Supplementary memorandum submitted by
the UN World Food Programme (WFP)
WFP FOOD AID
The United Nations World Food Programme is often
asked whether it is guilty of dumping surplus food from the developed
world on countries in the developing world with the effect of
undermining local markets.
While historically, there have been problems
attributed to the delivery of food aid, much has been achieved
over the past three decades to tailor the delivery of aid in such
a way that it has a minimal disruptive effect on the markets of
the recipient country while simultaneously enhancing its positive
impact in terms of assisting a population in need.
Whenever possible, WFP will buy food in the
very countries or regions where the hungry people live. This is
currently the case in Sudan, where one region of the country has
produced bumper harvests, allowing WFP to purchase food for beneficiaries
in another region, Darfur where 1.6 million people are now dependent
on food aid.
Dumping of food aid may become an issue when
food commodities are exchanged bilaterally on a government to
government basis. There is evidence that this kind of food aid
can cause market disruption when it is delivered as a resource
transfer for balance of payment or budgetary support.
This approach was particularly problematic in
Eastern Europe and the former Soviet Union during the early 1990s
when there were massive and misguided transfers of bilateral food
aid. This "programme food aid", as it is sometimes known,
often finds itself being sold on the markets of the recipient
country and leads to price falls that affect local farmers.
Such "programme food aid" is also
not necessarily utilised in a manner that guarantees it will reach
the most needy of beneficiaries as food delivered to the market
is often going to be out of the financial reach of the poorest
sections of the population.
This negative scenario can be avoided if food
aid is channeled through organizations like WFP. Our objective
is to ensure that we reach the hungry without distorting local
markets. To enhance our targeting of food aid, WFP has developed
a sophisticated system of "Vulnerability Assessment and Mapping",
or VAM analysis.
VAM delivers the information which not only
allows WFP to target the right people in the right place at the
right time, but also to answer the key question for the world's
biggest food aid organization: how can food aid make a difference?
This is how WFP ensures that food aid is targeted
extremely carefully at people who have little or no purchasing
power and is therefore highly unlikely to distort markets.
Refugees, internally displaced people, AIDS
orphans and hungry schoolchildren have very little purchasing
power and are hardly likely to be at the front of the queue at
markets and shops. They are not major actors in the commercial
food market.
Targeted food aid, delivered through the World
Food Programme has a way of reaching the neediest people like
no other resource. When drought, floods, war, HIV, or economic
crises strip people of their livelihoods, they are no longer consumers.
Food aid meets their absolute most basic needs,
freeing what little income or savings they may have for other
necessities like shelter, health care and education.
Broadly speaking, WFP would still argue that
when there is an urgent need for food commodities to be provided
to a targeted population in need, the origin of the commodities
is secondary to their utilisation.
To put it more bluntly, it would be a tragedy
if people were left to starve because WFP was prevented from using
surplus food from a country willing to donate that commodity.
However, it would be wrong to assume that WFP
is consequently being used as an instrument to dump unwanted food
from the developed world on populations in Africa and beyond where
people are suffering from chronic hunger.
Firstly, it is important to recognize that food
surpluses around the world have diminished in recent years. Partly,
this is due to strong demand from the expanding Chinese market
which has driven up prices and led to a dramatic reduction in
surpluses around the world. It is, therefore, far more profitable
for suppliers in the big agricultural nations, like the United
States, to sell their produce at high prices to willing buyers,
than to dump it on the developing world.
Secondly, the World Food Programme does not
set out to buy food surpluses. When WFP receives cash donations,
we buy on commercial markets, although some donors require us
to buy commodities in less competitive markets which does reduce
the amount of food we can purchase.
Finally, and this is perhaps the most important
point, it makes no economic sense for a major exporter to dump
surpluses through food aid because the costs of delivery—especially
with historically high ocean freight rates—and administration
are so high. Why pay over £120.00 per metric tonne to "dump"
a commodity valued at £80.00 a metric tonne? It is far cheaper
to use export subsidies or credits to dispense with commodities
that cannot be sold readily at commercial prices.
November 2004
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