markets and food security
DESCRIPTION
Markets and Food Security. PAT. Session 1.2. WFP Markets Learning Programme. Price Analysis Training. 1.2. 1. Learning objectives. After this session, participants should be able to: Explain the importance and value of market analysis in food security assessment - PowerPoint PPT PresentationTRANSCRIPT
PATMarkets and
Food Security
Session 1.2
WFP Markets Learning Programme 1.2. 1Price Analysis Training
Learning objectives
After this session, participants should be able to:
•Explain the importance and value of market analysis in food security assessment
•Identify the essential links between markets and food availability; and between markets and food access
WFP Markets Learning Programme 1.2. 2Price Analysis Training
A quick review…
Food Security…
Definition?
WFP Markets Learning Programme 1.2. 3Price Analysis Training
Food Security
A situation…
…when all people, at all times, have physical & economic access to sufficient, safe & nutritious food to meet their dietary needs & food preferences for active, healthy life
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Definitions for…
Availability?
Access?
Utilisation?
Market?
Market: A place where buyers & sellers come together to exchange goods and services
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So, why are markets important for food security?
MarketsFood
SecurityAs a group: discuss your assigned question:
1. What type of products do HHs exchange on markets?
2. Why are markets important for food access?
3. Why are markets important for food availability?
4. How can WFP use market interventions to address food insecurity?
Quickly note responses on flip charts…you have 10 minutes.
WFP Markets Learning Programme 1.2. 6Price Analysis Training
1. What type of products do HHs exchange on markets?
Food, cash crops, livestock, labour and other non-food items such as soap, charcoal, etc.
For each HH, the types of product they exchange vary:
Pastoralist, cash cropper, subsistence farmer or daily labourer?
Rich or poor?
Depending on the season and on good year versus bad year
Therefore, to understand the impact of markets, we have to find out about selling/buying patterns of our target groups
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2. 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
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3. Why are markets important for food availability?
Let’s talk definitions first:
General food availability vs. local availability
Food intake: impacted indirectly by food availability, through food access
Markets, or better: traders ensure that:
Food moving from food surplus zones to food deficit zones
Food being stored during surplus times for use during deficit times
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3. Why are markets important for food availability? (continued)
If markets don’t function well, they do not perform these functions, or only at large transaction cost
Good speculation and bad speculation ‘Good speculation’ if storage contributes to dampening
price volatility ‘Bad speculation’ if storage worsens price volatility, or if
done at unreasonable profit margins
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4. How can WFP use market 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
Purchase for Progress
WFP Markets Learning Programme Price Analysis Training 1.1.11
the food security & nutrition framework
(based on UNICEF Model)
outcomes
immediate
underlying
basicWFP Markets Learning Programme 1.2. 12Price Analysis Training
HH food access directly influences individual food intake
markets in the food
security & nutrition framewor
k
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MarketsFood
Security
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
Markets & Food Security Analysis Markets
Food Security
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Quick Case: Exercise 1.2.a. Government Policies in Pakistan
Task: Read the Quick Case and, with a partner, answer the questions below.
Government wheat policy tries to balance competing interests of producers and consumers. On production side, policy aims at increasing wheat yields, output, & support for farmer income. Increased wheat production seen as part of overall national FS strategy of reducing dependence on food imports for national food supplies.
On consumption side, government attempts to enhance HH food security, particularly through ensuring availability of wheat flour at affordable prices and maintaining price stability. Food policy options are constrained, however, by overall fiscal constraints, as well as a desire to minimize fiscal subsidies on food. Moreover, the wheat procurement price has been seen as a major determinant of overall inflation because of its role as a wage good and an indicator of overall government price policy. Thus, wheat policy is somewhat constrained by inflation targets and inflation policy.
What is the Government doing to impact availability? What is the Government doing to impact food access?
Adapted from: Nyberg, Jennifer, “Pakistan Market Assessment – Earthquake Affected Areas”, WFP, 2005, page 10.
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Sufficient food availability can be achieved through… Domestic production Imports (commercial and public imports) Public transfers (e.g. food aid) National/regional stocks
…but market functioning is also crucial to food availability Physical access (travel distance, time, seasonal
access) Market integration (transaction costs and trade flows)
Markets and food availability
MarketsFood
Security
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Understanding food availability is essential to determining likely impact of market on HH food access
Food availability is analyzed at two levels:
1. Macro-level analysis
2. Meso-level analysis
MarketsFood
Security
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Markets and food availability:Two levels of analysis
1. Macro-level analysis of food availability – conducted through secondary data on the market environment
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
MarketsFood
Security
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Markets and food availabilityMacro-analysis
Meso-level analysis of food availability
• conducted through trader surveys & community interviews
• Seeks to understand market structure, conduct and performance (more on this in Session 1.4)
• This is the level of food availability analysis that we will conduct via our market visit and survey
Markets and food availabilityMeso-Analysis
MarketsFood
Security
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Food access is determined by HH entitlements:
The means of acquiring food is based on assets (land, labour, livestock, savings), through:
Direct entitlement (own production) Trade/market entitlement
Markets and Food AccessThe Concept of Entitlement
MarketsFood
Security
WFP Markets Learning Programme 1.2. 20Price Analysis Training
entitlement: The set of alternative bundles of goods and services that a person can acquire by converting his/her endowments, such as land and labour, through production, trade or gifts
Access to food is reduced with entitlement failuresThese reductions are likely due to market failures
How do markets determine food access?
HH Food
Access
MarketsFood
Security
fall in wagesrise in food pricesloss of employmentdrop in cash crop or livestock prices
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Many indicators of “entitlement” are asset and market-based: relative pricesreal incomes market-related shocks
What are the market indicators of “entitlement”?
Markets Food Security
Thus: to understand reductions of HH entitlement – i.e. of food access – we must understand the markets with which
those HHs interact
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Effective demand is key
to HH food access
How do markets determine food access?
Effective Demand
Purchasing Power
Market Dependence
Market Accessibility
Livelihoods Analysis
MarketsFood
Security
Effective Demand: the quantity of a good or service that consumers are actually buying at the current market price.
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Market Accessibility of HHso Physical (distance)
o Financial (price, credit…)
o Social (gender, security…)
How do markets determine food access?
Effective Demand
Purchasing Power
Market Dependence
Market Accessibility
Livelihoods Analysis
Purchasing Power: Economic access, HH income, Prices
Market Dependence (involvement in markets)
o On/in markets for goods (food, non-food, livestock…) & services (labour, credit, capital…)
o Selling/buying behaviours: net seller/buyer, seasons and reasons of sales and purchases
MarketsFood
Security
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Question for Plenary
…and in your country?
Which livelihoods are more/less profoundly integrated into local markets? Which are generally more impacted by severe food price shifts?
Market
Food Access
Markets in Food Security Analysis
another view: the livelihoods perspective
HH CASH AVAILABILITY
Transfers
Remittances
Loans
Food aid
Commercial imports
Agricultural inputs
Extension
Microfinance
Food production
Non-food production
Employment
HH Assets
National food production and stocks
Market
Market
Market
Market
Food Availability
MarketsFood
Security
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Markets as food source :
• Evidence suggests very few, if any, HHs are autarkic
• Majority of HHs buy more than they sell on markets
Market participation and food security
MarketsFood
Security
autarkic: self-sufficient (here in terms of food)
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Market Participation & FS
Urban HHs - Senegal
Urban Food Security Assessment, Analysis of Impact of High Food Prices on FS & Livelihoods of Urban Populations in Senegal (Urban to Semi-urban Centres of Pikine, Kaolack, and Ziguinchor), FAO / UNICEF / WFP, November –2008
MarketsFood
Security
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Market Participation & FS
Rural HHs - Madagascar
Analysis of HH Food Security in Selected Districts of MadagascarWFP, Madagascar, September 2009
MarketsFood
Security
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Small Group Work
Exercise 1.2.c.
The Marketastan File: Food Insecurity in Northern Province
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Wrap-up: Markets & Food Security
Understanding how markets function, how interventions facilitate trade, helps identify how to alleviate negative impacts of shocks
Higher food prices make food access more difficult for HHs: most low-income smallholders are net buyers of food, often selling at low prices at harvest, buying back at high prices during lean season
Most vulnerable population groups: those who buy more food than they sell (net buyers), spend large share of income on food, have few coping strategies
These groups include urban poor, rural landless, pastoralists (who are particularly vulnerable: they face falling livestock prices as food prices rise, causing steep drop in purchasing power)
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