FOOD SECURITY, FOOD PRICES AND CLIMATE VARIABILITY - Food Security, Food Prices and Climate Variability - page 16

monitored in markets, for if a market is unusually poorly stocked or food prices are abnor-
mally high, problems of both access and availability may be occurring. Access-related food
insecurity is becoming increasingly prevalent with poor households reducing food consump-
tion during times of seasonal scarcity even during years of above average food production and
economic growth (Eilerts, 2006; Darnton-Hill and Cogill, 2009). Food security analysis that
uses food prices and production information can evaluate in a more comprehensive way the
impact of simultaneous income reductions and increased expenditures on food for rural
households and the urban poor.
Food security analysts need to know whether the price of food in a market is unusually or
prohibitively high for a particular set of households. Market analysis can help determine when
particular events or conditions prevent participants in a market from releasing food stocks or
moving commodities from one place to another. Food prices can provide information on
production shortfalls, increases in the price of food and inputs, falling agricultural output
prices, distress sales of livestock (e.g., sales of breeding stock or draft animals), unchar-
acteristically early movements of prices or large migration of people in search of causal
employment. These are all warnings of food security problems that should be reported, but
may not be visible through other sources of information.
FEWS NET's markets guidance handbook describes market information and analysis, and
how they contribute to food security analysis. Such information and analysis:
• deepensourunderstandingoffoodsecurity;
• addstemporaldynamictofoodsecurityanalysis;
• linkshouseholdstolocal,national,regionalandglobaleconomies;
• highlightsimportantnationalandregionalspatialrelationshipsorlinkages;
• allowsmorepreciseestimatesofhumanitariananddevelopmentneeds;
• improvesscenarioandoutlookdevelopmentandmonitoring;
• clariiesappropriatetype,magnitudeandtimingofresponse;and
• shedslightontheconstraintstofoodsecuritycausedbymarketirregularitiesandinefi-
ciencies (FEWS NET, 2009).
Information on food prices and the functioning of markets in which they are measured is
needed to anticipate potential market stresses, constraints and responses in order to foresee the
household response to these changes.
One way food price information is used in food security analysis is with an assessment of
market integration. Market integration is a measure of the trading behavior, information and
price differential between markets. A food security analyst is interested in knowing if there is
physical trade of goods between markets, obtaining an evaluation of whether the difference
in prices between two markets is about equal to the cost of transporting goods between the
markets, and determining whether the prices in two markets tend to move together over time
(FEG, 2013). Unfortunately, assessing integration of two markets quantitatively requires a lot
of information rarely available in developing countries. These include the local price of fuel,
transaction costs, transportation costs, government policy context and actual demand from
consumers in the market (Goletti and Christina-Tsigas, 1995). Since locally explicit, region-
ally accurate information about markets in developing countries is rarely available, integration
is often inferred from qualitative examination of price time series instead of quantitative ana-
lysis (Brown et al ., 2012).