The purchasing power of Non-cash food Program and household food security in Indonesia

Food assistance programs are widely implemented by governments worldwide to reduce food insecurity. Each country designs its own policies and mechanisms for delivering food aid to citizens. In Indonesia, the food assistance program, known as BPNT, provides beneficiaries with a card loaded with a uniform monetary value, which can be exchanged for specific food items. However, as an archipelagic country with diverse regional food prices and consumption patterns, beneficiaries face disparities in the purchasing power of this assistance across different areas. These disparities lead to variations in the program’s real value and thus its effectiveness across regions. This study estimates the variation in BPNT’s purchasing power across regencies and municipalities in Indonesia to assess the relative impact of the program on food insecurity in regions with high and low food prices. Using a panel data fixed effects (FE) approach, we examine the relationship between the local purchasing power of the BPNT program and household food insecurity levels. In addition to identifying heterogeneous impacts of the program across regions, our analysis provides a simple cost-effectiveness illustration to inform the fiscal implications of improving food security in lagging areas. Our findings challenge the current uniform-value scheme, suggesting that a regionally adjusted approach would be more effective. Increasing the purchasing power of beneficiaries in high-cost regions significantly contributes to reducing regional disparities in household food security.