Cash would be better

[ By Tillmann Elliesen ]

There are three situations where there is no alternative to food aid: first, where there is a proven food shortage or market failure, leaving people hungry with no access to food even if they could pay for it; secondly, where a crisis region is cut off from the outside world and ultimately reachable only by airlift; thirdly, where donors are unable (or unwilling) to provide any other form of help. Afghanistan does not fit the bill on any of these three counts. Since the years of drought from 1999 to 2001, the situation has significantly improved. So it would be better if donors were to deliver more cash aid rather than continuing to provide the needy with food. This is the conclusion reached by a study financed by the EU Commission to help the Afghan government manage food aid.

The two authors, Hansjörg Neun and Anthony Fitzherbert, spent three months in the early summer of 2003 examining the supply situation in Afghanistan and watching international food aid in action. Many of their findings relate to food aid in general, not just in the context of Afghanistan. One of their principal objections is that food aid is far too expensive. The transport of the commodities and other logistical expenses account for around half of the total cost of the current Afghanistan operation of the World Food Programme (WFP). The average cost of a ton of WFP food is over 500 US dollars; every ton of wheat costs 330 dollars. By comparison, Afghan wheat market prices at the beginning of May were around 170 dollars according to WFP. In view of this price gap and the “vibrant commercial market” in Afghanistan, the authors conclude it would be considerably more efficient to give cash to the needy rather than food.

Another central criticism contained in the study is that the WFP tends to overestimate food aid needs because it underestimates farm yields. In 2002, for instance, it was assumed that Afghan farmers would produce two tons of wheat a hectare, making for a nationwide deficit of just less than 1.4 million tons. The actual harvest, however, worked out at more like three tons a hectare, reducing the deficit on paper to a bit more than 350,000 tons. Another element of uncertainty is the size of the Afghan population (figures range between 20 and 28 million). Calculating the food aid needs, a difference of just one million population either way changes the anticipated grain deficit by 170,000 tons. But where the study’s authors see the biggest problem is in the fact that aid organisations are too fixated on food deficits and fail to consider the social situation of target groups as a whole. Because of this, Neun and Fitzherbert say, appraisals of the economic situation of aid recipients have tended to be inaccurate in the past. Off-farm income and other forms of social security were often ignored or underestimated. The EU Commission confirms, however, that the WFP vulnerability assessment has much improved since then. On the whole, the study regards the rural population of Afghanistan as very robust: “The country and the climate support diversity, and the market has never ceased to operate even under the most difficult conditions.”


Problems with food for work

The authors also express doubts about the WFP strategy of linking food aid to the development of long-lasting assets that will promote development. Food for work projects intended to do that are not deemed very suitable because food can only be used as payment for low-skilled work. Creating valuable assets calls for skilled labour that needs to be paid in money. What is more, Neun and Fitzherbert claim there is evidence, even in Afghanistan, that the introduction of food for work undermines people’s will and ability to help themselves, “so communities now expect to be paid to undertake work which for hundreds of years they had provided for nothing.”

The authors defend food aid, however, from the criticism that it has a detrimental impact on Afghanistan’s cereal markets. From a survey of more than 250 traders from allover the country, they conclude that not much aid finds its way into the trade and that where aid commodities are sold, they have only little impact on prices. A much bigger problem is seen in the volume of commercial grain imported from neighbouring countries, which is estimated to be many times more than annual food aid. These imports are important to make up deficits in domestic production but Afghan farmers compete with neighbours at a disadvantage because cereals production in countries such as Pakistan, Kazakhstan or Iran is subsidised. The study's authors advise the Afghan government to impose stricter controls on cross-border grain trading, most of which is illicit.


No impact on opium production

The EU report also confirms the claim made by WFP Country Director for Afghanistan, Susana Rico (see page 242), that food aid has no impact on opium growing: “Clearly, food aid or no food aid, the present price differential between opium and wheat is far beyond normal economic comparison even if you throw the price of wheat straw into the equation and doubled the price of grain.”
The most important recommendation the study makes is that the Afghan government should draw up a comprehensive food security policy strategy in which the role of food aid is clearly defined. According to the EU Commission, the government, with World Bank support, currently is working on such a strategy. What is found crucially important for food security in Afghanistan (and elsewhere) is stimulation for markets and better access to them. It could make sense, for example, to pay private traders to distribute food. Such an arrangement could have a positive impact on local markets and at the same time lower the cost of aid. With any aid delivery programme based on local purchases, however, it must not be forgotten that the anticipated price rises would primarily benefit a small number of big traders. “It is necessary to emphasise that the most efficient &Mac226;local purchase‘ operation is when Afghan consumers have enough purchasing power to enable them to buy what they need to secure their necessities of life.”

Assistance to the Transitional Authority of the Islamic State of Afghanistan
to Elaborate Policy Guidance Regarding Food Aid Utilisation in Afghanistan.
Final Report, 2 Vols., October 2003