Chapter 6


2.5.4 Local purchases to compensate for demand deficits

Experiences have shown that, even in countries with structural food deficits, there are usually
regions and periods with surplus production and un- or under-utilised production potentials.
Market surpluses and poverty-related food deficits often emerge side by side, and existing
production potentials remain unused if, due to wide-spread poverty, effective demand is
weak. The phenomenon of market surpluses coinciding with food deficits has been analysed
in detail in Annex 1. The perception that food deficits are often related to'poverty and
insufficient effective demand provides the rationale for local purchases of food aid
commodities in the recipient countries: local purchases compensate for the lacking effective
demand of the poor and vulnerable groups (see Figure 6.2).

Compared to the conventional approach of providing food aid supplies from abroad, the
local purchase of food aid commodities has several important advantages (GTZ, op.cit.).
* In compensating for the lacking effective demand of the poor, local purchases stimulate
 local food production, hence contribute to reducing existing production and supply
 deficits.
* Induced production increases mean also increased agricultural employment and income in
 the recipient country, which contributes to an improvement of demand factors affecting
 food security.
* In taking into account the transport costs for imported food (aid) commodities, local
 purchases are often more cost-effective than food aid imports, if there are no major
 distortions of the currency exchange rate (see example in Box 6.4).
* Local purchases enhance local food markets and marketing, instead of possibly creating
 disincentive effects and market distortions associated with concessional food imports.
* Local purchases help to avoid the common problems of irregular and delayed food
 supplies from abroad.
* Locally purchased relief and FFW food items are in accordance with prevailing
 consumption habits, avoiding the risk of inducing changes in local dietary patterns which
 may have adverse implications for health, local food production and the trade balance
 (once people get accustomed to exotic food, demand for locally produced food may go
 down and future commercial food imports may become necessary).


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