|No. 1||Rome, April 2004|
Cereal food aid anticipated to decline in 2003/04
Total cereal food aid shipments in 2003/04 (July/June) could decline in view of generally tighter world cereal supplies, strong international prices and soaring ocean freight rates. In the United States, the world’s largest donor, the requested food assistance funding for the FY 2003 (fiscal year 2002/03) under the P.L. 480 Title II, its primary food aid programme, stood at US$1.185 billion, up from US$850 million appropriated in the FY 20021/. However, the requested funding for the FY 2004 remains the same as in FY 20032/. Based on the budget allocations alone it is difficult to determine the actual volume of food aid shipments by the United States in 2003/04, but without an increase in funding, the steep rise in prices coupled with higher transport costs could result in a reduction in cereal food aid shipments from the United States in 2003/04.
Among the other major donors, however, Canada has been noted to have expanded its food aid activities since 2002 and this trend is expected continue in 2003/04. Since the start of this marketing season, cereal shipments from the Republic of Korea have approached 577 000 tonnes, up 170 000 tonnes from 2002/03, primarily destined for the Democratic Republic of Korea. In December 2003, the Government of India announced additional donations of wheat, some 61 000 tonnes. India also pledged about 1 million tonnes of wheat to the United Nations World Food Programme (WFP) for distribution in the form of fortified biscuits for school children in Afghanistan.
Cereal food aid shipment increased in 2002/033/
Total cereal food aid shipment in 2002/03 reached 8.6 million tonnes, an increase of 16 percent from the reduced level in 2001/02 (Appendix Table 13)4/. Larger wheat shipments accounted for most this increase, which, at almost 6 million tonnes, were 1 million tonnes more than in 2001/02. Rice shipments also increased significantly, by 600 000 tonnes to 1.6 million tonnes. By contrast, total coarse grains shipments fell by 500 000 tonnes to 1.1 million tonnes, the lowest since 1996/97. Shipments from the United States increased by 6 percent to 5.2 million tonnes in 2002/03, which represented 60 percent of the total. Food aid by the Republic of Korea, a non-traditional donor country, reached 400 000 tonnes, consisting entirely of rice donations to the Democratic Republic of Korea.
Cereal food aid shipments to the LIFDCs reached 7.4 million tonnes in 2002/03, up 1.3 million tonnes from the previous season. At this level, the share of food aid shipments as a percentage of exports to the LIFDCs is around 9 percent, which is higher than in 2001/02 but still well below the 13 percent level in the early 1990s. The increase in shipments to LIFDCs in 2002/03 was mostly driven by larger donations to Africa and Asia. The top five recipients of cereal food aid were Iraq (1.3 million tonnes), Ethiopia (1.2 million tonnes), the Democratic Republic of Korea, (975 000 tonnes), Bangladesh (353 000 tonnes), Afghanistan (388 000 tonnes), and Angola (217 000 tonnes).
Non-cereal shipments in 2002 almost unchanged5/
Total food aid shipments in the form of non-cereals reached almost 1.4 million tonnes in 2002, slightly below the previous year (Appendix Table 15). For the second consecutive year, the leading destination for non-cereal food aid was Pakistan, which received 177 000 tonnes of mostly pulses and vegetable oils. Other major recipients included the Democratic Republic of Korea, Afghanistan, India, and Indonesia.
Food aid in pulses account for most of non-cereal food aid. In 2002, total shipment of pulses reached roughly 762 000 tonnes, the same as in 2001. Shipments of another major food aid commodity, vegetable oils, were reduced slightly. By contrast, a strong rebound in skim milk donations was recorded in 2002, mostly due to higher shipments by the United States.
Non Cereals - Food Aid Shipments by type
Source: WFP Note: Totals computed from unrounded data.
Non-cereal food aid from the United States, the largest donor, fell to just over 1 million tonnes in 2002, still representing more than 70 percent of the total. Pulses account for more than one-half of all non-cereal shipments by the United States while vegetable oils account for more than one-third. However, donations from the United States in both commodities and sugar declined in 2002, while food aid in the form of meat and edible fats were reduced to nil.
Developments related to the Food Aid Convention
The Food Aid Committee (FAC) extended the Food Aid Convention by two years in June 2003. According to FAC, as of December 2003, total food aid shipped in 2002/03 was estimated at 9.2 million tonnes, in wheat equivalent, 1 million tonnes less than in 2001/026/. However, total shipments were above the FAC Member countries’ combined minimum annual commitments of about 5 million tonnes. Based on the FAC estimates, some 93 percent of aid provided under the Convention was in the form of grants.
Developments related to the World Food Programme
Food aid shipments channeled multilaterally have grown in size in recent years, reaching an all time high of over 5 million tonnes in 2002/03, up 42 percent from 2001/02. The increase is mostly driven by the continuing growth in food aid channeled multilaterally through the WFP, which in 2002/03 surpassed 4 million tonnes. As of 1 March 2004, confirmed contribution by the donor community to WFP reached roughly US$3.6 billion, the highest on record. Of this total, contributions to Emergency Operations (EMOPS) reached US$2.4 billion. Support for Protracted Relief and Recovery Operations (PRROs) remained high, at more than US$1.1 billion.
1. Title II of the Agricultural Trade Development and Assistance Act of 1954 (Public Law 480, also known as “Food for Peace”) is administrated by USAID. Nearly half of the allocated value is usually designated for humanitarian emergency food assistance, the bulk of which in the form of cereals.
2. The fiscal year 2004 in the United States begins on October 1, 2003.
3. More detailed statistics on cereal and non-cereal food aid shipments (1970/71-2002/03) are available on the Internet as part of the FAO World Wide Web at the following URL address: http://www.fao.org , under Statistical Database select FAOSTAT and then All Databases
4. Processed and blended cereals are converted into their grain equivalent to facilitate comparisons between deliveries of different commodities.
5. While cereal shipments as food aid are reported on a July/June basis, non-cereals food aid is reported on a calendar year basis and as of March 2004, complete information is available only for 2002.
6. Under the FAC rules, all food aid contributions are evaluated and counted in terms of their commercial value relative to wheat, i.e. “in wheat equivalent”.