Since its introduction in 2003 the _CADENA_ insurance program has expanded hugely such that in 2011 over 2.5 million farmers had been insured. It is debatable however whether _CADENA_ should be targeted at farmers with up to 20 hectares of irrigated annual crops given that these farmers are not among the most vulnerable sectors of the rural farming population. Moreover, survey respondents noted that the _CADENA_ payouts are inadequate to cover their costs invested in agricultural production – overall 60% replied that the payouts represented less than a quarter of their investment costs at the time of loss. There is a clear tradeoff for the government between increasing or keeping the coverage for vulnerable farmers and increasing the compensation amounts.

# **5. Conclusions**

The vulnerable are the largest economic group in Mexico. These are people who left poverty but do not have yet enough “economic security” to be considered part of the middle class. The people who belong to this economic group are more likely to reside in urban areas (though a quarter still resides in rural areas) and be engaged in wage activities (less so in the primary sector), most likely in the informal sector and exposed to a wide range of risks. Their situation probably stems from a combination of highly unsettled and low-paid employments, which remains a protracted source of stress, and exposure to many risks, which are often short-lived and somewhat unpredictable. It therefore seems necessary to distinguish between long-term and short-term sources of vulnerability to poverty.

From a policy perspective, keeping the distinction between quasi-permanent factors and risks is all the more relevant as the measures that need to exist to address each problem are very different. A ‘first-best’ solution would be to improve the capabilities and grant adequate entry points into labor, commodity and service (credit) markets. The provision of adequate jobs to enhance the prospects of wealth accumulation and labor mobilization is required, as are job skills and vocational training and productive investment grants. Effective risk management policies are also needed. The provision of cash transfers, conditional and unconditional, workfare programs, food/nutrition aid, health- and weather-based insurance products, and labor market programs and policies could go a long way toward mitigating the impact of risk and shocks that could turn the vulnerable into poverty.

Many of the policies and instruments referred above already exist in Mexico, and their incidence has been captured in the _Module of Social Programs_ (commissioned by the Ministry of Social Development - SEDESOL) as part of the National Household Income and Expenditure Survey (ENIGH). With the identification of vulnerable households from the ENIGH at a national scale based on the methodology employed in this paper it is possible then to explore the incidence of various social programs on the vulnerable and other groups in Mexico.

Our analysis shows that social programs rarely reach the vulnerable, according to the 2010 module of social programs —since then new strategies and reforms to existing programs were introduced to reach a larger share of the non-poor population. This is not indicative of underperformance as most 28