Protective and productive: The Role of Social Protection for Rural Development and Food Security

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1 Discussion Papers on Social Protection Protective and productive: The Role of Social Protection for Rural Development and Food Security By Barbara Rohregger Introduction Increasing agricultural production of small-scale farmers has for a long time been considered key for reducing rural poverty and increasing food security. Increased production levels would lead to an overall increase of farmers income while the steady supply of food at local and regional markets would keep food prices low. The overall increase in demand due to rising income levels would lead to the creation of jobs both inside and outside the agricultural sector, from which especially the land-less population would profit. The negative impact of the global financial and economic crisis, including skyrocketing food prices, as well as the increasing number of food crises due to natural disasters and wars have led to a rethinking of this supply-side based model. The rising degree of vulnerability of the rural population due to dramatically changing social, economic, ecological and demographic conditions, such as migration, aging, climate change, as well as the erosion of traditional community and family based social support schemes, have shifted the focus to demand-side measures, including social protection mechanisms as an important tool to combat rural poverty and increase food security. While the development of the rural economy remains a key pillar of rural development concepts, the role of social protection as an intrinsic element of rural development and growth is increasingly recognized (for example, BMZ, 2011; Europe Aid 2010; UN High Level Task Force on Food Security, 2010, HLPE 2012). Besides their protective function, social protection instruments also have the potential to promote investments in production, thereby increasing household incomes and strengthening economic growth. This policy paper examines the links and positive interactions between social protection and rural development as well as food security and gives recommendations how to better make use of the synergies between both policy fields in German development cooperation. Prevention, protection and promotion: The principal functions of social protection Social protection plays an important role in combating rural poverty and contributing to food security. First, social protection mechanisms support people to better cope with incurred social and economic risks and help to mitigate them by protecting their livelihoods and smoothing their consumption (protection from risks). Second, by strengthening peoples resilience and diversify their livelihoods, social protection measures shall prevent them from engaging in so-called negative coping strategies that may even lead them deeper into poverty, such as selling off their productive assets in crisis situations or taking children out of school (prevention of risks). Third, instruments of social protection play an important role in relation to growth and development of rural areas by contributing to the promotion of peoples livelihoods. By increasing the household income, cash transfers are an important catalyst for longterm structural change: By contributing to the growth of local and regional markets, cash transfers may also have a positive impact on employment creation and local production levels (promotion). (Devereux & Guenther 2007, Devereux, Sabates-Wheeler & Guenther 2008; Slater & McCord 2009, Dorward et al., 2008, Holmes et al., 2008). At the implementation level, these functions are often hard to separate: single social protection interventions may acquire multiple functions. Their function may also fluctuate depending on the specific context and situation. By enabling people direct access to food and other important basic needs, social transfers have for example, a direct, short-term poverty alleviating impact. At the same time, they support long-term structural changes by enabling people to improve their livelihoods thereby increasing their capacity to cope with future crisis situations (resilience). The function of social protection also depends on the way a social protection mechanism is linked to other social or market-based measures and it is embedded in an overall rural develop-

2 ment and/or food security strategy, for example when cash transfers are linked to the provision of productive assets and/or agricultural training services in order to improve the productivity of beneficiaries. The close linkage of protective and productive dimensions in social protection also points at its multi-sectorality which tends to blur the distinction between social protection and rural development measures. These overlaps become particularly apparent when looking at the implementing agents or policy sectors: so-called market-based approaches to social protection, such as subsidies on food or the provision of productive inputs, such as seed or fertilizer, nationally guaranteed food prizes or the provision of national grain reserves are mostly implemented by Ministries of Agriculture and Rural Development, Economics and/or Trade. They may be termed social protection interventions as much as measures of rural development and agriculture (Devereux, 2007). Analyzing the synergies and complementarities between social protection and rural development also means to take a closer look at the target groups: while rural development traditionally targets households with a minimum of agricultural assets and self-help potential, social protection measures in developing countries often target households with no or only limited productive capacity. In this context, social protection can fulfill an important complementary function for rural development measures. However, social protection does not only target the poor but the whole of society, encompassing a broad range of different population groups. For each group specific measures exist, depending on the type of risk /need to be covered, the overall goal of the measure (short-term or long-term poverty reduction) and finally, the financing capacity of the target groups. Insurance measures, for example, require a regular minimum income in order for beneficiaries to be able to pay regular contributions, an exclusionary factor for most rural poor. Against this background, the issue of targeting of social protection measures in rural development needs careful consideration. What is the overall aim of the intervention? Is it about providing a minimum protection against poverty and hunger for the very poor farmers and marginalized, often landless rural population or is it about strengthening the potential of the less poor who have land and some productive assets in order to boost their production and consumption and strengthen rural growth and development? Three dimensions of social protection in rural development Social protection thus may acquire different functions which may support traditional rural development measures. Depending on the specific instrument, it can provide an important complementary function in order to protect livelihoods and promote long-term structural change. Moreover, linking and aligning social protection with rural development measures in a more structured way, innovative approaches towards food security and inclusive growth and development in rural areas may be developed. (a) Social Protection as a Safety Net Social transfers have proven to be a highly effective and efficient instrument in order to deal with hunger and food crisis. Transfers in cash or in-kind, or vouchers that allow recipients to purchase certain food items or other important basic needs and social services, are highly effective safety nets that facilitate access to food for the most vulnerable groups, thereby reducing hunger and malnutrition. Such kind of social protection measures are usually ad-hoc programmes that are implemented in order to mitigate shortterm food crisis due to natural disasters, wars or hikes in food prizes (Europe Aid, 2012). Safety Nets also include food or cash for work programmes. They are usually short-term programmes that offer employment in return for cash or food to the able-bodied poor, most commonly in the public works sector, such as the construction of roads, schools, hospitals or dykes (Devereux & Guenther, 2007). The aim of these programmes is to support people in overcoming transient food crisis situations, while at the same time improving rural infrastructure. In the context of a development oriented Emergency and Transitional Aid Project (DETA) supported by BMZ/GIZ in South Sudan, a food and cash for work project has been implemented with the major aim of empowering returning refugees, in addition to local inhabitants, to secure their livelihoods. While improving productive infrastructure, the programme aimed at providing short-term support in cash and food through employment measures for people in need during critical times of transition from emergency towards sustainable development (GIZ, 2012) (b) Social Protection and structural poverty alleviation If provided over a longer period of time, social protection may have a positive impact on structural poverty reduction both of individuals and households. Instruments of social protection, such as cash transfers allow people to plan over a longer period of time, thereby adapting their investments and spending pattern to the agricultural cycle and seasonal food shortages. In this way, future food crisis may be prevented and mitigated, negative coping mechanisms, such as selling off their productive assets (land, livestock), reducing their food intake or abstain from necessary medical consultations, reduced. Experiences have shown that people who receive regular transfers also engage in economic activities that bear higher risks but also higher returns. This allows them to broaden their income portfolio, an important means to cope with future crisis situations and prevent them from falling even deeper into poverty (Barrientos & Sabates-Wheeler, 2006; Lichande, 2010, GTZ, 2005; 2008a; 2008b). Strengthening the resilience in order to be able to better cope with risks in the future is also one of the key concerns of the global approaches to strengthening the global food and nutrition security sustainably (UN High Level Task Force on Food Security, 2010). In this context, social protection is considered a powerful tool to improve global food and nutrition security, in particular when linked

3 to supply side measures that stimulate small-holder productivity and measures that protect national and international food markets (ibid.). The provision of regular cash transfers may also boost the purchasing power of households having in turn a positive impact on local economies. If markets function well, cash transfers may stimulate the demand for products and services and in turn increase local production and employment creation (Hailu &Soares, 2009). This is of particular importance in regions, where markets are not well-developed and agricultural production is mainly based on subsistence farming. Without demand side incentives that stimulate productivity and production the impact of supply-side interventions on agricultural production and structural poverty alleviation will be limited. The productive potential of social protection also refers to its role in stimulating human capital development. Especially in regard to cash transfers, a positive impact on the increase of school enrolment rates as well as utilization rates of health services is discernible providing an important contribution to sustained poverty alleviation across generations. Longitudinal studies point at a positive impact on health and educational levels (Barrientos for Mexiko, 2011). The social cash transfer scheme in Malawi supported by BMZ/KFW saw a significant decrease in reported sickness in adults and children, while at the same time the demand for health services by children and adults significantly increased which was also discernible in higher health care expenditure rates on household level. The increased level of health was also due to the fact that food security had significantly improved. Household expenditure on food had increased, and people also reported less missed meals, as well as the consumption of better quality food. Similar results have been found for education. Expenditure on education has significantly improved, resulting in higher enrolment and fewer absences (Miller et al., 2008). School feeding programmes show comparable results: while the access to food for school-children is the priority of such programmes they have a strong structural impact aiming at encouraging parents to send children to school, also in crisis situations, as well as improving the learning capacity of children. Besides transfers in the form of cash, transfers of productive assets, including rural extension services are of particular relevance, as they have a direct impact on agricultural production of rural households. The integrated livelihood programme funded by DFID in Bangladesh assists poor households and individuals in rural areas in establishing a sustainable livelihood through the provision of agricultural assets, such as livestock, skill development training and a small subsistence allowance. Community support, including social awareness education and health care services are complementing the material inputs. Income-generating activities, skills training and community awareness training regarding expenditure on food and community coping strategies in crisis situation, shall help to improve access to food. The component on community awareness and training on hygiene and nutrition, as well as health services aims at improving the utilization of food and hence, the health status overall (Holmes et al., 2012). As a social and economic unit, rural households are particularly exposed to reproductive and productive or workrelated risks. Sickness or other major live-cycle risks can create major economic drawbacks: apart from the temporary loss of labour supply due to sickness, the productive assets of the household may be at stake, as people are forced to sell them off in order to access and finance health services. In order to compensate for the loss of labour, children may be taken out of school or other negative coping mechanisms are employed. Both have catastrophic consequences for the survival of the household. While extreme poor households show a higher exposure to such risks, also less poor and able-bodied households are concerned. They also need social protection mechanisms in order to avoid that they fall deeper into poverty. Micro-insurance schemes for health, death, age or other live-cycle risks are important means to cope with these risks. Increasingly they are also used as effective means to cope with the risks and consequences of natural disasters and climate change, most notably in form of harvest insurance. The GIZ supported RIICE project (remote sensing-based rice Information and Insurance for Crops in Emerging economies) aims at providing crop insurance for rice farmers in seven East- Asian countries. The index-based insurance scheme insures crop failures with individual farmers, local or regional governments and banks. Latter sell the crop insurance as part of a loan portfolio. Based on geo-referenced data of actual rice yields the potential crop losses for an area or a region are estimated. This in turn, provides the basis for the calculation of the trigger, i.e. when the insurance cover becomes active (RIICE, 2012). (c) Social Protection and Inclusive Growth As an instrument that provides both protection and enhances productive opportunities for the most vulnerable in society, social protection provides an important contribution to inclusive growth and development in rural societies. Linking and aligning social protection measures with traditional agricultural interventions can create important synergies and increase the efficiency and effectiveness of both: Through well-designed and complementary supply-side and demand-side interventions the local production and local markets can be stimulated. Evidence shows that cash transfers can stimulate the demand for products and services and thereby, boost local production and employment creation. This is especially the case there, where markets are not welldeveloped and agricultural production is mainly based on subsistence farming. However, to promote inclusive growth social protection programmes have to be designed wisely. Experiences have shown that a better timing of social cash transfers in line with the agricultural cycle has a positive impact on the increase of production as well as on smoothing transient food crisis without having to fall back on negative coping strate-

4 gies. One positive example is the Productive Safety Net Programme (PSNP) in Ethiopia which provides access to a social transfer for six months a year with the aim to enable the rural population to better cope with chronic food shortages. In order not to disturb local markets and depending on the availability of food, this transfer is paid out in cash or in-kind. For those able-bodied the transfer is conditioned upon their participation in a public-works programme (Gillian et al., 2008). PSNP is part of a wider multi-donor supported programme on food security that provides training for farmers on innovative planning techniques and sustainable resource management. The programme also offers small-scale credits for productive assets. Apart from traditional agricultural inputs like seeds or fertilizer, the programme promotes alternative income sources for smallscale farmers and land-less population groups in order to further strengthen their income base. Through this complementary approach, which targets different population groups and their specific needs within one programme, short-term support is provided while at the same time, the resilience of rural societies is strengthened in the medium and long term. Other approaches of social protection include measures related to structured demand. These measures aim at reducing vulnerability by linking demand-side and supply-side aspects. They aim at enhancing the productivity of smallscale farmers by linking them to large, predictable sources of demand, such as food programmes, public canteens in schools or hospitals or large scale-industrial demand. These institutions usually rely on local procurement modalities. By strengthening local demand, it is hoped that food availability will increase overall, thereby raising farmer prices and stimulating production (Coles et al., 2012). Such measures which are usually based on contractual arrangements allow small-scale farmers to sell their products already before harvesting, thereby increasing their security in terms of planning and investment decisions. For the buyer this system guarantees a steady supply of products, less transaction costs and control over the product s quality. A specific form of structured demand which directly links measures for increased food and nutrition security with measures for increased market integration of local small-scale farmers is the provision of food for feeding programmes or public canteens of schools or hospitals through local farmers in order to guarantee a steady supply and reduce procurement costs, while at the same time strengthening the demand and incentives the production of local products. Such measures are increasingly also used by large scale emergency food programmes, such as the World Food Programme (ibid.). This approach is already successfully practiced in a number of countries, amongst other Brazil. German Development Cooperation plans to establish a similar model in Bolivia. Governance Challenges to Integrated Programming Linking social protection and rural development implies working cross-sectorally. This means to think, plan and implement across different policy sectors in order to achieve synergies and increase sector outcomes. Such an approach requires new and innovative forms of governance, including new forms of cooperation and coordination across different portfolios and line-ministries. At the same time, it means working in a multi-stakeholder environment where non-governmental actors, including development partners, NGOs, farmers associations and the private commercial sector play an increasingly important role. Incorporating these partners into political decision making processes as well as planning, implementation and monitoring is key for successfully putting into practice integrated rural development approaches. Successful programmes that integrate rural development measures with social protection and wider social policy and labour-market based policies are based on comprehensive development strategies that unite different policy areas and other actors in society around a common objective. In many developing countries social protection measures have been successfully put in place in order to combat rural poverty and food insecurity. Many of these countries have also ambitious rural development strategies that have growth and food security as their major goals. However, these strategies are seldom aligned, actions not coordinated. Countries that have developed a comprehensive development and growth strategy based on common goals, such as the Zero- Hunger strategy in Brazil or on a common focus, such as the promotion of agriculture in Ethiopia, were better able to align and harmonize policies across different sectors, including social protection, agriculture and labour market policies. Evaluation and monitoring mechanisms based on common targets and goals can further strengthen such efforts. Knowledge and evidence on the positive mutual impact of social protection and rural development is important in order to convince policy makers and practitioners to engage in more coordinated efforts towards strengthening rural development and food security. Equally important for the success of integrated approaches are however, also the policy discourse and public awareness of these topics. The way rural development, social protection, and food (in)security are perceived by the political elite and the public, including the causes for their failure and the solutions for their cure can in many ways be much more powerful and important in shaping strategies of rural development and food security, including social protection instruments and the choice for the priority target group than any empirical evidence to its contrary (for example Hickey, 2007). Taking these factors into account when advocating for, planning and implementing integrated approaches to rural development and food security is as much important as the creation of convincing policy evidence. Conclusions and Recommendations Social protection plays an important role in combating rural poverty and increasing food security. Safety nets help mitigating transitory crisis situations, including food insecurity. At the same time, social protection measures contribute to structural poverty alleviation by preventing people from engaging in negative risk management strategies and allow-

5 ing them to diversify their livelihoods, thereby increasing their resilience. Social protection is also an important demand-side intervention that helps to incentivize local markets, support investment in productive activities and have a positive impact on local employment structures. A stronger integration of social protection into rural development concepts as a complementary element in order to strengthen and maximize sector outcomes can, thus, improve the impacts of rural development and food security programs. While the positive impact of integrated approaches on rural development is widely recognized, their implementation provides major challenges, in particular the coordination and alignment of different policy sectors. In 2011, the German Development Cooperation has developed a new concept for rural development and its role for food security which promotes a comprehensive approach. Alongside with the development of the rural economy, sustainable management of natural resources, the improvement of the wider political-institutional framework and the development of technical infrastructure, social protection also plays an important role (BMZ, 2011). However, implementing such an approach is challenging. Against the background of the issues raised above, for the German Development Cooperation, the following aspects appear to be of particular relevance: German Development Cooperation is a strong and experienced stakeholder in regard to rural development supported in a considerable number of countries, especially in Africa and Asia. Many of these countries have also embarked on ambitious social protection programmes. Against the background of the new comprehensive framework for rural development, German Development Cooperation could play a stronger role in facilitating and strengthening cross-sector alignment and coordination between rural development and social protection in order to improve rural development and/or specifically strengthen food security in partner countries, for example through technical support for the development of a common strategy or the development of an evaluation and monitoring scheme, including common objectives/ indicators in order to measure progress. Cross-sector thinking and alignment of policy action would also need to be strengthened within German development cooperation. Its highly compartmentalized structure makes this a challenging task. Despite the development of an integrated framework for action, silo-thinking among the different policy divisions within German development cooperation persists. In order to better align sector policies and increase synergies for a sustainable and pro-poor rural development and increased food security cross-sector dialogue and planning within German development cooperation would need to be improved both on ministerial and headquarters level, as well as in the partner countries. This would also need to imply a greater flexibility in implementing country concepts, regional development strategies and focal areas of development at country level. At the implementation level, innovative approaches at the interface of social protection and rural development should be identified and further developed. These approaches should aim at increasing productivity while at the same time taking into account aspects of social protection and social policy with regard to a reduction of rural poverty and pro-poor development. Rural development programmes for example, that have an important infrastructural component, such as the construction of roads, markets or irrigation schemes, could consider a more systematic use of public works in order to protect and strengthen the livelihoods of rural population groups. The promotion of famers association for the promotion, processing and marketing of agricultural products is another key element of many rural development programmes. In many African countries farmers associations provide some sort of social funds for the payment of school fees, health costs or funeral costs for their members. Some of them have established micro-insurance schemes (mutuelles). These initiatives could be further strengthened, the potential role of farmers associations as delivery channels for micro-insurance schemes or other social protection measures enhanced. Increasing sector outcomes by linking social protection and rural development also relates to the debate around the different target groups. Here, social protection and rural development can indeed create strong synergies by bringing as well the most vulnerable such as the poor, the elderly and people with disabilities into development processes. Innovative approaches also need to be shared and experiences exchanged across countries and regions. German Development has an important role to play in this regard. Multi-sector approaches do not only imply to work across government, but to include nongovernment actors in the development, implementation and monitoring of comprehensive approaches, such as NGOs, civil society, the private commercial sector, other development organizations and research institutions. By facilitating and strengthening such a multi-stakeholder dialogue in regard to social protection and rural development, German Development Cooperation can play an

6 important role in ensuring that these actors and their knowledge, experiences and needs are stronger taken into consideration and integrated into the realization of comprehensive development and growth strategies. Politics matter. The political discourse and public awareness on rural development and food security are key for understanding and engaging successfully in country policy processes. It is paramount for donors, civil society and other non-government actors to engage in this process in order to be able to strengthen national efforts towards comprehensive approaches in rural development in order to increase food security or raise awareness there where comprehensive approaches stand in stark contrast to the dominant discourse on adequate approaches and solutions. Bibliography Barrientos, A., R. Sabates-Wheeler (2006) Local Economy Effects of Social Transfers. Institute for Development Studies: Brighton. Barrientos, A. (2011) Social Protection for Poverty Reduction: Approaches, Effectiveness and Challenges. Presentation at the International Conference Reforming Social Protection Systems in Developing Countries, Bochum, October 2011 Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (2011) Entwicklung Ländlicher Räume und ihr Beitrag zur Ernährungssicherung. Konzept. BMZ- Strategiepapier 1/2011.BMZ: Bonn Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (2009) Sektorkonzept Soziale Sicherung. BMZ-Strategiepapier 180. BMZ: Bonn Coles, Ch., Bhuvanendra, D. (2012) What is known about the impact of structured demand activities in resilient food systems? Overseas Development Institute: London Devereux, S., Guenther, B. (2007) Social Protection and Agriculture in Ethiopia. Country Case Study prepared for a review commissioned by the FAO on Social Protection and Support to Small Farmer Development. Conference Paper. Food and Agricultural Organisation: Rome Doward, A., Chirwa, E. Boughthon, D., Crawford, E, Jayne, Th., Slater, R., Valerie, K., Tskoka, M. (2008) Towards smart subsidies in agriculture? Lessons from recent experience in Malawi, Natural Resource Perspectives 116, September 2008, Overseas Development Institute: London Europe Aid (2010) Social Transfers in the Fight Against Hunger. Tools and Methods Series. Reference Document (Draft). EuropeAid: Brussels Gillian, D., Hoddinott, J. (2008) An Analysis of Ethiopia s Productive Safety Net Program and its linkages. Institute for Food Policy Research Institute: Washington [online] EDiA/papers/391-Taffesse.pdf GTZ (2008a) Policy Brief Konditionierte Sozialtransfers in El Salvador und Paraguay. Deutsche Gesellschaft für Technische Zusammenarbeit: Eschborn GTZ (2005) Social Cash Transfers Reaching the Poorest. Deutsche Gesellschaft für Technische Zusammenarbeit: Eschborn GTZ (2008b) Konditionierte Bargeldtransfers in Lateinammerikanischen Ländern. Erfahrungen und Lessons Learned. Workshop. GIZ: El Salvador Hailu, D. and Soares, S. (2009) What Explains the Decline in Brazil s Inequality? One Pager Number 89, [online] http: High Level Panel of Experts (2012) Social protection for food security. A report by the High Level Panel of Experts on Food Security and Nutrition of the Committee on World Food Security, Food and Agricultural Organization: Rome Holmes, R., Farrington, J., Rahman, T., Slater, R. (2008) Extreme poverty in Bangladesh: protecting and promoting rural livelihoods. ODI: London. Holmes, R., Slater, R. (2012) Social Protection and Resilient Food Systems: The role of integrated livelihoods Approaches. Draft. Overseas Development Institute: London Lichande, G. (2010) Decomposing the Effects of CCTs on Entrepreneurship. Policy Research Working Paper 5457, Washington: The World Bank Miller, C., Tskoa, M., Reichert, K. (2008) Impact Evaluation Report. External Evaluation of the Mchinji Social Cash Transfer Pilot for the Government of Malawi, USAID and UNICEF Malawi [online] ation_report_final_august.pdf RIICE (2012) Increasing Food Security in Asia through Satellite based Information and Insurance. [online] Rohregger, B. (2011) Potentiale und Anknüpfungspunkte von Ansätzen der sozialen Sicherheit im DEU Portfolio der Ländlichen Entwicklung/Ernährungssicherung. Studie im

7 Auftrag der Deutschen Gesellschaft für Internationale Zusammenarbeit, GIZ: Eschborn Rohregger, B. (2012) Optionen für Ansätze der Sozialen Sicherung im Kontext des Programms Nachhaltige Agrarwirtschafsförderung in Burkina Faso der Deutschen Entwicklungszusammenarbeit. Studie im Auftrag der Deutschen Gesellschaft für Internationale Zusammenarbeit, GIZ: Eschborn. Slater, R. und McCord, A. (2009) Social protection, rural development and food security: issue paper on the role of social protection in rural development. Overseas Development Institute: Londonhttp:// United Nations - High Level Task Force on the Global Food Crisis (2010) Updated Comprehensive Framework for Action. United Nations: New York Published by: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Registered offices: Bonn und Eschborn Dag-Hammarskjöld-Weg Eschborn/ Germany T F E social-protection@giz.de I March 2013 Issue No. 16 Editors: Cormac Ebken, Planning Officer and Martina Bergthaller, Policy Advisor, Social Protection Section Editor-in-chief GIZ Discussion Papers on Social Protection: Dr Matthias Rompel, Head of Social Protection Section The paper is intended to contribute to the debate and offers an overview of the current international discourse and more profound insights into current practice. The analysis, results and recommendations in this paper represent the opinion of the author(s) and are not necessarily representative of the position of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.