FOOD SECURITY
Concepts, Basic Facts,
and Measurement Issues
June 26 to July 7, 2006
Dhaka, Bangladesh
Rao 5b:
Policies for Raising
Food Entitlements
Learning: The learning goal is to develop the ability to
identify both direct and indirect policy options for raising
food entitlements of the food-insecure population, with a
focus on the variety of targeted and non-targeted
programmed options.
Brief Contents
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poverty reduction, entitlements, safety nets and FS
targeted policy interventions to improve access to food
impact path of targeted interventions
targeted asset distribution and production support
public works, their assessment and their cost-effectiveness
food for work programmes
special and supplemental feeding programmes
targeted food subsidies: geographical and commodity
targeting
• fair price and ration shops; food stamps
Poverty And Food Entitlements:
Access to Food
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Insufficient access is often crucial problem, not a general
shortage of food
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Access to adequate food as a prerequisite for FS applies to the
national as well as the individual HH level.
NATIONAL LEVEL
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With a production deficit, national access depends on
availability of foreign exchange (import capacity) which may
be limited due to debt service burdens and chronic balance of
payments deficits
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Thus, improved national access depends on
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BOTH maintaining macro balance and growth of foreign earnings
AND an international financial and trade regime that is favourable to
poor, food-dependent countries
Access to Food: HH Level
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HH access depends on food entitlements
FIS occurs if means are insufficient and so is
directly related to poverty
Targeted approaches will be required to
support the vulnerable, a group larger than the
actually poor or food-deficient (see Table)
Targeted policy interventions to
improve access to food
Type of interventions
Target groups
Targeted asset distribution Small farmers,
e.g., land reform Subsistence farmers,
Tenant farmers, Urban poor
Poor (sub-) urban dwellers
Public works
Rural landless,
Food-for-work (FFW)
Rural and urban poor, un- and
under-employed
Targeted food subsidies
e.g. fair price shops
Direct food transfers
e.g. relief assistance
Impact on food entitlements
Increased AG income = increased
HH food demand
Increased HH food supplies from
subsistence production
Increased cash income =increased
HH food demand;
Increased income in kind of food =
increased HH food supplies
Urban poor
Increased real income due to lower
Rural poor
food prices = increased HH food
Specific vulnerable groups
demand
Specific vulnerable groups, e.g.
Increased individual and/or
displaced, disaster-affected, female
HH food supplies through
headed HH, underweight children, etc.
direct food transfers
Impact path of targeted interventions on
factors determining access to food
Targeted Asset Distribution and
Production Support
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These can include all measures with two features:
1) the measures address specific constraints that the vulnerable or
FIS AG producers face;
2) the measures are effective in reaching the target group(s).
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This requires:
1) Identification of the target groups;
2) Identification of the constraints faced to increased production;
3) Design of appropriate measures to overcome the constraints;
4) Implementation of the programme;
5) Monitoring of the programme performance.
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To keep cost-effectiveness ratio in control, coverage of the
targeted group must be high.
The Arithmetic of Cost-Effectiveness
in Public Works
Assume that a programme begins in a region in which 1,000 HHs subsist on an
average of $1 a day and other HHs earn in excess of $2 a day. We want to raise
HH income of the first to at least $2 a day. Further assume that working in the
programme costs participants 50 cents a day out-of-pocket for added food,
travel, etc. A wage of $2.50 would then be enough to attract the target
population and keep away other workers who earn more than $2 a day. If the
value of a day's work performed under the programme is $2.50 and it costs
$3.50 for wages and materials, the public cost of augmenting incomes is $1. For
each dollar spent on the programme, the target population's income would
increase by $1. If the value of a day's work were $3, each dollar spent on
augmenting income would increase the target population's income by $2.
Clearly, this programme would be cost-effective.
Public works programs rarely achieve this cost-effectiveness. If the value of a
day's work were $1 rather than $2.50, it would cost the state $2.50 for each
dollar of income transferred to the target population. If the daily wage offered
were $3.50 rather than $2.50, the programme would attract many workers from
outside the target population. It might then cost the state as much as $5 to $10
to augment the income of the people in the target population by $1 a day.
Public Works Programmes
PWP are the main type of targeted interventions with
people paid in cash or food
Four categories of public work projects can be
distinguished
• Emergency relief projects, providing temporary (food) wage
employment to supplement/replace crisis-induced income loss
• Seasonal projects, aimed at supplementing the income of poor
HHs during slack AG seasons
• Regular infrastruc, projects aimed to create productive assets
while tapping surplus labor & giving employment for poor HH
• Long-term employment-generation projects, designed to tackle
chronic un- and under-employment by offering continuous job
opportunities, particularly to the urban poor and the landless.
Assessment of PWPs
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Compared to other forms of targeted assistance,
PWPs have 2 additional advantages:
assets created through e.g. rural roads, dams, land
conservation
self-targeting nature, if properly designed: attract
only those who have no alternative source of income
and employment.
Targeting is effective only if those employed are paid
below market wages. Else, it would attract the nonpoor or the not-unemployed.
Assessment of PWPs (contd)
• Cost-effectiveness depends on: net income the target
group derives and on value of the works performed or
assets created compared to the costs of the PWP.
• But cost-effectiveness must be considered not in itself
but in conjunction with assistance given to vulnerable
groups.
• Only projects which can absorb a large amount of
unskilled labour are suitable for implementation under
public works arrangements.
Food-for-Work (FFW)
• FFW projects are a special type of PWS where payment
to the employed is in food.
• Rationale: combination of employment creation, FS
and development objectives.
• Often, main reason comes from food aid provided by
external donors.
• Extensive debate about appropriate form of payment:
cash or kind. Even with food aid, this can be
monetized. Monetisation means the food is sold and
the funds used to finance PWP.
Food-for-Work – contd.
• FFW participants usually sell part of the food received
to have cash for non-food needs. With large FFW
programmes, this 'informal monetisation' can depress
food prices. This, again, depresses the participants' own
real income (lower value of the food received) and
farmers' income in the area.
• The need to avoid the negative effects of monetization
and lacking clear case for one or other form of
payment, the optimal solution may be a combination of
both.
Targeted Food Subsidies
• Given their high fiscal costs and market distorting
effects, general food subsidies are often replaced by
targeted subsidies.
• These are designed to reach needy groups. This can
yield substantial fiscal savings while maintaining
benefits to the poor and vulnerable.
• However, targeting also incurs special costs and has
specific infrastructural requirements i.e., need to screen
beneficiaries, to set up special distribution network, and
for effective administration and monitoring.
More on Targeted Food Subsidies
• Trade-off between administrative costs and leakage of
subsidy to non-target groups.
• Targeting may also cause social friction and political
problems, as targeting always means that certain
population groups are excluded from the subsidies.
• The effects of food subsidies on HH FS result from a
real income and a substitution effect. Both imply
increased HH food demand.
• Food subsidies may be targeted geographically, by
commodity, through a special distribution network (fair
price shops/ration shops), food stamps.
Geographical targeting
• Subsidies are exclusively directed to areas where vulnerable
groups are concentrated. These could be the urban/suburban
housing and squatter areas of poor families, or rural areas with
acute, seasonal or chronic food shortages.
• Simple geographical targeting involves low administrative costs
but will also benefit those HHs in the area who are less poor and
not affected by food shortages.
• To avoid this, geographical targeting may be combined with an
additional targeting method, e.g. ration cards for poor HHs only.
But this will raise administrative costs.
Targeting by commodity
• Targeting by commodity can be applied where poor and nonpoor groups have different consumption patterns e.g., coarse
grains, roots and tubers VS fine grains.
• Subsidies on "inferior" commodities are self-targeting and so
cost-effective.
• To prevent misuse as animal feed, etc., safeguards (e.g quantity
restrictions, food stamps) can help.
• But if aim is to make good certain nutritional deficiencies (e.g.
protein deficiencies of children and mothers) with suitable food
commodities (e.g. milk, dairy products), then, commodity
targeting will be inappropriate or insufficient.
Fair price/ration shops
• Fair price/ration shops are special outlets for the sale of
subsidised commodities.
• They can be a form of geographical targeting. Finer
targeting can be achieved with rules concerning types
and quantities of commodities .
• Compared to other approaches to targeted subsidies,
additional costs accrue from the need to set up and to
manage a particular distribution system. Such costs are
largely avoided in the case of a food stamp programme,
as discussed in the following section.
Food stamps
• Food stamps target subsidies by distributing coupons to eligible
groups and can be used to buy set commodities in specific shops
and the retailer refunded against the stamps.
• Beneficiaries can choose from a range of commodities so
coupons have a "near-money" property. Food stamps can be
both cost-effective and an attractive alternative to general food
subsidies.
• Crucial difficulties with food stamps include:
1) Beneficiaries must be identified and registered. This is generally
insurmountable in many poor countries.
2) They can be financially abused.
3) Inflation can rapidly erode food stamp values.
Direct food transfers
Direct food transfers mean a free distribution of food
rations to the beneficiaries through a particular
distribution network.
Free distribution of relief rations
• Necessary in the wake of natural or man-made disasters
at least as a transition measure.
• Targeting is usually best achieved if daily rations are
distributed. But this is administratively costly and
requires the beneficiaries to come to the distribution
centre every day.
Special/supp. feeding programmes
• Effective when targeted to high risk individuals, such as children,
pregnant and nursing mothers, old and sick people.
• Administratively intensive in terms of screening and reaching
eligible people. Existing institutions such as health centres or
schools are used for distribution.
• Sometimes special food distribution or feeding centres need to
be established to minimize leakage within HHs.
• But if the whole family is FIS, some such intra-family leakage
may be a small price to pay to give nutritional benefits for the
other HH members.
• School feeding programmes can provide an effective channel for
distributing food to children of low-income families and an
incentive for such families to send their children to school.