RAPID MARKET ASSESSMENT IN FLOOD AFFECTED AREAS OF NORTH-WESTERN BANGLADESH
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1 RAPID MARKET ASSESSMENT IN FLOOD AFFECTED AREAS OF NORTH-WESTERN BANGLADESH SEPTEMBER 2014
2 Acknowledgements This document has been prepared by Food Security Cluster (FSC) with contribution and participation from the following (in alphabetical order): ACF, Concern Worldwide, DanChruchAid, GUK, MMS, Muslim Aid, Oxfam, RDRS, WFP and World Vision. Special thanks to the Upazila Chairman, Upazila members, Union Parishad Chairman, market management committee members, local elites and, above all, the community people for their support in the data collection through FGDs. 1
3 Table of Contents 1. Overview Objectives Methodology Assessment tools Market Selection Market Structure Variation in price during and after flood Price seasonality and volatility Market Integration Integration among markets surveyed Analyzing the price margin Supply and restocking Market capacity Access to food and markets Conclusion and Recommendation for unconditional transfer modality
4 1. Overview As a result of heavy rainfall in the major river basins and upstream catchments of India as well as the northwest and north-eastern parts of Bangladesh; flooding has been reported in many locations across the country from around the 14 th of August. A Government situation report issued on the 20 th August indicated that across the country, 11 districts are affected by flooding with 8 out of the 11 mentioned being in areas in the Northwest of the country. After several reports on the situation were shared by organizations working in the affected areas, the co-chair of the HCTT triggered a JNA Phase 1 in the evening of the 19 th August 2014 with an objective to provide a rapid overview of the disaster and the need for assistance. At the time of launching the JNA, 9 districts in the north-west namely Lalmonirhat, Kurigram, Nilphamari, Rangpur, Gaibandha, Bogra, Sirajganj, Jamalpur, Sherpur were worst impacted and eventually became the target districts for the assessment. The draft JNA report, available on 31 August, highlighted that around 1.87 million people have been affected- which is 33% of the total population in the affected area. In terms of absolute number of population affected; Kurigram, Sirajganj, Gaibandha and Jamalpur have been found to be the worst and; in terms of percentage of population affected; Bogra, Sirajganj and Gaibandha are the top three. Taking these two into account, the JNA report urged upon immediate relief needs in Kurigram, Gaibandha Jamalpur, Bogra and Sirajganj.,. During the last FSC meeting on 03 September, the cluster members discussed on the future action plan based on the JNA findings. Under the agenda item 4 (Update on JNA Phase 1 for Flooding in Northwest Districts + FSC Action Plan), the cluster members proposed and agreed that a Rapid Market Assessment (RMA) be conducted at this stage to see the extent to which markets are functioning; this would guide the next steps and define the response modality. Following the FSC Contingency Plan, an unconditional transfer is part of the initial response phase; this assessment would determine whether a cash transfer will be appropriate or if food transfers would be required. Hence, the Technical Working Group (TWG) was tasked with preparing for a Rapid Market Assessment which started on 04 September through the first respective meeting of the TWG. 3
5 EXECUTIVE SUMMARY The TWG agreed to assess the functionality of the affected markets reported by the JNA phase-1 in order to define the response modality. Using a multi-stakeholder approach, the RMA covered 21 markets in 20 unions under Kurigram, Gaibandha Jamalpur, Bogra and Sirajganj districts. The markets were selected based on their functionality status (whether partially functioning or not functioning) reported by JNA phase-1 as of 31 August Different market functionality indicators were compared on temporal dimension i.e. how the different indicators varied between JNA period (25-28 August) and RMA period (8-9 September). The key findings are: 1. The Rouhadaha Bazar under Kamalpur Union, Sariakandi Upazila of Bogra District was eroded by the Jamuna River on 29 August Despite a slight increase in price for all basic food items during flood due to higher transport cost; the prices of all food commodities were found in a declining trend during RMA 3. Only potatoes and seasonal vegetables showed high price volatility from January to September % and 33.92% respectively. Damage to production was reported as main cause of high price volatility of vegetables while high unit price at source was the main reason in case of potatoes. 4. The prices of food items like coarse rice, wheat flour (both packet and loose), anchor dal (yellow split peas), potatoes, sugar and salt in the markets of selected districts were well integrated amongst each other during the RMA (08-09 September). The major variation was observed in the prices of Masur dal (Imported coarse one), cooking oil (Soybean normal loose) and vegetables. 5. The prices of most of the basic food items during the RMA were found aligned with the national market. A major variation was observed in the prices of seasonal vegetables (Correlation coefficient value r= ) which was attributed to the flood both by the traders and market management committee members. 6. A slight increase of transport cost of Tk. 0.50/kg or Ltr during flood (25-28 August) was reported by the traders. But the RMA found no unusual fluctuation of the price margin during and after the flood which points towards normal market functionality. Both transport costs and sales volumes became normal since 03 September. 7. Around 70% of the traders reported having the capacity to replenish their stock within 2-4 days. 8. The supply chain remained almost uninterrupted during the flood. During the RMA period (08-09 September) neither the traders nor the market management committee members reported any supply disruption. 9. While assessing the surplus and deficit in the stock of food commodities based on the current food stock and food supply in the markets, populations in the surrounding areas and net need of food by the population; the markets were found to have the capacity to respond to the existing demand for the coarse rice, wheat (both packet and loose), potatoes, cooking oil and masur dal. 10. During the end of August (JNA period) 14 out of 21 markets (almost 67%) had accessibility problem due to inundated roads. Only 5 markets (23%) were reported to have accessibility problem due to multiple reasons like inundation of roads and shops, and damage to food stock. But as the flood waters started receding from 31 August; all markets were reported accessible by the FGD respondents during the RMA (08-09 September). 11. Based on the findings of the RMA, the TWG concluded that unconditional cash-only response would be the most appropriate transfer modality for the current phase of flood response. 4
6 2. Objectives The overall objective of the RMA was to assess the functionality of the affected markets identified by the JNA phase-1 report in order to define the response modality. The RMA specifically looked into the following issues. Price seasonality and volatility of basic food commodities, Market stability Market integration Supply chain system and restocking Market capacity Accessibility of the flood affected population to the local markets. 3. Methodology 3.1 Assessment tools As the RMA had to cover a wider range of market functionality indicators within a very short time; the TWG members opted for a combination of Emergency Market Mapping and Analysis (EMMA), Market Information and Food Insecurity Response Analysis (MIFIRA) and WFP Trader Survey. Taking the WFP Trader Survey as base method; the TWG members worked out three different sets of questionnaires for the RMA: 1. Traders survey and supply chain assessment 2. Focus Group Discussions (FGDs) with Market Management Committees 3. FGDs with flood affected community people Key features of the assessment involved field teams compiling information into one consolidated template (Data Entry Sheet) for all selected markets. Field teams were oriented on the questionnaires, data collection procedures and input to the data entry sheet on 07 September From 08 to 9 September the assessment teams, composed of two to three people each, visited all selected markets and community people in the targeted unions. The completed questionnaires were entered into the data entry sheet by the teams in the field and sent to the coordination team for data processing and analysis. All human resources and logistics including vehicles were arranged and provided by the participating agencies on a voluntary basis Market Selection The JNA report was the main guiding document for selecting the markets. Out of 268 unions under 9 districts reached by the JNA, markets were reported fully functioning in 106 unions, partially functioning 1 Participating agencies included ACF, Concern Worldwide, DanChruchAid, Muslim Aid, Oxfam, WFP and World Vision. Local NGOs RDRS, MMS and GUK supported DanChurchAid, ACF and WFP accordingly in data collection. 5
7 in 94 unions and not functioning in 8 unions. This information relates to the last week of August The TWG members classified the partially functioning and non-functioning markets according to districts (as shown in the following table) Dist. Name No. of nonfunctioning markets No. of partially functioning markets Sirajganj 24 Sherpur 4 Rangpur 2 4 Nilphamari 2 Lalmonirhat 11 Kurigram 4 23 Jamalpur 10 Gaibandha 11 Bogra 2 5 TOTAL 8 94 Since the JNA report classified Kurigram, Sirajganj, Gaibandha, Bogra and Jamalpur as worst affected and subsequently suggested immediate relief operations; the TWG selected 21 markets in those 5 districts for rapid assessment. No. of nonfunctioning market (JNA) No. of partially functioning market (JNA) No. of selected non-functioning market Dist. Name Sirajganj Kurigram Jamalpur Gaibandha Bogra No. of selected partially functioning market TOTAL Total (partially and fully) affected Total selected markets for RMA in 5 markets in 5 districts = 79 districts = 21 While selecting the markets, the TWG members also considered issues like; size of the market, number of retail and wholesale traders, outreach in terms of both supply and demand and extent of damage to functionality. Map-1 shows the market functionality status based on JNA data and Map-2 shows the partially and non-functioning markets which were selected for the RMA. 6
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9 Market 8
10 4. Market Structure More than 90% of the selected markets are long established and well connected to the major supply nodes both at regional and national level. All sample markets have retail shops, wholesale shops and shops with both retail and wholesale business. During the RMA, the TWG found that the Rouhadaha Bazar (in red) under Kamalpur Union, Sariakandi Upazila of Bogra District was eroded by the Jamuna River on 29 August Name of the markets District Upazila Union No. of years market exists No. of wholesal e shops No. of retail shops Char Agg Bohail Bogra Sariakandi Bohail Koritola Bogra Sariakandi Kamalpur Rouhadaha Bazar Bogra Sariakandi Kamalpur Tekani Tekani Chukainagar Bogra Sonatola Chukainagar Fulchuri Bazar Gaibandha Fulchuri Gojariya Shaghata Bazar Gaibandha Shaghata Shaghata Kanchibari Gaibandha Sundorgonj Santiram Sreepur Gaibandha Sundorgonj Municipal Aria Kauniarchar Jamalpur Dewanganj Dangdhara Gothail Bazar Jamalpur Islampur Chinaduli Molamganj Bazar Jamalpur Islampur Patharshi Shilkuri Kurigram Borungamari Shilkuri Koraiborisal Bazar Kurigram Chilmari Chilmari Jatrapur Kurigram Kurigram Sadar Jatrapur Kotohakata Kurigram Nageswari Kotha kata Mondoler hat Kurigram Ulipur Buraburi Thetrai Bazar Kurigram Ulipur Thetrai Mukundagati Bazar Sirajganj Belkuchi Belkuchi Pourashava Hat Ghorjan Sirajganj Chowhali Ghorjan Natuapara Bazar Sirajganj Kazipur Natuapara Pipulbaria Bazar Sirajganj Sadar Ratankandi No. of shops with both retail and wholesale business 9
11 5. Variation in price during and after flood During the market assessment survey (08-09 September) the prices of all food commodities were found in a declining trend. The graph below shows the comparison of unit prices between the periods of during and after flood. Variation in price during and after flood During Flood (JNA period August) (Unit price Tk/Kg or Ltr) After flood (RMA period September) (Unit price Tk/Kg or Ltr) However, increase in transport cost was found to be the main reason for slight increase in price for all basic food items during flood (detail about price fluctuation due to increase in transport cost is available in section 7.3). 6. Price seasonality and volatility The traders and market management committee members reported that the prices of local agricultural products are very much aligned with those in the lean and harvest season in the crop calendar. But due to shortage of time and resources, the TWG couldn t assess the price seasonality. Nonetheless, the TWG looked into price volatility in terms of minimum and maximum variation in the prices of major food commodities over the period of January to September The TWG collected the maximum and minimum prices for all selected food commodities and calculated the price volatility which is shown in the table below. 10
12 Commodity Min price Max price Mean Standard deviation Coarse Rice Wheat flour packet Wheat flour loose Anchor dal (yellow split peas) Masur Dal (red lentils) Potatoes Vegetables Sugar Salt Cooking Oil (Soybean normal loose) Price volatility (Co-efficient of variation %) The prices of most of the basic food items remain stable over the year. Only potatoes and seasonal vegetables show high price volatility % and 33.92% respectively. In case of vegetables the high price volatility is mainly because of damage to production while in case of potatoes it is high unit price at source. This is also evidenced in the national price of potatoes being Tk/kg in 2014 which is high compared to 2013 (12.91 Tk/Kg). 7. Market Integration Two aspects of market integration were looked into, i) integration among local markets surveyed and ii) integration between national 2 and local (surveyed) markets. 7.1 Integration among markets surveyed During the RMA (08-09 September) the prices of food items like coarse rice, wheat flour (both packet and loose), anchor dal (yellow split peas), potatoes, sugar and salt in the markets of Bogra, Gaibandha, Jamalpur, Kurigram and Sirajganj were well integrated amongst each other. The major variation was observed in the prices of Masur dal (Imported coarse one) and cooking oil (Soybean normal loose) in Gaibandha and Sirajganj. The price of seasonal vegetables also varied between markets and was found Tk/kg higher in Molamganj Bazar (Jamalpur), Koraiborisal Bazar (Kurigram) and Mukundagati Bazar (Sirajganj) compare to other markets. 2 National prices of basic food items. Data collected from Department of Agricultural Marketing (DAM) 11
13 Variation in retail prices of major food commodities by markets Coarse Rice Wheat flour packet Wheat flour loose Anchor dal Mosur Dal Potato Vegetables Sugar Salt Char Agg Bohail Koritola Rouhadaha Bazar Tekani Chukainagar Fulchuri Bazar Shaghata Bazar Kanchibari Sreepur Kauniarchar Gothail Bazar Molamganj Bazar Shilkuri Koraiborisal Bazar Jatrapur Kotohakata Mondoler hat Thetrai Bazar Mukundagati Bazar Hat Ghorjan Natuapara Bazar Pipulbaria Bazar Bogra Gaibandha Jamalpur Kurigram Sirajgonj 7.2 Integration between national and local markets The prices of most of the basic food items during the RMA were found aligned with the national market. A major variation was observed in the prices of seasonal vegetables which was attributed to the flood both by the traders and market management committee members. The price of Masur dal was also slightly high compared to the national market Integration between national and local markets National Price (In Tk) Price in RMA districts (In Tk) 12
14 The market integration between the national and local markets was examined only for coarse rice, wheat flour (packet) and seasonal vegetables. The prices of coarse rice and wheat flour (packet) were well integrated with the national market (correlation coefficient close to 1 indicates good integration) while the price of seasonal vegetables (r= ) was inversely correlated with the national market. Correlation Co-efficient of price of coarse rice National Market Local markets (RMA samples) National Market Local markets (RMA samples) Correlation Co-efficient of price of wheat flour (packet) National Market Local markets (RMA samples) National Market Local markets (RMA samples) Correlation Co-efficient of price of seasonal vegetables National Market Local markets (RMA samples) National Market Local markets (RMA samples) Analyzing the price margin While analyzing the cost price and selling price of traders, it was observed that during the flood the traders were having an average of 2.92 Tk/kg or Ltr price margin which became 3.87 Tk/Kg or Ltr after the flood. A higher price margin was mainly observed in case of vegetables, masur dal and cooking oil. The traders reported the following two reasons behind the lower average price margin during the flood: An increase of transport cost of Tk. 0.50/kg or Ltr A sharp decrease (nearly 40-50%) in sales volume due to a lower number of customers. However, from the graph on price margins below, it is evident that there was no unusual fluctuation of the price margin during and after the flood which points towards normal market 13
15 functionality. Both transport costs and sales volumes have been reported to become normal since 03 September TK/KG/LI Margins ( During Flood, JNA) Average Margins TK/KG/LI (During Flood, JNA) Margins (During,RMA) Average Margins TK/KG/LI (During Flood, RMA) 8. Supply and restocking The supply sources for both the retailers and wholesalers in the selected markets remained the same before, during, and after the flood. Around 70% of the traders reported having the capacity to replenish their stock within 2-4 days. The supply chain remained almost uninterrupted during the flood. Only 4 markets were reported to have supply disruptions for around 4-8 days between 20 and 30 August. During the RMA period (08-09 September) neither the traders nor the market management committee members reported any supply disruption. 9. Market capacity The majority of the traders (both whole sale and retail) expressed satisfaction about the stability of the food supply in the markets during the RMA period (08-09 September). With the present capacity they can further scale up their stock by 10-15% aligned with increased demand within a 24 hour period. This study roughly assessed the surplus and deficit in the stock of food commodities based on the current food stock and food supply in the markets, populations in the surrounding areas and net need of food by the population. This exercise does not provide an 14
16 accurate estimation of surplus and deficit in supplies, it is rather an indication of market capacity to respond to changed circumstances due to flooding. This exercise was carried out for coarse rice, wheat flour (both packet and loose), potatoes, cooking oil and masur dal. The capacity of the market to meet the demand of the selected food items was calculated based on the frequency of restocking i.e. 15 days for coarse rice, 15 days for wheat flour, 4.5 days for potatoes 3, 20 days for cooking oil and 30 days for masur dal. The results are compiled in the table below: Capacity of the markets (retail & whole sale) to meet the demand (for 15 days) of coarse rice of the local community Population in the *Consumption of rice in 15 days in Total coarse rice stock in the market catchment areas the catchments 442 during the assessment (Retail+WS) Surplus (+) (Census 2011) gram/cap/day (MT) /deficit (-) 630, Capacity of the markets (retail & whole sale) to meet the demand (for 15 days) of wheat flour (both packet and loose) of the local community Population in the *Consumption of Wheat flour Total wheat flour stock in the catchment areas (packet) in 15 days the catchments market during the assessment Surplus (+) (Census 2011) 24 gram/cap/day (Retail+WS) (MT) /deficit (-) 630, Capacity of the markets (retail & whole sale) to meet the demand (for 4.5 days) of potatoes of the local community Population in the catchment areas (Census 2011) *Consumption of Potatoes in 4-5 days in the catchments@ 72 gram/cap/day Total potato stock in the market during the assessment (Retail+WS) (MT) Surplus (+) /deficit (-) 630, Capacity of the markets (retail & whole sale) to meet the demand (for 20 days) of cooking oil of the local community Population in the *Consumption of cooking in Total cooking oil stock in the market catchment areas days in the catchments 19 during the assessment (Retail+WS) Surplus (+) (Census 2011) gram/cap/day (MT) /deficit (-) 630, Capacity of the markets (retail & whole sale) to meet the monthly demand of mosur dal of the local community Population in the catchment areas (Census 2011) *Monthly consumption of mosur dal in the catchments 4.8 gram/cap/day Total mosur dal stock in the market during the assessment (Retail+WS) (MT) 630, * Daily per-capita consumption data collected from HIES 2010 Surplus (+) /deficit (-) 3 As both the retailers and wholesalers can restock potatoes in 4-5 days, the restocking frequency was considered as
17 The table above reveals that the markets have the capacity to respond to the existing demand for the mentioned food items. 10. Access to food and markets The RMA team conducted 21 FGDs with the community people living in the villages within Km radius from the surveyed markets. All respondents reported that they depend on the nearby markets for major food items such as rice, wheat flour, dal, potatoes, vegetables, sugar, salt and soybean oil. The frequency of purchase is once or twice a week for most of the respondents. But it was reported once in 3-4 weeks by the respondents of Fulchuri village under Gojaria union of Gaibandha District. This is because of the village being located in isolated char land and the travel cost to and from the nearby market (Fulchuri Bazar) also being high- 40 Tk/trip. The Rouhadaha Bazar of Kamalpur Union in Shariakandi Upazila, Bogra District does not exist anymore. The TWG assessed the accessibility of the rest of the markets. Among the 20 existing markets covered by the RMA; 15 (75%) are reachable in less than 30 min by various means of transport. 9 markets (45%) are within walking distance for the entire population living in the catchment areas and hence, incurring no travel cost. The table below shows the mode of travel, travel time and travel cost to and from the market. Name of market Mode of transport Travel time (min) Travel cost (Tk.) Char Agg Bohail Bazar Foot, boat and horse cart Koritola Bazar Foot, cycle, Rickshaw Tekani Chukainagar Foot and boat Fulchuri Bazer Foot & Van & boat Shaghata Bazat Foot & Van Kanchibari Foot & Van Sreepur Foot & Van Kauniar Char Foot 30 0 Guthail Bazar Foot 15 0 Molamganj Bazar Foot 5 0 Shilkuri Foot 30 0 Koraiborishal Bazar Foot, cycle 40 0 Jatrapur Boat Kothokhata Foot 45 0 Mondolerhat Bazar Foot 20 0 Thetrai Bazar Foot, cycle, Rickshaw Mukundagati Foot 20 0 Hat Ghorjan Boat 20 0 Natuapara Bazar Boat Pipulbaria Bazar Boat in rainy season, on Foot in dry season
18 Since the sample only includes partially and non-functioning markets, it is evident that there was poor or no accessibility to those markets during flood. The accessibility status of the selected markets during the flood (especially from August) and during the RMA period (08-09 September) reported by the FGD respondents is summarized below: Name of Market Char Agg Bohail Koritola Rouhadaha Bazar Accessibility status during August Not accessible Partially Accessible Not accessible Reasons for inaccessibility Shops were inundated, roads were inundated Shops were inundated, roads were inundated, food stock damaged Shops were inundated, roads were inundated, food stock damaged Accessibility status during September Fully Accessible Fully Accessible Market eroded on 29 August Tekani Chukainagar Partially Accessible Roads were inundated Fully Accessible Fulchuri Bazar Partially Accessible Shops were inundated Fully Accessible Shaghata Bazar Partially Accessible Shops were inundated Fully Accessible Kanchibari Partially Accessible Roads were inundated Fully Accessible Sreepur Partially Accessible Roads were inundated Fully Accessible Kauniarchar Partially Accessible Roads were inundated Fully Accessible Gothail Bazar Partially Accessible Roads were inundated Fully Accessible Molamganj Bazar Partially Accessible Roads were inundated Fully Accessible Shilkuri Partially Accessible Roads were inundated Fully Accessible Koraiborisal Bazar Not accessible Roads were inundated Fully Accessible Jatrapur Partially Accessible Roads were inundated Fully Accessible Kotohakata Not accessible Roads were inundated Fully Accessible Mondoler hat Not accessible Roads were inundated Fully Accessible Thetrai Bazar Not accessible Roads were inundated Fully Accessible Mukundagati Bazar Partially Accessible Roads were inundated Fully Accessible Hat Ghorjan Partially Accessible Shops were inundated, roads were inundated Fully Accessible Natuapara Bazar Partially Accessible Shops were inundated, roads were inundated Fully Accessible Pipulbaria Bazar Partially Accessible Roads were inundated Fully Accessible 17
19 During the end of August (JNA period) 14 out of 21 markets (almost 67%) had accessibility problem due to inundated roads. Only 5 markets (23%) were reported to have accessibility problem due to multiple reasons like inundation of roads and shops and damage to food stock. But as the flood waters started receding from 31 August; all markets were reported accessible by the FGD respondents during the RMA (08-09 September). 11. Conclusion and Recommendation for unconditional transfer modality This assessment examined the market structure, variation in price during and after the flood, market integration, price volatility, market conditions, market capacity to respond to the existing demand and accessibility to markets. The findings of the assessment indicate that more than 90% (19 out of 21) markets are long established, have good linkages with regional and national supply nodes and are capable of catering to the essential food needs of the people living in the catchment areas. Although all of the markets had some sort of inaccessibility during flooding they started becoming functional as soon as the flood water started receding. Map- 3 shows the current functionality status of the markets covered under the RMA. Based on the findings on the current status of these markets, the TWG is of the opinion that those markets which were not covered by the RMA are more or less similar to the sampled markets in terms of structure, capacity, connectivity and accessibility; hence it can be assumed that they are already fully functioning by this time. Therefore, it can be concluded that unconditional cash-only response would be the most appropriate transfer modality for the current phase of flood response. 18
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