Food aid and Nepal: Some comments

Abstract

There is no general agreement either on the disincentive effects or on the costeffectiveness of food aid. This article analyses the possible implications of food aid to the agricultural economy of Nepal. It deals with the incentive/ disincentive effects of food aid on the production, pricing and distribution of food commodities. It is argued that due to certain factors such as the existence of disguised unemployment, the need for family security, ineffective market mechanisms and lack of substitution possibilities, food aid does not cause disincentive effects on Nepal's food production, at least in the short run. However, food aid should be for a specific goal and should be phased out once that goal is achieved.