but progress nonetheless
House
- No Farm Bill vote yet. Ag Committee passed a bill that drops
LRP, reinforces monetization and the hard earmark.
If no Farm Bill?
- USAID authority for new programming expires Dec. 31. At
that point >50% of the world’s food aid flows cease!
Conclusion
US food aid still essential to global emergency response.
The Farm Bill offers a chance to further adapt US policy to all
that has changed in the world of food aid. But the current
House version is a step backwards and perhaps no bill at all.
Key policy issues for the 2012 Farm Bill:
- timeliness
- cost-effectiveness
- food aid quality
- flexibility
Implications: -permanent, mainstreamed LRP
- reduced/constrained monetization
- relaxed Title II non-emergency hard earmark
Thank you for your
time and interest!