Is European Community food aid in dairy products cost-effective?

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Abstract
Food aid is always controversial in part because the long debate, which has been preoccupied with assesment of impact on recipient economies and societies, has proved inconclusive. A different line of enquiry, focusing on the cost-effectiveness of food aid as a resource transfer, is proposed as relevant to policy discussions in the European Community and as a necessary prelude to more ambitious social cost-benefit analyses of food aid. This is explored for the European Community's 1978 food aid programme by Community Action in dairy products. The cost, relevant to food aid policy discussions in the context of the CAP, is taken to be the cost to the European Community's budget, and the value as the recipient country's potential saving in foreign exchange. The conclusions are that many dairy food aid transfers are not cost-effective; that explicit assessment of the cost-effectiveness of individual country allocations would contribute to an economically more rational food aid policy; and that, where allocations are costineffective, alternative transfer mechanisms should be considered.

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