Cash Transfers and High Food Prices: Explaining Outcomes on Ethiopia’s Productive Safety Net ProgramMarch 1, 2010 / Working Papers
Rachel Sabates-Wheeler and Stephen Devereux
An ongoing and highly politicised debate concerns the relative efficacy of cash transfers versus food aid. This paper aims to shed light on this debate, drawing on new empirical evidence from Ethiopia’s Productive Safety Net Programme (PSNP). Our data derive from a two-wave panel survey conducted in 2006 and 2008. Ethiopia has experienced unprecedented rates of inflation since 2007, which have reduced the real purchasing power of PSNP cash payments. Our regression findings confirm that food transfers or ‘cash plus food’ packages are superior to cash transfers alone – they enable higher levels of income growth, livestock accumulation and self-reported food security. These results raise questions of fundamental importance to global humanitarian response and social protection policy. We draw out some implications for the design of social transfer programmes and describe some steps that could be taken to enable ‘predictable transfers to meet predictable needs’wpdm_package id='4402']
Jennifer Leavy and Colin Poulton
According to this thinking, smallholder agriculture is uniquely positioned to deliver broad-based growth in rural areas (where the vast majority of the world?s poor still live). However, others fear that strategies for commercialising agriculture will not bring benefits to the majority of rural households, either directly or (in the view of some) at all. Instead, they fear that efforts to promote a more commercial agriculture will benefit primarily large-scale farms. At best, the top minority of smallholders will be able to benefit.
Accelerated growth in agriculture is seen by many as critical if the MDGs are to be met in Africa. Although there are debates about the future viability of small farms (Hazell et al. 2007), the official policies of many national governments and international development agencies accord a central role to the intensification and commercialisation of smallholder agriculture as a means of achieving poverty reduction.
Various explanations have been advanced for the persistent under?performance of agriculturein many African countries, where smallholder farming is still the dominant livelihood activityand the main source of employment, food and income. Some of the oldest argumentsremain the most compelling. African farmers face harsh agro?ecologies and erratic weather,characterised by low soil fertility, recurrent droughts and/or floods, and increasinglyunpredictable weather patterns associated with climate change. Vulnerability to shocks iscompounded by infrastructure deficits (roads and transport networks, telecommunications,potable water and irrigation) that keep poor communities poor and vulnerable, as testifiedby the phenomenon observed during livelihood crises of steep food price gradients fromisolated rural villages to densely settled urban centres. African farmers have also beeninadequately protected against the forces of globalisation and adverse international terms oftrade – for instance, Western farmers and markets are heavily protected in ways that Africanfarmers and markets are not.
This Working Paper draws on nearly twenty years of research in several African countries on the inter-related themes of food insecurity, seasonality, coping strategies, famine, formal and informal safety nets and social protection. The paper has three objectives:
- To document and synthesise evidence on the nature and consequences of seasonality across rural Africa, highlighting the similarities and convergences across contexts
- To explore the various policy interventions that have been implemented in response to seasonality, with particular reference to the emerging social protection agenda
- To argue that current approaches to social protection are misconceived and inadequate for addressing the seasonal dimensions of rural vulnerability
Stephen Devereux and Bruce Guenthe
Agriculture and social protection in Ethiopia are inextricably interconnected. Smallholder farming is the dominant livelihood activity for the majority of Ethiopians, but it is also the major source of vulnerability to poverty, food insecurity and their often fatal consequences– chronic malnutrition, premature mortality, recurrent famines. Ethiopian farmers have been the recipients of enormous volumes of food aid and other humanitarian assistance over recent decades, to such an extent that emergency relief has become institutionalised within government structures and donor agency country programmes.
Ghana was one of the first countries in Africa to embark on structural adjustment reforms. 25 years on, its continuing commitment to reform for national economic development has yielded impressive gains in growth and poverty reduction. Poverty in the country is measured through periodic Ghana Living Standards Surveys (GLSS). In 1991/92 GLSS3 found that 51.7%of the population were living below the national poverty line. By 1998/99 (GLSS4) this had fallen to 39.5% and by 2005/06 (GLSS5) it had fallen to 28.5% (Ghana Statistical Service2007). In absolute terms the number of poor people in Ghana has fallen from 7.9 million in 1991/92 to 6.2 million in 2005/06. At current growth rates, Ghana should achieve MDG1before 2010.
Andrew Dorward, Bruce Guenther and Rachel Sabates-Wheeler
This paper reviews social protection and agriculture policies in Malawi in order to explore the links, synergies and conflicts that lie between them. It begins with brief background information about Malawi, in terms of its economic and welfare indicators. Particular emphasis is placed on understanding agricultural and social protection policies within thecontext of:
(a) Political issues and
(b) Market and livelihood development
This is followed with a review of agricultural and social protection policies, their interactions and their impacts on livelihoods and welfare. Specific attention is given to evolving input subsidy policies which are of particular relevance to this review. We conclude with a discussion of lessons that can be learned from the Malawian experience with agriculture and social protection.
By Lidia Cabral, Colin Poulton. Steve Wiggins, Linxiu Zhang
Comparing reform of agricultural policy in Bangladesh,Chile, China and New Zealand, this paper derives lessons for countries contemplating reform. In all cases reforms to farm policy were undertaken as part of overall reforms across the whole economy, started in response to a perceived national crisis and usually implemented by new governments with a mandate to make major changes. Political will is, not surprisingly, anecessary condition.In designing reforms and their implementation, much depends on context, including external conditions such as world market prices.
The scope for change, and certainly the sequence and pace of reform, may be as much a matter of administrative feasibility as choice.Where outcomes are uncertain and state capacitylimited, gradual approaches to reform that allow for learning may be better than swift and comprehensive .‘big bang’ . packages. This working paper presents the first stage of a review of agricultural reform experiences within African countries, specifically Ethiopia, Kenya and Malawi. Itaims to draw out issues for would-be reformers by examining the experience of four cases of agricultural reform, purposely selected as often being seen assuccessful. These are:
• Reform of agricultural input markets in Bangladesh inthe early 1980s, followed by liberalisation of graintrading and the cancellation of several longstanding programmes of public distribution of grains during the late 1980s and early 1990s;
• The impact of economy-wide reforms and counterr eform of land on Chilean agriculture from 1973through to the 1980s;
• Introduction of the ‘household responsibility system’of production and liberalisation of marketing in China startimg around 1978;
Comparing reform of agricultural policy in Bangladesh, Chile, China and New Zealand, this paper derives lessons for countries contemplating reform.
In all cases reforms to farm policy were undertaken as part of overall reforms across the whole economy, started in response to a perceived national crisis and usually implemented by new governments with a mandate to make major changes. Political will is, not surprisingly, a necessary condition.
In designing reforms and their implementation, much depends on context, including external conditions such as world market prices. The scope for change, and certainly the sequence and pace of reform, may be as much a matter of administrative feasibility as choice.
Where outcomes are uncertain and state capacity limited, gradual approaches to reform that allow for learning may be better than swift and comprehensive ? ‘big bang’ ? packages.