5. Market Data TERMS AND DEFINITIONS Local and Regional Procurement Learning Alliance

Primary and Secondary Data Primary data: data observed or collected directly from first-hand experience Secondary data: data collected by someone other than the user

How will country offices collect price data? Guiding principle: Consistency –Data collection must be consistent within a given market over time –Ideally, data is consistently collected across markets over time Feasibility will depend on whether it is possible for primary data collectors to mimic secondary data approach

How will country offices collect price data? Monitor several prices –Retail prices and wholesale prices –Prices per commodity –Prices for different categories of markets Source markets Recipient markets Major central or regional markets Global markets (collected by Cornell)

How will country offices collect price data? Evaluate available secondary data on prices Complement secondary data with primary data collection for commodities or markets missing price data Briefly review definitions before proceeding to: –Assessing the usability of secondary data –Identifying complementary primary data –Collecting primary data

Approach to definitions By categories of markets By types of traders By characteristics of commodities

Markets and Communities Market: Physical location where buying and selling of food commodities occur; we are generally interested in the markets used by households (e.g., consumer or retail markets) Community: A community may have many markets or a single market

Market Categories National or central markets: major domestic markets in source and recipient countries Source market: market where procurement occurs Recipient market: market associated with distribution site / commodity’s destination Counterfactual markets: markets “matched” to source and / or recipient markets –A few pilots have counterfactuals Global markets: Collected by Cornell

Number of Markets to Monitor Market TypeLimited competitive procurement Competitive and noncompetitive procurement, vouchers and cash: National or central markets in source country 55 National or central markets in recipient country 55 Sample of source markets ≤ 5None Sample of recipient markets ≤ 5 Counterfactuals for source markets ≤ 5None Counterfactuals for recipient markets ≤ 5

Market types can overlap within or across categories: –Local procurement: source-country national markets = recipient- country national markets source and recipient (local) markets may be the same (e.g., school feeding) –Large competitive tenders: source markets may be the same as central or regional markets in a source country Some markets fulfill multiple categories

Traders: Types and Prices Along a commodity supply chain, each trader buys and sells at different prices –Farmgate: prices paid to producers by brokers, aggregators, wholesalers and other market agents –Wholesale: intermediary prices paid during transactions among brokers, aggregators and wholesalers –Retail: prices paid by households or individual consumers

Commodity Characteristics Commodities are not created equal; different characteristics can result in different prices. Key characteristics that can cause commodity prices to differ: –Observable quality –Color and size –Condition/ level of processing –Local vs. imported (or improved variety vs. landrace) The commodity selected for price collection and the commodity delivered should have the same characteristics.

Observable Quality Markets can contain different qualities of rice, maize, pulses, etc. Collect prices for the quality of the commodity that will be distributed. –For example, if the project will purchase and distribute 20% broken rice, collect prices for 20% broken rice –Agencies tend to distribute higher quality foods. If prices vary by observable quality, monitor higher quality If the project uses vouchers, collect the quality that is most popular for the targeted beneficiaries. Collect prices for the quality that will be distributed –Quality differences may be unobservable. Therefore, focus on price-differentiated quality differences

Color and Size Prices can vary by color (e.g., white maize vs. yellow maize) or size Monitor prices for commodities with the same color and size as those that will be distributed If distributed commodities are not available in certain parts of the country, monitor varieties that have similar characteristics/prices to those purchased and distributed.

Color, size

Condition/level of processing A commodity’s price can differ based on whether it is dried, has been husked, polished, milled, or is off the cob. Collect prices for products in a similar condition to what you are procuring and distributing. For example, if the project is distributing dried millet, do not collect prices for fresh or raw millet unless dried prices are not available.

Local vs. imported commodities The characteristics and prices of local and imported commodities may differ, with respect to quality, variety, condition, and costs of production. Unless the project is procuring imported goods, monitor prices for locally produced commodities.

Local, import: Maize prices vs. import parity – Lilongwe, Malawi Improving the Performance of Staple Markets to Exploit the Productive Potential of Smallholder Agriculture T. S. Jayne, A. Chapoto, and B. Shiferaw AGRA Conference on “Towards Priority Action for Market Development for African Farmers,” Nairobi, Kenya, May 13-15, 2009

Vouchers and cash: Selecting commodities to monitor Restricted vouchers: collect prices for allowable goods –If a food basket includes more than five commodities, select up to five that are expected to be most heavily purchased Cash or unrestricted vouchers: select up to five major commodities in the area of the program and any other key commodities Delivered commodities & monitored commodities should have the same characteristics

If commodities reflected in secondary data do not precisely match those being distributed, country offices will have to decide whether to use the data –Ideally: matched commodities have the same: Color and size Processing / condition Produced within source country Quality If the secondary data track prices for a commodity that is procured locally (and not imported), is of the same color and size, and is approximately the same quality and processing standards, note the differences, and use the data Comparing commodities with secondary data to distributed commodities

Characteristics of a commodity procured may also vary across markets during primary data collection. –If traders do not sell the same commodity that will be distributed, ask traders for prices on the commodity with characteristics closest to the distributed commodity Showing a sample of the distributed commodity to traders can help them identify which characteristics are most similar –Ideally: matched commodities have the same: Color and size Processing / condition Produced within source country Quality Comparing commodities in a market to distributed commodities

Frequency of Price Monitoring USDA and USAID requirements differ slightly We use a comprehensive requirement to ensure data are as comparable as possible Weekly or biweekly is ideal; monthly is minimum Monitor through Sept 2011

Volumes or Scale of Price Monitoring Prices often vary by the quantity of the commodity to be purchased. Larger volume purchases tend to have lower per unit prices than smaller volumes. For example, the per kilogram cost of a one metric ton purchase may be cheaper than the per kilogram cost of a one kilo-purchase. Units of measurements may be different across markets and even traders within markets Collecting consistent price data when prices vary by quantity purchased can be difficult.