1/12 PUBLIC DISTRIBUTION SYSTEM (PDS) FAQs
PUBLIC DISTRIBUTION SYSTEM
Iraq, October 6, 2006
I. What is the Public Distribution System?
The Iraqi Public Distribution System (PDS) is the largest public food program operating in the world. All Iraqi citizens and foreigners resident in Iraq are entitled to receive the PDS food basket.
Consumers pay a nominal price of 250 ID per month, entitling them to receive a basket of goods including: 9 kg of wheat flour, 3 kg of rice, 2 kg of sugar, 0.2 kg of tea, 1.5 liter of vegetable oil, 1 kg of dried whole milk, 1.5 kg of dried beans, 0.15 kg of iodized salt, 0.25 kg of soap and 0.5 kg of detergents. Families with children below one year also receive baby food and other infant supplies.
Table SEQ Table \* ARABIC 1- PDS historical data
II. When and how did the PDS system start?
PDS program started in 1988 for 18 million citizens at the time (Iraqis and foreigners who were residents in Iraq. It consisted of non targeted distribution of food /flour to all as a consequence of the increasing poverty generated by the economic embargo instated by the SCR s (SCR612) during the Iraq – Iran war.
The registration process for food recipients was started manually.
In 1992, the PDS Electronic Data Bank for 15 Iraqi Governorates (excluding 3 Kurdistan Governorates) was operational.
In 1996, as a consequence of Security Council Resolution #986 (SCR986) which generalized and expanded the PDS, a similar Database was developed for Kurdistan under the supervision of the World Food Program for the 3.2 million individuals.
Thus, SCR986 generated a food distribution program to cover almost 22 million Iraqi people and foreigners resident in Iraq at the time. For distribution reasons, Iraq has been divided into 644 Ration Registration Centers, of which 31 in Erbil and 14 in Dahouk.
There are four offices dealing with the PDS administration in Iraq:
· Ration Registration Center :receiving applications from families and distributing the Ration Cards
· Data Bank - PDS Database (keeping records of beneficiaries, updating Ration Cards)
· Food Agency, supplying the food
· Warehouse, for food storage
III. Who administers the PDS program?
The Ministry of Trade administers the program, and is responsible for ensuring that adequate supplies of rations are available, through domestic and imported sources. It also issues new ration cards at the start of each calendar year.
The corresponding Ration Registration Centers and sub-offices cross-check to ensure households do not receive double rations and record changes in the size and location of households. There are more than 50,000 local grocers nationwide serving as distribution agents, collecting coupons monthly from their customers and passing them on to the government in exchange for food supplies.
The food basket provided and the process utilized remains very similar to that under the U.N. Oil For Food Program in 1997-2003.
While consumers pay 250 ID, the resale market value of the commodity basket is estimated at about 18,000 ID. Many of the commodities come from imports. Since 2005, the full cost of the PDS is reflected in the national budget.
Kurdistan Government set up its own food import committee since 2005.
IV. What is the status of food dependency in Iraq?
More than 29 million citizens are currently receiving the food basket in Iraq (4.5 million households).
According to some World Food Program (WFP) evaluations, for 25% of the Iraqi population the food basket is indispensable while other 35% partially depend on it.
Recently issued WFP Food Security and Vulnerability in Iraq Analysis found that about 15.4 percent of the population are food insecure and another 31.8% would be rendered food insecure if they were not provided with the food basket.
V. What is the Ration Card?
Families registered in the PDS Database receive a certificate so-called Ration Card, which is to be renewed every year. The ration card is an A3 size paper, which on the right side registers household identification data (Ration card Number, District Number, Name of the household head, Household size, food item / flour agent, etc…).
On the left side of the Ration Card is the coupon area. For each month starting with January through December and for each item there is a specific coupon to be detached when the food is delivered.
Table SEQ Table \* ARABIC 2 - Ration Card (Example)
VI. How is the Ration Card issued and renewed?
The Ration Card (RC) was issued for the first time in Iraq in 1988. Any change in family status since then is notified for the annual renewal of the RC. New RCs for repatriated families are issued by the Ration Center.
Renewal of the RC starts in November, when the family head submits the application along with the IDs of all family members. If the November deadline is not met, the RC is not renewed for the next year.
Renewed RCs are available at the Ration Center in February or March for the relevant year.
VII. How do Iraqis transfer the Ration Card from one location to another in case of changing domicile, and what is the time period involved?
If A is the location the family moves from, to B, the necessary steps are as follows:
Application submission starts from B, with three carbon copies.
B Ration Center will notify A, and the record in A Database will be removed. Without having the removal confirmation from A, B doesn’t start the registration process.
To have the food basket available at the B location for the current month, the application must go to A before 13th of the month and be returned to B before 25th of the month. If the deadlines are met, the applicant will get the food basket for the application month.
VIII. What records are kept at the distribution centers to show that someone (or some family) received its monthly distribution?
The RC contains 12 months * 11 items = 132 small coupons. For each distributed allocated item, the beneficiary gives to the Ration Center the corresponding coupon in exchange. The agent distributing the items returns all coupons to the Food Agency to prove that the food has been delivered to the entitled beneficiaries (See answer IV).
IX. Does each family receive its distribution on the same day each month, or is the distribution schedule posted in a public location or on TV?
Food is distributed once for each family on a specific day of the month, depending on the name and the physical location. If there is a shortage in storage for some items or a security problem for a specific warehouse, local TV channels are used to inform people about delays or rescheduling of the food distribution dates.
X. The system is fraught with corruption. Where are the key corruption nodes? (At the port? At the provincial warehouses? At the local warehouses?)
The system is corrupt in its entirety.
· Inaccurate data encourages fraud.
Higher food quantities are imported in the absence of accurate demographic data. However, many families do not get their food basket, or at least not some of the items without a clear reason.
There is an annual demographic growth of 2.8- 3%, but the migration of Iraqis outside the country is also a mass phenomenon. However, the change in the number of qualified recipients is not reflected in public expenditure for food.
· Lack of control along the process, from imports to end consumers
Security Council Resolution #986 authorized UN- WFP to monitor the Oil For Food program in Iraq, the quantity and the quality of distributed food all over the country. After 2003, the WFP could no longer perform effective monitoring of the distribution process, and this has led to significant distortions and increasing corruption in the system.
Good quality food at the destination port rarely reaches its beneficiaries. The food is exchanged, and beneficiaries receive poorer quality food and lower quantities than they are entitled to get. The replaced items are resold outside of the country by a well organized network of smugglers, who very often are associated with the insurgency.
Thus, the PDS encourages wasteful consumption, smuggling and it is a source of money for the insurgency, with the use of public funds. Through the PDS and other largely subsidized goods, also subject of smuggling, the State is indirectly financing the insurgency and insecurity in Iraq.
· High level corruption
Influential people in the public life of the country are also running companies involved in the food import and distribution process.
For this reason, bad quality food distributed is never reported. More importantly, Iraq doesn’t have a Consumer Protection Authority, nor does it have specific legislation to control the quality of the goods for consumers.
Concluding, the food basket, initially meant to be a minimum support that the Iraqi State was providing its citizens to mitigate the economic and social impact of the embargo, became in a few years a mechanism to channel public funds towards influential business groups connected to public figures.
Large state imports of food have undermined the development of the private sector and have limited the market for the national production of similar items.
The composition of the food basket generated unhealthy consumption and strong dependency of individuals on State assistance.
XI. How much the PDS costs the Federal Budget?
XII. Did the GOI undertake any measures to start monetization?
1. Compensation program for undistributed food items in 2005
Based on a Cabinet Decision, for the missing items of the food basket from April to August 2005, the Ministry of Trade compensated the PDS beneficiaries in cash.
The amount the beneficiaries were entitled to receive varied from one Governorate to another, due to different missing items and to different prices on the local market.
The checks were printed in Lebanon by a company selected by the Iraqi Ministry of Trade. Kurdistan refused to use the checks because they were printed in Arabic, not in Kurdish, and they considered the approach unconstitutional.
Checks were distributed by the Ration Centers for all families, and bank offices to which beneficiaries were assigned released the cash.
The operation took place in February – March 2006 and was formally closed at the end of March.
2. Monetization Pilot in Dahouk
The monetization plan was ready to start on July 1st, 2006 as a Pilot. It included a phasing out process for some of the governorates (first step) and then for rich families (second step).
A special meeting for organizing the process took place in MOT with the participation of Mr. Salahadin, the MOT Director General coordinating the Ration Centers and the heads of the Ration Centers from Dahouk, Salahadin and Samawa.
The process of implementing the Pilot was stopped when the two sons of the MOT DG were assassinated and a threatening letter was sent to discourage any monetization efforts.
After the events, the GOI decided to start monetization at the same time for the whole country and to phase out food gradually until only Social Safety Net beneficiaries will remain covered.
 OFFP – Oil For Food Program
 Prices vary from region to region. The 18,000 IDs current value of the PDS / individual considers the maximum prices on the free market in September 2006
 Food Security and Vulnerability Analysis carried out by WFP and COSIT covered the second half of 2005