Appendix to Chapter 6


generated through programme food aid are largely used to finance the labour intensive public
works programme, they constitute a major source of income for a significant proportion of
the population. A reduction of programme food aid resulting from a reduction of programme
food aid supplies by some donors would imply less CPFs generated. As a result, household
income would diminish, affecting effective demand and the food deficit situation. The effect
is shown in Figure A6-3.

Figure A6-3: Effect of a decline of household income on structure of food deficits

price
 pi requirements
 production/
 domestic supply

 old effective
 new demand



mp ------ - ---- -- ----------------- mp: market price of local maize


ippi -- -- ippi: import parity price of imported cereals
mpi .--.-.-- - -" -- "- '-- -- ------;- - mPi: market price of imported cereals

 -volume
 A E D C B R


In our model, diminished household income leads to a downward-shift of the effective
demand function. Figure A6-3 shows that the consequences would be similar to the effects of
increased market prices: the market supply deficit would diminish (from B-A to D-A), but the
effective demand deficit would widen (from R-B to R-D), with increased needs for targeted
food assistance to maintain a level of food supply where the minimum food requirements are
met.

Point E shows the combined effects of the policy measures described above (decline of
programme food aid deliveries, price liberalisation, reduction of public works programmes).
The negative implications for national and household food security are obvious: Both the
supply and the demand deficits would substantially increase.


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