Leaked plans to redirect government spending to the foreign aid budget are condemnable, but hardly surprising.

While the coalition government has decided to increase foreign aid spending to 0.7 per cent of national income each year, almost all other departments are having to cut spending by an average of 25 per cent. No wonder civil servants are engaging in “budget juggling”.

In fact, the 0.7% spending target for foreign aid makes no sense: the actual needs of the world’s poorest bears no relation to the size of the UK economy. If the government is serious about development it should abandon arbitrary targets, and appraise each case for aid independently with the interests of those suffering at the fore.

Wasteful spending should be cut in the foreign aid budget, just as it is being in other government budgets. 

Our daily round-up of what other think-tanks and commentators are saying on the big issues:

Kieron Ryan: how the “blood diamonds” scare is a 24-carat disaster for Africa.

Tragedy of the wildlife commons in the US explained. 

Scott Gilmore says:

"It’s possible that one of the global leaders in aid is beginning to move away from the mantra of 'Spend More!' which dominated the last twenty years, and is moving towards the idea of 'Spend Better.'"

But we're not so sure. 

That would indeed be a welcome development and it may be what Andrew Mitchell wants us to believe but the devil lies in the detail, not in leaks to the Observer. DfID has not only promised to “ring-fence” aid spending, they have pushed to have a 0.7 per cent of GDP aid spending target enshrined in law. This would actually increase aid spending by a non insubstantial £2bn per year. Given that this was among their top priorities coming into Government, it’s not easy to believe “spending better before we spend more” rhetoric, much as we wish it were true.

We are particularly disappointed that the Coalition has decided how much to spend before the review into DfID’s current spending programmes has delivered its conclusions. Only a “top-down” aid agency could decide how much to spend before understanding which projects are worthy of UK taxpayer support.

The current debate in the UK re. aid appears to along the following lines: projects receiving DfID support are sporadically discussed by the media and then one of two things happen: 1) DfID rightly announces that funding to said project will be discontinued, mainly because of UK public outrage; or 2) DfID comes out in defence of the project it funds. With nothing seemingly thought through from the perspective of the aid recipients, it’s hard to take government claims to a commitment to “spend better” at face value.

The Nigerian-based International Institute of Tropical Agriculture (IITA) has recently discovered a way to cure ‘Xanthomonas Wilt’, a disease that has rendered over half a billion dollars worth of damage to the agricultural industry in East and Central Africa.  This development could help increase agricultural productivity in a region highly prone to food shortages.

However, betraying their fervent ideological commitment to the anti-GMO cause, Friends of the Earth Nigeria (FotEN) has recently denounced this development as an attempt by the biotech industry to colonise Uganda’s local food supply and negate their food sovereignty. 

This is not the first time FotEN has resorted to emotive anti-colonialist rhetoric to add weight to their arguments.  They previously denounced biotech tests on the Cassava shrub as “trading away our food future to modern colonialists that hide under the cover of agricultural biotechnology.”  Such rhetoric is strategically employed to make FotEN out to be on the right side of the debate.

But this doesn’t change the fact that their prescriptions will almost certainly undermine progress in a continent that desperately needs it. That the EU gave FotE’s European subsidiary EUR 813,721 in 2009 should be a source of embarrassment for those looking to promote development practices that actually work.   

Antony Ward, head of hedge-fund Armajaro, has been maligned recently for buying up 7% of the world’s cocoa bean production. The tabloid press, quick to jump on the banker-bashing bandwagon, have started referring to him as “Chocfinger”.  This move has prompted further calls for protectionist policies to prevent further speculation from the anti-poverty group World Development Movement.

Such policy prescriptions are irrational and unhelpful.  As The Economist explains, Ward has predicted that cocoa bean production will slump quicker in the Ivory Coast (the world’s largest supplier of the commodity) than has been generally acknowledged.  A sudden shortage of cocoa supply will raise prices on the international market.

Such an eventuality could be avoided provided that there are already reserves waiting to be sold if production falls.  By buying up such a large quantity of cocoa and storing it in refrigerated warehouses, this is precisely what Ward has aimed to do.  Providing his calculation is correct, the result is a win-win situation where he makes a profit and prices remain relatively stable as supply levels are maintained to meet demand for the commodity.

Furthermore, the claim that speculation is the cause of price volatility is getting things the wrong way around.  Price volatility is caused by many factors including the inherent unpredictability and time lags involved with growing cocoa, but also the fact that the vast majority of the world’s cocoa is grown in some of the world’s least business friendly environments, which stifle the incentives to invest and can make production much more irregular than it would otherwise be.  For instance, around 40% of the price paid on the international marketplace for cocoa goes directly into the pockets of Ivory Coast’s government, which regulates pesticides and undermines the property rights of cocoa farmers.  These counter-productive policies only make supply more irregular and thus the speculators are drawn in. 

Let us be clear: speculators react or try to pre-empt price fluctuation but they aren’t responsible for it.