LOCAL AND REGIONAL PROCUREMENT
1. Introduction to LRP
LRP Market Monitoring Training
Local and Regional Procurement (LRP)
 Local procurement or local
purchase means the purchase
of food in a country affected by
a food crisis or disaster to assist
targeted beneficiaries within
that same country.
 Includes cash and vouchers
 Regional procurement or
regional purchase means the
purchase of food in a country
other than the recipient
country in order to assist
beneficiaries.
Decision Tree for Food Aid Response
Are markets functioning well?
YES →Provide cash transfers or jobs to targeted
recipients, not food aid
NO
↓
Is there sufficient food available nearby to fill the gap?
YES →Provide food aid sourced through local
purchase/regional transactions
NO →Provide food aid through transoceanic
shipments
Source: Barrett CB, Maxwell DG (2005). Food aid after fifty years: recasting its role. Routledge, London
Comparing Cash and In-kind Food Transfers
Food transfers generally recommended when:
1. Food intake is prioritized for nutritional purposes (including
targeted feeding and micronutrient objectives)
2. Markets do not function well; food supply is limited
3. Women have more control over food resources
4. Markets are distant, or during the lean season
5. Inflationary risks are a significant concern
6. Security conditions permit (i.e. food commodities are highly
visible)
7. Cash transfer systems do not exist
8. Cost savings is sought through individual/household
targeting
Comparing Cash and In-kind Food Transfers
Cash transfers generally recommended when:
1. Overall humanitarian need, as well as choice and flexibility
are prioritized
2. Markets function well; supply is sufficient to meet demand
3. Markets are nearby, or during the peak, post-harvest season
4. Production disincentives due to food aid delivery are a
significant concern
5. Security conditions permit (i.e. cash is less visible but offers
greater incentive for theft)
6. Cash transfer systems exist
7. Cost savings is sought through lower logistical and
management overhead
Comparing Cash and Vouchers
Disadvantages of vouchers, vis-à-vis cash:
1. More administrative costs for vouchers
2. More decisions on programmatic design for vouchers (e.g.
number of vouchers/distribution, denominations, criteria for
participating vendors)
3.Vouchers can be exclusionary, particularly with respect to
small vendors that are difficult to include in voucher schemes
4.Often a tradeoff between increased consumer and trader
benefit and administrative costs
Comparing LRP and Transoceanic food aid
LRP is generally recommended because:
1. Likely to arrive faster than transoceanic aid
2. Potential for costs savings
3. May be better timed to arrive during lean season, minimizing
production disincentives
4. Serves as an incentive for increased production and investment in
marketing
Transoceanic food aid is generally recommended because:
1. LRP can cause inflationary pressure in source markets
2. Traders may increase prices, anticipating NGO purchases
3. Traders may default on tenders
4. Quality and safety standards may not be met
5. Cash to buy food locally is not available from donors
Comparing Cash and Vouchers
Benefits of Vouchers:
1. Gives beneficiaries varying levels of choice, while still having
some control over how transfer is used
2. Vouchers can be targeted within the household; can
potentially give more decision-making power to females
3. Ability to learn more about consumer/beneficiary demand.
This information can be used for future programming
Potential Benefits of LRP
 Time
 Cost
 Incentive to local production and local market actors
 Appropriate and culturally accepted commodities
 Reduced carbon footprint
 Integration of emergency food security responses with
longer-term food security programming, e.g. increasing
agricultural productivity, linking farmer groups to markets,
improving food quality standards, support to small traders
and businesses
Potential Negative Impacts of LRP
 Increased prices for consumers in source markets
 Increased concentration of large traders
LRP Methodologies
Competitive procurement – traders submit blind bids to
the procurement agency
 Advantages – quicker, cheaper, can buy in large lots, better
able to meet standards, traders can deliver
 Disadvantage – usually few traders who can meet the criteria
in the tenders; may concentrate market power; often cannot
trace commodities to source
 Examples – Burkina Faso (vegetable oil), Benin, Niger
(cowpeas and maize)
LRP Methodologies
Limited-competitive procurement – Tenders are targeted
to certain suppliers (typically smallholder farmers or specific
geographic areas)
 Advantages – helps to develop certain suppliers, may be
more local than competitive tenders
 Disadvantages – small farmers may default on volume or
quality requirements, often need to buy in smaller lots;
procurement may require more investment (transport,
trainings, sacs)
 Examples – Burkina Faso (millet, cowpeas), Mali
LRP Methodologies
Non-competitive procurement – Purchases are negotiated
with a specific supplier or a few specific suppliers.
 Advantages – Enhance specific vendors or supplier value
chains
 Disadvantages – Lack of competitive price discovery
 Examples – Bangladesh (cereal bars)
LRP Methodologies
Commodity-denominated vouchers – beneficiaries receive
coupons to purchase a fixed amount of specific commodities
directly from vendors
 Advantages – assures beneficiaries access with respect to
commodities and quality; nutritional value of ration is ensured;
money is invested in local communities; supports local market
systems
 Disadvantages – more difficult to monitor and control food
quality, supplies may be insufficient to meet demand; high
monitoring costs
 Examples – Full SPHERE standard minimum ration in Pakistan
LRP Methodologies
Cash-denominated vouchers – beneficiaries receive
coupons to purchase a fixed value of commodities directly
from vendors (may be restricted to allowable range of
commodities)
 Advantages – gives beneficiaries more choice with respect to
commodities and quality; money is invested in local
communities; supports local market systems
 Disadvantages – more difficult to monitor and control food
quality, supplies may be insufficient to meet demand; high
monitoring costs
 Examples – Niger
LRP Methodologies
Cash Transfer – beneficiaries receive cash to purchase
commodities directly from vendors
 Advantages – gives beneficiaries widest range of choice with
respect to commodities and quality; money is invested in
local communities; supports local market systems
 Disadvantages – most difficult to monitor market impact and
control food quality, supplies may be insufficient to meet
demand resulting in potential for inflation; highest
monitoring costs
 Examples – Cash transfers in Kyrgyzstan