11. Pilot Food Price Subsidy Scheme, THE PHILIPPINES

Dr M. Garcia

Objectives: The principal objective of the project was to reduce the caloric deficits among low-income households through the provision of consumer subsidies on rice and cooking oil. The pilot scheme was designed to evaluate the technical, economic and administrative feasibility of implementing a targeted food subsidy programme in the context of the Philippine environment.

Duration: The programme was conducted for three and a half years (1983-1986). Actual food subsidies were implemented in 1983-1984 while the study and evaluation of delivery mechanism and programme impact was conducted from 1983 to 1986.

Implemented by: The National Nutrition Council (Philippines), the Department of Agriculture (Philippines), and the International Food Policy Research Institute.

Budget: US$ 355,000 (75% from UNDP).

Programme Components: There were three main components: consumer food subsidy on rice and cooking oil; nutrition education; and technical, economic and administrative evaluation.

Most Successful Aspects: As the project itself was a pilot scheme, its strongest aspects were on the methods and management of monitoring and evaluation of the programme. A carefully drawn sample of households was analyzed in detail to determine the impact of the subsidies on food consumption and nutrition of the targeted populations. The project permitted an analysis of the cost of the delivery system, and comparisons to be made between the programme and other means of targeting, regarding its effectiveness in dealing with the nutrition problem.

Programme information on specific Workshop themes

Targeting: Targeting was by geographic location. Villages with a high concentration of malnutrition were selected and all households within the targeted villages were beneficiaries. This method of targeting removed the added administrative burden of selecting individual households through a means test. Geographic targeting, however, could only be successful where areas with high concentration of malnutrition could be identified. Child weighing programmes, such as that in the Philippines, are useful guides in determining such areas.

Staff Selection, Training and Supervision: The existing infrastructure of Home Management Technicians (HMTs), under the Department of Agriculture, formed the core of the staff that managed the scheme at the village level. They were trained by national and regional officers on the mechanics of the programme. Project supervision by the HMTs used up two days out of their five-day work week. This allowed the project to lower the cost of supervision since the tasks were dovetailed into the usual activities of the HMTs. Building up a separate administrative infrastructure would have considerably increased the cost.

Community Participation: As the programme required adequate understanding by programme actors (beneficiaries, retail store owners, local councils) of the objectives and mechanics of the scheme, substantial social preparation activities were conducted by the HMTs. Village assemblies were held in cooperation with local councils. Meetings with retail storeowners were conducted. Feedback from beneficiaries were useful in assuring uninterrupted flow of the food subsidies. Slackness in supply of the food commodities were reported to the HMTs for appropriate action.

Planning: National nutrition surveys by the Food and Nutrition Research Institute in the Philippines indicated that the most important nutritional problem was inadequate calories. It is most severe in low income groups whose consumption is 400 calories below the recommended daily levels. The project evolved from a national planning exercise. The scheme was conceived as one of the alternatives at bringing about immediate improvements in caloric intakes of the malnourished. It was recognized as a short term stop-gap measure to alleviate malnutrition in poor households, with phase-out linked to the success of other programmes on livelihood and income- generating schemes.

Evaluation: With respect to the evaluation of impact (outcome), the following procedures were taken, as described below.

· Subsidies in the form of price discounts on rice and cooking oil were made available to half of 14 villages selected for their high incidence of malnutrition, while the other half acted as a control population. The method of targeting was thus by geographic location (village). Each household in the targeted village was guaranteed access to the food subsidies.

· To evaluate the effects of the scheme, a sample of 841 households from the 14 villages was surveyed once prior to giving the subsidies, twice during the 12-month implementation, and once after the termination of the programme. Both comparative and multivariate analyses were conducted to estimate the impact of the scheme on household food expenditures and household calorie consumption. Effects on calorie consumption of preschoolers and their nutritional status were also evaluated. Data on a variety of socio-economic, environmental and biological variables relating to food consumption and nutrition were also monitored. Preschool children's weights and heights were also monitored monthly during the implementation period.

Results of the impact evaluation (Garcia and Pinstrup-Andersen, 1987) indicate that the scheme resulted in increases in calorie consumption of 138 calories per adult equivalent unit per day, which is roughly 7% of the current calorie consumption. The scheme also reduced the prevalence of underweight preschoolers from 32% to 20%. Nutrition education had a small positive effect in households where it was accompanied by the subsidy.

After accounting for all the delivery costs, it was feasible to assess the relative cost-effectiveness of the scheme. Administrative costs were estimated at about 16% of the total costs, with the remaining as the cost of food subsidy itself. The fiscal cost of transferring an equivalent of $1.00 of food subsidy was estimated at $1.19. However, if only the transfers received by households with malnourished preschool children are considered as a benefit, whereas the transfers received by others in the village as leakages, the cost increases to $3.61. Assuring a net increase in calorie consumption of about 100 calories per day for one year would be roughly $6.76.

Information on the processes of delivery of the food subsidies to target groups were monitored by the local home management technicians (HMTs) of the Department of Agriculture with assistance from the village para-professionals called the "Barangay Nutrition Scholars". Since the programme operated through privately owned village stores, the monitoring of delivery focussed on the ability of the accredited stores to keep an uninterrupted supply of subsidized rice and cooking oil. The process evaluation indicated that the efficiency of these stores was dependent on the following factors: i) the size of the population served, ii) store capital and supply of credit from rice and cooking oil wholesalers, iii) location in relation to the target population, and iv) character and community acceptance of the accredited retailers.

One of the key instruments to monitor accountability was the use of food discount cards given to participating households. Participation in the programme was estimated at 92% of the targeted households in the target villages. The rest were unable to participate due to: i) an inability to take advantage of the lower price because of their distance from the participating stores, and ii) insufficient cash during any given month.

The administrative and food cost of the scheme is considered low compared to other consumer food subsidy schemes. Several elements are considered important in the design: first, the choice of commodities (rice and cooking oil) which provided cheap sources of calories; second, the use of an existing administrative infrastructure to monitor the programme; and third, the mobilization of the private sector in the procurement and distribution of the subsidized food.

Management Information System: The monitoring and evaluation techniques used in the pilot programme provided important parameters on cost and cost-effectiveness which are necessary in determining the viability of using a geographically targeted food subsidy programme. These are important data that governments could use in assessing various alternatives of assuring that benefits go to the malnourished.