WFP "open-minded" on food vs cash debate

The United Nations World Food Programme (WFP) has published a paper in the ongoing 'food vs cash transfers' debate on the best method of dispensing aid, in which author Ugo Gentilini suggests an "open-minded" approach to both.

The paper, 'Cash and Food Transfers: A Primer', devotes the larger share of attention to cash transfers but says the varying circumstances in which either cash or food would promote food security most effectively suggest that the two should be regarded as "mutually reinforcing, complementary transfers".

Could cash or coupons be a more effective way to feed the hungry than shipping bags of food? A study commissioned by the WFP, which handles 40 percent to 50 percent of global food aid, welcomes "creative initiatives to help better understand the circumstances in which cash, food or a combination of both can be the most appropriate solution to help those in need," said Gentilini, a policy officer with the agency's Social Protection and Livelihoods Service.

WFP said properly targeted and monitored cash transfers could be appropriate when food markets functioned normally and prices were stable, but believed that when the markets were not functioning, as was the case in most emergencies, food aid was still the most appropriate, life-saving response.

"The fact that people can choose what and when to buy is a powerful argument in favour of cash, but then the question is whether conditions are in place to really enable them to make that choice, or whether there are some binding constraints that impede people from choosing," Gentilini commented.

"For instance, the fact that markets may not work properly seriously hinders people's ability to buy food. Providing people with cash in such circumstances would only expose them to the risk of supply failures."

In January 2007, another UN agency, the Food and Agriculture Organisation (FAO), recommended in its annual 'State of Food and Agriculture (SOFA)' report for 2006 that aid be provided in the form of cash or food coupons rather than food-aid shipments, which could affect producers and markets in recipient countries, and distort international trade.

Food aid should not be linked, either explicitly or implicitly, to commercial transactions or services in the donor country, the FAO report proposed, reiterating what most development agencies, such as Oxfam, have been saying for years.

Paul Harvey, a researcher at the UK-based think-tank, Overseas Development Institute (ODI), who has produced several papers on the debate, noted that humanitarian agencies "with the greatest capacity to deliver resources in the form of cash or food ... often fail to even consider cash as a possible alternative or complement to food aid because their resources remain tied to donor food surpluses".

Almost all food aid donated by the USA is tied to domestic procurement, processing and shipping, and many other donors have similar requirements, the SOFA report pointed out. 

Both work

Gentilini said the standard response in the 'food vs cash' debate, "food in emergencies, cash in development", were "outdated dichotomies", saying, "Both cash and food transfers can work in both emergency and development contexts, however, cash may not be appropriate in the immediate aftermath of an emergency."

He also argued in his paper that, to date, most cash transfers have been implemented as pilot projects, making it hard to determine longer-term or larger-scale effects. "The studies available have not yet reached a 'critical mass' from which reliable lessons can be drawn. Cash transfers are still marginal compared to the magnitude of food aid operations. More pilots are welcome, but only where assessments have already indicated that such pilots are appropriate."

The ODI's Harvey pointed out that although international aid agency cash-transfer projects have thus far been small-scale, this was not the case with government assistance. For example, in response to the 2005 Pakistan earthquake, the government provided a range of grants that totalled over US$747 million by July 2006.

"The central role played by national governments in providing cash aid in Pakistan, and following the Indian Ocean tsunami, suggests that where governments have the capacity, they are the most appropriate deliverers of assistance. This may imply a reduced role for international aid agencies in some contexts."

He pointed out that many southern African countries had the capacity and infrastructure to provide emergency aid, and many donors trusted these countries with funds for development but, "ironically, did not trust them to provide disaster relief".

"We know that much food aid continues to be tied, and that tied food aid costs substantially more to deliver than locally or regionally purchased food," Harvey said. "Until there is further reform of the international food aid system ... [aid agencies] will not be able to make 'evidence based' decisions about which resource is most appropriate in what context, or build suitable capacities to deliver cash or food, because their resources are tied."

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