Access to markets and services (Special Supplement 3)

6.1 Introduction

In emergencies, access to markets may be lost for a number of reasons. Since most people live in a cash economy, restoring and maintaining adequate access to markets is important as part of an emergency response.

In a livelihoods analysis, markets are considered under 'policies, processes and institutions'. The market itself is a process (or chain), consisting of producers, middlemen, transporters, wholesalers, retailers, processors and consumers. The market is also influenced by a number of policies and institutions. Government policies on food subsidies, grain reserves, movement of grain across administrative boundaries and market liberalisation all impact on each of the elements of the market chain. Institutions for credit, insurance, and transport will also influence the ability of markets to function. Finally, access to information about different markets, relevant policies and institutions is crucial for each part of the market chain to function well and respond to changes.

Market at the edge of Camp Aero, Bunia, eastern Democratic Republic of Congo

Any part of the market can be affected by emergencies. The form of market disruption will depend on the type of emergency. Production losses will affect supply to markets, and loss in income or assets will reduce demand for goods. In conflict, cutting off access to markets may be a deliberate strategy of warring parties, or a consequence of conflict due to insecurity. Similarly, floods and earthquakes may destroy or block roads. In situations of localised food deficit, traders may be reluctant to move food from surplus areas due to uncertainty of markets in the deficit area or because they lack sufficient information to alter trade routes. Markets can also be affected by the aid interventions themselves. Local purchase of food can increase food prices in areas of relative surplus, and conversely, imported food aid may have negative impacts on market prices (see chapter 4). Even the use of transport vehicles by aid agencies can have a negative impact on trade if there is a limited supply of trucks.

In essence, any food security or livelihoods intervention will need some analysis of markets, both to determine the most appropriate response and to determine potential impact of different interventions on markets:
"Food security responses are based on a demonstrated understanding of local markets and economic systems, which informs their design and, where necessary, leads to advocacy for systems improvement and policy change."
The Sphere Project (2004). Key indicator 1 for 'access to markets' minimum standard, p.131.

Market support in emergencies can aim to address any of the constraints on the functioning of markets. This chapter focuses on market analysis, gives a brief overview of market interventions in emergencies and development contexts, and describes voucher interventions in particular. The final section has case studies on a market analysis, food vouchers in Zimbabwe, and working with coffee farmers in Haiti.

6.2 Analysing markets

Until recently, market assessments in emergencies have involved gathering market price and food availability data.

A Market Analysis Tool, developed by Practical Action (formerly ITDG) and adapted by Oxfam.

Recent interest in more in-depth assessments is probably due to the increase in cash programming, where goods have to be supplied through the market, and increasing concerns about negative impacts of food aid on markets.

The objectives of analysing markets in emergencies can be summarised as follows;

1. To determine the extent to which the market can meet demand for food (and other goods) now and in the coming months.
2. To assess the impact of a disaster on the different parts of the market chain and thereby to identify interventions that will help markets recover.
3. To assess whether the market can respond to an increase in demand as a result of cash programmes.
4. To assess the feasibility of local purchase of food from markets and the potential impact.
5. To assess the impact of food aid or other relief items on markets.

The first two objectives relate to determining the type of emergency response needed. Objectives 3 and 4 relate to assessing the feasibility and appropriateness for different types of responses, and objective 5 considers the impact (retrospectively) of a given intervention on markets.

The Sphere indicators for 'access to markets' relate mainly to assessments, i.e. to determine whether "people's safe access to market goods and services as producers, consumers and traders is protected and promoted". The key indicators are:

• Producers and consumers have physical and economic access to operating markets, which have a regular supply of basic items, including food at affordable prices.
• Adverse effects of food security responses, including food purchases and distribution, on local markets and suppliers are minimised where possible.
• Basic food items and other essential items are available.

Key elements of market assessments in emergencies therefore include the affected populations' income to purchase goods, the availability and price of goods in markets, whether (and which) markets are operating, road and transport infrastructure to markets, the ability of producers to sell their products at fair prices, and the actual or potential impact of interventions on the price and availability of goods.

Such analysis is made easier with the use of a market model which illustrates all elements of the market. In its development work, Oxfam uses an adaptation of a market-analysis tool developed by Practical Action. The tool provides guidance on selecting the most important factors to investigate to determine whether a market functions well or not. The market is represented in three parts, the value chain, market services and the market environment (see figure 4).

The value chain identifies all the market players who are involved in trading a product as it moves from producer to consumer. Value chains are rarely linear and at each point in the chain there are usually several markets to which a producer or trader can sell. Market service providers may handle the product as it moves along the chain, but they are not involved in trading the product themselves. Service providers such as credit lenders and transporters can be critical in enabling a market to function. The market environment (everything from infrastructure to trade policies) is also key to the effective functioning of a market.

IDP camp in Aero Bunia, eastern DRC, site of market on p.36

In emergencies, this model can be used to assess the impact of the shock on each of the components of the market model. In the first phase of an emergency, the market assessment may be limited to establishing whether markets are operating or likely to recover quickly following a disaster, whether the basic items that people need are available in the market, and/or some information on the extent to which people are able to buy goods themselves. A more in depth assessment can be done as soon as time allows. An example of such an analysis is shown in section 6.5.1 using a case study of Haiti.

There are few examples of market assessments in emergencies, and most focus on the lower (consumer) end of the value chain. Two examples are the Oxfam assessment in Haiti (6.5.1) and CARE's assessment in Darfur. The latter (El Dukheri et al, 2004, September) focussed on rural and urban markets within the state, and food shortages and price increases as a result of conflict and drought. Recommended interventions included cash transfers to IDPs or the poorest, buffer stocks, FFR to rebuild social institutions and infrastructure, and transport subsidies to encourage the flow of grains from surplus regions in the country.

The model can also assist in determining whether the market will respond to a change in demand following a cash intervention. In particular, the model can assist in assessing the integration and competitiveness of markets, both of which are essential criteria for cash programming. The number of suppliers in relation to the number of buyers will give a good indication of competitiveness of markets. If supplies outnumber buyers, then buyers are likely to be in a very powerful position and the market is competitive. An integrated market allows goods to move smoothly along the value chain, from producer to consumer. An integrated market needs good market services such as good information flows, a well-developed transport system, and developed marketing networks. Government policies or restrictions on the movement of goods are also an important consideration in determining the integration of markets (both nationally and internationally). The key list of questions to ask about markets to help determine the appropriateness of cash interventions was given in table 4. The model can assist with determining the impact of local purchases, but the WFP emergency food security assessment guidelines give a more specific checklist for assessing the scope for local purchase (see box 15).

A local market in Nepal

Ideally, the analysis of a particular market should be a participatory process in which key players in the market (particularly producers and traders) decide who should be included in each of the three sections of the market model. In more stable contexts, the aim is to build a model of all key elements of the market using a participatory process. Once a simple model of the market is made in this way, the next step is then to identify the relative power of different market players, along with possible causes of unequal power distribution within the market. For example, by discussing the number of actors at each position in the supply chain, it is possible to identify a potential market distortion. Those players with access to knowledge and resources (such as market information and credit) are likely to have more power than those who do not. The trading environment can influence power relationships within a market. Local attitudes about the role of men and women in a market can also cause some players to be more powerful than others. For example, in West Africa, women buy paddy rice from male family or community members and 'polish' it before selling onto national traders. Analysis showed that while the men made a profit from their activities, the women 'polishing' and finding buyers did not make enough money to even cover their labour costs (David Bright, personal communication).

Source: WFP (2005, June).

6.3 An overview of market interventions

A market intervention can aim to remove any constraint at any point in the market chain. The cash interventions described in the previous chapter are one way of improving access to markets, as people will have the means with which to purchase goods. Similarly, cash grants to pay off debts, and micro-finance (or access to credit) to allow traders to recover business will stimulate the recovery of markets. Other examples of market interventions in emergencies include:

• Selling grain to traders or government at subsidised prices in order to stabilise escalating prices due to food shortages.
• Sale of subsidised goods through fair price shops.
• Improving physical access to markets through repairing flooded or war-damaged roads as part of a FFW or CFW programme.
• Livestock offtake interventions, which allow households to dispose of livestock that might not survive drought conditions.
• Voucher interventions, either through fairs or shops, which support access to goods by target beneficiaries and support the traders and producers from whom the goods are bought.

Queing to exchange vouchers for food

The provision of information in itself, or facilitating exchange of information, may be sufficient to stimulate the recovery of markets. Both buyers and sellers need information on market pricing controls, taxation, policies influencing the movement of goods, etc. This is also a key indicator for the 'access to markets' standard:

"There is increased information and local awareness of market prices and availability, how markets function and the policies that govern this."
The Sphere Project (2004). p. 131

'Fairs' organised for voucher interventions bring together producers, consumers and traders and also allow the exchange of information on markets in the area. There are two types of voucher. The first is a cash voucher, which can be exchanged for a range of commodities up to the specified value. The second type is a commodity voucher, which can be exchanged for a fixed quantity of named commodities. Vouchers can be exchanged either with traders and retailers in shops or with traders or producers in local markets, distribution outlets, fairs, and other events organised specifically for the programme. Vouchers have been used by a number of agencies to improve access to food, seeds, livestock, trade commodities, and other non-food items. Food vouchers are discussed in 6.4.

Bagging food ready for voucher exchange

In development work, market support aims to enable poor people to gain power by reaching a market, continuing to engage in that market, and gain reasonable returns from their engagement. Having identified the relative power of different market players and the possible causes of any power inequality, the next step is to identify how to build the power of poor people in markets. Often, a mix of programme interventions at different positions in the market brings about the greatest impact in the lives of poor people. Some of the more long-term interventions aimed at increasing the power of poor people in markets include:

• Lobbying for a supportive market environment by addressing specific trade barriers.
• Formalising markets through gaining agreement on codes of conduct, contractual arrangements and creating mechanisms for dealing with disputes.
• Supporting poor producers to diversify production.
• Developing the organisation and resources of small-scale producers.
• Improving poor producers' access to market services, especially credit.
• Working with small-scale producers to develop viable businesses.

Improving power in, and access to, markets can be highly challenging. For example, the lack of markets for Palestinians producing olive oil was having a severe impact on their livelihoods in late 2002. Israeli restrictions on movements, together with imported oil being used in the WFP ration, meant over-supply and reduced oil prices in the local market. Value chain analysis determined that the additional benefits of purchasing locally to the local economy would outweigh the additional cost (100-200% more expensive than imported corn oil). The WFP and the United Nations Relief and Works Agency (UNRWA) decided to distribute Palestinian olive oil in their packages, which was expected to use up about 50% of the surplus oil left from the previous year's harvest¹⁶. A case study on Oxfam's work with coffee producers is given in section 6.5.3.

Inevitable paperwork

Globally, trade rules do not give equal opportunities to developed and developing countries. The 48 least-developed countries (LDCs), home to 10 per cent of the world's citizens, have seen their share of world exports decline to 0.4 per cent over the past two decades. In comparison, the US and EU contain roughly the same number of people, yet account for nearly 50 per cent of world exports. Trade 'liberalisation', enforced by the WTO, makes it increasingly difficult for small traders to compete. 'Free trade' is supposedly in the interests of increased competition, but when multinational companies are able to benefit from subsidies and protections denied to small economies, this competition is unfair¹⁷. To make trade fair, global market access of poor countries needs to be improved. Some of the measures to make this happen include ending subsidised over-production in rich countries, curtailing the use of conditions attached to World Bank/International Monetary Fund (IMF) programmes which force poor countries to open their markets, and democratising the WTO to give poor countries a voice.

6.4 Food vouchers in emergencies

Food vouchers aim to improve consumer access to a specified range of commodities or services, and support traders in supplying these commodities. Food vouchers may also give some flexibility in the types of foods that beneficiaries can purchase, or beneficiaries may be given a choice between food and non-food items (for example, small livestock, seeds, etc).

Oxfam has implemented food voucher programmes in Zimbabwe in response to chronic food insecurity as part of a social safety net programme (see 6.5.2), in an urban population in Haiti in a response to conflict and floods (see 6.5.1), and in Niger in response to acute food insecurity following drought and locust infestation (see below). CARE has recently implemented a food voucher scheme, with WFP support, in Aceh, Indonesia, using local vendors to supply food instead of WFP. The vouchers also included a cash component (Meyer, 2006, January).

Both the Zimbabwe, Haiti, and Aceh, programmes used shops in which beneficiaries could exchange the vouchers. In Haiti, the reasons for this were:

• to enable local shops to be involved in the life of community
• to provide a cash boost to small shops and the local economy
• to reduce the risk of non-payment, since the shops are based in the community
• to limit risks to security, since each shop pays a maximum of 20 beneficiaries per week and so manages only a small amount of cash
• to minimise the necessary logistical support.

In Niger, Oxfam linked food vouchers with weekly local markets. Beneficiaries receiving cash vouchers for free or as payment for work activities were able to access and choose among different food commodities displayed in local weekly markets. The project recipients could exchange vouchers though predetermined local traders that had been previously sensitised by Oxfam/Association pour la Revitalisation de l'Elevage au Niger (AREN) staff and were aware of the system and the value of the vouchers. The system allowed Oxfam to inform traders in advance about the demand every week (total value of the vouchers) and to subsidise traders to transport commodities in the most remote deserted areas.

Issues that have arisen in the implementation of food voucher programmes have included community resistance to being directed to buy particular food in specified shops, insufficient food supplies, and high rewards being given to shop keepers. In Haiti, the reward given to the shops, at $2 per beneficiary, was high compared to bank cash payments which would cost only $0.6 per beneficiary. This caused suspicion amongst beneficiaries that the shops were profiting from their work and the money they earned. On the other hand, it could be argued that the shops were also affected by the floods and the high rewards enabled them to re-establish their businesses more quickly.

Food vouchers have not always been popular, in particular where they have replaced direct distribution of cash, or combined with cash distribution, For example in the UK for asylum seekers (Oxfam GB, TGWU, and Refugee Council, 2000) and in Haiti. People want to buy food according to cultural preferences and where they choose, rather than in pre-assigned shops. In Haiti, these problems were eventually resolved by adapting the proportion of cash and food vouchers given to beneficiaries.

In Oxfam programmes in Zimbabwe and Niger, the beneficiaries welcomed food vouchers, as they identified food as one of their priority needs. Criteria for implementing food vouchers should, therefore, include food being a priority for the target population and the need to encourage food traders into the affected area. The latter is more easily done with vouchers rather than cash as vouchers provide a guaranteed market.

6.5 Case studies

6.5.2 Food vouchers in Zimbabwe

By Ann Witteveen and Lewis Lawrence Musa, Oxfam

Children returning from miller with maize bought at the Grain Marketing Board.

The food voucher programme was designed to target the most vulnerable between December and February, the most food deficit months in Zimbabwe. The target group were chronically food insecure people who in normal years would cope by getting assistance from others, but who were not expected to get sufficient assistance from friends and relatives in a period of food shortage.

The food voucher activity was implemented by Oxfam in four districts in two provinces of Zimbabwe in December 2004 and in January 2005. Food was provided through vouchers to a total of 1,600 people (320 households (HH)). The vouchers were valued at Z$50,000 - enough to purchase 18kg maize or 10kg maize meal, 2kg beans and 0.375kg of oil. Traders were also encouraged to purchase from the Grain Marketing Board (GMB) where possible.

Problems encountered

A Chiru boy watering his vegetable garden.

A few problems arose. Low availability of certain food commodities locally delayed some of the fairs conducted in February by a few days, as traders searched for food to purchase. Some politicians took advantage of the community gatherings and addressed the community members either before or after the activity (national elections were held in Zimbabwe in March 2005). Food insecurity continued to deteriorate as the programme was being implemented. Additional households were registered for a second round of vouchers, and also households agreed for vouchers to be given to only one person/ household so that more households could be targeted. This meant that not all food needs of vulnerable households were met, thus limiting the impact of the programme.

Targeting

The community based targeting method was used through the Village Relief and Rehabilitation Committees (VRRC) and local leaders to identify the beneficiaries. A high turnout of unregistered community members was observed on the day of beneficiary verification and on the actual date for implementation of the food voucher activity in some districts. The team took this to be an indication of increased food needs. There were complaints from people not registered.

Women tending to an Oxfam supported onion garden.

A series of meetings were held with community leaders, representatives and traders in order to make the traders aware of the programme and how it would be implemented. It was noted however that most of those representing traders were shop keepers (employees or relatives of the owner who did not live in the community at all, but rather in Harare) and not the owners of the shops. This slowed down the process, as decisions could not be reached immediately.

During the first voucher activity in December 2004, many traders indicated no interest in participating, citing possibilities of their monies being tied up before they could get paid while others indicated that Christmas was near and they needed their money to stock up seasonal items. In the end the traders who did take part were generally happy with the interventions. The food voucher payments usually took place within a week of the activity.

The procedure

Beneficiary identification and registration

The community VRRC, community leaders and community members identified and verified the beneficiaries according to who was most vulnerable, e.g. persons affected and/or infected by HIV/AIDS or chronically ill persons with limited ability to secure food and/or no-one to assist them.

The food distribution manager and the community facilitators (both Oxfam GB staff) monitored the process of targeting to ensure transparency and fairness. The VRRCs called an open village meeting where the identified beneficiary names were called out, discussed and agreed upon. The identified beneficiaries were registered using Oxfam GB designed registration forms. The registration list was also used by community facilitators, community leaders and VRRC members to conduct follow up visits.

Centre and food trader identification

The community facilitators, under the guidance of the food distribution manager and livelihoods manager, discussed possible venues/traders for the food vouchers with the community leaders, VRRC, and beneficiaries.

Identified criteria included clean with no rodents, construction in good condition for food storage and protection from rain and rodents. In addition, there were certain requirements of the trader, e.g. should be able to read and write, have good record keeping skills, etc.

The stock of food in the identified traders shop was recorded by the community faciltiators and food distribution manager prior to procurement by beneficiaries. This information was vital in determining if the beneficiaries procured food or other items.

Food purchase by beneficiaries

A day was set aside after the registration of beneficiaries in which they were supplied with the food vouchers. One week was given to procure food. In practice, vouchers and food were exchanged in a day. The trader was paid by Oxfam GB based on the total value of food vouchers acquired from beneficiaries.

Food Voucher Activity Report writing

The community facilitators documented each step and compiled a report using the standardised report format while attaching all the necessary documents. Findings were discussed with other Oxfam GB managers and changes to the implementation were recommended.

Post Distribution Monitoring (PDM)

Monitoring was conducted by the community facilitators and the food distribution manager two to three weeks after the food voucher activity. Data were collected from community members and VRRCs.

After paying vendors, staff from the finance department based in Harare visited a few days after the fair. This ensured the accounts and payments were rigorously monitored.

Lessons learnt

Food vouchers are appropriate when food is identified by the community to be their priority need and there is potential for food provision through local traders. Beneficiaries preferred food vouchers to food distribution and traders valued the intervention. Given the time it takes to plan food voucher programmes, it is necessary to base beneficiary numbers on projections of needs at the time of intervention, rather than needs at the time of planning the intervention. When food sources are distant from the emergency affected area, traders should be given sufficient time to source and stock food.

6.5.3 Campaigning with coffee farmers in Haiti¹⁹

Coffee seedlings are grown in this nursery at Kooperativ Kefeyie Kapwa Lomo (KKKL), a coffee co-operative in Dondon, northern Haiti.

Oxfam GB has been working with poor coffee producers in northern and eastern Haiti since 1992, raising awareness of their rights and mobilising communities to take control of their lives. This has been achieved primarily through the building of strong community-based co-operatives that have supported the coffee producers throughout the global coffee crisis.

Oxfam paid particular attention to developing functional, transparent co-operative committees in Haiti, in which co-op members could put their trust. The leaders of each co-op were given training in organisational and financial management and went on exchange visits to national co-operatives to learn how to build an effective business. Initially, coffee farmers were motivated to join the co-operatives because they could get a better price for their coffee through collective marketing, along with access to credit and technical support. Then in 1997, the co-operatives were given the opportunity to supply the Fairtrade market. This offered their members a secure market, a guaranteed minimum price for their coffee, and a 60 per cent advance at the start of every contract. To take advantage of this opportunity, the co-operatives established a 'second-level' organisation, RECOCARNO, which would act on behalf of the primary co-operatives and be the main point of contact for the Fairtrade importer.

Drying coffee beans in the sun at the Cooperative Sainte Helene Carice.

RECOCARNO is based in Haiti's capital city, Port-au-Prince, and is managed by marketing professionals. However, it is owned and directed by the members of the coffee co-operatives. In 1999 they received funding from the EU to implement a capacity-building programme which enabled them to deliver high quality coffee to the international market. Five years later, RECOCARNO is a wellknown exporter of Fairtrade coffee, with established buyers across Europe, Japan and the US.

Additional training events were run to meet the particular needs of women. All decision-making bodies attached to RECOCARNO and the primary co-operatives were obliged to include equal numbers of men and women. Men and women producers were encouraged to set up separate accounts with RECOCARNO. This meant that family members could sell their coffee individually - providing women with their own source of income and strengthening their skills and confidence.

Dried coffee beans.

Global campaigning on coffee

The Haiti coffee producers are not alone in struggling to make a living from coffee production. There is a global crisis destroying the livelihoods of 25 million coffee producers around the world. The price of coffee has fallen by almost 50% in the past three years, to a 30 year low. Most developing country coffee farmers sell their coffee beans for much less than they cost to produce. Coffee traders are going out of business and national economies are suffering. The scale of the solution needs to match the scale of the crisis. Five big coffee roasters buy almost half the coffee beans each year. They sell with high profit margins. The coffee industry has been in the process of undergoing a change from a managed market to a free market system. This has brought very cheap raw material prices for the giant coffee companies. With Vietnam entering the market, and Brazil increasing its substantial production, prices have decreased further.

Sorting coffee for export at KKKL.

Oxfam is calling for a Coffee Rescue Plan to make the market work for the poor as well as the rich. This plan needs to bring together all the key players in coffee to overcome the current crisis. This plan includes recommendations for all participants in the coffee market including roaster companies, coffee retailers, producer and consumer governments, consumers and investors.

 

¹⁶The text on Oxfam's development work to improve access to markets was written by David Bright, Oxfam GB's market access advisor.

¹⁷This text was taken from the Oxfam website, http://www.oxfam.org.uk

¹⁹This case study is based on Campaigning with Coffee Farmers, written by Annabel Southgate, Oxfam. The text for the section 'Global Campaigning on Coffee' was taken from 'Mugged. Poverty in your coffee cup', Oxfam.