Kseniya Sydorkina, Deputy Chief of Party on the USAID
Ukraine Agriculture and Rural Development Support project (ARDS) speaks at #SEEP2018

What is the difference between a market distortion and a market disruption, and do we need to track data differently in these contexts? These are the fundamental questions that panelists at the 2018 SEEP Annual Conference session, M&E for Markets: Building Evidence, Tracking Distortions, and Measuring Success tried to answer. In a room split between development and humanitarian professionals, it was clear that while these concepts sound similar, we treat them very differently in the field. Ultimately this session shed light on two very different approaches to understand markets and gather market-evidence for program implementation.

Tracking Distortions

For humanitarian professionals, market disruptions and distortions are most often defined as external shocks that distort and sometimes cause markets to no longer function properly. When markets are distorted, prices can rapidly fluctuate, goods become limited or scarce, and the poor and vulnerable can suffer.

For those working in the humanitarian sector, working with some of the most vulnerable populations, particularly in fragile environments, tracking these distortions is essential. At the same time, few humanitarian professionals are trained as economists and many work in data-poor environments with limited resources. So, what are humanitarian professionals to do?

Catholic Relief Services and representatives from the Local Regional Procurement Learning Alliance initially designed MARKit: Price Monitoring, Analysis and Response Kit to guide food assistance practitioners through the steps to monitor markets during the implementation of food assistance programs, and to ensure that programs remain responsive to changing market conditions and do not negatively impact the markets in which they work. As Dina Brick, the senior technical advisor from Catholic Relief Services on Food Security and Markets explained, the tool is continuing to evolve to meet the needs of humanitarian assistance professionals and to reflect our growing understanding of how markets operate.

At its core, this tool provides guidance and a toolkit for non-economist trained humanitarian professionals to conduct project-level market monitoring. The tool uses price changes as a signal to investigate market distortions further, and a mix of quantitative and qualitative data to analyze fluctuations in the market that may impact their target populations. Qualitative data and key informant interviews are particularly helpful for establishing a baseline when no historical data exists.

While evidence has shown that markets are resilient and tend to bounce back from distortions, tracking distortions is still a useful method for non-economist staff to learn how the markets around them function, and to gather evidence for program implementation. Even though humanitarian projects operate on a shorter timeline, tracking distortions is one method humanitarian professionals can use to make small management adjustments to course correct and improve their programs.

Designing for Disruption

Whereas humanitarian professionals often focus on navigating and mitigating the negative impacts of market distortions, for development practitioners, disruption can be an entirely positive outcome of a market systems intervention. The market systems approach, with its holistic view of the market system, including market actors, supporting ecosystem, and regulatory framework, is used to identify and disrupt market inefficiencies or failures. However, as development practitioners, we cannot necessarily predict the pathways of change in a market systems intervention. This makes designing for disruption particularly challenging.

At #SEEP2018, Kseniya Sydorkina, the Deputy Chief of Party on the USAID Ukraine Agriculture and Rural Development Support project (ARDS) shared how her team designed for disruption using the market systems approach. In the case of ARDS, the project staff identified a market inefficiency in several fruit and vegetable agricultural value chains. In southern Ukraine, most of the companies growing fruits and vegetables are small enterprises with limited access to major retail markets in the north. Delivering their produce to supermarkets can be a major challenge, particularly during the summer. Due to a lack of alternative modes of transportation, the cost for transporting fruits and vegetables from farms in southern Ukraine to markets in the north can more than double in the summer high season. Up to 30 percent of the harvest can remain in the field due to the lack of adequate transportation during the high season and another 13 percent are damaged during truck transport on poor roads.

To disrupt this market inefficiency, the project staff designed a pilot they hoped would introduce a more efficient solution in the market. Working with private sector partners, the ARDS project tested a novel approach to lower the cost of transporting watermelons to market using a network of river barges and waterways instead of roads. The project built the pilot around certain assumptions, that included estimating the potential savings to farmers, and others involved in the pilot, as well as improved quality of products available to consumers. To develop these assumptions, the project team collected evidence through key interviews with private sector partners. While the method for collecting the qualitative and quantitative data was sound, the only way to verify the data was by testing it.

When the team tested those assumptions by launching the pilot, the assumptions did not hold. The savings were not as large as predicted, and the time it took to deliver the watermelons increased from one day to five days. When development professionals use evidence to design a (market systems) disruption, they are always working with imperfect information. It is impossible to account for everyone’s incentives and to plan for unintended consequences. However, the results of this pilot became a new body of evidence, revealing gaps the project team did not know existed and laying the groundwork for more holistic and adaptive programming.

Bridging the Gap

Whether you are tracking distortions or designing for disruption, having the right M&E systems in place to gather evidence, capture the results of your intervention, or to monitor its effectiveness is vital. Ultimately, this session showed that development and humanitarian professionals have very different perspectives on markets and different approaches and tools for building evidence to inform their programs. Development and humanitarian professionals may be working in different contexts and different approaches, but we all face challenges and limitations when it comes to getting and using the right kind of data to ensure that our programs are responsive to changes in the market (whether intentional or otherwise). Though this session served as an exploration of differences by bringing humanitarian and development professionals together, perhaps this session (and future sessions like it) can serve as a foundation for exploring the ways in which we can learn from each other’s experience and can create a shared body of knowledge between humanitarian and development professionals.

Spencer Parsons is an associate on Chemonics’ Economic Growth and Trade Practice.