State the advantages and disadvantages of food aid as a strategy of dealing with drought
Answers
Critics raised in the context of traditional food aid are known. They include effects such as market distortions, support of low food price policy etc., contributing to structural deficits being perpetuated. However, food aid, designed as being part of a strategy to regain selfsufficiency, avoids those disadvantages. The latter is even part of the strategy as a precondition of stimulating production. The Malien approach may serve as an example. In collaboration with all major donors, a joint programme of restructuring the grain market (liberalisation, adjustments of prices to adequate levels) identified as prerequisite for increased production, was set up. The role of food aid was and is to finance, through the generated counterpart funds (sales proceeds of food aid) for a transitional period the subsidies required for the adjustment of farm prices and to allow the government to adjust consumer prices at a socially acceptable rate. The implementation of this approach requires certain requisities. However, one of the major disadvantages of such an approach is that with increased production and hence reduced food aid, counterpart funds diminish through additional resources may be required. This has to be recognised and other resources to be included as soon as such a situation arises.