Question

Distributing food aid can have a negative impact on the local market. For example, if a large shipment of lentils or wheat is received in Ethiopia, the price for local lentils and wheat drops - thus threatening the livelihood of those involved in the production and sale of lentils and wheat in Ethiopia.

a) True
b) False

Answer 1

Food aid can negatively impact local markets by causing a surplus and driving down prices, adversely affecting local producers and sellers.

Step-by-step explanation:

The statement about food aid potentially having a negative impact on local markets is true. When a large shipment of food aid arrives in a country like Ethiopia, it can cause the local price of similar goods to drop. This occurs because the supply of the food commodity increases significantly, leading to a surplus compared to the existing demand. Consequently, local producers and sellers of lentils and wheat may suffer as the market price decreases, impacting their income and livelihoods adversely. This phenomenon has been noted in various instances worldwide, such as excess milk shipments to Jamaica from the European Union causing hardship for local dairy farmers, and rice shipments from the United States to Haiti pushing Haitian rice farmers out of business.