Markets, rations and transfer values

1Monitoring markets

Market monitoring records, weekly or monthly, the prices of key commodities, their availability, traders' restocking times and households' physical access. Joint initiatives such as the JMMI or WFP price monitoring make it possible to compare areas.

Always compare a price with a reference: the previous month, the same period last year, the five-year average. A rise of 20 to 25% in a short time deserves an alert. Rapid analysis tools (rapid market assessment, EMMA, CaLP's minimum standard for market analysis) help decide whether a cash transfer is feasible.

2Terms of trade

Terms of trade measure what a household gets by selling what it produces. For a herder: how many kilos of cereals does selling a goat buy? For a day labourer: how many kilos does one day's work buy?

Example: in March, a goat sells for 60 and a kilo of millet costs 0.50, i.e. 120 kg. In June, the thin goat sells for 40 and millet costs 0.80, i.e. 50 kg. The herder's purchasing power has been more than halved: this is a major early warning signal, well before malnutrition appears.

3Designing a ration according to Sphere

For general food assistance, Sphere uses a baseline of 2,100 kcal per person per day, with 10 to 12% of energy from protein and 17% from fat, plus adequate micronutrients. The ration takes into account what households already have, food habits and cooking means.

Example daily ration: cereals 450 g (about 1,580 kcal), pulses 50 g (170 kcal), fortified oil 30 g (265 kcal), iodised salt 5 g, sugar 20 g (80 kcal), i.e. about 2,090 kcal. Per month, that is about 13.5 kg of cereals per person. Fortified flours (for example a corn-soya blend) improve micronutrient intake for vulnerable people.

4The minimum expenditure basket and the transfer value

The minimum expenditure basket (MEB) costs, at market prices, what a typical household needs each month: the food component (often the 2,100 kcal ration), then water, hygiene, energy, rent, transport, health. It is usually calculated and updated by the cash working group and the cluster.

The transfer value covers the gap between the MEB (or its targeted part) and what the household can cover itself. Example: food component of 120 for a household of 6, estimated own capacity of 40: the food transfer is worth 80. It is harmonised among partners, rounded to ease payment and revised if prices move by more than 10 to 15%.

5Worked example: from price monitoring to the transfer value in Doumbaré

This fictional case returns to the "Terres Solidaires" cash transfer programme for 3,500 displaced households in Doumbaré (see days 1 to 3). The district Cash Working Group (CWG) asks the NGO, which leads the sub-group, to propose the monthly value of the food transfer.

1. Price monitoring

Prices are collected weekly from 5 traders per commodity in the central market and in two neighbourhood markets close to the sites, for a standardised unit of measurement (the weighed kilo, not the local "cup", whose weight is checked). The median is used rather than the mean, as it is less sensitive to an outlier price.

2. Terms of trade

• Goat to millet: 22,500 ÷ 410 = 54.9 kg today, compared with 30,000 ÷ 260 = 115.4 kg a year ago, a fall of 52%.
• Day of labour to millet: 1,500 ÷ 410 = 3.7 kg, compared with 5.8 kg a year ago, a fall of 37%. A day's work now feeds only 8 people in cereals instead of 13, at 450 g per person.

These figures are passed on to the early warning system and to the Cadre Harmonisé analysis group: they explain why households are selling more animals to obtain less food.

3. The food component of the MEB

Standard household of 6 people, cluster reference ration (450 g of cereals, 50 g of pulses, 30 g of oil, 20 g of sugar, 5 g of salt per person per day) over 30 days, plus a lump sum for vegetables and condiments set by the cluster to improve dietary diversity.

For information, the full MEB adopted by the CWG adds water (2,400), hygiene (3,500), cooking energy (6,000), transport (2,000), health (2,500) and clothing and household items (3,000), giving 79,100 CU. The NGO's programme, funded under a food security budget line, covers only the food component; another partner provides a top-up for non-food needs in the same sites, which is recorded in the CWG.

4. From the food component to the transfer value

The expenditure module of the survey shows that displaced households cover around 10% of their food needs themselves (casual work, gifts from relatives). Gap to be covered: 59,700 × 0.90 = 53,730 CU, rounded to 54,000 CU per household per month to make mobile money payment easier. The transfer is adjusted to household size by bands (3 bands: 1 to 3 people, 4 to 6, 7 and over), according to the rule agreed in the CWG, so that large households do not receive the same amount as small ones.

5. The revision rule

The CWG adopts the following rule: the food component is recalculated every month; if it varies by more than 10% from the reference value for two consecutive months, the transfer is revised.

The key point is not the formula but the rule agreed in advance: it prevents every price rise from triggering a debate, it protects households' purchasing power and it allows the donor to plan a budget reserve (for example 10% of the transfer budget) to absorb a revision.

6Checking a ration and using calculation tools

A ration is checked before it is ordered. The reference tool is the NutVal spreadsheet, developed by UNHCR and WFP, which calculates energy, protein, fat and the main micronutrients from the quantities of each commodity, using a food composition database for humanitarian commodities. The calculation below shows the principle with rounded values.

Step-by-step calculation for the reference ration

• Share of energy from protein: 59.5 × 4 = 238 kcal, i.e. 11.4% (Sphere target: 10 to 12%).
• Share of energy from fat: 45 × 9 = 405 kcal, i.e. 19.4% (Sphere target: at least 17%).
• Energy: 2,089 kcal, close to the 2,100 kcal reference.

Adjusting the 2,100 kcal reference

The 2,100 kcal value corresponds to a population with a standard demographic structure in a temperate climate, with light physical activity. Sphere and UNHCR and WFP guidance provide for adjustments: an increase of about 100 kcal for every 5°C of mean temperature below 20°C; an increase if the population has a high level of physical activity (agricultural work, long walks); an adjustment according to the age and sex structure if it differs markedly from the average; and allowance for a generally poor nutritional status. Conversely, a partial ration is calculated according to what households obtain by themselves, as measured by the assessment.

Beyond energy

• Micronutrients: a ration of cereals, pulses and oil provides poor coverage of iron, vitamin A, vitamin C, riboflavin and niacin (risk of pellagra with untreated maize). This is addressed through fortified commodities (fortified flour, fortified blended foods, oil fortified with vitamins A and D, iodised salt), through diversity (fresh vegetables, fresh food vouchers) or through targeted supplements.
• Acceptability: familiar commodities that households know how to prepare. Parboiled rice in a millet-eating area, or an unfamiliar flour, will be resold.
• Processing costs: milling, fuel, water. Whole grain entails a milling cost that must be covered; otherwise part of the ration is sold or given to the miller.
• Specific groups: complementary foods for children aged 6 to 23 months and pregnant and breastfeeding women as part of malnutrition prevention, in coordination with the Nutrition Cluster.

Price monitoring form (template)

7Common mistakes, variations by context and donor expectations

Common mistakes

• Recording prices in unweighed local units: the "cup" or the "heap" varies from one market to another and from one season to another; price rises can be hidden in a reduction in the quantity sold at the same price.
• Using the arithmetic mean of a few price readings, which is very sensitive to an outlier, instead of the median.
• Calculating the MEB with a theoretical household size (5 people) when the average registered size is 7: the transfer then covers much less than planned.
• Paying the full MEB when the objective is food security alone, or the reverse: claiming to cover basic needs with an amount that only covers food. The objective, the component covered and the share left to households must be explicit.
• Ignoring access costs: cash-out fees at the mobile money agent, transport to the payment point, milling costs. They reduce the real value received.
• Revising too late: without an agreed rule, a revision takes months of negotiation, during which purchasing power collapses.
• Setting different amounts across organisations in the same sites, which creates tensions, multiple registrations and complaints.
• Designing a ration without checking nutrients: a 2,100 kcal ration made up almost entirely of cereals meets neither the fat target nor micronutrient requirements.

Variations by context

What donors, auditors and evaluators look for

• Justification of the value: written calculation, price sources, household size, share covered, link with the CWG's MEB. BHA and ECHO explicitly require the value to be justified and consistent with the guidance of the coordination group.
• Harmonisation: alignment with the amount agreed in the CWG or an explanation for any difference.
• Market monitoring during the project: price series, analysis of any effects on local inflation, revisions made.
• Budget reserve for price revisions and reallocation rules agreed with the donor.
• Effects: comparison between what households can buy with the transfer and what was planned (PDM measures real purchasing power).

A sentence you should be able to say to a donor: "Our transfer of 54,000 CU covers 90% of the food component of the MEB adopted by the CWG for a 6-person household, calculated on October median prices; it will be revised if this component varies by more than 10% for two consecutive months, and a 10% reserve has been set aside for this purpose."

8Interview questions and key references

Interview questions

1. "How do you set the value of a cash transfer for food security?"

A good answer starts from the MEB or its food component calculated on local prices, subtracts the measured self-provisioning capacity of targeted households, adjusts to household size, takes access costs into account, rounds the figure, aligns with the CWG and provides for a revision rule and a budget reserve.

2. "Prices rise by 30% within two months of your transfers starting. Is your programme the cause?"

The answer proposes comparing with markets not covered by transfers, analysing regional prices and the exchange rate, asking traders about their supply costs, relating the injection to market volume, and acting according to the diagnosis (supply-side support, staggered payments, vouchers, change of modality).

3. "Check this ration: 500 g of maize, 30 g of beans, 20 g of oil."

The answer calculates the energy (about 1,750 + 100 + 177, i.e. about 2,030 kcal), slightly below 2,100 kcal, notes a fat share just above the threshold (about 18 to 19% depending on the value used for maize, to be confirmed with NutVal) and protein around 10 to 11%, then identifies the real problems: risk of niacin deficiency with untreated maize, low pulse content, no iodised salt, insufficient micronutrients without a fortified commodity; it proposes a correction (50 g of pulses, fortified oil, iodised salt, fortified flour or fresh produce).

4. "What do terms of trade tell you that prices alone do not?"

The answer explains that they measure the real purchasing power of a livelihood group, combining the value of what it sells (animals, labour) with the price of what it buys, and that they are a more telling early warning indicator than cereal prices alone.

5. "How do you manage a cash transfer programme in a context of hyperinflation?"

The answer cites indexation, value in a reference currency, frequent payments, monitoring of the parallel rate, exchange rate risks in the budget, the alternative modality (commodity vouchers or in kind) and coordination in the CWG.

Key references

• The Sphere Handbook (2018): reference nutritional requirements and the food assistance standard; appendix on nutritional requirements.
• NutVal tool for planning and monitoring rations: UNHCR and WFP.
• Guidance on the Minimum Expenditure Basket: UNHCR, WFP and CaLP; WFP Essential Needs toolkit.
• Minimum Standard for Market Analysis (MISMA): CaLP.
• Joint Market Monitoring Initiative (JMMI) methodology and bulletins: REACH.
• Market Functionality Index and price monitoring guidance: WFP.
• ECHO guidance note on large-scale cash transfers and BHA guidelines on justifying modalities and transfer values.