Agriculture Reference
In-Depth Information
reliance on international markets is easier to achieve if market intelligence func-
tions effectively, international supply is available and relatively easy to access,
and foreign exchange reserves are available. The Bangladesh experience is par-
ticularly instructive on this point.
Furthermore, because the levels of poverty and vulnerability to income
shocks are not uniform across regions, transporting grains from region to re-
gion and holding stocks all over the country is inefficient. With optimal control
and planning, level of stocks can be reduced substantially. For example, stocks
can be held in strategic locations at levels necessary to deal with income or pro-
duction shocks. Locations can be identified using vulnerability analysis, and the
stocks can be procured through competitive bidding. The chosen trading or-
ganization can then deliver the grain at the time and locations where the stock
is needed (see Gulati and Kahkonen 1996). The procured stock can then be ro-
tated through targeted distribution programs, especially in the regions where
such programs need to be continued because of infrastructural and institutional
bottlenecks.
DESIGNING APPROPRIATE SSNS
. Even if the private sector can be relied on
to ensure efficient allocation of resources, given the level of poverty and sus-
ceptibility to weather-related income shocks, the need for SSNs remains. The
question is how should they be administered after the price policies are re-
formed? Because these programs evolved as part of the dual-pricing policies,
the policy actions that break the procurement-stocking-distribution paradigm
can potentially create an undesirable vacuum. This imbalance is precisely what
had happened in Indonesia when BULOG was transformed into a state trading
enterprise without devising alternative mechanisms to replace BULOG's role
as provider of SSNs. Pakistan also has had similar experiences when its public
rationing system was abolished without devising alternatives to protect the poor
and vulnerable.
Issues of SSNs are addressed in the chapters on Bangladesh and India.
These chapters document the experiences of various programs, their cost ef-
fectiveness, and offer suggestions for necessary reforms or improvements. The
Bangladesh experiences suggest that a host of social SSNs have evolved since
the country liberalized its grain markets in the early 1990s. The chapter con-
cludes that, despite initial challenges, the effectiveness of the programs, in
terms of targeting and cost effectiveness, is improving over time, especially
when they are implemented under the partnerships of government and NGOs.
The chapter on India has reviewed the cost effectiveness of various SSN
programs and concluded that the self-targeted programs are more cost effective
than universal food subsidy programs. For instance, costs of transferring US$1
of benefits to the intended beneficiaries of PDS, a universal food subsidy pro-
gram, is more than US$6, which compares to US$1.4 and US$1.85 for Inte-
grated Child Development and Employment Guarantee Schemes, respectively.
Therefore, from the efficiency point of view, the suggestion is to move away
