August 2003
B ANGLADESH F OOD SECURITY B RIEF
Appropriateness of Targeted
Food Aid Programmes
Bangladesh is on its way to becoming selfsufficient in cereal production. Despite this
impending achievement, a significant part of the
population still lacks access to enough food to
meet minimal nutritional levels. The reason is
largely one of poverty and boils down to
inadequate purchasing power of the extreme poor.
The GoB, donors and food aid agencies must
continue to address the needs of those who
remain food insecure. There are, however, limited
resources available to bridge the gap between
what food is currently consumed and what should
be consumed by the poor to lead an active and
healthy life.
Who are most at risk ?
Households most vulnerable generally include
those lacking productive assets and depending on
irregular income from daily wage labour. Groups
such as landless agricultural day labourers, casual
fishermen, and beggars fall into this category.
Within households, children, the disabled,
pregnant women and nursing mothers face the
relatively high nutritional risks.
Although food insecure people can be found
throughout Bangladesh, a higher concentration are
found in urban slums and living on marginal lands
such as areas affected by river erosion along the
major river banks, chars, coastal zones and remote
areas of the Chittagong Hill Tracts.
Hunger is seasonal as well, and particularly acute
during the September – October lean period. Food
prices during this period are relatively high and at
a time when agricultural employment opportunities
are limited.
Poor households are likely to continue to suffer
from malnutrition as long as their purchasing
power
remains
deficient.
Food
security
interventions that act to transfer income remain a
viable way to improve the food consumption and
nutritional status of the poor in Bangladesh. This
transfer of income can be in the form of either food
or cash. But which is best?
Food versus Cash –
The Debate
Historically food aid has played a
prominent role in reducing food insecurity
and malnutrition in Bangladesh. However, due to a
number of factors such as policy influence,
leakage and poor targeting, food aid interventions
have not always been as effective as intended.
More recently, arguments have been raised for
transforming food-based programmes into cashbased programmes. The claim being that doing so
will reduce leakage, increase self-initiative, and
lead to a more sustainable economic environment.
However, shifting to cash is not proving to be a
magic cure to the ailments associated with food
aid. Food and cash each have both common and
distinct advantages and disadvantages. Some of
these are summarized in the table below.
How then do we decide? Two critical
considerations to be taken into account in the
choice between food and cash are i) the nature of
the programme and ii) the context in which the
programme is implemented.
(i) Nature of the programme
The nature of the programme has to do with the
target population, the outcome to be achieved, and
the preferences of beneficiaries.
Target population
Food security interventions should be target
extremely poor people whose primary concern is
food. These are people who spend most of their
income on food and who would otherwise remain
trapped in a situation of chronic food crisis. It is
these people that WFP tries to target through foodassisted programmes such as the Vulnerable
Group Development (VGD) and Integrated Food
Security (IFS). In these activities, food acts as a life
vest to lift up and keep otherwise destitute
Bangladeshis above the chronic poverty line. Food
meets their immediate nutritional needs and
relieves them from a situation of food distress and
allows greater opportunities for participation in
development-oriented activities.
At this stage cash transfers begin to present
certain advantages. Once meeting one’s family’s
The preference
for food over
food needs is no longer an all-consuming priority,
provision of cash can be used to encourage
investment in productive assets. Cash transfers
therefore become more important following the
transition from a situation of chronic crisis. This
process is depicted in the diagram below.
Cash versus Food transfers
Food
Advantages:
•
Food
directly
addresses
nutritional deficiencies.
•
Cash is fungible and allows
choice of utilization;
•
Food
has
element.
•
Cash is more cost efficient;
•
•
Food is under control of
women and has therefore a
positive impact on intrahousehold distribution.
Cash encourages investment
in productive assets;
•
In surplus areas with well
functioning markets, cash
has a stimulating affect on
the
local
economy
(multiplier effect)
•
The rationale behind WFP programmes in
Bangladesh is using food to lift poorest of the poor
above the extreme poverty line and out of a
situation of chronic crisis. After having benefited
from food transfers for some time and having
received skills and awareness training, the
beneficiaries, primarily women, are in a more
secure position to create productive assets, or
benefit from the provision of micro-credit by NGOs
– thus graduating from relief to a development
mode. It is at this point where cash-based
programmes have a comparative advantage.
Cash
Advantages:
self-targeting
Food is suited to the
established
government
managerial and administrative
capacity (PFDS).
•
Food provides households
with a sense of security.
•
Food is visible and risk of
diversion is therefore less.
•
Food protects against a
seasonal or sudden increase in
food prices.
•
Food immediately increases
the availability in remote
deficit areas.
Disadvantages:
•
Cash has a higher potential
for losses given weak
government
institutional
capacity for monitoring;
•
With cash it is more difficult
to target individuals, such as
children,
pregnant
and
lactating women.
•
Utilization of cash is often
determined by men and is
sometimes used for buying
non-food, non-essential and
non-productive items.
•
Cash presents a higher
security risk. This is
especially relevant for the
CHT.
•
Cash does not
against
food
fluctuations.
Disadvantages:
Food aid towards better nutrition
The primary objective of WFP’s food aid
programme in Bangladesh is to attain sustainable
improvements in food security and nutrition for
ultra-poor households. In programmes where
improved nutrition is a major objective, food aid is
likely to have a greater impact than cash. The
transaction costs incurred in converting food to
cash is a compelling argument for direct
consumption. This is what is known as the ‘food
factor’, i.e. providing food leads to higher calorie
intake than cash. Studies undertaken by IFPRI
(1993/1994) confirm the existence of a food
factor in Bangladesh. For example, food-for-work
beneficiaries were found to have a higher calorie
intake than cash-for-work beneficiaries (2488
compared to 2183 kcal/cap/day), and a VGD
beneficiary was found to consume 1624 kcal per
day compared to a non-VGD beneficiary from a
similar income group who consumed 1513 kcal
per day.
•
Food has high costs for
transportation, storage and
handling.
•
Food losses from spoilage
and theft.
•
Food is less easily exchanged
for other essential items.
•
Introduction
of
large
quantities of food into a local
market may depress food
prices, creating a disincentive
for local production.
protect
price
cash by beneficiaries depends on a number of
factors, the most important of which is the
household’s level of food security. A breadwinner
who is uncertain whether s/he would have enough
food to feed her/his children tends to prefer
receiving food over cash. Other factors influencing
preference include the level of control they can
exercise over the income transfer, the type of
programme they are enrolled in, and the
entitlements they are receiving (see section
“reactions from the field…”).
The favoured commodity used by food aid
programmes in Bangladesh is more often than not
wheat. Wheat is cheaper and on a pound for
pound basis has a higher nutritional value than
rice. Bangladeshi nevertheless generally prefer rice
to wheat. Wheat therefore offers an element of
self-targeting; only the poor are readily willing to
accept it, thus weeding out the less needy and
charlatans alike. Cash-based programmes, on the
other hand, are likely to attract less deserving,
Beneficiary’s choice
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B a n gl ad e sh F o od S e cu r it y Br ie f
southeastern part of the
country and along the major
rivers. Overlaying this map
with a map of the road
network in Bangladesh identifies areas
where food shortages may be experienced from
time to time, as poor or non-existent road
infrastructure directly impacts on the amount of
food being transported into an area as well as
increases the price of food due to high associated
transportation cost. This preliminary analysis would
indicate that there are geographic areas in the
Chittagong Hill Tracts, adjacent to major rivers, and
in the coastal zone, where people do not have easy
access to marketed food. Further analysis,
incorporating local price variations, would be
required to exactly determine areas where nonavailability of food grain is a key concern.
better-off households, ultimately demanding a
more tedious selection mechanism and monitoring
system.
At household level, wheat is only consumed in the
form of flour – “atta”. This means that the wheat
needs to be milled before consumption, the cost of
which the beneficiaries have to pay; an additional
reason why rice is preferred to wheat. In future,
most WFP beneficiaries will receive wheat in the
form of fortified atta, thus eliminating the burden
of milling costs. Fortification of atta is essentially a
process whereby cash resources are used to
increase the value of the food commodity that is
provided to the beneficiary.
Targeting individual household members is likely to
be easier through the provision of food than cash.
Supplementary feeding for pregnant/lactating
women and malnourished children is a good
example of how food aid can be used effectively to
directly address the particular needs of the most
vulnerable household members.
Food grain surplus/deficit producing areas
(2001/2002)
During natural disasters, physical access to food is
often severely hampered. Food stocks and crops
may be destroyed and markets are at least
temporarily
dysfunctional.
Transport
and
communication capacity is probably cut or at least
reduced. The emergence of food shortages is
imminent. During the 2000 flood in the southwest
of the country, the price of rice increased from 12
to 18 taka per kilo. Providing cash at the initial
stage of an emergency may result in further
increases of food prices. Bangladesh, being a
disaster-prone country, with annual floods,
recurrent cyclones and occasional droughts,
maintains a food grain security stock in order to
ensure adequate cereal supplies during
emergencies. This readily available food grain
enables timely implementation of relief activities
which help to avert food crises arising out of
natural disasters.
(ii) Context of the programme
The context in which the programme is
implemented involves issues such as availability
and accessibility of food, local economic conditions
and cost effectiveness.
Availability and access
It is generally accepted that food aid is most
effectively utilised where markets are weak and
food is scarce. In most of Bangladesh, however,
commodity markets function well and so, at least
on that score, it would make sense to provide
cash. Cash injections into a local economy can
have a stimulating affect on food production and
trade. This principle is derived from Sen’s
entitlement approach to poverty and famine, which
argues that restoring access to food is the key to
sustainable improvement in the food security
situation.
The map below shows the food grain surplus and
food grain deficit areas of Bangladesh. It is based
on an average non-poor demand for food grain of
504 grams per person per day (PMS 1999 / HIES
2000) and local production estimates. Although it
does not show the availability of food, it does
provide an indication of where pockets of nonavailability of food grain may exist. In these areas,
food transfers would be justified. Cash injections
into isolated areas may raise food prices beyond
the reach of the poor by raising demand for food
without increasing supplies. As the map illustrates,
food deficit areas are primarily located in the
Local economic conditions
-3-
more cash or a
more diversified
food basket would be beneficial. A reduction in
local purchases of food grain is unlikely if aid
programmes are well-targeted at the extreme poor.
Due to lack in purchasing power, their real demand
is not reflected in the market. In such
circumstances, an income transfer, even if it is in
the form of food, may actually increase the
demand for food.
Cost effectiveness
How much does it cost to transfer 1 taka worth of
food and how much to deliver 1 taka of cash?
IFPRI (1995), estimated that RMP, a cash-for-work
scheme, delivers 1 taka income at a cost of 1.3
taka, compared to the VGD programme that
delivers it at a cost of 1.6 taka. VGD operates with
higher expenses due to handling cost (e.g.
transport, storage, packaging). The immediate
conclusion is that cash is less costly to manage, as
it does not bear the cost of commodity handling.
However, other factors such as leakage,
institutional capacity, administrative charges and
likely impact also have to be taken into
consideration.
Given the current administrative distribution
channels, leakage is likely to be much higher in the
case of cash than food. Distribution of food aid is
visible by way of transport and storage. Cash does
not have this advantage and given the weak
institutional capacity in Bangladesh visibility may
be
an
important
factor
in
preventing
misappropriation.
Introducing cash programmes for the ultra poor
would require the establishment of a transparent
transaction and control system. To do so, there are
some major financial management difficulties that
need to be overcome. For example, it may be
difficult to use rural banks for the distribution of
cash. In case of VGD, the amounts of cash are
small and likely to be cashed immediately by
programme participants as soon as it is in their
accounts. Rural banks may therefore refuse to
open individual bank accounts or charge high
administrative fees. Monitoring the actual receipt
by the programme participants may also prove to
be more difficult than in the case of food as
without the benefit of a distribution point,
beneficiaries need to be individually visited to
verify whether they have received their taka
entitlement.
Seasonality plays an important role in the rural
economy of Bangladesh. Wage income and food
prices fluctuate according to the production cycle.
This in turn is reflected in the food intake of poor
people.
The lean period from October to
December is particularly severe due to redundancy
in agricultural employment and relatively high food
prices just prior to harvest. Fluctuating food prices
can be a justification for providing food transfers to
poor households. During a period of high food
prices, the real value of cash declines and less
food is bought for the same amount. When
assistance is most needed by the hungry poor, the
value of the cash transfer is at its lowest. On the
other hand, a food transfer becomes a more
valuable resource during this period. This was
acknowledged by one of the VGD women
interviewed who reported, “during crisis, food is
better as the price of food is too high”.
Large quantities of food aid can have a negative
impact on the local production of basic food
commodities. This will be the case if, due to food
transfers, excessive amounts of food grain are
marketed or if demand for local commercially
supplied grains is reduced. Carefully targeted food
aid programmes and appropriate ration scales
would minimize these consequences. Food rations
should be based on the consumption requirements
of the poor in order to reduce the likelihood of sale
or diversion. Participants in the Road Maintenance
Programme, for example, who receive 75 kgs of
wheat per month, often received the 2 – 3 months
entitlement at once. It is unlikely that programme
beneficiaries are able to store or consume these
large amounts and subsequently much is sold on
the local market. In such circumstances, providing
-4-
B a n gl ad e sh F o od S e cu r it y Br ie f
entitlements if instead of
wheat they would be given
cash. Some quotes:
“My husband’s long hand will
grab it”
“The money lender will come and I have to pay
back my loan. When I receive wheat, he will leave
me alone”
“With wheat I can tell him (the husband), that it is
for the kids. If instead I would receive money, he’ll
take it and spent it on something else, leaving me
without food for my children”
This sort of feedback from programme participants
supports the premise that highly food insecure
households prefer to receive food over cash. Once
their access to food is secured however, then cash
is preferred.
The monthly food entitlement for a RM beneficiary
(about 75 kg) is enough to negate the usual
concerns about food sufficiency. It has been noted
that delays in delivery of both food and cash to the
RM participants compel them to take out loans.
When the food is eventually delivered, most of it is
sold on the market in order to repay these loans. It
becomes apparent, therefore that once their
access to food secured, cash becomes their
preferred option, as it allows them to purchase
food, spend it on education, or buy productive
assets such as poultry and goats.
This is not the case for VGD participants. Their 30
kg wheat ration normally last between 15 – 20
days. From a situation of chronic food crisis, the
VGD ration provides them with a sense of
household food security. As one VGD woman put it:
“Wheat gives my family a secure meal throughout
the month.”
WFP Bangladesh
Vulnerability Analysis & Mapping Unit
Reactions from the field…
To get feedback from the field on the issue food
versus cash, WFP conducted a series of focus
group discussions with WFP programme
participants. Discussions were held with
participants from the previous and current
Vulnerable Group Development (VGD) cycle, and
the Routine Maintenance (RM) programme. VGD is
essential a food for training programme were ultra
poor women receive a ration of 30 kg of wheat per
month in exchange for training. RM is a food for
work programme were female participants receive
compensation in the form of food (75 kg per
month), cash (Taka 350 per month) and savings
(Taka 400 per month).
Interviewing VGD participants in Helatala Union of Kalaroa Upazila (photo: SM
Murshid, WFP)
There was a distinct difference between VGD and
RM participants in their choice for wheat or cash.
While the first group preferred wheat, the second
opted for cash combined with a wheat ration. This
outcome
corresponds
with
their
current
entitlements. RM participants would even prefer to
receive their wages fully in cash if timely payment
could be guaranteed. Problems associated with
wheat payment, such as, bad quality, cleaning and
milling losses, undersupplied ration, and
transportation difficulties were mentioned as
reasons for their preference for cash payments.
Cash provides them with more flexibility in paying
for other essentials items.
For VGD participants this flexibility of cash was
predominantly found to be a negative factor.
Several women with disabled or sick husbands
reported, “with money I have to pay for the doctor,
leaving my family without food.” Family often puts
pressure on the women of how to spend the
money they earn. The women were particular
concerned about having less control on their
Conclusions:
The requirements for bridging the consumption
gap of the poor are enormous. While donors are
interested, resources are limited. As some donors
are more likely to make available substantial
amounts of food surpluses than cash to
Bangladesh, it is important to understand the
comparative value of food aid in addressing the
needs of the extreme poor before advocating a
shift to cash-based programmes.
Food and cash have both an important role to play
in eliminating hunger and achieving sustainable
improvements in the food security and livelihoods
-5-
situation of the poor. Food-based programmes
should be targeted at households in situations of
chronic poverty and where access to food is the
primary concern. Food can be used as a safety net
to hold the poorest of the poor above the chronic
poverty line. However, food alone cannot achieve
this, and needs to be complemented by skills
training and creation of assets. This is where cash
has an advantage as it better facilitates and
encourages investment in productive assets. Cash
can also be used to increase the value of the food
aid commodities, for example through the
fortification of flour or the production of highenergy biscuits. Thus, rather than talking about
food versus cash, it is important to explore ways of
how food and cash can complement each other in
the combat against hunger and malnutrition.
References:
BBS, Preliminary Report of Household Income & Expenditure Survey 2000, December
2001.
BBS, Report of the Poverty Monitoring Survey, May 1999
IFPRI, Akhter U. Ahmed, Yawar Shams, Nutritional Effects of Cash versus Commoditybased Public Works Programs, 1994.
IFPRI, Akhter U. Ahmed, Cost Effectiveness of Targeted Food Programs in Bangladesh,
1995.
IFPRI, Paul A. Dorosh et.al., Food Aid and Producer Price Incentives, FMRSP Working
Paper No.32, May 2001.
IFPRI, Carlo Del Ninno and Paul A. Dorosh, In-kind Transfers and Household Food
Consumption: Implications for Targeted Food Programs in Bangladesh, FMRSP
Working Paper No.17, March 2000.
Goldstein, Daniel M., Timothy R. Frankenberger, Cash-for-Work / Food-for-Work
Programs for Improving Household Food Security During Food Deficits, University of
Arizona.
Hisham Khogali, Cash: An Alternative to Food Aid, Oxfam GB.
RESAL, Cash Payments in Comparison to Payments in Kind in Income Generating
Food Security Programmes, Frieder Konold, Seminar on “Integration of Cash Payment
Systems into the Food Security Programmes of Bangladesh.”
Stephen Devereux, Social Protection for the Poor: Lessons from Recent International
Experience, IDS Working Paper 142, January 2002.
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