Chapter 5


1) Geographical targeting

Geographical targeting means that the subsidies are exclusively directed to areas where
vulnerable groups are concentrated. These could be the urban/suburban housing and squatter
areas of poor families, or rural areas with acute, seasonal or chronic food shortages. Simple
geographical targeting involves low administrative costs but will also benefit those
households in the area who are less poor and not affected by food shortages. To avoid this,
geographical targeting may be combined with some kind of additional targeting method, e.g.
ration cards issued to households according to specific criteria such as income below a certain
level, families with children, female headed households, etc. This, however, will increase the
administrative costs, as mentioned above.

2) Targeting by commodity

Targeting by commodity can be applied in areas and countries where there are differentiated
consumption patterns of low and high income groups, for example coarse grains, roots and
tubers constituting typical staples of low income groups while high income households prefer
other food commodities such as fine grains like wheat or rice (see section 3.3.5 of Chapter 4
and the discussion of demand elasticities in section 4 of Annex 1).

Subsidies on "inferior" commodities are a relatively cost-effective method of targeting with
few administrative requirements, as they are largely self-targeting. However, safeguards may
become necessary against misuse (e.g quantity restrictions, food stamps), in order to prevent
the subsidized low-cost food commodities being (mis-)used for other than the programme
purposes (e.g. as animal feed or for beer brewing). Such practices would substantially reduce
programme performance.

In general, the opportunities for commodity targeting are very country specific, depending on
existing food consumption patterns and on other factors. It also depends on the objectives of
the food intervention programmes. If the objective is a food-mediated income transfer to poor
households and/or an increase in their calorie intake, commodity subsidies may be an
appropriate method. If the objective is to mitigate certain nutritional deficiencies of specific
vulnerable groups (e.g. protein deficiencies of children and mothers of poor families) with
suitable food commodities (e.g. milk, dairy products), or where there are no typical staples of
the poor, mere commodity subsidies are not effective. In such cases, they must either be
combined with other forms of targeting (e.g. geographical targeting, ration cards or ration
shops, see Box 5.5 and 5.6), or approaches to direct food transfers must be applied (see
section 3.5 below)..

3) Fair price/ration shops

Fair price/ration shops are special outlets for the sale of subsidized commodities to the target
population. As such shops are usually placed in areas where low income groups are
concentrated, they represent a form of geographical targeting. In order to achieve more
precise targeting, restrictions concerning the population groups eligible to purchase in such
stores and/or regulations concerning types and quantities of commodities which can be
obtained there may be applied.


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