lrp market monitoring training local and regional procurement 1. introduction to lrp
TRANSCRIPT
LRP Market Monitoring Training
LOCAL AND REGIONAL PROCUREMENT
1. Introduction to LRP
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 aidNO↓Is there sufficient food available nearby to fill the gap?YES →Provide food aid sourced through local purchase/regional transactionsNO →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 resources4.Markets are distant, or during the lean season5.Inflationary risks are a significant concern6.Security conditions permit (i.e. food commodities
are highly visible)7.Cash transfer systems do not exist8.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 exist7.Cost savings is sought through lower logistical
and management overhead
Comparing Cash and VouchersDisadvantages of vouchers, vis-à-vis cash:1.More administrative costs for vouchers2.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 aid2.Potential for costs savings3.May be better timed to arrive during lean season,
minimizing production disincentives4.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 tenders4.Quality and safety standards may not be met5.Cash to buy food locally is not available from donors
Comparing Cash and VouchersBenefits 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 LRPTimeCostIncentive to local production and local market
actorsAppropriate and culturally accepted
commoditiesReduced carbon footprintIntegration 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 LRPIncreased prices for consumers in
source marketsIncreased concentration of large traders
LRP MethodologiesCompetitive procurement – traders submit
blind bids to the procurement agencyAdvantages – 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 MethodologiesLimited-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 MethodologiesNon-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 MethodologiesCommodity-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 MethodologiesCash-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 MethodologiesCash Transfer – beneficiaries receive cash to
purchase commodities directly from vendorsAdvantages – 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