2.3. Market Analysis & Emergency Food Security Assessment

Food Security Cluster Needs Assessment Workshop Dhaka, Bangladesh19 – 20 February 2012

Session ObjectivesAfter this session, participants should be able to:•Define a number of market analysis concepts•Explain how market assessment can inform an

emergency food security assessment•Identify the key aims and components of a

market assessment survey

Food Security Assessments: Phases & Tools

Why?Market Analysis: to inform FS response decisions

Facilitates:

food assistance intervention planning with assurance that impact on domestic food production and food markets is not negative

decision whether cash or food aid is the best option to address food insecurity

local or regional food purchase planning and ensure these are implemented at the best time with maximum effect on producers and markets

Why are markets important for food availability?

Markets, or better, traders ensure that: Food moves from food surplus zones to food

deficit zones Food is stored during surplus times for use

during deficit timesIf markets don’t function well, they do not perform these functions - or only at large transaction cost

Why are markets important for food access?

HHs buy, sell, barter on markets, influencing their food availability, while prices they pay & receive, & their use of credit, influence HH income & expenditure

Each HH is confronted with price variation, influencing its ability to acquire food, & buying, selling, bartering patterns of HHs throughout the year & between years

HH food access influences individual food intake

markets and the food security & nutrition framework

What?Purpose of Market Analysis in FSA

1. Estimate national/regional/local food supply capacities against domestic requirements

2. Gauge HH dependency on markets for food

3. Gauge HH capabilities to access food through markets

4. Determine market response capacities to cover food demand gaps

5. Formulate early warnings if domestic production & markets cannot cover food demand gaps

6. Inform food security response strategies

Macro-level analysis of food availability – conducted through analysis of secondary market data

Market vulnerability to macro-economic conditions: economic growth & price volatility, international reserves

Policy environment : trade policies, regulations, institutions, food policy and interaction of grain reserves with markets, governance

What?Markets and food availability

Meso-level analysis of food availability▫ conducted through trader surveys & community interviews ▫ Seeks to understand market structure, conduct and

performance

Micro-level analysis of food availability▫ conducted through HH-level surveys▫ Seeks to understand HH-level food availabilities

What?Markets and food availability

• Evidence suggests very few, if any, HHs are “autarkic” (or “self-sufficient”) in terms of food

• Majority of HHs buy more than they sell on markets

What?HH participation in markets and food security

Households Dependence on Markets for Food

Country % of HH food obtained at market

WFP Household Surveys

Mali 70%

Niger 70%

Lao, PDR 40%

Tanzania 66%

Timor Leste

59%

What?Market Structure

Identifying critical marketing chains that may have been disrupted by the shock

What?Market Conduct

Identifying patterns of behaviour that traders follow to affect or adjust to changing market conditions:

•Price-setting behaviour

▫Level of competition

•Buying and selling practices

▫Weights and measures

▫Grades and standards

What?Market Performance

Identifying extent to which markets produce outcomes deemed good or preferred by society: regular, predictable availability of basic foods at affordable prices

• Price levels and stability over time and space (market integration)

• Margins and costs

• Volumes

• Profits: excessive or not

• Product quality

• Food distribution within market

Market Performance: Example50

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on

thly

Defla

ted M

illet P

rice

(C

FA

/Kg)

1996m1 1998m7 2001m1 2003m7 2006m1Month and Year

Agadez Diffa

Dosso MaradiNiamey TahouaTillaberi Zinder

Real millet prices in regions of Niger and Nigeria, 1995 to 2006

What?Market Integration?

Identifing the existence of trade flows: the movement of food in response to supply/demand imbalances

Market integration allows price signals to be transmitted from one market to another

Impact on HH Food Security of market integration?

▫When markets are integrated, prices become more stable: then HH FS is likely to be improved, as poor HHs can obtain food at more affordable prices

How?Using market-based interventions to address food insecurity

Improve market functioning / reduction of transaction cost, often with partners, to:

reduce (informal) taxes

improve infrastructure

broaden the number of traders

enhance trade credit provisioning, etc.

Distribute cash or vouchers

Local and regional procurement

How?Market Analysis tools for FSA

Price analysis tools (e.g. CPI, seasonality analysis, volatility analysis, terms of trade analysis) to understand:

• How shocks may have disrupted or added to “normal” prices fluctuations

Market survey tools (e.g. Trader Survey) to understand:

• Current price and sales conditions

• 6 month outlook for price and sales conditions

• Market constraints

• Market response

ExamplesGeneric Trader Survey

Sidr Cyclone Trader Survey

Useful Resource

WFP VAM’s

“Market Analysis Tool: How to conduct a trader survey”

To summarise, markets:

Influence food availability, co-determine purchasing and selling conditions, have an impact on food access and, subsequently, an indirect influence on individual food intake

Play a role in addressing food insecurity, through market interventions, local procurement and cash/voucher programmes

Wrap-upMarkets & Food Security Analysis