TARGETING POLICIES TO RESPOND TO FOOD INSECURITY SHOCK SUDARNO SUMARTO NATIONAL TEAM FOR THE ACCELERATION OF POVERTY REDUCTION (TNP2K) AND SMERU OECD-ASEAN.

TARGETING POLICIES TO RESPOND TO FOOD INSECURITY SHOCK

SUDARNO SUMARTO

NATIONAL TEAM FOR THE ACCELERATION OF POVERTY REDUCTION (TNP2K)

AND SMERU

OECD-ASEAN Regional Conference on Policies for Food SecurityBogor, 11 November 2014

Outline

Food Security in Indonesia : Situation and its Challenges

Impact of Food Insecurity Shocks Targeting Policy to Address Food Insecurity Shocks

Food Security in Indonesia : Situation and Challenges

Food Availability

• Out of four (4) strategic food commodities, self-sufficiency only in rice production (sometimes imported to sustain seasonal shocks)

• Others still need to be supported by imports

• Still categorized as “serious” in 2014 Global Hunger Index

• Land conversion continues to increase

• Low agricultural productivity

• Decreasing agricultural labor force

2010 2011 2012 20130

20

40

60

80

100

120

Productivity: Agricultural Vs Other Sectors

Agriculture Sector Other Sectors

Rp M

illio

n/Pe

rson

Source: BPS, 2010-2013

Food Access and Utilization

• Increasing inequality measured by Gini index

• Lower rate of poverty reduction since the last three years

• Poor infrastructure, leads into high cost of distribution

• Shifting consumption pattern to ready-made food

• Food price volatility

Impact of Food Insecurity Shocks

Indonesia: 3 Large Food Price Shocks in Last 6 Years

• 74% of their expenditure goes toward food

• A 10% increase in price of rice leads to a 0.4 percentage point increase in CPI inflation (direct) and a total impact (direct and indirect) of a 0.9 percentage points increase on CPI inflation.

• A 10% increase in the price of rice is estimated to lead to a 1.3 percentage point increase in poverty rates.

Source: BPS, SUSENAS MARCH 2014

Food price increases directly impact poor and vulnerable households

Food Commodity Rural % Urban %Grains/Rice 32.89 25.14Tobacco 8.64 9.68Egg 2.77 3.43Instant Noodle 2.42 2.56Sugar 3.36 2.33Tempe 2.00 2.30Tofu 1.68 2.07

Non-food Commodity Rural % Urban %Housing 7.31 9.78Electricity 2.00 3.48Transportation 2.46 3.16Education 1.52 2.81

Since vulnerability remains high, small shocks to food prices easily send households into poverty

Source: 2009-10 Susenas panel data and World Bank calculations

Source: Susenas 2011

30mPoor

62m Vulnerable

55 percent of this year’s poor were not poor the year before

…and enter poverty easilyMany are vulnerable to poverty

0

20

40

60

80

100

Existing Poor Newly Poor

Percentage of Current Poor

Series10

10

20

30

40

50

Below Poverty LineBetween 1.0x and 1.5x Poverty Line

Perc

enta

ge o

f Pop

ulati

on

…and can worsen the population’s nutritional status

Underweight Stunting Central Obesity Wasting0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Several Nutrition Status Indicators for Indonesia in 2007 and 2013

2007 2013

Source: Riskesdas, 2013

Targeting Policy to Address Food Insecurity Shocks

Alignment with National Strategy for Poverty Reduction

…one objective is to improve targeting performance of social assistance programs.

Nat

ion

al

stra

teg

y

Cluster 1 (family-based)

- Scholarships - Health fee waivers- Subsidized rice- Cash transfers

Cluster 2 (Community-

based)

- Community Empowerment Programs(PNPM)

Cluster 3 (SME-based)

- Credit for SMEs- Other programs to stimulate job creation

Cluster 4(other pro-poor

programs)

- Housing- Transportation- Clean water- Electricity- Livelihoods

Utilization of national single registry system to identify potential beneficiaries

• New and improved proxy means testing identified the poor more accurately

• Expanded to cover about 25 million households, classified as the poorest 40% of the population

• Available for use by different anti-poverty programs to identify target groups eligible to receive benefits

• Using community-based meetings to update targeting lists to address exclusion errors

• In June 2013 the Government of Indonesia issued the Social Protection Card (KPS) to grant access to social assistance programs.

• Cards were delivered to the poorest 25% households in Indonesia (based on the national registry which covers about 65 million individuals)

• Cards give access to: Subsidized rice allocations (Raskin) Scholarships for the poor (BSM) Unconditional cash transfers

…which has been strengthened by Issuing Social Protection Card (KPS)

and it has an updating mechanism

PT. Pos

HouseholdsVillage LevelDeliberation

Recapitalization

TNP2K’s Unified Database

Synergy with Food Security and Vulnerability Atlas of Indonesia

Source: Food Security Council, Ministry of Agriculture, 2009

Complemented by Geographical Targeting Approach to Identify Lagged Areas

Kabupaten/Kota Prioritas Daerah Maju

Kabupaten/Kota Prioritas Daerah Tertinggal

Bukan Kabupaten/Kota Prioritas

Example: mapping of lagged areas, including poor infrastructure

…And Other Indicators, Such as Nutrition

Example of targeting prioritization based on stunting levels (>40%) and poverty level (>11.47%)

Source: SMERU, 2014

Conclusion and the Way Forward

The National Single Registry is the main and best available source for identifying poor and vulnerable households.

It has to be maintained to ensure it reflects the most current socio-economic status of the households

Synergy and combination with other targeting approaches will result in optimal outcomes for any budget constraints

Targeting is only part of comprehensive response to food insecurity shocks. There are other components which need to be taken into account, such as;

• Development of pre-determined triggers• Development of a real-time reliable information system• Development of a well-designed monitoring system• Designing effective public communication, information dissemination and

policy coordination• Improving and expanding social assistance programs• Improving supply-side service delivery

THANK YOU