Session 1.2
Markets and
Food Security
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
• Identify the essential links between markets and
food availability; and between markets and food
access
WFP Markets Learning Programme
Price Analysis Training
1.2. 2
A quick review…
Food Security…
Definition?
WFP Markets Learning Programme
Price Analysis Training
1.2. 3
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 4
Definitions for…
Availability?
Access?
Utilisation?
Market?
WFP Markets Learning Programme
Price Analysis Training
Market: A
place where
buyers &
sellers come
together to
exchange
goods and
services
1.2. 5
So, why are markets important for
food security?
Markets
Food
Security
As 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
Price Analysis Training
1.2. 6
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
WFP Markets Learning Programme
Price Analysis Training
1.1.7
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
WFP Markets Learning Programme
Price Analysis Training
1.1.8
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
WFP Markets Learning Programme
Price Analysis Training
1.1.9
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
WFP Markets Learning Programme
Price Analysis Training
1.1.10
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
HH
food
access
directly
immediate
influences
individual
food
intake
underlying
basic
WFP Markets Learning Programme
Price Analysis Training
1.2. 12
Markets
Food
Security
markets in
the food
security &
nutrition
framework
WFP Markets Learning Programme
Price Analysis Training
1.2. 13
Markets & Food Security
Analysis
Markets
Food
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 14
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.
WFP Markets Learning Programme
Price Analysis Training
1.1.15
Markets and
food availability
Markets
Food
Security
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)
WFP Markets Learning Programme
Price Analysis Training
1.2. 16
Markets and food availability:
Two levels of analysis
Markets
Food
Security
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 17
Markets and food availability
Macro-analysis
Markets
Food
Security
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 18
Markets and food availability
Meso-Analysis
Markets
Food
Security
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 19
Markets and Food Access
The Concept of Entitlement
Markets
Food
Security
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
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 20
How do markets determine
food access?
Markets
Food
Security
Access to food is reduced with entitlement failures
These reductions are likely due to market failures
HH
Food
Access
WFP Markets Learning Programme
fall in wages
rise in food prices
loss of employment
drop in cash crop or livestock prices
Price Analysis Training
1.2. 21
What are the market indicators of
“entitlement”?
Markets
Food
Security
Many indicators of “entitlement” are
asset and market-based:
 relative prices
 real incomes
 market-related shocks
Thus: to understand reductions of HH entitlement – i.e. of
food access – we must understand the markets with which
those HHs interact
WFP Markets Learning Programme
Price Analysis Training
1.2. 22
How do markets
determine food access?
Effective
demand is key
to HH food
access
Markets
Food
Security
Effective
Demand
Purchasing
Power
Market
Dependence
Market
Accessibility
Livelihoods Analysis
Effective Demand: the quantity of a good or service that
consumers are actually buying at the current market price.
WFP Markets Learning Programme
Price Analysis Training
1.2. 23
How do markets
determine food access?
Markets
Food
Security
Purchasing Power:
Economic for
access,
HH income, Prices
Question
Plenary
Market Dependence (involvement in markets)
o
o
…and in your country?
On/in markets for goods (food, non-food, livestock…) & services
(labour, credit, capital…)
Which livelihoods
more/less
Selling/buying
behaviours: net are
seller/buyer,
seasons and reasons of
sales
and purchases
profoundly
integrated into local markets?
Effective
Demand
Market
Accessibility
of HHs
Which
are generally
o
more impacted by
Physical
(distance)
severe
food price shifts?
Purchasing
Power
o
Financial (price, credit…)
o
Social (gender, security…)
WFP Markets Learning Programme
Market
Dependence
Market
Accessibility
Livelihoods Analysis
Price Analysis Training
1.2. 24
Markets in Food Security Analysis
another view:
the livelihoods perspective
National food
production
and stocks
Agricultural
inputs
Extension
Food production
Market
HH
Assets
Non-food
production
Markets
Food
Availability
imports
HH CASH
AVAILABILITY
Microfinance
Employment
Market
Commercial
Market
Food
aid
Market
Market
Food
Security
Food
Access
Transfers
Remittances
Loans
WFP Markets Learning Programme
Price Analysis Training
1.2. 25
Market participation
and food security
Markets
Food
Security
Markets as food source :
• Evidence suggests very few, if any, HHs
are autarkic
• Majority of HHs buy more than they sell
on markets
autarkic: self-sufficient (here in terms of food)
WFP Markets Learning Programme
Price Analysis Training
1.2. 26
Market Participation & FS
Urban HHs - Senegal
Markets
Food
Security
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
WFP Markets Learning Programme
Price Analysis Training
1.2. 27
Market Participation & FS
Rural HHs - Madagascar
Markets
Food
Security
Analysis of HH Food Security in Selected Districts of Madagascar
WFP, Madagascar, September 2009
WFP Markets Learning Programme
Price Analysis Training
1.2. 28
Small Group Work
Exercise 1.2.c.
The Marketastan
File: Food
Insecurity in
Northern Province
WFP Markets Learning Programme
Price Analysis Training
1.1.29
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)
WFP Markets Learning Programme
Price Analysis Training
1.2.30