Why is market analysis important for food security assessments?
First, markets have the capacity to ameliorate the negative impacts of shocks. Without trade, a modest drop in domestic cereal production may lead to huge price increases and consumption shortfalls. With trade, prices increase until they reach parity with import prices, limiting the consumption shortfall. Understanding how markets function, and the interventions that can facilitate trade, can help in identifying measures to alleviate the negative impacts of shocks. It may also allow us to better estimate the appropriate amount of food aid to import, reducing potential market distortions. Second, market analysis contributes to food security monitoring. If markets function well, surpluses readily move to deficit zones with adequate purchasing power. However, if purchasing power in deficit zones is very low, or trade is constrained by security problems, lack of infrastructure or the absence of competition, disastrous effects on local food supply and prices may result. Market monitoring sh
