Mark Langworthy - Experience in Food Security Issues and in Cape Verde

The field work for this assessment took place in November and December, 1995. The assessment was conducted for Agricultural Cooperative Development International by Dr. Mark Langworthy from the Department of Agricultural and Resource Economics at the University of Arizona.

Dr. Langworthy has had considerable experience in analyzing food security issues, particularly at the level of rural households. He has focused on examining the household livelihood strategies, food purchase and expenditure patterns, and other indicators of household nutritional status of rural areas in Cape Verde, Mozambique, Chad, Afghanistan, and Bangladesh.

Dr. Langworthy has extensive research experience in Cape Verde, first as an investigator in the University of Arizona's Food Crop Research Project. As part of this project he assisted in the development of the social sciences department of the Cape Verdean National Agricultural Research Institute. Economic information about the agricultural sector was collected in a series of field surveys on different islands of the archipelago. These surveys were designed to provide information about the livelihood strategies pursued by rural households in Cape Verde, and their consumption patterns. Subsequent field work focused on gathering information about the economic costs and returns of alternative agricultural activities, and variations in irrigation management practices. Dr. Langworthy also assisted with the design and analysis of a rural household survey undertaken for the International Fund for Agricultural Development (IFAD) in 1990. This survey evaluated the feasibility of promoting pigeon peas and other agricultural and soil conservation practices under an IFAD project. Additionally, he designed the monitoring and evaluation system used under the IFAD project.

Dr. Langworthy has a Ph.D. from the Food Research Institute at Stanford University.

Food security in Cape Verde has two crucial elements:

A structural food deficit: domestic production is normally less than 10 percent of requirements, due to climate and lack of arable land; and

A severe shortage of foreign exchange to finance food imports.

At present, net cereal availabilities from all sources, including food aid, come close to meeting national requirements. However, access to food is not adequate for many households. As evidence, 16.2 percent of children suffer from chronic malnutrition and a further six percent from acute malnutrition. Twenty-two percent of households have individual consumption of 1,800 calories per day or less, and 10 percent (of the 22%) have less than 1,500 calories per day.

Access to food in Cape Verde is critically affected by income. According to a 1994 World Bank study 30 percent of the population fall below the poverty level (26,000 CVE or 338 $US annual household income) and 14 percent below the "ultra poverty" level (18,000 CVE or $235). Fifty-four percent of household income is spent on food on average, with this rising to 60 percent in rural areas.

Food aid plays a major role in meeting food security in Cape Verde. First, at the national level, it meets a significant portion of the gap between requirements and domestic availabilities and commercial imports. In the period 1990 to 1995, domestic corn production accounted for only seven percent of total domestic availability of cereals, commercial imports were 27 percent and food aid was over 65 percent. The U.S. portion of food aid between 1990 and 1995 accounted for an average of 37 percent of the total amount of corn available for consumption and 20 percent of total cereal availabilities; much of this was consumed in rural households.

Second, the proceeds from the sale of food aid commodities are used for programs that provide employment to needy families. Fifty-five percent of per capita income of rural households in five geographic zones comes from employment created by activities funded with local currency derived from food aid. These programs provide basic subsistence incomes to a large number of the poorest households in rural areas, a population which spends 60 percent of its income for food. These programs also play an important role in improving irrigation methods, afforestation and soil conservation, all aimed at enhancing the limited resources available for food production. They also improve incomes for the poor in other ways, such as use in a small business credit program.

Third, food aid has a major impact on the macroeconomic stability of the country by helping to maintain equilibrium in the national balance of payments. There is a large and growing trade deficit, with exports now covering only 2-5 percent of the value of imports. Private (remittances) and public (official aid) transfers cover a large part of the trade deficit. The government has instituted a program of economic liberalism including a program to encourage foreign investment in export-producing businesses, but in the short to medium term the removal of restrictions on foreign exchange will put greater pressures on the economy, and the development of export industries will clearly be a long term proposition.

Food aid deliveries to Cape Verde, which account for approximately 70 percent of total cereal availability, are about to be sharply cut. The U.S. program, which has been the largest supplier, providing one-fifth of the total available cereals, is scheduled to end in September 1996. The World Food Program will phase out its activities by 2000. Other bilateral donors (e.g. Germany, France, Austria) are expecting to reduce or even eliminate their food aid programs as well..

The costs of adjusting to these impending losses will be great and will be borne disproportionately by the poorest individuals and households. Food insecurity would be widespread. Given the delicate nutritional status of many in the population, with little margin to adjust to additional dietary reductions, malnutrition, particularly in the rural areas, is likely to increase substantially.

There are few options open to the government to meet this challenge. Efforts to improve the natural resource base are bearing some fruit, but in the context of total food demand, these increases are marginal. In any event most of this activity is funded by donors who will be departing. Efforts to increase exports will be some time in maturing. The strong growth in remittances will be tempered by EU restrictions on further immigration. Borrowing from official sources has increased sharply in recent years; further increases would mortgage future foreign exchange earnings and create inflationary pressures -- and it is the most food insecure households which suffer the most from inflation. Clearly food security in Cape Verde is at a crossroads.

Introduction

The food security situation of Cape Verde is constrained by two aspects of the national economy: first, the structural deficit of domestic food production capacity in relation to the consumption needs of the population; and second, the limited means to generate the foreign exchange needed to purchase food imports on international markets. On the one hand, domestic production of staple foods (corn, beans, and tuber crops) is only able to meet 20 - 25 percent of all food needs in years with extremely favorable growing conditions, and with the erratic rainfall patterns in recent years, national production has usually been less than 10 percent of total requirements. On the other hand, the two main private sources of foreign exchange--exports, and emigrant remittances together only cover about 40 to 50 percent of the total cost of imports. The difference is made up through foreign aid and concessional loans from international organizations. These two realities of structural food deficits and limited opportunities to generate foreign exchange earnings have strongly affected the history of the islands, and will continue to place severe limitations on the national food security outlook for at least the next five to ten years (and quite possibly much longer).

Since independence in 1975, the country has been able to overcome these structural constraints in large measure through bilateral and multilateral foreign assistance, including food aid. This assistance has permitted the country to avoid the ravages of famine which periodically visited the islands during colonial times. In fact, the rainfall patterns have been very unfavorable for agricultural production since the 1970s, but the economy and population have grown over this time, and food consumption has been stable and generally adequate for most people, in large part as a result of the foreign assistance programs.

The objective of this Food Needs Assessment is to evaluate the current and future food security situation of Cape Verde. Food security will be assessed at the national level by examining how national resources are used to secure the food needs of the domestic population. Food security at the household level will be analyzed by identifying the different kinds of strategies pursued by different types of households to provide food for their members and the extent to which these strategies depend on food aid receipts. Information about the food security situation of households has been collected by a survey undertaken as a part of this Food Needs Assessment. The survey was administered to 125 households residing in areas where public programs financed through the sale of U.S. food aid have been implemented.

Drawing upon information collected from meetings with government and donor officials, secondary documents, and results of the survey, this report will examine the following issues:

i) the overall food balance of the country, comparing the relative importance of domestic production, commercial imports, and food aid in meeting domestic food needs;

ii) macroeconomic conditions in country, and dependence on foreign aid, including food aid, to meet import requirements;

iii) income levels, poverty, and the food security situation of different household types in the population, evaluating the impacts of the U.S. food aid program at the household level;

iv) use of local currency funds generated by sales of food donations to finance social assistance programs and public investment programs.

Finally, the report will discuss the perspectives for changes in each of these areas in the future, as U.S. and other donors consider the reduction or elimination of foreign assistance programs.

Historical Background

The Cape Verde islands were uninhabited when first discovered by the Portuguese in 1460. The first European settlers were granted trading rights for sections of the Guinea Coast, and Ribeira Grande (present-day Cidade Velha) became a trading center that linked the flow of goods between Africa, Europe, and later, the colonies in the New World. European settlers on the Cape Verde islands established trading networks for gold, ivory, iron, cloth, spices, etc. along the Guinea Coast. The commercial item of highest value, however, was the African slave, first acquired by capture, and then through the active local slave market. Ribeira Grande became a holding point and market center, where slaves were trained and Christianized as they awaited transshipment, primarily to the New World. During this era, when the economy of the archipelago was based on trade, agriculture provided food for the local population, and some cash crops, principally cotton and sugar cane, were produced and traded both in Europe and along the African coast.

The first agricultural strategies of production were based on local experimentation with different crop and livestock alternatives imported from both Europe and the New World. The early settlers found the traditional European cereal crops (wheat, and barley) unsuitable to local conditions. During the 1500s, corn and beans were introduced via Brazil and became the established staple food crops of the population. These, along with cotton were the primary rainfed crops. In the valley bottoms (ribeiras) sugar cane, yams, cassava, and sweet potato were produced along with bananas, figs, and other fruits. From Europe, the settlers brought livestock, especially goats, which quickly adapted to the local rangelands and the semi-arid climate. By the beginning of the 19th Century, the agricultural sector of the archipelago began to show signs of stagnation: exports declined significantly, cotton production disappeared almost completely, and dependence on food imports began to increase. One continual problem was the cyclical periods of drought which could last for many years. In addition, the increasing population placed growing pressures on the agricultural resource base. References to "uncultivated" (either virgin or fallowed) lands have been found from 19th Century sources (Carreira 1982), but in modern times all available cropland is cultivated annually without any fallow period.

The recurrent droughts not only influenced the development of agriculture in Cape Verde, but also caused a cyclical pattern of famines and food "crises" in the country. Table 1 shows the record of these crises since the 1500s. Even as late as 1946-47, the consequences of drought proved catastrophic, when an estimated 20 percent of the population died from starvation. Not until independence and the increased access to food aid from the international community has the local population been freed from the devastating impacts of recurring drought on food availability.

Drought and famine have made Cape Verde a nation of emigrants. Emigration from Cape Verde began with the arrival of American whaling ships in the first decade of the 19th Century (Carreira 1982). Cape Verdeans were recruited as sailors on the ships that stopped for provisioning at the islands, and sought employment in the U.S., primarily in Rhode Island and Massachusetts, as the ships returned from their voyages. Emigration was accelerated by Portuguese colonial policy of forced migration in the 20th Century that channeled Cape Verdean labor to colonies suffering labor shortages (e.g. S o Tome and Principe) and later to Portugal to replace Portuguese workers who began to emigrate to northern Europe.

Recently, the Cape Verdean government has embarked on major changes in economic policies. The elections held in 1991 brought into power a new government committed to major economic reform and market liberalization. The previous government had attempted to guide economic activity through direct management of many major activities (transport, import and export of essential commodities, banking) and had maintained quite restrictive controls on many parts of the private sector, particularly on imports. Since 1991 the government has eliminated most of the public monopolies, liberalized import policies, and removed restrictions on access to foreign exchange. In addition, the government is actively promoting foreign investment by advertising the advantages of investing in Cape Verde by providing a number of tax incentives. The long run goal of this economic liberalization strategy is to promote economic development, but in the short run the strategy reduces the degree to which the government can target activities and resources toward addressing food security problems within the country.

Food Balance Situation

At the national level, the amount of food available for domestic consumption is made up of domestic production, commercial imports, and food aid deliveries. Table 2 shows the domestic availabilities for corn, wheat, and rice, the cereals consumed in Cape Verde, as well as beans, the other important staple crop which is grown domestically. A number of important aspects of the national food security situation are evident from the numbers in this table. First is the magnitude of the structural food deficit. Corn is the only cereal produced domestically in Cape Verde. Over the six-year period 1990-95, domestic corn production has accounted for only seven percent of total domestic availability of cereals, while commercial imports represented 27 percent, and food aid accounted for over 65 percent of the total supply. U.S. food aid alone represented one-fifth of the total supply of cereals in Cape Verde over this period. In 1994, domestic production was insignificant, only 1,500 tons, and the country was essentially dependent on imports to meet all food needs in that year.

The domestic production figures also reveal a very high degree of variability from year to year. The coefficient of variation (CV, the ratio of standard deviation to the mean) of domestic corn production is very high, at 0.60, which means that the actual production in any year is on average 60 percent higher than or less than the mean for the period. The production is so variable that there is not a clear trend of production figures over time, which makes planning for future import needs very difficult. Imports do dramatically reduce the annual variability of overall cereal availability. The CV for corn is 0.20, while the CV for all cereals is 0.11, one-sixth the degree of variability of domestic corn production. However, both commercial and food aid imports generally do not adjust to domestic production levels, namely food imports do not decrease in years of high domestic production and vice versa, even with a one-year lag. Rather, the high variability of domestic production does not affect overall availability very much simply because of the very low share of domestic production in the overall supply.

Domestic> food production is severely constrained by the paucity of agricultural resources in Cape Verde-- arable land which receives adequate rainfall or has access to subterranean water supplies. Much land in Cape Verde is too steep or rocky to be farmed, and, except for a few microclimates, the whole archipelago suffers from inadequate rainfall. Most groundwater used for agriculture is drawn from alluvial flows which are also very dependent on rainfall patterns. In recent years many wells have either dried up or have suffered from salt intrusion as low rainfall has reduced alluvial water supplies. These natural factors severely limit the possibilities for large-scale increases in agricultural production within the next several years. Possibilities exist to adapt and disseminate crop varieties which are better suited to Cape Verde's rainfall patterns, but the prospects for substantial increases in food production on rainfed land are very limited at present. There is greater scope for increasing production on irrigated land, primarily through improved management practices (such as drip irrigation systems, which are being promoted by ACDI's USAID-funded WARD project). Experts from the FAO agricultural extension project consider that Cape Verde has the potential to produce most tuber crops domestically through a combination of improving cultivation and more efficient management of irrigation water.

Table 3 compares domestic availability of grains and beans in relation to estimated requirements for the population. The per-capita requirements are from CNASA, and are used by FAO in the annual estimates of national food needs for discussions with donors (FAO 1994). The per-capita requirements of corn, rice, wheat, and beans correspond to a daily per-capita intake of approximately 2,000 calories per day, which is very close to FAO recommended daily allowances for active adults. The results of Table 3 show that in recent years the net availability of cereals has been very close to the food requirements, with the percent of net cereal availability as compared to requirements equal to 97 percent over the 1990-95 period. Thus, in addition to being highly dependent on imports, particularly food aid, Cape Verde has been right at the margin of meeting basic food requirements for the domestic population in recent years.

Macroeconomic Conditions

Cape Verde's extremely limited natural resource base creates a very special set of challenges for the nations's macroeconomic policy makers. Traditionally, the country's economy has been based on services. Because of the limited natural resource base, the service sector, rather than the agricultural sector has been the mainstay of the economy. The primary sector accounts for only about 13 percent of GDP because of low agricultural potential and limited exploitation of fishery resources. Officially, the primary sector employed about 30 percent of the population, but given the fact that approximately 60 percent of the population lives in rural areas, a larger portion of the total population is at least partially dependent on agriculture for their livelihoods. On the other hand, the service sector accounted for 60 percent of GDP in the 1980s and employed about 41 percent of the active population. Within the service sector, commerce, transport, and public services accounted for 47 percent of value added. While foreigners are presently investing in a number of tourism projects in the country, this subsector does not yet provide significant value added, employment, or foreign exchange to the national economy. The industrial sector is presently extremely limited, the main activities being assembly and light manufacturing, fish processing, and artisanal production. The government is trying to promote foreign investment in export-oriented activities, but to date only one apparel manufacturing firm has begun operations. Presently the industrial sector accounts for less than seven percent of GDP. Construction accounts for almost 12 percent of national value added.

The lack of natural resources also explains the very skewed nature of Cape Verde's external accounts. Table 4 shows the balance of payments for Cape Verde from 1990 through the first semester of 1994. The commodity trade account is characterized by a very large deficit, with exports only covering two to five percent of the value of imports. This reflects the lack of capacity to produce exports within the economy. The trade deficit has widened over time; between 1990 and 1993, the cost of imports has increased at an annual average rate of over 13 percent, while export earnings have declined. Imports increased as a result of growing population and per-capita income levels. The commodity trade deficit can therefore be expected to grow in the near future. Only a dramatic increase in export earnings would reverse this trend.

The government, with assistance from USAID, has embarked on a program (Center for Investment and Export Promotion, PROMEX) to promote foreign investment in export-oriented businesses in Cape Verde. A report undertaken for USAID (The Services Group 1991) to

evaluate the potential for setting up a duty-free manufacturing zone outlined several of the difficulties with setting up manufacturing operations in Cape Verde, including high transportation costs, high costs of labor in comparison with competing regions, and high costs of water and energy. Perhaps the greatest challenge to developing an export-oriented industrial base is the high cost of shipping goods to and from major markets. Because Cape Verde has to import all raw materials, the shipping costs would adversely affect both the costs of inputs and the realized value of the outputs for manufacturers operating in the country. These factors are likely to discourage many investors from locating operations in Cape Verde, even with favorable tax treatment. The prospects for big increases in export earnings in the near future are open to question.

The trade deficit is financed in part by payments for services, primarily port services at Mindelo and the international airport on Sal. However, these payments have been also declining, from 27 percent of the commodity trade deficit in 1990 to less than nine percent in 1993. This fall is in part due to competition from other port facilities in the Canaries and Dakar, and reduced demand for the airport facilities as South African flights can now land on the African continent. On a more positive note, tourism provides opportunities for increased foreign exchange, perhaps within the near future. There are presently a number of hotel projects which are either under construction or have been approved on Sal, Santiago, Boa Vista, and Santo Ant o islands. In addition, the runway on Santiago is planned to be extended, permitting jets flying from Europe to land on this island.

Private and public transfers finance a large portion of the merchandise trade deficit. Private transfers, mostly emigrant remittances, have increased at an annual average rate of over 14 percent, from 3.76 billion CVE in 1990 to 5.68 billion in 1993. Public transfers, which includes food aid as well as other kinds of official aid, increased at an even faster annual average rate of 33 percent. In 1993, official transfers equaled 36 percent of the trade deficit. The remaining deficit in Cape Verde's overall balance of payments has been offset by capital inflows, which in turn are predominantly made up of government borrowing, e.g. from the African Development Bank and the World Bank. Government borrowing grew dramatically between 1990 and 1993, from 104 million CVE, to almost 950 million. This increase in borrowing will generate added demands for foreign exchange in future years to repay the loans.

Management of the external accounts is particularly difficult in Cape Verde for two main reasons. First, the policy of economic liberalization has reduced the level of direct control which the government has over the foreign exchange market. In the past, foreign exchange was allocated directly to importers so the government could control a permanent situation of excess demand for foreign exchange. Under the new economic policies, the central bank must make foreign exchange available to all who want to purchase at the going exchange rate, or devalue the currency in order to reduce the demand. To defend the exchange rate, the government must either draw down foreign exchange reserves, or borrow from foreign creditors. The first option is limited by the amount of foreign exchange reserves available, while the second option increases the need for foreign exchange in the future to repay the loan.

The second major difficulty in managing the structural trade account deficit arises from the fact that so many of the variables are outside the control of national policy. The main sources of foreign exchange--private and official transfers--are more directly affected by the policies of other governments. The level of emigrant remittances is fundamentally affected by immigration policies in the countries of destination for Cape Verdean emigrants. Recent changes in EU immigration policy will make travel to Europe more difficult for Cape Verdeans in the future. Official foreign transfers are determined by political and administrative decisions undertaken in the donor countries, and are likely to diminish in the future. In addition to the decision to terminate U.S. assistance to Cape Verde, other multilateral and bilateral donors are considering reductions in their aid programs. Export earnings depend on the decisions of domestic and foreign private investors. While the government is actively trying to promote foreign investment in export-oriented industries, the decisions to invest in these industries are strongly conditioned by economic factors beyond the control of the Cape Verdean government.

Given these constraints on policy interventions, the only way for the government to cover the growing balance of trade deficit in the near future will be to increase foreign borrowing. This is particularly true since the government liberalized the foreign exchange market after 1991. Previously, the government could directly control the amount of foreign exchange made available to private traders. Now, without quantitative restrictions, the government must meet market demands for foreign exchange or face severe pressures to devalue the exchange rate. These pressures will probably push the country toward increased levels of foreign borrowing, which in turn will engender greater demands for foreign exchange in the future, and will also create inflationary pressures within the domestic economy.

Household Incomes and Food Expenditure Patterns

At the household level, income is the crucial variable which determines the food security status of the household. Poor households face greater difficulties in securing adequate quantities of food to meet their consumption needs. While the mean per-capita income of Cape Verde was 850 USD in 1992, one of the highest in Sub-Saharan Africa, this average figure masks a high incidence of poverty in the country. A household survey (Direc‡ o-Geral de Estatistica. Inquerito as Familias: 1988-1989) collected information on household expenditure patterns. The results of this survey reveal that the mean expenditure per person was 38,000 CVE (500 USD), but 40 percent of the sampled families had per-capita expenditures less than 36,000 CVE, as shown in Table 5. An assessment of poverty in Cape Verde undertaken by the World Bank (World Bank 1994) established two per-capita expenditure criteria with which to identify households living in poverty. The higher level of 26,000 CVE (338 USD) was defined as two-thirds of the average per-capita expenditure from the household survey. The lower poverty level (known as the level of "ultra poverty") was set at 18,000 CVE, estimated to be twice the annual wage on public work fronts (FAIMOs). Of all the families interviewed in the household survey, about 14 percent are "ultra poor", while 30 percent fall below the less stringent poverty level. (See Table 6.) Poverty is more prevalent in rural areas, with 46 percent of the rural population poor, and 23 percent ultra poor. Some 70 percent of the poor and 85 percent of the ultra poor are rural residents. Poverty is also strongly related to the gender of the head of household. A significant number of households in Cape Verde are headed by women, often unmarried mothers. These women typically have very limited access to productive resources and employment opportunities. As shown in Table 6, a higher proportion of female-headed households live in poverty and ultra-poverty than do male-headed households. Well over half of all ultra poor households are headed by women.

Several aspects of poverty in Cape Verde are of particular importance with respect to food security issues. First, as pointed out in the World Bank Assessment, poverty is most prevalent in rural areas. This due to the extreme scarcity of agricultural resources in relation to the existing rural population. The average amount of rainfed land farmed per household is approximately one hectare. The expected output from this small land area is also very meager, because of the unfavorable agroclimatic conditions. Thus, most rural households do not have sufficient agricultural resources to meet their subsistence needs in all but the very best years, and usually must purchase a large portion of their food needs. In 1994, when domestic agricultural production was essentially zero, households needed to purchase almost all of their food. However, the prices of food items are quite high in Cape Verde, because of high marketing costs. Table 7 shows the average prices for the major food staples reported in the FNA household survey. Most commodities are imported and their prices reflect high shipping costs. Furthermore, foods are marketed within the country by very small-scale merchants (rabidantes) who also face very high per-unit marketing costs. As a result, the prices which rural residents must pay for essential commodities are quite high, which erodes even further the purchasing power of their low incomes.

The high incidence of poverty (and ultra poverty), in conjunction with high retail prices of foodstuffs implies that most households devote a very large portion of their available incomes to purchasing food. The 1988/89 household survey results indicate that Cape Verdean households spend an average of almost 54 percent of their incomes on food purchases, with the share for rural households exceeding 60 percent of income (See table 8.) This extremely high expenditure share for food implies that income levels severely constrain access to food for many households in Cape Verde, particularly in rural areas.

The nutritional status of the population of Cape Verde has not changed significantly since the previous 1992 Food Needs Assessment, namely that there is not presently widespread malnutrition in the country, but much of the population survives just at the border between hunger and malnutrition. At the national level, the amount of food available is just sufficient to meet the needs of the population. However, because of low incomes, some households are not able to secure adequate diets, even in terms of energy requirements. The results of the Nutritional Survey in Rural Cape Verde (CNASA April 1994) support the conclusion of generally adequate diet for most of the population, but with some portion of households suffering from nutritional problems. The Nutritional Survey reports cases of acute malnutrition (low weight for height) and chronic malnutrition (low height for age) based on measurements from children between the ages of two and nine years. Overall the prevalence of acute nutrition was quite low, less than six percent for the sample as a whole. (See Table 9.) Chronic malnutrition was more pronounced, with 16.2 of the children exhibiting low height for age. These results are consistent with a population facing moderate rather than severe nutritional problems. Children adapt to restricted diets by slowed physical growth, but are able to maintain normal weights for their (shorter) heights. However, such children have more difficulties in adjusting to further dietary restrictions, since they have fewer energy reserves stored in body tissues to draw upon. While acute malnutrition problems (low weight for height) are not yet much in evidence in Cape Verde, the higher incidence of low height for age suggests that a significant number of children are experiencing dietary deficiencies which can hinder their ability to withstand any further reductions in their level of food intake.

Further support for this conclusion comes from a survey taken as a part of this Food Needs Assessment, which provides information about household purchases of major food staples, including cereals, beans, tubers, oil, and sugar. Since agricultural production was insignificant in the year covered in the survey, all food came from purchases. Food purchases were translated into Calorie equivalents and divided by the number of adult equivalents in the household. (Pre-adolescent children were considered to be the equivalent of 0.67 of an adult in terms of energy requirements.) The results, reported in Tables 10, show that average levels of Calorie intake are adequate, with an overall mean level of 2,700 calories per day. For reference, FAO and National Academy of Sciences recommend 2,400 - 3,000 calories per day for moderately active adult men, and 1,800 - 2,200 calories per day for moderately active adult women (Foster 1992). This figure corresponds closely to other estimates for calorie consumption in Cape Verde and also compares favorably with estimated calorie intake levels in other Sub-Saharan African countries. (See Table 11.)

However, while the average per-capita calorie consumption levels are adequate, a substantial number of households reported quite low levels of calorie intake, with 22 percent reporting consumption levels of 1,800 calories or less, and 10 percent with less than 1,500 calories per adult equivalent per day. (See Table 12.) Thus, overall, the level of energy intake seems adequate, but with a significant proportion of households reporting consumption levels significantly below the recommended allowances.

Uses of Local Currency Funds from Sales of Food Aid

The government of Cape Verde uses the proceeds from the domestic sales of food aid deliveries to finance a number of activities which have the combined goal of providing social assistance to needy households and undertaking important social infrastructure investments. These activities are carried out through the institution of public work fronts (known as FAIMOs, for frentes de alta intensidade m o-de-obra), which undertake projects ranging from road construction and maintenance to construction of rural engineering works and afforestation programs. The FAIMOs were originally instituted during colonial times as a means of providing temporary relief during droughts. Since independence they have become a permanent part of the rural economy, and the safety net which provides large numbers of households the necessary income to meet their basic subsistence needs. Their continued operation every year depends on the annual food aid shipments.

Initially, the activities of the FAIMOs were managed by the national government under the auspices of the Ministry of Public Works or the Ministry of Rural Development. The activities of the FAIMOs were designed to provide the maximum employment in those rural areas which most needed economic assistance. Often this objective conflicted with that of undertaking activities with the highest economic returns. For example, erosion-control investments were typically initially undertaken in the downstream portions of valleys (ribeiras) so that they would be accessible to larger numbers of people. However, from an efficiency perspective, the better strategy would be to begin activities at the higher elevations to better control erosion and runoff downstream. Often, because of inadequate upstream protection, large works in downstream locations were washed away during storms.

The dependence on FAIMOs represents a major source of income for households. Rural household surveys conducted on Santiago and Santo Ant o in the mid-1980s revealed that off-farm wage income, almost entirely FAIMOs, represented 27 and 34 percent of total household income on these two islands (Finan and Belknap 1984; Langworthy et al. 1986). Furthermore, the share of income from FAIMO employment was largest for the poorest households and households working on FAIMOs had fewer agricultural resources than other households, suggesting that the public works program was quite successful in directing the employment to the poorest families. Likewise, a study on food security strategy studies undertaken by CNASA (CNASA 1994a) reports that FAIMO employment was the most frequently cited strategy undertaken by households to meet their food needs. The FAIMOs have indeed been very successful in providing basic subsistence incomes to a large number of the poorest households in rural areas.

In the late 1980s, donors and the Cape Verdean government began to reconsider the objectives of the FAIMOs and began to place more emphasis on the investment objectives in place of the employment goals. This change in focus was the result of a number of experiences with the earlier projects undertaken with FAIMOs. First, the government was concerned that the rural infrastructure investments, structures and forestry projects, were not receiving adequate maintenance from the local population. Erosion-control structures built on farmers' land would fall into disrepair, and planted trees would be destroyed either by livestock or by excessive cutting for fuel. The government and the donors financing these activities began to worry that such neglect would offset any positive effects of these public investments. At the same time, there was growing concern to engage local communities more fully in project design and management, as well as implementation of project activities. It was felt that this would ensure that project activities would better address the needs of the beneficiaries, and as a result the beneficiaries themselves would take a greater interest in protecting and maintaining the investments.

The activities financed by sales proceeds from U.S. food aid, as implemented through the WARD project, were designed in accordance with this new philosophy. In particular, the WARD project now solicits requests from farmers and community associations in rural areas for activities to be undertaken with project assistance. The project supports rural engineering activities (both erosion control structures and irrigation infrastructures), afforestation projects, and several pilot projects, such as drip irrigation systems. Individuals or groups in the communities decide on what type of activity they would like to undertake, and the project provides technical assistance in designing the activity, provides materials, and, for some types of activities, pays for the labor provided by the members of the community.

One of the objectives of this Assessment was to examine the impact of WARD project activities funded with local currency sales proceeds on the livelihoods of households living in areas where the project operates. Tables 13 and 14 provide summary information about the surveyed households. Overall, 40 percent of the interviewed households were members of associations working with the WARD project, and 48 percent of the households received salaries from the association. This difference is explained by the fact that the association may contract nonmembers to work, and similarly, association members may not necessarily work for the association or receive wage payments from the association. The sample was not intended to be statistically representative, so the proportion of members in the sample cannot be extrapolated to the whole zone. Rather, the sample was chosen to ensure a sufficient number of association members, other project beneficiaries, and non-beneficiaries to allow comparisons across these groups. Agua de Gato shows no project beneficiaries, because the project activities were suspended shortly after getting started this year due to the rains. Reported per-capita income levels were very low; the overall average income level is just above the World Banks ultra poverty line. Two factors should be taken into consideration in the interpretation of these figures. First, the information is based on a single interview, and depends on the respondent's recall of all sources of income over the past year. Many sources of income are likely to have been forgotten during the interview. Second, the period covered in the survey, the 1994 agricultural year was a disaster in all of the project zones. In most of the zones, respondents reported that they had hardly any straw production from their rainfed crops, and no grain was harvested. However, even taking these two factors into consideration, the average income per person is extremely low.

The other salient finding about household incomes is the very high level of dependence on activities funded by local currency proceeds from food aid sales. In addition to the WARD project activities, other activities funded with food aid sales proceeds include working on other agricultural projects (INERF) and on road projects for the local government authorities (Camaras). Overall, 55 percent of household income was earned from these FAIMO activities. There was substantial variation across zones, with 75 percent of all income coming from FAIMOs in Ribeireta to only 25 percent in Picos. Again, these figures in part reflect the total absence of agricultural income in 1994.

Looking at comparisons between project beneficiaries and non-beneficiaries, Table 13 shows that associations seem to be quite effective at providing employment to the poorest households in their communities. In particular, those receiving wages from association activities, both members and non-members have relatively low income levels, even compared with non-beneficiaries. The association members that did not receive salaries, on the other hand, have relatively higher incomes. Based on this information, there is no reason to believe that associations tend to divert money to the richer and more influential individuals in the local communities. On the contrary, they are able to direct salaries to the neediest households in the community.

The activities undertaken by FAIMOs are intended to be economically productive investments in addition to providing employment for rural people. The direct economic benefits of some types of investment are evident and easily estimated. In particular, the benefits from construction and maintenance of irrigation structures provide landowners with the opportunity to dramatically increase the returns from their land. Based on crop budget estimates for rainfed and irrigated crops, the net returns from irrigated crops are at least ten times greater than the expected returns from rainfed crops, providing an annual benefit per hectare of 180,000 CVE (Langworthy and Finan forthcoming).

Investments in erosion control also provide very significant economic benefits to the economy, since their objective is to conserve two of the scarcest and most valuable natural resources in Cape Verde--water and fertile agricultural land. However, because the benefits of these investments are dispersed among a large number of beneficiaries, there must be some involvement of the public sector. Private individuals are not likely to undertake erosion control measures on their land, since the benefits of the investment will not accrue directly to the landowner, but to other landowners and water consumers downstream in the watershed. The benefits from erosion-control activities in Cape Verde are presently difficult to quantify, since detailed information about current rates of erosion and water runoff on agricultural lands as well as the expected reductions in these variables resulting from investments to control erosion (both engineering works and afforestation) is not presently available. However, given the scarcity of water and good agricultural land, the economic benefits of effectively increasing the availability of these resources (or reducing their rate of depletion) must be large. In terms of evaluation, the more difficult question is the extent to which the specific investments actually reduce the rate of soil erosion and increase the rate of water infiltration. Recent stidies undertaken by researchers at INIDA in cooperation with IFAD provides some preliminary estimates on the quantitative impacts of erosion control interventions. Measurements of erosion were made on experimental plots, one planted in the traditional way with corn and beans, and another planted with these same crops but also having hedges planted along contour lines of the plot. The estimated annual erosion on the plot with contour hedges was almost 30 percent less than on the land with no erosion-control investments (Querido et al.).

Future Food Security Situation

The future food security situation of Cape Verde is critically affected by the decision of the U.S., government to suspend its food aid program, particularly in light of the expected termination or reduction of other bilateral and multilateral assistance programs. The government of Cape Verde is now faced with the prospect of having to adjust to losing food aid equivalent to one-fifth of the total national cereal consumption. The costs of adjustment to this sudden loss will be great on the national economy, and the burden is likely to be borne disproportionately by the poorest individuals and households in the country. While the particular strategies for adjustment to this cutback will be decided by the government of Cape Verde and cannot be foreseen with total certainty, the issues which must be addressed are clear, and the options available to the government of Cape Verde are quite limited.

First, the imports of cereals presently provided by the U.S. will certainly have to be met in the future by increased food aid deliveries from other donors, or more likely, through increased commercial imports. With current U.S. food aid donations, the country is just barely importing enough to meet the food consumption requirements of the population, so any reduction in food imports will come at a very high cost in terms of the nutritional status of the nation's inhabitants, particularly for those with more limited resources to purchase food. A reduction in cereal availability of one-fifth with respect to the current levels is simply not a feasible option--the country must replace U.S. food aid shipments with other sources. The likelihood of meeting these needs from other donors is very small, given the current unfavorable climate for expenditures on foreign assistance in many of the donor countries and the large demands for emergency assistance in other parts of the world. In Cape Verde, all World Food Programs will be phased out by 2000, and several of the other bilateral food aid donors (Germans, French, Austrians) are expecting to either reduce or possibly eliminate their assistance programs. Thus, rather than being able to expect additional assistance from other donors to substitute for lost U.S. food aid, the government of Cape Verde is looking at reductions in food aid from other donors.

This increased demand for foreign exchange will probably not be accompanied by an increase in the supply of foreign exchange from non-official sources, at least for the next several years. The prospects for increased levels of emigrant remittances are not favorable, given the recent changes in immigration laws in Europe, and the continuing restrictions on emigration to the U.S. Service income, from the port facilities and airport, has been declining for several years, and is likely to continue to do so in the future. While foreign investments in export-oriented industries such as apparel and tourism provide hope for added foreign exchange earnings in the future, they will not likely to provide these benefits for several years at least. As part of the strategy to attract foreign investors, they are offered a tax holiday for ten to twenty years, which further reduces the government's access to foreign exchange for a significant period of time. With the non-official sources of foreign exchange unlikely to provide additional funds in the near future, the government will face growing pressures to borrow from official sources to cover the increased demand for foreign exchange to pay for commercial food imports. This borrowing imposes two sorts of cost on the economy. First, borrowing foreign exchange today creates demands in the future to meet debt repayments. If the borrowing is not used to increase future capacity to generate foreign exchange, such as developing export industries, the problem will just be exacerbated in the future. Second, public borrowing creates pressures for inflation in the economy, as public spending is not offset by taxation which would normally act to reduce private consumption expenditures. Among the many impacts of inflation which would particularly hurt poorer consumers would be the increase in the price of basic foods. The incomes of poorer households generally do not increase as rapidly as inflation, so they would experience an erosion in their real income levels.

Perhaps even more damaging than the macroeconomic impacts of the elimination of U.S. food aid would be the loss of sales proceeds which have been used so effectively to provide assistance to the poorest households in rural areas. The rural population has come to depend on FAIMO employment as a source of income. Elimination of this source will be devastating to the most marginalized households in the country. There will likely be an even greater movement of people to urban areas as rural employment opportunities disappear. The Cape Verdean government simply does not have the financial resources to finance FAIMO activities at their current levels out of the government budget. The revenue base of the government is extremely limited, and presently depends very heavily on foreign assistance. One of the consequences of the program of economic liberalization initiated by the current government is that the government has given up some important sources of revenue, such as taxation of foreign companies. Therefore, in order to finance FAIMO activities, the government would have to reduce other expenditures, such as education and health services. Reduction of these activities also would impose serious costs on the economy. It is hard to envision a scenario which would permit the national government to finance FAIMO activities. As a result, while elimination of food aid would make food scarcer and more expensive (at least in terms of domestic currency), the government would also lose the capacity to provide safety nets for the poorest households to ensure that they could continue to meet their basic subsistence needs. Given that the nutritional status of the population is now quite delicate, with little margin to adjust to additional dietary reductions, malnutrition problems are very likely to become more widespread, particularly in rural areas.

This bleak scenario is due to the structural nature of the food deficit in Cape Verde, the inability of the country to come anywhere close to being self-sufficient in food production in the near future, and also the inability to increase foreign exchange earnings with which to purchase imported food. Since these conditions cannot change rapidly, the short run impact of the elimination of US food aid will be to seriously compromise the food security situation of the country, and the costs will be disproportionately borne by the poorest households in the country.

Conclusions

Throughout most of the history of Cape Verde, the local population has been subjected to serious, often disastrous, consequences of droughts. The natural resource base of the archipelago is not adequate to sustainably support the food needs of the resident population. Only in the last 50 years has the country been able to meet the food needs of the population independently of the vagaries of local agricultural production levels. This has been possible due to foreign assistance provided from the international community. The government now faces the prospect of losing a significant portion of this assistance in the coming year. This poses a very serious dilemma with respect to the national food security situation. While the termination of the U.S. food aid program is imminent, and further reductions in foreign aid are also possible in the future, the availability of national resources to replace this assistance is very limited, at least in the short run. The options available to the Cape Verdean government are limited, and the chances of any single strategy to resolve the problem in the short run are slight. Therefore, the government must consider pursuing all possible avenues for resolving the problem. In the longer run, the government must continue all efforts to support activities which will provide foreign exchange to the economy. Also investments to increase agricultural production, through research on improved crops and techniques for rainfed and irrigated crops, and investments to increase effective water supplies, should be supported. However, all these strategies will only provide results after a period of time, and the critical concern facing the Cape Verdean government will be to address the immediate food security problems which the country will begin to experience in the coming year. In the very short run, only two options are available. The first is to present strong arguments to actual and prospective donors for the need to provide additional assistance to address the foreseen food security problems. Another short-run strategy is to undertake additional foreign borrowing in order increase commercial food imports. However, unless effective measures are taken to ensure that increased foreign exchange will be available to repay the loan, serious macroeconomic disequilibria will develop. Private lenders are unlikely to make loans to finance current imports, so the loans would have to be arranged with other governments or official lending agencies. Careful planning of both long-term and short-run strategies to address the national food security problem will be critical to a successful solution of this impending problem.