Cash or food?

When emergency strikes, the rich world sends food. But would it be better to send money? John Vidal explores a very topical controversy.

Over the next few months, more than 10 million people in six southern African countries will need western help to stay alive after their crops failed. A massive humanitarian effort is under way, led by the UN’s World Food programme, the Department for International Development, aid agencies and national governments. Ships full of North American grain are even now crossing the Atlantic, lorries of maize and cassava are thundering up from South Africa and countries with food surpluses, while traders are hoarding food in expectation of the price rising and people are queuing patiently for handouts.

But in southern Zambia, one of the worst-hit regions, 10,500 families received no food in December. DFID, working with Oxfam, has started handing them the equivalent of about $20 cash a month – roughly the price of a 50kg bag of maize and some beans. The idea is that they can go to their local markets and buy the food that they choose, or use it to stimulate their economies. As the food crisis inevitably grows until the next crops are harvested in March, Oxfam expects people will be given more money and the programme will be expanded to about 86,000 people.

The Zambian scheme is expected to be one of the biggest “cash transfers” ever tried in a humanitarian crisis – and the world’s food-exporting nations such as the US and Canada, the UN’s World Food Programme (WFP) and many NGOs are all watching closely to see how well it works. The idea of giving money rather than food or other commodities is politically and socially controversial.

Give people cash, say the cash sceptics, and you will increase insecurity and corruption, upset local economies, fuel conflicts and exclude the most needy. Apart from being physically risky for people handling the money, they say, cash may disadvantage women who are less able to keep control of it. Because of these and other fears, the overwhelming form of help by the West in developing world emergencies for the past 30 years has been “in kind” – food.

But, the growing band of cash advocates responds, the potential benefits are enormous. Theoretically, the money can go far further because the transport and logistics costs of taking money around are up to two-thirds lower. Giving cash lets people decide what they should spend their money on, and, they say, it can have knock-on multiplier effects for local markets. They also maintain that cash is more dignified than food in the sense that people can avoid waiting in degrading queues. Moreover, they claim, cash has the potential to help development as well as to relieve suffering.

There’s not much empirical evidence either way, but what there is so far suggests that most of the sceptics’ fears are unfounded, and – this is important – as long as there is food to be bought in the region and the market can respond, people overwhelmingly spend any money or vouchers they are given on basic essentials. Giving cash has been tried successfully after the Montserrat volcano, the Bam earthquake and the tsunami, as well as the first Iraq war and in the Palestinian territories in 2002. The Red Cross, Oxfam and Christian Aid have tried it in Afghanistan, Somalia and Ethiopia – but all on a limited scale.

Oxfam is confident that the money will get to the right people in Zambia. “We have worked out who are the poorest and most vulnerable. So far, from the limited monitoring we have done, we have found that 95 per cent of the money has been spent on productive use”, says country director Ric Goodman. “People bought mainly maize, cassava, oil, sugar, and salt. A very few spent some of it on education. There have been no reported misuses. Giving cash gives people the flexibility to pay for other things. They have a range of options.”

So why has cash not been used more by agencies and governments? According to a discussion paper by the Humanitarian policy group at the Overseas Development Institute (ODI) , the barriers to cash are institutional and organisational. The whole humanitarian system, it says, is structured around food aid and there are few local, national or international organisations with any experience in handling cash rather sacks.

Clearly, one problem is that food aid is very big business, worth $3-4 billion a year, and therefore highly political. Countries with surplus food, like the US, may tie their gifts of rice or wheat to their own strategic objectives. It has been used in the past to dump heavily susbsidised grain surpluses, to improve trade figures, to reward favoured groups of farmers and transporters. Because there are so many vested interests in subsidies – food aid plays an important part in world trade. The EC has made the link most clearly, phasing out food aid as far as possible in favour of cash grants.

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