SHELTER COMMODITIES MARKET SNAPSHOT
MAKWANPUR, NEPAL
MAY 2015
EXECUTIVE SUMMARY
Dates of data collection: 17th - 18th of May, 2015.
Locations assessed: Tistung VDC, Palanga VDC and Hetuada, Makwanpur, Nepal.
Methodology: Rapid Assessment for Markets (RAM) adapted version.
Summary of Findings:






The key shelter commodities needed by the earthquake affected household to rebuild their houses include: corrugated
galvanized iron sheets (CGI), cement, rebar bars and timber.
The marketplaces used by the community to purchase these commodities pre-shock period are accessible and the
damage created to them by the earthquake is very limited.
Demand has significantly increased for CGI and significantly decreased for the rest of the shelter materials.
The current capacity of the traders to adapt to the changing demand for CGI is extremely limited. Wholesalers anticipate
the market to recover in two months. Retailers and wholesalers expressed confidence in their ability to increase
supplies and meet anticipated rising demand for the rest of the shelter materials after the monsoon season.
Access to credit by traders has significantly changed since the earthquake; for commodities in high demand, advanced
cash payment have become the norm.
Prices did not suffer significant changes, mainly due to the government’s policy prohibiting any price increase.
SHOCK AND MARKET OVE RVIEW SUMMARY
SHOCK REFERENCE POINT
A powerful 7.8 magnitude earthquake struck Nepal on 25 April 2015, with the epicentre in Lamjung District of Kathmandu.
30 out of 75 districts in the country were affected in the Western and Central Regions. An estimated 8,000 people were
killed, and a further 20,000 are injured (UN). On 12 May 2015, a second earthquake of 7.3 magnitude struck Nepal, this time
with the epicentre 76km east of Kathmandu (Ref: USGS), triggering landslides and further damage and increasing casualties
in already devastated areas. For the purpose of the market assessment, the date of the second earthquake is considered the
reference point for the shock.
MARKET SELECTION
Tistung Deurali Village Development Committee (VDC) in north-east of Makwanpur District has been identified as one of the
tree worst earthquake-affected VDCs in Makwanpur, with 73% of households (1,226 out of 1,688) partially or totally
damaged. Tearfund staff conducted a Rapid Needs Assessment in two (out of nine) wards of Tistung VDC (Basenta in Ward
6, and Taruka in Ward 4) on the 10th of May which highlighted shelter as one of the urgent unmet humanitarian needs in the
area. Due to limited humanitarian assistance received in this location, Tearfund subsequently focused its interventions in
this VDC.
Markets in the district were assessed by WFP on the 15th of May and found to be functional. In order to ascertain the
feasibility of immediate and longer term cash transfer programming in the shelter sector specifically, the decision was made
to conduct a market assessment on the key shelter commodities.
Discussions with the local communities revealed the essential shelter commodities for their self-recovery to be: corrugated
galvanized iron sheets (CGI), cement, rebar bars and timber. While all commodities were essential for the reconstruction of
permanent houses after the monsoon period, CGI was considered an immediate priority.
The market places that the earthquake affected households used to buy the commodities before the shock included: Tistung,
Palang and Hetauda.
Image no.1. Map of Makwanpur District
SECTION 2: MARKET INFORMATION
PHYSICAL IMPACT OF THE SHOCK ON THE MARKET
Besides small damage to the shops structure and small amounts of stock loss, the earthquake did not have a significant
physical impact on the market. Access to these markets is unobstructed.
MARKET DEMAND
CGI-Significant increase in the immediate demand. The CGI were the single most sought after commodity on the market. This
has put heavy pressure on the supply chain.
Cement, rebar bars and timber- Significant decrease in the immediate demand. With the monsoon season approaching no
permanent buildings can be (re)built. The construction work that was underway pre-shock has been halted. Contractors and
households report being afraid to rebuild at the moment even before the start of the monsoon season, due to the possibility
of another earthquake.
Commodity
Tistung –retail
Palang -retail
Hetauda –wholesalers
Cement
N/A
-85%
-29%
Rebar Bars
N/A
-20%
-67%
Timber
N/A
N/A
-100%
CGI
N/A
+ 3678%
+1500%
Fig1. Change in sale of key shelter commodities
MARKET SUPPLY AND MARKET RESPONSE CAPACITY
The number of wholesalers and retailers has not changed since the earthquake. Changes in supply capacity have occurred
mainly due to increased demand and the government’s policy.
CGI-Currently significant supply issues, market anticipated to recover in two months. The traders have depleted most of their
pre-earthquake stocks. At retail level, on the 18th of May there was zero stock in Tistung (only one shop) and 25 bundles
(enough for 5 HH) in Palang (3 out of 4 suppliers). At wholesaler level, half of the CGI traders in Hetauda (4 out of 8) had
cumulatively 850 bundles (enough for 170 HH in stock). Traders were unable to say when they could provide additional CGI
and mentioned that they are unable to deliver on promised orders (including to INGOs). The impediments to restocking lie
with:
1.
2.
The lack of capacity of the local factories to adapt to increased demand. As this is not the usual period for
production, the factory did not have the raw materials in stock to start immediate production. The lead time to
procure raw materials from India delayed the initial start. It is also reported that the factories do not have electricity
all the time and as a result cannot produce at full capacity. The government has put a significant order to the
factories to be able to provide CGI for the most affected districts. Due to this, the factories cannot fulfil orders from
private wholesalers.
Import restrictions. The government has restricted the importation of CGI at the end of May. However, even before
this ban, traders lacked any interest in sourcing the commodity from outside the country. Importing the goods
would imply an increase in price by 30% to due import taxes. Wholesalers do not want to risk procuring expensive
CGI that will not be bought locally in the near future. Wholesalers in Hetauda were negotiating with the
government to wave the import fees before the ban on CGI was enforced.
Cement and rebar bars- Currently no supply issues and high capacity to meet additional demand. Traders had significant stock
for these commodities and had confidence that once the demand would rise (after the monsoon season) they will able to
use the same supply chains to meet the demand. The retail traders In Tistung and Palang purchase these items from Hetauda
factories directly or from wholesalers who order them from the main factories or import them. The wholesalers did not
anticipate any issues with the production of cement and rebar bars at a national level or with their capacity to find additional
storage space if needed. It was only at Tistung level that the only shop that sold construction materials could not restock as
the owner was heavily involved in the local relief efforts.
Timber –Current no supply issues, potential threats to meet additional demand in the future. The timber traders had overall
good stock in Hetauda and could meet higher demand at the moment. However, the Government owned Nepal Timber
Cooperation, the only body that is authorized to sell timber, has stopped all sales to private wholesalers over the next
months, effectively pulling the timber from the private local market and leaving mills with import as the only option. Timber
for reconstruction is most likely to be sourced by households from their own and community forests. If not sufficient, the
Nepal Timber Cooperation will distribute in the district according to agreed need. With the significant demand that will raise
especially after the monsoon, and the halt on sales to local mills, there are concerns that even if the timber can be sources,
there will not be capacity to process it in time. The price from the community forest is approximately 21 times cheaper than
the local market.
PRICE INFORMATION
Immediately after the earthquake, the government issued a country wide policy making it illegal for traders to increase their
prices. The traders at Tistung and Palanga level mentioned that prices did not increase at all although the population
mentioned an increase in price of 15%. In Hetauda, the wholesalers did mention an increase in the price of CGI by 2%.
Commodity
Specification
Quality
Tistung
Palang
Hetauda
Cement
50 kg
O.P.L
720
720
720
Rebar Bars
1 kg
AVERAGE
80
75
Cubic ft.
AVERAGE
Bundle 72ft.
AVERAGE
Timber
CGI
5500
5500
4700-5500
5100
Fig 2. Average price of commodities in NRP
ACCESS TO CREDIT
Access to credit varied significantly across traders. While some traders (both retail and wholesalers) mentioned that before
the earthquake they were able to purchase almost everything on credit, now they have to pay cash and even pay in advance
for items that are in high demand. Especially for CGI, the factories did not accept credit anymore. The retailers mentioned
debts of around 75.000 NRP while the wholesalers reported more than 10.000.000 NRP. The discussions with traders did not
seem to indicate that these limitations would obstruct their purchasing of CGI if the commodity would become available.
While traders’ access to credit was being limited, they still continue
to give credit to buyers.
Amount of credit
given
10.000-25.000 NRP
Credit
period
Average total
credit
1-5
months
250.000 NRP
RECOMMENDATIONS
Considering the extremely limited capacity of the market to meet the raising demand of the shelter commodity that the
earthquake affected households are in most need of- CGI, it is not recommended to meet this need through cash based
programming at the moment. The robustness of the market for the other shelter commodities suggests that the use cash
transfer programms for future, permanent shelter reconstruction interventions will be feasible. To this end, it is
recommended that until the construction phase starts, at the end of the monsoon period, the markets continue to be closely
monitored.