This sludy al/empled 10 look in to the food security situation and the issues surroundingrnProductive Safety Net Program transfers in two case study Kebeles in Soda Zuria Woreda,rnWolaYla Zone, Soulh Nations, Nationalities and Peoples Region (SNNPR). The case study wasrnconducted in Wachiga Busha and Humbo Larina PAs thaI receive food and cash transfers,rnrespectively. The 'entitlement theory' was used as analytical framework to understand thernchallenges in cash and food transfers in Safety net programs. A total of 46 household headsrn(10 percent of the total beneficiary HH;) were selected for the structured interview usingrnstratified random sampling technique. Besides these, separate men and women focus grouprndiscussions and key informant interviews were conducted.rnSodo Zuria Woreda, in general, and the case study PAs, in particular, stiffer from chronicfoodrninsecurity. More than 70 percent of the respondents in each of the two PAs reported to haverncovered only up to three months of their annual food consumption needs. Crop and livestockrnproduction are constrained by a number of factors ine/uding small and fragmented holdings,rnlack of plough oxen, soil degradation and etc.rnThe PSNP, which was designed as a response to chronic food insecurity, has been active sincernJanuOlY 2005 transferring cash andfood resources to selected beneficiaries. At the inceptionrnof the program, the share of food transfers beneficiaries both at the national and Soda ZuriarnWoreda levels were much lower than that of the cash transfers. And, even the policy directionrnwas to fiwther reduce and finally culminate with cash tramfers. However, the recentrninjiationOlY trends in the countly forced the government the other way - to shi/i from cash tornfood at least up to 50 percent levels. Though, the Program Implementation Manual laid thernre;ponsibility to choose cash and lor food transfers On Woreda Food Security Task Forces, thernactual praclice has been the Regional Food Security Coordination Bureau making such'rndecisions. It was learned that the Iype of transfers decisions is delicate and needs thoroughrnanalysis of different factors ine/uding market situation.rnThe cash wage rate has been 6 birr per day, which, due to inflation, was going down in valuernor the bundle offood grains it can command. There is a strong need for flexibility in wagernrates based on regular assessments of markets. On the other hand, the food transfer has beenrnmore gracious as the ration size was over what is stipulated in Ihe PIM Almoslthe entire foodrntransfer benefiCiaries have been selling the food to traders and get more money than the cashrnrecipients. Thus, all beneficiaries (both cash and food recipient;) prefer food tramfers morernthan cash.rnIrrespective of the fact that almost all the food aid is sold in the market, the prices of similarrnfood items produced locally was not depressed. Two probable reasons were: the overall sizernof food aid has not been large enough to influence prices and the overwhelming majority of thernfood is sold out of the Woreda. Again two reasons could be mentioned for why the foodrntransfers are being sold. First, the type of food being tramferred (e;pecially wheat) is quiterndifferent from the one the benefiCiaries are accustomed to consuming (maize) and second, thernbenefiCiaries are enticed by the relatively better price they get for sale of the food items. Inrnrelation to cost effectiveness, the current study confirms what other researches haverncone/uded, ie.food aid shipped directly from the donor countries is not cost effective.rnTherefore, some of the study'S recommendations are consideration of family planning programrnas a component of food security in the target areas, jlexibility in the size of tI'ansfer, carefitlrnselection of basket offood items to synchronize with community food habits and untying ofrnfood aid.rnThe Challenges of Food and Cash Transfers in Elhiopio 's PSNP