Food security interventions in developing countries

The effect of the ongoing global economic crisis, especially that arising from the increased food prices, and its impact on the poor, has been the focus of intense debate. Apart from its obvious impact on those already poor, the steep rise in foodgrain prices has also had the effect of making food unaffordable for more than a 100 million people, especially in the least developed countries. Which type of social safety nets are the most effective and least distortionary ways of delivering assistance to these people?

Nora Lustig is spot on in describing the global food crisis as one involving a price increase rather than reduced supply, and therefore the most appropriate safety net is to compensate the affected population - both the 'old' and 'new' poor - for their loss in purchasing power. She analyses four categories of social safety net programmes - direct cash transfers, food for work, food rations/stamps, and school feeding - and finds that 19 out of 49 low-income and 49 out of 95 middle-income countries do not have any such programme.



For any of these programs to successfully address the issue of 'food security', not only does it need to effectively bridge the reduced purchasing power, but also have mechanisms to select the 'new' poor. Further, it is also important to deliver the assistance without much time lag. School feeding programs, with their universal nature, are an excellent option for all times. Food for work is mainly an employment generation activity, and does not address the issue of decreased purchasing power. It may be more effective as a demand management response, but not as food security initiative.

Both cash transfer and food stamps are more effective ways of delivering assistance to those hurt by reduced purchasing power. Cash transfer programs though an economically efficient way to transfer assistance, is difficult to administer, especially in assisting the 'new' poor. However, this may be appropriate for middle income and developed countries, where financial inclusion is achieved (people have access to formal bank accounts) and beneficiary information in accurately captured.

In the least developed countries, food vouchers/stamps, though less efficient than direct cash transfers, may be faster to implement and much easier to administer. Selection of the 'new' poor is always going to be a huge challenge, especially given the short response time available, in these countries. Further, except for a small minority, the ovewhelming majority in these countries are likely to be affected by reduced purchasing power. Therefore a strong case can be made out for a universal public distribution system for distribution of the basic foodgrains. Any program that seeks to screen out a small minority will have unaccpetably high transaction costs and the market distortions. Multi-lateral and bilateral aid to these countries should be aimed at assisting such programs.

However, as the graphic shows, food for work has become the most popular food security intiaitive in the low income countries. Unfortunately food stamps are the least favored policy response even among the least developed countries.

The crisis is also a timely reminder about the importance of subsistence farming and increasing farm productivity, especially for the rural poor. Since most rural families have access to atleast some small plot of farming land, it may be important to ensure that this land is brought under cultivation and productivity on that land is increased. This may be one of the most fundamental and effective food security initiatives.