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Market Assessment: Shekhan District

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Market Assessment: Shekhan District Market Assessment: Shekhan District August 3, 2016 Report author: Daniel Packwood, Programme Support Officer RAM team members: Hakim Osman, Cash Project Assistant; Arkan Salih, Assessor; Shukria Abdul Baqi Ali, Assessor [email protected] www.tearfund.org Table of contents Executive Summary .................................................................................... 2 SECTION I: Needs analysis summary ..................................................... 3 SECTION II: Market mapping .................................................................... 4 2.1 Commodity market chain ............................................................................... 4 SECTION III: Trader analysis ..................................................................... 4 3.1 Physical access of affected population to the market ....................................... 4 3.2 Affected household’s purchasing power and change in consumer behaviour ... 4 3.3 Change in commodity supply chains ................................................................ 5 3.4 Capacity of retailers to increase their supply to meet increased demand ......... 6 3.5 Change in commodities being demanded by traders and households .............. 8 3.6 Change in prices of food and non-food commodities ....................................... 8 3.7 Opportunities for market-based interventions ................................................ 8 3.8 Market related considerations requiring further analysis ................................. 8 3.9 Assumptions, difficulties and challenges faced during the assessment that users should be aware of ..................................................................................... 8 3.10 Implementation experience in the area and lessons learnt, activities planned or being implemented by other agencies .............................................................. 9 ANNEX I: Price monitoring averages.................................................... 10 Executive Summary Tearfund conducted a market assessment in Shekhan city (Ain Sifne) to get a basic understanding of the key markets in the district to inform the decision making process on the most appropriate transfer modality. The assessment covered the 21 items in the Survival Minimum Economic Basket (SMEB) as the intent is to support people meet their basic needs. The assessment produced the following findings: . Purchasing power has decreased leading to a drop in demand: Despite the influx of IDPs into Shekhan traders have reported a net drop in demand citing unemployment and the non-payment of government workers as key reasons for the drop in demand. Market access constraints exist for Sunni Arab IDPs: Assayish (Kurdish government security organization) permission was required for Sunni Arab IDPs only to access Shekhan city. These had been granted as there were only a small number of Sunni Arab IDPs in the city, this would be unlikely to happen should there be mass displacement of Sunni Arabs into Shekhan following the liberation of Mosul. It is therefore necessary to assess whether Sunni Arab IDPs are able to access SMEB commodities in camps and areas outside of Shekhan city should there be further displacement. Market supply is vulnerable to Turkish border closures: There is increased dependence on trade routes from Turkey and Iran with trade from Baghdad via Mosul being cut off since 2014. This has increased vulnerability to risks such as Turkish border closures which increase prices when they occur for prolonged periods as reported by traders. Traders are confident in their ability to increase supply: Traders have adapted to changing trade routes developing new supplier networks to compensate for the loss of trade from Mosul where necessary. Traders are able to meet current reduced demand and reported confidence in being able to increase supply through both current and different suppliers should demand increase. Reduction in credit given to customers and received from suppliers: 11% less customers are receiving credit from before the IS Ninewa offensive and 6% less suppliers are giving credit. Debt is also significantly higher amongst food and hygiene item wholesalers, requiring further analysis as to whether they are able to sustainably increase supply with current debt levels. Price changes in the assessment showed no clear trend: Traders reported both increases and decreases in prices for the same items with no clear trends, data for Ninewa however suggests prices for agricultural commodities have been declining. MARKET ASSESSMENT: SHEKHAN - AUGUST 3, 2016 2 SECTION I: Needs analysis summary Tearfund conducted a market assessment in Shekhan city (Ain Sifne) to get a basic understanding of the key markets in the district to inform the decision making process on the most appropriate transfer modality. The assessment covered 21 commodities (listed in the table below) taken from the Survival Minimum Expenditure Basket (SMEB) excluding shelter items such as rent1. The SMEB was chosen as the basis for the assessment as the intent is to support people meet their basic needs. The assessment focused on Shekhan city only as the primary market for Shekhan district and hosts a significant number of IDPS. It was assumed that if the market was functioning in Shekhan city it is likely that commodities would also be available in surrounding villages which are well connected with the city infrastructure. Furthermore, areas in the south of Shekhan district fall within 15km of the frontline so are not deemed safe for travel for the purposes of this assessment. Key events influencing the market: June-August 2014, Islamic State (IS) Ninewa offensive leading to mass displacement of people into Shekhan Economic crisis in Iraq and the Kurdistan Region of Iraq (KRI) due to the declining price of oil and non- payment of government worker salaries. Turkish border closure in December 2015-January 2016 Date of market assessment: 20-25 July 2016 Affected areas assessed: Shekhan city (Ain Sifne) Total population in affected area: 5,856 households, 27,727 individuals Affected population within affected area: 2,530 households, 10,530 individuals Average household size: 4 (Mayor’s Office, Shekhan) Location of affected population: IDP camps, unfinished buildings, finished buildings Markets assessed: Shekhan city (Ain Sifne) Number of traders (wholesalers and 5 key informants (Mokhtars (IDP leaders)) (1 interview, retailers) and market representatives 1 focus group discussion); 6 wholesalers; 12 retailers (6 included in assessment: food and hygiene, 5 bakeries, 1 gas yard) Commodities included in the assessment:* Food: Bread, bulgur wheat, chickpeas, milk, eggs, lentils, poultry, rice, salt, sugar, vegetable oil, wheat *In this report analysis is structured in the flour, white beans. following three categories: bread/flour, Hygiene: All-purpose liquid cleaner, dish washing gas, food and hygiene items. This was sponge, laundry detergent, sanitary pads, shampoo, because commodities followed the main soap, toilet paper, toothpaste. supply chains as reported by traders. Gas: Butane cylinder. 1 The SMEB is the total income the average household requires to cover 100% of minimum food energy needs, costs associated with food preparation (including shelter costs, gas for cooking, hygiene items etc.) and expenditure on water. Items in the basket are culturally adjusted to those typically available to and used by the average Iraqi family required for survival. MARKET ASSESSMENT: SHEKHAN - AUGUST 3, 2016 3 SECTION II: Market mapping 1.1 Commodity market chain Imported commodities such as hygiene items and some food items were reported by traders as coming from Turkey via Zakho and Dohuk and from Iran via Erbil – with Turkey being the main trading route. Prior to the IS advance in 2014 commodities had also come from Baghdad via Mosul, however this is no longer the case. An FAO market assessment of the agricultural market chain within Ninewa found significant disruption to the market with the IS advance in 2014 due to silos and fields being captured disrupting the sowing season. Ninewa had traditionally been known as the bread basket of Iraq (FAO, 2016). The two gas yards in Shekhan were owned by the federal government, gas came from Baghdad and was put into cylinders at the gas factory in Shekhan. Previously one trader also used gas factories near Mosul which are now under IS control and are no longer used. SECTION III: Trader analysis 3.1 Physical access of affected population to the market Mokhtars interviewed all reported that business in Shekhan was continuing as normal and the majority of IDPs did not have issues relating to physical access. However, the Mayor’s Office in Shekhan reported that IDPs in Shekhan city were predominately Yazidi and only a small minority were Sunni Arab. Sunni Arab IDPs required Assayish (Kurdish government security organization) permission to access Shekhan which had been granted as only a small number had settled in Shekhan city. If there is further displacement of Sunni Arabs it is unlikely larger numbers will be granted access to Shekhan, instead they will settle in formal camps and will have difficulty accessing the market in Shekhan city. IDPs were not interviewed as part of the assessment to corroborate whether this is the case. It will need to be monitored whether markets outside Shekhan city serving Sunni Arab IDP camps and areas are able to provide commodities in the SMEB in the event of further displacement. Shekhan district is part of the disputed
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