Secondary Impact of WFP’s Voucher Programme in Palestine – WFP report

Secondary Impact of WFP's Voucher Program in Palestine

Executive Summary

This report summarizes the findings of a second round of monitoring of WFP’s Food Voucher Programme in Palestine (VP). It provides an assessment of the direct and secondary economic impact of the VP on the basis of primary data that was collected in 2014 from beneficiary households, participating retailers, local dairy producers whose commodities are redeemed through the electronic vouchers, and farmers supplying fresh milk to these producers. Counterfactual evidence is also provided in the report through analysis of data collected from comparison groups, namely: in-kind food assistance beneficiary households, nonparticipating retailers, local dairy producers whose products are not sold in the participating shops, and farmers supplying fresh milk to these producers.

The study shows that the proportion of beneficiary households with acceptable food consumption has increased from 72% in 2013 when the first round of data collection was undertaken to close to 80% in June 2014, or 8% difference. Similarly, the proportion of VP beneficiary households with borderline and poor food consumption scores has decreased by 8% (from 28% in 2013 to 20% in 2014). The study found that the VP leads to about 9% improvement in dietary diversity conditions, as measured by food consumption score (FCS), of its beneficiaries over in-kind food assistance.

The study also shows evidence of positive secondary economic impact of the VP on participating shops’ sales, new employees hired and retained, and investments. This was particularly true for small shops, which the survey has shown were the most impacted in terms of improvement in sales turnover increases and investments.

The survey found that for each dollar redeemed by beneficiaries at the retail level, the VP generates close to 4.9 cents of additional VAT revenue to the Palestinian Authority. This means that the VP at its current scale generates, on average, NIS 225,277 (US$ 64,364) of VAT revenue for the PA per month, or NIS 2.7 million (US$ 772,000) per year.. This is in addition to the business income tax which was difficult to estimate in the survey.

Participating dairy processors reported significantly higher value of average monthly sales than did nonparticipating dairy processors (US$ 174,090 compared to US$7,644), reflecting the larger size and distribution capacity of the former group on the one hand, and the low sales of the latter group at the baseline. While 65% of participating processors attributed their increased sales to higher sales to the shops participating in the VP to greater distribution outreach to new participating shops, the proportion and value of increase in participating processors’ sales that could be specifically attributed to the VP could not be measured by the survey. This is mainly due to the fact that none of the participating dairy processors was willing to divulge their sales records to these shops.

The survey found that the total number of permanent jobs created in participating processors since the baseline is 260; or about 18.6 new jobs per dairy processor. Most of these jobs have been created in small and medium dairy processors, which have witnessed an increase in employment of 41% and 44% respectively; compared to a 17% increase in workers in large dairy processors. Employment in nonparticipating dairy processors has remained largely unchanged since the baseline.

Overall, the survey findings suggest that the programme’s impact has not trickled down to the level of farmers. This is evident by analysis of changes in employment and wages paid in the farms of participating farmers, ownership of milking cows, milk production capacity and farm-gate milk prices. This is believed to be due to on-going structural problems in the dairy farming system.

The main recommendation is to further promote the Voucher Programme in WFP’s operations in Palestine.

The specific recommendations are for WFP to: (i) promote the expansion of the Voucher Programme on the basis of the positive direct and secondary impacts it has induced; (ii) to the largest extent possible, expand the retail network of shops to include small shops as this would maximize the secondary economic impact of the Programme; (iii) negotiate discounts with participating retailers to generate efficiency gains, (iv) consider scaling up significantly with the voucher programme to have a more significant impact on the level of dairy processor and farmers, and limit the addition of more food commodities within the voucher selected commodities; (v) ensure targeting medium and small size dairy producers and encourage them to deal with medium and small size farmers; and (vi) minimize uncertainty for retailers whenever possible.