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close this bookTackling Hunger in a World Full of Food: Tasks Ahead for Food Aid (WFP)
close this folder4. Chronic hunger and weak markets
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View the documentThe case for food aid
View the documentFood aid in support of agriculture and income generation
View the documentMarket-friendly food aid

Market-friendly food aid

More food aid is purchased in developing countries than ever before
4.6 On the other hand, food aid can help to strengthen existing markets by localized actions in the marketing of food, such as local purchases and monetization. Important quantities of food aid is purchased in developing countries, either for use in a deficit region of the same country or in another country. The share of global food aid purchased in developing countries doubled between 1990 and 1994, rising from 6 to almost 12 percent. In 1994, the World Food Programme alone purchased close to 1 million tons of food commodities in developing countries. Such purchases can give a significant boost to local production, trade, the local transport sector and infrastructure development, as well as reducing costs. Furthermore, food transfers based on local purchase are often more firmly grounded in local dietary preferences than food aid based on long-distance shipments.
4.7 Moreover, some food aid can be fully or partially monetized. Monetization can encourage more efficient market performance by promoting private sector participation in marketing rather than channelling food through parastatal companies (Riely 1995). Eritrea is one example of a country where nascent private sector engagement in the marketing of food can benefit from a judicious channelling of monetized food resources through local businesses, when cost efficiency can be assured. In other cases, monetization of food aid could offer some potential for challenging a constraining influence on markets of monopolies or cartels. And monetization during emergencies also deserves careful consideration where scope exists for stabilizing local prices and for protecting markets that can be kept functioning.
4.8 A last area in which there may be scope for stimulating local production and marketing lies in micronutrient-enriched or blended foods. While experience with such initiatives is limited so far, preliminary signs are that increased attention to micronutrient issues will result in demand for locally processed, fortified, and enriched foods for use in projects that have specific nutrition goals. Products of this nature (blended foods for therapeutic and supplementary feeding) are already produced in countries such as Senegal and Malawi.