Chapter 6


Programme food aid is usually monetised, i.e. sold on the local market at prevailing or
subsidized market prices. In the latter case, programme food aid constitutes a major resource
for targeted (or non-targeted) food subsidy schemes (see section 3.3 of Chapter 5).

The budgetary support component of programme food aid depends mainly on the regulations
concerning the use of the sales revenues. Some typical regulations and the corresponding
budgetary effects are listed in table 6.3. In general one can say that programme food aid (as
any type of commodity aid) has supportive effects for the government budget to the extent
that the sales revenues from monetisation are used for purposes which, in the absence of such
funds, would have to be financed by the government from its own budgetary resources.


 Table 6.3: Regulations concerning use of sales revenues and budgetary effects


 Regulations concerning use of sales revenues Budgetary effects

Sales revenues go into the general budget, with or Full budgetary support through sales revenues
without regulations concerning allocation to
specific budgetary positions

Sales revenues are used in support of general Full budgetary support through sales revenues
policy initiatives, e.g. structural adjustment,
related social security programmes.

Sales revenues are allocated to specific projects or Budgetary support to the extent that the projects
programmes (e.g. targeted food subsidies) or programmes would have to be financed by
 budgetary resources if the sales revenues were
 not available.

 Sales revenues are put in specific counterpart Budgetary support to the extent that the
 funds administered by the donors of programme counterpart funds are used to support projects or
 food aid programmes that otherwise would have to be
 financed from the budget.

 Sales revenues are used by donors for own No budgetary support
 purposes (e.g. for purchases, or to pay the costs
 for maintaining own establishments in the
 recipient country).



 The effectiveness of programme food aid in achieving food security objectives depends on
 the conditions under which it is provided and on the situation in the recipient country,
 specifically the type of prevailing food deficits. We will return to this issue in section 2.5
 below. Programme food aid can also play an important role in efforts to stabilise food
 supplies in countries and situations characterized by large production and supply variations.


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