Cash vs. in-kind transfers: Indian data meets theory

This paper uses qualitative and quantitative data from a survey of over 1200 rural households in nine Indian states to explore the arguments for and against cash and in-kind (in this case, food) transfers. When respondents were asked to think about, argue, and ‘choose’ between the two, two-thirds of the respondents expressed a preference for food. Rather than the choice made by respondents, the focus here is on understanding the reasons behind their choice, as explained by beneficiaries themselves. Two main findings emerge. First, some arguments corroborate existing theory (e.g., paternalism, fungibility), but others (e.g., self-control, transition costs) are not incorporated in existing theory on the advantages of in-kind transfers. Second, context is important. Most importantly, respondents’ reported preferences were associated with the benefits they were experiencing under the status quo: where the PDS performed better at distributing food, respondents were more likely to report preferring food to cash transfers. The contention of traditional theory that cash is superior fails to factor in contextual concerns.     

Does peer monitoring influence choices between cash and food? Findings from a field experiment

To explore whether choices for transfers are influenced by peer monitoring, we examine private versus public choices among monetarily equivalent values of cash and food in northern Kenya. Many northern Kenyan communities face high-levels of chronic food insecurity and are tightly-knit, often sharing food aid transfers. Yet, humanitarian cash transfers are relatively new to the area. Whether cash will be subject to the same sharing norms is not well understood. Utilizing a randomized block experiment, we find that assigning a respondent to choose in front of peers decreases the likelihood of choosing a cash transfer relative to at least some food. We argue that peer monitoring decreases the value of cash relative to food in two inter-related ways. Choosing food in public, first, provides an opportunity for respondents to publicly demonstrate a commitment to local food aid sharing norms. Second, choosing cash in public may be riskier since cash does not yet have established sharing norms. A critical implication is that transfer choices and retargeting of resources within the community can be influenced by use of public or private discussions when eliciting community views, especially in communities where sharing is a salient social norm.     

Does food aid have disincentive effects on local production? A general equilibrium perspective on food aid in Ethiopia

This paper examined impacts of food aid on domestic food production employing a computable general equilibrium modelling technique and using data from Ethiopia. The simulation experiments have shown that food aid has unambiguous disincentive effects on domestic food production. The removal of food aid caused a modest increase in food prices but this stimulated food production. Employment and income generation effects of the latter outweighed the adverse effect of the former. Consequently, the removal of food aid led to improvements in aggregate household welfare. Contrary to some concerns in the food aid literature that any reduction in food aid would hurt the poor, the simulation experiments suggested that actually poor rural households and urban wage earners are the ones who benefit most in absence of food aid but entrepreneurs are more likely to encounter a marginal welfare decline. We have distinguished between in-kind food aid and cash equivalent transfers in order to isolate the disincentives that in-kind transfers would make to domestic production from those that are related to household purchasing power problem. The expansionary effect of removing food aid becomes significantly larger when it is accompanied by cash equivalent payments because the latter would provide demand side stimulus to agriculture while the removal of in-kind transfers would stimulate supply side, with the supply and demand side effects reinforcing each other. In our modelling framework, the only adverse effect would be a modest deterioration in the external current account, because the expansionary effects of food aid would cause imports to rise but exports to fall.     

One more tool for the food aid toolbox? Experimental evidence on food aid packaging

International food assistance reaches more than 90 million people per year, much of it through in-kind programs that distribute food. Several key aspects of in-kind programs—what food is shipped, when and from where it is sourced—have been changed to improve program effectiveness and efficiency, becoming helpful tools in the modernized in-kind food assistance toolbox. Packaging—in what food is shipped—remains an unstudied and underused tool despite more than 50 million bags per year passing through in-kind supply chains, affecting program effectiveness and efficiency. We conduct an experiment with 46 shipments using different packaging materials and sizes to measure the effect of packaging on shipment quality, cost, and timeliness. Analyzing the data with randomization tests, we find that, relative to the current materials, new materials maintain shipment quality and cost while improving timeliness and in some cases may reduce cost. One promising material that balances cost and effectiveness is a bag with a biopesticide applied, designed to prevent insects from reproducing. We also find that, relative to the current size, larger bags may improve costs at least in the domestic portion of the supply chain. Donors and their partners should consider packaging as one more tool in the modernized food assistance toolbox. As the toolbox continues to fill, the coming opportunity and challenge to identify situations where the various tools work in complementary ways.     

The impact of the Social Cash Transfer Scheme on food security in Malawi

The Malawi Social Cash Transfer Scheme (SCTS) was launched in 2006 to improve food security by directly providing cash transfers to the country’s most destitute households. Although government-implemented cash transfer schemes have gained popularity throughout Latin America, these schemes are just emerging in Africa. While where there is evidence of the beneficial impact of cash transfers on food security from Latin American countries, there is a dearth of evidence from resource poor countries in Africa.     

Food aid,domestic policy and food security: Contrasting experiences from South Asia and sub-Saharan Africa

Food aid, both for short-term emergency relief and as program food aid that helps address medium-term food “deficits”, is often a major component of food security strategies in developing countries. This study reviews the experience with food aid of four major recipients of food aid (India, Bangladesh, Ethiopia and Zambia) regarding food production, trade, markets, consumption and safety nets, as well as the policy responses to food emergencies. The widely varying experiences of the study countries suggest that food aid that supports building of production and market enhancing infrastructure, is timed to avoid adverse price effects on producers, and is targeted to food insecure households can play a positive role in enhancing food security. However, food aid is not the only, or in many cases, the most efficient means of addressing food insecurity. In many cases private markets can more effectively address shortfalls in food availability and cash transfers may be a viable alternative to food transfers in-kind.     

Cash transfers and high food prices: Explaining outcomes on Ethiopia’s Productive Safety Net Programme

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’.     

Sri Lanka: Food aid as a resource transfer

Sri Lanka is used as a case study to consider: the significance of food aid in the long run as a resource transfer; the extent to which food transfers have substituted for or been additional to commercial imports; the significance of donor programming for recipient country food policy. The article finds evidence that food aid has represented an important resource but is now of diminished significance; it has largely provided balance-of-payments support rather than additional cereals imports; but unresponsive programming by donors seriously reduced the effectiveness of food aid as a transfer and food security mechanism.     

Household composition and food expenditures: a cross-country comparison

In the analysis of food expenditures, use of household member counts as an explanatory variable assumes each member has the same marginal food expenditure impact. In our analysis of Latin American food expenditures we reject this assumption via the estimation of endogenously determined adult equivalence scales that vary by household member gender and age. A series of hypothesis tests indicate significant differences not only in the male versus female equivalence scales but also across country. With the use of such equivalence scales in the definition of per capita expenditures we find significant differences in the distributions implying substantially different poverty rankings.     

Eating at the limits: Barriers to the emergence of social enterprise initiatives in the Australian emergency food relief sector

This article explores the absence of social enterprise responses to food insecurity in Australia. Continued growth in demand from chronically food insecure consumers and criticism of the dominant food bank model of gifted food support has led to the development of ‘community supermarkets’ that charge consumers for donated food in countries including Canada, the United Kingdom, France and Italy, but not in Australia. This research investigates barriers to the development of community supermarkets in Australia through in-depth interviews with senior staff within seven organizations involved in the food relief supply chain, as well as a pilot survey of 38 food insecure consumers. The results of this research are analyzed through the lens of ‘voluntary failure’ theory and highlight systemic barriers to the reach of social enterprise as a mechanism for addressing food insecurity.     

Produce growers’ cost of complying with the Food Safety Modernization Act

Small and medium size growers using both conventional and sustainable farming practices have expressed concern that compliance with the Produce Rule implementing the Food Safety Modernization Act will be prohibitively costly. We use data from an original national survey of fruit and vegetable growers to examine that contention. In particular, we analyze how expenditures on food safety practices required by the Produce Rule vary with farm size using a double hurdle model to control for selectivity in both using food safety practices and reporting expenditures. We find that expenditures per acre decrease with farm size. We also find some evidence that growers using sustainable farming practices spend more than conventional growers on many food safety practices. We use our estimates to quantify how the cost burden of compliance varies with farm size. We then explore the policy implications of exemptions to the Rule by simulating how more stringent exemption thresholds for farm revenue and share of direct sales might affect the cost burden of each food safety practice on farms at the threshold.     

Migration and food consumption patterns in Ghana

This paper examines the link between migration and food consumption patterns in Ghana, which has a history of widespread migration and high levels of poverty. Data from 4130 households from the nationally representative 2005/2006 Ghana Living Standards Survey are used for the analysis. Since migrants self-select into migration, an instrumental variable approach is taken to analyze the relationship between migration and total food expenditures per capita, food expenditures across a range of food categories and shares of food expenditures across these categories. Overall, the results indicate that migration does not substantially affect total food expenditures per capita, and has minimal noticeable effect on food expenditure patterns. Looking at results in different settings, the analysis indicates that only in high migration regions does migration appear to increase overall food expenditures resulting in a shift towards the consumption of potentially less nutritious categories of food, such as sugar and beverages and eating out of the home. The results raise questions about the value of migration for improving the food consumption of migrant sending households.     

A rotten deal for schools? An assessment of states’ success with the National School Lunch Program’s in-kind food benefit

The National School Lunch Program (NSLP) is one of the United States’ largest domestic food aid programs. The NSLP provides states with both cash and commodity foods for school meals. This research assessed the success of the school commodity program by comparing states’ available annual funding to the value of foods that states actually received from 2001 to 2009. Results indicate that an in-kind food funding system is not desirable for schools; states failed to receive entitled commodity food value in most years, resulting in annual funding losses for schools of $35–87 million. Inconsistent funding inhibits schools’ ability to improve meals and, ultimately, child nutrition outcomes. In light of these results, it is recommended that a cash benefit should replace the National School Lunch Program’s commodity food program.     

Assessing the contribution of artisanal fisheries to food security: A bio-economic modeling approach

Artisanal fisheries are an important food source in many developing regions. Quantitative bio-economic models are needed that comprehensively assess artisanal fisheries’ contribution to food security. Our model combines standard resource economics theory with the literature on food systems. It explains impacts of environmental variations and market development on output, prices and ultimately food security. The application to the Senegalese purse-seine fishery reveals that total sector rents account for 2% of per capita yearly food expenditures for the coastal inhabitants. We examine the relative importance of main drivers and the vulnerability of different regions. Market development plays a crucial role: The resource is of far greater relevance for remote regions.     

Total and per capita value of food loss in the United States

There are few peer-reviewed or major published studies that estimate the total amount of food loss in developed countries and even fewer attempt to estimate the monetary value. We compiled estimates of the amount and value of food loss for more than 200 individual foods in the United States using the US Department of Agriculture’s Economic Research Service’s Loss-Adjusted Food Availability data and then aggregated these values to estimate the total value of food loss and the value by food group. The results indicate that in 2008, the estimated total value of food loss at the retail and consumer levels in the United States as purchased at retail prices was $165.6 billion. The top three food groups in terms of the value of food loss at these levels are: meat, poultry, and fish (41%); vegetables (17%); and dairy products (14%). Looking more closely at the estimates for the consumer level, this level of loss translates into almost 124 kg (273 lb) of food lost from human consumption, per capita, in 2008 at an estimated retail price of $390/capita/year. Food loss represents a significant share of household food expenditures: our estimates suggest that the annual value of food loss is almost 10% of the average amount spent on food per consumer in 2008 and over 1% of the average disposable income. This consumer level loss translates into over .3 kg (0.7 lb) of food per capita per day valued at $1.07/day. Our estimates of the total value of food loss in the United States and loss estimates by food group are useful in that they can generate awareness of the issue among the food industry members, governments, and consumers. Potential large-scale approaches and economic incentives to mitigate food loss in developed countries are also discussed.     

Time preferences and food choices: Evidence from a choice experiment

Time preferences have been recognized by numerous studies as an important driver of a number of healthy and environmentally-friendly behaviors. In this study, we first examined if healthy and environmentally-friendly food labels (e.g., USDA organic, carbon trust, health claim, and calories) are relevant in driving food choices. Second, using the Consideration of Future Consequences (CFC) scale we analyzed if individuals with different time preferences have different choice behavior and valuations in relation to these labels. Results indicate that consumers value both healthy and environmentally-friendly attributes displayed on labels. Results also suggest that time preferences can significantly influence consumers’ valuation for the USDA organic label, the presence of health claims and the calorie amount attribute.     

Not enough money or not enough time to satisfy the Thrifty Food Plan? A cost difference approach for estimating a money–time threshold

Food production at home requires money and time. Food assistance programs focus exclusively on the money cost, while ignoring the time cost. This one-dimensional focus could undermine the effectiveness of food assistance programs. In the spirit of Vickery (1977), this paper uses a cost difference approach to develop a money–time threshold, and several related metrics, to determine whether money or time is the most limiting resource in reaching the Thrifty Food Plan (TFP) target. In our empirical analysis we find that when time is ignored, single headed households spend on average 35% more than required to meet the TFP target. However, when time is included, these households spend on average 40% less than required to meet the TFP target. In addition, we find that when time is ignored, 62% of single headed households on average spend enough money to reach the TFP target, but when time is included, only 13% of single headed households spend enough on average to reach the TFP target. Our empirical results suggest that time is more constraining than money in reaching the TFP target. These results imply that metrics solely focusing on money could severely underestimate the gap between actual expenditures and those required to reach the TFP target.     

The economics and nutritional impacts of food assistance policies and programs

Recent evidence on malnutrition and poverty raise important questions on the role of food assistance policies and programs. In this review article, we examine evidence on the economic and nutritional impacts of international food assistance programs (FAPs) and policies. The returns on investments in FAPs are, on average, high but depend considerably on the targeting and cost structures as well as on food quality and role of complementary activities. We disaggregate findings into four classes of recipients. Returns to FAPs are highest for children under two. But, FAPs oriented towards early childhood interventions are less well funded than are interventions aimed at school-age children or at the broader, largely adult population even though available evidence indicates that these latter classes of interventions offer considerably lower average returns in economic, health, and nutrition terms. Nonetheless, FAP effectiveness in achieving any of several objectives varies with a range of key factors, including targeting, additionality, seasonality, timeliness, incentive effects, social acceptability and political economy considerations.     

Modeling heterogeneity in consumer preferences for select food safety attributes in China

Food safety issues often arise from asymmetric information between consumers and suppliers with regards to product-specific attributes. Severe food safety scandals were observed recently in China. These events not only caused direct economic and life losses, but also created distrust in the Chinese food system domestically, as well as internationally. While much attention has focused on the problems plaguing the Chinese government’s food inspection system, little research has been dedicated to analyzing Chinese consumers’ concerns surrounding food safety. In this paper, we measure consumer preferences for select food safety attributes in pork and take food safety risk perceptions into account. Several choice experiment models, including latent class and random parameters logit, are constructed to capture heterogeneity in consumer preferences. Our results suggest that Chinese consumers have the highest willingness-to-pay for a government certification program, followed by third-party certification, a traceability system, and a product-specific information label. The results of this study call for the direct involvement of the Chinese government in the food safety system. A stricter monitoring system will not only improve consumer well-being in the short-run, but also restore consumers’ trust leading to a social welfare increase in the long run.     

The impact of migration on food consumption patterns: The case of Vietnam

This paper explores the relationship between migration and consumption patterns using panel data from the 2004 and 2006 Vietnam Household Living Standards Surveys. Employing an instrumental variable approach to control for the endogeneity of migration, our results indicate that short-term migration has a positive effect on overall per capita food expenditures, per capita calorie consumption and food diversity. Long-term migration also appears to be positively related to consumption, but impacts are often insignificant and of a lesser magnitude than short-term migration. The results provide no evidence of negative effects of migration, and support the view that short-term migration is a mechanism by which households maintain food security. The results suggest that to improve food security the Vietnamese government should enact policies that facilitate short-term migration flows as well as the transferring of remittances.