Food aid to developing countries aims to assist impoverished people; but in many cases it works against the interests of struggling local producers in those countries, as well as distorting global trade.

“In many cases food aid can compete with domestic agricultural production and imports, inhibiting internal markets,” Rural Industries Research and Development Corporation (RIRDC) Chairperson Mary Boydell said this evening.

Ms Boydell was launching Food Aid and Agricultural Trade Reform — a new RIRDC report from economist David Harris  — which examines the economic impact that food aid can have on market conditions in recipient countries and on world trade.

 “Genuine emergency food aid prevents loss of life in emergency situations; and the research suggests that this type of aid needs to be clearly distinguished from trade-distorting disposal of surpluses by developed economies,” Ms Boydell said.

In many developing countries the rural sector is characterised by small-scale farmers who produce food for their own consumption and sell small quantities to generate cash income. Non-targeted food aid affects the local markets for their produce, and can worsen rural poverty.

Food aid also has international trade-distorting effects, reducing demand for commercial imports into food-deficit countries.

The objective of the research was to examine concerns about the use of food aid as a form of export assistance. This research reviews global developments in food aid since the UR Agreement on Agriculture was implemented in 1995, with a particular focus on the trade-distorting effects of food aid in the context of industry support measures in donor countries.

“Emergency relief and short-term assistance to prevent loss of life are reasonable responses to crisis situations; but if non-emergency food aid acts as a substitute for commercial trade in food on domestic and global markets, this can obstruct economic development,” Ms Boydell said.

The report recommends that to minimize the market-distorting effects of non-emergency food aid, a World Trade Organisation agreement should establish a set of principles for declaring an emergency situation. Careful consideration should be given to the forms of aid provided in non-emergency situations to prevent distortions of the market.

Food Aid and Agricultural Trade Reform is the latest of a series of reports on trade issues published by RIRDC.

“RIRDC invests in research and development for more profitable, sustainable and dynamic rural industries and communities, with a special role to handle national
rural issues – research in areas that affect all rural sectors,” said RIRDC Managing Director Dr Peter O’Brien.

“RIRDC research helps Australian agriculture to improve its performance in the global marketplace. By looking at all the factors that influence the global trading environment —like the effect of food aid on international trade — we can contribute to Australia's trade policy agenda to benefit rural industries.” Dr O’Brien said.

Food Aid and Agricultural Trade Reform is available from RIRDC. For more information visit www.rirdc.gov.au, call 02 6271 4160 or email publications@rirdc.gov.au

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Media enquiries: Martin Field – RIRDC Public Affairs Manager – tel - 02 6272 4735 / 0418 430 760, email - martin.field@rirdc.gov.au