screen 1 of 26 markets assessment and analysis markets and food security learning objectives...

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Markets Assessment and AnalysisMarkets and Food Security

LEARNING OBJECTIVES

Identify the components of a typical market assessment for food security.

Understand what are the different market assessment tools and their application.

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This presentation will introduce some methods used to assess markets for improving food security analysis.

INTRODUCTION

How do markets operate? How do they relate to and affect food security and vulnerable

households?

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Market assessments can be national, sub-national or regional in scope.

COMPONENTS OF MARKET ASSESSMENT

Market assessments tend to follow a similar format

Analysis of constraints, opportunities and response

Analysis of demand

Analysis of Supply and the market system

Definition of the objectives

Concrete recommendations for interventions

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ANALYSIS OF DEMAND

• which commodities are relevant to which population groups (livelihood groups);

• how/where households access these commodities.

To describe the demand, you first have to identify:

Description of demand

What commodities are important?

Different commodities can be important to different food insecure populations.

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Which are the most important commodities from a consumption point of view.

ANALYSIS OF DEMAND

Consumption commodities

To select commodities, you need to identify:

Production/income commodities

Which are the most important commodities from a income earning point of view.

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• Are theses commodities necessities?• Are there substitutes for these commodities?• Are these commodities consumed in greater or

lesser quantities as incomes rise?• How elastic or inelastic do you think the

demand is?

To select commodities you will also need to know some basic characteristics of demand:

A substitute (commodity) is a commodity that can replace another in consumption or production, such as millet for sorghum.

ANALYSIS OF DEMAND

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These minor markets will be important ones to include in your analysis.

ANALYSIS OF DEMAND

The most food insecure populations may depend on or have access to just one or two minor markets.

Which markets are important to food security?

Description of demand

Which markets are important?

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Which are the most important markets from a consumption point of view.

SELECTING MARKETS INDICATORS

Consumption markets

To select commodities, you need to identify:

Production/income markets

Which are the most important markets from a income earning point of view.

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When conducting a market assessment, you shouldn’t limit your analysis to vulnerable and food insecure

populations

ANALYSIS OF DEMAND

You should take into account other consumers in the market who, together with the food insecure population, make up the total demand.

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Different tools can be used to assess demand, supply and the market systems:

MARKET CALENDARS AND MARKET CHAIN DIAGRAMS

MARKET NETWORK MAPS

BASIC SEASONAL AND HISTORICAL PRICE TRENDS

THE STRUCTURE-CONDUCT-PERFORMANCE FRAMEWORK

SUPPLY AND THE MARKET SYSTEMS

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MARKET CALENDARS AND MARKET CHAIN DIAGRAMS

Market chains illustrate the points within the market system where production, transformation, distribution and consumption of a commodity take place.

Market calendars illustrate the availability of a commodity in the market throughout the calendar year.


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Market network maps help highlight which areas of a country:

• are linked to one another through markets; or

• are linked to neighbouring countries through cross border trade and markets.

MARKET NETWORK MAPS

Maps can be constructed for sub-national, national and regional market networks.


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BASIC SEASONAL AND HISTORICAL PRICE TRENDS

Commodity prices tend to follow a seasonal pattern.

seasonal patterns of food insecurity

Looking at seasonal price movements helps us to understand:

price expectations

market performance


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THE STRUCTURE-CONDUCT-PERFORMANCE FRAMEWORK

Conduct

Structure

INFLUENCE

Performance

INFLUENCE


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What type of demand and supply response will there be?

Will traders who have stocks of commodities available in one location or market move them to another market that is experiencing scarcity and rising prices?

How will food insecure households and food suppliers react to market changes?


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Collecting information on markets can take time and may be impractical within the tight time frame of an emergency

It is important to collect all possible information about the market system


Much of this information can be gathered and organized once and periodically updated.

Often some of this basic market information is already available and just needs to be gathered and incorporated in the food security assessment.

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Typical applications of assessment

TYPES OF MARKETS ASSESSMENTS

1

2

MARKET FOOD SECURITY MONITORING AND EARLY WARNING

MARKETS AND FOOD SECURITY DISASTER ASSESSMENT

3MARKET ASSESSMENT OF RECOVERY

PROGRAMS

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1

Initial baseline market assessment

At the beginning of the season, a baseline assessment of the market context, structure, conduct and performance is required if this information does not already exist.

Regular monitoring

In the process of regular monitoring, current data and information are compared to historical trends, five-year averages or a similar situation in the past looking for anomalies that could suggest significant changes in market and food security conditions.

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1

This type of market assessment focuses on:

Signs of deterioration or improvement in food security that are related to food availability and access.

Signs of the way the markets are functioning that could have implications on food security, e.g. declines in world market prices for important crops.

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1

The assessment focuses on:

• Look for anomalies (what is different)• Look for trends• Historic (over a number of years)• Seasonal (over one year)• Compare information to reference points/periods • Project future trends• Estimate demand and supply response• Form expectations, make plausible assumptions and develop outlooks

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1

When monitoring indicates a deterioration in markets that has significant implications on food security conditions, an assessment is warranted in order to:

• verify the analysis of the situation and basic assumptions;

• gather more information on market and food security impacts;

• gain a better understanding of why and how a food security situation is unfolding; and

• identify appropriate responses.

This type of assessment is normally focused on slow onset disasters. However, it also help to understand how a rapid onset disaster may have affected the population.

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MARKET FOOD SECURITY DISASTER ASSESSMENT2

In the best case scenario, a disaster assessment will take place where a food security monitoring system is in place.

In this case, the response to a rapid onset disaster could initially focus on verification of the early warning systems, rather than having to build the basic knowledge about the market system.

In the case of a slow onset disaster, a market assessment looks very much like the early warning situation.

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MARKET ASSESSMENT OF RECOVERY PROGRAMS3

Road reconstruction activities following rapid onset or complex emergencies serve as a primary source of employment and the improvement in roads facilitates the inflow of productive inputs, food and other basic goods as well as the output of commodities.

Markets are an integral part of many recovery programs.

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MARKETS AND RESPONSE DESIGN

Markets are an important aspect of the response options to food insecurity.

• fine tune the determination of unsatisfied needs in terms of magnitude, location and time frame;

• condition the type and extent of humanitarian response;

• provide opportunity for earlier response through market related policies;

• reduce the need for humanitarian response;• reduce dependence on donors when the

private sector is engaged in the response; and• help to rebuild shattered/destroyed

economies in post emergencies.

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MARKETS AND RESPONSE DESIGN

Many humanitarian agencies uses cash-based responses to address emergency needs following a rapid onset disaster.

An important consideration in the choice between a cash or food response is what will be the affect on local markets and ultimately food security.

In general, to avoid negative impacts resulting from cash or food aid interventions, a proper market assessment prior to project implementation is needed.

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SUMMARY

A market assessment should be designed to answer a specific set of questions and objectives.

Demand and supply and the market system should be assessed.

The assessment should be focused on markets and market performance as they relate to food security.

Typical types of market assessments include:

• Market food security monitoring and early warning• Markets and food security disaster assessment• Market assessment of recovery programs

Markets are also an important aspect of the response options to food insecurity.

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