Chapter 6


1) The local purchase potential which is determined by the marketable surpluses available
 in a country or region which can be absorbed by local purchases without disturbing the
 local food market. Close market and price monitoring is required to assess such potential,
 in order to avoid severe market distortions that may occur if local purchases exceed
 available market supplies. It appears, however, realistic to assume that such market
 potentials can be gradually developed by repeated local purchase operations in the same
 areas (demand induced expansion of local marked production).

 An already widely applied alternative, incorporating most of the advantages of local
 purchases mentioned above, consists in so-called triangular or trilateral transactions,
 specifically if neighboring countries or countries belonging to the same region as the
 recipient countries are involved. Triangular transactions function according to the
 following principle:

 Figure 6.3: Triangular transactions in food aid

 Donor country



 Food aid Fin ial
 co itment flow



 Recipient country < Commodity flow Procurement country

2) The funding requirements for local purchases. While food aid deliveries from surplus
 producing countries are often additional to other development aid, local purchases require
 additional and specifically allocated financial resources. This is likely to limit the
 potential scope for local purchases.

In spite of such limitations, the share of food aid procured in developing countries has
substantially increased in recent years, reaching 16.2 percent of all food aid deliveries in 1995
(see Table 6.1). About 70 percent of the commodities were procured in a third country
through triangular or trilateral transaction and 30 percent through local purchases in the
recipient country itself.

2.6 Evaluating and improving the efficacy of food aid interventions

For an assessment of the efficacy of food aid interventions in enhancing food security,
various aspects have to be taken into account. These are in summary:
* The objectives of the food aid interventions: improving food security (mitigating acute
 food shortages, transitory, chronic food insecurity), foreign exchange support, budgetary
 support, compatibility of objectives of donors and the recipient country, distinction
 between short-run and long-term objectives.


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