Lesotho

Special Report: FAO/WFP crop and food supply assessment mission to Lesotho 22 Jul 2004

Attachments

Mission Highlights
Cereal production in Lesotho for 2003/04 is forecast at 49 400 tonnes, comprising 34 000 tonnes of maize, 13 000 tonnes of wheat and 2 400 tonnes of sorghum. These levels represent less than half of last year's output and one-third of the average level for the previous five years.

Generally inadequate, late and poorly distributed rainfall, combined with reductions in cultivated area and use of fertilizer and improved seed, accounted for this production decline.

Cereal import requirements for 2004/05 (April/March) are forecast at 348 500 tonnes. Commercial imports are projected at 304 800 tonnes, leaving a food-aid requirement of 43 700 tonnes. WFP has 22 300 tonnes in stock and pipeline; thus a gap of 21 400 tonnes remains to be covered by additional external assistance.

A total of 948 300 people will need food assistance in varying amounts in 2004/05.

Severe soil and land degradation, lack of proper land and crop husbandry practices, inefficient use of improved seeds, fertilizers and pesticides, and an extension service without appropriate technical dissemination are all factors that continue to hamper agricultural production in this country.

1. OVERVIEW

On 11 February 2004, the Kingdom of Lesotho declared a state of emergency because of the high level of food insecurity in the country. The 2003 winter harvest failed after persistent droughts that have also caused severe water shortages. An appeal for food assistance has been made for more than one-quarter of the population. Against this background an FAO/WFP Crop and Food Supply Assessment Mission visited Lesotho from 13-26 May 2004 to estimate cereal production, assess the overall food supply situation and forecast import requirements for the 2004/05 marketing year (April/March), including food assistance needs.

The Ministry of Agriculture and Food Security, the Ministry of Economic Planning, the Disaster Management Authority, the Ministry of Industry, Trade and Marketing and the Bureau of Statistics cooperated fully with the Mission. Discussions were also held with relevant UN agencies as well as donor representatives, NGOs and grain importers. The Mission split into two groups and was able to cover all ten districts in the country. Interviews were conducted with District Agricultural Officers and staff from crops, livestock, extension, disaster management, nutrition and health divisions. Interviews were also conducted with village chiefs, farmers, households and traders.

The estimated area planted to cereals in 2003/04 was less than 80 percent of the average for the previous five years. This reduction resulted not only from the late rains that discouraged planting, but also from the lack or diminished capacity of farm labour. Subsequent poor distribution of rainfall combined with drastic reduction in the use of fertilizers and improved seeds, partly as the result of cuts in subsidies, have resulted in poor yield levels. Some frost damage was also observed by the Mission in several mountain districts where many households suffered serious crop losses.

Overall, the Mission forecasts 2003/04 cereal production at 49 400 tonnes, which is only 42 percent of last year's production and 32 percent of the average for the previous five years. Maize production is estimated at 34 000 tonnes, wheat at 13 000 tonnes and sorghum at 2 400 tonnes. The late rains did, however, encourage the cultivation of other crops such as vegetables, beans and potatoes, which are expected to contribute to household diets and provide cash incomes when grown in larger quantities.

The cereal import requirement in the 2004/05 marketing year (April/March) is estimated at 348 500 tonnes, and commercial imports can be estimated at 304 800 tonnes. This leaves a food-aid requirement of 43 700 tonnes of cereals. There are already 22 300 tonnes in stock and in the pipeline; thus there is an uncovered gap of 21 400 tonnes of food aid that will need to be provided. The national VAC estimates that 948 000 people will face food and/or income deficits of varying amounts.

A shortfall of these proportions is a serious concern, particularly for the most vulnerable populations and those living in remote and inaccessible parts of Lesotho. Many households have exhausted their coping capacity as they have already been experiencing similar circumstances for several years. Another serious issue is the continuous reduction in the cropping area because of severe soil and land degradation and lack of proper land and crop practices in the country's agriculture. Medium- to long-term interventions are urgently required to stop and reverse the loss of large tracts of agricultural land.

However, the key issue remains the lack of physical and economic access to food for certain segments of the population, i.e. they do not have the purchasing power to buy food even if it is available in the market. Agricultural activities remain the main source of income for nearly 60 percent of households. But more than 95 percent of these households cannot produce adequate food for their own requirements. Even for those with enough land, home-grown food often lasts for fewer than five months of the year, even in good years. To address this problem, a recent government initiative, "Block Cultivation", encourages the grouping together of farmers' fields and streamlining of labour so as to facilitate input and output distribution and allow for mechanized, high-input production to boost crop yields and rural incomes.

HIV/AIDS is a growing problem that is exacerbating the food production shortages. The prevalence of HIV/AIDS has risen from almost no officially reported cases in 1992 to an estimated infection rate of 31 percent in 2001 (among 15-49 age group). The rate of infection among pregnant mothers attending antenatal clinics is 42 percent, and there are an estimated 70 000 AIDS orphans in the country. The stigma surrounding the disease may be leading to under-reporting; it is likely that infection rates may be even higher. The seriousness of the situation has been acknowledged by the government. In late 2003 an autonomous National Aids Commission replaced the Lesotho AIDS Programme Coordinating Authority, whose resources and influence were insufficient for effectively implementing programmes.

2. SOCIO-ECONOMIC SETTING1

2.1 General

The Kingdom of Lesotho is a small, mountainous, landlocked country entirely surrounded by South Africa, with no substantial natural resources other than water. More than 85 percent of the population of 2 million live in rural areas and are engaged mainly in agriculture and informal activities. Agriculture contributes about 14 percent of GDP, but has remained only a supplementary source of income, because about one-half of rural household income derives from family members working in mining and other jobs in South Africa. Although these migrant earnings are declining, they nevertheless constitute about 30 percent of Lesotho's GNP. Agricultural production not only lacks a solid commercial base, it is also very erratic as there have been severe droughts in recent years. Only about 13 percent of total land area is suitable for cropping. Mining declined after the closure of the main diamond mine in 1983, although it reopened in 2003 and there are signs of further positive developments in the sector. Another most notable development has been the growth of export-oriented manufacturing, led by the clothing and footwear sub-sector. Exports to the United States have been growing owing to Lesotho's qualification for export concessions under the Africa Growth and Opportunities Act (AGOA).

Lesotho's GDP grew at an annual average rate of 6.3 percent during the period 1988-1997. Despite uncertainties and rapid changes in the economic landscape, Lesotho achieved an impressive economic performance between 1995 and 1997, with a real GDP growth rate that averaged about 10 percent annually. The positive impact from the construction of the Lesotho Highlands Water Project, which supplies water to South Africa, and a small but rapidly growing manufacturing sector, contributed to the surge in economic growth in the late 1990s. There was subsequently a turnaround in the performance of the economy following a political crisis in 1998. GDP contracted by 5.4 percent that year. Growth resumed in 1999 and 2000, but at a slower pace, with rates of 2.8 percent and 2.5 percent, respectively. These rates, however, did not allow for per capita income growth. The economic recession was caused mainly by the civil unrest in 1998, which led to widespread looting of businesses, job layoffs and reduced investor confidence.

2.2 Recent macroeconomic developments

Lesotho's real GDP growth was estimated at 3.6 percent in 2003 and is forecast to average 3.8 percent during 2004-2006. Gross national income per capita was estimated at US$609 in 2003, compared to US$330 in 2001. This large increase is attributed to the sharp appreciation of the rand against the US dollar.

The three-year Poverty Reduction and Growth Facility (PRGF) programme agreed between the Government of Lesotho and the IMF was not strong enough to address poverty and related problems in Lesotho; although it did help the country recover marginally from the political disturbances of 1998. The IMF will continue to offer support and has extended the PRGF by three months to June 2004. A new PRGF is expected to begin soon.

In March 2004, the annual Inflation rate slowed to 5.2 percent as food prices decreased. Prices in South Africa, the source of around 80 percent of Lesotho's imports, will remain the main influence on inflation. A 20 percent increase in petroleum prices in March/April 2004 is expected to cause year-on-year inflation to rise until February 2005. The drop in domestic cereal production and continuing food shortages will also have some effect on prices. Inflation in 2004 is expected to average around 5.8 percent. A budget surplus of 2.7 percent of GDP, after grants, is projected in 2004/05 (April/March), compared to a projected deficit of 2.9 percent of GDP in 2003/04. This surplus comes as the result of a windfall from Southern African Customs Union (SACU) revenue after a two-year delay in disbursing members' shares.

Employment in manufacturing, the largest formal employer, rose by an estimated 22.5 percent in 2003. Despite the deterioration observed in the manufacturing production volume index, improvement in employment levels in this sub-sector may indicate growing optimism about demand from the United States, particularly for clothing. Another important source of employment for Lesotho is the mining industry in South Africa, which also provides foreign exchange income for the country. The number of people from Lesotho working in the mines showed some increase in the last quarter of 2003, but fell by 3.0 percent year-on-year and ended at 61 424 by the end of 2003.

Positive trends have also been registered in the external trade sector. The current account deficit is expected to narrow to 8.5 percent of GDP in 2004 and 7.4 percent in 2005 as export values increase. However, food imports need to increase to offset the impact of drought conditions.

The local currency, the Maloti, is set at par value with the South African rand. The rand strengthened by 39.2 percent against the US dollar in 2003, averaging R7.56 per US$1; the exchange was R6.7 per US$ at the time of the Mission visit.

2.3 Population estimates

According to the 1996 population census, the total population of Lesotho was then estimated at about 1.86 million. In 2001, the Lesotho Demographic Survey put the figure at about 2.16 million people. This implies a population growth rate of 2.0 percent per annum.2 According to recent estimates, the average life expectancy has fallen from nearly 60 in the mid-1990s to 38.6 in 2004, mainly from the effects of HIV/AIDS.

Footnote:

1 The Central Bank of Lesotho annual and quarterly reports, World Bank, IMF and the Economist Intelligence Unit (EIU) are the mainsources for this section.

(pdf* format - 228 KB)