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Cash Can Beat Food Aid in Combating Hunger, Study Says

(File) A Palestinian girl walks past sacks of flour food aid from the United Nations and USAID at the Shatie refugee camp in Gaza City.
(File) A Palestinian girl walks past sacks of flour food aid from the United Nations and USAID at the Shatie refugee camp in Gaza City.
Cash can be more effective than food aid when it comes to reaching hungry people, according to a new study.

The finding comes as the U.S. Congress considers the law governing its $2 billion food aid budget.

However, the study authors find there is no right way to deliver aid, and say flexibility is key.

Since the 1950s, U.S. food aid has helped more than 3 billion people in more than 150 countries, according to the U.S. Agency for International Development (USAID). That aid comes largely in the form of U.S. commodity crops like corn, soybeans and vegetable oil.

It’s a point of pride for the farmers and food processors who make it, and they have been strong supporters of the program. But food is often available locally at a lower cost than shipping it across the ocean.

Critics say what people really need in a crisis is money to buy their own food. That’s why European donors support cash and local purchase more than food aid.

Search for evidence

Both sides claim they’re right, says economist John Hoddinott at the International Food Policy Research Institute, but neither has much evidence to back them up.

“What we wanted to do was bring evidence and facts to bear on this debate,” Hoddinott said.

So, Hoddinott and colleagues at the World Food Program studied aid projects in four very different countries: Ecuador, Uganda, Niger, and Yemen.

In each project, beneficiaries received either cash or food of the same value. The researchers studied both the quantity of food, measured in calories, and the quality and diversity of the diet the recipients ate. They also calculated the cost of delivering the aid.

They found that cash was cheaper to provide than food, which saves more than just money.  

“It would only be a slight exaggeration to say we’re also talking about saving lives,” Hoddinott said.

If the projects used only cash or vouchers, an additional 32,000 people could have been fed, approximately 15 percent of the total.

However, Hoddinott stressed, “We want to be very clear: the results of our study do not say that you should always provide cash.”

Shopping options

It really depends on what the program is trying to achieve.

When the researchers looked at the impacts of cash compared to food aid on the amount of calories and dietary diversity, Hoddinott said, “What really jumped out at us was the variation in effects.”

In Ecuador, for example, the people who received food aid got more calories but a less diverse diet that those who received cash or vouchers. But the opposite was true in Niger. Those who received cash ate more calories but a less diverse diet.

That’s because “fundamentally, context matters,” Hoddinott said.

The project in Ecuador served Columbian refugees in urban areas with well-stocked markets where food was available for beneficiaries to buy.

“What they needed was the resources," Hoddinott said. "Hence, the cash and vouchers work well in that environment."

By contrast, the project in Niger served very poor people in rural areas where the markets did not have much more than staple grains available.

“People who got cash basically went out and bought lots of grains,” Hoddinott said.

Food aid, on the other hand, included grains, lentils and cooking oil. “That meant their diet became more diversified than households that got the cash and were just basically stocking up on staples.”

Hoddinott says aid programs need to have an understanding of the fundamental goal of their intervention because that will affect which method to choose.

"Both the U.S. and the [European Union] would benefit from a more flexible approach to food assistance,” he said.

'All the tools in the toolbox'

The U.S. spent about $200 million on cash and vouchers last year, out of a roughly $2 billion budget. Congress is considering legislation that would allow slightly more flexibility.

U.S. farmers, shippers, food processors and some aid groups have opposed more significant changes to U.S. food aid policy.

Paul Green, a consultant for the North American Millers Association, agrees that every food insecurity problem is different, and “the study reinforces the need for all the tools in the toolbox.” He also believes current U.S. foreign aid programs provide adequate flexibility for emergency response.   

Other aid groups see it differently.

“This study further underscores our call for reform of current food aid programs to make them more flexible and allow for more tailored responses,” said Eric Munoz of the aid group Oxfam.

The legislation is part of the much larger Farm Bill. House and Senate negotiators begin hammering out the differences in their versions this week.

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