Smallholder rural farmers are exposed to diverse idiosyncratic and covariate shocks that lead to high income and consumption volatility. Formal cash management tools, which are important for managing risk and volatility, often break down due to high information asymmetries and the transaction costs of operating in rural areas.

This study empirically investigates the effect of the productive safety net programme (PSNP) on household food consumption and dietary diversity in Ethiopia. The study applied random effects with instrumental variables to estimate the effect of PSNP membership.