By many measures, cash transfers are becoming the preferred method of social protection over in-kind or food-based programs. This reflects trends over the last two decades driven by economic theory, improved delivery technology, extensive evidence of impacts, and evidence that cash transfers have lower costs than equivalent food-based programs. However, food-oriented programs still persist in many countries due to political and social factors. This document explores the evolution of various countries' social protection programs from agricultural and food-based approaches toward more integrated cash transfer systems through a series of case studies and discussions of broader themes. It also examines some remaining challenges faced by both food-based and cash-based social protection programs.

1. Harold Alderman
Senior Research Fellow, IFPRI
IFPRI, November 20, 2017

2. By many measures cash transfers are the
future of social protection
Cash transfers assist roughly one billion people in low and
middle income countries
This reflects a trend over the last two decades prompted by:
➢ Basic economic theory
➢ Improved technology for delivery and monitoring
➢ Extensive evidence on impacts
➢ Also evidence that the cost of assistance is 13-23% less than
with an equivalent food based transfer
Nevertheless, food oriented transfers persist, even in countries
that also provide cash. The path to reform is often two steps
towards cash, one step back.
This book explores this process

3. 2012 2015

4. 2012 2015

5. Case Study: SNAP [US Food Stamps]
The Supplemental Nutrition Assistance Program is a voucher based
program covering 14% of the population in 2014.
It evolved over 80 years from the Depression including a hiatus in
which commodity distribution returned to the fore
The modern program began in the 1960s and as it expanded
changed purchase requirements, became an entitlement, and
converted from stamps to an electronic benefit card
But it remains a Department of Agriculture program and has run in
parallel with smaller in-kind programs such as the Women,
Infants, Child Nutrition Program

6. Case Study: Mexico’s PROGRESA
The transition to PROGRESA and on to Prospera is well known, well
studied, and iconic.
Less well known is the fact that it was less a quantum leap than an
evolution from generalized price subsidies, to targeted electronic
coupons for a quota on tortillas and on to a piloted debit card
before becoming a full fledged cash transfer.
But even with a well run cash transfer, the government also spent as
much as 7% of the expanded cash transfer budget on a food
support program (PAL) which continued until 2016.
Moreover, between a network of retail outlets (Diconsa), milk
distribution, VAT exemptions on food and other generalized price
supports, the country still spends > 1% of GDP on food support.

7. Case Study: Sri Lanka’s Samurdhi Cash
Transfer
Sri Lanka provided universal low-priced—or free—food on quota for
decades before introducing a means-tested voucher program.
These food stamps were only a way station toward a program of
cash transfers.
The evolution included varying combinations of vouchers and cash
as well as changes in value with inflation and with successive
governments.
During this period of transition, subsidies to wheat imports also
fluctuated with particular consequences for estate Tamils.
One significant in-kind transfer remains: 900,000 children and
pregnant and lactating women receive supplementary food in the
Triposha program

8. Case Study: Egypt
Food subsidies in Egypt are as old as the pyramids, with a system
that dates from 1941 only recently receiving structural reforms.
This system combined general bread subsidies and rationed
commodity support
Prior to 2014 reforms were only at the margin, determined in part
by inflation and deficits, but the government and the populace
agree that there is a social contract to make food cheaply
available.
Reforms initiated in 2014 consolidated the ration system and the
bread subsidy and converted the ration into a voucher program
covering a wide range of food items.
A targeted cash transfer runs parallel to the food oriented program
but is currently dwarfed by the latter.

9. Case Study: India’s Public Distribution
Scheme
The targeted pubic distribution system in India is the largest-scale
social assistance program worldwide. It provides subsidized food
rations to 800 million individuals in designated shops.
A key moment in its evolution stems from a Supreme Court ruling
that converted benefits from nutrition programs into a right.
The program walks a tightrope between its aims to ensure food price
stability for farmers and consumers and its role as a targeted
social protection program meant to ensure food security and
nutrition for the poor.
The poverty focus has been promoted by a shift from an urban
orientation to rural inclusion.
Distribution has been plagued by inefficiencies, but has improved in
some states with increased community involvement.

10. Case Study: Indonesia’s Raskin Program
Indonesia is a relative newcomer to the distribution of subsidized
food, only beginning its Raskin—“rice for the poor”—program
after the Asian financial crisis in 1997–98.
Indonesia had a generally successful record of stabilizing prices via
trade and storage policies but was reminded in 1998 that it is hard
to stabilize rice prices when the macroeconomy is out of control.
Indonesia decided in 2004 to raise domestic rice prices significantly
above world prices by preventing imports; Raskin shifted from
crisis response to a poverty reduction program.
Indonesia has also run cash transfers in parallel to Raskin and is in
the process of reforming the latter as part of a debit card program
and is expanding a small system of retail outlets selling subsidized
foods (e-warung).

11. General Themes Part I: From Agricultural
Objectives to Social Protection
In countries with large shares of the population in agriculture,
subsidies and transfers allow both price supports to producers and
affordable consumer prices.
Raskin’s high domestic rice prices fit this strategy.
Similarly, at various times subsidies provided a wedge between high
producer prices for grain and low consumer prices [eg Mexico as
well as Morocco] and allowed reductions in mandatory
procurement in Egypt.
In this vein, India’s ration shops can be seen as tied to procurement
polices; in this case they provide an outlet for millions of tons the
government has on hand
Even in later stages of agricultural transformation food oriented
transfers are seen as enhancing demand for agricultural output.

12. General Themes Part II: Crises as Critical
Junctures
Almost every crisis is a reminder for policymakers of the volatility of
markets and ensuing risks for producers and consumers.
Often, but not always, a crisis opens the political space and
generates opportunities for reform.
Most of the book’s flagship food-based programs case studies were
introduced or significantly reformed during war-times or after
severe economic shocks. For example, Mexico’s reform followed
NAFTA and the aftermath of the Chiapas uprising.
Program stasis often builds rent seeking (millers, shop keepers and
bureaucrats all have stakes in long running programs).
Democracy and civil society can be a catalyst for reforms but in other
circumstances the former can encourage clientism.

13. General Themes Part III: Nutrition Sensitive
Social Protection
In-kind transfers and vouchers are often infra-marginal; this limits
their impact on total food purchases.
There is only limited evidence that cash transfers – whether
conditional or unconditional- reduce stunting even though they
have been shown to increase food consumption at a greater rate
than other income sources.
This reflects the importance of ties with other programs, particularly
behavioral change communication [BCC] as well as WASH.
India, Mexico, Sri Lanka and the US all provide targeted supplements
to improve nutrition in addition to their main transfer programs.
Countries that still have general food oriented assistance sometimes
miss the opportunity to fortify such foods with micronutrients.
Fortification programs in Egypt and India have not been sustained.

14. Some Remaining Challenges
Targeting: Reduction of inclusion errors necessary fosters exclusion
errors (and vice versa). Despite improvements many states in India
still have extensive mistargeting. This reflects poor data and
monitoring but in some countries – for example, Egypt, programs
are not designed with a strong poverty focus.
Benefit provision: A fair share of commodities goes missing. For
example, Raskin’s recipients only receive about 1/3 of their
entitlement. New technology – often applied to cash transfers –
can assist in improving delivery just as registries improve
targeting.
Linkages to nutrition agenda remain untapped: In addition to BCC to
address undernutrition there is a need to influence purchase
patterns to prevent obesity. Education is key; other approaches
such as restriction of coupon use remain controversial.

15. Conclusion
There is a general trend towards cash transfers but the path is not
linear.
But even food programs are becoming more integrated with the
social protection systems and, on average, have improved their
performance
The fact that a program is food or cash does not necessarily
determine performance in terms of coverage, targeting accuracy,
and other dimensions
Most programs have multiple objectives: poverty reduction,
improved nutrition, and support to agriculture.
The policy choices available at any given time are not just about
optimal strategies but rather, in part, the legacy of previous
policies.

16. 2012 2015
Team
… 3 volume editors (Harold Alderman, Ugo Gentilini, and Ruslan Yemtsov)
and 17 country case study authors, namely Moustafa Abdalla, Sherine Al-Shawarby,
Shrayana Bhattacharya, Vanita Leah Falcao, Hastuti, Citlalli Hernández, Victor Oliveira,
Mark Prell, Raghav Puri, John Scott, David Smallwood, Chinthani Sooriyamudali, Sudarno
Sumarto, Laura Tiehen, Ganga Tilakaratna, and Peter Timmer
… plus other 40 expert advisers whose precious engagement helped shape up the book
over the past 2 years.