Rapidly Rising Global Food Prices

1. Rapidly Rising Global Food Prices Social Protection Responses in LAC Ian Walker Lead Social Protection Specialist

2. Social Protection responses: key point of entry for the Bank Global Food Crisis Response Program (GFRP) highlights SP responses GFRP component II: Social protecion actions to ensure food access and minimize the nutritional impact of the crisis on the poor and vulnerable Governments need rapid, high profile responses Existing safety nets provide an option to act quickly and with minimum negative impacts on economic incentives by: Allowing households to maintain their consumption, ensuring food access and minimizing the nutritional impact of the crisis Give time to adjust consumption baskets and pattern of work or productive activities in the medium term, in response to changed relative prices

3. Risks to be addressed • Long term human capital effects • Nutrition effects: Danger of reduced complementary feeding for children aged 6-24 months leading to increased chronic malnutrition. Big risk in countries with stunting rates above 25% (Guatemala, Honduras, Haiti, Bolivia, Ecuador, Peru) • Education effects: Danger of withdrawal of children from school due to income effect of price increases • Poverty effects • Danger of increased poverty and extreme poverty rates among net consumers of food - most rural and virtually all urban LAC families • Income shock effects • Danger of unrest and discontent from reduced spending power across the board, especially in urban marginal areas

4. Characteristics of programs to support • Scale up existing, institutionally credible programs • No time to establish new programs in a crisis setting • Scaling up existing programs with proven effectiveness is best option • Emergency reponses have hightened governance and corruption risks – using established programs helps mitigate this • Appropriate scale and scope • No point using little programs which don’t help most of the target population • Well targeted • Avoiding leakage of emergency resources • Temporary (avoiding new entitlements)

5. Strategic approach of GFRP to Social Protection responses • Rapid in-country diagnostics • Problems / population affected • Analysis of available household and administrative datasets • Use of rapid diagnostic tools developed in the SP anchor • Available programs • Match of programs and problems • Financing short term support to most vulnerable populations • Strengthening SP systems in the medium term

6. Short term support for vulnerable populations: GFRP options • Transfer programs • Targeted cash transfers • Conditional cash transfers • incentives for health and education • Need to avoid distorting original programs • Food stamps & rations • School feeding • Large scale and good administration • Incentive for school permanence • Option of take home rations • Public works / workfare • Self targeting (in absence of good targeting system) • Nutrition and health programs • Supplements, monitoring and counselling

7. Strengthening SP systems • Development of SP system to provide a basis for more effective mitigation in future crises • Improve capacity of existing transfer programs: targeting, beneficiary registers; payment and delivery systems; procurement; program governance & oversight mechanisms; MIS, monitoring and evaluation; communications • Strengthen linkages between transfer programs and the health and education sectors, eg. ways to verify compliance with conditionality • Strengthen communication on health and nutrition

8. LAC actions to date • Three goals: • Expand coverage and benefits through existing social protection mechanisms to buffer the impact of the shock on the poorest and most vulnerable households • Head off negative human capital impacts in nutrition, health, and education. • Seize the opportunity, as part of the crisis response, to strengthen social protection systems

9. Priority countries • Central America – nutrition and poverty effects • El Salvador, Honduras, Costa Rica, Guatemala, Nicaragua • Caribbean – political instability and poverty effects • Haiti, Jamaica • Andean region – nutrition and poverty risks • Peru, Bolivia, Ecuador • Potential for GFRP Grant assistance: • Haiti ($10 mn approved); Honduras, Bolivia, Nicaragua (IDA countries)

10. Main existing SP programs

11. Rapid response missions • Completed: • Costa Rica, El Salvador, Haiti, Honduras, and Nicaragua. • Planned: • Bolivia, Ecuador, Haiti (follow-up), Guatemala, Jamaica, Nicaragua, and Peru. • Recent SP system assessments available • Bolivia, Ecuador, Peru, Jamaica

12. Country level responses to date Caribbean and Andean regions • Haiti. Emergency supplemental US$ 10 mn development policy grant, financed out of the Food Price Crisis Response Trust Fund. • Jamaica. Bank’s new Social Protection Project supports the PATH safety net program (a CCT), increasing the benefit level by 23% to offset inflation and expand coverage by 50% to reach 14% of the population. June workshop planned where Bank will discuss with government and other stakeholders how to strengthen the social protection system • Ecuador. Following dissemination of Ecuador Nutrition study, government has asked for a scoping mission on food price crisis response (planned for June) • Bolivia. New Bank SP project supports a Nutrition CCT that could be scaled up to respond to food price crisis • Peru. A recent Bank assessment of the social protection sector and TA on nutrition provide basis for recommendations on an appropriate response – including stronger nutrition emphasis of Juntos CCT program

13. Country level responses to dateCentral Amercia • Guatemala. Bank’s new Maternal and Infant Health Nutrition Project addresses potential nutrition effects; and Bank is providing TA for development of new CCT program which will strengthen SP system in medium term • Honduras. Bank will strengthen the Nutrition and Social Protection Project, enhancing the basic package of nutrition services provided; with possibility of additional financing toreach over 20,000 children under age five by August • Nicaragua. Multi-sectoral rapid response mission visited Nicaragua in May. SP analysis highlights expected impacts and options for using existing programs. Government interest in support on nutrition and health in vulnerable areas, and in establishing a conditional cash transfer program in medium term. Workshop on Chronic Malnutrition planned for June 5th • El Salvador. Bank gives TA to Red Solidaria, a social safety net in poorest 100 municipalities, covering 80,000 households. Government will expedite expansion of the program in response to rising food prices. • Costa Rica. Govt plans transfers of $100 to 16,000 female-headed poor households and possible interest in DDO for support on food price shock under new CPS