Presentation is loading. Please wait.

Presentation is loading. Please wait.

Market Analysis for Effective Food Security Programming IFADC May 7, 2012 Prepared by USAID-BEST Project/Fintrac Inc.

Similar presentations


Presentation on theme: "Market Analysis for Effective Food Security Programming IFADC May 7, 2012 Prepared by USAID-BEST Project/Fintrac Inc."— Presentation transcript:

1 Market Analysis for Effective Food Security Programming IFADC May 7, 2012 Prepared by USAID-BEST Project/Fintrac Inc.

2 Theory: Key Elements & Approaches Practice: Challenges & Insights Q&A 2012 IFADC: Market Analysis Overview Fintrac/USAID-BEST Ethiopia Study, 2010

3 Food Aid: Intervention Tools To improve food security for vulnerable populations, donors can use a number of food aid tools: ºDirect distribution ºMonetization ºLocal or regional procurement (LRP) ºCash transfers ºVouchers Fintrac/USAID-BEST Zimbabwe Study, 2012

4 We want to maximize food security impact, and maximize efficient use of scarce resources We don’t want to risk hurting the very people we are trying to help, by: ºEncouraging dependency ºPutting people out of business ºCompeting with farmers for labor ºSupporting corruption ºSupporting uncompetitive markets ºCreating inflation Market Analysis to Maximize Impact & Efficiency, Minimize Risk Fintrac/USAID-BEST Guatemala Study, 2011

5 How Does the Market View Food Aid? Distributed food aid: ºAn increase in the local food supply ºAn (in-kind) income transfer to a household Monetized food aid: ºAn (ad hoc) increase in the local food supply induced by a non-commercial market actor Local procurement of food aid/cash/vouchers: ºAn (ad hoc) increase in demand for the local food supply Fintrac/USAID-BEST Guatemala Study, 2011

6 What Happens When Supply Increases? Fintrac/USAID-BEST Ethiopia Study, 2010 Fintrac/USAID-BEST Zimbabwe Study, 2012 Quantity supplied or demanded Supply Price Pe S0S0 S1S1 P0P0P0P0 Q0Q0 Q1Q1Q1Q1 Demand P0P1P0P1 Q0Q1Q0Q1 Monetized/ Distributed D0D0

7 What Happens when Demand Increases? Fintrac/USAID-BEST Ethiopia Study, 2010 Fintrac/USAID-BEST Zimbabwe Study, 2012 Quantity supplied or demanded Demand Supply Price Pe S0S0 P0P0 P1P1 Q0Q0 Q1Q1 D0D0 D1D1 LRP/cash/ vouchers

8 Key Factors to Safeguard Markets Distributed food aid: ºEffective targeting (who, where, what, when, how much) Monetized food aid: ºFair market price ºVolumes small relative to local market’s supply LRP/cash/vouchers: ºEffective targeting (who, where, what, when, how much) ºSupply able to expand to increased demand Fintrac/USAID-BEST Zimbabwe Study, 2012

9 Moving from Theory to Practice Analytical frameworks Data/information needs Real-life challenges Fintrac/USAID-BEST Guatemala Study, 2011

10 What Types of Analytical Frameworks Exist? Market Information Food Insecurity Response Analysis (MIFIRA) Emergency Market Mapping and Analysis (EMMA) Structure Conduct Performance (SCP) Fintrac/USAID-BEST Zimbabwe Study, 2012

11 Market Information Food Insecurity Response Analysis (MIFIRA) Development/emergency Designed for specialist? Key feature: decision tree

12 Emergency Market Mapping and Analysis (EMMA) Emergency Designed for layman Key feature: market map

13 Structure Conduct Performance Framework Basic conditions: Seasons and seasonality, infrastructure, consumer preferences, income distribution, stability, government policies Conduct behavior and strategies of market actors (price setting behavior, buying and selling practices, informal norms of trade, and information use) Performance outcomes of market interactions (e.g. prices) Structure relatively stable features of market environment (# and concentration of buyers and sellers, barriers to entry and exit, vertical and horizontal coordination, and licensing requirements)

14 Do I Really Need One of Those Analytical Frameworks? Depends on objective… Cherry pick from one framework based on your objective: ºMIFIRA – which response is most appropriate ºEMMA – inform emergency response ºSCP – broad understanding of markets Fintrac/USAID-BEST Guatemala Study, 2011

15 What Do We Need to Know, and Where Do We Find It? Household needs (demand) How local markets ‘work’ (supply, demand, price formation) Primary sources Secondary sources Secondary Vulnerability assessments, livelihood profiles, consumption and expenditure surveys Crop assessments Trade statistics Price monitoring: gov’t, FEWS, WFP, FAO, etc. Primary Formal and informal surveys of market actors (producers, traders, wholesalers, retailers, consumers) – esp. producer and trader conduct

16 How Do We Get the Information We Need? Desk research ºExisting market analyses including past Bellmon analyses, food security reports ºPrices, production, trade, and food aid data from international and local data collection systems In-field research ºInterviews with private sector, various levels of government, communities, NGOs, and UN agencies ºMarket visits Fintrac/USAID-BEST Zimbabwe Study, 2012

17 What we’ve covered: Basic principles Analytical framework General data/information needs So, now what? Practical challenges translating theory into practice

18 Practical Challenge Production, trade, and food aid data from desk research are often unreliable or incomplete

19 Production Lack of resources to conduct frequent assessments Sometimes politicized Validation in field is critical, but also imperfect

20 Imports Lack of resources to monitor and report Importers’ incentive to evade customs duties

21 Food Aid Not all donors report to online databases Among donors who report, reporting is often inconsistent FY vs CY vs MY Does not specify whether monetized or distributed food aid

22 Practical Challenges Commodity markets are complex. Fintrac/USAID-BEST Haiti Study, 2011

23

24 Questions So Far? Market Analysis: Piece of Cake, or Piece of Work?

25 Practical Challenge People sometimes tell you what they think you want to hear…or what they want you to believe. Fintrac/USAID-BEST Haiti Study, 2012 Fintrac/USAID-BEST Guatemala Study, 2011

26 Price Definition Types Lack of market information systems Asymmetries Fair market price Objective measure of fair market price: Import Parity Price (IPP) Fintrac/USAID-BEST DR Congo Study, 2010

27 Import Parity Price (IPP) Value of a unit of product brought from a foreign country and priced at a geographic location of interest in the importing country. Fintrac/USAID-BEST Honduras Study, 2011

28 Calculating IPP: Import data (assess likely country of origin) Commodity cost (in likely country of origin) Ocean transport (from likely country of origin) Insurance fees, port charges at port of entry Custom duties and taxes (if applicable) Inland transport costs to eventual point of sale (if applicable) Storage, operational fees, etc. (if applicable)

29 Determining Country of Origin Ex: UN Comtrade – Wheat Imports

30 Example of IPP Calculation Refined Soybean Oil No.ItemSourceUS$/MT 1Refined Soybean Oil Ex RotterdamUSDA FAS Data.748 2Ocean FreightMarill Freight50 3Insurance1% of #17.5 4CIF Djibouti#1+#2+# Customs Duty30% of # VAT15% of (#4+#5) Withholding Tax3% of # Port Charges, handling etc.Axis Transit Services39.5 9Inland FreightAxis Transit Services StorageECEX7.5 11PackagingWhey Consulting Ltd AdministrationWorld Bank Salary Data4.0 13Total Import Parity PriceSum(#4:#12)1440.1

31 Practical Challenge USG implementing partners have rich experience with demand-side constraints Newer tools -- LRP/cash/vouchers -- require understanding supply-side constraints as well Fintrac/USAID-BEST Haiti Study, 2011

32 Practical Challenge Markets are dynamic.

33 External organizations Reading Lists List of Data & Information Resources Trade groups Government ministries Universities TOPS, Learning Alliance, FEWS NET, FAO, etc. Resources USAID-BEST Your colleagues

34 Market Analysis for Effective Food Security Programming Questions? Comments? Fintrac/USAID-BEST Haiti Study, 2012 Fintrac/USAID-BEST Peru Study, 2011

35 Thank You! IFADC May 7, 2012 Prepared by USAID-BEST Project/Fintrac Inc.


Download ppt "Market Analysis for Effective Food Security Programming IFADC May 7, 2012 Prepared by USAID-BEST Project/Fintrac Inc."

Similar presentations


Ads by Google