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Rapid Market Assessment Summary Report October 2, 2014 Kirkuk, Daquq, Heet Executive Summary Dates of data collection: September 13 – 20, 2014 1
Locations assessed: Kirkuk, Daquq (Kirkuk), Heet (Anbar) Summary of findings: • Targeted markets are accessible to, and currently serving, significant numbers of IDPs. • Demand has noticeably increased as IDPs have moved into the area and local businesses have responded with increased supply. • Businesses are demonstrating capacity to adapt to the changing situation. • Access to credit is limited and not consistently available. • Retailers and wholesalers expressed confidence in their ability to increase supplies and meet rising demand. • IDP households are primarily purchasing basic food items, and household goods (pillows, mattresses, kitchen sets, fryers etc). • Prices are higher than in other years, although not hyper-­‐inflated, and should be expected to remain elevated but relatively steady. Section 1: Shock and market overview summary In 2014, Iraq has experienced several shocks and outbreaks of violence or conflict. The ongoing fighting has had a dual impact on the areas and markets assessed. The first impact is the restriction of access to source markets and general insecurity in the area. The second is the increased demand caused by the influx of IDPs. This assessment used January 2014 as the point of reference for the initial shock to the markets. These areas have been subject to various shocks throughout 2014, with several dates pinpointed when violence either escalated or expanded to new areas. June 2014 (the Mosul Crisis), and August 2014 (the Sinjar Crisis) were discussed as potential dates to use as a reference point for the shock, however the partners who were conducting the assessment in their home areas of operation felt that as January was the initial disruption, it would be their preferred reference point. The conflict is ongoing in many of the areas targeted and their surroundings. Front lines, or control of various areas could rapidly change and should be carefully monitored. Market Selection Kirkuk, Daquq, and Heet, were identified as large market centres within their governorates that have experienced significant influxes of IDPs and were accessible to Mercy Corps’ local partners. The assessment was planned to look at the supply chains and availability of 4 main commodities (2 food 2
and 2 non-­‐food) which partners identified as most important for IDPs in their area. These included: 1. Rice 2. Cooking Oil 3. Blankets 1
The assessment was also intended to cover Khanaqin (Diyala) and Sulaymaniyah, although not all interviews requested were conducted and returned to MC with sufficient information to include here. 2
Although these commodities were agreed on at the initial training with local partners, some enumerators chose to assess different items once they were in the field, these included sugar, tea, baby formula, and rice. 4. Kitchen Sets Section 2: Business3 Interview Analysis Targeted markets are accessible to, and currently serving, significant numbers of IDPs. As target beneficiaries for programming will be predominately IDPs, local partners were asked to select marketplaces IDPs were likely to be shopping in an d report on the access (time to travel and any barriers or checkpoints) IDPs would experience travelling to them. They generally reported that access was largely unhindered, although travel times ranged from less than 20 minutes up to 30 minutes. Businesses interviewed reported that their current customer base included significant numbers of IDPs (reports ranged from 35 – 80% of customers). Table 1: IDP access to marketplaces assessed Location Heet 4
Kirkuk Daquq Access to Marketplace 5 – 10 minutes of travel time, with no obstructions or checkpoints. 20–30 minutes of travel time, with no obstructions or checkpoints. Some of the interviews were conducted in marketplaces within areas with high concentrations of IDPs, while others were conducted in the marketplace in the city centre. Responses varied between interviews in Daquq, some indicated no obstructions, while others reported “some obstructions and blockages” as well as checkpoints within the marketplace. No interviewees reported any damage to the market infrastructure, or significant barriers to trade in their locations. The areas selected are not sites of current fighting, although due to proximity to conflict areas this may change in the future. Demand has noticeably increased as IDPs have moved into the area and local businesses have responded with increased supply. One interviewee reported that immediately following the initial shock, consumer demand spiked significantly, he explained that this was due to a fearful reaction to the outbreak of fighting and concerns that the supply of goods might shortly dry up. Essentially people started stockpiling. In the months since the initial shock in January, demand was reported to have remained high, although more normal and was attributed to the influx of IDPs shopping in the market. Traders reported increasing their stocks in response to the IDP demand, and in preparation for the coming colder weather (blanket wholesalers specifically focused on this). The higher demand was also attributed to the IDPs need to set up their new (likely temporary) homes with household items, specifically kitchen sets, mattresses, and blankets, as they had left most of their things behind in the move. Businesses are demonstrating capacity to adapt to the changing situation. The primary changes to trader behaviour reported were changes to source location of goods, changes to the routes goods travelled to arrive at their marketplace, and increased stocks in response to the population influx and increased demand. • Changes to source location of goods: Businesses in Kirkuk reported that they used to bring kitchen sets in from Syria, but now import from markets in Turkey or Iran. Most businesses indicated that they were aware of alternative source markets should their current supplier be unable to meet demand, or should transport to them become too difficult. • Changes to the routes goods travelled to arrive at their marketplace 3
Businesses interviewed for this assessment include a mix of wholesaler and retail traders. Local partners in Kirkuk were asked to conduct the assessment in the main market for Kirkuk Town. Interviews were returned listing: Hai Al Askary, Al Qahla (Al Haseer), Ras Domiz, and Al Qadisya as the location of the interview. Hai Al Askary, Ras Domiz and Al Qadisya were both described as market places in areas with large clusters of IDPs. While Al Qalha (Al haseer) was described as the marketplace located inside the city. 4
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In Kirkuk, traders spoke of bringing goods via a road from Iran, instead of via their normal route through Iraq. They said that this was in response to road blockages and security concerns. This was particularly an issue for goods brought imported from China (mostly blankets). o Traders in Heet spoke about blockages on the roads, however did not indicate a significant behaviour change, rather that they simply had to pay more to get goods in because of the blockages. Increased stocks: Several traders indicated that their current stock holdings are higher than normal so as to accommodate increased demand. 5
Table 2: Percentage of customers Access to credit is limited and not consistently available. credit is currently extended to Information on credit supply and access to credit was not consistently collected in all locations, and availability varied Location IDPs Host significantly. The information provided for Heet and Kirkuk, Community indicates that credit is not readily available for IDPs. In Heet, the Heet 2% 60% levels of credit available to locals had actually increased since Kirkuk 0% 0% before the shock. Although, the businesses in Kirkuk said credit Daquq 45% 55% was not provided to either population. In Daquq, credit appears to be available to both IDPs and host community, although at reduced levels compared to before the shock. Retailers and wholesalers expressed confidence in their ability to increase supplies and meet rising demand. Wholesalers interviewed for both the food and non-­‐food items indicated that they should have little difficulty increasing their supply. All reported the availability of alternate suppliers, including alternate supply locations, should their current source become unavailable, or be unable to meet the demand. Overall the businesses interviewed presented a high level of flexibility and ability to adjust to changing circumstances. The overall trend noticed in business responses was that stock holdings are currently higher than they were before the shock. Although, the reason for this was not specifically probed by the interviewers, it appears that this might have been done in response to the increased demand and anticipated needs of the increased population in IDP areas. This indicates good capacity to maintain supply availability in the marketplaces. Food items were largely reported to be resupplied within days (average of 1-­‐7 days for all locations) of placing an order. Almost all interviewed businesses said there would be no problem for their current suppliers to increase volumes, should they need it, however transport may become more expensive with larger shipments. Furthermore, most businesses interviewed were confident that should their current suppliers face difficulties, there were others available for them to work with. The businesses trading in blankets indicated that they would need approximately one month to bring a new shipment in from China, however they also stated that they had accounted for the increased demand from IDPs in the orders they have already placed for this season, and so should have capacity to meet the demand. IDP households are primarily purchasing basic food items, and household goods (pillows, mattresses, kitchen sets, fryers etc). 5
Answers on the interview forms regarding access to credit and the terms credit was provided on were not well completed. In Kirkuk, the forms were essentially left blank, while in other locations percentages were indicated, however the questions about terms and amounts provided were answered unclearly. The most remarked on change to demand was the increase in demand for both food and household items. All traders interviewed reported that a significant portion of their clientele is currently IDPs, and remarked that as they had recently arrived with no furniture or basic household items and were living in new homes that they needed to furnish. Several traders also indicated that the demand for food products had increased with the influx of IDPs. This would be expected, however it was interesting to note that many added the observation that IDPs had higher demand for food products because “they don’t get food from the government.” Finally, a few traders raised the point that IDPs were seeking out cheaper, and potentially poorer quality, items as compared to their normal clientele. This included fast food, canned or prepared foods that would not need significant preparation. Table 3: Main goods purchased by IDPs by location Location 6
Heet Kirkuk Main Goods Purchased by IDPs (as reported by businesses interviewed) Rice, sugar, cooking oil, tea, fast food, canned food, flour Rice, sugar, cooking oil, tea, beans, lentils, chicken, tomatoes, blankets, mattresses, pillows, carpets, kitchen set, fryer, tea pot, plates, and spoons Cooking oil, rice, baby formula Daquq The blanket traders interviewed were clearly anticipating the coming colder weather and have prepared their stocks for increased demand. Prices are higher than in other years, although not hyper-­‐inflated, and should be expected to remain elevated. Almost all of the interviewees reported that prices had increased since January 2014. This was largely attributed to the increase in fuel costs, increased insecurity along supply routes, and the attendant rises in cost of transportation. Increased demand was mentioned, however rising prices were more consistently attributed to the transport, fuel, and security rather than demand increases or scarcity of goods available. Prices are unlikely to return to pre-­‐crisis levels in the near future, but are also not likely to be further inflated by the introduction of cash programming. Particularly not at the scale that is currently proposed. Ongoing monitoring information during initial programs will help to inform the capacity to further scale up. Table 4: Price data – all prices are in IQD 7
Commodity Specification Brand/Quality Al Qalha Daquq Main Heet Specifications (Kirkuk Market Town) 16/9/2014 16/9/2014 Individual 1 set of 6 -­‐ Dettol soap pieces 5,813 1,000 1 bottle, 400 -­‐ Toothpaste Crest ml 2,850 7,750 1 piece -­‐ Toothbrush Orbit medium 1,350 1,125 6
Only food traders were interviewed in Heet, and so the responses to this question may be lacking NFI items due to the nature of the goods they have on offer, rather than IDPs not wanting to purchase the NFIs. 7
Data from Heet was not available at the time this report was compiled. Bucket with lid Blanket Set of pots Mattress Bread Rice Tomatoes Kidney beans Fuel Cooking gas hardness Plastic, 15-­‐20 L size 2*2 M. Aluminium type Size 1*1 M. 8 pieces (1000 G) 1 KG 1 KG 1 KG 1 L 1 Bottle Turkish Turkish 3 Pieces 8 KG 15 cm tall Double Basmati Type Altunsa Turkish medium size Turkish Iraqi -­‐ 6,100 14,400 10,000 25,000 37,400 9,000 7,125 8,250 2,000 2,400 2,250 2,000 2,500 2,500 3,450 1,250 60,000 3,500 1,250 50,000 -­‐ -­‐ -­‐ -­‐ -­‐ -­‐ -­‐ -­‐ -­‐ Section 3: Hawala Information Alongside the assessment of food and non -­‐food items, Mercy Corps conducted a series of interviews with hawala (money transfer agents) in each of the targeted market locations in order to improve our understanding of their capacity and potential to support cash transfer programming. Hawala offices in Sulaymaniyah, Baghdad, Erbil, Kirkuk, Khanaqin, Daquq, and Heet were approached with questions regarding their current ability to send or receive money in Kirkuk, Anbar and Diyala governorates. Almost all offices interviewed reported serving a significant number of IDPs (25 – 80% of their current customer base) in these locations. Recent changes to their operations Overall, the hawala companies interviewed indicated that operations to Heet, Kirkuk, and Khanaqin are ongoing and relatively normal. In Baghdad and Khanaqin, two companies indicated that they had temporarily closed offices, but were now operational again. One agency in Sulaymaniyah, said that they regularly reviewed the situation in Heet before sending funds. A few agencies approached in Sulaymaniyah and Erbil said that they had no engagement with the targeted areas and so full interviews were not conducted with them. Interestingly, two agencies in Daquq indicated they have actually increased their operations in recent months. Ability to access cash Over the last few months NGOs have experienced some difficulty with the liquidity of banks in Iraq. These interviews specifically highlighted the lack of cash available through the banks, and asked hawala how their businesses had been able to respond to the situation. Most indicated that they had not had problems with cash flow, and were able to continue operating relatively normally. One agent in Heet said that they had experienced problems because of the security, and a few in Sulaymaniyah reported increased difficulty accessing USD. Capacity to transfer now Interviewed hawala were asked about the number of transfers they had the capacity to handle in one day, and one week. Responses provided covered a range of capacity from 50 -­‐ 100 transfers per day, to 400 – 2,000 in one week, and 1,000 in one month. Considering the number of households current cash programming is proposing to target, even the lower estimates from these hawalas ind icate sufficient capacity to meet the needs of current humanitarian programming. Section 4: Recommendations Markets should be carefully monitored as the situation in Iraq evolves. In this context, monitoring should not only track price and availability, but also incorporate security analysis to be aware of the impact shifting front lines and armed control of different areas may have on supply routes. The information and analysis in this report should be used and considered in light of the current situation and ever-­‐changing conflict areas.