Food aid to developing countries: A survey

World Development Vol. 7 pp. 225-247 0 Pergamon Press Ltd. 1979. Printed in Great Britain

0305-750x/79/0301-0225/$02.00/0

Food Aid to Developing Countries: A Survey S. J. MAXWELL and H. W. SINGER*

Institute of Development Studies, University of Sussex Summary. - Food aid currently hence has considerable potential dence on the impact of food aid use of food aid is influenced by

constitutes nearly 15% of official development assistance and as a stimulant to growth in LIXs. This paper reviews the evion growth and its associated factors. While recognizing that the a constellation of interests in recipient and donor countries, it

identifies a set of guiding principles for maximizing the effectiveness of food aid. These include the need for food (relative to other development needs), its level of substitutability with commercial imports, its incorporation in a poverty-oriented development plan, its guaranteed availability and its complementarity with financial aid. Current food aid programmes recognize the relevance of some of these principles - e.g. the criteria of necessity -but ignore others - notably the need to situate food aid in a comprehensive plan for improving patterns of income distribution

in LDCs.

tive action in this field than has been observed in the recent past.

1. INTRODUCTION Food aid is both important and controversial: it currently amounts to around $2000m each year’ and accounts for some 15% of official development assistance (ODA); at the same time its adherents and detractors pursue a running battle which has already lasted for over 20 years and which shows no signs of abatement. The purpose of this survey is to sort through the debris of those 20 years, to identify the issues (Section 2), to review the evidence (Section 3) and to suggest areas where new fronts might be established or old ones reopened (Section 4). It concludes that there is a strong a priori case for certain types of food aid to certain countries in certain conditions: food aid is not a substitute for financial aid and is usually second-best aid but it can, if certain general principles are followed, make a contribution to development and to self-reliance. Whether it has always done so in practice is another matter: there are many pitfalls and dangers in food aid and as yet insufficient empirical evidence on its contribution to faster growth, social development and more equal income distribution. These aspects require further work, as do the particular contribution of food for work and supplementary feeding projects, and the various uses of dairy aid, notably from the EEC. This might also lead to more innova-

(a) Taxonomy The list of outstanding questions serves to illustrate the heterogeneity of food aid with respect to products, donors and end-use. There is no unique food aid problem - or opportunity _ and it is appropriate therefore to begin taxonomically with a statistical review.* After a dip in the early 1970s food aid recovered strongly in both volume and value terms to reach a value of $1790m or 15% of net ODA in 1976 [OECD (1977), pp. 174-175].3 In 1975/6 cereal aid amounted to 9.1 m tons,’ a figure not far short of the World Food Conference target of 10m tons per annum,’ and a significant increase over the low of 5.5m tons in 1973/4. At the same time, dairy food aid, particularly from the EEC,

* The authors are respectively temporary Research Officer and Professorial Fellow at the Institute of Development Studies, University of Sussex. Part of the research on which this paper is based was carried out for the UN/FAO World Food Programme. The WFP is of course not responsible for the views contained herein. We recognize assistance from Mr.

Patrick Muma and the benefit of advice from and discussion with other colleagues. 225

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has been increasing, though somewhat erratically: dairy aid in the form of butter oil and skimmed milk powder may now account for some lo- 15% of all food aid in value terms.6 The dominant role of the US in food aid programmes has declined: its share was 94% in 1965, 70% in 1970 and only 58% in 1975.7 In 1976 its share rose to 68%, largely because of a fall in food aid from European countries;’ nevertheless these countries taken as a group remain the second largest donor, their share having risen from 0.5% in 1965 to as high as 29% in 1974 before slipping to 20% in 1975 and 16% in 1976.’ Canada is the third largest donor with a share in 1976 of lo%.” An increasing share of food aid, now about 20%, is being channelled through multilateral agencies, mainly the UN World Food Programme and the EEC.” Most food aid, about two-thirds, is sold by recipient countries on their domestic markets to extend supplies and generate funds; the rest is used on food for work projects of various kinds (about 16%), in supplementary feeding programmes (about 1 l%), or (excluded from this survey) for emergency relief (about 7%).” Add to these dimensions the different situations obtaining in recipient countries and the variety of policy tools available to modify the impact of food aid and the dangers of oversimplifying reality become apparent. Historically, as will be clear from the references cited, the literature has been more concerned with US food aid than with aid from other bilateral donors and multilateral agencies; with grain aid as opposed to dairy aid; with direct distribution as opposed to market sales; with the disincentive effect as opposed to other effects on growth and income distribution; and with aid to the Indian subcontinent as opposed to other parts of Asia and to Latin America and Africa. In assessing the available evidence, care has to be taken to allow for these biases - which also give us a list of gaps which it would be desirable to fill in the future.

(b) Changing legislative contexr

It is necessary also to allow for the changing legislative context within which food aid is delivered. Stanley (1973) describes early food aid efforts; Mettrick (1969) traces the history of food aid from the passage of PL480 in 1954 to the founding of WFP in 1963 and the signing of the Food Aid Convention in 1967; Boerma (1976) takes the story up to the World Food Conference of 1974 and the 10m ton target and

US (1976) describes the evolution of PL480 up to the major reform in 1975. Delorme et al. (1977) summarize EEC food aid policies. l3 As compared to the late 1950s the main features distinguishing food aid in the late 1970s can be identified as the presence of a large multilateral sector and of a significant European food aid programme; the absence of sales for local currency (abolished by the 1966 amendment to PL480); the greater emphasis on the development objectives of food aid; and the closer attention to inter-country allocative mechanisms. 2. THE ISSUES (a) The case for food aid None of the changes noted above has greatly affected the basic case for using food aid as a development resource, inspired by Nurkse (1953), set out in detail by an FAO pilot study prepared by M. Ezekiel in 1955 (FAO, 1955) and further elaborated by a UN expert group in 1961 (FAO, 1961).14 With later additions and clarifications” this case can be summarized in 4 propositions: 1. Food aid can lift a constraint on growth and self-reliance by providing the real resources necessary to expand investment or to dampen the inflationary repercussions of an existing development plan (the output aspect).16 2. Food aid can have a disproportionately favourable impact on disadvantaged groups, notably by supporting specific nutrition or food for work projects or by distribution at concessional prices (the distribution aspect). 3. Food aid can assist governments to set up storage and price stabilization programmes at national, regional or local levels (the stabilization aspect). 4. The value of all these benefits is enhanced by the fact that food is at least partly ‘additional’ - aid that would not otherwise be forthcoming in cash and food that would not otherwise be purchased (the additionality aspect). r7

(b) The case against food aid The case against food aid is more diffuse,” resting partly on a denial of the propositions advanced in favour of food aid and partly on 4 specific, inter-related criticisms: r9 1. Food aid has a disincentive effect on local agriculture, through the price mechanism, by

FOOD AID TO DEVELOPING COUNTRIES: A SURVEY

its effect on government policy or directly by attracting agricultural labourers to food for work sites (the disincentive aspect). 2. The allocation of food aid between countries does not reflect criteria of need but rather the economic, political and military interests of donor countries (the allocation aspect). 3. Partly as a result, food aid is associated with forces leading not to greater self-reliance but rather to greater dependence (the dependency aspect). 4. Food aid is second-best aid, expensive, double-tied, dependent on surpluses, irregular, bureaucratic and often inappropriate (the inferiority aspect). A closer look at these 8 aspects of the food aid debate will clarify questions both of theory and of fact: this is the task of Section 3.

3. THE EVIDENCE (a) The output

aspect

The idea that development can run into a food constraint has been basic to the case for food aid since the FAO report of 1955. In that report and in much of the subsequent literature, food aid has been seen principally as a resource to overcome the binding constraint on growth without inflation: in the absence of food aid, high income elasticities of demand for food interact with the multiplier effect to produce excess demand for food. Food aid helps by providing real resources and (being a leakage in the Keynesian sense) by dampening the multiplier .‘O Food aid is seen as useful even if development stimulates agricultural production, because, with given crop cycles, demand is generated more quickly than supply; and it may be particularly helpful if structural change such as land reform disrupts agricultural production in the short run or reduces the marketed surplus [FAO (1961);Balogh(1977)]. In response, some observers have pointed out that the availability of food aid does not guarantee its use to foster growth: food aid can equally substitute for domestic savings or be used to increase consumption,21 including consumption in the form of defence expenditure.22 Furthermore, others have argued that food is not always the binding constraint on greater output, or at least that it need not be, given structural change and different policies.23 A larger development plan supported by food aid may then run into other constraints causing a lower demand for food and a possible disincen-

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tive effect on local agriculture if food aid is released. If the binding constraint is the availability of non-food consumer goods then prices may rise and farmers may suffer a fall in relative income even if agricultural prices remain For this reason the need for food aid steady.% to be combined with other aid in cash or commodities is often seen as essential to hold the non-food price line.25 In view of these counter-arguments, the impact of food aid on aggregate output26 becomes a matter for empirical investigation, albeit hypothetical since it is impossible to be certain what tax, investment, import and other policies would have been in the absence of food aid. In general, this is an under-researched question, the main sources being the US financed studies of the impact of PL480:” these reach different conclusions for different countries, reflecting different magnitudes of food aid flows, different development strategies and the use of different assumptions in analysis. Thus one study concluded that the im act on growth in Ginor Turkey was ‘infinitesmal’2 P whereas (1963), assuming that PL480 resources were fully additional, found that in Israel PL480 might have contributed 2% to GNP over the period 1955-60. Rath and Patvardhan (1967) studying Indian experience, conceded the contribution of food aid to investment but implicitly questioned the general validity of Ginor’s assumption since ‘in the absence of PL480 the Government would possibly have taken stronger measures for raising additional internal resources’ (p. 1 5).29 Most of these studies relate the growth effect of food aid directly to the expenditure of counterpart funds, deducting ‘US uses’ such as embassy maintenance that would have been paid for anyway in dollars and then relating the remaining value of counterpart funds to investment outlays. A more useful procedure would be to examine the question from the point of view of fiscal management, since food aid could provide an opportunity for expansion without inflation: the inflation-dampening effect of food aid reported by several country studies,30 while speculative for the same reason as the addition to investment impact is in effect a contribution to growth.31 Thus the impact of food aid might be greater than usually reported. Food aid is also said to contribute to faster growth in 5 subsidiary ways. If it substitutes for commercial imports it releases foreign exchange for investment goods;32 it can release from the need to produce food land that could more profitably be used for other crops, particu-

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larly export cash crops;33 by providing cheap inputs, it can stimulate processing industries such as textile? or livestock;35 by contributing to better nutrition it can assist in the formation of human capital;36 and by acting to stabilize food supplies it can provide favourable conditions for growth.37 The country studies do not normally relate these factors to overall growth, perhaps because the dynamic analysis required presents methodological problems.38 In some cases the contribution has historically been sma1139 but there have been notable successes in some areas such as the stimulus given by feed aid to the Israeli livestock industry.40 Closer attention could usefully be paid to food aid which substitutes for commercial imports and to the effect of food aid on cash crop exports: these and other factors are discussed in more detail below!l

(b) The distribution

aspect

Whatever the overall impact on growth, there remains the question of employment and income distribution. Many proponents of food aid argue that it has positive distributional effects, enabling governments to avoid squeezing agriculture,42 making it easier to adopt labourintensive and basic-needs strategies which often create large new demand for food,43 and making it possible to undertake specific poverty-focused food-for-work and feeding programmes.44 Critics of food aid, on the other hand, argue that its effect on distribution is unfavourable, either because it encourages governments to maintain existing policies of capital-intensive industrialization and ‘urban bias’,45 or because it introduces new biases, for example, by diverting investment in grain storage from villages to large harbours.@ The bulk of the literature on this question is concerned with food-for-work and supplementary feeding programmes, inappropriately since less than one-third of food aid is used to support poverty-focused projects through direct distribution and any distributional effects are more likely to occur through the impact of food aid used for market sales, including concessional sales through ‘fair price’ shops.47 There is much theoretical discussion but little hard evidence that food aid has greatly influenced government policy towards more equal distribution of assets, incomes or public investment:48 this may be seen as support either for the thesis that food aid is neutral with respect to government policy or for the more radical view that food aid supports the continuation of inequality.

With regard to food for work, there is a considerable literature, much of it generated by the UN World Food Programme and concerned to show that food for work reaches the poor, that it contributes to income and employment and that it counters the capital-intensive bias of other aid and development programmes.49 The validity of these conclusions can best be assessed by treating food for work as a special case of public works and setting the food for work literature in the context of the much larger set of writings on public works.” In so doing it becomes clear that despite important shortterm employment benefits, public works tend to suffer serious political and structural limitations on their ability to create incomes in the long run: the majority view in the literature is that public works programmes tend to worsen the distribution of assets5i and that for a variety of reasons, including low productivitys2 and the emphasis on road-building to the detriment of more productive projects,53 the number of long-term jobs created is often disappointing.54 Despite these limitations, various cost-benefit analyses have concluded that public works may be desirable, particularly if the consumption of the poor is weighted as a benefit;55 and in general terms public works are seen as having a useful short-term role in the context of structural change.56 What this literature also suggests, however, is that food for work may be a poor way of undertaking public works. Paying wages in kind has been criticized as being expensive and inconvenient;57 as unpopular with workers who often sell food wages at a discount,58 and regard food for work as a last resort;59 and as being associated with very low productivity.60 In favour of payment in kind it is argued that it guarantees additional consumption and that nutritional status is thereby benefited,61 but the case is not proven62 and anyway may not present enough advantages to outweigh the costs. If there is a case for food aid to support public works then it would often seem preferable that the support should be indirect through the provision of real resources, rather than directly through food for work. As regards the use of food aid to support supplementary feeding programmes it is necessary to draw a distinction between those recipients on the one hand, pre-school children and pregnant or lactating women, who are of high priority nutritionally; and those on the other, mainly school children and college students, who are of lower nutritional priority. Some two-thirds to three-quarters of recipients in feeding programmes are in the latter cate-

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gory63 and for them it is generally accepted that the nutritional benefits to be derived are small but that the justification for feeding programmes is essentially non-nutritional, having to do with creating incentives to attend school, or ensuring greater attentiveness.@ The evidence for these benefits is inconclusive and mostly qualitative:65 where quantitative studies have been carried out they have often failed to confirm the benefits.66 Even if there are benefits, various observers have pointed to the costs of school lunch programmes, either direct or indirect, and have questioned their value from the point of view of opportunity cost:67 particular weight has been given to the diversion of staff time associated with planning and preparing school meals.68 At the very least these programmes seem to require greater empirical justification. For pre-school children and mothers a priority nutritional problem does exist69 and the debate has been over whether or not supplementary feeding works; whether, if it works, it is the best approach; and whether, if it is the best approach, food aid support is necessary or desirable. The answers to all these questions are in dispute, although evidence is accumulating to suggest that the effectiveness of supplementary feeding programmes has been limited by poor health which inhibits absorption, by low family incomes which encourage trade-offs between institutional feeding and family feeding, and by administrative difficulties.m Some have been led to conclude that as a result of these problems supplementary feeding is unlikely to be cost-effective;71 others believe that programmes can be improved sufficiently to justify their continuation or Gxpansion, particularly for pregnant women. Within this group, not all believe that further work should be based on direct use of food aid and some argue for the use of local foods on grounds of cost, acceptability or replicability.B A separate argument has been concerned with the non-nutritional aspects, with some observers arguing that supplementary feeding is largely justified by the fact that it provides an income supplement74 or improves receptivity to health messages7’ but with others pointing to the introduction of unfamilar foods76 or to the diversion of time from health or education work.77 On the distributional question there is some doubt as to whether supplementary feeding programmes are able to reach the poorest areas and within those areas the poorest groups: there tends to be a bias to developed, accessible areas7* and whether or not poor families benefit

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depends greatly on access to health and education services which is often unequal.79 Supplementary feeding, whether supported by food aid or not, may conceivably worJb,n income distribution. On the other hand, to the extent that food does reach the poor, the fact that programmes would often not be undertaken without food aid may strengthen the case for using food aid in this way.80 The task of drawing up a balance-sheet on supplementary feeding is beyond the scope of this survey and is attempted elsewhere.*l Suffice it to say that there are sufficient problems to warrant much closer evaluation of supplementary feeding programmes than has hitherto been the case.

(c) The stabilization

aspect

The use of food aid to support storage and stabilization schemes has been widely supported in the literature.*’ Such schemes are seen as contributing to long-term welfare in a variety of ways, ranging from the provision of resources to fund village level store construction to the establishment of international buffer stock arrangements. An example of the latter is the proposal by D. Gale Johnson (1976) that countries whose food production falls more than 6% below trend should be compensated from an international food aid fund. However, like many similar proposals in the past this remains unimplemented and in practice the main role of food aid has been in support of national buffer stock policies. Here, there has been a wide discrepancy between plans and practice, with planned stabilizatior schemes often succumbing to the pressures of rising demand and administrative complexity.83 A potential exists for food aid to contribute to stabilization policies, but it is yet to be realized.

(d) The additionality

aspect

An important plank in the case for food aid has been the idea that it is wholly or partly ‘additional’ aid, often voted and administered separately from the more usual forms of development assistance and supported by a separate (and larger or more influential) constituency in Food aid may therefore developed countries.M be second-best aid, but as long as it is useful there is a case, so the argument runs, for its continuation. This is a view which has often been accepted uncritically but which requires detailed investigation: there are certainly some

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countries (e.g. the UK) which fund food aid from the general aid budget and where there is a clear tradeoff. For other countries too doubts have been expressed as to how far food aid really is additiona18’ and it is worth asking how far the concept of additionality is consistent with medium-term planning of food aid or planned surplus production; from the point of view of individual recipient countries it would be worth investigating how far a reluctance to accept food aid could be translated into increased flows of financial assistance, from the same donor or from other donors.% A second aspect of additionality has to do with the relationship between food aid and commercial imports: it has been a cardinal principle of international debate that food aid programmes should not disrupt commercial trade and that ‘usual marketing requirements’ should be fulfilled before food aid is allocated to particular countries.8’ On this interpretation the role of food aid is seen in terms of the ‘additional’ imports and ‘additional’ development made possible. A counterview holds, persuasively, that developing countries benefit most from food aid when it substitutes for commercial purchases they would have made anyway, because then food aid is as good as untied financial aid, freeing resources for imports of investment goods.ss The estimation of how far food aid substitutes for commercial imports is another area for hypothetical ‘guestimation’ since no-one can be sure what import policy would have been in the absence of food aid. But a number of recent studies, using methodologies ranging from opinion surveys to econometric models, are agreed that with the exception of India, somewhere between a half and threequarters of food aid has substituted for commercial importssswhich countries would have made anyIn India, which is a large recipient, the way. figure is much lower, perhaps only around a quarter,” but nevertheless the conclusion is startling, confirming earlier fears that food aid might damage commercial exports, either absolutely or in terms of relative shares of a growing world market.” On the whole such a situation is fully in the interests of developing countries, with the exception of those, such as Argentina for wheat and some Asian countries for rice, which have been food exporters.92 There is a certain inconsistency in proposals which talk about food aid as providing balance-of-payments support while insisting that developing countries cannot be helped to pay for the food imports they are forced to make commercially;93 and the strongest single argument for food aid may

well be that it does to a large extent replace commercial imports. The inconsistency can be resolved, however, if it is accepted that food aid itself leads to economic expansion in the recipient countries creating the markets and resources for additional imports, including food imports. (e) The disincentive aspect The possible disincentive effect of food aid on recipient country agriculture is the single most widely treated issue in the food aid literature,” and seems to be widely accepted as an established and inevitable product of food aid.95 A brief discussion will show that the problem is in reality more complex and that government policy has a crucial role to play. The disincentive effect was originally presented by Schultz (1960) as working through the price mechanism: if food supplied as aid were sold on the open market then he argued that the price would fall below what it would otherwise have been and farmers would produce less food than they otherwise would. The concept was refined by Fisher (1963), who showed that the change in domestic production would depend on the price elasticities of both supply and demand for food, and it has been tested empirically in various forms, usually with a further refinement to allow for movement in the relative price of food rather than its absolute level.% Before turning to empirical tests, however, the criticisms of the concept itself should be noted: first, Schultz’s paper set off a controversy about the supply elasticity of agricultural production in developing countries, which now appears to have been settled in favour of the view that elasticities are positive though low, perhaps of the order of 0.2 for commodities of the surplus type.97 Secondly, it has been argued that where a recipient country is facing a food constraint on development and serious inflationary pressure, the provision of food aid helps to prevent inflation: of course food prices will be lower than without food aid, but it is argued that the benefits of high food prices in times of inflation often go not to farmers but to traders and that in any case food prices are likely to rise well above the levels required in the long term to attract sufficient investment and increase supply.9s Thirdly, it has been argued, originally by S. R. Sen, that Schultz’s formulation ignores the income creating and growth effects of food aid which lead to increasesin demand offsetting, at least in part, the effect on price of increased supply.99 Finally, it has been argued that the

FOOD AID TO DEVELOPING COUNTRIES: A SURVEY perfect market implicit in Schultz’s argument is not present in a reality which incorporates structural weaknesses and profiteering in the wholesale sector ‘O” government intervention in price fixation ‘101 and such devices as fair price shops to differentiate the market and increase demand.“* The thrust of these reservations is to argue that in fact the disincentive effect of food aid on food production is or can be negligible and it is necessary therefore to resort to empirical tests. Twenty-one empirical studies have been examined, demonstrating a variety of approaches, with the later ones tending more to the use of multi-equation econometric models. As many as 12 of the studies deal with the Indian experience of PL480: apart from the fact that they do not all reach identical conclusions, there is a danger in extrapolating from the Indian case because India has a particularly sophisticated market structure and because food aid shipments, although large in absolute terms, have added less than in some countries to total availability. Nevertheless the Indian studies are given special attention below, Of the 9 remaining works, 2 identify a significant disincentive effect (Colombia” and Pakistan iW) whereas 7 find no impact on price andpr production (Brazil,“’ Greece,lae Turkey,” Egypt,“’ IsraeLlog Upper Volta,“’ Tunisia”‘). Indeed in the Greek and Tunisian cases a significant incentive effect is claimed to have resulted from the government policy of using the real resources provided by PL480 imports to meet part of the financial cost of a price policy which provided incentive prices for producers while subsidizing consumers.“* In all 9 cases government policy prevented the operation of a free market in some way or other, although not always with favourable results for food production: in Colombia the government’s attempts to maximize revenue from the sale of imported food undermined local wheat production. But in most cases a combination of more rapid growth and government price support does seem to have led to the maintenance both of relative prices and of production. The Indian case is more complex, with different studies adopting different methodologies and examining different periods.113 Of the 12 studies, five114 argue that the disincentive effect was negligible or nonexistent, onells finds that prices were affected but output was not, four116 find that there was a significant negative effect on both prices and output reach mixed conclusions, finding and two”’ a disincentive in some periods but not in

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others. The greatest effects are reported by Mann (1967) and Seevers (1968), the former suggesting that a rise in PL480 imports of 1 lb per capita would lead to a fall in domestic production equivalent, after allowing for compensations over 10 years to 0.32 lb per capita; and the latter calculating that a fail of 1% in PL48O’s contribution to total cereal utilization (equivalent to a 20% fall in shipments) would lead to an increase in output of 0.40%. Neither of these impacts seem very large and Mann in particular notes that there is still a large net increase in consumption; nevertheless the figures of both Mann and Seevers are larger than those of other analysts. The most sophisticated multi-equation econometric model, that developed by Rogers et al. (1972), finds an impact less than one tenth as great as that of Mann.“* The difference is accounted for by the introduction of differentiated markets in the Rogers model, which allows for subsidized consumption through fair price shops and the conclusion reached is that differentiated markets are the appropriate policy tool to avoid a price disincentive effect on food production. Other reasons cited for the absence of a disincentive include increased government expenditures leading to greater demand”’ and, especially in later periods, the restriction of PL480 imports to levels at which relative prices are not damaged.‘*’ It does seem probable that a price disincentive effect on production can be and has mostly been avoided by an appropriate mix of policy tools. As regards demand expansion, it has been demonstrated that if demand expansion is to absorb all the food provided by food aid then it has to be greater than the domestic value of the food aid, and there may be an effect on non-food prices unless non-food aid is available to meet new demand.‘*l If this is not available then it may be necessary to resort to differentiated markets or a price policy which provides different prices for producers and consumers: Fedeler (1972) has argued that the costs of the latter will exceed revenue except under certain conditions of price elasticity which are unlikely to be fulfilled and has also pointed out that differentiated markets will only eliminate negative effects if some local food is also channelled through the fair price shops or their equivalent.‘** Either tactic is therefore likely to reduce the funds available for growth stimulation by demand expansion to very low levels: it follows that to secure growth, demand expansion should be the preferred option, with food aid being backed up by non-food aid in cash or kind.

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The emphasis on policy in the price disincentive discussion illustrates the artificiality of dividing disincentive effects into ‘price’ and ‘policy’ effects.123 Nevertheless there is a separate strand of the literature which deals with the effect of food aid on government attitudes to agriculture. The literature does not work with a consistent, rigorous definition of what constitutes a ‘policy’ effect. Often the effect is described in very vague terms illustrated by Aktan’s remark in 1965 that in Turkey ‘agriculture has not received the thoughtful concern and the integrated programme of action needed to make it a si nificant contributor to economic growth’.’ ZF In other cases the disincentive is seen partly in terms of a low share of overnment investment going to agriculture, B25 of inefficient administrative regulation of grain marketing,126 of insufficient technical assistance to producers,127 of unwillingness to undertake land reform128 or of a failure to shift the terms of trade in favour of agriculture.129 A full analysis should take account of all these variables; in practice the emphasis of most analysts has been partial and impressionistic, concentrating on agricultural output as the dependent variable and on government investment as the independent variable. Of the studies examined dealing with ‘policy’ effects, nine deal with India, where the majority view is that food aid did have a disincentive effect on government policy towards agriculture during the 1960~.‘~’ Other observers argue that agricultural development in India was not in fact neglected,131 or, more commonly, that any neglect was independent of food aid shipments and more the product of a general reference for heavy industry and ‘urban bias’.13 4 Choosing between these positions is a matter for judgement, but it may be noted that studies concerned with the question of what policy would have been in the absence of food aid (rather than what it ought to have been) have given a smaller share of the responsibility to food aid and a larger one to other biases. Outside India, opinion is equally diverse: in some countries food aid is seen as responsible for inadequate policy; 133 in others it is cleared in still others different of this charge;lM analysts reach different conclusions,135 usually because they study different periods.lX Barlow and Libbins (1969), in a study of six countries including India, concluded that any ‘failure to meet the increasing demands has been due to . factors in farm organization that existed long before the Title I programme’ and the weight of evidence seems to favour those who argue that in many countries food aid is sucked

in by poor agricultural policy rather than itself bein responsible for the vacuum which it fills!38 some commentators have gone Indeed, further, to suggest that food aid has made possible policies more favourable to agriculture than would otherwise have been the case. As noted above the rationale for food aid is often based on this proposition139 and there is some evidence to support it: in Israel, Ginor (1963) showed that food aid facilitated the growth of the livestock industry and in various countries the availability of food aid has been cited as a factor contributing to faster agricultural growth.14’ Whatever happens to production, a separate argument has been concerned with farm income, which is seen as being threatened in relative or absolute terms by food aid. Lipton has stressed the absolute fall in farm income brought about by food aid releases, quoting an unidentified report from the UN in Bangkok to the effect that the immediate loss to Indian farmers in the year of release, before they had time to compensate by switching to other crops, was equivalent to 1.9% of farm income between 1957-63, 7.7% in 1964-67, and 1.2% in 1 968-69.14’ Lipton also argues that switching to other crops, a compensating strategy recommended by other analysts,142 may not maintain incomes at their original level if their prices then fall because of increased suppl~.‘~~ Even if absolute incomes are protected, others have argued that farm incomes may fall in relative terms and that food aid disposal amounts to a tax on farmers because non-food prices are likely to rise under pressure from demand expansion or because general deverlgment causes urban industrial incomes to rise. Disappointingly, this question has not been treated to a full empirical investigation; early work on Colombia suggested that farmers compensated for falling wheat prices by switching to barley,14’ but a recent study by Dudley and Sandilands (1975) has suggested that both production and income suffered a net loss. Mason (1966) discussed a switch by Pakistan farmers from wheat to cotton but without providing data on incomes; other studies have noted a positive impact of food aid on farm production and hence, presumably, on farm incomes.146 A study of the impact of food aid on farm incomes in India would be particularly useful. A final version of the disincentive effect suggests that the provision of alternative employment through food for work programmes can attract agricultural labour away from its normal employment and so cause a decline in

FOOD AID TO DEVELOPING COUNTRIES:

oUtpUt.147 The danger is emphasized by those who see public works primarily as a device to mop up seasonal unemployment,148 though others argue that rural works can have a beneficial effect on the rural labour market if they do compete for labour and so drive wages up towards minimum standards149 or enable labourers to escape from dependency on employers.150 This is another area where empirical work is lacking: one study, by Stevens (1977a) concludes that in various African countries this type of disincentive did not occur. (f) The allocation aspect Food aid is criticized - as all aid is - because the humanitarian arguments used to justify appropriations are not reflected in the allocation of aid as between countries. American food aid has been the particular target of attack because of its concentration on a relatively small number of military allies: Wallensteen has calculated that 14 ‘allied’ countries contained 23% of the population of low and middle income countries receiving food aid in 1973, yet received 81% of all food aid directed to that group (Wallensteen (1976), Table 9).t5i Power and Holenstein (1976) point out that in 1974 ‘S. Vietnam, Cambodia, Jordan and Israel received 63% of the total Title 1 programme’ (p. 60). A related criticism is that US food aid has been used to provide extra-budgetary military assistance to recipient countries through the provision in PL480 for counter-part fund expenditure on common defence.“’ This provision was repealed in 1975 but experience in some countries has emphasized that food aid can support high military expenditures indirectly.ls3 The proponents of food aid point out in reply to these criticisms that India and Bangladesh have been easily the largest recipients of food aid in recent years, absorbing over a third of PL480 aid in 1975,‘% and cite the 1975 legislation which specified that at least 75% of Title I food aid should be allocated to countries with a per capita income of less than $300.155 It is not yet clear how far such a change in legislation will affect allocation policy.156 A great part of food aid is non-US aid and for other donors conditions may be different. Multilateralization in particular should reduce concentration. EEC aid is less heavily concentrated than US aid and is directed predominantly to MSA and LLDC countries;“’ WFP aid is increasingly moving in the same direction, with 70% of new commitments to development projects bein to MSA, LLDC or other ‘hardship’ countries.‘58

A SURVEY

(g) The dependency

233

aspect

A number of criticisms of food aid have to do with the increasing dependency of recipients. Many are clearly related to the criticism of allocation policy in that they see greater dependency as an objective of donor policy;‘59 others see dependency as simply an unintended by-product of food aid policy.’ ’ Three main facets of the dependency problem can be distinguished: first, it is argued that food aid is associated with increasing dependency on food imports, concessional or otherwise, and that this opens the possibility of diplomatic pressure; secondly, it is argued that food aid provides a cover for the penetration by foreign capital of recipient economies, leading to the creation of economic dependency; and thirdly it is suggested that food aid can act as a ‘fiscal drug’ discouraging domestic taxation and leading to dependence on selling food aid as a source of revenue. Parallel criticisms have also been made of financial and other forms of aid, but few of the critics have compared the different forms of aid, so it is difficult to judge whether food aid is particularly sharply exposed. The relationship between food aid and food imports can be seen from several points of view. Some observers have been concerned with the role of food aid in developing long-term commercial markets, citing in this connection the explicit objectives of PL480,161 the historical experience of many food aid recipients” and the conditions imposed on the use of counterpart funds to rule out the development of competing export crops.163 Others have been concerned with the related role of food aid in market ‘pre-emption’, that is with using food aid as a tool to increase the share of particular donors in particular markets.la Still others have drawn attention to the problem of developing countries which cannot afford commercial imports and which become dependent on longterm food aid.i6’ In all cases the need to import food is seen as opening the door to political pressure by countries which dominate the world food market.‘& The mechanisms by which these effects are said to be brought about include the disincentive effect on local agriculture (discussed above), the ‘increased familiarity’ with exotic products encouraged by food aid and, in the case of US food aid, the use of counterpart funds for purposes of ‘market development’ required by law under PL480.16’ An important place is also given to the relationship between food aid and the development of cash crop export economies with the participation of MNCS.‘~~

234

WORLDDEVELOPMENT

Some analysts deny that food aid does necessarily lead to greater imports in the long run, often basing themselves on the potential contribution food aid can make to agricultural development ;16’ others point out that greater food imports may not be undesirable, particularly if they are concessional, provided the land released from domestic food production is used productively, as for export cash crops.“’ There are a few case studies which test these alternative hypotheses against individual country experience. Certainly it is true that many countries have made the transition from concessional to commercial imports,171 and that in some cases the food aid donors have been able to preempt markets.“’ There have also been cases where food aid has been used successfully as a political lever.ln On the other hand, EEC food aid policy has generally been less aggressive in this respect than US policy,174 and even in the case of the US doubts have been expressed as to the efficacy of food as a political weapon.175 Perhaps the most important area for future work in this field is the role of wheat aid to non-wheat producing countries and its effect on the structure of demand and production.176 Multinational corporations are said to benefit from food aid at the expense of developing countries by virtue of the fact that they are paid to process and pack food aid commodities; through cooperation with firms in developing countries; as beneficiaries of loans made from counterpart funds (the so-called ‘Cooley’ loans); and indirectly by the style of agriculture encouraged by food aid legislation, stressing high input technologies.177 Susan George (1976) has cited many examples in support of this argument with respect to US food aid which tends to confirm the idea that food aid can be used consciously or unconsciously as a vehicle for transnationalization and the creation of dependence.178 The third form of dependence is fiscal dependence, the dependence of governments on the revenue generated by selling food aid because they are unable or unwilling either to raise resources domestically or to cut expenditure. The danger of fiscal dependence was raised as early as 1960 in a report on Laos, Cambodia and Vietnam [US Department of State (1960)1, and was an issue for large recipients such as India throughout the 1960s [e.g. Raj (1965)]. Other cases reported include those of Colombia [Dudley and Sandilands (1975)] and Bangladesh, where 40% of the national budget is said to be derived from the sale of imported food [US Congress (1976 b)]. Since the bulk of food aid in all countries is sold on the market to generate

revenue, fiscal dependence greatest problems associated

(h) The inferiority

may be one of the with food aid.179

aspect

Turning to the inferiority aspect, all observers agree that cash aid would be preferable to food aid, if comparable amounts were available on similar terms; if only because food aid is tied aid which reduces freedom of choice.180 The particular argument against food aid to be considered here takes the logic one step further to suggest that food aid is so inferior as to be hardly worth bothering with even if it is additional aid. Much of the critique of food aid has been concerned not with its potential contribution to growth but with the fact that it is expensive; dependent on surpluses and therefore irregular; often composed of inappropriate products; bureaucratic in its operation; and logistically difficult to deal with. There is some substance to all these criticisms. On the first, frequent mention has been made of the fact that food aid is an expensive way of obtaining food: US and EEC prices are usually above the world market price; handling costs are high; US shipping is expensive; and a high degree of processing adds to the cost. us’ One estimate concluded that the cash equivalent value to recipients of food aid was only about 3 1% of the reported value.18’ As regards the relationship of food aid to agricultural surpluses in donor countries, and its consequent unreliability, many observers have noted the origins of US PL480 in the surpluses of the post-Korean war period;183 and others have linked EEC dairy aid to butter mountains and milk lakes.lM More recently, attention has been drawn to the dramatic decline of food aid, particularly in grant form,18’ in the early 197Os, at a time when needs were greater rather than less.las Although food aid has recovered since the World Food Conference and its cereal component is now close to the target of 10m tons, it remains to be seen whether shipments will continue at the same rate, if, as seems likely to happen very socm+ the world gram market again becomes tight. Attempts to institute medium-term planning of food aid have not met with success188 and food importing countries are still seen as dependent on annual decision-taking by donors.189 With respect to products, critics of food aid have noted that although the theory of food aid assumes that the products available will also be those in demand in recipient countries, and although the importance of ensuring such

FOOD AID TO DEVELOPING COUNTRIES: A SURVEY a match is stressed,igO very often the products supplied as food aid are exotic and therefore difficult to dispose of or likely to encourage a taste for non-indigenous food.“’ Jonsson (1978) has pointed out in passing that food aid consists increasingly of refined products which add to value without adding noticeably to usefulness. A particular problem is posed by dairy products which account for an increasing proportion of food aid, especially that from Europe: 19* there is evidence that dried milk used in feeding programmes is difficult to use safely and that it can act as a disincentive to breast-feeding,‘93 and there has been criticism of alternative uses such as the channelling of milk powder and butter oil to dairy development organizations e.g. in India [Crotty (1977)l.l” Of all forms of food aid, dairy aid is the most problematic: more research is badly needed on whether or not developing countries need dairy imports and on whether anything can usefully be done with dairy products if they are given away free. The administrative heaviness of food aid, and the associated expense, are recurring themes in the food aid literature and the critics argue that the opportunity cost of resources invested in handling food aid is particularly high.i9’

4. CONCLUSIONS The critique of food aid could be presented within a dependency model, incorporating some of the more neo-classical literature on such aspects as the disincentive effect and the questions raised with respect to particular products, notably dairy products, or particular uses, such as supplementary feeding. The main contribution of such a critique would be to abstract from the detailed debate and stress that food aid is never neutral: that its use is influenced by a constellation of interests in both donor and recipient countries, not all of which (some would say none of which) are concerned with true development for the poorest people in poor countries.‘96 Such a statement is so obvious as to be agreed even by the convinced advocates of food aid. The debate then resolves into a question of how food aid has actually been used in practice and it must be said that the arguments on both sides require more detailed empirical investigation. The dangers of a disincentive to agriculture may have been exaggerated, but nevertheless the impact of food aid on the growth and distribution of income, on storage and stabilization, on greater self-reliance all require further empirical

235

work before the theoretical case for food aid can be fully established as of universal practical relevance.

(a) Guiding principles This does not mean that no theoretical case exists: it clearly does, and the important task is to specify the conditions under which food aid can be useful to developing countries. The literature reviewed above suggests 7 guiding principles for food aid programmes. First, food aid can be useful in those cases where food is a constraint on growth or on the more equal distribution of income; in other circumstances it may cause a disincentive. Second, in such cases, food aid is most useful when it substitutes for commercial imports a country would have made anyway, because it then releases foreign exchange for other purposes. Third, food aid is best deployed in general support of a broadlybased, povertyoriented development plan which puts pressure on domestic food supplies and emphasis on domestic food production, and not through specific food for work or supplementary feeding programmes. Fourth, to do this job, food aid must be planned in advance and of guaranteed availability. Fifth, food aid should preferably consist of products which are indigenous to the country concerned, or part of the normal diet. Sixth, food aid must be complemented by other aid and must not be a substitute for financial assistance. Seventh, the resources generated from the sale of food aid must be available for development purposes and must not be tied to nondevelopmental uses.

(b) Current policv discussions Just how many current food aid programmes adhere to these principles is a matter for debate, the key issue being perhaps the extent to which domestic food production really needs to constrain development. In more general terms, it is interesting to assess current efforts to improve food aid in the light of the 7 principles. Since the World Food Conference of 1974 discussions have continued in the Committee on Food Aid of the World Food Council and elsewhere on how food aid might be improved,‘97 and in some cases legislation has been passed to reflect changing ideas.19s An important area of work has been on criteria for allocating food aid among countries, with US legislation now stipulating that 75% of Title I aid should go to countries with a per capita

236

WORLD

DEVELOPMENT

income of less than $300 and EEC food aid being allocated according to whether countries have a food deficit, a balanceof-payments deficit and a per capita income below $300 [ EEC (1977)]. WFP has been moving in a similar direction in its calculation of food aid requiredistinguishing a ‘variable’ component ments, to meet unexpected shortfalls in domestic supply and a ‘stable’ component to support development programmes [WFP (1977b)l. What seems to be missing in much of the discussion on allocation of food aid is an awareness of the income distribution problem (principle 3). This is only partly covered by the stress laid on the need to deploy food aid in support of agricultural development programmes which appear most forcefully in the US legislation but is also a factor in the discussion of tying counterpart funds in EEC discussion:‘99 the US insistence on ‘creating a favourable environment for private enterprise and investment’ [USDA (1977), p. 171 might be considered doubtful in this respect. On a related point there seems to have been insufficient attention to the problem of defining just when food is a constraint on development and on what structural changes might be necessary (principle 1). Another area for concern has been the desirability of medium-term planning of global food aid resources (principle 4) with WFP reporting that some progress is being made thanks partly to forward commitments under the Food Aid Convention and the WFP pledging system, partly to minimum allocations specified in PL480 and partly to the action of individual donors, notably Sweden and Canada (WFP (1977c), p. 5). A proposal from the EEC Commission for a 3-year indicative plan (EEC (1976a)) has not however been approved by the Council of Ministers. Other emerging proposals include triangular transactions whereby food aid can be supplied

deficit countries from nearby developinn countries at the cost of developed countries, the use of food aid to support programmes of food stamps,*” easier terms for food aid*‘* and simpler administrative arran ements for disbursing and handling food aid.*’ ? A major gap in the discussions has been the question of food aid which substitutes for commercial imports (principle 2): there is a prima facie case for abolishing or revising the Principles of Surplus Disposal and recognizing that food importing developing countries need help in meeting the mounting cost of filling structural deficits. There has also been insufficient rational debate on how food aid can best be used by developing countries (principle 3): a case can be made to the effect that WFP should be flexible in its policy on project tying and that it should allow recipients to experiment more with open market sales. to

(c)Further

research

needs

In fact,

there is a general case for greater experimentation in the search for innovative uses of food aid: there is a need for experimental data on the use of food aid in crop insurance; on the provision of input aid (fertilizers, feed) rather than output aid (food); on the feeding of farmers who may be too hungry to work well at certain seasons of the year. These are some of the areas where further work is needed. Others include the development of a better statistical base: a better appreciation of the dynamic contribution of food aid to growth and equality; a more rigorous treatment of the value of project uses; and the particular contribution of dairy aid. Food aid has clearly come to stay as an important component of total aid; it is important to maximize its potential for progress and to minimize its potential for disruption. It appears that the controversy over food aid is by no means over.

NOTES 1. We are not dealing here with the question of valuation of food aid which led to much discussion in the 1950s and 1960s. 2. Food aid statistics are something of a disaster area. OECD publish aggregate food aid values in the annual Development Cooperation Review [e.g. OECD (1977), table]; FAO publish details of individual agreements in their Food Aid Bulletin [e.g. FAO (1977)] ; and individual agencies publish programmes or annual reports [e.g. US Congress (1976~); USDA (1977); EEC (1976b and 1977)]. But it is not possible to obtain easily a breakdown of world food aid (a) by commodity, (b) by recipient, (c) by end use, all

in quantity and value terms. on Food Aid?

A task for the Committee

3. This represents a decline from 1975 when food aid totalled $2079m and reached 15% of net ODA [OECD (1976), Table lo], and falls substantially below the proportion of net ODA accounted for by food aid in the 1960s [see OECD (1971), (1974),and (1976),Table VI-131. 4. OECD (1976) 5. UN (World lution XVIII.

Table VI-14. Food

Conference)

(1975),

Reso-

FOOD

AID TO DEVELOPING

6. This is an approximation (1976b and 1977); USDA (1977); 7. OECD (1976),

Table VI-13.

8. OECD (1977),

pp. 174-175.

9. OECD (1976), Table OECD (1977), pp. 174-175. 10. OECD (1977),

derived from OECD (1977).

EEC

VI-13

and

(for

1976)

11. Another approximation derived from figures in Helldorff (1977); OECD (1977); and WFP (1977a). The calculation is complicated by the fact that the EEC contributes to other multilateral agencies.

13. See (1977).

also

EEC

OECD

(1976);

(1974);

A SURVEY

25. Sen (1960); Dubey Rosenstein-Rodan (1965). 26. As opposed sidered below.

pp. 174-175.

12. Calculated from (1976~); WFP (1973).

COUNTRIES:

UK

US Congress

(1976);

Helldorff

by V. K.

H. Singer V. Rao,

15. See (1965); Dubey (1977);OECD

and Figueres

and

Crawford (1961); Kern (1968); (1964).

M. R. N.

and

(1964);

to agricultural

Chakravarty

output

which

and

is con-

27. Including Coutsoumaris ef al. (1965); Aktan et (1965); Ginor (1963); R. Johnson (1963); Rath and Patvardhan (1967); Barlow and Libbins (1969): and others noted in bibliographies by Henderson for FAO (1964) and by Schneider (1975) for the OECD Development Centre.

al.

etal.

28. Aktan 29. A and Hill OECD

(1965),

See especially p. 199;Ginor

32.

p.

of Indian p. 343 p. 83.

shared more

taken

and

by by

Patvardhan

p. 145.

On the 14.

237

point see

G. Johnson

(1964).

Stevens

33. Ginor (1963);R. Mason (1966); (1967); Isenman Singer (1977).

(1977a). Johnson Seevers

Alienes (1966). The effects (1964) aspects growth. 17.

expansionary often presented and (1965)], of same problem

e.g. Jones

Tulloch

inflation-dampening [e.g. by but are in a food on

aid can

(1971);

37.

(1961).

This list problems which primarily interest, notably accumulation of local and the questions of and fiscal which are to disappear the transition dollar sales by the amendment to [See, however, (1964); Srivastava al. (1975); Hubert (1972)]. 20. Beringer (1964); Dandekar (1965); (1975); Isenman and Singer (1977).

e.g. mercial 39.

of owned

Srivastava

et al.

22.

36.

UN

(1974).

18. summaries of case against from somewhat ideological positions found in Gale Johnson and Susan (1976).

21. Dubey

35. Ginor

40.

on

Of course effects are exclusive, aid cannot replace comand lift food constraint. stabilization [(b) below].

[see

below]

and

Ginor On substitution crop exports

42. Islam (1976).

(1972);

43.

Merrill (1977).

44.

FAO (1955

45.

Shenoy

46.

OECD (1971);

47.

Srivastava

commercial (e). MacBean

and

imports

(d);

Balasubramanyan

and 1961).

(1964). (1974),

p. 252; Lipton

(1977).

Raj (1965).

23. D. G. Johnson Maxwell (1978a). 24. Dandekar Seevers (1968).

(1973);

(1965);

D. G. Johnson

(1973).

Lappe and Collins (1977);

Rath

and Patvardhan

(1967);

(1968 and 1975).

48. Ginor finds, on the contrary, a slight fall in the share of wages in Israeli national product, attributable

238

WORLD

DEVELOPMENT

to the capital-intensive bias of additional investments made possible by food aid. Ginor (1963), p. 91. The US Comptroller General (1976) has also expressed doubts on this score. 49. See particularly Costa (1973a); WFP (1973 and 1976~). For an analysis of food for work see Maxwell (1978a). 50. Recent reviews of the public works literature including food for work - are by Terhal (1975); IBRD (1976); and Thomas and Hook for USAID (1977). Discussions of programmes not covered by these reports can be found in Stevens (1976, 1977a, 1977b, 1977~); Gerhart and Norbye (1976); Tiano (1972); WFP (1976~); and International Labour Review (January 1966). A separate strand of the literature deals with the public works component of community development programmes; see e.g. Edel (1968 and 1969); IL0 (1970 and 1974); Lorenzo (1969); Kikuchi ef al. (1973). 51. Godbole (1973); Arlbs (1974); Grissa Reynolds and Pushpa (1977); Sobhan (1968).

UN (1975);

IBRD (1976).

67.

e.g. Berg (1973),

p. 175.

68.

Levinson

p. 505.

Ch. VI.

69. Puffer and Serrano (1973); Sommer and Loewenstein (1975); Belli (1971); Selowsky and Taylor (1973); Cravioto and De Licardie (1973); Selowsky (1976); Scrimshaw and Gordon (1968). 70. Beaudry-Darisme (1975); WFP (1970, Conference) (1974), (1974); Berg (1973);

and 1975);

57. IBRD (1976), p. 48; Lewis (1972) p. 105. 58.

Grissa (1973),

59.

Stevens

60.

Wl:P (1976~);

61.

Aries (1974);WFP

IBRD (1976), Thomas

p. 164;IBRD

(1976);Grissa Stevens

64. 171.

(1973)

(1977b).

(1973).

Stevens

(1976

Table

US

Congress

11;

and 1978a);

e.g. Stevens

208-209;

Berg (1973),pp.

65. See UN (World Food Conference) (1976a); Gongora and Shaw (1977); Stevens (1976 and 1978).

Oftedal

Guest

(1973); Reutlinger and (1977); Pines (1976);

el al.

mothers to nutrition (1975), pp. 200-202.

edu-

King

(1975);

(1978a).

75. e.g. by attracting cation classes. Gopaldas (1977);

George

77. Stevens (1977a); (1970), p. 505.

79.

Stevens

(1976).

Berg (1973),

p. 170; p. 40.

p. 161; Levinson

Oftedal

and

Levinson

(1978a).

80.

Gongora

81. Maxwell

pp.

(1971);

p. 204;

p. 48.

(1973),

Latham

Behgin

73. e.g. Fougere and (1972); Gordon (1976).

78. Berg (1973), (1974); WFP (1973),

(1973).

62. WFP (1976~); Grissa IBRD (1976); pp. 4849. 63. WFP Table 16.

p. 74.

(1971),

(1976),

and

72. Selowsky and Taylor Selowsky (1976); Reutlinger Kielmann et al. (1977).

76. 55. See IBRD (1976), Table IV: 1, p. 35; Thomas (1971); Rodgers (1972 and 1973); Andriamananjara (1971); Kikuchi ef al. (1978). Lewis (1972

and Latham (1971); Gopaldas 1974a, 1974b); UN (World Food p. 146; Oftedal and Levinson Behgin et al. (1972).

71. Beaudry-Darisme and Levinson (1974).

74.

54. On employment created directly see IBRD (1976), pp. 29-32; Tiano (1972); on indirect employment see Costa (1973a); WFP (1976~).

56.

(1970),

(1973);

52. Ardant (1963);Costa(1973aand 1974);Richards (1976); WFP (1976~); Stevens (1977a); IBRD (1976); Lewis (1972); Apte (1973); Gupta (1971). 53.

66. Roy and Krishnamurthy (1970); Roy and Rath (1972). For a counter view, however, see Chandrasekhar and Amirthaveni (1976). Note that where attendance does increase, the new attenders are likely to be from poorer families.

(1976),

170~-

(1974); WFP WFP (1973);

and Shaw (1977);

Stevens

(1978a).

(1978b).

82. FAO (1971);Crawford (1961);Dantwala (1963); OECD (1963);D.G.Johnson (1976); Sarris and Taylor (1976);Poleman(1977);Tayloretal(1977);Carruthers and Davis (1976); Isenman and Singer (1977). 83. Rath WFP (1972

and Patvardhan (1967); Stevens and 1976b); Streeten (1972).

84. Jones and (1977); Streeten

Tulloch (1972);

(1974); Mettrick

Isenman (1969).

(1977~);

and

Singer

85. e.g. Jones (1976), p. 50. Davis (1959) quotes an unpublished estimate that half of Title I aid between 1954 and 1957 would have been provided anyway under special US programmes.

FOOD

AID TO DEVELOPING

86. The bargaining position of developing countries might be particularly strong in times of emergency, although it can also be argued that emergency food aid is most clearly additional. 87. FAO (1972); Congress (1976a)].

also Section

88. Ginor (1963); R. (1969); Stevens (1977a). 89. See particularly Andersen and Tweeten on individual countries (1965);Ginor (1963).

103 (c) of PL480

Johnson

(1973);

Mettrick

Abbott (1976); Pinstrup(1970); Stevens (1977); and Amin (1966); Coutsoumaris

91. Crawford (1961); Stam (1964); Allen and Smethurst (1965); Purvis (1963); Wightman (1968); Stanley (1973). OECD (1963 and 1971).

93.

e.g. UK (1976).

94. See the bibliographies by Schneider FAO (1964), the reviews by Witt (1975) (1977) and the discussion by Isenman (1977). e.g. D. G. Johnson

96.

On this point

(1973);

see Dandekar

Lipton

(1975) and and Merrill and Singer

(1977)

(1965).

97. See particularly Olson (1960); Khatkhate (1962); Falcon (1963); Srivastava et al. (1975); US Comptroller General (1975). 98.

Dandekar

(1965);

Dantwala

(1963).

99. Sen (1960 and 1961); Dantwala (1967). In a variant of this argument, food aid can provide resources to stimulate agriculture directly, e.g. by dual prices. 100.

Dandekar

101.

Coutsoumaris

102.

(1965);

Amin (1966).

109.

Ginor

110.

Stevens

(1977c).

111.

Stevens

(1978b).

112.

Coutsoumaris

113.

For reviews of India studies see also Srivastava Blandford and Plocki (1977).

(1963).

(1965),

pp, 81ff.

et al. (1975);

114.

115.

Sen (1960); Dantwala (1967); Raj (1965);Barnum (1971).

Rath and Patvardhan

Rogers

et al.

(1967).

116. Mann (1967); Seevers Bhagwati and Desai (1970).

(1968);

117.

and Singer (1977).

Shenoy

(1974);

Isenman

Purvis

(1963);

118. However, both Mann and Rogers et al. present reduced form equations without any measure of goodness of fit and without significance tests on the reduced form coefficients. It is not clear, therefore, how much of the variation is explained by these nor whether the alternative coefficients equations, are significantly different from zero or from each other. 119. Sen (1960); Dantwala Singer (1977) argue that the Rogers er al. overstates the cause they ignore this effect and hence on demand. 120.

Shenoy

(1967). Isenman and econometric model of disincentive effect beof food aid on growth

(1974).

121. See especially FAO (1955); Fisher (1963); Dandekar (1965); Srivastava et al. (1975). For a discussion see Maxwell (1978a). 122.

See also Sen (1960)

123.

Isenman

124.

Aktan

125.

Streeten

and Hill (1968);

126.

Beringer

(1964).

127.

Shenoy

128.

Isenman

and Singer (1977).

129.

Bhagwati

and Desai (1970).

on this point.

and Singer (1977). et al. (1965).

Raj (1965).

(1965);

Rogers et al. (1975).

et al. (1972);

103.

Dudley

and Sandilands

104.

Beringer

105.

R. Johnson

106.

Coutsoumaris

107.

Aktan

(1964). (1963). (1965).

er al. (1965).

239

108.

(1972);

92.

A SURVEY

[US

90. Rath and Patvardhan (1967), p. 38, estimate one-fifth and low substitution is confirmed indirectly by the econometric studies of the disincentive effect by Mann (1967) and Rogers et al. (1972).

95.

COUNTRIES:

Amin (1966); Fedeler

(1975).

(1972);

D. G. Johnson

(1973).

Sen (1971). Srivastava (1974);

Kern (1968).

130. Bhagwati and Desai (1970); Rath and Patvardhan (1967); Shenoy (1974); Streeten and Hill (1968); Mason (1966). 131.

Sen (1960),

p. 1034.

WORLD

240 132. Kern (1968); Kirkpatrick and Singer (1977); Lipton (1977).

(1976);

133. Turkey [Atkan et al. (1965)J; Indonesia [Merrill (1977)].

DEVELOPMENT

Isenman

Bangladesh

and

134. Israel [Ginor (1963)]; Botswana, Lesotho, Upper Volta [Stevens (1977)]; Spain [Alienes (1966) quoted by Merrill (1977)]. 135. Colombia is a good example with Goering (1962) Goering and Witt (1963), Wheeler et al. (1964) denying a disincentive but Dudley and Sandilands (1975) disputing this finding [see also Kern (1968)]. 136. Thus in a disincentive and Beringer (1968); Islam

Pakistan food aid is seen as having had effect in the 1950s [by Mason (1968) (1964)] but not in the 1960s [Mason (1972); Mettrick (1969)].

137.

by Witt (1975),

Quoted

138. A conclusion reached Isenman and Singer (1977); 139. FAO (1955 Kern (1968).

and

Lipton

142.

e.g. Dantwala

143. ibid. government

(1977),

inter alia by Witt (1964); Merrill (1977). 1961);

(1967);

144. Seevers (1968); Dandekar (1965).

Crawford

155.

US Congress

Table 3. (1976a).

156. NARMIC (1975) discusses the problem of implementing the new policy, as do Lappe and Collins (1977), pp. 339-340. 157.

Helldorff

etal.

158.

WFP (1977a).

159. George stein (1976).

(1977);

(1976);

Yost

Delormeet

(1974);

160.

e.g. Stanley

161.

US Congress

162.

George

163.

Wightman

(1968);

164.

Discussed

by Bard (1972).

al. (1977).

Power

and Holen-

(1973).

Mason

(1961);

(1976a).

(1976). D. G. Johnson

(1973).

(1966); 165. e.g. Dandekar vardhan (1967).

in

Foreword

to

Rath

and

Pat-

Rath

166.

Wallensteen

167.

George

168.

ibid.

169.

FAO (1961).

170.

Isenman

(1976).

Kern (1968). assumes

and

no exports

Patvardhan

145. Goering (1962); Menzie ef (1968); Goering and Witt (1963).

147.

USDA (1977),

p. 294.

This of course intervention.

146. Coutsoumaris (1978b).

154.

p. 20.

140. Isenman and Singer (1977); Islam (1972);Coutsoumaris (1965). 141.

with respect to food aid but that development expenditures are not: this would require substantiation in specific cases.

(1965);

Ginor

al.

(1962);

(1976).

and no

(1967);

and Singer (1977).

Kern 171. Japan, Spain, Italy, Greece, are quoted by Bard (1972), p, 45.

(1963);

Israel

and Taiwan

Stevens 172. e.g. Pakistan and Table C-l 3.

discussed

by Beringer

(1964),

p. 21

WFP (1976d).

148. Costa (1973b); Tiano (1972). 149. Lewis (1977).

(1972

IL0

and

(1972);

1975);

150. Reynolds and Pushpa and Rath (1970), p. 131.-

Ardant

Reynolds

(1977).

and

173.

For a discussion

174.

Delorme

175.

Wallensteen

of this see Gustafsson

(1976).

(1963);

Pushpa

p. 1155; Dandekar

et al. (1977). (1976);

176. For a related Rothman (1977).

US Congress

discussion

see

(1977). Carbonell

and

151. See also Gustafsson (1976 and 1977); George (1976); Yost (1974); Power and Holenstein (1976).

177. George (1976), Ch. 8. Cooley loans have effectively ended with the conversion to dollar sales. See USDA (1977), p. 47.

152.

178.

Yost (1974).

153. Raj (1965); NARMIC (1975). Of course it could always be argued that military expenditures are inelastic

Sunkel and Fuenzalida

(1978).

179. It is sometimes argued that fiscal dependence can be avoided by channelling food aid directly to

FOOD AID TO DEVELOPING projects, which actually cost governments money for transport, storage and staff. But in fact dependence can be created just as surely as by programme aid, because the government has to find the money to continue the projects when food aid stops. 180. Mettrick (1969); Pearson (1969), p. 19; Jones (1976), p. 16. But the argument against food aid as inferior would weaken where food aid replaces commercial imports. 181. See al. (1975)

particularly Schultz (1960); Srivastava Ch. 3; Stevens (1977a and 1977b).

182. 5.8.

Pinstrup-Andersen

183.

Mettrick

184.

e.g. New Scientist (17 June 1976),

(1969);

and Boerma

Tweeten

(1971),

ef

Table

(1976). pp. 642-643.

185. Power and Holenstein (1976), Ch. 5. This irregularity is not a new phenomenon: see Hoffman (1961). 186. Thus shipments of wheat and wheat products from the US, which exceeded 6m tons every year from 1957-72 and exceeded 12m tons for much of the 196Os, feB to 4m tons in 1973 and 1.5m tons in 1974 [US Congress (1976a), Table II]. Commercial imports by developing countries rose meanwhile from 21m tons in 1970 to 36m tons in 1973 and 46m tons in 1975 [FAO, quoted in WFP (1977)]. 187.

Financial Times (26 January

188. e.g. EEC (1976). For question see WFP (1977). 189.

Gustafsson

(1976

190.

A SURVEY

Jones and Tulloch

review

241

(1974);

Kirkpatrick

(1976).

191. Shaw (1970); George (1976). On the limitations of the WFP basket in this respect see WFP (1966). et al. (1977).

192.

Delorme

193.

Berg (1973);

Muiler and Haworth

194.

See however

Jul(1977)

195. For information (1977); WFP (1973);

(1976).

for a contrary

view.

on this see Shaw (1970); Delorme et al. (1977).

ISMOG

196. Similar arguments apply to ail aid and food aid may be no different in this respect from financial aid. See Isenman and Singer (1977) for a detailed treatment. 197. See particularly a review of food aid policies for thecommittee on Food Aid [WFP (1977c)]; Schneider (1976) for OECD/DAC; EEC (1974 and 1976); UK (1976); US Comptroller General (1977). 198. e.g. the US International Development Assistance Act 1975 [US Congress (1976a)]. 199.

and Food

EEC (1977).

200. WFP (1970 (1977).

and

1977~);

201. The Economist (l&l6 also Reutlinger (1977).

1978).

a general

COUNTRIES:

Sharp

Sept.

and Whittemore

1977),

pp. 13-15;

of this

and 1977).

202.

WFP (1970 and 1977c).

203.

ibid.

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