Trader Survey Training 1.2. SG - Market Analysis & Food Security.doc
1.2. Market Analysis and Food Security
Session-at-a-glance
Content / Approximate Time / Instructional ActivityIntroduction and Review of Definitions / 15 minutes / Plenary Presentation & Q&A
Importance of Markets for FS / 45 minutes / Small Group Work and Plenary Debrief
Quick Case: Exercise 1.2.a. Government Policies in Pakistan / 25 minutes / Participants in pairs – analysis of short case
Markets and Availability / 20 minutes / Plenary Presentation & Q&A
“Half-time” Wrap-up / 5 minutes / Plenary Q&A
Markets, Access & Participation / 30 minutes / Plenary Presentation & Q&A
Option: Exercise 1.2.b. Food & Nutrition Insecurity in Northern Laos / 45 minutes / Small Group Work & Plenary Feedback
Final Wrap-up / 10 minutes / Plenary Q&A
Total Time / 195 minutes
Session 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
Session Supplies
§ Power-point: 1.2. Markets & Food Security.ppt
§ Workbook Exercises (annexed to this Session Guide)
o 1.2.a. Quick Case: Government Policies in Pakistan
o 1.2.b. Food & Nutrition Insecurity in Northern Laos
Key Messages
§ Market analysis is essential to understanding the level of food and nutrition insecurity.
§ Markets play a role in addressing food insecurity through market interventions, local procurement and cash/voucher programmes.
§ To understand the impact of markets, the selling and buying patterns of target groups must be identified.
§ Without functioning markets, a small drop in domestic grain production can lead to huge price increases & consumption shortfalls.
§ Access to food is reduced with entitlement failures; these reductions are likely due to market failures such as a fall in wages, a rise in food prices, loss of employment or a drop in cash crop or livestock prices.
§ With trade, prices increase until they reach parity with import prices, limiting consumption shortfalls.
§ Today, very few, if any, HHs are autarkic; most HHs buy more than they sell on markets.
§ Understanding how markets function, and interventions that facilitate trade, can help in identifying measures to alleviate negative impacts of shocks. This may allow us to better estimate appropriate amount of food assistance to import, reducing potential market distortions.
Facilitator Guidance and session preparation
Review the session exercises (annexed to this session guide.)
Be sure to familiarize yourself with the FS & Nutrition Framework (PPT 9) and the PPT animation features used to present the various components of the framework.
Room Setup
Arrange for small group work in the plenary conference room.
Session Activities
Introduction & Review of Definitions
15 minutes
Show:
· PPTs 1-2 to introduce the session and the session objectives.
· PPT 3 and ask participants for the accepted definition of food security. Take a few responses and then show PPT 4 to ensure all know the definition.
· PPT 5 and briefly solicit definitions for availability, access and utilization. Finally solicit the definition of “market” – after taking responses, show the definition on the slide. Note that the key word here is “exchange” – any exchange of goods or services is in fact a “market”.
Importance of Markets for FS
45 minutes
Show PPT 6 and form the plenary into four small groups and assign one question to each group; these are:
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?
Give them about ten minutes to respond. Take their reports in plenary.
Use PPTs 7-11 to fill in gaps as needed - where essential points may have been missed.
Use PPT 12 to explain how markets link to the WFP food security framework. Note that it is based on the UNICEF malnutrition model. Point out the different levels of food security analysis: community, household, and individual, and then use the final animation to highlight the influences that markets have indirectly (through household food access) on food intake. Take your time here: take questions as needed. Try to ensure participants “get this point” – it is key to understanding why markets analysis is increasingly given importance and attention by WFP.
Be sure then to highlight the impact of markets on food access and the subsequent impact of food access on individual food intake.
Use PPT 13 to summarize the relationships between markets and food security and take any comments or questions. Move on…
Quick Case: Exercise 1.2.a. Government Policies in Pakistan
25 minutes
Show PPT 14 and ask the participants to turn to Exercise 1.2.a. in their Workbooks. Tell them to read the case and then, with a partner, respond to the questions and be prepared to present their thoughts to the plenary group within 15 minutes.
Use the last 10 minutes before the break to debrief the Quick Case. Ask for volunteers to respond to Question 1 (What is the Government doing to impact availability?). Responses should include:
· On the production side, policies aim at increasing wheat productivity (yields) and output.
· Also: Increased wheat production is part of an overall national food security strategy of reducing dependence on food imports for national food supplies.
With regard to Question 2 (What is the Government doing to impact food access?), the responses include:
· Support for farmer income
· Ensuring availability of wheat flour at affordable prices and maintaining price stability.
Finally, ask the group in plenary how the Government’s policies are faring. (They should note that “wheat policy is somewhat constrained by inflation targets and inflation policy.”) Note that you will be considering further market policies and performance in Session 1.4.
Markets and Availability
20 minutes
Show PPT 15 and review the various ways in which food availability sufficiency can be achieved. Then note that well-functioning markets are also crucial to food availability. Review briefly the factors shown that impact market functioning – e.g., physical access (travel distance, time, seasonal access), and market integration (transaction costs and trade flows.) Regarding market integration: briefly explain that this refers to the degree to which price changes in one location are reflected in similar price changes in another location. Good integration implies that food will flow (via commercial transporters) to areas characterised by high food deficits and prices; poor integration implies a lack of food flows. Thus it is clear that market conditions directly impact the local availability of food.
Show PPT 16 and note the importance of analyzing availability to understand the market’s impact on household food access. Note as well analysis of availability is carried out on two levels: macro and meso. Go immediately to PPTs 17 and 18, and review the various points, in particular: Macro-level analysis of food availability is generally conducted through secondary data analysis of conditions such as economic growth & price volatility, international food reserves, and the policy environment, including trade policies, regulations, institutions, food policy and interaction of grain reserves with markets, and governance.
On PPT 18 review the points on “meso”-analysis, noting that (1) the WFP trader survey is one means of obtaining data to conduct such an analysis and (2) that the analysis is done to understand the market’s structure, conduct, and performance. Take questions/comments, but try to keep on schedule.
“Half-time” Wrap-up
5 minutes
Use the final five minutes of this first part of Session 1.2. to ask participants if they have questions regarding markets and food security, the framework, or markets and availability. Respond as needed and note that, upon return from break, you will dig more deeply into the relationships between markets and food access.
Go to break.
Markets, Access, & Participation
30 minutes
Show PPT 19 and note that understanding markets is also essential to understand the status of household food access. Introduce the concept of entitlement, the determinant of food access. That is, the less direct or market entitlement that a household had, the less food access it enjoys as well. Note that all entitlement failures are likely to occur through market mechanisms, and, as such, can be monitored and signalled through market dynamics.
Use PPT 20 to further explain the relationship between food access and entitlement: a fall in fall in wages, a rise in food prices, loss of employment, or a drop in cash crop or livestock prices – all the possible results of market failures – can all reduce household food access .
Show PPT 21 and note that many indicators of “entitlement” are asset and market-based, such as relative prices, real incomes, and market-related shocks. Thus, to understand reductions of HH entitlement – i.e. reduction of household food access – then we must strive to understand the markets with which those household interact.
Show PPTs 22 and 23 to review the relationships between livelihoods, purchasing power, market dependence, access and effective demand. Highlight the importance of a livelihoods approach in EFSA, that is, in understanding how an emergency impacts traditional livelihoods and coping strategies and, in turn, negatively impacts “effective demand” and HH food access through reductions in HH purchasing power and market access. Stress that the various dimensions that determine effective demand are all linked to livelihoods analysis; stress also that all three factors – purchasing power, market dependence, and market accessibility – must be studied by the analyst to understand effective demand
Then “fade in” the Question for Plenary on PPT 23. Ask participants to provide examples of how, in their country, livelihoods analysis is key to understanding effective demand (or HH food access.) Ask them how market dependence differs by livelihood (i.e. which livelihoods seem more profoundly integrated into markets, which are more impacted by market and price shifts?)
Use PPTs 24 through 26 to present the concept of market participation – i.e., the degree to which HHs depend on markets for their food sources. Stress that autarky is pretty much “a thing of the past”, and that very few HHs today are self-sufficient in terms of producing their own food. Almost all depend to some degree on market interactions. (PPTs 25 and 26 provide examples of market dependence – obviously high in urban areas of Senegal, but also surprisingly high in rural Madagascar.)
Option: Exercise 1.2.b. Food and Nutrition Insecurity in Northern Laos
45 minutes
If time permits, have the participants conduct this exercise. If additional time has been taken up for answering participant questions on concepts, this can be omitted. This assumes that the Quick Case - Exercise 1.2.a. – has been conducted.
Show PPT 27 and have the participants turn to Workbook Exercise 1.2.b. Ask them individually to read the case and then, in small groups of 3-4, discuss their answers to the questions:
1. What particular aspects of market analysis will you be concerned with on your mission?
2. What are the key links between these aspects and food and nutrition security?
After about 20-25 minutes (give them a bit more if reading takes a long time), ask the groups to respond to the questions in plenary. Take no more than 20 minutes for this debriefing.
Answers to the first question should refer to the main points of the session, in particular:
· The degree to which the price increases have been transferred to local markets in the north
· The magnitude of market participation of the northern farmers
· The differences in food price increase impact by livelihood group (e.g., different impacts for highland farmers vs. pastoralists) and of changing terms of trade
· Changes in purchasing power and market access by livelihood group
· Changes in coping strategies, particularly with regard to loss of natural and other assets
Answers to the second question should include the following:
· The impact of a reduction in purchasing power at the market directly translates into a loss of HH food access for those who actively participate in markets. This loss likely means less food consumption at the level of the HH and, as a result, a decline in nutritional security for those who are already nutritionally vulnerable.
· Pastoralists may be nutritionally secure for the short-term, but over the long term as their animals are either sold or eaten and their asset base is lost, they confront the greatest food and nutrition insecurity of all: unsustainable coping strategies.
Final Wrap-up
10 minutes
Show PPT 28 and wrap-up the session by reviewing the points:
· 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
Take any final comments or questions. Go to lunch.
Annex 1. Workbook Exercises
Workbook Exercise 1.2.a. Quick Case: Government Policies in Pakistan[1]
Task: Read the Quick Case and, with a partner, answer the questions below.
Quick Case: Government wheat policy in Pakistan attempts to balance competing interests of producers and consumers. On the production side, policy is aimed at increasing wheat productivity (yields) and output, as well as supporting farmer incomes. Increased wheat production has also been seen as part of an overall national food security strategy of reducing dependence on food imports for national food supplies.
On the consumption side, the government has attempted to enhance household 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 to some degree constrained by inflation targets and inflation policy.