I am submitting my colleague, Edson Musopole's paper on "IMPACT OF FOOD AID ON LIVELIHOOD SOURCES IN MALAWI" for your consideration. It has several implications for not just national governments, but also donors like DFID in terms of what programmes they support and their approach to food aid. I have shared ActionAid's recommendationso n food aid with the group in earlier submissions. ------------------------------------------------- IMPACT OF FOOD AID ON LIVELIHOOD SOURCES IN MALAWI, Edson Musopole, ActionAid Malawi The Malawi food crisis of 2002/2003 resulted from a food supply gap of 485,000MT caused by growing level of poverty and vulnerability, the impact of HIV/AIDS, food reserve mismanagement and unsound government policies. The crisis affected 3.2million people (28% of the national population) and called for 208,000MT of emergency food aid. The Government of Malawi, donors, NGOs and local church groups participated in providing food aid to vulnerable groups such as pregnant women, infants, destitute people, flood and drought victims. Food aid is an aspect of welfare transfer entitlement, safety nets, and can be in-kind and cash. It is administered as targeted, untargeted and self-targeting transfers. Food aid in Malawi is used for both relief and development purposes. Malawi's dependency on food aid has been growing. The impact of food-aid has been perceived as generally successful in ameliorating hunger and malnutrition in short term and supportive of livelihood sustainability and national welfare. In the short-term food aid has benefited targeted vulnerable beneficiary households while creating dependency syndrome and distortion of local food prices and markets. This paper attempts to analyse the implication of growing dependency on food aid and the observed impact it is having on the sustainability of livelihood sources in Malawi. Agriculture and Livelihood Sources in Malawi: Livelihoods are means of people's access to adequate stocks and flows of food, cash and other resources to meet basic needs in an environmentally sustainable way. Agriculture is the dominant source of livelihood practiced by 80% of the population. Smallholder agriculture practiced on an average land holding of 1hactare by 70% 0f the farming community is mostly subsistent. It produces for household consumption and not much for the market. However failure to produce enough for household consumption calls for food aid to feed rural households by the Government. Malawi experiences both chronic and transitory food insecurity and has increasingly become dependent on food aid from donor countries. The situation is said to be exacerbating poverty levels and economic, social and political vulnerability. The potential of agriculture as a livelihood source in Malawi is comparatively enormous if compared with other less fortunate countries. The country is endowed with arable land with fertile soils, rich water resource and wetland, cheap labour, relatively reliable annual rainfall, good climate etc. The large population in the country offers a ready market and sustainable income for agricultural producers of food and raw materials. The declining agriculture potential leaves the country with no meaningful alternative source of livelihood for the predominantly rural dwellers. Therefore the scenario calls for the protection and improvement of efficiency in performance of the sector. The subsistent agriculture needs to be transformed into market based-commercial agriculture to create wealth and stimulate the national economy. Increased income from agriculture will proliferate investment into alternative sources of agriculture non-agriculture based livelihood sources. The economic linkage will enhance and sustain agriculture production, livelihoods and food security. There are no substitutes for agriculture development in societies that have a substantial rural sector. Providing food security is an important rationale for investing in agriculture to create confidence in food security manifested by stable food prices. The situation can be translated through extensive externalities and linkages into rapid economic growth. The role of the market Competitive rural markets efficiently deliver incentives to rural investors there by enhancing and sustaining rural livelihood sources. Promotion of private sector participation remains a key to the development of such a marketing system, which connects farmers with local buying agents. The system transmits market information and facilitates commodity exchange. The process generates gains in efficiency from trade. The marketing system serves to transform agricultural commodities at the farm gate into food at the time, place, and form desired by the consumer. An efficient market system has to solve the problem of price discovery, at least at the local level and seasonally, even if the government policy sets a band in which such price discovery must take place. Most urban food systems are not well linked to domestic supplies but rely heavily on imports. Switching the role of food aid from mainstay of food relief to domestic food economy that provides ample incentive to farmers to increase productivity is an enormous challenge for the Malawi government. Though increase of produce prices is necessary to redress the complacence the problem requires other interventions such as changes in the way business is done, infrastructure, institutions and credit facility support is provided. The role of the Government in sustaining food security Government's role is to prioritise agriculture, especially to raise productivity of agricultural commodities by farmers to ensure food security. Investment in public goods such as roads, communication system, market centres, extension and research services etc is necessary to improve efficiency of the domestic market system especially in the rural areas. Food security is a principal task of the Government. Policies to stabilise food prices are required to be instituted in favour of both producers and consumers. Inducing farmers to produce food for household and urban consumption requires the Government to pursue and agriculture development strategy that focuses on smallholder farmers. The Government is also responsible for intervention in the market to stabilise prices in the domestic markets. Lately, however, agriculture and rural infrastructure have been under valued and market interventions have created disincentives and displaced markets rather than invest in improving their efficiency. Building an efficient rural marketing system requires careful intervention and support from the government, but not too much to allow the private sector to grow, learn to take risk and compete effectively. The Government has to learn to play its role in market economy just as traders, banks, shipping companies and support institutions must learn theirs. The Malawi government relies heavily on export of primary commodities to earn the foreign exchange needed to finance a food import strategy. The prices and earnings from the commodities are highly unstable and destabilize the entire macro-economy. The destabilization affects the economic growth. Therefore it is wiser to depend on domestic food production to ensure food security and stimulate economic growth than depend on commodity exports for foreign exchange earnings to be used for food imports. It is harder to stabiliser export earnings than to stabilise food prices. To achieve this priority will have to be placed on investment in rural infrastructure and research on raising productivity of farming systems. Intervention will have to be effected to restructure incentives in favour of food production through stability of price levels for inputs and outputs. Increased investment in irrigation systems to stabilise agricultural output while raising crop yield will be prioritised. Failure to sustain food security results in disposal of production assets as coping mechanisms to survive severe food insecurity. Asset loss undermines livelihood sustainability. Food -aid helps to avoid asset erosion and under mining livelihood sources. Food aid Food aid has been promoted internationally by need for trade expansion and reduction of surplus grain, humanitarian and internationalist sentiments. The result, which is a marriage of surplus disposal and humanitarian relief, is a successor to the World war 11 American food relief programme in Europe. It is an institutionalised international transfer mechanism. (Raymend F. Hopkins 1984). Food aid has since 1954 drawn criticism for its policies to create permanent food surpluses and the potential to create enmity and violation of liberal trade principles. In 1979 a criticism that food aid depressed local food production by lowering prices paid to producers necessitated devices to prevent the perverse "disincentive" effects. The other criticism was on the short term and unreliable quality of food aid. Political and market development objectives were not put into consideration for development of domestic food policy when negotiating for food aid. Food aid critics want the food to be rationed for development ends and not expended for consumption that may even reduce pressure on governments to address rural development. Dependency on food aid and subsidized grain undermines the political will needed to invest in domestic agriculture. The government does not have the imperative to develop its domestic food production. The problem undervalues local food production and remains unsustainable in the long run and short run. Food aid distribution conducted through relief pipelines undermines commercial supplies and livelihoods. Food-aid offered in cash by donors to the beneficiary government and used to buy food grain locally or regionally stimulates local food production and farm gate prices. It promotes sustainability of future local food production and livelihoods. Food aid and Its Impact on livelihood sources and food security As alluded to above agriculture is the main source of livelihoods in Malawi. This means that through agricultural production and trading employment and household income is realised for sustainability of the well being of Malawians. For example crop cultivation by smallholder farmers generate demand for seed and fertilizer from distribution companies and create employment and business opportunities for Malawians. Agricultural produce is sold to marketing agencies and processors who create employment for marketing staff, transporters and security employees. Food aid apart from the short-term life saving benefits has also the effects of price dampening because it creates temporal satisfaction and reduces food demand and market price. The low market price creates a disincentive to food producers. Investment decisions change in the production plans of the subsequent season in favour of cash crop production. The livelihood chain linked to the agricultural commodity gets under mined and collapse. Food supplies decrease and food prices increase and become un affordable requiring further food aid. The WFP study (2002/2003EMOP Evaluation report) on the effect of food crisis interventions has in record that the availability of food aid under the EMOP contributed to excess stocks of maize, which undermined the sells of government commercial maize programme. Only 37,000MT of maize got sold out of the total importation of 239,000MT. The stagnation in the Government commercial maize price and the apparent lack of movement in stocks, the price of maize from commercial traders declined over the period, leading to a general decline in food prices and on the overall consumer Price Index during the period. Maize prices dropped to levels below the cost of production i.e. MK10 per kg from MK17 per Kg. Food distribution livelihood activities suffered income loss. However the evaluation results of the WFP-Emergency Operation (EMOP) intervention study conducted in June 2003 indicates that the provision of food aid yielded short term and unsustainable benefit results in addressing the problem of food insecurity. It enables beneficiaries to concentrate on production of subsequent food supplies or income generation livelihood source to access food on the market. Increased area of land was put under cultivation an achievement attributable to the fact that farmers had more time and strength to work in their fields since they did not have to go searching for casual employment to acquire food. Targeted HIV/AIDS infected and affected households mitigated the impact of the infection and eased labour demand for caring for the sick. The health deterioration was decelerated and labour supply increased due to improved nutrition. Livelihoods were enhanced. At the peak of the food crisis from December to April, 2002 the common plea by food insecure households was for food aid and inputs to enable them plant their fields and gain strength to manage their filed crops after germination. Both men and women spent long hours fetching for food and casual labour (ganyu) for income to buy food from the market at the expense of caring for their crops. Increased frequency of funerals due to HIV/AIDS and hunger related deaths exacerbated demand for time and resources. Un traditional mass burials due to labour constraint to prepare traditionally accepted individual graves for burying the dead tolerated. Food aid eased the situation and enabled the observance of the traditional practices. The nutritional improvement reduced death rates and saved funeral labour there by enhancing people's livelihoods. Politicians claimed the food aid hand-outs to be a result of their efforts in order to gain political recognition. Food aid prevented the depletion of people's livelihoods by allowing vulnerable people not to resort to erosive coping mechanisms, for example, sales of productive assets, migration for search for casual employment. Food aid strengthened social cohesion through food sharing mechanisms. Therefore food aid can enhance household food security if perceived to be a means to an end. Otherwise food aid promotes complacence and dependency and undermines livelihoods used as coping mechanisms. Food production subsidy is perceived to be the opposite of food aid. It promotes sustainable livelihood sources and has long-term benefits to beneficiaries. It employs the skills and labour of the beneficiary. Though it undermines established input distribution businesses in the short term it facilitates the sustenance and resurrection of collapsing livelihoods. ------------------------------------------------------------------------ Ruchi Tripathi Food Rights Policy Officer ActionAid International UK Hamlyn House MacDonald Road London N19 5PG Ph: 44 207 561 7560 ActionAid's vision is a world without poverty in which every person can exercise their right to a life of dignity. Registered Charity No. 274467 www.actionaid.org.uk **DISCLAIMER** This e-mail and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this e-mail in error please notify the postmaster at <address removed>
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