Malawi

FEWS Malawi Food Security Report mid-Jul to mid-Aug 2002

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EXECUTIVE SUMMARY

Planting of winter crops is still ongoing in areas with residual moisture or irrigation facilities. These crops will reach maturity in November and December.

The number of rural households that have run out of their own produced food continues to increase. Some of the households are forced to eat only one meal per day due to the shortage of food.

Some rural households are receiving food aid distributed by the various non-governmental organizations (NGOs) across the country. There is great need to increase the pace of these distributions.

Local market maize prices are beginning to show signs of an upward turn since last month. Local market maize prices ranged between MK10/kg to MK23/kg. The highest price was recorded at Mchinji market. These prices are however generally below the Agricultural Development and Marketing Corporation (ADMARC) price of MK17/kg but higher than prices last year at the same time. However, it’s too early to conclude whether this marks the end of the downward trend in these prices for most of the markets this season.

Private traders are buying maize between MK10/kg to MK15/kg. However, the flow of maize to markets is not adequate due to the general shortage of maize in the country.

The national inflation rate continued to drop, registering a decline from 16.7 percent in June to 16.1 percent in July.

1. AGRO-CLIMATIC CONDITIONS

Dry weather conditions persisted across the country. Farmers have started to prepare their gardens in many parts of the country. Garden preparation is expected to peak in September.

A few areas, especially along the lakeshore and in the Southern highlands, experienced some showers, which are good for the winter crops.

2. FOOD AVAILABILITY

a. Food Stocks

Some households have already depleted the maize they harvested in April-May and are depending on various sources of income to obtain cash to buy food.

Intensification of winter crop cultivation this year is expected to help alleviate the food shortage problems later in November/December when these crops mature.

According to sources in the Ministry of Agriculture and Irrigation (MOAI), the number of rural households running out of home-grown food continues to increase every day and is higher than at the same time last year in almost all the Extension Planning Areas (EPAs). These food shortages are exacerbated by the fact that this is the second consecutive year the country has faced a food crisis and the resilience of many households has been over stretched. Most households that have run out food now depend on various income-generating activities, such as sale of firewood, vegetables, and non-farm and on-farm work to obtain cash to buy food. However, during the recent, first-round Vulnerability Assessment Committee (VAC) food needs assessment field trip, it was observed that casual on-farm labor (ganyu) is not yet the main income source as the main agricultural season has not yet started.

Several programs aim at boosting winter production, the major one being the government’s Targeted Input Program, which distributed farm inputs to about 300,000 households with access to fields (dimbas) for winter cultivation. According to the MOAI, these inputs are expected produce an additional 75,000 MT of winter maize this season as part of the total winter maize production of about 166,200 MT, as projected by MOAI in May/June this year. Winter maize production is expected to be the highest in the four years when the Ministry started estimating winter crop production separately. In most areas the winter crop looks promising.

However, during the food needs assessment, farmers expressed fears that the harvest may be adversely affected by theft of green maize, which is now too common. Whereas in some areas, farmers have not planted due to lack of residual moisture, in other areas, such as Salima District along Lake Malawi, for instance, the water in some of the fields has not yet subsided for winter cultivation; if the situation persists to the end of September, it will be too late to plant winter crops. This means that some farmers have not been able to utilize the crop inputs they received for winter cultivation as expected. These concerns not withstanding, there will be some incremental production out of the winter TIP and the winter crop will provide a much-needed respite to some rural households affected by the food shortage come November/December when most of the crops mature.

Some of the ADMARC markets and depots are being used to store the imported relief maize awaiting distribution to various parts of the country. Information about the quantity in stock was not available at the time of producing this report.

National Food Reserve Agency (NFRA) stocks as of August 22 stood at 79,553 MT. This includes 31,533 MT of the planned commercial imports of 250,000 MT in 2002/03; 25,119 MT carry-over stock from the last arrival of 2001/02 commercial imports and 19,909 MT from the European Union funded purchase of 40,000 MT of local maize to replenish the Strategic Grain Reserve.

b. Market Conditions and Food Access

Anecdotal reports indicate that ADMARC has not yet started buying maize. Private traders are buying maize in the rural areas at prices ranging from MK10/kg to MK15/kg.

Local market maize prices begin to show signs a modest upward turn as an increasing number of markets register moderate price increases. Local market maize prices ranged between MK11/kg and MK22/kg as of the second week of August.

ADMARC had been expected to start purchasing maize towards the end of July. However, observations during the recent food assessment field trip showed that ADMARC had not yet started buying maize. This means that if ADMARC decides to buy now, they will find it difficult to get adequate stocks this late in the season as private traders are already busy buying the little that is available. The main problem cited for ADMARC’s inability to participate in buying maize is lack of financial resources. However, ADMARC may be banking on selling the maize that the NFRA is importing into the country.

Private traders in most parts of the country started buying maize as early as May. During the recent VAC food needs assessment, it was discovered that buying prices range between MK10/kg to MK15/kg. Traders hang their scales along rural roads, awaiting farmers to come and sell their maize. However, these traders have not bought much because of the general shortage of maize. Some traders are also cautious, as they do not know exactly how the maize market will perform when NFRA reaches the market and when donor maize distribution increases.

The post-harvest decline in maize prices may have run its course as a number of markets register modest price increases. If the trend continues, the country could face 5-6 fold price increases like those last season. Figure 1, showing maize price trends in some of the local markets since January last year, illustrates these tentative price increases. The figures for August are based on the first two weeks of the month.




However, perhaps the advantage this year is that Malawi and its partners have learned some difficult lessons about being prepared and have already taken a lot of steps to avoid a repeat of last season’s food crisis. The first commercial imports of 250,000 MT of maize have already arrived and more are expected to come. If these imports continue flowing adequately, they will moderate the local market maize price increases.

According to the MOAI, local market maize prices for the first two weeks of August ranged from an average of MK10.71/kg at Rumphi market in the Northern Region to MK21.63/kg at Nkhotakota market in the Central Region. Although prices are generally higher than at the same time last year, they are below the ADMARC fixed price of MK17/kg. The prices are abnormally higher than at the same time last year in Mchinji (79 percent), Chimbiya market in Dedza District (69 percent) and Salima (60 percent). These unusually high prices coincide with the preliminary findings of the recent food assessment where the top five food insecure districts are Salima, Mchinji, Kasungu, Thyolo and Dedza, in descending order.

The government’s National Food Reserve Agency (NFRA) is importing 250,000 MT of maize to ensure that commercial maize is readily available in the markets across the country. The NFRA import program has started on a promising note this year, unlike last year when the first consignment arrived in October. As of August 22, the NFRA had received 31,500 MT of this maize. At the current rate of imports, about 30,000 MT/month, the NFRA expects to receive about 150,000 MT by the end of December.

Yet, it is imperative to speed up the process to ensure that the maize arrives in the country on time before the rainy season slows distribution around the country and ADMARC and local markets run short. Hence, the sooner imports arrive, the better. If the current rate of imports is maintained, and indeed NFRA receives all the maize as projected, it will greatly increase the availability of maize in the country and moderate seasonal maize price increases.

The commercially imported maize is landing at an average price of US$285/MT, which equivalent to nearly MK28/kg. If the NFRA is to sell this maize at a profit, it will be quite expensive for consumers, considering that ADMARC sold last year’s imported maize at MK17/kg. It is against this background that the Government of Malawi recently received a nod from the IMF on its plans to subsidise the consumer sales price of maize that the NFRA is importing into the country. According to reports in the press, the GOM will spend MK2.5 billion on a generalized subsidy on maize, but the exact details as to how this will be implemented are not yet clear.

Meanwhile, the relief maize donated by the US government continues to arrive. According to recent WFP, the country has already received about 28,000 MT of maize from the US and another 22,000 MT is reportedly at the port of Beira in Mozambique en route to Malawi. According to the reports, the US government plans to send to Malawi a total of 73,000 MT. The maize is being distributed across the country through a consortium of NGOs.

3. VULNERABILITY UPDATE AND INTERVENTIONS

Some households are cutting down to one meal per day to one as the food shortage and food access worsens.

Fortunately, households in a number of areas are now receiving food aid distributed by the various NGOs across the country.

A visit to some of the rural areas shows that the food security situation is deteriorating fast. Some of the households are already resorting to coping mechanisms typical of hard times. These include consumption of less preferred foods, such as maize husks; eating one meal per day instead of the normal two or three; and, in worst circumstances, going without a proper meal for the whole day. Based on the seasonal calendar in normal times, this is a bit too early to start resorting to these coping mechanisms and only explains the seriousness of the situation this year. Some rural households harvested almost nothing in April-May this year and have depleted their assets, such as livestock, which they could have fallen back on. Most poor households sold most of their livestock at the peak of the hunger season (January/February) this year (section 4).

Government, NGOs, donors and other stakeholders are working hard to avoid the food security situation degenerating into a major humanitarian crisis. The first food being distributed by various NGOs in the food aid consortium is already reaching the intended people. However, the recent food assessment team observed problems with distribution. For example, in some areas, chiefs are allegedly favoring their relatives at the expense of the people genuinely in need of assistance. There is need to develop monitoring mechanisms to prevent this practice. In some areas, the rations are subdivided to ensure that as many people as possible receive something at a given time. The rations therefore become inadequate for the intended beneficiaries. The best approach is to increase the pace of food aid distributions.

Malawi is one of the few southern African countries that have accepted the genetically modified (GM) maize from America without conditions. This is the maize that has up until now been distributed to the beneficiaries. Some countries in the region have refused GM maize, preferring instead maize flour for fear of the environmental impact of the GM maize, should farmers plant genetically modified seed.

Following pressure from other governments in the region, the GOM is rethinking its position on GM maize and has decided to move away from distributing maize grain to maize flour to be in line with the other countries. The GOM will mill the maize into flour at its own cost and distribute the flour instead of maize. The logistics of such an operation are yet to be worked out. Some argue that this is an unnecessarily expensive undertaking since there is no known danger to the environment, as those who oppose GM maize claim. Questions, such as what happens to the commercial maize being imported since some of it is also GM, are not easy to answer. Various sources report that, to varying degrees, a proportion of the maize produced by the other major exporters, Brazil, Argentina, China, South Africa and Australia, is GM but not declared. It remains to be seen how these issues will be addressed.

The government will embark on a free farm input distribution program with assistance from the British Department for International Development (DFID) and Norway. This program has existed in various forms since the 1998/99 season but the number of beneficiaries in the past two seasons has been reduced as one way of phasing it out. However, this time it is going back to its original status when it targeted all smallholder households in the first and second years. According to DFID, the original plan is to increase the number of beneficiaries from less than 1 million last year to two million this year. The whole program will cost about US$15 million. However, Government wants the number of beneficiaries to be increased to about 3 million, covering all smallholder households in the country. It is not clear how GOM will fund the additional 1 million beneficiaries. Discussions are still ongoing to find the best solution to this. Meanwhile, registration of beneficiaries has already started.

4. PASTURE AND LIVESTOCK CONDITIONS

Livestock prices have risen to their usual levels after plummeting when a lot of the poor households depleted their livestock at the peak of the hunger season in January/February.

Rural households depend on sales of cattle, goats and chickens as an important source of income, especially during the hunger season. However, during recent visits to most parts of the country, it became clear that most households had sold all or most of their animals at the peak of the hunger season (January/February). With so many households selling at once, prices fell, requiring households to sell even more animals to afford to buy food. These distress sales have deprived rural households of a significant resource for coping with food shortages, making them more vulnerable than at the same time last year.

Rising cases of theft is another factor that has contributed to the drop in livestock ownership, especially that of cattle. A number of rural households have lost their cattle due to theft. In some areas along the southern border, it is alleged that the cattle are taken to Mozambique whereas in other cases, they are simply taken to the urban centers for slaughter. The situation is so serious that people are reluctant to own cattle and some households were forced to sell their cattle for fear of losing them due to theft.

There have not been any significant livestock disease outbreaks reported. However, a number of households complain about Newcastle disease, which resulted in a great loss of their chickens.

As reported last month, livestock prices have risen to their usual levels for this time of year households are no longer forced to sell their livestock in order to buy food. Cattle prices now average about MK10,000 to MK15,000 each, goats around MK1,000 and chickens around MK100 each. These prices had crashed by more than half at the peak of the hunger season.

It is important, therefore, to ensure that steps are taken to rebuild the livestock population in the country; otherwise Malawi will become increasingly dependent on imported livestock products. Since livestock are such an important source of income for the majority of the rural population, efforts to increase livestock ownership will therefore contribute significantly in the reduction of household vulnerability to poverty, hunger and disease.

5. MACRO-ECONOMIC INDICATORS

The value of the Malawi Kwacha remains stable at an average of about MK76/US$.

The national inflation rate is also fairly stable, registering a drop of 0.6 percentage points between June and July.

The value of the Malawi Kwacha depreciated slightly in July as the exchange rate moved from about MK76/US$, where it had stayed for about three consecutive months, to MK77/US$. However, the exchange rate figures for August show that the Kwacha appreciated back to about MK76/US$. In general the exchange rate has been stable for sometime now, which is good for the economy. This stability is particularly important at this time when Malawi needs to import a lot of commercial food to face its current food security problems. The exchange rate has been more stable this year than at the same time in the previous two years, as depicted in Figure 2.





The national rate of inflation has continued to register slight drops each month since September last year. According to the National Statistics Office, the national inflation rate dropped from 16.7 percent in June to 16.1 percent in July. Since March this year, the inflation rate has been the lowest in the past four years.

Without offsetting increases in income, high inflation rates erode people’s purchasing power, including their ability to buy food. In addition, even those who assist others with food or cash to buy food (be they relatives or otherwise) find it difficult to manage their own budgets as their disposable incomes are eroded, increasing the vulnerability of poorer households to food insecurity. Figure 3 shows the inflation trends for the past five years.




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