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Bio-fuels and food aid: the impact on southern Africa

Publication date:
C. Grant
Type of publication:

The production of biofuel has more than doubled in the United States since 2001 while food aid levels have been steadily declining. This brief considers how the global shift to ethanol may affect food aid flows to Southern Africa. In particular, it explores the effect of increased ethanol production on global food prices, as well as the impact of the US Farm Bill and current World Trade Organisation deliberations on food aid disbursements. The brief highlights the following:

prices for cereals and other related food products reached 10 year highs in 2006 as a result of increased biofuel production
this price effect spread to other foods, including poultry, dairy and meat products that rely on animal feed
currently the US provides nearly all of its food aid in-kind and while there have not yet been large decreases in the overall level of commodities donated, there has been a significant decrease in the amount of maize given as food aid
previous attempts attempts to allow up to 25% of US food aid to be donated as cash and used for local and regional purchases have so far been resisted by Congress however this proposal is again being put forward as part of the 2007 Farm Bill
the diversion of US corn crops to bio-fuels will not have as large a direct impact on southern Africa as on other regions in the world as very little American corn finds its way into the region as food aid
the main impact will be the increase in the global price of corn which will in turn raise the cost of buying food aid significantly

The brief concludes that southern Africa may be more affected by the increase in global corn prices than by the diversion of US stocks into the production of bio-fuels. The increase in global prices, will, however make it more expensive and difficult for food aid agencies to procure the same amount of maize when needed.