Is this the most evil Aid program in the world?

U.S. Food Aid has long had a dirty name in development circles. Whether you prefer see it as a giant exercise in Corporate Welfare or a transparent sop to farm state senators, one thing is clear: the program is more concerned with shifting grain surpluses (in gringo ships, of course) than with feeding the world’s hungry.

Now, research by Nathan Nunn and Nancy Qian just published in the hyper-prestigious American Economic Review shows it’s even worse than we thought.

U.S. Food Aid kills. In the actual bullet-holes-in-bodies sense.

How? You’ve heard of the butterfly that flaps its wings in Brazil and causes a rain storm in North Dakota. Turns out that rain storm leads to a bumper U.S. wheat harvest, which U.S. AID ships out to Africa, where a warlord steals it, sells it, and uses the money to buy weapons and kill people.

Nunn and Qian start with the (standard) observation that the key determinant of U.S. aid shipment volumes for wheat have little to do with conditions on the ground in recipient countries. Instead, food aid closely track wheat production in the U.S.: a good harvest in the mid-west is inevitably followed by a spike in food aid shipments the following year.

Their strategy is to identify the impact of wheat aid shipments in a given year on the incidence of civil conflict in recipient countries. Some whiz-bang econometrics later they conclude that, on average, “an increase in US food aid increases the incidence and duration of civil conflicts.” The more it rains in the mid-west, the more violence there is in very poor countries.

The deeper you get into the weeds, the hairier this story gets:

The amount of theft can even exceed the value of the food, since convoy vehicles and other equipment are also stolen. In 2008, MSF Holland, an international aid organization working in Chad and Darfur, noted the strategic importance of these goods, writing that these “vehicles and communications equipment have a value beyond their monetary worth for armed actors, increasing their capacity to wage war” (Polman 2010, p. 105).

The research finds no impact of U.S. Food Aid on local food production or prices. Let me just repeat that, because it’s actually quite staggering: flooding a conflict area with free American wheat does not cause local food prices to go down. Nunn and Qian do note that the available data on this is limited – still, that’s amazing.

On the one hand this is “good”, in that it suggests aid may not lead to agricultural disinvestment or to farmers reallocating their labour to armed conflict due to agricultural prices collapsing (the traditional case against aid).

On the other hand, it’s hard to see what possible use Food Aid can be at alleviating hunger if it leaves food prices where they were before. It suggests the scale of Food Aid diversion in conflict areas is so vast that all it does is bolster the resource base of the parties to the conflict, without so much as a cursory bump to food availability.

What intrigues me is the Limited Access Orders reading to this evidence – something that, to be clear, Nunn and Qian don’t really go into. In an LAO reading, developing country conflicts are usually driven by failures in elite pacts over how to divvy up rents. Food aid is, in a way, the ultimate rent: free food that drops from the sky (sometimes literally.) It’s just more stuff to squabble over.

And I know it’s true, because I read it in the AER.

6 thoughts on “Is this the most evil Aid program in the world?”

  1. A childhood friend of mine who spent time in the peace corps explained this to me back in the early nineties. It’s good to see someone has quantified what many people already believed. Now what?

  2. Yes, it is in Dowden too. His piece on Sudan and the MPLA was very illuminating. Delta came in for a lot of abuse. Although at that time it was the UN that got the blame not the USA.
    I think though you have got this badly wrong. Why are these people in a queue for food; its free to them.
    The way forward some are proposing is that the US should remove farm subsidies and ship subsidies and send cash instead of food. It is a big laugh really because it will just mean when they no longer subsidise corn and obviously stop growing it or they continue to grow it and make ethanol out of it, then there will be a world shortage, prices will go up, aid will become more expensive and the warlords will make more money controlling the food now more expensive than before the US stopped growing it. I haven’t seen anyone yet in the development world who has had the nerve to suggest that the US should send the cash and still keep growing the corn, wheat and soya and send it round the world as aid. But that will be next.
    I suppose the benefit will be the food riots which might overthrew governments but knowing the governments that won’t happen and they will leave a lot of dead bodies on the streets.
    One other way forward is for the USA to pull out of aid and let the rest of the world pick up the tab. This would show the value of the USA subsidy. America has got to stop subsidising the development world.

  3. I’m a bit sceptical about this paper’s findings. I attempted to replicate it for an econometrics assignment, and while I was able to reproduce their instrument, I did not find any statistically significant impact on the incidence of conflict in recipient countries.

    Nunn and Qian use FAO data which spanned from 1970 to 2006. The FAO data provides the total amount of food aid provided by each donor to each recipient country. The FAO data does not distinguish between types of food aid (i.e., emergency, program, or project), nor does it make any distinctions with regards to delivery methods (i.e., whether it is directly delivered or purchased locally or in a third country).

    The FAO data is no longer available onlne (I used an archived copy in my replication). Instead, it has been supplanted by data provided by the World Food Programme for the years from 1988 onward. The WFP data is far more detailed – it provides a break down of each type of good provided, as well as the type of food aid and the delivery method. Using this WFP data, I was able to reproduce their instrument, but found no impact on conflict.

    Nunn and Qian are right about a lot of American food aid decisions being driven by domestic interests – specifically, the need to dispose of surplus grain and to pursue geopolitical goals. And their instrument (the lag of US wheat production interacted with the time-invariant probability of being a US wheat aid recipient) does a very good job of predicting the level of PROGRAM and PROJECT food aid that a recipient country receives in a given year.

    So, what’s the problem? Well, the instrument used by Nunn and Qian does not do a good job at predicting the levels of EMERGENCY food aid that a country receives. This makes sense – emergency food aid is, by definition, aid that is delivered in response to crises like wars or famines. This is the type of aid that is delivered directly to people in need, often across long distances and through parts of the country that are not under government control.

    Nunn and Qian argue that the mechanism through which food aid fuels conflict is the theft and misappropriation of aid by combatants. But, what type of food aid that is stolen in conflicts? EMERGENCY food aid. The other types of food aid, project and program, are usually sold by governments or development agencies in recipient countries in order to generate revenues. This is not the type of aid that is diverted at roadblocks set up by insurgents or used to feed guerilla fighters masquerading as refugees.

    You could make an argument that food aid causes conflict by depressing agricultural incomes and making rural farmers more likely to join an insurgency, but as Nunn and Qian point out, food aid doesn’t seem to have much of an impact on recipient countries’ agricultural markets.

    I agree that most food aid is hypocritical, self-serving, and ineffective, but I don’t think it is the case that it causes conflict. Nunn and Qian use low-quality data, and in their regressions they actually leave out some of the very countries whose experience they point to as being indicative of the link between food aid and conflict. Take a look at their replication files available online – none of the former Yugoslav republics are included, in spite of the fact that they use the example of Serb and Croat militants stealing food aid at roadblocks in Bosnia.

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