Food aid and poverty.

Using data from the Food and Agriculture Organization of the United Nations (FAO 2005), we calculate the annual value of cereals food aid as a percentage of cereals consumption for a sample of 99 developing countries (2) and take the average value of this number for the period 1970-1979, 1980-1989, and 1990-2000. (3) We show the cross-sectional income profile for these three time periods in figure 5 by using a locally weighted regression of decadal average cereal export share on the decadal average of the log of income per capita (bandwidth = 0.8). Figure 6 shows the results of performing the same analysis on the sample of Sub-Saharan African countries. We run the same regressions for net food export share and net cereal export share and present those results in figures 7-10.

Figure 5 indicates that among developing countries, it has typically been the middle-income countries that rely most heavily on food aid. The cross-sectional relationship between the percentage of cereals consumption coming from food aid and income has changed over time. Between the 1970s and the 1990s, the average percent of cereals consumption from food aid increased at all levels of income. This increased reliance on food aid was most pronounced for the richest countries in the sample. During the 1970s, food aid cereals consumption of a developing country with an average income of $8,103 averaged only around 3%, while during the 1990s, it averaged almost 8%. Figure 6 illustrates for SSA the cross-sectional relationship between income and the percentage of cereals consumption from food aid switched from a hump to a U-shape leaving the middle-income SSA countries where they started. The implication is that both the poorest and the richest countries in SSA have become more dependent on food aid over time.

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Figure 7 indicates that among developing countries, only middle-income countries earn income from food exports. The cross-sectional relationship between food export earnings share and income appears to be flattening over time. In the 1970s, a country with a per capita income of $1,100 is predicted to have positive net food exports. A country with this level of income in the 1980s or 1990s is predicted to be a net food importer. The trend in these data appears to be toward zero net earnings from food exports. Though not shown here, this impression is even stronger when the sample size is enlarged to include twenty-one high-income OECD member countries.

In figure 8, we limit the sample to SSA. During the 1970s, only the poorest African countries were net food importers--countries like Nigeria, Uganda, and Togo were net food exporters. This is no longer true. Comparing the dotted line to the solid line, we can see that the poorest countries switched from being net food exporters to net food importers. Taken together, the results in figures 7 and 8 do not allow us to rule out the possibility that food aid caused some countries, especially in SSA, to become net food importers. Since the majority of food aid comes in the form of wheat, we turn now to an analysis of net wheat exports.

Figure 9 shows that, in each decade, the poorest countries spent the largest fraction of their incomes on cereal imports. In fact, so few developing countries were net cereal exporters in any decade that the predicted net cereal export share was negative even at the highest income levels observed in the data. (4) Figure 10 shows that countries in SSA were net importers of cereals during the 1970s. The regression lines across decades look so similar that it is fair to say that in terms of cereals, not much has changed in SSA.

Except during the 1980s, wheat food aid has gone disproportionately to middle- and upper-middle-income developing countries, calling into question the notion that food aid is primarily used to combat hunger in the poorest countries. This is in spite of the fact that the poorest developing countries spend disproportionately more of their income on cereals imports. The majority of the poorest countries in our sample that were net food exporters during the 1970s are now food importers. Based on the evidence though, it seems unlikely that food aid is responsible for this reversal. The majority of food aid comes in the form of cereals and the poorest countries were net importers of cereals in the 1970s and still spend roughly the same proportion of their income on cereals imports. Nevertheless, the trend is disturbing particularly since it is largely driven by SSA where agricultural productivity is falling (Masters 2005), and farmers are losing jobs as a result of imported food. (5)

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Conclusions

Food aid is unreliable and has not delivered long-term developmental benefits to the poorest countries. (6) Poor countries pay proportionately more of their income for cereals imports and receive proportionately less in cereals food aid than middle-income developing countries. These patterns have remained relatively constant over time. At the same time, developing countries that were once net food exporters are now net food importers: this trend is most pronounced for countries in SSA. However, it is difficult to tie developing countries' increased dependence on food imports directly to food aid. Food aid comes primarily in the form of cereals and developing countries' net cereals exports have hardly changed over the last thirty years.

One possibility that we have not explored in this article is that by helping to preserve the status quo, food aid has inadvertently contributed to the decline in agricultural productivity in SSA. Governments that know they can rely on food aid in times of crisis may be less apt to spend scarce resources investing in agricultural research and development.

To identify food aid's impact on production and welfare, future work must exploit the variation in food aid due to domestic concerns in donor countries and unrelated to conditions in recipient countries. As in the case of Ethiopia, U.S. food aid donations are more closely related to U.S. wheat prices than to the food supply in Ethiopia. Although food aid is becoming more focused on humanitarian concerns, the historical record contains ample evidence of ulterior motives for food aid donations. Using motives centered on domestic donor concerns rather than recipient countries, one can avoid the spurious negative correlation due to famine-induced food aid and identify the causal effect food aid has on recipient countries.

An alternative explanation for SSAs increased reliance on food imports is trade liberalization. As tariff barriers are removed, imported food becomes less expensive. This problem is exacerbated by SSA's relatively low agricultural productivity. Whatever the reason, it is clear that African countries are becoming more and more reliant on food imports. This would not necessarily be a problem if these countries were exporting lots of manufactured goods or non-food agricultural exports; however, this is not the case.

References

Abdulai, A., C.B. Barrett, and J. Hoddinott. 2005. "Does Food Aid Really Have Disincentive Effects? New Evidence from Sub-Saharan Africa." World Development 33(10):1689-1704.

Barrett, C.B. 2007. "The United States' International Food Assistance Programs: Issues and Options for the 2007 Farm Bill." AEI Working Paper Available at www.aei.org/farmbill.

Feenstra, R.C., R.E. Lipsey, H. Deng, A.C. Ma, and H. Mo. 2005. "World trade flows: 1962-2000." NBER Working Paper 11040, National Bureau of Economic Research, Cambridge, U.K.

Food and Agriculture Organization of the United Nations. 2005. FAOSTAT CD-ROM. Available at www.fao.org/icatalog/inter-e.htm. Rome, Italy.

GebreMichael, A. 2004. "The Impact of Globalization--Its Promises and Perils to the Ethiopian Economy." Paper presented at EEA Second International Conference on the Ethiopian Economy, Addis Ababa Ethiopia, 3-5 June.

Gilligan, D.O., and J. Hoddinott. 2007. "Is There Persistence in the Impact of Emergency Food Aid? Evidence on Consumption, Food Security, and Assets in Rural Ethiopia." American Journal of Agricultural Economics 89(2):225-42.

Harrison, R 2002. "Ethiopia: Grain Marketing--Review of Recent Trends." Unpublished, World Bank.

Jayne, T.S, J. Strauss, T. Yamano, and D. Molla. 2002. "Targeting of Food Aid in Rural Ethiopia: Chronic Need or Inertia?" Journal of Development Economics 68(2):247-88.

Levinsohn, J.A., and M.S. McMillan. 2007. "Does Food Aid Harm the Poor? Household Evidence from Ethiopia." In A. Harrison, ed. Globalization and Poverty. Chicago: University of Chicago Press, pp. 561-598.

Masters, W.A. 2005. "Paying for Prosperity: How and Why to Invest in African Agricultural R&D." Journal of International Affairs 58(2):35-64.

Mustapha, S. 2007. "GAWU Empowers Rice Farmers." The Statesman Online, January 20. Available at http://www.thestatesmanonline.com/pages/ news_detail.php?newsid=2124§ion=2

(1) An alternative approach employed in a recent paper by Gilligan and Hoddinott (2007) employs matching techniques to construct the counterfactual. The authors do the best they can with the data they have, but theirs is a relatively small sample over a relatively short time horizon and so it would be unwise to use their results to generalize about the long-term consequences of food aid.

(2) The sample includes three transition economies: Poland, Romania, and Hungary.