Monetisation: Linkages to Food Security?

Up to now, the vast majority of NGO experiences with monetisation involve NGOs from the United States. The monetisation of Title II resources, ie. food aid allocated by the US government to NGOs for their programming, has been part of US NGO practice for a number of years and, as a result, a substantial body of experience has been built up. The justification for the monetisation of Title II emerged from covering overhead costs for feeding programmes. While the justification for the food aid sale is to cover costs of the aid and transport, the proceeds are invested in development projects with a household food security impact. In a world of shrinking cash resources where food resources remain relatively stable, US NGOs have used monetisation as a way of covering a variety of programme costs. While some NGOs have tried to affect local household food security, the bulk have sought to influence food security by means of market availability through food aid sales. Thus, the main aim of monetisation in the US context has been to generate funds.

Monetisation aimed solely at raising funds is an activity that is not well known in the European NGO world and much of its language and practice is related more to the business community than it is to the jargon of development practitioners. In spite of the unfamiliarity of some of the concepts, it is nonetheless an increasingly important area, not least due to the fact that most US NGOs foresee more and more potential for increased monetisations, particularly 100% monetisations not linked to food aid programmes, and European NGOs are also beginning to see opportunities ahead.

European NGOs have become more interested in the prospect of undertaking monetisations in a different context to their North American counterparts. Unlike NGOs from the USA, the European NGO interest in monetisation is not solely to do with raising money, but also reflects a concern with directly affecting food security through the actual process of monetising. For example, in emergency situations such as Somalia (1992), food aid was sold to traders to bring down/stabilise the market prices of food so that they were more affordable for the local population. In other situations, food aid has been sold directly to consumers at subsidised prices via fair price shops; food for work etc. and gradually, a body of knowledge is being built up around these experiences. Indeed, the most recent EU food aid regulations reflect this trend and encourage it by emphasising a shift away from the free distribution of food aid towards a strategic approach aimed at strengthening local household food security. Thus, a new climate is developing where European NGOs are looking to using food aid in a more innovative way.

However, as already stated, the main experiences come from the USA Title II monetisations and this pool of experience contains some important lessons for us all. This paper sets out some of the basic tenets of Title II monetisations including the conditions of monetisation, ie. ensuring that food aid does not have a disincentive effect and the need for the commodity at the national level to attract a food price that is sufficient to cover costs. Indeed, the process itself can be complex and sometimes technical, and the Americans have gone about dealing with it in their customary thorough and business-like way.

As the potential for monetisations grows for European NGOs, this Network Paper provides an excellent introduction to the experiences of one particular type of monetisation and also sets the scene for further Network Papers that seek to illustrate different types of monetisations, especially those that have a direct affect on food security at local level.