strategy
Monetizing food aid
Synonyms:
Selling food aid locallyReceiving cash for food aid
Description:
Selling rather than giving food aid. This is intended to either: (i) generate counterpart funds -- raising local currency in situations where no other alternative sources of funding are available or in situations where the exchange rate is artificially overvalued; (ii) directly affect the food market in order to lower or stabilize prices, regenerate local distribution networks, break local monopolies and discourage hoarding of food; or (iii) provide an income transfer to vulnerable groups by increasing the availability of affordable foods in situations where the demand is stable and food is in short supply. Implementation:
There are three scenarios where this strategy could be beneficial. (1) Selling the food locally, at the port or in the capital, to generate the maximum amount of local currency. The funds generated finance food security, or other, projects. (2) Selling food aid to local traders/merchants to bring down or stabilize market prices in emergency situation. The main aim is to temporarily prop up the market until it can recover. (3) Selling or bartering food aid directly to consumers. The aim is to improve access to affordable staple foods. This can involve cash for work; food for work; selling food in fair price shops; grain banks; and destocking/restocking programmes in pastoralist communities. Types (2) and (3) have a direct impact on food security. Key problems that can impede effective monetarization are (i) time lags undermining original economic logic ([eg] via devaluing currencies, falling prices), (ii) red tape, (iii) theft of funds and (iv) lack of suitable storage. Claim:
1. Monetization of food aid is a "niche activity", effective in certain situations, but should not be seen as replacing food aid or replacing other funding sources.2. Sales of food, for better or worse, have an important impact on the marketing system of the receiving country. The monetization transaction is a means of developing the internal markets of recipient countries. The use of sales proceeds in ways that improve the agricultural sector of the recipient country.
Counter Claim:
There is a contradiction between the humanitarian/altruistic mandate of NGOs delivering food aid and the commercial imperatives of monetization. In times of increasing funding cuts, NGOs could even use monetization as a way of raising money without due regard to the real aims and objectives of helping the poor and impoverished. Overuse could produce a "monetized culture" in the receiving country and additionally devalue provision of free food in favour of "cash over food". Narrower:
Paying for work Constrains:
Taking advantage of food maldistribution Facilitates:
Limiting monopoliesStabilizing currencyGenerating counterpart fundsAllowing regulated distribution rateReducing inequality of access to foodRegenerating local distribution networks Facilitated by:
Improving food aid policies and programmes Values:
Aid Organizations:
EuronAid References:
Mitchell, John: The Monetisation of Food Aid Type Classification:
E: Emanations of other strategies Related UN Sustainable Development Goals:
