Food Aid and Agricultural Trade Reform

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There are three types of food aid:
• Emergency food aid—appropriately targeted assistance to relieve human suffering when natural disasters or unusual events disrupt normal food supplies
• Project food aid—development projects that address longer term deficiencies in food supplies
• Program food aid—to help disadvantaged countries alleviate balance of payments difficulties or budget constraints
Food aid to prevent the loss of human life in emergency situations is a perfectly reasonable response. However, food aid is a long standing contentious issue that raises questions about market distortions and the welfare considerations of humanitarian assistance.
This study examines the economic impact food aid has on market conditions in recipient countries and world trade. Food aid can be a substitute for commercial imports, reducing the demand for those imports and displacing products onto the world market. It has unintended consequences for rural communities in recipient countries that can have significant welfare implications.

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