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Design and implementation
of FISP:
evolution, challenges, and
innovations
Ephraim Chirwa and Andrew Dorward
Facts
By 2013/14 season, FISP has been with us for 8
agricultural seasons
Subsidy budget has risen from 6.8% of total bu...
No major changes in the design have occurred
during this period, except
Consideration of farm households in addition to
...
Design & Implementation Features &Changes
Targeting
Resource poor smallholder farmers : 2 bags of fertilizer
50 kg bag ...
Design & Implementation Features & Changes
Main challenges in targeting
Poor are more likely targeted than the non-poor
(...
Design & Implementation Features & Changes
Coupon Allocation & Distribution
Initially through traditional authorities
S...
Design & Implementation Features & Changes
Main challenges in coupon distribution
Enormous undertaking for MoAFS to regis...
Design & Implementation Features & Changes
 Coupon Redemption
Fertilizer coupons mainly through ADMARC and SFFRFM
Varia...
Design & Implementation Features & Changes
Main challenges in coupon redemption
Long distance to markets
Long queues – f...
Strengths Weaknesses
Operational innovation given
political space
Reaching out to a large
proportion of rural
households...
Opportunities Threats
Efficiency gains – earlier
timing
Coordination with other
programmes – extension,
markets, social ...
Strategic Areas of Further Innovation
Programme objective
Targeting and coordination
Graduation and sustainable impacts...
Strategic Innovation ………
Programme objective
Primary objective should focus on achievement of
productivity
“To increase...
Strategic Innovation ………
Targeting
Targeted households should be resource poor productive
smallholder farmers (poor but ...
Poverty Targeting: SCT & FISP (50% R HH)
0.0
3.3
8.7 10.4 11.2
14.8 15.3
41.9
37.9
31.2 29.1 28.1
23.7 23.1
0.0
5.0
10.0
1...
Strategic Innovation ………
Sustainable Graduation
Design must embrace the concept of sustainable
graduation
Fixed subsidy...
Other innovations
Private sector involvement
Fertiliser formulations
Budget & tender timing & processes
Targeting meth...
Design and implementation
of FISP:
evolution, challenges, and
innovations
Ephraim Chirwa and Andrew Dorward
0.0
3.3
8.7 10.4 11.2
14.8 15.3
41.9
37.9
31.2 29.1 28.1
23.7 23.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
0.00 4....
Multidimensional Poverty (MH)
Dimension Indicator Deprived of … Weight
Education Years of schooling No member with 5 years...
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Design and implementation of FISP: evolution, challenges, and innovations

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Design and implementation of FISP: evolution, challenges, and innovations

  1. 1. Design and implementation of FISP: evolution, challenges, and innovations Ephraim Chirwa and Andrew Dorward
  2. 2. Facts By 2013/14 season, FISP has been with us for 8 agricultural seasons Subsidy budget has risen from 6.8% of total budget in 2006/07 to 10% in 2013/14 The amount of subsidized fertilizers has ranged from 131,000 MT to 216,000 MT, stabilized at 140,000MT The subsidy on fertilizer has increased from 64% in 2005/06 to 96.8% in 2013/14 of the unsubsidized price
  3. 3. No major changes in the design have occurred during this period, except Consideration of farm households in addition to maize areas in area targeting Taking out smallholder tobacco, tea and coffee, cotton seeds and chemicals Introduction of legumes Main Design Features and Changes
  4. 4. Design & Implementation Features &Changes Targeting Resource poor smallholder farmers : 2 bags of fertilizer 50 kg bag 23:21:0+4s ( NPK) – basal fertilizer 50 kg bag urea Improved maize seeds and legumes Main Changes over time More emphasis on targeting vulnerable groups Intermittent introduction of subsidy on cash crops Cotton seeds and chemicals in 2007/8 Tea & coffee in 2008/9 No tobacco since 2009/10 More regional equity in subsidy targeting
  5. 5. Design & Implementation Features & Changes Main challenges in targeting Poor are more likely targeted than the non-poor (random targeting?) Non-poor get more on average than the poor High proportion of repeat beneficiaries – some have received it 8 times (can some farmers graduate?)
  6. 6. Design & Implementation Features & Changes Coupon Allocation & Distribution Initially through traditional authorities Supplementary coupons – less transparent More recently, farm registers and distribution through MoAFS and VDCs Main Changes over time Use of farm registers and beneficiary verification Distribution MoAFS Elimination of supplementary coupons since 2009/10 Open system of coupon allocation and distribution Public display of beneficiary lists in the communities
  7. 7. Design & Implementation Features & Changes Main challenges in coupon distribution Enormous undertaking for MoAFS to register farm households Variable district performance in accomplishing this exercise Provides opportunities for creation of ghost villages Farm families numbers inconsistent with NSO national population of rural households Increased intra-village re-distribution
  8. 8. Design & Implementation Features & Changes  Coupon Redemption Fertilizer coupons mainly through ADMARC and SFFRFM Variable participation of private sector in fertilizer voucher redemption Private sector participation in seed voucher redemption Use of Agricultural Development Divisions for cotton inputs Main Changes over time Private sector participation in fertilizer redemption in 2006/7 and 2007/8 Private sector participation in seed redemption from 2006/7 Farmer coupon redemption price falling from MK950 2006/7 to MK500 since 2009/10 (64% to 98% subsidy) Use of voter IDs for voucher redemption Use of e-vouchers in seed subsidy in pilot areas in 2013/14 Improved security features of coupons
  9. 9. Design & Implementation Features & Changes Main challenges in coupon redemption Long distance to markets Long queues – facilitating ‘tips’ and ‘bribes’ Intermittent supply of subsidized fertilizers in some markets – frequent stock-outs Political interference in coupon redemption price setting Diversion and fraud
  10. 10. Strengths Weaknesses Operational innovation given political space Reaching out to a large proportion of rural households Critical role in household food security given growing population Some diversification & growth impacts Positive benefit costs ratios Private input market development in seeds Private sector exclusion in redemption of fertilizer coupons Targeting inefficiencies Unclear productivity effects Displacements in both seeds and fertilizer markets Uncertainty in farm families Poor timing & stock-outs of inputs One fertilizer formulation package fit-all-soils Delayed payments to suppliers Delayed input delivery SWOT Analysis
  11. 11. Opportunities Threats Efficiency gains – earlier timing Coordination with other programmes – extension, markets, social protection, infrastructure, soil fertility Private sector retail of subsidized fertilizers Reduced cost / increased farmer contribution Graduation Fertiliser formulations E vouchers /id cards High fertilizer prices Security of vouchers and fraud Fiscal budget pressures  Lack of sustainability High maize prices Low farmer redemption prices Inefficient payment system Population growth SWOT Analysis
  12. 12. Strategic Areas of Further Innovation Programme objective Targeting and coordination Graduation and sustainable impacts Other innovations
  13. 13. Strategic Innovation ……… Programme objective Primary objective should focus on achievement of productivity “To increase land and labour productivity of smallholder maize production” Secondary objectives that maybe achieved consequentially Food security is implicit in increased maize productivity Increases productivity also deals with improved incomes and hence poverty reduction Improved productivity ensure sustainable outcomes Farm and non-farm diversification
  14. 14. Strategic Innovation ……… Targeting Targeted households should be resource poor productive smallholder farmers (poor but not ultra-poor) Resource poor unproductive farmers (ultra-poor) should be targeted for social cash transfers If transfers under SCT are lower than under FISP – cost savings Other considerations Ensure minimal displacement effects Use of objective and multidimensional criteria Ensure providing platform for stepping-up or stepping-out Strong coordination with social protection programmes to avoid multiple dipping Targeting challenges & costs National identification system
  15. 15. Poverty Targeting: SCT & FISP (50% R HH) 0.0 3.3 8.7 10.4 11.2 14.8 15.3 41.9 37.9 31.2 29.1 28.1 23.7 23.1 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 0.00 4.82 12.74 15.23 16.43 21.69 22.43 MKbillion % under SCT SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg -MK29,400 SCT FISP 0.0 4.0 10.5 12.5 13.5 17.8 18.4 41.9 37.9 31.2 29.1 28.1 23.7 23.1 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 0.00 4.82 12.74 15.23 16.43 21.69 22.43 MKbillion % under SCT SCT: MK2,400/month/hh; FISP: 2 bags of 50 kg -MK29,400 SCT FISP 0.0 4.9 13.1 15.6 16.9 22.2 23.0 41.9 37.9 31.2 29.1 28.1 23.7 23.1 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 0.00 4.82 12.74 15.23 16.43 21.69 22.43 MKbillion % under SCT SCT: MK3,000/month/hh; FISP: 2 bags of 50 kg -MK29,400 SCT FISP Assumptions Projected population of rural households 2.8 million (NSO figures) Totalpercentage of rural households under SCT and FISIP is fixed at 50% (half of rural households) Value of subsidy for 2 bags is MK29,400 SCT Targeting Options 0.0%: None (50% FISP) 4.85%: MH >5 (poor FCS) 12.74%: Labour constrained & food insecure 15.23%: MH >5 (7 days food consumption) 16.43%: MH >5 (poor & borderline FCS) 21.69%: MH >5 (12 months food consumption) 22.43%: Ultra-poor IHS3
  16. 16. Strategic Innovation ……… Sustainable Graduation Design must embrace the concept of sustainable graduation Fixed subsidy and flexible farmer voucher redemption price or increasing farmer contributions Other considerations Requires complementary interventions – soil conservation & fertility, diversification, credit access, extension services, maize markets Political commitment to sustainable approaches to subsidization Strong internal monitoring and evaluation to determine achievement of objective and graduation conditions
  17. 17. Other innovations Private sector involvement Fertiliser formulations Budget & tender timing & processes Targeting methods
  18. 18. Design and implementation of FISP: evolution, challenges, and innovations Ephraim Chirwa and Andrew Dorward
  19. 19. 0.0 3.3 8.7 10.4 11.2 14.8 15.3 41.9 37.9 31.2 29.1 28.1 23.7 23.1 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 0.00 4.82 12.74 15.23 16.43 21.69 22.43 MKbillion % under SCT SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg - MK29,400 SCT FISP 0.0 3.3 8.7 10.4 11.2 14.8 15.3 43.3 39.1 32.3 30.1 29.1 24.5 23.9 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 0.00 4.82 12.74 15.23 16.43 21.69 22.43 MKbillion % under SCT SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg - MK30,400 SCT FISP 0.0 3.3 8.7 10.4 11.2 14.8 15.3 49.3 44.5 36.7 34.3 33.1 27.9 27.2 0.0 10.0 20.0 30.0 40.0 50.0 60.0 0.00 4.82 12.74 15.23 16.43 21.69 22.43 MKbillion % under SCT SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg - MK34,600 SCT FISP Assumptions Projected population of rural households 2.8 million (NSO figures) Totalpercentage of rural households under SCT and FISIP is fixed at 50% (half of rural households) Fertilizer prices increase but redemption price remains MK500 SCT Targeting Options 0.0%: None (50% FISP) 4.85%: MH >5 (poor FCS) 12.74%: Labour constrained & food insecure 15.23%: MH >5 (7 days food consumption) 16.43%: MH >5 (poor & borderline FCS) 21.69%: MH >5 (12 months food consumption) 22.43%: Ultra-poor IHS3 Poverty Targeting: SCT & FISP (50% R HH)
  20. 20. Multidimensional Poverty (MH) Dimension Indicator Deprived of … Weight Education Years of schooling No member with 5 years 1/6 Children school attendance Any school age child not in primary school 1/6 Health Child mortality Any child death in the family 1/6 Nutrition Food consumption less than adequate 1/6 Standard of living Electricity Household has no electricity 1/18 Sanitation Household’s sanitation facility is not improved 1/18 Safe drinking water Household does not have access to safe drinking water 1/18 Floor of house Household has a mud or sand floor 1/18 Cooking fuel Household cooks with wood or charcoal 1/18 Assets Household does not own more than one asset (radio, TV, telephone, bike, motorbike, refrigerator, car) 1/18

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