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Contributions from
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Studies and reports
World Bank: Only poor countries have reformed
State-centricity is the problem
Deciding on the Food Aid Convention’s future
“Poor choices for poor countries”
02/2005 |
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[ Farm subsidies ]
Deciding on the Food Aid Convention’s future
If food aid worked as intended by the international Food Aid Convention (FAC), it would be a useful instrument. According to the FAC,
– donors should make food aid available on a predictable basis according to need;
– food aid should be directed where it is actually required;
– it should not interfere with commodities markets in the recipient regions;
– it should be organised in a manner supportive of long-term food security; and
– donors should coordinate their actions to reach these objectives.
The International Food Aid Committee, to which all donors belong, agreed to the Convention in 1967. It has been renewed five times, the current version was adopted in 1999.
However, the FAC has always been the target of criticism. For a long time, food aid has not been working as well as designed by the Convention. While donors do fulfil their minimum supply obligations, it is the world grain market, rather than actual need, that controls the availability of food aid. When cereal prices rise, aid becomes scarce. When prices fall, donors, especially the US, turn their agricultural surpluses in to aid contributions. Indeed, such aid is not needed everywhere it goes. Rather, it causes harm in many cases by distorting local markets and creating a culture of dependence. Effective donor co-ordination seems the exception rather than the rule.
The Food Aid Committee discussed all of these problems at its most recent session in London in December. The focus was on the US policy of using food aid as a tool to support domestic farms. The US administration buys agricultural surpluses and distributes them around the world as food aid. In the end, this form of subsidy distorts trade, which makes it a matter for the World Trade Organisation (WTO). But the US, so far, has persistently refused to discuss this practice seriously. “At the WTO in Geneva, the Americans evade the subject by referring to the negotiations under the FAC. In the FAC, they refer to the WTO as soon as discussion turns to issues relevant to trade,” says Martin Nissen of the German Agriculture Ministry, which, together with and under the leadership of the Development Ministry (BMZ), represents Germany on the Food Aid Committee.
The Committee, however, broke this cycle at its recent session and resolved to defer the negotiations on updating the FAC (the current version of which expires in the middle of the year) until the WTO has made a decision on US food aid. The Convention will possibly be renewed for two years without any changes. Ilse Hahn, the BMZ representative on the Committee, says that the US representatives are clearly open to criticism of their country’s policy. The problem, she says, is that US aid is regulated by national legislation. Even if US representatives on the Committee wanted to change the policy, that would be beyond their power.
According to Hahn and Nissen, the gulf between the Convention and actual practice must be reduced, if the FAC is to remain credible. Hahn believes that it would make a significant difference if observance of multilateral rules were controlled more effectively. For example, determining and monitoring aid needs could be centralised with the United Nations. While the British government has proposed to abandon the FAC, Hahn and Nissen oppose this option at least as long as there is no alternative forum to discuss food aid issues. However, with US practices in mind, Nissen does suggest reconsidering whether a new Convention really makes sense or whether it would end up disguising a policy with a completely different purpose.
In the view of the two German delegates, the FAC requirement that as much food aid as possible be channelled through the World Food programme (WFP) makes sense, as purely bilateral aid would lead to an even worse state of affairs. However, Ilse Hahn says that the WFP should become less dependent on US grain supplies and that other donors should become more active. So far, US cereals make up more than half of WFP resources. If it were to receive more money instead of grain, the WFP would be in a position to buy more of its supplies in the affected regions. Tillmann Elliesen
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