design and implementation of fisp: evolution, challenges, and innovations
TRANSCRIPT
Design and implementation of FISP:
evolution, challenges, and innovations
Ephraim Chirwa and Andrew Dorward
Facts
By 2013/14 season, FISP has been with us for 8 agricultural seasons
Subsidy budget has risen from 6.8% of total budget in 2006/07 to 10% in 2013/14
The amount of subsidized fertilizers has ranged from 131,000 MT to 216,000 MT, stabilized at 140,000MT
The subsidy on fertilizer has increased from 64% in 2005/06 to 96.8% in 2013/14 of the unsubsidized price
No major changes in the design have occurred during this period, except
Consideration of farm households in addition to maize areas in area targeting
Taking out smallholder tobacco, tea and coffee, cotton seeds and chemicals
Introduction of legumes
Main Design Features and Changes
Design & Implementation Features &Changes
Targeting Resource poor smallholder farmers : 2 bags of fertilizer
50 kg bag 23:21:0+4s ( NPK) – basal fertilizer
50 kg bag urea
Improved maize seeds and legumes
Main Changes over time
More emphasis on targeting vulnerable groups
Intermittent introduction of subsidy on cash cropsCotton seeds and chemicals in 2007/8
Tea & coffee in 2008/9
No tobacco since 2009/10
More regional equity in subsidy targeting
Design & Implementation Features & Changes
Main challenges in targeting
Poor are more likely targeted than the non-poor (random targeting?)
Non-poor get more on average than the poor
High proportion of repeat beneficiaries – some have received it 8 times (can some farmers graduate?)
Design & Implementation Features & Changes
Coupon Allocation & Distribution Initially through traditional authorities
Supplementary coupons – less transparent
More recently, farm registers and distribution through MoAFS and VDCs
Main Changes over time
Use of farm registers and beneficiary verification
Distribution MoAFS
Elimination of supplementary coupons since 2009/10
Open system of coupon allocation and distribution
Public display of beneficiary lists in the communities
Design & Implementation Features & Changes
Main challenges in coupon distribution
Enormous undertaking for MoAFS to register farm households
Variable district performance in accomplishing this exercise
Provides opportunities for creation of ghost villages
Farm families numbers inconsistent with NSO national population of rural households
Increased intra-village re-distribution
Design & Implementation Features & Changes
Coupon Redemption Fertilizer coupons mainly through ADMARC and SFFRFMVariable participation of private sector in fertilizer voucher
redemptionPrivate sector participation in seed voucher redemptionUse of Agricultural Development Divisions for cotton inputs
Main Changes over timePrivate sector participation in fertilizer redemption in 2006/7 and
2007/8Private sector participation in seed redemption from 2006/7Farmer coupon redemption price falling from MK950 2006/7 to
MK500 since 2009/10 (64% to 98% subsidy)Use of voter IDs for voucher redemptionUse of e-vouchers in seed subsidy in pilot areas in 2013/14 Improved security features of coupons
Design & Implementation Features & Changes
Main challenges in coupon redemption
Long distance to markets
Long queues – facilitating ‘tips’ and ‘bribes’
Intermittent supply of subsidized fertilizers in some markets – frequent stock-outs
Political interference in coupon redemption price setting
Diversion and fraud
Strengths Weaknesses
Operational innovation givenpolitical space
Reaching out to a large proportion of rural households
Critical role in household food security given growing population
Some diversification & growth impacts
Positive benefit costs ratiosPrivate input market
development in seeds
Private sector exclusion in redemption of fertilizer coupons
Targeting inefficienciesUnclear productivity effectsDisplacements in both seeds
and fertilizer marketsUncertainty in farm familiesPoor timing & stock-outs of
inputsOne fertilizer formulation
package fit-all-soilsDelayed payments to suppliersDelayed input delivery
SWOT Analysis
Opportunities Threats
Efficiency gains – earlier timing
Coordination with other programmes – extension, markets, social protection, infrastructure, soil fertility
Private sector retail of subsidized fertilizers
Reduced cost / increased farmer contribution
GraduationFertiliser formulationsE vouchers /id cards
High fertilizer pricesSecurity of vouchers and fraudFiscal budget pressures Lack of sustainabilityHigh maize pricesLow farmer redemption pricesInefficient payment systemPopulation growth
SWOT Analysis
Strategic Areas of Further Innovation
Programme objective
Targeting and coordination
Graduation and sustainable impacts
Other innovations
Strategic Innovation ………
Programme objectivePrimary objective should focus on achievement of
productivity
“To increase land and labour productivity of smallholder maize production”
Secondary objectives that maybe achieved consequentially
Food security is implicit in increased maize productivity
Increases productivity also deals with improved incomes and hence poverty reduction
Improved productivity ensure sustainable outcomes
Farm and non-farm diversification
Strategic Innovation ………
TargetingTargeted households should be resource poor productive
smallholder farmers (poor but not ultra-poor)
Resource poor unproductive farmers (ultra-poor) should be targeted for social cash transfersIf transfers under SCT are lower than under FISP – cost savings
Other considerations
Ensure minimal displacement effects
Use of objective and multidimensional criteria
Ensure providing platform for stepping-up or stepping-out
Strong coordination with social protection programmes to avoid multiple dipping
Targeting challenges & costs
National identification system
Poverty Targeting: SCT & FISP (50% R HH)
0.03.3
8.7 10.4 11.214.8 15.3
41.9 37.9
31.2 29.1 28.1 23.7 23.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
0.00 4.82 12.74 15.23 16.43 21.69 22.43
MK
billi
on
% under SCT
SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg -MK29,400
SCT FISP
0.04.0
10.512.5 13.5
17.8 18.4
41.9 37.9
31.2 29.1 28.1
23.7 23.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
0.00 4.82 12.74 15.23 16.43 21.69 22.43
MK
billi
on
% under SCT
SCT: MK2,400/month/hh; FISP: 2 bags of 50 kg -MK29,400
SCT FISP
0.04.9
13.115.6 16.9
22.2 23.0
41.9
37.9
31.2 29.1 28.1
23.7 23.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
0.00 4.82 12.74 15.23 16.43 21.69 22.43
MK
billi
on
% under SCT
SCT: MK3,000/month/hh; FISP: 2 bags of 50 kg -MK29,400
SCT FISP
AssumptionsProjected population of rural households 2.8 million (NSO figures)Totalpercentage of rural households under SCT and FISIP is fixed at 50% (half of rural households)Value of subsidy for 2 bags is MK29,400
SCT Targeting Options0.0%: None (50% FISP)
4.85%: MH >5 (poor FCS) 12.74%: Labour constrained & food insecure 15.23%: MH >5 (7 days food consumption) 16.43%: MH >5 (poor & borderline FCS) 21.69%: MH >5 (12 months food consumption) 22.43%: Ultra-poor IHS3
Strategic Innovation ………
Sustainable GraduationDesign must embrace the concept of sustainable
graduationFixed subsidy and flexible farmer voucher redemption
price or increasing farmer contributions
Other considerationsRequires complementary interventions – soil
conservation & fertility, diversification, credit access, extension services, maize markets
Political commitment to sustainable approaches to subsidization
Strong internal monitoring and evaluation to determine achievement of objective and graduation conditions
Other innovations
Private sector involvement
Fertiliser formulations
Budget & tender timing & processes
Targeting methods
Design and implementation of FISP:
evolution, challenges, and innovations
Ephraim Chirwa and Andrew Dorward
0.03.3
8.7 10.4 11.214.8 15.3
41.9 37.9
31.2 29.1 28.1 23.7 23.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
0.00 4.82 12.74 15.23 16.43 21.69 22.43
MK
billi
on
% under SCT
SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg - MK29,400
SCT FISP
0.03.3
8.7 10.4 11.214.8 15.3
43.3 39.1
32.3 30.1 29.1 24.5 23.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
0.00 4.82 12.74 15.23 16.43 21.69 22.43
MK
billi
on
% under SCT
SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg - MK30,400
SCT FISP
0.03.3
8.7 10.4 11.214.8 15.3
49.3 44.5 36.7 34.3 33.1 27.9 27.2
0.0
10.0
20.0
30.0
40.0
50.0
60.0
0.00 4.82 12.74 15.23 16.43 21.69 22.43
MK
billi
on
% under SCT
SCT: MK2,000/month/hh; FISP: 2 bags of 50 kg - MK34,600
SCT FISP
AssumptionsProjected population of rural households 2.8 million (NSO figures)Totalpercentage of rural households under SCT and FISIP is fixed at 50% (half of rural households)Fertilizer prices increase but redemption price remains MK500
SCT Targeting Options0.0%: None (50% FISP)
4.85%: MH >5 (poor FCS) 12.74%: Labour constrained & food insecure 15.23%: MH >5 (7 days food consumption) 16.43%: MH >5 (poor & borderline FCS) 21.69%: MH >5 (12 months food consumption) 22.43%: Ultra-poor IHS3
Poverty Targeting: SCT & FISP (50% R HH)
Multidimensional Poverty (MH)
Dimension Indicator Deprived of … Weight
Education Years of schooling No member with 5 years 1/6
Children school attendance
Any school age child not in primary school 1/6
Health Child mortality Any child death in the family 1/6
Nutrition Food consumption less than adequate 1/6
Standard of living
Electricity Household has no electricity 1/18
Sanitation Household’s sanitation facility is not improved
1/18
Safe drinking water Household does not have access to safe drinking water
1/18
Floor of house Household has a mud or sand floor 1/18
Cooking fuel Household cooks with wood or charcoal 1/18
Assets Household does not own more than one asset (radio, TV, telephone, bike, motorbike, refrigerator, car)
1/18