The State of Food and Agriculture (2016) 2015: Social protection and agriculture

FAO Economic and Social Development Department

Social protection and agriculture: breaking the cycle of rural poverty

The State ofFood andAgriculture 20

15

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Rob VosFAOWashington D,C, 2 February 2016

FAO Economic and Social Development Department

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Social protection: Why FAO?

• Most of the poor and hungry live in rural areas

• Most have no access to social protection• Better risk management helps promote

food production• From protection to production• UN and social protection floor• SDGs emphasize importance of social

protection (Preamble, SDG 1, 5, 10)

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Most of the extreme poor live in sub-Saharan Africa and South Asia

Presenter

Presentation Notes

We have achieved considerable progress in fighting global hunger and poverty. The share of people living in extreme poverty (living on less than $ 1.25 per day) has fallen from 43% in 1990 to about 17% today. But the numbers remain high. … about 1 billion people, more than 1/3 of all people in low- and middle-income countries, are poor (living on less than $ 2.00 per day). And, almost another 1 billion, about 1/6, is extremely poor (living on less than $ 1.25 per day) Extreme poverty has fallen substantially over the past three decades in many regions, especially in East Asia and the Pacific as well as in South Asia. In sub-Saharan Africa little progress has been made and almost half the population is extremely poor. Sub-Saharan Africa accounts for about half the world’s extreme poor and about two-thirds of the world’s ultra-poor, with the latter referring to those living on less than half the $1.25 per day extreme poverty line. Graphic source: World Bank. 2015. Povcalnet. Online analysis tool for global poverty monitoring.

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Most of the extreme poor live in rural areas

Presenter

Presentation Notes

[Graphic shows: share of rural and urban populations in low- and middle-income countries in extreme poverty (less than $ 1.25 a day), by region] Extreme poverty is disproportionately concentrated in rural areas. The World Bank estimates that, by 2010, 78% of the extreme poor lived in rural areas. This pattern of rural deprivation is evident across regions despite differences in overall poverty rates. In all regions, the share of people in extreme poverty is larger in rural than in urban areas. The relative deprivation in rural areas is reflected in a wide range of indicators of socio-economic welfare. For example, child malnutrition, as measured by the prevalence of underweight in children under five, is worse in rural areas in virtually every country for which data are available Rural people in most developing countries, but especially in SSA, rely on agriculture for an important share of their incomes, although they may engage in many income-generating activities. And for poor agricultural households, income from on-farm activities is relatively more important than it is for other agricultural households. For example, in Ghana food producers make up 43% of the population but account for 69% of the headcount poor. In SSA almost three-quarters of the economically active rural population are small family farmers who produce a significant share of their own food consumption: many of them are poor or extremely poor. Family farms are the backbone of agriculture in low- and middle-income countries, but many family farms are small and poor. Almost 75% (375 million family farms) of farms in low- and middle-income countries are smaller than one hectare. The poorest farming households are net food buyers, and food makes up a large share of the household budgets of the poor, whether or not they farm. Graphic sources: World Bank. 2015. Povcalnet. Online analysis tool for global poverty monitoring, and World Bank. 2015. World Development Indicators database.

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Most in developing world not covered by social protection

Presenter

Presentation Notes

In developing countries, the successful experiences with large-scale programmes that help the poor and vulnerable, as for example in Brazil, Ethiopia, India, and Mexico, has given impetus to a reassessment of the value and role of such programmes in combating poverty, hunger as well as social, economic and political inequality. There has been a rapid expansion of SP programmes in the last two decades. In 2014 at least 145 countries provided one or more forms of SP. Nearly all countries have some form of school feeding, covering at least 368 million children. Throughout the developing world about 2.1 billion people, about 1/3 of the population, are covered by some form of SP. There is a wide variation among regions, with coverage lowest in the regions where poverty incidence is highest. Only about 30% of the population of South Asia and 20% of the population of SSA are covered by SP measures of any kind. In South Asia and SSA, social assistance transfers have the broadest coverage, reaching on average about 17 and 16 % of the population, respectively. These levels are far lower than the social assistance coverage in other regions, which ranges from an average of 27 % in Latin America and the Caribbean to 34 % in the Middle East and North Africa. CCTs have expanded dramatically between 2008 and 2014 when they were operated in 63 countries, up from 27 in 2008. Twenty-two out of the 33 countries in Latin America and the Caribbean has a CCT programme in place. In SSA the figure was 18. There are about 130 UCTs, 37 of which are social pension programmes. In SSA there were 41 UCT programmes operating in 2014, 20 more than in 2008. Globally, the number of public works programmes rose from 62 to 94 between 2011 and 2014; they are most prevalent in SSA (39 countries), although South Asia has some of the world’s largest programmes of this type. Graphic source: ASPIRE, World Bank, online database.

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Poorest households more likely to be covered by social protection, but the shares vary

Presenter

Presentation Notes

[Graphic shows: shares of rural population covered by social assistance, by income quintile and region] … and within rural areas poorer households are more likely to receive social assistance than higher-income households. Coverage is much lower in the poorest regions: in rural areas of South Asia and sub-Saharan Africa, the share of the poorest quintile receiving some sort of social assistance is only about 30% and 20 % respectively, compared to about 70 % in Latin America and the Caribbean. The poorest income quintiles are more likely to receive social assistance, but significant shares of other income quintiles, including the richest, also receive social assistance. Across all regions, about 15-35 % of the richest quintile in rural areas receives social assistance. Graphic source: ASPIRE, World Bank, online database.

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Social protection protects the poor and prevents worse deprivation

• Social protection reduces poverty and food insecurity

• SP also raises the quality of food consumption and increases dietary diversity

• Having a social protection system in place allows governments to react quickly in times of crisis

• Gender-sensitive social protection increases positive impact on food security

Presenter

Presentation Notes

Fiszbein, Kanbur and Yemtsov (2014) estimate that about 150 million people are kept out of poverty by different SP measures. The majority of these people are in Eastern Europe and Central Asia. Far fewer people are protected in SSA and it is estimated that only 1 % of the population moves out of poverty each year as a result of SP transfers. In Mexico the Prospera programme reduced poverty by 10 % and the poverty gap by about 30% between 1998 and 2000. Mexico highlights the importance of rigorous independent monitoring and evaluation. In Brazil, Bolsa Família is an example of a comprehensive network of complementary policies. The government was able to react quickly after 2008, scaling up at low cost. India’s Targeted Public Distribution System reached about 45% of the population in 2010-11 and is expected to expand to about 75% of the pop. In 2009-10 the poverty headcount rate would have been 4.6% higher in the absence of the TPDS. It reduced rural poverty but about 11 % and the poverty gap by about 18%. Seasonality is a major contributor to hunger and undernutrition. A meta-analysis covering 48 studies of 39 social protection programmes, found average programme impacts (relative to the baseline) of 13% for calorie intake, 17% for food consumption/expenditure. Some programmes improved dietary diversity, esp wrt to consumption of animal products. Impact of SP on food security and poverty reduction can be enhanced by focusing on role of women and addressing gender inequalities in decision-making and control over household income.

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Social protection also promotes investment and transforms individual’s capacities to take their lives into their own hands.

• Has positive long term effects for human capital

• Helps households manage risk• Increases on & off-farm investment and farm

production• Reduces burden on social networks and

informal insurance mechanisms• Does not create dependence but broadens

choice• Children work less and go to school more

Presenter

Presentation Notes

Many poor households’ livelihoods are based on agriculture, mainly subsistence. They often live in areas where markets for inputs and outputs, labour and other goods and services such as credit and insurance, are lacking or do not function well. In addition households face risks such as bad weather, plant or animal disease or illness in the household without access to affordable insurance. Without access to credit markets, and with poor alternative risk-coping mechanisms, the time horizon of agricultural households shortens when their very survival is threatened. As a result households often adopt low-risk, low-return agricultural and other income-generating strategies. For similar reasons, households may underinvest in the education and health of their children, or adopt negative risk-coping strategies such as distress sale of assets, reducing the quantity and quality of food consumption, taking children out of school, etc. In this context, social protection can affect investment decisions via three pathways: managing risks (regular and predicable transfers provides certainty and security, partially substituting for insurance); relaxing liquidity, credit and savings constraints (regular and predictable transfers provide liquidity and can serve as collateral), and; spillover effects into the community and local economy (transfers strengthen social networks and the additional income leads to a multiplier effect for the local economy).

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Social protection creates community infrastructure and boosts demand for locally made goods and

services• “Ghana’s LEAP has had a positive impact on local

economic growth. Beneficiaries spend about 80 percent of their income on the local economy. Every Cedi transferred to a beneficiary has the potential of increasing the local economy by Cedi 2.50.”

— Ghana’s President John Dramani Mahama, April 2014

• Public works programmes can provide important infrastructure and community assets.

Presenter

Presentation Notes

Public works prorammes can provide important infrastructure and community assets. Design and implementation are important. Social cash transfers have spill-over effects into the local economy beyond the immediate beneficiaries. When beneficiaries receive cash transfers, they generally spend additional income, although some of the transfers may increase savings. The immediate impact is to raise the purchasing power of beneficiary households. As the cash is spent, the impact of the transfers spreads from beneficiary households to others. Income multipliers in the target villages are set in motion by doorstep trade, purchases in village stores and periodic markets. The larger the local share of goods and services bought, the larger the local multiplier. The local income multiplier measures the resulting changes in overall local income per unit transferred. SP programmes thus can have substantial local-economy effects. Differences among countries, and among areas within countries, are determined by the openness and structure of the local economy, and the degree to which goods and services bought are locally produced, and the flexibility of local supply, particularly non-beneficiaries. Complementary programmes that reduce supply side constraints are important to prevent significant price rises, and increase the real-income and production impacts of the programme.

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Social protection by itself is not enough to move people out of poverty

• Addressing chronic poverty and food insecurity requires long-term, predictable social protection and complementary measures

• Agricultural programmes needed to address structural constraints

• Social protection and agriculture need to be articulated as part of strategy of rural development

• Social protection and agriculture together build resilience

Presenter

Presentation Notes

How to link agriculture and social protection? There are different way in which agriculture and social protection can be brought together in combatting hunger and poverty in rural areas: Making social protection interventions more sensitive to agriculture and vice-versa. Social protection interventions can be tailored to agricultural livelihoods. E.g. Kenya’s Hunger Safety Net Programme, is well suited to the semi-nomadic lifestyle of its main beneficiary group since households are able to redeem payments where and when they want. Focusing both agriculture AND social protection interventions on targeted households. This can be achieved by combining interventions into joint programmes or by coordinating different programmes. e.g. Ethiopia’s Food Security Programme includes the Productive Safety Net Programme (a cash transfer and public works programme) and Household Asset Building Programme (which provides access to credit, inputs and agricultural extension). Beneficiaries with access to both PSNP (and HABP had the largest improvements in food security, better agricultural technologies and participation in non-farm business enterprises compared to beneficiaries of either PSNP alone or PSNP with higher benefit levels Aligning interventions that target different households. Institutional procurement programmes (IPP) create markets for family farmers to meet demand for social protection programmes. Home grown school-feeding programmes are examples of IPPs (in Africa they sometimes build on WFP’s Purchase for Progress, P4P). IPPs can also be designed to help specifically disadvantaged, poor farmers. How can it be done? Mobilize political support There is growing recognition of the combined role of agriculture and social protection (e.g. CFS 2013; Malabo Declaration 2014 ) in reducing hunger and ongoing country-level efforts in this direction. But more neds to be done, Political support and drive to get things done is fundamental. Development Partners can play a role by supporting Governments in testing new ideas and generating evidence on what works/does not work so well. Adjust policy and investment frameworks Frameworks related to food security, poverty reduction rural development need to recognize the role that together agriculture and social protection can play in achieving their goals. Similarly, agricultural policies should recognise how social protection can help support productive inclusion and Strengthen coordination mechanisms At national and sub-national levels to ensure that these include adequate membership from agriculture and social protection and that formal procedures for working together are clear and that agencies have the required capacities e.g. personnel, transport Harmonize targeting Agreeing on which households should be targeted by different interventions and relevant targeting criteria; sharing information on who is participating in which programmes (unified registries may help for this). Support programme design and implementation Setting a transfer size commensurate with desired impact; selecting the appropriate instruments (e.g. subsidy and/or cash transfer); ensuring the timely and predictable delivery of transfers; sensitive to rural and agricultural seasonality and to the profiles of beneficiaries; messaging regarding use of the transfers and support

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Social Protection plays a role in promoting the sustainable transformation of agriculture

• Social protection promotes inclusiveness• by facilitating access to education/health

services and social networks • as well as by providing insurance and

liquidity• Social protection impacts migration decisions.• Social protection can strengthen household

resilience to shocks, including climate shocks and promote the sustainable use of natural resources.

Presenter

Presentation Notes

SP raises enrolment, attendance, improves learning (school feeding), can encourage accessing health services and strengthens poor households access to social networks. SP, when regular and predictable, provides some insurance and liquidity and allows poor households to participate in economic opportunities by reducing risk and credit/savings constraints. But SP can also help avoid migration born out of desperation. It can provide greater choice and allow migration in response to economic opportunities, thus facilitating the transformation. For example, in South Africa, old-age pension schemes increased labour market participation for some households, as pensions helped support migrants until they became self-sufficient, while older pensioners could care for small children, thus freeing younger adults to look for work elsewhere. SP aimed specifically at increasing resilience against climate change, for example, by mobilizing labour for public works to produce environmentally friendly and beneficial assets, and sensitizing communities on land use management, is referred to as adaptive social protection. PWPs can provide employment to the chronically poor and vulnerable, which provides income to help people adapt to climate change. Secondly the provision of infrastructure (e.g. roads, irrigation canals), much needed by the community, can build resilience to effects of climate change. There is potential for a third such benefit for adaptation when PWPs are aimed at environmental rehabilitation or conservation of natural resources. Examples include: i) environmental rehabilitation, such as soil and water conservation through tree planting, bunds, area catchments and fenced enclosures; ii) building or reinforcing water access or de-silting irrigation, especially in drought-prone areas; iii) climate-proofing physical infrastructure (strengthening embankments, buildings, roads, bridges or gullies that resist flash flooding. Social protection programmes may be combined with specific interventions to help households adapt to climate change. For eg asset transfer programmes can be used to introduce livestock more suited to changing climatic conditions. Programmes may provide free or subsidized insurance. Programmes may include training for livelihood diversification or other issues (pests, flooding) that arise with climate change. SP can also have a negative impact. For example, SP interventions targeting pastoralist communities in drought-prone areas could reduce households’ short-term or seasonal vulnerability. However, creating an incentive to stay in areas with poor long-term prospects might instead be counter-productive. SP may also accelerate non-sustainable production and dietary transitions towards land and other resource-intensive food (e.g. meat and other livestock products).

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For more information …

The State of Food and Agriculture 2015

Social protection and agriculture:breaking the cycle of rural poverty

FAO‘s major annual flagship publication

Available in:Arabic, Chinese, English,

French, Russian and Spanish

www.fao.org/publications/sofa

http://www.fao.org/publications/sofa

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ANNEX

REFERENCED SLIDES

Increase in food security

Zambia Kenya Malawi Ghana Lesotho

Not enough food at least one month

NS

Months with sufficient food +++ NS

Months some shortage +++

Months extr shortage - - -

Eats more than one meal a day +++ +++

Food security scale +++ +++ +++ NS

Is not severely food insecure +++

Better off than 12 months ago +++

Child smaller meal - - -

Child fewer meals than needed - - - - - -

Child sleep hungry - - - NS

Improved dietary diversity

Zambia Kenya (1) Malawi Ghana Lesotho

Meat +++ +++ +++ - - - NS

Dairy +++ +++ +++ NS NS

Cereals +++ NS +++ NS NS

Fruits/vegetables NS NS +++ NS NS

Sugars +++ +++ +++ NS NS

Fats, oil, other +++ +++ +++ +++ NS

Dietary diversity +++ +++ +++ NS NS

1) 2007-2009LittleimpactBig impact, partially

through increased agricultural production

Improved ability to manage riskZambia Kenya Malawi Ghana Lesotho Tanz

Negative risk coping - - - - - -

Pay off debt +++ +++ NS

Borrowing - - - NS - - - NS NS

Purchase on credit NS NS NS

Savings +++ +++ +++ NS ++ poorest

Give informal transfers NS +++ +++

Receive informal transfers NS +++

Remittances - - - NS - - - NS (1)

Trust (towards leaders) ++

Strengthened social networks• In all countries, re-engagement with

social networks of reciprocity—informal safety net

• Allow households to participate, to “mingle” again

• Reduction in negative risk coping strategies

• Increase in savings, paying off debt and credit worthiness—risk aversion

• Some instances of crowding out

1) Mixes remittances and informal transfers

Households invest in livelihood activities—though impact varies by country

Zambia Malawi Kenya Lesotho Ghana Tanz

Agricultural inputs +++ - ++ +++

Agricultural tools +++ +++ NS NS NS

Agricultural production +++ NS ++ NS

Sales +++ NS NS NS - -

Home consumption of agricultural production

NS +++ +++ NS NS

Livestock ownership All types All types Small PIgs NS Small

Non farm enterprise +++ NS +FHH-MHH

- NS

Stronger impact Mixed impact Less impact

Why?What explains differences in household-level

impact across countries?

Crop Livestock NFE Productivelabour

Social Network

Zambia yes yes yes yes

Malawi yes yes no yes small

Kenya no small yes yes

Lesotho yes small no no yes

Ghana no no no small yes

Predictability of payment

Regular and predictable transfers facilitate planning, consumption smoothing and investment

0

1

Sep-

10

Nov

-10

Jan-

11

Mar

-11

May

-11

Jul-1

1

Sep-

11

Nov

-11

Jan-

12

Mar

-12

May

-12

Jul-1

2

Sep-

12

# of

pay

men

ts

Zambia CGP

0

1

2

3

4

5

6

# of

pay

men

ts

Ghana LEAP

Regular and predictableLumpy and irregular

Bigger transfer means more impact

0

5

10

15

20

25

30

35

40

GhanaLEAP (old)

Kenya CT-OVC (big)

Burkina Kenya CT-OVC

RSA CSG LesothoCGP (base)

GhanaLEAP

(current)

Kenya CT-OVC

(small)

Zim(HSCT)

ZambiaCGP

ZambiaMCP

MalawiSCT

Widespread impact

Selective impact

% o

r per

cap

ita in

com

e of

poo

r

Local economy effects vary

0

0.5

1

1.5

2

2.5

3

Kenya (Nyanza) Ethiopia (Abi-Adi)

Zimbabwe Zambia Kenya (Garissa) Lesotho Ghana Ethiopia(Hintalo)

Nominal multiplier Real multiplier

Every 1 Birr transferred can generate 2.52 Birr of income

If constraints are binding, may be as low as 1.84

Income multiplier is greater than 1 in every country

The State of Food and Agriculture (2016) 2015: Social protection and agriculture

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