Cash transfers and high food prices: Explaining outcomes on Ethiopia's Productive Safety Net Programme (PSNP)
The article studies data from PSNP and presents an econometric analysis of food and cash transfer programs. Due to the food price increase, the effectiveness of social transfer programs is now questioned. This feeds the debate on food-insecurity alleviation strategies: cash or food ? The study's findings reveal that the susceptibility of social transfers to price inflation has been under-acknowledged and that food transfers or a combination of food and cash transfers are superior to cash transfers alone. The article makes recommendations on mechanisms that should be put in place to protect households who receive cash transfers from inflation. In particular, those recommendations address:
- Transfer methods: food bonds which guarantee that a certain quantity of food can be bought independent on prices, programs with both food aid and cash transfers
- Insurance mechanisms: insurance of the most vulnerable persons to high prices
- Price stability mechanisms: indexing social transfers to food prices, subsidize some subsistence food products.
R. Sabates-Wheeler, S. Devereux, Future Agricultures Consortium - January 2010
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