Food for the Hungry: the case for buying locally 
Author : Josette Sheeran
Date : May 7th, 2008
Last month, I spoke to a group of British parliamentarians who sit on something called the International Development Committee. Their role is to scrutinise the work of the Department for International Development. “DFID” - as it is known - is the arm of the British government concerned with promoting development, supporting the alleviation of poverty across the globe, and funding multilateral organisations like the UN World Food Programme.Members of the International Development Committee asked me to travel to London to speak to them as part of their inquiry into the work of the World Food Programme (WFP) and the support it receives from DFID. As part of the inquiry, an open invitation was issued to any organisation or individual with an interest in global food security to contribute written evidence.
It was an opportunity for organisations like Oxfam, who work with WFP, and others who have an opinion about the way we do our work, to express their opinion, and to influence the line of inquiry. Reading the input from these organisations and individuals is a bit like discovering the comments of your teachers after the headmaster has asked them to contribute to your end of term report.
What has been really interesting, is that a lot of the inputs are encouraging, recommending and cajoling WFP into doing more of something that is already very much part of the fabric of our work: the local procurement of food for the hungry.
It is always comforting to hear independent voices recommend something that is so central to WFP’s policy, and in promoting local procurement in developing countries, I think we have been ahead of the curve. Where I would admit we may have been slower - until more recently - is in promoting the extent of WFP’s involvement in local procurement, the fact that we have been doing it for decades, and explaining the reasons why we think it is so important.
As a major player on global food markets, WFP has been in the business of buying basic food commodities from one source or another for pretty much the past forty years. One of our guiding principles is to get the best price for the food we buy, so we can stretch the precious money we receive off donor governments and use it in the most efficient way to feed the world’s hungry.
The experts who run WFP’s food procurement unit realised fairly early on that there were obvious advantages if food could be purchased close to where it is going to be used. Food that is sold by small farmers in regions like sub-Saharan Africa, might not be as cheap as that which you find in the sophisticated North American and European markets, but if you buy locally, you can cut down dramatically on the costs of transport and storage.
More importantly, these savings are among a number of positive advantages that come with local procurement. Foremost among these is the opportunity to use WFP’s local procurement policy as a way of investing in the sometimes fragile agricultural economies of the developing world.
With our “purchasing power” we can make a real difference. In 2007 that meant ploughing US$612 million into developing countries where we purchased more than 1.6 million tonnes of food from small farmers. To put this in perspective, by virtue of our local procurement policy, WFP put more money into
Africa in 2007 than the World Bank.
The question we are now asking ourselves is how we can use this big “purchasing footprint” - that stretches from Uganda and Ethiopia to Pakistan, Colombia and beyond - to support small farmers in a way that helps their business grow and contributes to the evolving economies of the developing countries where they live.
Our first step has been to set up a “Purchase for Progress” unit at WFP headquarters in Rome, which is launching a set of pilot activities - primarily in Africa - to explore how we can take this exciting concept further. We want to work with a broad range of partners, including governments, UN agencies, non-governmental organisations, farmers, traders and research institutions to see how we can use WFP’s purchasing power to sustainably develop the agricultural sector.
With the escalation in global food and fuel prices, and the tremendous impact this is having on the hungry in the developing world, this initiative really could not have come at a more vital time. Now is the moment when we can really benefit from a local procurement policy that cuts down on transportation costs and helps to connect farmers in the most vulnerable communities to markets.
The timing of the International Development Committee’s inquiry into WFP’s work coincided with this extraordinary era of high food commodity prices, and gave us a welcome platform to explain not just the role that local procurement can play in helping us to reach our goals, but also the other factors that are making WFP’s mission yet more challenging.
But for everything that local procurement offers, we have to remain realistic that the capacity among the agricultural economies of the developing world is not yet sufficient to support the needs of an agency like WFP which aims to feed more than 70 million people this year. We will continue to focus efforts on using our funding wisely to support small farmers wherever we can and to help them improve their crop yields.
For now though, we have to accept that even in the ideal situation where WFP receives its full budget in untied cash, we would still have to purchase some of our food from markets in North America, Europe and the industrialised economies of Asia.
These are challenging times for the world’s hungry and for the agencies that have been set up to help them. If we are going to protect them we will need to confront these challenges with a variety of tools. Local procurement is one powerful tool among the many we need to use.
Other Languages:
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Folayemi
Date : October 20th, 2008 06:57:01
Is there a list of the African countries that WFP “Purchase for Progress” is targeted at?
Phillip Huggan
Date : June 30th, 2008 10:32:37
I’m presently looking into how farm policy is passed and a nation-by-nation assessment of policies relating to individual crops.
I think the general strategy to initiating a holistic agriculture framework should focus upon lessening consumption of developed world corn syrup, unhealthy oils (ie. all except sunflower and canola I think), sugar, red meats where feed is grown on land with other potential uses (alfalfa on marginal land okay, corn/barkey feed not okay), barley…and I think developing world production should be decreased for all crops where rainforests are harmed.
I’d increase consumption of fruits and vegetables in the developed world, and grains for food, especailly highly storable wheat, in the developing world.
In all cases should tobacco and ethanol (unless a complete energy lifecycle accounting is first undertaken) production be decreased.
In all cases should honey and beeswax be subsidized. Bees pollinate 10x as much crop value as is their industry capitalized. This is probably the lowest hanging fruit.
Of particular importance are the policies of China and the USA, both exporters of more than 10% world production of food.
Rather than reducing first world subsidies, I’d like to see the developed world allocate a small portion of their subsidies to subsidize their competitors in the third world. IDK the optimal ratio, but maybe something like a 60% European subsidy would see the EU subsidize the 3rd world at a 6% rate. A 40% Canadian subsidy would see the 3rd world subsidy be at 4%. Merely removing subsidies would raise commodity prices and harm developing world farm labourers and urban poor.
Be nice to research a crop that contains all 8 amino acids. Also, urban greenhouses are the way of the future and this research should be promoted. Especially since fruits and veggies tend to grow in warm coastal humid climates and I’d think global warming induced rainfall and temperature variations would harm fruit yields particularly hard.
The EU should probably allow GMOs where the gene traits are greater insect tolerance, drought tolerance, etc. Maybe assign a ladder of GMO importance and delay less important traits while waiting for further research to determine the odds of crops turning into weeds or nutritional harms and other frankenfruit issues. Having the ability to rapidly transition back to pre-GMO agriculture might address GMO fears.
It might make sense to index an agri-company (machinery, seeds and fertilizer) R+D (or even corporate) tax credit inversely to a food inflation rate index. When food prices rise you want Monsanto and Potash to output more stuff. If GMO producers would fast-track desirable gene traits, maybe they could be excempted from some future environmental damage liability.
Date : June 25th, 2008 11:56:05
In response to Mr Brazier:
The United States is traditionally WFP’s number one donor and this year it is expected to be so again. But the overall funding picture will be a little different in 2008 because Saudi Arabia recently donated US$500 million in untied cash to WFP. This was the biggest single donation ever made to any UN agency and means that Saudi Arabia is the second biggest donor to WFP this year, behind the United States. The donation came in response to our appeal for funds to help us deal with the impact of high food and fuel prices on our operations – this year we aim to feed some 90 million people in 78 countries.
Over the past several years, WFP has been focusing on developing long-term partnerships with the Middle East, and Gulf countries, in particular. Through high-level visits, media and participation in key forums such as the Dubai International Humanitarian and Development Conference, World Economic Forum - Middle East Chapter - we have been able to build awareness and interest in WFP’s humanitarian mandate and the issue of high food prices. We will continue these efforts and the generous Saudi donation of US$500 will almost certainly help us.
Phillip Huggan
Date : May 22nd, 2008 10:17:44
My advice to participants of the FAO’s June 3-5 High-Level Conference of World Food Security:
1) Scrap all biofuel ethanol subsidies and redirect them towards wheat production (maybe also other protein-rich crops intended for direct human consumption).
2) Taxes/tarriffs on hogs and beef cattle where both the source and consumption are 1st world nations, with the proceeds redistributed in a way that sustainably assists 3rd world farmers (such as the FAO’s IFSP and all of CGIAR’s activities).
i) All the recent papers exposing the craponomics of ethanol from maize (and all other crops) are correct. The USA is spending about $4.5 billion/yr in subsidies that are costing her energy consumers $7 billion/yr, given a complete energy life-cycle analysis. I suggest transferring subsidies rather than eliminating them, because it eliminates much (not all) political lobbying pressure that may otherwise extend the subsidies indefinitely.
I suggest wheat as the new subsidy target, because it is the grain with the longest shelf-life. A glut of wheat on the market would stimulate the construction of more grain elevator storage capacity. In addition, wheat is generally not utilized as feed. A recent increase in meat consumption in China is part of the reason for recent agri-commodity price rises. By subsidizing a crop used for direct human consumption, the former inflationary effect is mitigated somewhat. If the externality of health and nutrition is considered, it might also make sense to redirect some of the ethanol subsidies to protein-rich crops as well as wheat. I wouldn’t suggest subsidizing oats or any other crop widely used for animal feed, despite the high protein content. Perhaps beans and lentils.
ii) The first world primarily suffers from obesity related consumption maladies like diabetes and heart disease, not malnutrition and starvation. I’m not sure, but I think it would save healthcare dollars in the 1st world by increasing the price of red meats. This despite such a policy harming relatively poor 1st world red meat consumers such as myself. In addition, there are many negative environmental externalities implicit in operating a large hog farm.
Hog and beef exports from 1st world nations to other 1st world nations, or more powerfully, all hog/beef consumption in 1st world nations where the point of origin is another 1st world nation, could be taxed/tarriffed. The revenue could be directed towards 3rd world farmers in a way that insures sustainable farming practises. IDK what all of these would be; the construction of a agriculture commodity futures exchange in Ethiopia, drip irrigation, education of farm diversification towards labour intensive high value crops like peppers…the goal is to not retard the growth of a domestic 3rd world farm supply chain. I don’t suggest eliminating 1st world food subsidies as this would increase prices for 3rd world poor non-farmers. Rather, I think the process should be to give 3rd world farmers about the level of subsidy 1st world farmers enjoy.
In general, we were closer to a solution a few years ago when food prices were low. All that was missing was income subsidies to 3rd world farmers. I don’t know if the financial institutions (microfinance) to directly subsidize 3rd world farmers for the most part exist or if they must be created. We must work backwards now and deconstruct (literally, ethanol conversion factories) the actions that are increasing food prices. Most types of agriculture R+D should be better funded, especially bioengineering more resiliant and storable crop varieties. As agri-commodities move in concert with oil (a 0.6 correlation), perhaps a multilateral hedge fund could be set up to stabilize income for 3rd world farmers; some of the revenues from suggestion #2 could be used to speculate on long petroleum contract positions as grain prices rise (this could be risky as new factors could eleiminate the 0.6 correlation)? Simpler insurance schemes might be available.
Kayzad Namdarian
Date : May 17th, 2008 08:24:36
Josette,
If the WFP gets every single dollar it desires for Food Aid, and more, does it currently potentially have the capacity, and reach, to end all deaths associated with starvation?
CHE THUY NHU
Date : May 12th, 2008 09:44:10
I read all realated with article .
I agree that the locally procurement allow reduce the cost for transport and shortage .
Also the food is appropried with eating habit .
People need to learn the rules of procurement .
The local law system should be clear .
Reserve system Vietnam have locally procurement .
This system keep foods , medicine , vacxin for urgent situation .
Thank you Che Thuy Nhu -Danang
Phillip Huggan
Date : May 10th, 2008 06:21:28
A tax-cut or subsidy for food consumption whose point of food origin (farm) is one-day travel distance from the consumer?
Don’t wanna get carried away with the low-footprint concept as many 1st world consumers are applying political pressure to limit to food exports.
Life cycle analysis of oil costs in food is what is trying to be estimated and costed here.
Rob Brazier
Date : May 10th, 2008 01:17:48
I recently learned that many of the oil rich countries in the middle do not contribute to the WFP. The USA by far gives more than any other country and we are criticized about everything while countries like these are given a pass.