Malawi

FEWS Malawi Food Security Report mid-Jan to mid-Feb 2003

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EXECUTIVE SUMMARY

Moderate to heavy rains continued during the first 10 days of February, increasing the threat of flooding in flood-prone areas.

While rains have generally been good for crop production so far this year, they need to continue through March in order to ensure that the crop that is still young matures.

The government, through the National Food Reserve Agency (NFRA), had about 258,000 MT of maize stocks due, in part, to low ADMARC sales.

The government continues to relax some of the sales restrictions it had imposed regarding its imported maize in a bid to increase sales.

Local market maize prices are relatively stable around the ADMARC fixed price of MK17/kg. The prices are generally lower than last year at the same time.

1. FACTORS AFFECTING CROP PRODUCTION

a. Agro-climatic Conditions

Moderate to heavy rains fell in most parts of the country during the first 10 days of February 2003.

Moderate to heavy rains continued throughout the country, as illustrated in the first map of figure 1, which shows that most parts of the country received over 100 mm of rainfall during the first 10 days of February. A few areas reported less than 50 mm of rain, including parts of Chitipa and Karonga in the northern region and parts of Chikwawa and Nsanje in the southern region. These heavy rains increase the threat of further flooding in some areas of the country. Cumulatively, most parts of the country had received normal rainfall (75-125 percent of the expected rainfall) between October 1, 2002 and February 10, 2003, as shown in the second map of figure 1. Only parts of Nsanje and Balaka districts received below normal or less than 75 percent of the expected rainfall. Generally, the rains have been good for agricultural production.



However, as a result of the delayed and then erratic start of season, planting and subsequent crop development has been varied. The early planted maize is tasseling and cobbing while the late planted crop is at vegetative stages. Therefore, the rains need to continue until at least the end March or early April to ensure that all crops reach maturity. An abrupt end to the season could adversely affect the final harvest outcome.

2. CROP PRODUCTION PROSPECTS

The crop production prospects still look favorable.

The crop production prospects still look good due to favorable weather and increased use of inputs, and crops are in good condition except where fertilizer was not applied. Fortunately, many farmers had access to inputs through free issues either by government or NGOs, while others got them through cash and/or loan purchases.

However, continued heavy rains in some areas may adversely affect crops if soil nutrients are leached.

3. FOOD AVAILABILITY AND ACCESS

a. Official Maize Stocks and Sales

Government maize stocks stood at about 258,000 MT by the end of the first week of February.

Government imported maize amounted to about 233,000 MT by the end of the first week of February.

ADMARC maize sales remain low at only about 21,000 MT by the end of the first week of February, about half of the amount sold by the same time last year.

Government maize stocks, held by the National Food Reserve Agency (NFRA), remained high by the end of first week of February at about 258,000 MT. These unprecedented levels are due, in part, to low sales in the ADMARC markets. The government built these stocks, mainly through imports, in order to address the food security problems the country is facing. These government imports amounted to about 233,000 MT of maize by the end of first week of February. Unlike last season, the government has successfully imported adequate stocks in time to avoid a food security crisis this season.

ADMARC, the only institution allowed to buy the maize from the NFRA for sale to the public, has been buying the maize at a fixed price of MK14/kg and selling to the public at a fixed price of MK17/kg in an effort to ensure the maize reaches as many people as possible at a reasonable price. ADMARC’s price represents a government subsidy of about 40 percent, as the landed cost of the imported maize is estimated at about MK28 to MK30 per kg. These fixed prices were one way the government sought to address food security concerns, since high prices were mainly to blame for the food crisis last season. However, the rate of sales has been low in the ADMARC markets for various reasons, including ADMARC-imposed sales restrictions and alternative supplies. As a result, current government maize stocks are higher than they have ever been at this time of year, and concerns are mounting since much of the government’s money is locked up in the maize stocks. In addition, the outlook for this season’s harvest is good at the moment, and if production is high, it is likely that ADMARC sales will be further undermined. The government is now cautiously (bearing in mind that the production prospects can change) taking steps to increase ADMARC sales by removing a number of the original sales restrictions. For instance, individuals can now buy up to 5 bags (50kg each) per day instead of only one. The government has also just tendered for the sale of 50,000 MT of maize to the general public. In addition, NGOs and other organizations who want to buy maize for their own programs can now buy the government’s maize. It remains to be seen how the market is going to respond. It is important to keep in mind that although it is clear that the government needs to increase maize sales, it still needs to retain some carryover stock because with the current maize production projections the country will only just about breakeven.

b. Local Market Conditions and Prices

Average local market maize prices for the first week of February ranged from MK14.19/kg to MK20.98/kg. The prices are 5 to 61 percent lower than those at the same time last year.

Local market prices remain stable around the ADMARC fixed price of MK17/kg.

Maize is readily available on most local markets. Most of this maize is sold by private traders who obtained it from various sources, including locally, and from Tanzania and Mozambique. Some of the private traders who are speculating by holding on to maize to sell at higher prices during this lean period (December 2002 to February 2003) have realized that prices will not rise to last year’s levels because of the full government’s stocks and ongoing interventions such as the free food distributions. Some of these traders are, therefore, being forced to sell at the prevailing prices, which are, for the most part, considerably lower than last year at the same time. See Table 1.


Table 1: COMPARISON OF MAIZE PRICES DURING FIRST WEEK OF FEBRUARY 2002 AND 2003
Market
Feb-02
Feb-03
Percent Change
BANGULA
19.50
18.55
-5
CHIMBIYA
37.50
14.70
-61
CHITIPA
23.44
14.19
-39
KARONGA
15.53
16.00
3
LIWONDE
33.90
18.98
-44
LUCHENZA
28.00
17.00
-39
MITUNDU
34.08
19.60
-42
MZIMBA
33.98
15.08
-56
NAMWERA
37.50
20.44
-45
NCHALO
21.00
19.80
-6
NKHOTAKOTA
27.87
18.33
-34
NTAJA
46.75
20.98
-55
RUMPHI
29.58
15.64
-47
SALIMA
40.54
22.19
-45

Average maize prices during the first week of February this year ranged from MK14.19/kg to MK22.19/kg at Chitipa (further north, bordering Tanzania) and Salima (in the central region along the lakeshore) markets respectively. Prices are 5 to 61 percent lower than at the same time last year (for the markets whose data was available). Only Karonga market, closer to the Tanzanian border, registered a price higher than last season by 3 percent. Most of the maize from Tanzania passes through Karonga and this flow-through has a significant impact on maize prices there.

The prices are not only lower than last year, they are also stable, hovering around the ADMARC fixed price of MK17/kg. This differs from last year’s experience, when prices shot up between December 2001 and February 2002. Figure 2 compares the maize prices in the local markets in the 2001/02 and 2002/03 seasons for the months of December and January and the first week of February. Last year, there was no maize in ADMARC markets and private traders took advantage of the situation to raise prices to much higher levels than the ADMARC fixed price of MK17/kg. This year the government has ensured adequate supplies to ADMARC; as Figure 2 illustrates, this supply has kept prices in most of the local markets down around the ADMARC fixed price of MK17/kg.




4. VULNERABILITY UPDATE AND INTERVENTIONS

Although market indicators point to favorable food security conditions in the country, a lot of people still cannot afford to buy food on the market, even at the current subsidized prices.

WFP’s emergency operation, intended to address the food security problems generated by last year’s production and price shocks, continues. Out of the 279,079 MT food requirements identified during the August 2001 national assessment, 250,488 MT (90 percent) had been resourced and confirmed, while 143,459 MT (51 percent) had been received by mid-February. Maize makes up 184,136 MT of the total 279,079 MT food requirements, and maize meal comprises the remaining 3,310 MT. Almost all of the maize (184,222 MT) and more than three times the maize meal (12,498 MT) requirements have been resourced and confirmed. Out of these, 122,918 MT of maize (66 percent of the requirement) and 615 MT of maize meal (19 percent of the requirement) had been received, leaving a balance of 61,000 MT and 12,000 MT of maize and maize meal respectively. Figure 3 compares the amount of food required (by type) to the amount of food received so far.




While 122,918 MT have been received in country so far, only 81,260 MT have actually been delivered. As such, by the end of January, WFP still had some commodities in stock pending distribution. These included about 42,000 MT of maize and 30 MT of maize meal. These stocks (including the 61,000 MT maize pledged but not yet received) are enough to meet the additional cereal requirements resulting from the increase in the estimated number of people in need of emergency food assistance (up from 3.4 million to 3.6 million for the period February to March 2003). Although market indicators point to favorable food security conditions in the country, it is commonly agreed that there are a lot of people, especially at this time of year, who still cannot afford to buy food on the market, even at the current subsidized prices.

FEWS NET Project
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Telephone and Fax: +265 754892
E-mail: fewsmw@malawi.net