January 2014

FYI – those of you who are bored of me harping on about market systems should probably skip this post and go read the newspaper instead. 🙂

Towards the end of January I went to Eastern Samar for a week to help support (and get trained on) an EMMA. For those of you who are wondering, EMMA is not a woman, it is an Emergency Market Mapping and Analysis tool (you can find out more about the toolkit on the EMMA website).

With an EMMA, you select one critical commodity that you want to learn more about (could be soap, rice, wheat flour, chickens, taxis, etc) and map out the market chain, looking at supply chains, end users, and all of the other factors that influence that product getting from the manufacturer to the consumer.

Totally fascinating I know.

🙂

At first I was frankly a bit terrified, as it all sounded an awful lot like economics, which I was really rubbish at when I was at school. However once I learned all about how it was done, it wasn’t so scary, and it turned out to be really interesting! So I went to Eastern Samar to help map out the market system for Corrugated Iron Sheeting (CGI), which is the main material used for roofing in the Philippines and one of the main shelter needs since Typhoon Yolanda/Haiyan.

It was an amazing learning experience for me, although it was a very rapid EMMA (usually there are around 4-6 days allocated for data collection in the field, but due to travel problems we only had 2 days to collect the data), and I can’t tell you how much I learnt about market systems in such a short period (although I’m planning to try!). We interviewed communities, small and medium retailers/traders/hardware stores, larger wholesalers and distributors, trucking companies, port authorities, and junkshop owners.

Here is what our baseline market map for CGI sheets looks like (before typhoon Yolanda).

At the top you’ll see all of the laws, institutions and governing bodies that affect the CGI market system as a whole, such as business permits, import/export taxes, fuel prices, nationwide controls such as quotas or limits to how much any one trader is allowed to buy or sell etc. In the middle section you have the actual market chain for CGI, which tracks all the key players involved in getting the CGI from the manufacturers to the end users. And at the bottom is all of the key infrastructure and services that support the market chain and allow it to function – like roads and bridges, ferries, ports, trucking companies, petrol stations, insurance companies, banks that lend retailers credit etc.

And then this is what the map looked like after the typhoon:

As you can see, several key components were either disrupted, operating at a reduced capacity or completely destroyed. Aid agencies also feature as a major new player in the market system.

The results were really interesting. Basically we found that immediately after the typhoon, there was a brief surge in demand locally for CGI, which smaller traders and hardware stores were able to meet, although the prices went up a bit as a result. The surge was caused by the better-off families who had some money or savings who immediately went out to buy CGI to fix their roofs. However, after all the people who were able to buy it had done so, the demand tailed off, as although there was still a massive need for CGI sheets, most people didn’t have the money to buy it (decreased purchasing power).

In addition, all the transportation routes for hardware and building materials were severely disrupted, including Tacloban port, which used to be a major entry point for goods into Leyte and Samar. The port is now only functioning at 20% capacity, partly due to damage to warehouses and storage facilities – so unloading boats is much slower as there’s nowhere to put stuff. Also after the typhoon, only relief goods/ships were being prioritised, so commercial goods were waiting out in the water to enter the port, and having to pay huge amounts as the boats sat out in the water day after day.

NGOs and aid agencies are also hiring large numbers of trucks locally to transport goods, meaning that a lot of hardware owners can’t get trucks for their goods anymore, as NGOs pay more for trucking services, driving up the prices and leaving smaller retailers unable to move stock.

We also found that credit systems had broken down, so smaller traders who used to be able to buy stock on credit are no longer able to do so, and can therefore only make orders based on cash interactions, which is limiting their ability to replenish their stocks. Warehousing has also been badly damaged across the board, meaning that few suppliers are able to store stock until their warehouses are repaired/functioning again. And as you can see from the post-Yolanda map, in a lot of cases, aid agencies are by-passing the retail chain completely by purchasing CGI in bulk from Manila or Cebu and distributing it directly to households.

In terms of the response analysis, we recommended that aid agencies switch to a combination of vouchers and cash rather than in-kind, to support the local market chain. Vouchers were preferable, as it means that you can ensure a certain level of quality control in the type/thickness of CGI sheeting given to people, whereas if you only give cash, they might buy the cheapest option, which would be less durable and resilient to the next typhoon.

So there you are, that’s EMMA in a nutshell!